McGill, Alex v Lornden and Associates Pty Ltd

[1998] FCA 1678

FEDERAL COURT OF AUSTRALIA

INDUSTRIAL LAW - termination of employment - demotion or resignation - whether termination at initiative of employer or employee - notice - whether termination for reasons including temporary absence through illness - whether termination for reasons including disability

Workplace Relations Act 1996 ss 170CE, 170CF, 170CFA, 170CK, 170CM, 170CP, 170CQ, 170CR
Industrial Relations Act 1988 s 170EDA
Conciliation and Arbitration Act 1904 s 5

Brackenridge v Toyota Motor Corporation (1996) 142 ALR 99
Strahan v Liquorland (Australia) Pty Ltd (Industrial Relations Court of Australia, NI 1266R of 1995, 6 February 1996, unreported)
Stratton v Illawarra County Council (1979) 2 NSWLR 701
Mohazab v Dick Smith Electronics (No. 2) (1995) 62 IR 200
Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154
Cowell v Irlmond Pty Ltd (1997) 76 IR 352
Jackson v Monadelphous Engineering Associates Pty Ltd (unreported, Industrial Relations Court of Australia, 17 October 1997)
Johns v Gunns Ltd (1995) 60 IR 258

ALEX MCGILL v LORNDEN & ASSOCIATES PTY LTD

BEFORE:      RYAN JR

PLACE:         MELBOURNE
DATE:           23 DECEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 388  of   1998

BETWEEN:	ALEX MCGILL APPLICANT
AND:	LORNDEN & ASSOCIATES PTY LTD RESPONDENT
JUDICIAL REGISTRAR:		RYAN
DATE OF ORDER:		23 DECEMBER 1998
WHERE MADE:		MELBOURNE

THE COURT:

1. Declares that the respondent terminated the employment of the applicant and failed to give the applicant the period of notice required under s 170CM(2) and failed to pay the applicant compensation instead of notice under ss 170CM(4) and (5).

2. Orders that the respondent pay to the applicant the sum of $1288 in compensation in lieu of notice.

3. Declares that the termination of the employment of the applicant by the respondent did not contravene ss 170CK(2)(a) or (f).

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 388 of 1998

BETWEEN:	ALEX MCGILL APPLICANT
AND:	LORNDEN & ASSOCIATES PTY LTD RESPONDENT

JUDICIAL REGISTRAR:	RYAN
DATE:	23 DECEMBER 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE APPLICATION
This is an application by an employee for orders in relation to an alleged unlawful termination of the employee’s employment.  The application has been filed pursuant to Federal Court Rules (order 4 rule 1) and is substantially in accordance with the Form 5 in the First Schedule.

Order 48 rule 4(2) states:

“The application must:

(a)      be in accordance with Form 5; and
(b)      be accompanied by a claim in accordance with Form 5A and

(c)have attached to it a certificate regarding the failure, or likely failure, of conciliation issued by the Australian Industrial Relations Commission under subsection 170CF(2) of the Workplace Relations Act.”

The application (Form 5) in this case states that it is “brought under s.170CP(1) of the Workplace Relations Act 1996 seeking orders under s.170CR of the Act in respect of an alleged contravention of s.170CE(1)(a), s.170CK and s.170CM of the Act.” (emphasis added)

The application (Form 5) did not, in accordance with order 48 rule 4(c) have attached to it a Commission certificate under s 170CF(2). However, such a certificate was filed in Court on 17 September. The certificate is in the following terms:

“In accordance with subsection 170CF(2) of the Workplace Relations Act 1996, the Commission hereby certifies that all reasonable attempts to settle the matter by conciliation have been, or are likely to be, unsuccessful so far as it concerns the grounds set out in s.170CE(1)(a), 170CK and 170CM. (emphasis added)

An assessment of the merits has been indicated to the parties in the following terms:

It is not possible to make an assessment due to a conflict in the factual position and the necessity to hear evidence.”

While the application (Form 5) and the Commission certificate refer to s 170CE(1)(a) I have treated the application as brought under s 170CP(1) for contravention of s 170CK and s 170CM. Any application for relief in respect of termination of employment on the ground that the termination is harsh, unjust and unreasonable and accordingly in breach of s 170CE(1)(a) must be made to and dealt with by the Commission (see s 170CFA(2) and s 170CFA(5)).

The claim for unlawful termination of employment (Form 5A):

• identifies the applicant as Alex Stanley McGill and the respondent as Lornden & Associates Pty Ltd trading as Mobile Curtains and Canvas Repairs

• describes the applicant’s occupation while working for the respondent as “Workshop Manager”

• sets out a period of employment from 5 February 1996 to 11 May 1998

• lists as remedies reinstatement, compensation and “other Penalties see Application (Form 5)”.

In the application (Form 5) the applicant claims:

1. a declaration that the Respondent’s dismissal of the Applicant was in breach of either or both of s.170CK(2)(a) and s.170CK(2)9f) of the Act

2. a declaration that the Respondent failed to pay the Applicant in lieu of notice, contrary to s.170CM of the Act

3. an order pursuant to s.170CR(1)(b) of the Act that the Respondent reinstate in its employment the Applicant

4. an order pursuant to s.170CR(1)(c) of the Act that the Respondent pays to the Applicant an amount of money equivalent to all lost wages from the time of dismissal of the Applicant to the time of reinstatement of the Applicant

5. in the alternative to the orders contained in the paragraphs numbered 3 and 4 above, an order pursuant to s.170CR(1)(c) of the Act that the Respondent pays to the Applicant an amount of money equivalent to 6 months wages, determined by reference to the usual wage of the Applicant on or about the time of dismissal of the Applicant

6. a penalty of $10,000 be imposed on the Respondent on account of the conduct of the Respondent for each breach of s.170CK of the Act, pursuant to s.170CR(1)(a) of the Act

7. an order pursuant to either or both of s.170CR(1)(d) and s.170CR(1)(e) of the Act that such penalty amount be paid to the Applicant to compensate him for the pain, suffering, anxiety, humiliation, stress and in addition, further economic loss caused by the dismissal such that is not compensated for by another order pursuant to the Act

8. an order pursuant to s.170CR(4) of the Act that compensation be paid to the Applicant by the Respondent, in the amount of pay in lieu of notice in accordance with s.170CM.

At the conclusion of the trial counsel for the applicant indicated that reinstatement was no longer sought (paras 3 and 4 above) and that the alternative claim of compensation at the maximum of an amount of money equivalent to six months’ wages was pursued in lieu (para 5 above).

THE EMPLOYMENT AND APPROVED CHANGES IN HOURS OF WORK
The applicant was employed by the respondent for 27 months from 5 February 1996 to 11 May 1998.   He was aged 44 years when the employment ended. For some time he was the leading hand for the respondent in a workshop at K&S Freight, a road freight transport company. The respondent had a contract to provide certain equipment and to repair tarpaulins and other canvas goods used by K&S Freight.  Initially, the respondent had required the applicant, and any other employees working at the workshop under the applicant’s supervision, to work 40 hours a week 8 hours a day 7.00 am to 4.00 pm Monday to Friday with 30 minutes for lunch. At times witnesses referred to the normal hours as 7.00 am to 4.30 pm, 7.30 am to 4.00 pm and 7.30 am to 4.30 pm. Given 30 minutes were taken for lunch and 8 hours were worked a day it does not matter whether the normal hours were 7.00 am to 4.00 p.m. or 7.30 am to 4.30 pm. For the purposes of these Reasons for Judgment the normal hours are recorded as 7.00 am to 4.00 pm.

Some time after the applicant began he adopted a practice whereby he began an hour early Monday to Thursday and took four hours off on the Friday afternoon.  I accept that the Managing Director of the respondent company, David Donovan, knew of this practice and, initially, did not disapprove of it. The rationale presented by the applicant was that a K&S supervisor, Lloyd Crumwell, insisted the workshop be thoroughly cleaned on Fridays beginning as early as 12.30 pm and that the cleaning involved lifting heavy equipment by forklift and hosing out the workshop with a fire hose. It was conceded that once this was done the workshop floor, which was uneven, took several hours to dry to a degree in which it was practicable for work to continue on the repair of tarpaulins and other canvas. The result was that no repair work could be done on Fridays after cleaning began or after cleaning concluded. Another result of these arrangements was that any employee or employees working under the applicant’s supervision would work unsupervised on Friday afternoon, the applicant being absent at that time.  According to the applicant he also asked any other employee of the respondent working in the K & S Freight workshop to work an extra 30 minutes Monday to Thursday so that they could leave at 2 pm on Fridays but still work 40 hours a week.

At some stage, I accept with the initial concurrence of Mr Donovan, the applicant arranged on his own behalf and on behalf of any full-time employees under his supervision, that each employee would work an extra 30 minutes a day five days a week so that the employees, usually two, the applicant and a full-time casual, could have one Monday a month off, a monthly RDO with no two employees taking the RDO on the same Monday.

RESPONDENT REQUESTS EMPLOYEES TO WORK STANDARD, “NORMAL” HOURS
It is not suggested that the applicant or any employee under his supervision failed to work the full 40 hours per week.  However, some five to six weeks prior to the termination of the applicant’s employment, Mr Donovan advised him that he was dissatisfied with the spread of hours then being worked by the applicant and other employees and was particularly dissatisfied with other employees being unsupervised by the applicant on Friday afternoons.  Mr Donovan states that he directed the applicant to revert to a fixed 40 hours a week with 30 minutes for lunch and that these regular hours were to apply to all employees.  It is admitted that the applicant protested that there would be problems because of the cleaning operations on Friday afternoons. The applicant claims that the reversion to the normal hours was never actually settled with Mr Donovan but he admits that thereafter he completed time sheets for himself and any other employee which stated that each employee, including himself, worked the normal hours five days a week.

The evidence is unclear as to whether Mr Donovan issued a firm direction that the applicant and any other employee or employees of the respondent working in the K & S Freight workshop were to immediately revert to and maintain the normal 40 hours with 30 minutes for lunch.

Mr Donovan’s evidence included the following:

“About one and a half months before he left … there was a conversation … I discussed with Alex that everybody had to start at the same time, finish at the same time so … there were no junior employees left by themselves at any stage … junior employees were left on a Friday afternoon … I told him I wasn’t happy about it … it had to stop because I’m the one that is liable if an accident happens when there is a junior left by himself … I explained to Alex … it’s got to stop … he didn’t really sort of say anything he just sort of said ‘well, you’ve known about it’. I said ‘well, okay, I probably have known about it but I want it stopped so everybody falls into line’ … when that conversation concluded I was under the impression that it was going to happen …(there) were conversations about his hours or times between this time, a month and a half before he left the employment, I had mentioned it a couple of times over that period …I said ‘the starting time is 7 till 4.30 and I want everyone to fall into line with that’ …Lloyd (Crumwell) works for K & S Freighters. Lloyd’s position there … is to make sure we have work … that was Lloyd’s job, to feed us work. It was his only position as far as we were concerned … I had a couple of conversations with Lloyd regarding the early knock-offs and all this sort of thing and I explained to Lloyd exactly what I said … ‘I want them to start at 7.30 - 7.00 and finish at 4.30 so everybody finishes at the same time’.”

The applicant’s evidence was to the effect that

“In March or April 1998 David Donovan wanted time sheets - wanted normal hours - wanted me to work same hours as the others.”

The applicant said that he “explained that he had the Friday clean-up … every Friday Lloyd said to do it”.

The general tenor of the applicant’s evidence was that the change of hours was not settled and was not pursued by Mr Donovan. The fact that the applicant, on his own admission, filled out the time sheets for the last several weeks of his employment as if he and all employees were working the standard hours suggests that Mr Donovan had given a firm direction or, even if a firm and settled direction had not been given, the applicant sought, by filling out the time sheets, to give the impression that the normal hours were being worked by himself and other employees.

On the other hand,  Mr Donovan admits that he mentioned it (the required hours) a couple of times over the last month and a half (of the applicant’s employment) and told the applicant that he wanted “everybody to fall into line with that”.  Mr Donovan also admitted that during the period he had “a couple of conversations with Lloyd … regarding the early knock-offs and all this sort of thing and explained to Lloyd (that he wanted his staff) to start at 7.00 and finish at 4.30 so everybody finished at the same time”.

This evidence suggests that, while Mr Donovan had expressed the view that the applicant and all the respondent’s employees at K & S Freight were to work the normal hours and he “was under the impression that it was going to happen”, the normal hours were not being worked by the applicant and Mr Donovan was aware of this, hence his further conversations with the applicant and with Mr Crumwell. Indeed, the following exchange in cross-examination (T19) reveals that Mr Donovan knew that the applicant ahd other employees were “still finishing up early on Friday”:

“Counsel:It’s not as though you were being diddled of hours or anything like that?

Witness:No, that’s correct as well. I fully agree with that. My main concern was the hours that I had asked to be worked were not worked and there was a junior employee left there by himself.

Counsel:Okay. Well, if you were really serious about that matter, that perhaps would have been something that you could have put in a written warning, isn’t it?

Witness:Yes, possibly, yes.

Counsel:And you didn’t do that?

Witness:No.

Counsel:You knew - I think you said that you raised it with him on a few occasions. That’s your evidence?

Witness:Correct.

Counsel:With both Lloyd and Mr McGill?

Witness:Together?

Counsel:No?

Witness:Separately?

Counsel:Yes. Do you agree with that?

Witness:Yes.

Counsel:Now, Mr McGill disagrees with that. He says you didn’t, you raised it once or maybe twice. But you say you raised it on a few occasions?

Witness:Yes.

Counsel:So you knew, did you, or you thought that they were still finishing up early on a Friday despite what you’d said?

Witness:No, I knew.

Counsel:You knew, okay?

Witness:Yes.

Counsel:so by the time he went off on 27 April you knew?

Witness:Yes, I had an inkling it was happening.

Counsel:Still hadn’t put it in a written warning, had you?

Witness:No.”

APPLICANT ABSENT ON SICK LEAVE 27 APRIL TO 11 MAY
The applicant was absent from work from 27 April to 11 May, the day on which the employment relationship came to an end.  The applicant asserts that the respondent, through Mr Donovan, terminated the employment relationship on 11 May and “for reasons including (the applicant’s) temporary absence from work because of illness and (the applicant’s) physical or mental disability”.

In a defence filed 22 October, the respondent denies that:

• Mr Donovan terminated the applicant’s employment and “dismissed the applicant from his employment with the respondent”

• the respondent “in any way discriminated against the applicant by reason of any illness or condition suffered by the applicant”.

Paragraph 2 of the respondent’s Defence reads as follows:

“The Applicant left his employment with no notice to the Respondent of his intention do so. This occurred after a discussion with Mr David Donovan of the Respondent as to false times being inserted on the employment time sheets. The Respondent’s Mr David Donovan specifically advised the Applicant that he would remain employed with the Respondent as a full time casual employee but without the responsibility of being the workshop leading hand. The Applicant then said he was leaving the Respondents employ and that he would speak to a customer of the respondent and take the contract for himself.”

THE TERMINATION OF EMPLOYMENT
The general tenor of the applicant’s evidence, reproduced below, is a summarised extract from notes taken when he gave his evidence. It is not a verbatim record from transcript.

“I was sick on 27 April. I had been diagnosed earlier with Hepatitis C. I had not told David. I rang David on the Monday prior to coming back to work - I had been off for a week at that stage (this suggests the telephone call was made on Monday 4 May and Mr Donovan agrees that the telephone conversation was on 4 May) - I told him I was still sick and had Hepatitis C. David said ‘you will need a fair bit of time off then’. I said ‘no, not necessarily … if I stay away from alcohol I can keep the time off to a minimum … if I can I will be back on Thursday (i.e. 7 May) … I returned on Monday 11 May. I arrived at a few minutes to 6. David walked in. There was just me and David. We spoke for about half an hour. He said ‘you have been falsifying sheets’. I said ‘no, you know well the guys work an extra half day and that covers Friday’. He said ‘I am not happy the way things are … from now on you are casual and not in charge’. I said ‘if that is the case I won’t service the machines when they go down, I won’t dust out trailers, I will not order ropes etc’. I intimated ‘when the time comes I will consider tendering for the workshop myself’. David said ‘oh well you make it fairly obvious. You may as well go’. I said ‘what is going on David?’. He said ‘you would like that’ and he smirked. I asked him again ‘what is going on?’. He put his face very close to mine and said ‘don’t hang around here giving me the shits … fuck off’. I was very intimidated. I backed away. I went out of the workshop. I waited for Sandy. I said to Sandy ‘I have been sacked’. He said ‘You are kidding. What for?’. I said ‘I do not know. There are no reasons. I think it was because I have been off sick’. Sandy said ‘I do not believe that’.

The person referred to as “Sandy” was not called to give evidence.

Mr Donovan’s evidence is not dissimilar to that of the applicant in terms of the telephone call of Monday 4 May when the applicant advised him that he had Hepatitis C. Some of his evidence is extracted below. It is not his complete evidence but it is extracted directly from the transcript of 9 November 1998 (from evidence-in-chief T6-10).

“On the morning of the 27^th there was a message on the answering machine that he wouldn’t be in. Then I heard from him the following Monday … around the 4^th. He said ‘I’ll be back … I’ve got Hepatitis C’. I said ‘oh yeah’. I thought, well - you know, I knew that was serious. He said he was having a couple of tests. He said he was going to have a couple more tests and would be right to resume work on the Thursday of that week.

I was out at K & S filling in for Alex and the Thursday came. I never saw Alex. The following Monday he returned to work. That is the 11^th. I was there. I think I got there about 6, 6.15. I’d actually placed an ad in the paper looking for a casual employee … to replace Ashley Ballard. I did find somebody. His name is Chris Vlek. He was there about 20 past 7 (the witness probably meant 20 past 6). I think he rang me about 10 past 6.

I was showing the new bloke what I expected him to do about 20 past 6, from memory. Alex walked in and I said ‘How are you?’.  He said ‘good as can be expected’. I said ‘yeah, well, that’s … no good’ - just in small talk sort of thing and introduced him to the new bloke.  I said ‘Alex, this is Chris’.

As the conversation got on we walked away from Chris and he said ‘yes, well, Ashley rang me the other day and said he was sick and I told him not to worry about coming back in’. I wasn’t happy about it because I hadn’t been notified. I said ‘well … while we’re on the subject of these time sheets you are still starting at 6.30 and finishing early on Friday. I’ve spoken to you about it and it’s still happening’. I think I said ‘as far as the time sheets are concerned you are falsifying company documents’.  He didn’t like that. I said ‘I’ve had a rethink about the situation here’. The workshop was dirty. I spoke to him about that. He said that there was another chap that left and it hadn’t been cleaned up. It was like a pigsty over in the corner where he was working.

He said ‘I’m not cleaning up his mess’. He said that it was caused by somebody else. Chris Arvon was his name.

I said ‘Well, it’s not good enough, Alex. Things are changing. I’m going to change you from permanent to casual permanent and take your responsibilities away from you as in running the operation’.

He became pretty flustered about that and basically didn’t like what he was hearing. He threatened me. He said ‘Well, I’m going to go in and see Michael Griffiths and get your contract. I’m going to see Michael Griffiths. I’m going to see Michael Griffiths and put a tender in for your contract. You’re making a fortune out of this joint’.

That was one of his sentences, and he basically walked out, walked back in, walked out, went to …”.

The following exchange then took place (examination-in-chief T10):

“Counsel:Did you reply to those comments?

Witness:Yes, in the end.

Counsel:What did you say?

Witness:Well, I was pretty annoyed with that. I thought, well, that’s my bread and butter.

Court:What did you say?

Witness:I actually told him to eff off, Your Honour.

Counsel:When was this?

Witness:That was in the conversation we had after he’d sort of walked out and walked back in.  You know, I felt ---

Counsel:Immediately after he said to you ‘I’m going to go and see Griffiths about the contract’, did you reply to that?

Witness:Yes I did.

Counsel:What did you say?

Witness:Yes, I felt a bit, you know, threatened by that basically. I thought, well, that - you know, if I didn’t have reasons to dismiss him, I thought, well, they’re good enough if I had to dismiss him.

Court:What did you say?

Witness:Well, I just told him to fuck off, Your Honour.

Counsel:How did you feel when this threat was made to try and get your business away from you?

Witness:I was pretty annoyed with it, actually - very annoyed with it.

Counsel:Mr McGill has said that after this conversation you had he went and did some work and he was putting a blind up or something and doing it with the young new chap, Chris Vlek, what do you say about that?

Witness:He was very agitated.

Counsel:No, was he doing that?  Was he putting a blind up or anything like that?

Witness:No, he wasn’t.

Counsel:So what was he doing?

Witness:In and out, sort of kept on walking out, back in, and did nothing basically, then walked over, got his bag and went. That was after he went to the office desk and pulled out the book, the K & S book with all the phone numbers in it.”      

Mr Donovan impressed me as an open and honest witness. In cross-examination he:

• admitted that he had been thinking about making the applicant permanent casual for “over a period of three months … tossing things around” (T20)

• conceded that on the evening of 10 May he had decided to remove from the applicant the responsibilities of leading hand and make him a permanent casual employee (T21)

• described the position as “permanent casual - basically doing exactly the same job without the responsibilities of looking after people and equipment” (T22)

• admitted that while he had discussed the requirement to work regular hours with the applicant “on three or more occasions”, he changed the method of employment on 11 May, “took his job, the way you put it, from him, because he wasn’t doing what I asked” , but “never told him that if he didn’t change he (Donovan) would take serious action” (T24)

• repeated that it “was right” that he “hadn’t warned (the applicant) of any serious consequence if he didn’t pull up his socks” but had “spoken to him regarding these matters a number of times” and had “made my decision the night before the 11^th” (T27)

• stated “I never sacked Alex … I said I wasn’t sacking him. I never sacked him” (T29)

• thinks, from memory, that Alex said to him on 11 May “What’s going on? Are you sacking me?” (T29)

• responded to the proposition that he said to the applicant at one point “look, you might as well go” as follows:

  “We’d had our discussion. He said to me that, ‘I’m going to see Michael Griffiths regarding our contract. I’m going to get it.’ That’s when I said, you know, you may as well - I thought that was good enough reason. I felt agitated with him saying it. That was a threat to us. That’s when I said ‘Fuck off’.” (T29)

• asked in cross-examination for permission to “run through how it happened” and gave the following evidence:

  “We had our discussion. I said to Alex, ‘Things are changing,’ right. As the conversation went on he said, ‘I’m not happy with that. Are you sacking me?’ I said, ‘I’m not sacking you,’ right. He said, ‘Well, I’m going in to see Michael Griffiths to try and get the contract off you,’ and that’s when he walked out, probably gone for five minutes, came back, got his bag. That’s - you know, that’s what happened. That’s it, and I did tell him to fuck off and that’s how it happened.” (T30)

CIRCUMSTANCES IN WHICH A DEMOTION MAY AMOUNT TO DISMISSAL
A demotion as such does not constitute a termination of employment at the initiative of the employer:  Brackenridge v Toyota Motor Corporation (1996) 142 ALR 99 represents Full Court approval of the application by the trial judge, Beasley J of the judgment of Moore J in Strahan v Liquorland (Australia) Pty Ltd (Industrial Relations Court of Australia, NI 1266R of 1995, 6 February 1996, unreported).

In Stratton v Illawarra County Council (1979) 2 NSWLR 701, the New South Wales Court of Appeal held that reclassification of an employee is constructive dismissal if it is done without consultation or if the employee has no option but to accept reclassification.

A demotion may be “an act of an employer that results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee”:  Mohazab v Dick Smith Electronics (No. 2) (1995) 62 IR 200 at 205.

In Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 at 160 Moore J stated:

“It is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer.  Such determination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect.  I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer’s conduct.”

In Cowell v Irlmond Pty Ltd (1997) 76 IR 352 at 355 Moore J referred to his statement in Jackson v Monadelphous Engineering Associates Pty Ltd (unreported, Industrial Relations Court of Australia, 17 October 1997):

“Drawing on another area of the law, whether the conduct of Monadelphous caused the termination of Jackson’s employment involves a practical common sense concept: see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 and March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506.  In my opinion there is a direct causal link between the conduct of Monadelphous and the termination of Jackson’s employment. This conduct commenced the process that led to and caused the termination of the employment. Jackson’s employment was terminated at the initiative of Monadelphous.”

In Jackson Moore J referred to his citation of Mohazab in Rheinberger and continued:

“I was then unaware of a line of authority in the federal courts of the United States of America that concern actionable constructive discharge. Constructive discharge can be established by demonstrating that the employer deliberately made an employee’s working conditions so intolerable that the employee was forced into an involuntary resignation and the employee acted reasonably. However it would not be necessary to demonstrate that the intolerable working conditions were imposed for the purpose of forcing the employee to resign: see Young v Southwestern Savings and Loan Association 509 F 2d 140 (5^th Cir, 1975); Bourque v Powell Electrical Manufacturing Co 617 F 2d 61 (5^th Cir, 1980); Shawgo v Spradlen 701 F 2d 470 (5^th Cir, 1983); and see also Greg McCarry, “Constructive Dismissal of Employees in Australia” (1994) 68 ALJ 494.”

In Cowell Moore J found that the factor which precipated the termination was the decision taken to demote Mr Cowell. It was also His Honour’s opinion that the “event” of demotion caused the termination “when Cowell refused to accept the demotion”. Here too, were it not for the intervention of another “event”, it may be that the applicant would have refused to accept the demotion and it may be that in such circumstances it could be held that the demotion rejected by the applicant amounted to termination at the initiative of the employer. In this case the applicant may have been moving towards leaving because of an unwillingness to accept the demotion. However, in my view, the termination, at the initiative of the employer, came about before the applicant made any definitive decision to reject or accept the demotion.  He left the workshop. He returned. He again asked Mr Donovan was he being sacked and he uttered the words which led Mr Donovan to terminate the employment. The applicant indicated that he would “get” or “try to get” the K&S contract. The reaction of Mr Donovan was to instantly dismiss the applicant without notice, without consultation and without providing the applicant with any opportunity to reflect on whether he was going to accept the change in status and continue to work with the respondent or reject the change and leave and possibly tender for the K&S contract. I observe that there is no evidence that the applicant ever did tender for the K&S contract and, unlike Cowell, this was not the “second occasion” of demotion or change of status which, Moore J held, “reinforced the conclusion” in that case of termination by demotion.

FINDINGS AS TO TERMINATION
Facts and circumstances determine whether the action of an employer, be it a demotion or be it some other action, constitutes a termination of employment at the initiative of the employer such as to attract the jurisdiction of the Workplace Relations Act.  I have concluded that the decision on 10 May to advise the applicant on 11 May that he was to be demoted, to lose his position of leading hand with supervisory duties in the workshop, to henceforth be a permanent casual working 40 hours a week, and the communication of that decision to the applicant on 11 May was not a termination of employment and was not a termination of employment at the initiative of the respondent. However, if I am wrong and if the removal of the leading hand responsibilities and the transfer of the applicant to a permanent casual position were to be held to constitute constructive dismissal this does not appear to be a matter of moment. For reasons outlined above and below I have concluded that the respondent did terminate the applicant’s employment.

I accept the evidence of Mr Vlek that when he first entered the workshop the applicant and Mr Donovan were speaking but did not appear to be on unfriendly terms. I have concluded that the applicant did not leave his employment as a result of Mr Donovan’s advice that he was demoted and that that advice did not cause the termination of the employment relationship.  However, after about ten minutes working with Vlek, the applicant approached Donovan again and I believe that the most likely sequence of events is that at this stage the applicant again asked “What is going on?  Are you sacking me?” and that the applicant also added that he would not work further in ordering goods etc. and most importantly added words to the effect that  “at the appropriate time … I will try and get the contract”.

Counsel for the respondent contends that this expression of intent by the applicant terminated the employment relationship. He argues that this threat to take the work from the respondent ended the relationship and was an initiative of the applicant.

Counsel for the applicant on the other hand suggests that this was a statement made in the heat of the moment and should not be construed as ending the relationship.

I have concluded that the statement was made and was made in the heat of the moment and did not constitute a resignation or an ending of the relationship at the initiative of the applicant.

I have however concluded that Mr Donovan’s reaction, immediate, angry and explosive, did end the employment relationship and was a termination of the employment. It was a termination at the initiative of the employer. As I have already indicated I consider Mr Donovan a frank and honest witness.  He has taken the view that the applicant quit the employment but his evidence is revealing. He admits he was annoyed when the applicant told him that he (the applicant) was going to see Michael Griffiths “about the contract” and “get the contract” or “put in a tender for your contract”.  He admits that he “felt threatened” and that he thought “if I didn’t have reasons to dismiss (the applicant) they’re good enough (reasons) if I had to dismiss him”.

Mr Donovan was asked by the Court what he said at this stage. His reply was open and frank “Well, I just told him to fuck off, Your Honour”.

In my view at that stage Mr Donovan, on behalf of the respondent, sacked the applicant. He took the initiative that ended the employment. He had given the applicant no notice and he paid no compensation instead of notice and his action was a breach of s 170CM(1)(a) and (b).

WAS THERE AN UNLAWFUL TERMINATION FOR PROHIBITED REASON?
If an employee or former employee alleges termination of employment by an employer for reason or reasons including a reason or reasons set out in 170 CK(2), and if the termination is found to have occurred, and to be a termination at the initiative of the employer, the employer has the onus of proving that the termination was for a reason or reasons that do not include a proscribed reason (other than a proscribed reason to which ss 170CK(3) and (4) apply).

It is not necessary for the employee or former employee to prove that the termination was for a proscribed reason. The onus falls squarely on the employer to establish a negative namely that the reasons for dismissal do not include a proscribed and prohibited reason or reasons. This is the effect of s 170CQ, the “proof” provision for allegations of contravention of s 170CK of the present Workplace Relations Act 1996. Section 170EDA(2) of the Industrial Relations Act 1998 and of the earlier version of the Workplace Relations act 1996 placed the same onus on the employer. This too was the onus placed on an employer under s 5 of the Conciliation and Arbitration Act 1904 which made it a criminal offence for an employer to dismiss an employee by reason of the specified circumstances. In the Federal Court in 1976 and in the Industrial Relations Court of Australia in 1995 Northrop J reviewed such provisions and earlier authorities relating to them.

In Johns v Gunns Ltd (1995) 60 IR 258 at 267 His Honour said:

“In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257, those provisions and earlier authorities relating to them were discussed at length and in particular at 266-271. I set out a passage appearing at 268 which has equal application to cases where s 170DF(1)(a) of the Act applies:

‘The provisions of s 5(4) of the Act cast an onus of disproving facts, namely, that the reason for the defendant’s action was not actuated by the reason alleged in the charge. It has been held that a defendant need not prove the reason why he dismissed an employee”: Atkins v Kirkstall-Repco Pty Ltd (1957) 3 FLR 439. The mere proof of a reason for dismissal, other than the reason alleged in the charge, does not necessarily negate the reason alleged in the charge. A mere denial of the reason alleged in the charge may not be sufficient to satisfy the onus cast upon the defendant. All the facts and circumstances leading up to the dismissal must be considered, including any reason expressed at the time of the dismissal, as well as any denial of the reason alleged in the charge.’”

In this case the respondent must establish a negative or negatives namely that the reasons for dismissal of Mr McGill did not include the reasons that Mr McGill was temporarily absent from work because of illness and that the reasons for dismissal did not include the reason that Mr McGill was the subject of physical or mental disability.

In my view, the respondent has discharged that onus and has proved that the termination was for reason or reasons that did not include a proscribed reason.

It is common ground that the applicant told Mr Donovan on 4 May that he had Hepatitis C. At no stage did the applicant call evidence to establish that he had been diagnosed as infected with Hepatitis C but it is clear that Mr Donovan accepted the applicant’s claim to that effect. However, there is nothing in the applicant’s evidence or Mr Donovan’s evidence or the evidence of any other witness which suggests that the employment of the applicant was terminated because of any temporary absence from work because of illness or because the applicant was thought to have a disability associated with Hepatitis C.

The applicant seeks to draw an inference from Mr Donovan’s alleged comment in the telephone conversation on 4 May when he was advised by the applicant that the applicant had Hepatitis C. The applicant claims that Mr Donovan said words to the effect that “you will need a fair bit of time off work then”. Even if Mr Donovan made such a comment it does not constitute strong grounds or any grounds for drawing an inference that Mr Donovan had a proscribed reason as the reason or a reason for terminating the employment. However, Mr Donovan denies that he made such a comment at all (T15).

The applicant seeks to draw a more general inference which, his counsel asserts, leads to the conclusion that the respondent has failed to prove that the reasons for termination did not include one or more prohibited reasons. Counsel described this inference as follows:

“The strong inference on the evidence was that (Mr Donovan) wanted the flexibility to deal with Mr McGill because he (Donovan) thought in the future he (McGill) could be sick. He’d exhausted sick leave. It was possible that that flexibility would advantage him (Donovan).”

Mr Donovan was cross-examined very thoroughly about his motivation for the termination of the applicant’s employment. At no stage did Mr Donovan concede that he dismissed the applicant but I have found that to be so. Mr Donovan said in cross-examination:

• “If you’ve got Hepatitis, it is a serious thing, I believe. I didn’t sort of discriminate him over it or anything like that” (T15)

• “No, I didn’t say that at all” (i.e. did not say on 11 May that he was unhappy that Mr McGill had been off work) (T24)

• “No, I think you’re twisting it a little bit there” (response to counsel’s suggestion that “You were concerned that if you’re sick, you can’t work”) (T25).

Mr Donovan denied that he “had a little think about (Mr McGill’s) ability to do his work when (McGill) told him about his illness” (T25).

There is no evidence that the respondent dismissed the applicant for a prohibited, proscribed reason. In the circumstances, it is my view that the respondent has discharged the onus of proving, in the words of s 170CQ(6) “that the termination was for a reason or reasons that do not include a proscribed reason”.

I have, in the words of Heidt, considered “ all the facts and circumstances leading up to the dismissal … including any reason expressed at the time of the dismissal, as well as any denial of the reason alleged in the charge”.  Under persistent cross-examination, Mr Donovan denied that his reasons for termination, a termination he also denies, included Mr McGill’s disability or absence through illness. In terms of motivation I believe him. A mere denial may not be sufficient to discharge the onus but firm and constant denial in the absence of evidence of consideration of prohibited reasons is sufficient to discharge an onus which is determined on balance of probability.  I have concluded that Mr Donovan summarily dismissed Mr McGill when he reacted immediately and angrily to what he perceived to be a threat by Mr McGill to take the K & S contract from him.  If Mr Donovan had other reasons I am not satisfied on a test of balance of probability that those other reasons included prohibited reasons.  Put positively the respondent has satisfied me on a test of balance of probability that the reason or reasons for termination did not include prohibited reasons

It is not a function of this Court to consider whether the termination of the employment was a contravention of s 170CE(1)(a). The Court has found that the respondent breached s 170CM but did not breach ss 170CK(2)(a) or (f). The orders of the Court are as follows.

ORDERS
The Court:

1. Declares that the respondent terminated the employment of the applicant and failed to give the applicant the period of notice required under s 170CM(2) and failed to pay the applicant compensation instead of notice under ss 170CM(4) and (5).

2. Orders that the respondent pay to the applicant the sum of $1288 in compensation in lieu of notice (i.e. 2 weeks at a weekly rate of $644 gross).

3. Declares that the termination of the employment of the applicant by the respondent did not contravene ss 170CK(2)(a) or (f).

I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Ryan

Associate:

Dated:             23 December 1998

Counsel for the Applicant:	Ms M Young
Solicitor for the Applicant:	Ryan Carlisle Thomas
Counsel for the Respondent:	Mr P Cash
Solicitor for the Respondent:	Prior & Prior
Date of Hearing:	10, 11 November 1998
Date of Judgment:	23 December 1998