Masters v Local Boys Ltd
[1996] IRCA 365
•14 August 1996
DECISION NO: 365/96
C A T C H W O R D S
INDUSTRIAL LAW - Termination of employment - Abandonment - temporary absence because of illness or injury - Compensation for Distress - Damages for stress flowing from breach of employment contract - Exacerbation of psychiatric illness - Reasonable Notice - Expenses - no valid reason for termination - reasons for termination included temporary absence from work because of illness - termination harsh, unjust and unreaonable - inadequate performance - future duration of employment likely to be short - reinstatment impracticable - no compensation for distress - no damages at common law for distress or exacerbation of psychiatric illness.
Industrial Relations Act 1988 ss.170DC, 170DF, 170EA, 170EE
CASES:
Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199
Ellis v Conaust Ltd (IRCA) (26 September 1995) Decision 529/95
Grout v Gunnedah Shire Council (1994) 1 IRCR 143
Johns v Gunns Ltd (1995) 60 IR 258
Aitken v The Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (IRCA) 7 August 1995, WI-320/1994, Decision 352/95
Jones v Armas Nominees Pty Ltd trading as Network Rent A Car (IRCA) VI-1245/94, Decision 151/94
Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67
Baltic Shipping Company v Dillon (1993) 176 CLR 344
JENNIFER MASTERS -v- LOCAL BOYS PTY LTD
No. VI-4107 of 1995
Before: Ryan JR
Place: Melbourne
Date: 14 August 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-4107 of 1995
B E T W E E N :
JENNIFER MASTERS
Applicant
AND
LOCAL BOYS PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Ryan 14 August 1996
THE COURT ORDERS:
That the Respondent pay to the Applicant within 21 days compensation in the sum of $4,700.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-4107 of 1995
B E T W E E N :
JENNIFER MASTERS
Applicant
AND
LOCAL BOYS PTY LTD
Respondent
Before: Ryan JR
Place: Melbourne
Date: 13 August 1996
REASONS FOR JUDGMENT
THE CLAIMS
The sequence of events is as follows:
on 11 July 1994 the Applicant was employed by the Respondent as a “tea lady”
the Respondent admits that the Applicant’s employment was terminated on 20 July 1995 (see para 10 of Defence filed 17 November 1995)
on 20 July 1995 the Respondent delivered by certified mail a letter addressed to the Applicant and marked for her attention and which reads as follows:
“as you have been absent for a period in excess of 48 hours, without any support of medical advice, or contact, we are writing to inform you that the position of tea lady for our company, is no longer available to you
Any monies owing to you can be collected at our office at 1 Watt Road, in person.
Yours sincerely
J K Edwards
Director”on 3 August 1995 the Applicant’s solicitors filed a claim of unlawful termination of employment seeking reinstatement and/or compensation
on 8 August 1995 the Respondent filed a notice of employer’s appearance
on 4 September 1995 the Court received a certificate from the Australian Industrial Relations Commission indicating that the Commission had been unable to settle the matter by conciliation (a conciliation conference having been held on 29 August 1995)
by facsimile dated 1 September 1995, but sent on 4 September 1995, Mr Bornstein of Slater and Gordon, the Applicant’s solicitors, communicated with a Mr Mark Farrelly of Richmond and Bennison, solicitors acting for the Respondent, advising that the Applicant would be seeking to amend her application to join to it a claim for damages for breach of contract (see paragraph 4 of Mr Bornstein’s affidavit sworn 6 October 1995)
this facsimile letter also indicated that the Applicant proposed to join an application pursuant to S178 alleging multiple breaches of the Federal Clothing and Textiles Award and seeking monetary penalties in respect of the failure to pay the Applicant a travelling allowance. The letter also confirmed that the Applicant alleged multiple breaches of the Industrial Relations Act including S170DC, S170DE, S170DF(1) and S170DB and that the Applicant was seeking compensation for exacerbation of her depressive illness as a result of her termination by the Respondent
by letter dated 22 September 1995 Mr Farrelly advised Mr Bornstein that he would raise at a Directions hearing his expectation that any application to join a claim at common law for damages for breach of contract should be made by way of notice of motion. Mr Farrelly also suggested that any application pursuant to S178 should be made by way of notice of motion with supporting documentation
at a Directions hearing before me on 26 September 1995 the Applicant’s solicitor sought leave to file and serve an amended application incorporating the Applicant’s claim for damages for breach of contract and to amend the application from one for reinstatement and/or compensation to an application for compensation only. I indicated that I was not prepared to amend the application to incorporate a claim for damages for breach of contract and that such an application should be made by notice of motion. However, I amended the application to a claim for compensation only and fixed the matter for trial on 15 and 16 February 1996 with mutual discovery of documents upon which the parties proposed to rely seven days prior to trial.
on 30 October 1995 North J granted a Motion filed by Notice whereby the Applicant sought joinder of the claim for damages to the application pursuant to S170EA and directed that both applications be heard on the dates already set down for the hearing of the application pursuant to S170EA. Other orders were also made in respect of a statement of claim, a defence and further and better particulars.
STATEMENT OF CLAIM AND DEFENCE
The Respondent admits that in July 1994 agreement was reached between the Respondent and Applicant whereby the Respondent agreed to employ the Applicant and the Applicant’s duties were to include duties of “tea lady”. The Respondent does not admit claims made by the Applicant that the contract of employment was partly in writing (by way of payslips), partly oral (consisting of conversations between the Applicant and Ms Jan Edwards, a director of the Respondent company), and partly to be implied to give efficacy to the contract by operation of law.
The Respondent conceded that it was a term of the employment agreement that the Applicant’s duties would include the duties of “tea lady”. The Respondent denies a claim of the Applicant that it was a term of the contract that the Applicant would provide her services on a full time basis as “tea lady” and also denies that the Applicant provided such services in accordance with the contract from 11 July 1994 until the date of her termination.
The Respondent admits that the Applicant was required by the Respondent to undertake travel on a daily basis during working hours and in the course of her employment with the Respondent using her own motor vehicle.
The Respondent denies that it was a term of the contract that the Respondent would pay the Applicant petrol money in respect of travel undertaken by the Applicant using her own motor vehicle and in the course of her employment.
The Respondent denies that it was a term of the contract that the Respondent could terminate the employment of the Applicant by providing the Applicant with reasonable notice of termination or payment in lieu of it.
The Respondent concedes that it was a term of the employment agreement that the Applicant would be entitled to be paid annual leave at the rate of four weeks for each completed year of service but denies that it was a term of the contract that the Respondent would pay the Applicant four weeks annual leave per year.
The Respondent denies that it was a term of the contract that upon being terminated by the Respondent, the Applicant would be paid all outstanding petrol allowance, annual leave payments and payments in lieu of notice. The Respondent asserts that it has provided to the Applicant any annual leave entitlements accrued by the Applicant and that following the termination of the Applicant’s employment the Respondent made payment to the Applicant which included, inter alia, a payment equivalent to two weeks normal wages.
The Respondent concedes that the Applicant’s employment was terminated on 20 July 1995 but denies that the Applicant’s employment was terminated in breach of the contract of employment.
The Respondent denies that it has withheld outstanding annual leave payments, notice payments and petrol allowance.
The Respondent denies that by reason of the matters set out by the Applicant in a statement of claim filed on 31 October 1995 that the Applicant has suffered loss and damage, including loss and damage arising from the exacerbation of an aggravation to a pre-existing psychiatric illness. The Respondent also denies that by reason of the matters set out in the Applicant’s statement of claim that the Applicant has suffered loss arising from the mental distress caused by the termination of her employment.
The Court notes that in his affidavit of 6 October in paragraph 6 Mr Bornstein states:
“The S170EA application before the Court includes a claim for reinstatement and/or compensation. I am now instructed to amend her S170EA application so as to make clear that she is now seeking compensation, not reinstatement, as a remedy.”
In fact, the application had been so amended at the Directions Hearing on 26 September at the request of the solicitor then appearing for the Applicant.
However, at the commencement of the trial Mr Bornstein announced that the Applicant was once more seeking reinstatement. Counsel for the Respondent described the initial claim for reinstatement, the withdrawal of that claim and the renewal of that claim as “blowing hot and cold” and as “a tactical claim for reinstatement”. The Court simply notes that reinstatement is the primary remedy if unlawful termination is found.
The Court also notes that no breach of award claims were made or pursued directly pursuant to S178, although the breach of contract claim includes claims for:
(a) approximately $800 being two weeks annual leave
(b) approximately $1600 being four weeks in lieu of notice
(c) $324 being outstanding petrol allowance
(d)damages for breach of contract in an amount not exceeding $10,000 (Mr Bornstein’s affidavit 13 October 1995)
Finally, the Court notes that the Applicant’s pre-existing psychiatric illness is claimed to be:
(a)severe depression and anxiety for which the Applicant was treated during the period 17 July 1995 to the date of termination, and for which the Applicant continued to be treated
(b)depression and anxiety exacerbated and aggravated as a result of the Applicant’s summary termination in breach of her contract of employment
THE APPLICANT’S EVIDENCE
(a) The Nature of the Job
The Applicant’s evidence included the following:
on Thursday 7 July 1994, in response to an earlier inquiry made by the Applicant, the Respondent’s “manager” (i.e. the Director, Ms Jan Edwards) arranged an interview on Saturday 9 July. At the interview Ms Edwards and the Applicant discussed:
(a) washing dishes
(b) cleaning toilets
(c)“running...by car from one factory in Watt Road, Mornington to another factory in Latham Street, Mornington....about 1 km away”
at the interview on 7 July the Applicant did not discuss any requirements of notice of termination or rates of pay or, according to her, any other terms and conditions of employment. Indeed, the Applicant stated that she just wanted a full-time job and understood that this was a full-time job
the Applicant began her duties as a tea lady on 11 July 1994 and understood the hours to be 7:30 am to 3:30 pm but finishing every second Friday at midday
she described her duties as including:
(a) washing dishes
(b) cleaning toilets and tables
(c)washing and drying tea towels which she took home at the request of Ms Edwards
(d)“running around in my car to do grocery shopping for coffee and tea and cleaning goods...with reimbursement for the goods but not for petrol”
(e)“every day I travelled by car from the factory in Watt Road to the factory further away...at 3:00 pm...and...once a week shopping 1km away”
(b) Conflicting Evidence
In examination in chief the Applicant gave some responses which conflicted with other responses given in evidence in chief. In cross-examination the Applicant gave further conflicting or at least confused evidence. By way of example, the Applicant initially denied there were any discussions with management about performance during employment and denied any complaints were made by Ms Edwards and stated:
“Jan Grant complained about toilets not being cleaned properly...I cleaned once a day...Jan Edwards said ‘look Jenny the toilets are not being cleaned, could you clean them twice a day?...I cleaned them twice a day...this conversation was late in 1994...six months before the termination of employment...there were no warnings, verbal or written, from Jan Edwards”
Later in cross-examination the Applicant gave the following evidence:
“I got complaints but it was because I was not shown properly by the (previous) tea lady beforehand...the complaints lasted a couple of weeks...Jan Edwards only said about the one incident with the toilets...on at least half a dozen occasions Jan raised not cleaning the toilets properly...when Jan Grant complained, Jan Edwards raised about the ‘S’ bend but she only raised the toilets once and that was in relation to the Grant incident...I do not remember Jan pointing out dust...I do not recall Jan saying that I did not empty the sanitary buckets...Jan raised that the floor was dirty but this was probably just after morning tea had finished...yes she did raise it a number of times....yes I am saying there was only one complaint....the floors were not a complaint....well, yeah, she did say the floors were not good enough and that they needed to be cleaned...yes, I only cleaned the floors once a week....Jan was saying I needed to clean them every day...yes I knew they (the women) were complaining...there was too much cleaning for one person...you needed two cleaners...yes the floor was not cleaned properly...there was a complaint about the standard of cleanliness of the tables in the canteen... only a guy in the sewing room complained, he swore at me, Jan was away that day...yeah, sugar could be spilt and collect on the tables...I agree an accumulation of stains can discolour cups. I was scrubbing the cups and putting bicarbonate of soda in the cups especially Jan Edward’s cups. I used to scrub those cups. The manager’s cups were sitting in the office for hours without me knowing about it...there were carpets in the toilet. I had to throw them out. They were disgusting. They had probably been in there for years. ....Nick Giannopoulos complained about sugar stuck to a table. There was a little bit there. There was so much dust...”
THE EVENTS LEADING UP TO ENDING OF THE EMPLOYMENT AND THE ABSENCE FROM WORK FROM MONDAY 17 JULY 1995 TO MONDAY 24 JULY 1995
The Applicant states that during her employment she had taken some sick leave but did not remember how many days she had taken. She said it “could have been one or two days” and “that on a couple of occasions” that she “could have taken two days sick leave” but that she always provided medical certificates and Ms Edwards did not complain about her absences or say anything about the medical certificates.
Referring to either the weekend of Saturday 15 July and Sunday 16 July 1995 or to Friday 14 July the Applicant gave evidence as follows:
“I just had a migraine...I was feeling sick...nauseous...I have had migraine headaches before but not this bad. I had a migraine headache...the day before I took leave I was suicidal...it just came on suddenly...I had not been sleeping for six months beforehand...I did not consult a doctor... I just thought I would get over it...I did not know what was wrong...I had not felt suicidal before”
In reference to “the day before I took leave I was suicidal” could be a reference to Friday 14 July and to her last day at work before the absence of five days between Monday 17 and Friday 21 July. The Applicant suggested in her evidence that she was so unwell when she came home from work (presumably on 14 July) that she had to lie down and spent the weekend lying down. On the other hand, the reference could be to Sunday 16 July. It does not matter much. Her evidence is clearly that she was in considerable distress by Sunday 16 July and felt suicidal on or before that date.
Her evidence continues:
“on the Sunday (16 July) I was on the couch. I slept all day. On Monday 17 July I felt upset. I got up. I just could not do anything. All I wanted to do was put a gun to my head. That is how I felt. I slept that morning. I rang my future mother-in-law (i.e. Mrs Audrey Gains). I asked her could she ring Berkeley Fashions (i.e. the Respondent, Local Boys Pty Ltd trading as Berkeley Fashions). I asked her to say that I could not come in and that I had a migraine. She said she would. She rang back and said that that would be OK. I did not tell her I felt suicidal because I did not want to worry her. I have known her for eleven years.
I visited a doctor that day. He gave me sleeping tablets and told me to go home and rest. He prescribed panadine forte. I did not ask for a certificate that day. I did not get a certificate that day.
During the following few days I felt worse. I lay on the couch asleep all day. I could not sleep at night. I had not slept at night for six months.
On Wednesday I was on the couch. I went to Dr Rope. He gave me an injection. I said to the doctor that I felt sick and felt suicidal and had migraine and that I could not sleep. I asked for a certificate. He used the words ‘major depression’. He gave me Prozac tablets.
On the Wednesday (19 July) my mother-in-law came and rang work from my home. I was in the lounge room. I said I felt sick. She said that I would not be in for the rest of the week. It was a short conversation. I asked her what they (the Respondent) said and she said ‘it is OK’.
On Thursday (20 July) I was on the couch. Later that day in the afternoon I went to the letterbox and there was a note to pick up security post. On Friday (21 July) I was on the couch in the morning. I drove to the Mornington Post Office in the afternoon and picked up the letter. When I opened the letter (Exhibit A2) I felt really upset and sick inside because I was shocked. I was not expecting this letter. I tried to ring Berkeley Fashions at 2:30 pm and then realised it was a short Friday - a 12 midday finish.
On Monday 24 July 1995 I rang Jan Edwards. I said I had received the letter. I said I had a certificate. I said I was suffering from major depression. I did not have to tell her that but I did. I said ‘do I have to pick up my pay or will it go into the bank’. She said ‘you will have to pick up your pay and I did’.
About 10:00 am I went to Berkeley Fashions. Jan was outside having a cigarette. She said ‘where are the towels?’ I said ‘they are at home’. She said ‘go and get them or I won’t pay you’.
I went home and got the towels. I waited in the tea room. Jan Meyer handed over a payslip and cheque (payslip is Exhibit A3).
I never had an opportunity to show a medical certificate. I never brought it with me. I had told Jan that I had the medical certificate. She said come and pick up your pay. I knew it was the end of my employment and I knew that from the letter as well. I intended to go back to work on the Monday morning. I would want to get the job back if I was given the opportunity.
I am continuing to get medical advice on depression. I still get symptoms probably once a month. I cannot really say because attacks come and go quickly.
I never asked for reimbursement of petrol expenses.
I saw the Employment Separation Certificate (Exhibit A5) when I went in on Monday 24 July to pick up my pay.”
The Court notes that the Employment Separation Certificate was signed on 24 July 1995 and is stamped “Local Boys Pty Ltd, 1 Watt Road, Mornington”. The certificate:
indicates that employment was terminated due to unsatisfactory work performance
describes the reason for unsatisfactory work performance as “long absent without notice”
records annual leave payment on termination as $293.37 for 3.5 days
records a net final payment (including annual leave) of $201.31
Exhibit A3 is the final payment for the period ending 24 July 1995 and it is stated to be 29.92 hours at $9.80 per hour, (i.e. $293.37) less tax at 31.4%, (i.e. $92.06) thus giving a net payment of $201.31. Exhibit A3 indicates that the Respondent calculated the payment due to the Applicant at 67.92 hours but initially deducted 38 hours because the Applicant gave “no notice or reason for absence”.
The letter of termination (Exhibit A2) is dated 20 July 1995 and is on the letterhead of Berkeley Fashions Pty Ltd. The letter is addressed to the Applicant and reads as follows:
“As you have been absent for a period in excess of 48 hours, without any support of medical advice or contact, we are writing to inform you that the position of tea lady for our company, is no longer available to you.
Any monies owing to you can be collected at our office at 1 Watt Road in person.
Yours sincerely
J K EDWARDS
Director”
On 5 September 1995 the Respondent made an additional termination payment. A letter detailing the payment is part of Exhibit R1 (document 5). The letter reads as follows:
“5.9.95
3 Mundoora Crt,
Mornington, Vic, 3931.
Dear Ms Masters,
RE: ADJUSTED TERMINATION PAYMENT
Please find enclosed cheque in the sum of $766.81 representing additional payment to termination pay dated 24/07/95. The additional sum is calculated as follows:
-38 hours payment (initially deducted from termination pay dated 24/07/95)
-Further payment equal to 2 weeks pay in lieu of any requirement to give notice.
Total sum $1,117.80 less tax @ 31.4% $350.99 leaving a nett sum of $766.81.
Further we confirm that accrued holiday pay (75.92 hours) was correctly calculated and paid in the termination payment of 24/07/95.
Yours faithfully,
JAN EDWARDS.
DIRECTOR.”
The Court notes that the adjusted and increased termination payment provided a payment equivalent to 3 weeks at 38 hours a week at a gross weekly rate of $372.36.
The Court also notes the evidence of Ms Edwards that the Applicant “was paid $372.00 gross per week...the same wage as a machinist and $30.00 above ‘the award for a tea lady’...knowing that she (the Applicant) had extra things to do running around in the car”.
THE TELEPHONE CALLS
Mrs Audrey Gains gave evidence which included the following:
“Jenny (the Applicant) rang up to say she was sick. This was early in the week before she was dismissed. I went down and saw her and came home again (at this stage Mrs Gains indicated that she telephoned the Respondent). I spoke to a female. I just said Jenny Masters will not be in and is not well. She was quite nice about it. She said ‘thankyou’.
I went to Jenny’s place on the Wednesday or Thursday. She was still sick. She was white like my dress. I spoke to a woman on this occasion. I said, ‘Jenny would not be back at work this week and that she was sick’. The woman was quite nice. She said ‘thankyou’. It was in the afternoon. The day Jenny went to the doctor. If Jenny went to the doctor it would have been Wednesday.
The next week Jenny came to my place, she was upset and crying. She said that she had been sacked.”
In cross-examination, Mrs Gains gave evidence which included the following:
“I made the second telephone call after Jenny had gone to the doctor’s. I believe it was Wednesday if that was when she went to the doctor. It was in the afternoon. I rang at some time between lunch and 5:00 pm. It was after lunch but before knock off time. I think it would have been between 1:00 and 4:00 pm. I spoke to a female. I am not sure who I spoke to. I could not say it was a different person to the woman I spoke to on Monday. It was a girlish voice on the Monday. I think I said I was Jenny’s mother-in-law, Mrs Gains.”
Counsel for the Respondent pursued Mrs Gains quite vigorously in relation to the second telephone call which the Respondent has stated was never received. When cross-examination began Mrs Gains firmly maintained that she had made a second phone call to the Respondent on behalf of the Applicant. However, at the conclusion of the cross-examination she moved back from that firm position and concluded with the following statement:
“I am pretty sure I did (i.e. make the second call to the Respondent)... because Jan asked me to.”
Jan Elizabeth Meyer, Administration Manager with the Respondent gave evidence that on Monday 17 July at about 7:00 am she received a telephone call from a woman who identified herself as the Applicant’s mother-in-law. She states that this woman reported that the Applicant had a migraine and would not be at work that day. She states that she thanked the lady for calling and asked her to keep them (i.e. the Respondent) posted. She also states that she immediately buzzed Ms Edwards on an intercom and advised her. She states that she received no other calls during that week in relation to the absence of the Applicant.
Rene Sands, Receptionist, gave evidence that she normally answers inward telephone calls and that if she is at lunch or otherwise engaged the telephone would normally be answered by Ms Edwards, Ms Meyer or “Leonie” from the cutting room floor.
It is possible that the telephone call which Mrs Gains is “pretty sure” she made “between 1 pm and 4 pm” on Wednesday 19 July was made and answered by a person who did not pass the message on to Mrs Edwards. However, the weight of the evidence suggests that it is unlikely that such a call was made. Mrs Gains is very positive and clear in her recollection of the call on Monday 17 July. Ms Sands has confirmed she took that call. Ms Edwards has confirmed it was passed on to her. Ms Meyer has also confirmed that she was aware of that call. Mrs Gains is much less certain about the call on Wednesday 19 July. Furthermore, the Court has noted a number of inconsistencies in the Applicant’s evidence and has concluded that, on a balance of probability, the second telephone call was not made.
If it had been made it would be natural and expected that the Applicant would have referred to the telephone call when she spoke to Ms Edwards by telephone on Monday 24 July and when she saw Ms Edwards at about 10 am. However, the Applicant does not claim to have raised this matter with Ms Edwards on either occasion and this would be an extraordinary and inexplicable omission if her mother-in-law had made the second telephone call on Wednesday 19 July. In fact what the Applicant admits she said on 24 July is that she had been at the Frankston Hospital and the Respondent’s witnesses claim the Applicant claimed she had been in the hospital for three days, (i.e. an inpatient in the hospital). The Applicant’s claims about the second telephone call and many other inconsistencies in her evidence reflect adversely on her credit. The evidence of Respondent witnesses is preferred wherever there is a conflict in the evidence.
RESPONDENT’S EVIDENCE ON PERFORMANCE
Ms Edwards, the Respondent’s Managing Director, gave evidence which included the following:
“floors were not mopped, toilet bowls were not cleaned, there were cobwebs everywhere...I raised these matters with Jenny five or six times in 12 months....her performance never improved...she would say she would try to do better.
I took her to the toilets, probably only once or twice. I spoke to her on other occasions in the canteen.
Before the canteen was always very dirty especially around the sink. I probably did not complain to Jenny as much as they (the female machinists) did to me.”
In cross-examination, Ms Masters conceded that:
nothing was ever recorded in writing in respect of the Applicant’s performance
no timetable was formulated for the Applicant
the timing of the cleaning duties was at the Applicant’s discretion
she (Ms Masters) “believed” that the Applicant was adequately trained
the Applicant was not supervised in the performance of her duties
In cross-examination Ms Masters claimed that she counselled the Applicant “several times” about the possibility of “losing her job” but, when pressed to give examples of how such counselling occurred, Ms Masters said:
“I said I needed someone the whole time and that the job had to be done properly”
If that was the substance of the counselling, it fell far short of adequate counselling. It would have been what the Chief Justice described in Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199 at 210 as “a mere exhortation to improve”. The context of that remark at 210 was as follows:
“The employee is to be given the opportunity to defend himself or herself ‘against the allegations made’; that is, the particular allegations of misconduct or poor performance that are putting the employee’s job at risk. S170DC(a) is not satisfied by a mere exhortation to improve.”
Jan Elizabeth Meyer, Administration Manager, gave evidence which included:
a description of the importance of a dust free environment for computers housed in the office at Latham Street
a claim that the Applicant was required to clean the office at the Latham Street factory
a statement that the Applicant did not clean “up to expectations”
requests “on occasion” from Ms Meyer to the Applicant to vacuum the office
claims by Ms Meyer that:
(a)there were no problems with cleaning with the cleaning ladies who proceeded and came after the Applicant
(b)the toilets were “not up to scratch”
(c)the kitchen “was not as clean as it should have been”
(d)“the utensils were not up to scratch” and were “generally shabby”
The Court notes that there is no evidence of Ms Meyer counselling, reprimanding or warning the Applicant.
Rene Sands, Receptionist, gave evidence that:
the toilets smelt of urine and were not as clean when the Applicant was responsible for them as they had been prior to the employment of the Applicant
the towels in the toilet area were not clean and she (Sands) would not use them
at times there was spilt sugar stuck to the tables in the canteen
Again, there is no evidence that Ms Sands counselled or warned the Applicant or that she had any responsibility in respect of supervision of the Applicant.
ABANDONMENT
The Court finds that the Applicant did not abandon her employment. The concept of abandonment embraces conduct by an employee which repudiates the employment contract, Ellis v Conaust Ltd (IRCA) (26 September 1995) Decision 529/95, No. VI-2211 of 1995 at 3. If the Applicant here repudiated the contract by being absent for more than 48 hours without authorisation, and I doubt that the Applicant by that action did repudiate the contract, nevertheless the Respondent in accepting the repudiation, (if it was a repudiation), undertook an act which terminated the Applicant’s employment. The step or steps “that effectively terminated the employment or purported to do so were taken by” the Respondent; Grout v Gunnedah Shire Council (1994) 1 IRCR 143 at 161.
TERMINATION BECAUSE OF TEMPORARY ABSENCE - SECTION 170DF(1)(a)
This is often a difficult area for an employer when a former employee asserts that employment was terminated by that employer for a reason or reasons including temporary absence from work because of illness or injury.
“The Respondent has to establish a negative, namely that the reasons for dismissal did not include the reason that (the Applicant) was temporarily absent from work because of injury. A mere denial may not be sufficient. All the facts and circumstances of the case have to be considered.”
Johns v Gunns Ltd (1995) 60 IR 258 at 268.
The Applicant’s solicitor took Ms Edwards to Clause 19(3) of the Clothing Trades Award which relevantly reads:
“The employee shall prove to the satisfaction of the employer or, in the event of a dispute of a board of reference, that he or she was unable on account of such illness or injury to attend for duty.”
Ms Edwards was taken to Clause 19(e) in the context of her evidence in which she was explaining the first paragraph of her letter of termination of 20 July 1995 which reads:
“As you have been absent for a period in excess of 48 hours, without any support or medical advice, or contact, we are writing to inform you that the position of tea lady for our company, is no longer available to you.”
Ms Edwards did not refer to Clause 19(e) or to any specific clause of the Clothing Trades Award but she did refer to her understanding that the Award required notice of sick leave within periods of absence which she variously put at 24 hours or 48 hours or 72 hours. Ms Edwards concedes that she was notified of the Applicant’s absence because of illness on Monday 17 July and there is no doubt that in the letter of termination on 20 July Ms Edwards was relying for termination of the Applicant on absence “for a period in excess of 48 hours without any support of medical advice, or contact”. This is confirmed by the statement in the employment separation certificate on 24 July (Exhibit A5) which reads “long absent without notice”. The Court agrees with the Applicant’s solicitor that there is a compelling inference that one of the reasons which led Ms Edwards to terminate the employment was the Applicant’s continued absence on 20 July when Ms Edwards had been informed of her illness on 17 July. Certainly the Respondent has failed to prove to the satisfaction of the Court that the reasons for dismissal did not include temporary absence from work because of illness or injury.
PERFORMANCE
In the circumstances it is not necessary to determine whether the Respondent relied on inadequate performance as purportedly a valid reason for termination. The Respondent’s evidence on performance has already been covered in some detail. The Court doubts that the Respondent relied at all on performance as a ground of termination and clearly did not give the Applicant adequate counselling or warning and did not provide the Applicant with an opportunity to respond to any allegations which may have been made in respect of inadequate performance. Even if the Court was held to be wrong in finding that the Respondent has breached S170DF(1) this termination was harsh, unjust and unreasonable pursuant to S170DE(2) and was unlawful and without valid reason pursuant to S170DE(1).
COMPENSATION FOR DISTRESS
In the event that reinstatement is found impracticable, the Applicant seeks compensation including compensation for distress.
The solicitor for the Applicant relies on Aitken v The Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (IRCA) 7 August 1995, WI-320/1994, Decision 352/95 and Jones v Armas Nominees Pty Ltd trading as Network Rent A Car (IRCA) VI-1245/94, Decision 151/94.
In Aitken a first instance award of compensation of $7,000 was confirmed. The award was made under S170EE for contravention of S170DE. On review the relevant circumstances were found to include underpayment of the sum to be paid in lieu of notice, failure to pay an appropriate redundancy payment and the anguish and injured feelings occasioned to the employee by the circumstances and consequences of his termination. The Applicant gave unchallenged evidence that he found the sudden termination of his employment and the period thereafter very stressful and upsetting.
In the unreported judgment at 8, 10 and 11 Lee J commented:
“It is well known that the circumstances and manner of termination of an employee’s services can have a substantial effect upon an employee’s self-esteem and confidence and impact adversely upon the employee’s ability to secure further employment. It is, therefore, considered to be in the public interest to ensure that employees whose services are terminated are treated in a fair and reasonable manner enabling them to retain confidence in their self worth and reducing the prospect that they will have cause to rely on relief of payments from public revenue.
In some cases consequences of emotional stress and financial embarrassment are an unavoidable result of the termination of services and if the termination is effected not only for a valid reason but in compliance with requirements of the Act such consequences by themselves will not make an otherwise proper termination harsh, unjust or unreasonable.
It was quite inappropriate for the intended severance payment to have been subjected to such regular reduction and the purpose of the entitlement frustrated.
The compensation to be ordered to be paid under S170EE(2) is such amount as the Court thinks appropriate. It is a statutory remedy for which no criteria or assessment or prescribed, other than a requirement in S170EE(3) that the Court have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment and subject to the limit set in that sub-section.
Division 3 of the Act provides the context in which S170EE is to be construed. The contract indicates that the Act is concerned, inter alia, with the protection of the dignity of employees, a breach of the Act in respect of which S170EA provides a right to seek redress. S170EE provides an entitlement to receive compensation (which) may be said to have some of the characteristics of a statutory tort. Therefore principles relevant to the assessment of damages in tort may provide assistance to assessing the compensation to be paid under S170EE(2) in particular cases. That is to say, it may be appropriate to include in the measure of reasonable compensation to be paid pursuant to S170EE a sum sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment.”
The circumstances in Aitken are readily distinguished from the circumstances in this case. Aitken was a review of a first instance decision where the parties agreed that any findings of fact made by the Judicial Registrar were accepted by the parties unless Counsel submitted otherwise. No adverse findings were made in respect of the credibility of Mr Aitken. The case involved redundancy, an inadequate severance payment and an underpayment in lieu of notice. None of these circumstances in Aitken apply in this case.
Like the Judicial Registrar in Aitken, and unlike the reviewing Judge in Aitken, I have had the advantage of assessing the weight of the evidence and observing the witnesses. Unlike Aitken I have made certain adverse findings in respect of the credibility of the Applicant and her mother-in-law. On the basis of that evidence, and in the absence of independent evidence in support, I am not satisfied that the Applicant suffered distress, disappointment and loss of self-esteem as a result of the termination, or that any distress, disappointment or loss of self-esteem so suffered was of a kind which warranted, in the circumstances of this case, inclusion as a specific element and component in an award for compensation.
The Court observes that the circumstances in Jones v Armas can also be distinguished. The Court particularly notes that in Jones the Judicial Registrar relied not only on the evidence of Ms Jones in respect of the stress occasioned by her treatment as an employee during the course of the employment and on the circumstances surrounding her termination but also on the evidence of a counsellor. Again, in Jones, there were no adverse findings in respect of the credit of the employee or the counsellor.
DAMAGES - PERSONAL INJURY - EXACERBATION OF ILLNESS - DISTRESS
At common law and for breach of contract the Applicant also seeks damages for loss and damage allegedly arising from the exacerbation of an aggravation in a pre-existing psychiatric illness and for loss allegedly arising from mental distress caused by the termination of her employment.
The Applicant relies on Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67. In that case Mr Grout submitted that having regard to the judgments of the members of the High Court in Baltic Shipping Company v Dillon (1993) 176 CLR 344 damages could be awarded for the distress caused by the Respondent’s repudiation of the contract. In Grout Moore J commented:
“If the applicant was thereby suggesting that damages could be awarded for what might be described as mere distress or disappointment or humiliation, then it is not apparent that the members of the High Court in Dillon were expressing the view that Addis v Gramophone Company Ltd (1909) AC 488 is no longer to be accepted as correctly stating the common law position as it concerns damages for wrongful dismissal.
The general principles reflected in Addis, are subject to accepted exceptions which include an entitlement to damages for distress associated with physical injury resulting from a breach of contract. Physical injury may be taken to include psychiatric illness: See Mount Isa Mines Ltd v Pursey (1970) 125 CLR 383 and Dillon at 362 and 405.
There is no authority of which I am aware in which damages have been awarded where wrongful dismissal has caused or has exacerbated a psychiatric illness of a dismissed employee. That may be because such situations may be rare, unlike situations where an employee felt, as could be expected, anxious and distressed at being wrongfully dismissed. Nonetheless the Applicant is entitled to damages if they are available on this basis at common law.”
In Grout Moore J found that the conduct of the respondent in indicating that it was treating the employment relationship as concluded and in indicating that it was not prepared to have the employment relationship continue and by conduct in maintaining that attitude, aggravated psychiatric illness from which the applicant was then suffering and caused the applicant mental distress.
In this case the Court simply notes that in Grout evidence was given by a treating psychiatrist and by a consulting psychiatrist called by the respondent. No expert evidence was called in this case. No evidence is before me on which I would be prepared to find exacerbation of a pre-existing psychiatric illness. Likewise, the only evidence before the Court of loss allegedly arising from mental distress caused by the termination of the employment is the evidence of the Applicant and her mother-in-law. For the reasons already given the Court does not accept that evidence as acceptable evidence of mental distress caused by the termination of employment.
REASONABLE NOTICE
The Applicant relies on Grout (No 1) and Grout (No 2) in support of her contention that, in breach of contract, the Respondent has failed to provide reasonable notice of termination.
In Grout some of the factors suggesting a lengthy period of notice to be reasonable included the senior management position, the high salary and the employee’s age of 56 years.
Factors which pertain to the employee and which are relevant in assessing the reasonableness of notice include length of service, professional standing, age, qualifications and experience, degree of job mobility and prospective pension or other rights. A list of such factors and authorities supporting their relevance in assessing the reasonableness of notice are recorded in the Law of Employment (3rd Edition) Macken, McCarry and Sappideen at 158. The learned authors comment:
“such a list is not much more helpful than the conventional aphorism that each case in this area will depend on its own facts. But obviously if one has an ‘important’ and ‘high grade’ appointment carrying a large salary and occupied by a long serving employee with but a few years to serve until retirement, a generous period of notice will be required, perhaps nine or twelve months, even more in occasional cases. But in the case of a lowly paid person in a routine job a much shorter period will be held reasonable, especially if the employee has not had a lengthy period of service. A week might still be enough in that case. A non-legal, if, for some, unpalatable, rationalisation of the cases on reasonableness of notice is to say that the higher the job on the socio-economic scale, the longer will be the necessary period of notice. The lower the job, the shorter the notice. As was said earlier, the lesson is to specify the period of notice in the contract when employment commences.”
The Applicant was paid two weeks salary in lieu of notice. The Court:
notes that notice for the position under the Clothing Trades Award was one week
observes that one week’s notice is required under S170DB
finds that reasonable notice for the position was a maximum of two weeks
PETROL EXPENSES
It is fair and reasonable the Applicant should be compensated for the expense of travelling twice every day between the Respondent’s two factories and for using her car to shop for the Respondent once or twice a week. However, the Court notes the evidence of Ms Edwards that the Applicant was paid some $30 a week above what was claimed to be the appropriate rate for her position and this was in part to compensate the Applicant for the use of her vehicle during the course of her employment. No evidence was led by either party as to an award rate for the position but, on the basis of the evidence given, the Court finds that the Applicant’s weekly wage took account of car expenses.
FINDINGS
The Court finds that:
the Respondent terminated the Applicant’s employment
the termination breached S170DF(1)(a), S170DE(1), S170DE(2) and S170DC and was unlawful, harsh, unjust and unreasonable
reinstatement is impracticable
compensation should not include compensation at common law or pursuant to Division 3 of Part VIA for distress or exacerbation of a pre-existing illness
adequate payment was made in lieu of notice and for the use by the Applicant of her motor vehicle in the course of her employment
DURATION OF EMPLOYMENT
Having observed the Applicant and made adverse findings as to her credibility, and having noted that the Applicant’s performance was questionable and her future ability to perform the duties of her position doubtful, I have concluded that her future duration of employment with the Respondent would have been short and possibly no longer than four to six weeks after termination; Nicolson v Heaven and Earth Gallery (1994) 1 IRCR 199 at 213.
COMPENSATION
The Applicant is not in good health. She has experienced difficulty in the past in obtaining employment. At the time of the hearing she had only secured part-time employment. The termination was unlawful, harsh, unjust and unreasonable. Taking these factors into account and balancing such factors with the likely short duration of future employment, for the reasons already given, I have concluded that adequate compensation would be in the order of 16 weeks salary at 30 hours a week at a gross weekly salary of $293.37, i.e. $4, 693.92.
On that basis, I assess compensation at $4,700 and order that the Respondent pay the Applicant compensation in the sum of $4,700 within 21 days of today’s date.
MINUTES OF ORDERS
THE COURT ORDERS:
That the Respondent pay to the Applicant within 21 days compensation in the sum of $4,700.
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 22 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 14 August 1996
Solicitor for the Applicant: Mr Bornstein of Slater & Gordon
Solicitors for the Respondent: Richmond & Bennison
Counsel for the Respondent: Mr J L Bourke
Date of hearing: 15 and 16 February 1996
Date of judgment: 16 August 1996
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