Margaret Anne Percival v Studioline Holdings Pty Ltd
[1996] IRCA 39
•09 February 1996
DECISION NO: 39/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - whether termination at employer's initiative or RESIGNATION - whether VALID REASON for termination - whether PROCEDURAL FAIRNESS - COMPENSATION
INDUSTRIAL RELATIONS ACT 1988 Ss 170DC, 170DE(1), 170DE(2), 170EDA(1)(a), 170EDA(1)(b), 170EE(2), 170EE(3)
INDUSTRIAL RELATIONS AND OTHER LEGISLATION AMENDMENT ACT 1995, SCHEDULE 2, ITEM 10, ITEM 14(2)(b)(ii)
Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233
May v Lilyvale Hotel Pty Ltd, unreported, IRCA No. 628/95, Wilcox CJ, 1 December 1995
Bean v Milstern Retirement Services Pty Ltd, unreported, IRCA No. 248/95, Moore J, 2 June 1995
Aitken v CMETSWUA - WA Branch, unreported, IRCA No. 352/95, Lee J, 7 August, 1995
Williams v Kirkman's Crane Trucks of Melbourne Pty Ltd, unreported, IRCA No. 140/94, Staindl JR, 23 November 1994
MARGARET ANNE PERCIVAL -v- STUDIOLINE HOLDINGS PTY LTD - WI 95/1467
BEFORE: RITTER JR
PLACE: PERTH
DATE: 9 FEBRUARY 1996
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 95/1467
BETWEEN: MARGARET ANNE PERCIVAL
- Applicant
AND: STUDIOLINE HOLDINGS PTY
LTD
- Respondent
MINUTE OF ORDERS
BEFORE: RITTER JR
PLACE: PERTH
DATE: 9 FEBRUARY 1996
THE COURT ORDERS AND DECLARES THAT:
The respondent terminated the employment of the applicant in contravention of Sections 170DC and 170DE of the Industrial Act, 1988.
Within 21 days, the respondent pay to the applicant $7,000.00 in compensation pursuant to Section 170EE(2) of the Industrial Relations Act, 1988.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 95/1467
BETWEEN: MARGARET ANNE PERCIVAL
- Applicant
AND: STUDIOLINE HOLDINGS PTY LTD
- Respondent
BEFORE: RITTER JR
PLACE: PERTH
DATE: 9 FEBRUARY 1996
REASONS FOR JUDGMENT
This is an application under Section 170EA of the Industrial Relations Act 1988 ("the Act") arising out of the alleged termination of employment of the applicant, by the respondent, in contravention of Division 3 of Part VIA of the Act. The applicant sought compensation, arguing that reinstatement was impracticable. The respondent did not submit that reinstatement was practicable.
The primary issues were as follows:-
Whether the respondent terminated the employment of the applicant or whether she resigned.
If there was a termination of the employment of the applicant by the respondent, whether this was in contravention of the Act.
If there was a contravention of the Act, the amount of compensation to be ordered.
BACKGROUND
The applicant gave evidence in support of her case and called her mother-in-law, Mrs Patricia Francis as a witness. Evidence for the respondent was given by Mr John Woods, a director of the respondent and Mr Christopher Lewis.
The respondent trades as J & M Advertising, an advertising agency. The applicant commenced employment with the respondent on 6 February 1995. Initially, the applicant worked on a part-time basis with the respondent. This occurred for two to three weeks. After that she worked full time. Mr Woods thought that the full time employment commenced on 17 February 1995. The applicant's duties were to run the accounts system and also obtain quotations for advertising work as well as the booking of media production work. The applicant had previously worked for the respondent as a contractor from time to time. She had assisted with the installation and running of the accounts computer software package of the respondent.
During the time the applicant worked for the respondent, those employed at J & M Advertising were the applicant, Mr Woods, Ms Michelle Cohen, who was also a director, and a man who did advertising design work. The advertising designer was named in the evidence but for reasons of sensitivity which will become apparent later in these reasons, I do not think it appropriate to name him. Mr Woods said that Ms Cohen did not give evidence because of an illness. However, there was no reason given for the advertising designer not giving evidence.
It is agreed between the parties that the applicant's employment with the respondent ceased on 13 April 1995. As stated above, what was in contention was whether she resigned or her employment was terminated.
TERMINATION OF EMPLOYMENT
On 13 April 1995 the applicant was late for work because she had to attend a specialist doctor's appointment. The doctor's appointment was scheduled for 7.00 am. The applicant had informed Mr Woods of the appointment but said that she hoped to be at work not much later than the ordinary commencement time for work of about 8.30 am. However, the doctor's appointment was delayed. According to the applicant's evidence she did not arrive for work until 9.45 am. Mr Woods' evidence was that she arrived for work at about 10.20 am; however, little turns on this difference.
The applicant said that when she arrived at work Mr Woods called her into his office. He asked where she had been. The applicant's evidence was that "I said something like: 'You know where I have been, I've been to the doctor', something of that nature. And he said: 'But you said you were going to be at work on time. The phone has been ringing, we have clients coming in. It's busy' ".
The applicant said that Mr Woods then asked her where she had been the previous day. The applicant had not been at work the previous day. This was because she had a commitment to a former client of hers to provide some training in relation to a software package which had been purchased from the business which the applicant ran prior to her employment with the respondent. Mr Woods had been aware of this.
The applicant's evidence was that she said to Mr Woods " 'You knew I wasn't going to be in yesterday', something of that nature. At which point he used words something like: 'This is not working out, I think we should make a break'. I asked him what he meant by that, whether he was asking me to leave and he said yes".
The applicant said that the telephone then rang so that was as far as the conversation could proceed at that point in time. After Mr Woods had completed his telephone conversation the applicant said that "I was upset and I was angry and I said 'Do you want me to stay and work the day, do you want me to leave now, will I work out a month or what do you want me to do?' ". A client then arrived to see Mr Woods. The applicant said that she was feeling ill by this time and suggested that she would go outside for half an hour to get some fresh air so that she could clear her head and endeavour to feel better.
When the applicant came back to the office Mr Woods' client had left. The applicant said that Mr Woods then told her that he thought that she should leave now. There was then a discussion about the payment of one month's pay in lieu of notice. The contract of employment between the applicant and the respondent dated 3 February 1995 (Exhibit 1) contained a term that "Upon either you or J & M Advertising wishing to terminate your employment, a one month's notice in writing will be required by both parties". It was the applicant's evidence that Mr Woods readily agreed that the applicant should be paid one month's salary in lieu of notice. Arrangements were made for this amount to be paid and then the applicant left the office.
Mr Woods' evidence of the conversation on 13 April 1995 was different. Mr Woods said that he was at the reception area of the respondent when the applicant arrived for work that day. He said that he was shocked because the applicant did not come in with an apology for being late. He said that he was concerned at the lack of apology for being late, bearing in mind the workload that the respondent was then experiencing. He said that he asked the applicant to come into his office. He said that the applicant sat down and he said to her "Look, Anne, this plainly isn't working". Mr Woods said that the applicant was a bit taken aback and expressed some concern. She asked what wasn't working. Mr Woods said "Well, look, the media, the production roles, your general attitude to the work being completed is not up to standard". Mr Woods said that the telephone then rang. Mr Woods had a telephone conversation and then a client walked in just after that. Mr Woods said that he told the applicant that this could not be resolved right now, that she should take a break for an hour and then come back and talk it through. Mr Woods said that the applicant agreed and left his office. After Mr Woods concluded his meeting with his client, he spoke again to the applicant in his office. He said again to the applicant that things were not working and reiterated the fact that there were great concerns about her work in relation to the media work and the preparation of quotes. Mr Woods' evidence was that the applicant then "said to me, 'I've never been spoken to', or 'I can't believe that you're speaking to me in this manner, I've never been so insulted in all my life' or words to the effect. And then she quite clearly said to me 'If I didn't have a family to support, I would walk out this very minute' ".
Mr Woods said that he told the applicant that "If that's how you feel, please do". Mr Woods said that the applicant asked whether if she did would she get her severance pay. Mr Woods replied that of course she would as it was in the contract. There was then a brief discussion about the amount of the "severance pay" and the preparation of a cheque in payment of that. Mr Woods denied that he intended to or did terminate the employment of the respondent.
There were no witnesses to the conversation on 13 April 1995.
The determination of the issue of whether there was a termination of the employment of the applicant by the respondent involves an analysis of the evidence given by the applicant and by Mr Woods and an assessment of their credibility. I find that, on balance, I prefer the evidence given by the applicant. I make this finding for a number of reasons, as follows:
The applicant gave her evidence in a fair and straightforward manner. Her demeanour was that of an honest and reliable witness. Whilst Mr Mossenson in his closing submissions for the respondent suggested that the applicant was lacking in recollection about some matters, these were generally peripheral matters about which one would expect an honest witness, some time after the event, to express some uncertainty.
In contrast I found Mr Woods' evidence, particularly in cross examination, to be at times evasive and argumentative.
I think that some of the evidence given by Mr Woods was exaggerated. For example, he said that one problem with the applicant's work was that she was often visited by her mother-in-law, Mrs Francis. Mr Woods said that Mrs Francis attended at the workplace to the best of his recollection "most days". In contrast, the applicant and Mrs Francis said that Mrs Francis attended at the workplace usually on one day per week. Mrs Francis said there was the odd occasion where there would be a need to call on the applicant twice in the week "but that would be most unusual". The purpose of Mrs Francis' visits to the applicant at her workplace was to collect and deliver ironing for the applicant. I accept the evidence of Mrs Francis.
There was a difference between the evidence of Mr Woods and the Summary of Facts filed by the respondent regarding a not insignificant matter. The evidence of Mr Woods was that he had a discussion with the applicant concerning her work performance on 6 March 1995. In his evidence, he said that following the meeting her work performance did not change but things became worse . As pointed out during cross examination, this statement contrasted with the respondent's Summary of Facts which stated that the "Applicant's performance improved after the formal warning, for a few days and then deteriorated again".
The respondent paying to the applicant one month's salary in lieu of notice is far more consistent with the applicant's version of events than with Mr Woods' version. If the applicant had resigned, as Mr Woods alleges, there would have been no need for the respondent to pay the applicant one month's salary in lieu of notice. This was pointed out to Mr Woods in cross examination. Mr Woods said that the amount was paid to the applicant because "it was in the contract". However, it was plainly not in the contract. The contract referred to the parties giving each other one month's written notice of termination of employment.
Mr Woods said that the amount paid, "about $3,800.00", was a considerable amount of money and was "to compensate for the fact that she was leaving". When asked why he gave the applicant a month's salary when, according to Mr Woods, the applicant left without giving notice, Mr Woods answered that "She asked me to". Mr Woods said "I don't see anything wrong in that, what - can you explain? I don't understand, what's wrong with that?". When further questioned "Why would you give her a month's pay when she was terminating", Mr Woods answered "I beg your pardon, I fail to see the connection. Please can you explain?".
I think this aspect of Mr Woods' evidence was unsatisfactory. He had been an employer for twenty years and, even allowing for the fact that he was a layman and not a lawyer, can be expected to have understood that there was no need for him to pay a month's salary in lieu of notice if it was the applicant who was terminating the employment without notice. Payment of one month's salary in lieu of notice was inconsistent with his claim that the applicant had resigned. On the contrary, it was entirely consistent with the applicant's employment being terminated and Mr Woods feeling he had an obligation to pay the applicant an amount of money in lieu of notice.
The applicant said that she had sold her previous business and decided to take salaried employment because her husband was leaving a salaried position to commence a photography business. The applicant said that she wanted the security of a salaried position. Given this, I think it is unlikely that the applicant would suddenly resign.
The applicant said in her evidence that when she commenced employment with the respondent she made a commitment to work in the position for at least twelve months. The applicant's work, insofar as it related to advertising work, was new to her. Both she and the respondent knew this when she commenced employment. From my observations of the applicant in the witness box, I think that she is a person who prides herself on her capacity to get things done. Given this and the commitment that she had made to remain with the respondent for twelve months, I do not think that she would have resigned as Mr Woods alleged.
I think that termination of the applicant's employment is consistent with Mr Woods' dissatisfaction with her work performance and frustration at the fact that she had not worked the previous day and was late on 13 April 1995. He himself admits telling her that things were not working.
As stated, for each of the above reasons, I prefer the evidence of the applicant to that of the respondent. Therefore, I find that the respondent, through Mr Woods, terminated the employment of the applicant on 13 April 1995. This was a termination of employment within the meaning of Division 3 of Part VIA of the Act.
CONTRAVENTION OF THE ACT
As stated earlier, the respondent alleged that if I were to find that the respondent did terminate the employment of the applicant then there had been no contravention of the Act in termination.
The applicant contended that in terminating the employment of the applicant, the respondent had breached both Sections 170DC and 170DE of the Act.
For relevant purposes, Section 170DC of the Act provides that an employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless the employee has been given the opportunity to defend themselves against the allegations made.
Section 170DE(1) relevantly provides that an employer must not terminate an employee's employment unless there is a valid reason connected with their capacity or conduct. Section 170DE(2) states that a reason is not valid if, having regard to the employee's capacity and conduct, the termination is harsh, unjust or unreasonable. The respondent has the onus of proving that, apart from Subsection 170DE(2), there was valid reason of the kind referred to in Subsection 170DE(1): Section 170EDA(1)(a). Pursuant to Section 170EDA(1)(b), if the respondent does so prove, the termination is nevertheless taken to have contravened Section 170DE(1) if the applicant proves that, because of Section 170DE(2), the reasons proved by the employer were not valid.
Both Sections 170DC and 170DE require me to discern the reasons why the respondent terminated the employment of the applicant.
In the conversation between the applicant and Mr Woods on 13 April 1995, as recounted by the applicant, Mr Woods said that her employment was not "working out". I take this to mean that Mr Woods was not happy with the work performance of the respondent.
Mr Woods gave evidence of a number of aspects of the applicant's work performance that he was dissatisfied with. These are as follows:
The applicant had not understood procedures in relation to media bookings as quickly as Mr Woods would have liked.
In obtaining quotes for advertising work, the applicant had to contact suppliers more times than Mr Woods would have anticipated. Mr Woods said that this was reported back to him by suppliers. However, no supplier was called to give evidence of this.
Mr Woods was desirous of his computer providing a more precise accounts reporting service. He had obtained a software package which he thought would allow this. This was discussed with the applicant. She was of the view that a better alternative could be created by her. However, this was not created by the applicant as quickly as Mr Woods would have liked. The applicant had not completed this work by the time of her termination.
The applicant was short and bad-tempered with members of staff and directors of the respondent and clients and other people she had to deal with on behalf of the respondent.
The applicant made derogatory comments about the respondent and Mr Woods to clients of the respondent. Mr Woods asserted that this was relayed to him by clients of the respondent. However, no such client was called to give evidence of this on behalf of the respondent.
The applicant had upset a fellow employee in relation to comments about his sexuality. This person was not called to give evidence.
The applicant received an excessive number of personal phone calls.
The applicant received an excessive number of personal visits at her workplace, especially from her mother-in-law.
The applicant essentially denied each of the above matters. In respect of matter 3, she accepted that she was to create the accounts tracking system and that she had not completed this task prior to termination. However, she denied that this was a major issue between her and Mr Woods. She said that Mr Woods had asked her on several occasions how it was proceeding, but did not make it clear that he was dissatisfied with the progress in relation to this.
In relation to matters 1 and 2, the applicant accepted that as she was entirely new to advertising work it would take some time to become fully proficient in this. Matters 4 and 5 above were specifically denied by the applicant.
With respect to No. 6, the applicant's evidence was that she got on well with the employee concerned. She said that they had a number of general conversations and she would have asked him as to whether he was married or had a girl friend. This could have inadvertently upset that employee as he was said to be homosexual. However, the applicant remained firm that the relationship between her and the employee was good at all times. As stated above, the employee was not called to refute this.
With respect to No. 7, the applicant accepted that she had a number of personal calls from the person who had purchased her former business. She said that Mr Woods knew that this would be the case when the applicant was discussing being employed by the respondent. Mr Woods acknowledged this to be the case. In addition, the applicant accepted that she received a number of personal calls on her birthday, 8 March. She accepted that this was criticised by Mr Woods.
With respect to No. 8, being personal visits, this complaint seems to mainly refer to the attendance of the applicant's mother-in-law at the workplace. I have referred to the evidence with respect to this above.
Of the eight matters referred to I am satisfied that only items 1 and 3 have been proved by the respondent to be areas of justifiable concern about the applicant's work performance.
In considering all of the matters of complaint raised in the evidence of Mr Woods, I am under the clear impression that at the end of day Mr Woods was simply not satisfied with the rate of progress of the applicant in the performance of her duties as an accounts systems operator and in the media and production work that she was doing. I think that Mr Woods became frustrated with this, especially given that the applicant was being paid $45,000 per annum salary. This should be understood against the background of a business which had an acknowledged cash flow shortage at the time. I think that Mr Woods' frustration at the applicant being late for work on the day of termination and absent the previous day, together with these matters, caused him to terminate employment on 13 April 1995.
I am satisfied that there was a breach of Section 170DC of the Act. I do not consider that the relevant matters were put to the applicant in such a way that she had a fair opportunity to respond to them prior to her termination. She did not get the "fair go" that the section requires: Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233, page 243.
Mr Woods said that there was a meeting between himself and the applicant on 6 March 1995 in which he discussed with the applicant her poor work performance. The applicant did not agree that the subject matter of this meeting was her poor work performance. She said that the meeting was mainly an opportunity for each of them to express the difficulties that they were having communicating with the other. They resolved to meet at set times to discuss media and production matters. Again, I prefer the applicant's evidence on this point. If Mr Woods intended to make this meeting a meeting when he was putting allegations of poor work performance to the applicant, then this was not adequately communicated to the applicant. Further, this meeting was not sufficiently close to the date of termination to properly comply with Section 170DC: see Nicolson v Heaven and Earth Gallery Pty Ltd page 244.
I also accept that there has been a breach of Section 170DE of the Act. I accept that Mr Woods was frustrated at the fact that the applicant did not become as fully proficient in the media and production side of things as quickly as he would have liked. Further, he was frustrated at the fact that the accounts reporting package had not been put together. However, these matters must be balanced against the fact that the applicant was working relatively long hours and, as known by Mr Woods, was entirely new to advertising work. I consider that it was at least harsh and unreasonable of Mr Woods to have terminated the applicant's employment after only two months' full time work.
This is particularly so given that in late March 1995 on an occasion when the applicant and another employee both worked to 1.00 am on some media and production work, the applicant's work was praised and Ms Cohen had bought her a bottle of champagne in recognition of the good work done. This work was done in the absence of Ms Cohen and Mr Woods, who were in the eastern states.
Mr Woods also accepted that the accounts work that the applicant did was of a high standard.
Mr Lewis, who gave evidence for the respondent, worked for Colliers Jardine as the residential project marketing manager for Observation Rise. The respondent did advertising work for Colliers Jardine. Mr Lewis said that in early March 1995 he had occasion to complain to Mr Woods. He complained that the directors of his company were unhappy with the standard of work that was being produced, due to errors and time delays. This was in the putting together of advertising campaigns in brochures, price lists, design drawings and general media advertising. He explained that the errors mainly fell within the production of brochures.
Mr Woods, in his evidence, suggested that the applicant was primarily responsible for the work which had led to this complaint. However, I do not think that this is entirely fair.
When the complaint was made, the applicant had only worked with the respondent for three or four weeks full-time, at most. In addition, as has been said more than once above, the applicant had no prior experience in media or production work. It was accepted by Mr Woods in cross examination that if there were spelling errors contained in brochures this would be the responsibility not of the applicant but of the employee who had done the design work on the computer. Mr Woods suggested that the applicant would have been responsible for time delays in so much as she was involved in deadline control and getting the work through the system. However, Mr Woods also accepted in cross examination that "because Mrs Percival was in a training mode, and I emphasise that, I took it on myself to - to make sure that the deadlines were controlled". Considering all of the relevant evidence, I do not think the evidence that Mr Lewis gave about his complaint to Mr Woods can support the proposition that there was a valid reason, in terms of the Act, for the termination of employment of the applicant.
I therefore conclude that there has been a contravention of Sections 170DC and 170DE of the Act
REMEDY
As stated at the outset of these reasons, the applicant did not seek reinstatement, contending that it would be impracticable in all of the circumstances. The respondent did not argue with this submission.
The applicant sought compensation pursuant to Section 170EE(2) of the Act. This section was amended by Item 10 of Schedule 2 of the Industrial Relations and Other Legislation Amendment Act 1995. This amendment applies to all applications made to the Court before the date fixed by proclamation for the commencement of the amendment if the Court has not pronounced final judgment in respect of the application before that day: see Item 14(2)(b)(ii) of Schedule 2 of the Industrial Relations and Other Legislation Amendment Act. The date fixed by proclamation for the commencement of Item 10 of Schedule 2 is 15 January 1996. Therefore, the amendment to Section 170EE(2) applies to the application before the Court.
The effect of the amendment is that the Court may make an order requiring a respondent to pay to an applicant compensation, if the Court thinks that reinstatement of the employee is impracticable and "if the Court considers it appropriate in all the circumstances of the case".
As stated above, neither party contended that reinstatement was other than impracticable. I think this was a correct assessment of the position. Having seen the applicant and Mr Woods give evidence and having regard to the small size of J & M Advertising, I am satisfied that it would be impracticable to order reinstatement.
I am also of the view that it is appropriate in all the circumstances of this case to order compensation.
Section 170EE(2) states that the Court may make an order of compensation "of such amount as the Court thinks appropriate". However, this is limited by Section 170EE(3). This states, in essence, that in working out the amount of compensation the Court is to have regard to the remuneration that the employee would have received, or been likely to have received, if the employer had not terminated the employment, but the amount of compensation must not exceed the amount of remuneration that would have been received by the employee in respect of the period of six months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect.
In May v Lilyvale Hotel Pty Ltd, unreported, IRCA No. 628/95, 1 December 1995, Chief Justice Wilcox confirmed the approach to be taken in assessing compensation under the Act. This is that, firstly, one assesses the appropriate amount of compensation in light of all relevant circumstances; secondly, one considers whether that amount exceeds the permissible maximum award and, if so, thirdly, reduces the assessed amount accordingly (see page 14).
In taking the first step, that of assessing compensation in light of all relevant circumstances, it should be acknowledged that the determination of an appropriate amount of compensation is not an exact science: Bean v Milstern Retirement Services Pty Ltd, unreported, IRCA No. 248/95, 2 June 1995, Moore J, page 24.
In Aitken v CMETSWUA - WA Branch, unreported, IRCA No. 352/95, 7 August 1995, Lee J said:-
"In assessing the compensation that is appropriate the Court will have regard to what is reasonable in the circumstances and look at what would have been likely to occur had the Act not been contravened ... The Court will consider the detriment occasioned to the employee by the employer's contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences". (page 20)
His Honour also said that it may be appropriate to include in the measure of compensation to be paid, a sum sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment.
I am of the view that if the applicant's employment had not been terminated in contravention of the Act, then the applicant would have remained employed by the respondent. Whilst there is the possibility that the applicant's employment could have been terminated by the respondent other than in breach of the Act, in the short to medium term, I do not think that was likely. I think it likely that the applicant's aptitude was sufficient to ensure that she would have been able to carry out the media and production work to the reasonable satisfaction of the respondent. However, the possibility of a lawful termination of employment, or indeed a resignation, are matters which need to be borne in mind in assessing compensation.
The evidence about the applicant's loss of income since the termination of employment was not entirely satisfactory. At the time of termination of employment the applicant was paid a salary of $45,000 per annum plus 4% statutory superannuation. This would amount to $1,800 being contributed to a superannuation fund on behalf of the applicant. The applicant's employment contract contained the term that "your salary is to be reviewed after a six month period at which time it is envisaged that your salary will increase to $50,000 per annum and thereafter on a yearly basis and shall at least be kept in line with CPI". As the applicant commenced employment on 6 February 1995, the six months' salary review would occur on 5 August 1995. The term of the contract does not state that the salary will then increase to $50,000 per annum but that it is simply "envisaged" that it will. Given that the applicant's progress as an employee was not as fast as the respondent would have liked, I consider that there is a 50% chance that the salary would not have increased to $50,000 if the applicant had remained employed with the respondent from 5 August 1995. Alternatively, in light of such matters the parties may have agreed a salary increase at the intermediate amount of $47,500. I think it appropriate that I consider that the applicant's salary would have been $47,500 plus a statutory superannuation contribution of $1,900 from 6 August 1995.
Using these figures, the applicant would have received remuneration of $14,616.99 from the date of termination until 5 August 1995 (114 days) and $22,060.82 from 6 August 1995 until the date of the trial, being 16 January 1996 (163 days). This gives a total of $36,677.81 that the applicant would have received in remuneration prior to the trial, had her employment with the respondent continued.
The applicant's actual earnings in the same period are more difficult to assess, due to the difficulties in the evidence on this point.
To some extent, the applicant's capacity to earn was restricted after her termination of employment, due to the agreement that she entered into with the person who purchased her former business. This business, called Accura Systems, owned accounting software packages which it sold to other businesses. Accura Systems also helped to install the software and conducted training of staff where necessary. Through the same business, the applicant also conducted training in other software programs for other businesses in Perth. The applicant's business had been conducted since about 1990. As stated previously, the applicant sold this business prior to and in reliance upon her employment with the respondent. The respondent was aware of this. Under the sale of business agreement, the applicant was not allowed to conduct any accounting sales installations or bookkeeping work that could be in competition with the business sold. Under the agreement with the purchasers of the business, this restraint of trade clause is to continue for a further 13 months.
In assessing compensation I think it appropriate in the circumstances of this case to have regard to the fact of this restraint in the applicant's ability to earn income.
The applicant said that she did endeavour to obtain word processing training work as she considered that she was able to pursue this work and not breach the agreement with the purchasers of Accura Systems. To this end, she went to a business called Random Access, which had provided her with work previously, to see whether she could obtain any work from them within the bounds of the agreement with the purchasers of Accura Systems. Some work was able to be obtained through this process. In addition to this, the applicant has assisted her husband in trying to establish his photography business. The applicant has also continued to look for other work.
For the training work that the applicant performed subsequent to her termination, she invoiced the relevant businesses in the name of a company, Yaykel Pty Ltd. This was a company of which the applicant and her husband were directors and shareholders. The decision to invoice in this way was made by the applicant as it suited herself and her husband. The businesses employing the applicant to do training did not require payment to be made in this way. In all the circumstances I think I can take into account the amounts earned by Yaykel Pty Ltd in this way as being remuneration which the applicant could have earned through her own personal exertion subsequent to termination. Mr Schapper, for the applicant, raised for my consideration the question of the expenses which Yaykel would have had as being a deduction from the amount of such earnings. However, no evidence was provided of the quantum of such expenses. Further, as the work performed by the applicant was simply training, it is likely that the expenses involved were minimal.
For the period 10 May 1995 to 23 October 1995, Yaykel rendered sixteen invoices totalling $17,275. During his closing submissions, Mr Schapper advised me that there were other invoices which were not then present in Court which were rendered by Yaykel for training performed by the applicant subsequent to 23 October 1995. With the consent of counsel for the respondent, these invoices were forwarded to the Court subsequent to the hearing. These five invoices total $3,067.50. Therefore, the total amount earned by Yaykel through the efforts of the applicant in training subsequent to her termination of employment totals $20,342.50.
The applicant did not base her post termination earnings upon the amounts earned by Yaykel through her training work but instead relied on amounts drawn from the bank account of Yaykel in payments to or on behalf of the applicant. The applicant produced a document (Exhibit 2) which set out the relevant withdrawals from Yaykel. These were withdrawals for the benefit of the applicant. Those withdrawals which totally benefited the applicant were listed in a "100%" column whereas those withdrawals which equally benefited the applicant and her husband were included in a "50%" column. The sum of the total of the 100% column and half of the 50% column in relation to payments up to 12 January 1996 total $13,123.81.
However, I was not provided with any evidence of the balance of the Yaykel bank account, at relevant times, and the other deposits into the bank account from, for example, the applicant's husband's photography business which she was assisting with. It was clear that the amounts earned by the applicant in her training work were deposited into the Yaykel bank account, but other than that it is difficult to assess the relationship between those deposits and the amounts withdrawn from the Yaykel bank account for the benefit of the applicant. I do not think it correct, however, to assume in any way that the amounts withdrawn from the Yaykel bank account are amounts earned by the applicant in addition to those amounts earned by Yaykel as a result of her training work.
Exhibit 2 also disclosed that the applicant had earned $186.00 in work that she had done for Drake Personnel and that the applicant had received social security benefits in the sum of $1,339.63.
The available evidence does not allow me to make a precise quantification of the applicant's loss of remuneration even prior to trial. However, I think there is sufficient evidence to prove that, on balance, there has been some loss of income in this period.
As always, the situation post trial and into the future is even less certain. In such circumstances, the Court is left to do the best that it can in assessing compensation.
In determining the amount of compensation to be awarded in this case, there are other factors which need to be considered. One of these is that the applicant is no longer employed and at present does not have the security of income that employment provides. In addition, her employment contract with the respondent gave the applicant superannuation benefits, twenty days' holiday leave and ten days' sick leave each year. If the applicant remains self employed she will not have these benefits. These benefits are substantial although difficult to quantify: Williams v Kirkman's Crane Trucks of Melbourne Pty Ltd; IRCA No. 140/94, 23 November 1994, Staindl JR, page 3.
I also have regard to the fact that the applicant received the payment of $3,461.52, being four weeks' salary in lieu of notice.
Finally, I note that whilst the applicant does not have any formal qualifications, she presents as an intelligent and industrious person who is likely to be able to earn a reasonable income in the future. In this regard I note that the previous business owned by the applicant provided her with earnings of $50,000 per year, as stated in her evidence.
In assessing compensation I also take into account that the applicant was peremptorily dismissed when she had not been given any clear indication that there was dissatisfaction with her work performance which could place her employment in jeopardy. I accept that the applicant was understandably upset at the manner of her termination. The applicant said and I accept that "For two or three weeks I didn't do a whole lot [of] looking for work because I was still coming to terms with the fact that I had been sacked. I had never been sacked before".
In all of the circumstances referred to above, I think the appropriate amount of compensation to be awarded is $7,000.00. In determining this as the amount of compensation, I have not awarded individual amounts to the various aspects of compensation as referred to above. Rather, the amount represents a synthesis of my consideration of each of the factors identified as being relevant.
As $7,000.00 is less than the statutory maximum amount of compensation under Section 170EE(3), there is no restriction to making an order for this amount, which I will do. I will order that this amount be paid to the applicant within 21 days of the date of the order.
I certify that this and the preceding 20 pages are a true copy of the Reasons for Judgment of Judicial Registrar Ritter.
Associate
Date:
Counsel for the applicant: Mr D H Schapper
Solicitors for the applicant: D H Schapper
Counsel for the respondent: Mr I Mossenson
Solicitors for the respondent: Mossensons
Hearing date: 16 January 1996
Judgment date: 9 February 1996
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