Martin v Toyota Motor Corporation Australia Ltd
[1997] IRCA 207
•24 June 1997
DECISION NO:207/97
CATCHWORDS
INDUSTRIAL LAW - EMPLOYMENT CONTRACT - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - OPERATIONAL REQUIREMENTS - REDUNDANCY - VALID REASON - NOTICE OF TERMINATION - TERMINATION OF EMPLOYMENT CONVENTION - TERMINATION OF EMPLOYMENT RECOMMENDATION - REMEDY - REINSTATEMENT - ONUS OF PROOF.
Workplace Relations Act 1996 (Cwth) ss170DC, 170DE, 170EDA, 170EE.
Workplace Relations & Other Legislation Amendment Act 1996 (Cwth) Sch. 16.
Termination of Employment Convention Art.13.
Termination of Employment Recommendation Part III.
Industrial Relations Court Rules O74.
Grout v Gunnedah Shire Council (No.1) (1995) 1 IRCR 143;
Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370;
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371;
Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666; on appeal [1982] ICR 693;
APESMA v Deniliquin Council (1995) 63 IR 451;
Kenefick v Australian Submarine Corporation Pty Ltd (No.2)(1996) 65 IR 366;
Howarth v Babin (unreported, Industrial Relations Court of Australia, Wilcox CJ, 30 September 1996);
Kerr v Jaroma Pty Ltd (1996) 70 IR 469;
Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 28 August 1996 and 17 December 1996);
Thomas v Ralph Lynch t/as Bellingen Grocery (unreported, Industrial Relations Court of Australia, Wilcox CJ, 20 December 1996);
Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327;
Bullock v Mayne Nickless Ltd (1996) 68 IR 227;
Sinclair v Anthony Smith & Associates Pty Ltd (unreported, Industrial Relations Court of Australia, von Doussa J, 1 December 1995); on appeal Anthony Smith & Associates Pty Ltd v Sinclair (1996) 67 IR 200;
Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1;
Minister for Health Western Australia v Ferry (1996) 65 IR 374;
Mitchell-Collins v The Latrobe Council (1995) 60 IR 480;
Kozelj v Kellogg (Aust.) Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, 26 July 1996);
Liddell v Lembke (1994) 1 IRCR 466;
Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199;
Perkins v Grace Worldwide (Aust) Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, Marshall and North JJ, 7 February 1997);
Johns v Gunns Ltd (1995) 60 IR 258;
Yew v ACI Glass Packaging Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, 11 December 1996;
Fryar v System Services Pty. Ltd. (1996) 137 ALR 321;
Gibson v Bosmac Pty Ltd (1995) 60 IR 1;
Perrin v Des Taylor Pty Ltd (1995) 58 IR 254;
Mooney v W & B Morieson Pty Ltd (unreported, Industrial Relations Court of Australia, Moore J, 5 June 1997);
The Termination, Change and Redundancy Case (1984) 8 IR 34.
MARTIN v TOYOTA MOTOR CORPORATION AUSTRALIA LTD
VI97/1239
Before: MURPHY JR
Place: MELBOURNE
Date: 24 JUNE 1997
IN THE FEDERAL COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI97/1239
BETWEEN:
JOHN MARTIN
Applicant
AND
TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED
Respondent
BEFORE: MURPHY JR
PLACE: MELBOURNE
DATE: 24 JUNE 1997
MINUTES OF ORDERS
ORDERS:
The court declares the respondent has breached s170DE(1) of the Act;
The applicant within seven days be reinstated to a position with the respondent on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment;
The respondent for all purposes is to treat the applicant as continuously employed from the date of termination until the date of reinstatement;
The respondent pay to the applicant the remuneration lost because of the termination after taking into account amounts already paid and the applicant’s earnings.
Liberty to apply.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE FEDERAL COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI97/1239
BETWEEN:
JOHN MARTIN
Applicant
AND
TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED
Respondent
BEFORE: MURPHY JR
PLACE: MELBOURNE
DATE: 24 JUNE 1997
REASONS FOR DECISION
The proceeding.
This proceeding concerns what in the literature is described as an economic dismissal - in common parlance, a redundancy. The proceeding commenced by application to the Australian Industrial Relations Commission under the Industrial Relations Act 1988 (Cwth). When the Commission certified that it was unable to resolve the matter by conciliation, and the parties elected not to have the matter dealt with by way of consent arbitration, it was referred to the Industrial Relations Court of Australia. Schedule 16 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cwth) transferred that court’s jurisdiction under the Industrial Relations Act 1988 (now retitled the Workplace Relations Act 1996 (Cwth) (“the Act”)), and any proceedings where the court had not commenced the substantive hearing, to the Federal Court of Australia: items 63 and 64. Sch 16 also provided for the appointment of the judicial registrars of the Industrial Relations Court of Australia to a comparable office in the Federal Court for the balance of their respective terms: items 73 and 19. Item 67 of Sch 16 also preserved as Rules of the Federal Court the Industrial Relations Court Rules. Those rules delegate to each judicial registrar all the powers of the court in proceedings that relate to a claim that the termination of an employee’s employment was unlawful: O74 r2. As a result of these provisions, and as I have taken the relevant oath of office, this matter is properly before me.
Introduction.
Under s170EA of the Act the applicant seeks reinstatement to his position with the respondent. His employment as a middle manager was terminated on 16 December 1996. The issues were whether the respondent had a valid reason based on its operational requirements to terminate the applicant’s employment, and whether reinstatement was impracticable. The applicant also claimed, in the alternative, compensation, and, in the court’s associated jurisdiction, damages for the failure of the respondent to give him reasonable notice of the termination of his employment.
Background.
The respondent’s purchasing division is located at Altona. The General Manager Purchasing is Mr William Pike. He has held the position for two years. For functional purposes the division is divided into production and corporate departments. At the relevant time reporting to Mr Pike were Mr Rausa, the Manager Production Purchasing, and Mr Russell Woods, the Manager Corporate Purchasing. Under these managers were a number of section managers, of which the applicant was one. The applicant held the position of Corporate Purchasing Manager and reported to Mr Woods. In the July 1996 organisation chart (Exhibit R1) the applicant had eight individuals involved in various aspects of the corporate purchasing function reporting to him.
At the time of his termination he was on the substantial annual salary package of $61,125 and was also provided with a standard company car valued at $15,648 (Exhibit R5). He had commenced with the respondent in the purchasing division as Supervisor Original Equipment Buying in April 1988.
For the eighteen months prior to December 1996 the applicant had been involved in a computerisation project known as SAP (“the project”). This had involved him relocating to Port Melbourne to work on the project. In the period known as Phase 1 the applicant led the project as the purchasing division was significantly involved. When Phase 1 was completed in January 1996 the leadership of the project was assumed by the finance division of the respondent. Phase 2 also involved the purchasing division and the applicant’s involvement with the project continued but he relocated back to Altona in April 1996. It was envisaged however that his involvement was to reduce as Phase 2 of the project was implemented.
There was some contest in the evidence on this point but it was common ground that in the period up to mid-1996 the applicant was spending three or four days per week on the project. It was his evidence that in the period towards November - December this tailed down to one to two days per week on average. At this point the applicant picked up the line responsibility for those under him, as well as assuming some of the duties that a Mr Derek Pike, who reported to him and who resigned in October, had previously performed.
The respondent’s witnesses Mr William Pike and Mr Woods gave evidence that the applicant’s commitment to the project remained substantial until December 1996. They put that commitment at about three or four days per week. It was common ground that the applicant worked long hours. On this conflict in the evidence I prefer the applicant’s account that the project was demanding one to two days per week of his time in November - December 1996. I accept the genuineness of the estimate of Mr Pike and Mr Woods, however the applicant is in a better position to make a more precise estimate as to the demands on his time.
Economic pressures on the respondent lead to a restructure.
Mr Pike gave evidence that in 1996 the respondent had sustained a $100 million loss and there was pressure on senior managers like himself to implement efficiencies. In November Mr Pike received a directive from his Vice President that he required an improvement in efficiency and a reduction in costs. In cross-examination Mr Pike said that this directive also included a two percent reduction in “headcount”. Mr Pike did not produce any written documents in relation to the directive and conceded in cross-examination that no particular deadline had been imposed to achieve the efficiencies and savings.
Mr Pike considered the organisation of his division and formed the view that a restructure would enable him to make two positions redundant. The restructure that he decided upon involved the elimination of two section manager positions titled Corporate Purchasing Managers. These were held by the applicant and Mr Zanone, and both reported to Mr Woods. A new position at about the same level would be created titled Corporate Materials Manager. This position would report to Mr Woods. The staff previously reporting to the applicant and Mr Zanone would report either to the new position or direct to Mr Woods.
Associated with the restructure and reflected in a new organisation chart (Exhibit R2) that came into effect on 1 January 1997, was the reassignment of two employees who in the July organisation chart reported to the applicant. Mr Frank Davies went to the production department, and another employee, Mr Bruce Robinson, was reassigned to the information systems division.
At the time the applicant’s employment was terminated, the position held until October by Mr Derek Pike remained vacant and the applicant and Mr Rausa were still interviewing candidates to fill that position. From 1 January 1997 the duties previously assigned to Mr Derek Pike were reassigned to Mr Petkovic. Mr Petkovic previously reported to the applicant, but after the restructure reported directly to Mr Woods. Mr Ray Lambert, a purchasing specialist who previously reported to Mr Zanone was promoted to the newly created managerial position, Corporate Materials Manager.
Mr Pike gave evidence that he considered the suitability of both the applicant and Mr Zanone for the newly created position but formed the view that Mr Lambert’s skills, performance and experience made him more suited for the position. In cross-examination Mr Woods accepted that the applicant would be able to perform the duties of Corporate Materials Manager. Although it was disputed by the applicant, I am satisfied that there was only a relatively small overlap between the duties and functions of the Corporate Materials Manager position and the applicant’s previous position.
Mr Woods was not consulted about the appointment of Mr Lambert to the position as Corporate Materials Manager, and it was only in January 1997 that the relevant position description (Exhibit R6) was written by Mr Woods. The position description specified a tertiary qualification. Mr Lambert holds only trade qualifications. The applicant has completed three years of tertiary studies.
The applicant is retrenched.
Mr Pike determined upon the restructure of the division without discussing the fact that it involved the retrenchment of the applicant with either the applicant himself or Mr Woods. He reached the conclusion in late November that the applicant’s services were redundant. Mr Pike gave evidence that he discussed the availability of other positions within the respondent with the General Manager Human Resources and in group discussions with other General Managers. He was told that no other positions were available for the applicant as other divisions were under similar pressures to economise as his own.
On 16 December 1996 Mr Woods was advised by Mr Pike that the services of the applicant and Mr Zanone were to be terminated, effective on 31 December. The applicant was to be told however that he was not required to work out the period of notice and was to leave that day. At about 11.00 am Mr Woods advised Mr Zanone that his services were terminated. At about 11.30 am the applicant was called in and advised that as a result of a restructure his position had been eliminated and he was redundant. Mr Woods stressed to the applicant that the decision did not reflect on the applicant’s performance. The applicant was handed a letter that confirmed the restructuring and contained details of the redundancy package (Exhibits R3 and R4). He was also advised that an outplacement consultant was available for immediate discussions, and that such services would be available to assist him in the future. The applicant did speak briefly to the consultant. He then cleared his desk and left.
He has been able to retain his company vehicle to date as, due to a stock shortage, there are no vehicles available for him to purchase under an employee purchase plan operated by the respondent. At the time of his termination the applicant was paid until 31 December 1996. He was also paid five weeks pay in lieu of notice, twenty-six weeks severance pay (three weeks per year of service), pro rata long service leave and other accrued entitlements.
Since his dismissal the applicant has undertaken a wide search for alternative employment. Although obtaining interviews for a number of positions, the only employment he obtained is week to week contractual work as assistant to an accountant in an overseas aid agency.
The meaning of “valid reason based on the operational requirements”.
The respondent carries the onus of proof that it had a valid reason based on its operational requirements to terminate the applicant’s employment: ss170DE(1) and 170EDA(1) of the Act. The meaning of this provision has been elaborated in numerous authoritative decisions of the Industrial Relations Court of Australia. For present purposes it may also be noted that the Act as a whole has been given a broad beneficial effect in the public interest: see eg. Grout v Gunnedah Shire Council (No.1) (1995) 1 IRCR 143 at 160.
In Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370 at 372 Lee J said:
“By giving effect to the Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer”.
In Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373 Northrop J said that the meaning of the term “valid” is “sound, well-founded or defensible”. The learned judge also went on to say that the provisions of the Act are to be applied in a practical manner in actual workplaces where each party is to be “treated fairly”. He referred to Gibson v Bosmac Pty Ltd (1995) 60 IR 1.
In Nettlefold (above) at 373, Lee J said about the term “operational requirements”:
“The Act does not define the term “operational requirements”. Obviously it is a broad term that permits consideration of many matters including past and present performance of the undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of undertaking if the action of the employer is necessary to advance the undertaking and is consistent with the management of the undertaking that meets the employers obligations to the employee.”
In the same decision Lee J noted at 372 that in Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693, Lord Denning said that it is an implied term of an employment contract that an employer be “good and considerate” to its employees.
These comments in Nettlefold are consistent with earlier and later decisions that in the case of an economic dismissal whether the employer has discharged its onus of proof requires consideration of the operational reasons of the employer and how the employer has treated the employee effected before reaching its conclusion that its operational requirements required the termination of the employee’s employment: see eg. APESMA v Deniliquin Council (1995) 63 IR 451; Kenefick v Australian Submarine Corporation Pty Ltd (No.2)(1996) 65 IR 366; Howarth v Babin (unreported, Industrial Relations Court of Australia, Wilcox CJ, 30 September 1996); Kerr v Jaroma Pty Ltd (1996) 70 IR 469; Westen v Union Des Assurances De Paris (unreported, Industrial Relations Court of Australia, Madgwick J, 28 August 1996 and 17 December 1996); and Thomas v Ralph Lynch t/as Bellingen Grocery (unreported, Industrial Relations Court of Australia, Wilcox CJ, 20 December 1996).
Has the respondent discharged its onus of proof?
Here counsel for the respondent argued that this was a bona fide restructuring. He submitted that it was not put to Mr Pike that the decision to eliminate a layer of middle-management was not made bona fide in the interests of improving efficiency and reducing costs.
Counsel for the applicant on the other hand argued that this was not a bona fide restructure because the direction to improve efficiency and to reduce the headcount had no particular deadline attached. He further argued that the way Mr Pike moved to implement the restructuring showed its lack of genuineness. He referred to the failure to consult his departmental managers and the failure to prepare the position statement for that of Corporate Materials Manager. He also referred to the failure to consult the applicant before it was decided to eliminate his position and terminate his employment.
In evidence was an extract of the respondent’s Policies and Procedures Guidelines (“the guidelines”) (Exhibit A1). The document is dated 20 June 1996, is headed “Redundancy Policy”, and is expressed to apply to all employees “under the Australian Industrial Relations Act 1988”. It states that it does not form part of the employee contract of service but provides guidelines “as to how Toyota shall manage a redundancy program”. The guidelines go on to note that a redundancy program may be necessary in a number of different circumstances including restructure or economic pressures. Where a reduction in employee numbers is identified, a full analysis of the options available will be undertaken. This includes whether the redundancy program will involve “specific positions (involuntary redundancy), or be offered to all employees (voluntary redundancy), depending on the Company’s operational requirements”. After that analysis if the respondent determines that a reduction in employee numbers could not be avoided then the unions will be notified as well as “the employees involved, with sufficient notice in writing”. The policy also goes on to note that the respondent will consider redeployment and that where required and to assist the process the Human Resources Division and the employee will prepare a resume for the purpose of placing the employee in alternative positions.
It was submitted by counsel for the respondent that this document applied only to award employees and did not apply to the applicant. In his evidence Mr Woods said he had read the document some time ago. Mr Pike was not asked about the document but did refer to a corporate policy and said he had consulted the General Manager Human Resources. No satisfactory reason was advanced why the guidelines, which only elaborate what appears sound managerial practice and reflect the Termination Change and Redundancy Case (1984) 8 IR 34, did not apply to the applicant.
Conclusion - termination not for valid reason.
Here I am not satisfied that the respondent has discharged its onus of proof that it had a valid reason based on its operational requirements to terminate the applicant’s employment. The decision cannot be characterised as defensible within the terms of the authorities referred to above.
Mr Pike, I accept, was advised by his Vice President to implement efficiencies and reduce costs. I am not able to accept his evidence that he was told to reduce the headcount in his division by two percent, although that was about the result of his actions. It is surprising that such a directive was not in writing. Such a directive however, whether or not it contained a quantitative target, comes squarely within the terms of the respondent’s own redundancy policy and under the terms of that policy required that the applicant, as an employee involved, be given “sufficient notice in writing”. This did not occur.
Further, it was surprising that neither Mr Woods nor Mr Rausa, the two key managers within Mr Pike’s division, were notified by him of the decision to restructure and terminate the employment of the applicant, before the decision was to be actioned. Mr Lambert was also placed in a new position which did not have a position description, and was to report to Mr Woods, without Mr Woods being consulted about the matter.
The applicant gave evidence that he had received an assurance of his future with the respondent in July 1995 from Mr Pike. At that stage he was awarded a performance related bonus. Mr Pike had also discussed with him in August 1995 that there was no pressure on headcount within his division. Mr Pike admitted in his evidence that he failed to consult the applicant’s personnel file before choosing to terminate his services. Further, Mr Pike was operating under a misunderstanding as to the applicant’s level of commitment to the Purchasing Division. On the applicant’s evidence as at November - December, it was only one to two days per week, whereas Mr Pike was under the impression that it was three to four days. Mr Pike gave no evidence that he consulted with anyone as to the implications on the project of the applicant’s departure from the respondent. An indication of the precipitate nature of the decision to terminate the applicant is that the applicant and Mr Rausa were, until the applicant’s termination, actively seeking to fill the position previously held by Mr Derek Pike. The applicant gave unchallenged evidence that he had been told to fill the position before the end of the year.
Mr Pike gave evidence as to the reason why he did not consult the applicant and allow him to work out his period of notice. This was the sensitivity of the commercial information within the purchasing division. While this is a reason why the applicant could not be consulted, Mr Pike, who had only known the applicant for some two years, did not consult either Mr Rausa or Mr Woods, who had been involved with the applicant for a longer period, before reaching this conclusion. Further he admitted in cross-examination that he had no specific example in front of him to indicate that the applicant would have breached his duty of confidentiality. On this basis I give little weight to this aspect of Mr Pike’s evidence. In certain cases such a consideration can be decisive. Here however, with the applicant’s loyal service and the assurances previously given to him by Mr Pike, the respondent could and should have consulted the applicant.
Counsel for the respondent also pointed to Mr Pike’s evidence that he consulted with other general managers and with the General Manager Human Resources as to the availability of other positions for the applicant. Due to pressures on those other divisions there were no positions available. I am unable to accept that these actions allow the decision to be characterised as defensible.
Here the two key factors depriving the respondent’s decision of validity or defensibility are the failure to consult the applicant, and the failure to comply with the guidelines. The rationale for and importance of consultation as “an essential element of fairness” in the event of economic restructuring has been recognised in numerous decisions: see eg. Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327 at 336; Bullock v Mayne Nickless Ltd (1996) 68 IR 227; and Thomas (above). The employer in these circumstances is addressing an aspect of “measures to avert or minimise” and “mitigate the adverse effects of the termination”: Termination of Employment Convention Art. 13(1)(b) and Termination of Employment Recommendation Part III. It has also been said that consultation is of assistance “to permit the possibility of arriving at some rearrangement of the workplace which has lesser consequences than dismissal”: Sinclair v Anthony Smith & Associates Pty Ltd (unreported, Industrial Relations Court of Australia, von Doussa J, 1 December 1995); the exploration of other options: Quality Bakers (above); and to allow the employee to negotiate about the timing or necessity of a termination: Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1 at 7.
In this case important consequences of the failure of the respondent to consult the applicant were that the applicant was deprived of the opportunity to suggest lesser alternatives, and to negotiate the timing of his departure from the respondent in the event that an alternative position was not available for him.
Here the fact that Mr Pike gave no evidence that there was any particular deadline on the need for him to achieve efficiencies and to reduce his headcount is important. Had the respondent consulted the applicant about its economic pressures and the proposed restructuring to eliminate a management position, then the applicant would have been able to make suggestions, based on his own knowledge of the respondent, of possible alternatives to his termination. These may have included the assertion that his own skills and background gave him a better claim to the Corporate Materials Manager position than Mr Lambert. While it was not argued that there was a breach of s170DC of the Act, because the decision to terminate the applicant’s employment was based on a comparative assessment of his skills and performance with that of Mr Lambert, the purposes of s170DC as identified in Perrin v Des Taylor Pty Ltd (1995) 58 IR 254 at 256 and applied in a business restructuring context in Mooney v W & B Morieson Pty Ltd (unreported, Industrial Relations Court of Australia, Moore J, 5 June 1997), provide a further reason why the respondent’s process here lacks defensibility. The applicant had no opportunity to assert his suitability, or to raise matters of a more personal nature, such as his financial commitments, before he was dismissed. He had no opportunity to put to the respondent that he may have accepted a lower level position: Howarth (above).
In the event that the search for alternatives to termination proved fruitless, the applicant would have been able to negotiate with the respondent as to the timing of his departure. For a person in his station in life (he is aged forty-seven, has school-age children and had just incurred a mortgage on a new house), having spent most of his years in the narrow field of automotive purchasing, and more recently on the project, this was very significant for the applicant. The important purpose of notice to allow the adjustment to the change of circumstances and to seek other employment was recognised in Fryar v System Services Pty. Ltd. (1996) 137 ALR 321 at 331. It has also been recognised that it is often easier to obtain employment whilst employed: Sinclair (above). Had the respondent’s own guidelines been complied with these consequences could have been avoided. The guidelines here are analogous to the award provisions that bound the employers in Sinclair (above), Minister for Health Western Australia v Ferry (1996) 65 IR 374; Mitchell-Collins v The Latrobe Council (1995) 60 IR 480; and Kozelj v Kellogg (Aust.) Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, 26 July 1996). While in those cases the relevance of the award provisions was primarily to the now invalidated s170DE(2) of the Act, the jurisprudence involved has re-emerged in relation to s170DE(1) as a result of decisions such as Nettlefold (above), Kerr (above), Thomas (above) and Westen (above).
Counsel for the respondent pointed to the provision of outplacement services and the redundancy package as factors that are to be considered in determining whether or not the respondent had discharged its onus of proof under s170DE(1). Clearly both factors must be considered. In the present case however, where the applicant was not unqualified for the position ultimately assigned to Mr Lambert, the applicant had given dedicated and loyal service to the respondent, and the respondent’s own guidelines included the provision of notice to employees in the event of redundancies, these considerations are not sufficient to discharge the respondent’s onus of proof. The respondent has breached s170DE(1) of the Act and I so declare.
Remedy - is reinstatement impracticable?
The applicant seeks reinstatement, the primary remedy under the Act: Liddell v Lembke (1994) 1 IRCR 466. The first consideration is whether the Court considers it appropriate in all the circumstances of the case: s170EE(1). This requires the Court to “evaluate the practicability of a reinstatement order in a commonsense way”: Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 at 210; applied in Perkins v Grace Worldwide (Aust) Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, Marshall and North JJ, 7 February 1997).
The respondent maintained that reinstatement was impracticable. It carries an evidentiary onus on the issue as such matters are within its knowledge: Sinclair (above); affirmed on appeal Anthony Smith & Associates Pty Ltd v Sinclair (1996) 67 IR 200; Quality Bakers (above). There was no suggestion in the evidence that the respondent’s management had lost mutual trust or confidence in the applicant as a result of the circumstances of his termination or these proceedings: Davis v Portseal Pty Ltd (1996) 70 IR 320; affirmed on appeal (unreported, Industrial Relations Court of Australia, Wilcox CJ, Lee and Marshall JJ, 10 March 1997); Perkins (above).
It was the evidence of Messrs Pike and Woods that there was no management position available at the respondent for the applicant. Mr Woods gave evidence that the purchasing division had no approval to seek additional staff, and that he was aware of the fact that all divisions were suffering pressure on staffing levels. It was common ground that the applicant’s position of Corporate Purchasing Manager no longer existed. It is important to note however that the position does not exist as a result of a restructuring exercise implemented by Mr Pike that the Court has held was not implemented in accordance with the guidelines and which, in the case of the applicant, involved a contravention of s170DE(1) of the Act.
The evidence given by the respondent’s witnesses as to the unavailability of a suitable position for the applicant within either the purchasing division, or elsewhere within the respondent, was at a level of generality that makes it difficult to accept. This applies particularly to Mr Pike’s evidence as to the impact of the lack of a position given his divisions’ headcount. First it is clear that there is considerable interchange between the two departments within the division. That is the explanation why Mr Rausa was participating with the applicant in the interviews for a replacement for Mr Derek Pike. Next a direct comparison of the two organisation charts (Exhibits R1 and R2) with the present position shows that the headcount has been reduced by more than the two per cent claimed by Mr Pike to be the Vice President’s November directive. At present the applicant and Mr Zanone have been dismissed. Mr Derek Pike has not been replaced and Mr Hariskos has left. Ms O’Brien no longer works for the respondent and the position held by L Baxter has not been filled. Mr Davies has been transferred to another division. As against this a graduate recruit Mr Kotronis has joined the division. These movements show that the headcount cannot be determinative in addressing whether the reinstatement of the applicant is practicable.
It must also be recalled that the Court has found that the termination of the applicant’s employment was effected without compliance with the respondent’s own guidelines. The guidelines set out a number of steps that can be undertaken before an involuntary redundancy may occur. One of those steps is the preparation by the potentially redundant employee, in consultation with the Human Resources Division, of a “basic resume of the employee’s skills” to be used to identify opportunities for re-deployment to alternative positions within the respondent. Here, although Mr Pike maintained in his evidence that no other suitable positions were available, he admitted that he had not accessed the applicant’s personnel file, nor viewed his resume. What documents the Human Resources Division had used in its search, if any, for an alternative position for the applicant, did not emerge in evidence.
Conclusion - reinstatement to a comparable position practicable.
I am not satisfied on the evidence that it is impracticable to reinstate the applicant to a position on similar terms and conditions to that held previously. It was accepted by Mr Woods that the applicant is able to perform the duties of Corporate Materials Manager. This position is however filled by Mr Lambert. The position is, in effect, the successor to the applicant’s position, albeit with substantially different responsibilities. Mr Lambert was promoted to the position as it had been previously decided that he was to be the next employee of the division to be promoted to a management position. It is not appropriate that the applicant be directly reinstated to that position, but its existence is very relevant because it has been held that the filling of a position cannot be used to avoid a reinstatement order: Johns v Gunns Ltd (1995) 60 IR 258 at 271.
The respondent is a large organisation operating at two locations in the metropolitan area. The applicant has worked at both. Demand for its product is such that earlier this year it was recruiting assembly workers, and the applicant has been unable to purchase a vehicle at staff rates. The decline in profitability that was a factor last year has been arrested. The applicant has extensive experience in the purchasing area and more recently led a team on the computerisation project. The respondent has not satisfied me that there is not a position that is available or may be created to utilise the applicant’s skills. The Act does not require the Court to specify that position.
Sub-paragraph 170EE(1)(a)(ii) of the Act provides that the court may make an order requiring the employer to reinstate the employee by:
“appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination”.
In Anthony Smith (above) at 244, the Full Court said:
“The sub-paragraph [s170EE(1)(a)(ii)] empowers the Court to require the employer to reinstate the employee by appointing him or her "to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination". This might be a specific position, the availability and suitability of which is revealed by the evidence. On other occasions, the Court will not specify a particular position. Provided that the Court is satisfied that reinstatement is practicable and appropriate, it is open to the Court to make an order in terms of para.(a)(ii), leaving it to the employer to choose the position and to comply with the Court's order to provide terms and conditions that are no less favourable than those on which the employee was employed immediately before the termination. If this course is taken, the employer may select an existing position, or he or she may create a new position for the purpose. If the latter, contrary to the submission of counsel for the employer, it will not be to the point that, in the absence of the order, the employer might not have created the position. We appreciate that creation of a new position may occasion a cost, or other disadvantage, to the employer. Where there is evidence that this will be so, that evidence may be relevant on the issues of practicability and appropriateness. But it would be contrary to principle to treat such evidence as necessarily determinative. The occasion for the order arises because the employer has acted unlawfully in terminating the employee's employment. A reinstatement order is akin to an injunction compelling a wrong-doer to restore the position of the innocent party. In considering whether to grant an injunction, a court will always take into account the consequences of an order to the wrong-doer but the existence of adverse consequences has never been regarded as excluding the possibility of an order being made.”
Those comments are applicable here. Such an order was also made in Mitchell-Collins (above), APESMA (above), Kozelj (above) and Yew v ACI Glass Packaging Pty Ltd (unreported, Industrial Relations Court of Australia, Wilcox CJ, 11 December 1996). There is no reason why, in all the circumstances, the respondent should not choose the position to which the applicant is to be reinstated, whether it be within the purchasing division or elsewhere.
There will be an order that the applicant be reinstated to a position with the respondent on terms comparable to those he held on 16 December 1996. There will be orders to maintain his continuity of service. The respondent will also be ordered to reimburse the applicant for remuneration lost, after taking into account the amounts that the applicant has received, and the amount of his earnings to the date of reinstatement.
Associated jurisdiction claim.
My decision to order reinstatement makes it unnecessary for me to consider the alternative claim by the applicant in the court’s associated jurisdiction that the respondent failed to give the applicant reasonable notice of the termination of his employment. It is sufficient for present purposes to note that it is very strongly arguable that the five weeks pay in lieu of notice was unreasonable: Mitchell-Collins (above); Fryar (above); Westen (above).
ORDERS:
The court declares the respondent has breached s170DE(1) of the Act;
The applicant within seven days be reinstated to a position with the respondent on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment;
The respondent for all purposes is to treat the applicant as continuously employed from the date of termination until the date of reinstatement;
The respondent pay to the applicant the remuneration lost because of the termination after taking into account amounts already paid and the applicant’s earnings.
Liberty to apply.
I certify that this and the preceding nineteen (19) pages are a true copy of the reasons for decision of Murphy JR.
Associate: KAREN HALSE
Dated: 24 JUNE 1997
APPEARANCES
Counsel appearing for the applicant: MR BRIAN LACY Solicitors for the applicant: A J MACKEN & CO Counsel appearing for the respondent: MR FRANK PARRY Solicitors for the respondent: FREEHILL HOLLINGDALE & PAGE Dates of Hearing: 10 & 11 JUNE 1997 Date of Judgment: 24 JUNE 1997.
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