Marshall v Morwood Motors Pty Ltd
[1997] IRCA 234
•30 July 1997
DECISION NO:234/97
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - PROCEDURAL FAIRNESS - ACCRUED JURISDICTION - COMPENSATION.
Workplace Relations Act 1996, ss.170DB DC DE(1) EDA EE(2) EE(3) EE(5) and 430
Kenefick v Australian Submarine Corporation Pty Ltd (No 2) 65 IR 366
PHILIP NEIL MARSHALL v MORWOOD MOTORS PTY LTD
(ACN 008 574 294)
AI 1002 of 1997
BEFORE: LINKENBAGH JR
PLACE: SYDNEY (HEARD IN CANBERRA)
DATE: 30 JULY 1997
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY AI 1002 of 1997
BETWEEN:
PHILIP NEIL MARSHALL
Applicant
AND
MORWOOD MOTORS PTY LTD
(ACN 008 574 294)
Respondent
BEFORE: JUDICIAL REGISTRAR LINKENBAGH
PLACE: SYDNEY (HEARD IN CANBERRA)
DATE: 30 JULY 1997
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The respondent pay the applicant the sum of $700.00 as compensation pursuant to the provisions of s.170EE(3) of the Act.
By consent the respondent pay the applicant the sum of $364.00 as the balance due to him for annual leave entitlements.
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
AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY AI 1002 of 1997
BETWEEN:
PHILIP NEIL MARSHALL
Applicant
AND
MORWOOD MOTORS PTY LTD
(ACN 008 574 294)
Respondent
BEFORE: LINKENBAGH JR
PLACE: SYDNEY (HEARD IN CANBERRA)
DATE 30 July 1997
REASONS FOR DECISION
This is an application pursuant to the provisions of s.170EA of the Workplace Relations Act 1996. The application was filed in the Australian Industrial Relations Commission on 12 September 1996 and relates to the termination on 3 September 1996 of the applicant’s employment as a Service Adviser at the respondent’s business at Fyshwick.
The applicant had commenced his employment in October 1994 and was initially employed as a Spare Parts Interpreter. After approximately 12 months he was transferred to the position of Service Adviser. The applicant’s duty on behalf of his employer was to control the flow of work to the workshop and liaise with customers. On 3 September 1996 at about 5.30pm as the applicant finished work for the day, Mr Glenn Wood, on behalf of the respondent, handed the applicant a letter. It read:
“This letter is to confirm the termination of employment of an employee of Morwood Motors, the employee that is being terminated is Phillip Marshall effective from close of business Tuesday 3rd September 1996.
The reason for the termination is due to the downturn in the economy and because of this it has led to a restructuring of the organisation to reduce the overheads, thus leading to the amalgamation of positions within the workshop.
It is with deep regret that we have to let leave the organisation as it is our policy to hold and enhance or valued employees and Phil’s input into the organisation will be missed.”
The applicant’s claim is made pursuant to the provisions of s.170EA of the Act. The evidence indicates, however, that there are altogether five claims by the applicant against the respondent, some of which can be dealt with in the discretion of the Court pursuant to s.430 of the Act. They are:
A claim pursuant to the provisions of s.170EE(5) for damages for breach of s.170DB of the Act by the respondent.
A claim for unpaid annual leave in an amount of $364.00. This claim is conceded by the respondent and will be the subject of an order by consent.
A claim for payment of 7 days pay in lieu of rostered days off.
A claim alleging that the deduction of the sum of $413.70 from the applicant’s termination pay by the respondent in satisfaction of the applicant’s staff account with the respondent was not justified and that the respondent owes the applicant $142.64 on the balance of that account and an entitlement to bonus payments.
A claim for a remedy pursuant to the provisions of s.170EE(2) and (3) of the Act for breaches of ss.170DE(1) and DC of the Act.
There are several documents which have been brought into evidence by both parties to support their respective claims concerning the details of the calculation of moneys paid to the applicant on the termination of his employment. It is necessary for the Court to make findings in respect of the reliability of those documents in order to determine claims numbered 1 and 4.
Exhibit 1
This document is headed “Morwood Motors Act Pty Ltd” “Termination Pay Report”. It was brought into evidence by the applicant who told the Court that he received it with payment of $829.40 on termination of his employment. It breaks down the moneys due to the applicant as follows:
Outstanding Long Service Leave $ 202.33
Outstanding Annual Leave $ 803.31
Total $ 1146.22
Less Tax $ 316.80
Net $ 829.40
Mr Glenn Wood, the manager of the respondent, who conducted the case for the respondent before the Court, and other witnesses for the respondent deny that this document is a document generated by the respondent.
Exhibits 2 and 20
Exhibit 2 is a printout of computer records relating to the applicant’s staff account as at 30 August 1996. The applicant told the Court that it was given to him with his termination pay and Mr Wood agreed that it was probably given to him at that time. It shows an outstanding balance of $413.70 owing on the account. Comparison of Exhibit 2 with Exhibit 20 confirms the accuracy of the items charged for on Exhibit 2. Exhibit 20 is a more complete document in that it shows that cash payments were made to reduce the account from time to time they being amounts of $200.00, $50.00, $100.00, $62.00 and $150.00. Exhibit 20 indicates that the last transaction on the account was a cash payment of $150.00 on 25 July 1996 leaving an outstanding balance of $413.70.
Exhibit 3
Exhibit 3 was brought into evidence by the applicant. It contains printed writing and figures and some handwritten writing and figures. The applicant’s evidence is that it was given to him with his termination pay, that he discussed it at that time with Mr Wood and that the handwritten part of the document was created at that time. The applicant’s evidence is that Mr Wood agreed that the staff account was in credit at that stage in the sum of $32.64.
The applicant’s evidence is further that the amount of $650.00 which is shown as a credit on the document was a credit due to him under a bonus scheme of which he had the benefit. The applicant told the Court that there was an oral agreement between him and Mr Wood that he would receive $50.00 per week bonus to compensate him for hours worked in excess of 38 hours in any week and that if he worked on a Saturday he was to receive a cash payment of $50.00, the entitlement to which was noted on a calender from time to time. The applicant also told the Court that he was entitled to a cash payment of $60.00 for time spent during a stock take in addition to his normal pay. The applicant’s evidence was that as part of the oral agreement he was entitled to 1 day per month as a rostered day off to further compensate him for hours worked over and above 38 hours per week.
The applicant’s evidence was that he discussed Exhibit 3 with Mr Wood when he received his termination pay and that Mr Wood agreed that the credit of $650.00 should in fact have been a credit of $760.00 being bonus payments, Saturday entitlements and $60.00 for the stock take. The applicant told the Court that Mr Wood agreed that in addition to the credit shown on Exhibit 3 of $32.64 he was entitled to a further $110.00 being the difference between the correct amount due to him for his bonus and the amount of $650.00 shown on Exhibit 3.
Mr Wood denies any knowledge of Exhibit 3 and denies that it was ever discussed between him and the applicant. Mr Wood also denies that there was any oral agreement relating to the payment of bonuses or rostered days off.
Exhibit 16
Exhibit 16 was brought into evidence by the respondent. It was put to the applicant in cross-examination and he denied that it was in the form of the pay slips he received from the respondent. The respondent’s evidence is that Exhibit 16 is the form of pay slip which was provided to its employees as at 4 September 1996 and that it contains a correct calculation of the moneys paid to the applicant on termination of his employment. It calculates the payment as follows:
76 Normal Hours $ 939.36
Annual Leave Entitlement $ 997.73 $1,937.09
Less: Staff Account $ 413.70
Tax $ 694.10 $1,109.80
Net $ 829.30
A considerable part of the evidence in this case was devoted to the issue of whether various documents particularly pay slips were genuine documents produced in the course of the respondent’s business in particular Exhibits 9 and 19 were the subject of evidence of that kind. Exhibit 9 is the applicant’s pay slips for the week ended 28 August 1996 and his ordinary pay for the week ended 4 September 1996, the last week of his employment. Exhibit 19 is a bundle of pay slips which cover July and August of 1996. The witnesses for the respondent assert that these documents are not documents generated by the respondent and the applicant asserts that he received the documents with his pay for the respective week. Exhibit 14 is a summary of wages and deductions for each employee from 3 July 1996 to 4 September 1996. The information in each week as set out in Exhibit 14 appears to correspond with the information in the relevant document from Exhibit 19 for that particular week. The respondent did not call to give evidence the person who physically puts the pay slips in the envelope with the cash on pay days. The closest evidence to that process is the evidence of Mrs Wood who keys the information into the computer, which generates the pay slips and other records. It would seem that Exhibits 9 and 19 are genuine in spite of the assertion by the three witnesses for the respondent that they are not in the usual form of documents that the company produces. The Court has been able to determine this matter on evidence other than that contained in Exhibits 9 and 19 and the evidence about those exhibits. The Court is inclined to accept the applicant’s evidence in relation to Exhibits 9 and 19 but at the same time draws no conclusion adverse to the credit of the witnesses for the respondent in relation to those exhibits as none of those witnesses are persons who deal with the pay slips directly. The credit of the applicant suffers as a result of his evidence in relation to Exhibits 1 2 3 and 16, particularly his evidence in relation to Exhibit 3 and where there is a conflict between the evidence of the applicant and the respondent the Court generally accepts the evidence of the witnesses for the respondent.
CLAIM FOR DAMAGES UNDER S.170EE(5)
Exhibit 16 indicates that the applicant was paid 2 weeks pay in his termination pay. Exhibit 1 shows no such payment. Exhibit 16 shows a payment for 68.7 hours of accrued annual leave in an amount of $997.73. Exhibit 1 shows payments for annual leave of $803.31 and a loading of $140.58. Exhibit 16 indicates a gross payment of $1,937.09 while Exhibit 1 shows a gross payment of $1,146.22. Exhibit 1 purports to include an amount for outstanding Long Service Leave, notwithstanding that the applicant would not have had any entitlement to such leave.
Exhibit 16 gives the applicant credit for the balance of the Staff Account of $413.70 and tax of $694.10, while Exhibit 1 makes no allowance for the Staff Account and shows payment of tax of $316.80. Mr Wood gave evidence that the amount of $694.10 has been paid to the Australian Taxation Office for the applicant. The evidence of the applicant and the respondent concerning Exhibits 1 and 16 is irreconcilable. Exhibit 16 is consistent with the summary of wages records for all employees which is Exhibit 14 and there is no evidence to suggest that the respondent’s computer records have been tampered with. The Court is satisfied on the balance of probabilities that Exhibit 16 sets out the true calculation of moneys paid to the applicant on the termination of his employment. He does not deny that he received the sum of $829.30. Exhibit 16 and the evidence of Mr Wood confirm that he has a taxation credit of $694.10 and that his Staff Account of $413.70 was satisfied on that day. Exhibit 16 includes payment of 2 weeks pay at the rate applicable for normal hours. The applicant had received all wages due to him for work done to 4 September 1996 and the 76 hours paid to him which is referred to in Exhibit 16 can only be payment of 2 weeks in lieu of notice. The Court therefore finds that the respondent has satisfied its obligations under s.170DB of the Act.
CLAIM FOR PAYMENT IN LIEU OF ROSTERED DAYS OFF
The applicant’s entitlement to this claim depends upon the Court’s being satisfied that there was an oral agreement between the parties for the payment of bonuses and the taking of a rostered day off a month in lieu of time worked in excess of 38 hours per week. The applicant’s evidence as to the making of that oral agreement is vague as to its time and detail and Mr Wood denies that there was any such agreement.
The evidence is that the applicant did not work on a Saturday as the Service Area was not open and the evidence of the applicant and Mr Wood is at odds as to whether or not there was a calender on which such entitlements were noted. Mr Wood’s evidence is that any bonus payments were due were payable only to Spare Parts staff. The applicant’s evidence was that bonus payments were to be applied to reduction of his Staff Account. There is no evidence of any credit of that nature at any time. Exhibit 20 confirms that the applicant made cash payments, including a Visa payment of $150.00 on 19 April 1996, in reduction of his indebtedness on the Staff Account from time to time. The applicant has not satisfied the Court that it was a term of his employment that he was entitled to bonus payments and rostered days off as asserted by him and his claim in respect of payment in lieu of rostered days off therefore fails.
STAFF ACCOUNT
There is no doubt that the balance of this account at 4 September 1996 was $413.70 and the Court has found that the respondent deducted that sum from the termination pay due to the applicant. The applicant’s case is that he is entitled to the credit of $32.64 shown on Exhibit 3 and the amount of $110.00 which he says Mr Wood agreed was due to him for the balance of bonus payments. The Court has found that the applicant was not entitled to bonus payments and it follows from that finding that the veracity of Exhibit 3 is further in doubt. A curious and unexplained aspect of Exhibit 3 is the item numbered 2 being $203.56 for parts bought. That figure is irreconcilable with any of the figures in Exhibit 2 or Exhibit 20. Further, the balance of $413.70 is the balance of the account for the whole of its life taking into account the cash payments made by the applicant as shown in Exhibit 20. That being so, the amount of $203.56 could not have been owing as a separate amount in addition to the $413.70.
The Court rejects the applicant’s evidence that Exhibit 3 was generated by the respondent and handed to him at the time of termination of his employment and finds that the figures shown in Exhibit 3 are inconsistent with other evidence. The Court further notes that on the last day of the hearing the applicant indicated that he did not wish to pursue his claim in respect of the $110.00 balance of bonus payments or the credit of $32.64 shown on Exhibit 3. The Court has, however, considered it appropriate to determine this claim because of its inter-relation with other aspects of the applicant’s case and because of its significance in relation to the applicant’s credit. The claim in respect of the Staff Account therefore fails.
CLAIM FOR A REMEDY PURSUANT TO S.170EE(2) AND (3)
Was there a breach of s.170DE(1)?
The respondent’s case is that there was a valid reason for the termination of the applicant’s employment. Exhibit 11 is the Balance Sheet and Profit and Loss Statements for the Wood Unit Trust, through which the respondent conducts its business, and those statements indicate a slight fall in gross profit for the year ended 30 June 1996 and a fall in net profit from $82,650.53 at 30 June 1995 to $25,963.28 at 30 June 1996. Exhibit 13 shows that the balance of the company’s current account fell from $57,493.71 at 1 July 1996 to $21,042.20 at 30 August 1996. The respondent relies on these figures to justify its assertion that the business was undergoing hard financial times.
The figures are inconclusive in the absence of an exhaustive inquiry into the company’s affairs and a detailed comparison of items of expenditure in the current year as against previous years. The fall in the bank balance in July and August of 1996 appears to have been largely attributable to payment of substantial accounts for the purchase of stock. In the absence of a figure for stock-on-hand and comparative figures for the previous year, the Court is unable to make much of the fact that the bank balance declined substantially. There is however the evidence of the witnesses for the respondent to the effect that the number of customers in the workshop declined after March of 1996, evidenced by the fact that the mechanics in the workshop very frequently finished their work during the afternoon and were idle for part of the day on many days. The observation from Mr Glenn Wood and the Managing Director of the company was that the workshop side of the business was not as busy as it had been previously. The evidence is that the respondent took action to cut costs after it became aware of its financial state as at 30 June 1996. The employees were informed that they should take up any opportunities which were available to them for alternative employment because it was likely that cost cutting measures and possibly reduction of staff numbers would be necessary if the company’s financial position did not improve. The applicant acknowledged in his oral evidence that the staff were informed at monthly meetings of the tight financial situation the company was experiencing and he also acknowledged that Mr Wood made efforts to attempt to improve efficiency. The applicant denied that Mr Wood made any remarks regarding the possibility that employees should take up opportunities for alternative employment if they presented themselves.
The respondent’s case is that the efficiency measures put in place by Mr Wood in July and August did not have sufficient effect and that after the end of August the company decided to reduce its staff. The total number of staff was about 10, including Mr Glenn Wood. The respondent determined that the area of its operations from which a staff member would be removed would be the workshop because it was not producing sufficient income to sustain its operations effectively. The applicant was the only employee in the workshop who did not produce income directly by his personal effort and the respondent decided to terminate his services rather than the services of one of the mechanics. The applicant’s duties were taken over by Mr William Wood, the managing director of the company and no other staff was employed or has been employed to replace the applicant. Since September of 1996 and up to the date of hearing the total number of the respondent’s staff has reduced by a further 2 persons.
The applicant’s case is that because he had had experience in the spare parts division of the respondent’s business the redundancy process should have involved members of the spare parts division as well as himself. The respondent argues against that that the applicant had not had recent experience in the spare parts division and that he would have needed some time to up date his knowledge in that area, whereas those persons working in the spare parts division at the time had recent knowledge and experience.
The respondent bears the onus of proving that there was a valid reason for the termination of the applicant’s employment, pursuant to the provisions of s.170EDA(1) of the Act. S.170DE(1) provides that there must be a valid reason for the termination of the employment and that that reason must be connected with the employee’s capacity or conduct or be based on the operational requirements of the respondent’s undertaking. In this case the evidence indicates that the respondent had a need to reduce its outgoings and as other cost saving measures had not been sufficiently successful, it was necessary for the respondent to reduce its number of staff. The Court should not interfere unduly with the respondent’s capacity to operate its business in the manner in which it thinks is best. The respondent’s observation that the workshop area of its business was the least profitable and therefore the area from which a staff member could be taken is, on the evidence before this Court, a reasonable view. The decision to select the applicant because he did not directly produce income and was in effect more readily dispensable than the other employees in the workshop is also reasonable.
Whether the applicant should have been selected instead of one of the persons in the Spare Parts division is a more difficult question but in the opinion of this Court does not invalidate the reasonableness of the decision. The course taken by the respondent satisfies the test which has been restated on many occasions in this Court that for a reason to be a valid reason it must be soundly based and well-founded and not be capricious. It could not be said on the evidence in this case that the respondent’s action could be described in those terms, and therefore there is no breach of s.170DE(1) of the Act.
Was there a breach of s.170DC?
The respondent is, however, in breach of s.170DC of the Act. That section provides that employment must not be terminated for a reason relating to the employee’s conduct or performance unless he has been given the opportunity to defend himself against the allegations made against him. The extended meaning of those words taken by the Court in the Full Court of this Court in Kenefick v Australian Submarine Corporation Pty Ltd (No 2) 65 IR 366 has the effect that if a redundancy selection process involves consideration of the conduct and performance of employees then s.170DC is brought into play. In the present case the fact that the applicant was not a direct money earner for the business was a consideration in the mind of the respondent when it made its decision. That consideration involves aspects of the employee’s performance and he should therefore have been given an appropriate opportunity to respond to the reasons for the action proposed by the respondent. He was given no opportunity and was in fact summarily dismissed on 3 September 1996.
Is any remedy appropriate?
Whether any remedy is appropriate in all circumstances of the case for the breach of s.170DC is the next question. The Court finds that even if the applicant had been given an opportunity to be involved in the decision to terminate his employment the result for him would have been the same. The process may have taken a little longer and the date of termination may have been a week or two later. On all of the evidence bearing in mind all of the circumstances, there was no other solution to the respondent’s problem at the time than to select the applicant for termination of his employment. The Court finds that reinstatement is impracticable, given the further decline in the respondent’s business since 3 September 1996 and given the findings which the Court has made which are adverse to the credit of the applicant.
Compensation is appropriate but only to a very limited extent. The Court considers that in all the circumstances of the case it is appropriate to order compensation in the sum of $700.00.
The orders will be:
That the respondent pay the applicant the sum of $700.00 as compensation pursuant to the provisions of s.170EE(3) of the Act.
That by consent the respondent pay the applicant the sum of $364.00 as the balance due to him for annual leave entitlements.
I certify that this and the preceding 8 pages are a true copy of the reasons for decision of Judicial Registrar Linkenbagh.
Associate:
Date: 30 July 1997
Solicitor for the applicant: Mr J Wilson
Barker GoslingThe respondent was not represented by a solicitor or counsel Dates of hearing:
Date of Judgment:21 & 22 May and 18 July 1997
30 July 1997
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