Margaret Mackeen v Pets Paradise Pty Ltd

[1995] IRCA 642

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 2957 of 1995

B E T W E E N :

MARGARET MACKEEN
Applicant

AND

PETS PARADISE PTY LTD
Respondent

Before:           Judicial Registrar Murphy
Place:              Melbourne
Date:              8 December 1995

REASONS FOR JUDGMENT

This proceeding under Part VIA of the Industrial Relations Act 1988 (“the Act”) arises out of the sequelae to an injury sustained by the Applicant at work in July 1992.  As a result of the injury the Applicant was unable to return to resume normal duties.  The main questions for determination were the obligation of the Respondent to provide alternative or modified duties and the obligations, if any, of the Respondent in the event of the redundancy of the Applicant’s position.

The Applicant suffers a serious injury at work
The Respondent is involved in the management of a chain of pet shops.  Most of these shops are a franchise but in Victoria five are owned and managed outright by the Respondent.  The Applicant had worked for the Respondent between 1987-89.  In January 1991 she resumed employment and from June 1991 was appointed manager of the Altona Gate shop.  At that stage at the shop there was one other full time employee and one casual employee.
In July 1992 at work she sustained an injury to her left knee.  Surgery was required.  In October 1992 her doctor cleared her to return to work four hours/day five days per week.  She was advised by the then manager of the shop that the managing director of the Respondent, Mr Diamond (“Diamond”) had indicated that no position was available to her until she was 100% fit.  Later that year the Applicant’s condition deteriorated and further surgery was required.  By July 1993 her doctor provided her with a certificate that she could work for 2 hours/day/3 days per week on restricted duties.  The certificate that he provided to her at the time reads:-

“Can start work; Mon/Wed/Fri for 2 hours per day; to sit down when         possible.  No climbing on ladders only.”

The Applicant’s evidence was that when she resumed duties she could not climb nor kneel.  She also needed to rest her knee from time to time.  The Applicant’s evidence was that although the Respondent allowed her to perform the modified duties and hours it did not really facilitate this.  In particular the then manager of the Altona Gate shop refused to allow a chair in the shop.  The result of this was that when the Applicant was required to rest her knee she had to leave the premises and go to public rest facilities nearby.  In October 1993 the Applicant’s knee again deteriorated and she ceased work.

The duties of employees in the shops
The Applicant was originally employed as a shop manager but when she resumed duties in July 1993 the manager remained employed and she worked primarily in non-managerial duties.  A picture of the duties of personnel in shops can be obtained from a document known as the “Procedures Manual” of the Respondent that was in evidence.  That manual sets out duties of the manager and other staff at the Respondent’s shops.  Each of the retail shops of the Respondent have only three or four core staff.  The staff structure is such that there is a heavy responsibility on all staff to ensure that the store is tidy, pens, cages, aviaries and fish tanks are kept clean and animals looked after.  The staff structure appears to provide that the shops have a manager with the balance of the staff being described as “juniors”, either on a full time or casual basis.  The work of the staff can be quite physical in nature.  Aviaries must be cleaned on a weekly basis.  These aviaries range in height from well above eye level down to floor level.  They must also be accessed to serve customers.  Dog and pet pens must also be cleaned.  For this to be done effectively the staff member virtually has to crawl into the pens.  Fish tanks must be drained and cleaned.  A full height meat refrigerator also has to be cleaned on a regular basis from top to bottom.  The shops also have shelving up to ceiling height.  Merchandise is stacked on these shelves.  It must be accessed to serve customers.  From time to time all merchandise in the shops must be removed from the shelves which must then be cleaned and the merchandise itself dusted and replaced.

The Court heard evidence as to the operation of the Altona Gate shop from the present manager.  The tenor of the manager’s evidence was that within a shop the manager has to lead from the front in the duties required.  While much of the physical work fell on the shoulders of juniors, the manager had her own list of duties and, in supervising juniors, had to get down and show the juniors how things were done.  In addition to the daily routines involving physical work, when serving customers staff members had to access the high aviaries or shelves.  Further, the staff structure of the shop was such that the manager had to cope with all store duties in the event that one of the juniors was absent.

The picture that emerged from the evidence of the Respondent’s witnesses was that work of all staff, including the manager, is quite physical, and that the manager in a sense must get their hands dirty.

The Applicant’s attempts to resume duties
After the deterioration in the Applicant’s condition in October 1993 that forced her to cease her modified duties the Applicant sought to resume duties when her condition stabilised.  However, she was advised by her employer by letter dated 6 January 1994 as follows:-

“..there is no longer an employment position available for you at Pets Paradise.

We understand that you have advised this office that your Doctor has cleared you to work for a maximum of two hours at a time, three days per week. There is no part-time or casual position available and as such, C.I.C. Insurance (our Workers Compensation Insurer) have advised this Company that our obligation under the Accident Compensation Act 1985 is to keep your position open for twelve months. As this period has now expired, it is no longer practical to do so.”

After receiving this letter the Applicant continued to press the Respondent for a return to work on modified duties.  On 14 December 1994 her Solicitors, seeking to bring the matter to a head, wrote to the Respondent noting that the Respondent had engaged other employees but failed to offer any work to the Applicant.  The letter further stated that the Respondent had “failed to offer her work within her capabilities”.  The letter noted that the monthly Workcover medical certificates continued to specify that the Applicant was capable of returning to work with modified duties.

No response was received by the Applicant’s Solicitors to this letter and on 27 March 1995 the Solicitors again wrote to the Respondent stating that the Applicant proposed to present herself for work on 3 April.  The letter stated that the Applicant “will be ready, willing and able to perform her pre-existing duties, subject to modifications”.  The letter also stated that the Applicant would provide details of “appropriate modifications to her work and will provide written confirmation from her medical practitioner that she is able to perform those duties”.  The Respondent replied to this by advising that the relevant staff within its hierarchy were unavailable to make any decision as to a return to work.  In response to this obfuscation the Applicant attended at the Altona Gate shop on 3 April 1995.  She was advised by the assistant to Diamond that the Respondent was not in a position to provide her with duties as the relevant decision makers were unavailable.  She was further advised that Diamond would make a decision as to her future.  The Applicant returned to the Altona Gate shop on 24 April 1995 and was met with the same response. 

When the Applicant attended at the shop on 3 April she handed to the shop manager a Workcover certificate of capacity.  That certificate was dated 29 March 1995.  It stated that the Applicant was fit for modified duties from 3 April 1995 to 7 April 1995.  She was to have her condition reviewed on 7 April 1995.  The certificate referred to work restrictions as follows:-

“To work 3 hours per day; sit down whenever possible; no climbing and no           repeated kneeling.  Working on Mon/Wed/Fri.”

Although the Applicant’s Solicitors had stated that the Applicant would provide details of the duties she was able to perform to the Respondent, the only material provided to the Respondent was the above certificate.

The Applicant issues proceedings under Part VIA of the Act
After the April refusal of the Respondent to offer work to the Applicant, on 22 May 1995 she issued proceedings under Part VIA of the Act. In those proceedings she did not seek reinstatement to her position.

In late August the Applicant was not paid her weekly Workcover payments.  She contacted the Respondent and on 31 August 1995 her Solicitors received the following letter:-

“We refer to our telephone conversation on 1 August, 1995 and your letter dated 31 July, 1995.

We are instructed that our client has no available positions to re-employ your client in any of its stores.  Accordingly, we are instructed that our client terminates your client’s employment effective from 31 August, 1995.  We will forward a separation certificate, redundancy payment calculations as at 31 August, 1995 together with our client’s cheque in the sum of $3,714.33 in the near future.  We will also forward you an eligible termination payment form from the Australian Taxation Office in due course.  We also request that you advise CIC Workers Compensation make (sic) all further weekly payments directly to your client.

Please acknowledge receipt of this letter.”

In evidence the manager of the Altona Gate shop advised that in August she had been advised that the shop was to become a franchise.  She met the proposed franchisee and he offered all staff the opportunity to be employed by his company on a one month trial basis.
An administrative assistant with the Respondent, Ms Stone (“Stone”) gave evidence that the Applicant’s employment was terminated on 23 August.  The Applicant, however, continued to be employed and paid by the Respondent until 27 September which was the day before the changeover of the Altona Gate shop to a franchise.  Stone arranged to calculate all the payments due to the Applicant and she was paid those amounts.  The Applicant’s weekly payments of Workcover continued then from the Insurance company.

The store supervisor of the Respondent, Ms Brightwell (“Brightwell”), gave evidence that she told the employees of the Altona Gate shop that it was going to be franchised, that the employees would be redundant, but that the new owner may take them on.  Neither she nor Stone could shed any more light on the Respondent’s decision to franchise the shop.  Diamond was not called to give evidence.

After the Applicant’s Solicitors received the letter of 31 August they sought to join a further application under Part VIA of the Act to the extant proceeding and the Court granted the application on 24 October.

Did the employer have an obligation to offer work?
The first issue to be determined is whether the Respondent was under any duty to the Applicant to offer her work when she had a capacity to perform limited duties.

The Applicant’s Counsel submitted that in April 1995 the Respondent by failing to provide limited duties to the Applicant, had constructively dismissed the Applicant. The Respondent’s Counsel argued that it was fully within its rights to refuse to provide any duties to the Applicant and that nothing it did in April or May 1995 constituted a termination of her employment at its initiative, within the meaning of the Act.

The Respondent accepted that it had terminated the Applicant’s employment by letter dated 31 August 1995 but asserted that it had validly done so by reason of the redundancy of the Applicant’s position consequent upon the franchising of the Altona Gate shop.

The medical material both before the Court and the Respondent in relation to the Applicant’s condition at relevant times was less than satisfactory. What is clear however was that the Respondent’s position since 6 January 1994 has been that it had no suitable part time or casual position available for the Applicant. It is important to note that the Applicant has been paid Workcover payments, at the appropriate rate for total incapacity, since she ceased work in October 1993. The Applicant was previously employed in a full time position as a manager. As a result of the injury and its sequelae the Applicant was unable to work full time or to perform the full range of duties she had previously discharged. In these circumstances the actions of the Respondent in failing to offer alternative modified duties pursuant to the request of the Applicant in March 1995 and substantiated by the medical certificate does not, in the Court’s opinion, constitute a repudiation of the contract of employment. The Applicant was seeking to modify her obligations under the contract of employment. She was seeking, in effect, a variation to the original agreement between the parties. It was open to the Respondent not to accept her offer. As a matter of law, and absent any statutory intervention by a provision such as Section 122 of the Accident Compensation Act 1985 (Vic) the Respondent was entitled to maintain that position. Section 122 had no application here. The provision is referred to in the Respondent’s letter of 6 January 1994 and requires employers to provide, for a period of twelve months after an injury, a suitable alternative position for an injured employee. The time had long expired during 1995.

It follows from this that the Applicant’s original application filed 22 May 1995 alleging a termination of her employment was premature and that at that stage there was no termination at the initiative of the employer.

Did the Respondent have a valid reason to terminate the Applicant’s employment in August 1995?
The Respondent carries onus of proof under Section 170EDA that it had a valid reason to terminate the Applicant’s employment under Section 170DE(1) of the Act. The Respondent also carries the onus of proof that its reason for termination of the Applicant’s employment did not include a reason under Section 170DF(1) of the Act. Counsel for the Applicant asserted that the reason for the termination of the Applicant’s employment included “temporary absence from work because of illness or injury” and “physical or mental disability” and were thus reasons prohibited respectively by sub-sections 170DF(1)(a) & (f).

Counsel for the Respondent asserted that the Respondent’s reason was the redundancy of the Applicant’s position and that in any event its reason did not include a reason prohibited by Section 170DF(1). The Respondent also relied on its defence under Section 170DF(2) of the Act. This provides that even if the reason for the termination includes one prohibited by Section 170DF(1)(f), for example, physical disability, then the reason may still not infringe Section 170DF(1)(f) if the reason is based on the inherent requirements of the particular position.

The Respondent’s evidence as to the termination of the Applicant’s employment came from the manager of the Altona Gate shop and from Brightwell.  The manager’s evidence was that due to the physical limitations and small staff complement of the shop there was no part-time position available for the Applicant prior to the move to a franchise, and indeed after that change in operation.

Brightwell’s evidence was that the same position prevailed throughout the other four shops in the metropolitan area owned by the Respondent. Given the small staff complement of each store, the evidence of the physical nature of the work, and the Applicant’s own evidence as to her physical limitations following her injury, I accept that the Respondent had a valid reason pursuant to Section 170DE(1) of the Act to terminate her employment. That reason related to the operational requirements of the Respondent and not to the Applicant’s capacity or conduct. The reason was that following the decision to franchise the Altona Gate shop, the Respondent had no position for the Applicant.

This reason, I am satisfied, did not include the fact that she was “temporarily absent from work due to injury” (Section 170DF(1)(a)) because at that stage the Applicant’s absence was far from temporary.  She had not performed her normal duties for over three years.  She had not performed limited duties for nearly two years and there was no material before the Respondent that there was a likelihood that she would ever be able to resume normal duties.  There had been no change in the Applicant’s physical condition for months.  The Court is satisfied that it is more likely than not that the franchising of the Altona Gate shop was the matter that prompted the termination.

Each of the other employees of the Altona Gate shop had their employment terminated at the same time as the Applicant received her redundancy payment.  This coincidence suggests that it was the franchising decision which prompted the termination rather than the Applicant’s physical condition.  After all the Respondent could have chosen to terminate the Applicant’s employment any time from January 1994 when it advised her that it had no position available.

It follows from this that the Court is not satisfied that a reason for the termination included the Applicant’s physical disability and thus was contrary to Section 170DF(1)(f).

If the Court is wrong about this the Court is further satisfied that the reason did not in any event infringe Section 170DF(1)(f) because the inherent requirements of the particular position, namely shop manager, or shop assistant, required the ability to engage in quite physical work that the Applicant was not capable of. The Respondent has thus made out its defence under Section 170DF(2).

Was the termination harsh, unjust or unreasonable?
There was no consultation between the Respondent and the Applicant before she received the letter of 31 August terminating her services. This failure to consult in the event of a forthcoming redundancy, would, had the Applicant actually been working at the time, probably have made the termination harsh and in breach of the Act.

Here, however, the Applicant was not working and was not, on her own admission, likely to be able to fully resume her former duties.  The Applicant in August 1995 was in receipt of Workcover payments for total incapacity.  The Applicant had been on notice from as far back as 6 January 1994 that no suitable positions were available to her.

Given this background, and the fact that at the time of her termination the Applicant was paid five weeks pay in lieu of notice and four weeks severance pay, the Court is not satisfied that the termination contravened Section 170DE(2) of the Act.

It was reasonable, given the condition of the Applicant, that the Respondent no longer keep her on their books given the lack of any positions in either the Altona Gate shop or elsewhere and the unlikelihood of the Applicant ever being in a position to resume her former position as a manager.

The Court has considerable sympathy for the Applicant. She has obviously sustained a nasty injury which severely affects her ability to perform the type of duties she is obviously good at. The Applicant has however been unable to convince the Court that her treatment by the Respondent contravenes any provision of the Act.

Outstanding annual leave
The Applicant’s Counsel argued that the Respondent had failed to pay the Applicant one weeks accrued annual leave upon her termination.  The Applicant sought to have determined the amount due in the accrued jurisdiction of the Court.  The Respondent did not oppose this course of action.  The evidence relating to the matter was the assertion of the Applicant as to the periods of leave she had actually taken, and an ambiguous annual leave record of the Respondent.  The Court accepts the Applicant’s evidence that upon the termination of her employment the Respondent wrongly failed to pay her one weeks accrued annual leave.  The amount due was $434.34 and the Court will make an order for that amount.

The Applicant further argued that the redundancy payments made by the Respondent were calculated on the wrong weekly rate of pay.  The Court is not satisfied on the evidence that this is the case and refuses to make any order in that respect.

MINUTES OF ORDERS

THE COURT ORDERS:

1. The Application for a remedy under Division 3 of Part VIA of the Act is dismissed.

2. The Respondent within 21 days is ordered to pay to the Applicant damages in the sum of $434.34.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:                   
Dated:  8 December 1995

Solicitors for the Applicant:               Messrs Tress Cocks & Maddox
Counsel for the Applicant:                 Mr P Burchardt

Solicitors for the Respondent:  Messrs Macpherson & Kelley
Counsel for the Respondent:             Mr P Harris

Date of hearing:  15 November 1995
Date of judgment:  8 December 1995

C A T C H W O R D S

INDUSTRIAL LAW - UNFAIR TERMINATION - VALID REASON - employee who suffered an INJURY terminated while on Workcover payments for PHYSICAL DISABILITY - lack of consultation - whether HARSH, UNJUST or UNREASONABLE TERMINATION.

Industrial Relations Act 1988 ss.170DE, 170DF & 170EDA.

MARGARET MACKEEN -v-PETS PARADISE PTY LTD

No. VI 2957 of 1995

Before:  Judicial Registrar Murphy
Place:  Melbourne
Date:  8 December 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 2957 of 1995

B E T W E E N :

MARGARET MACKEEN
Applicant

AND

PETS PARADISE PTY LTD
Respondent

MINUTES OF ORDERS

Judicial Registrar Murphy     8 December 1995

THE COURT ORDERS:

1. The Application for a remedy under Division 3 of Part VIA of the Act is dismissed.

2. The Respondent within 21 days is ordered to pay to the Applicant damages in      the sum of $434.34.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.