Michael Conroy and Leisure Australia
[1994] IRCA 130
•16 Nov 1994
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
SYDNEY DISTRICT REGISTRY No. 787 OF 1994
BETWEEN
MICHAEL CONROY
Applicant
AND
LEISURE AUSTRALIA
Respondent
MINUTES OF ORDER
THE COURT ORDERS THAT:
That the termination of the applicant’ s employment by the respondent contravened s. 170DC of the Industrial Relations Act 1988;
That, within 21 days of 16 November 1994, the respondent pay to the applicant compensation in the sum of $9, 435.91 (gross).
Note: Settlement and entry of orders is dealt with in accordance with Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
SYDNEY DISTRICT REGISTRY No. NI 787 OF 1994
BETWEEN
MICHAEL CONROY
Applicant
AND
LEISURE AUSTRALIA
Respondent
CORAM: PATCH JR
PLACE: SYDNEY
DATE: 16 NOVEMBER 1994
REASONS FOR JUDGMENT
(Delivered ex tempore - revised from transcript)
This is an application under section 170EA of the Industrial Relations Act 1988 which I will refer to as “the Act”. The applicant filed an application on 12 September this year seeking the following orders:
(a) An order declaring the termination of the employee's employment to have contravened division 3 of part VIA of the Act.
(b)An order requiring the respondent to reinstate the employee in employment; and
(c)An order that the respondent pay compensation to the employee.
Such other order or orders as will put the employee in the same position (as nearly as can be done) as if the employment of the employee by the respondent had not been terminated: see section 170EE of the Act.
The applicant was employed as the Aquatics Coordinator of the Willoughby Leisure Centre. In that position he had various responsibilities which included some staff management responsibilities, the supervision of the pool, ensuring that the quality of the water was of a proper standard and other responsibilities which it is not necessary to detail.
As a preliminary point, or, as the respondent described it, as the respondent's principal submission, the respondent argued that the applicant was an employee who was excluded from the operation of the Act by virtue of section 170CC of the Act, together with Regulation 30B.
Section 170CC of the Act reads as follows:
“The Regulations may exclude specified employees from the operation of specified provisions of this Division. An exclusion has effect only if:
(a) it is permitted by paragraph 2, 4 or 5 of Article 2 of the Termination of Employment Convention; and
(b) in respect of an exclusion permitted by paragraph 2 of that Article - it is limited in such a way as to provide adequate safeguards as mentioned in paragraph 3 of that Article.”
The relevant parts of Regulation 30B are as follows:
“Employees Excluded from Requirements for termination of Employment.
30B (1) For the purposes of section 170CC of the Act, the following employees are excluded from the operation of subdivisions B, C, D and E of Division 3 of Part VIA of the Act:
(a) ......
(b) ......
(c) Employees serving a period of probation or a qualifying period of employment, if the duration of the period or the maximum duration of the period, as the case requires:
(i) is determined in advance; and
(ii) is reasonable, having regard to the nature and circumstances of the employment;
(d) ...... “
Mr Sant, the solicitor for the respondent, submitted that the applicant is excluded from the operation of the Act by virtue of the combined operation of section 170CC and Regulation 30B.
He submitted that the following questions should be determined by the Court in relation to that principal submission:
(1) Was the employment of the applicant subject to a probationary period?
(2) Was the duration of the probationary period determined in advance? and;
(3) Was the duration of the probationary period reasonable, having regard to the nature and circumstances of the employment?
The respondent argues that I should give a broad interpretation to the meaning of Regulation 30B. It submits that, in the circumstances of this case, the requirements of regulation 30B that the period of probation be determined in advance, and be reasonable, are satisfied.
It submits that the probationary period in this case is “the reasonable period of time necessary to allow the applicant an opportunity to demonstrate that he could perform the job.” It submits that when Mr Penfold said, (there is no dispute about this), at the end of the appraisal interview on 23 August, words to the effect that the period of probation was “to be extended to give Mr Conroy a further chance”, that altered the employment contract to insert a term that Mr Conroy was on probation for such further reasonable period as necessary to allow him an opportunity to demonstrate that he could perform the job.
It may well be that that did happen - that such a term was inserted into the employment contract. But that does not necessarily mean that the requirements of Regulation 30B were satisfied.
Regulation 30B(c) refers only to employees who are serving a period of probation which is determined in advance and is reasonable, having regard to the nature and the circumstances of the employment.
The argument by the respondent blurs the distinction between the two separate requirements. It cannot be said that, if there were a clause in an employment contract that a period of probation be "reasonable", that therefore means that the period is “determined in advance”. To do so would be to make the entirely separate requirement that the duration of the period be “determined in advance” entirely meaningless.
I find that Regulation 30B requires that there be a specific limited period, the duration of which is clearly spelt out. Any other type of period, such as a "reasonable" period, would not fit within the limitations of Regulation 30B.
The employment of the applicant by the respondent commenced on 16 May 1994. Prior to the commencement of his employment, he was informed that there would be a 3-month period of probation. That came to an end on 15 August 1994.
It is clear that, during that initial three month period, the applicant was a probationary employee in the sense of Regulation 30B. ie: He was serving a period of probation, the duration of that period was determined in advance, and it was reasonable having regard to the nature and circumstances of the employment.
On 23 August he was informed that he was again on “probation”. However, the period of the probation was not determined in advance. I therefore find that, whatever the meaning of the phrase “probation” as it applied to the applicant, he was not an employee serving a period of probation within the meaning of Regulation 30B. He was not, therefore, an employee excluded from the operation of the Act.
When the applicant had first been employed, he and the respondent had agreed that, after the initial three month period of probation, or at some time towards the end of it, (the evidence was not clear as to that) the applicant would undergo a performance appraisal.
On or about 15 August 1994, probably on that very day, the applicant was given the necessary forms for the performance appraisal. He was given those forms by Mr Penfold, his immediate superior in the hierarchy of the respondent, and the person responsible for assessing the applicant's performance.
By agreement made on or just after 15 August 1994, the applicant and Mr Penfold met on 23 August to go through the formal appraisal interview. Prior to that, the applicant had had ample time to consider and complete the forms that he had been given by the respondent.
Likewise Mr Penfold had completed, and to a limited extent, upon further consideration, changed, the form that it was his responsibility to complete and take to the interview.
So Mr Conroy, the applicant, and Mr Penfold, on behalf of the respondent, attended this interview having each completed the necessary forms and considered their positions. The interview was quite lengthy, at least one and a half hours, and there was considerable discussion between the applicant and Mr Penfold about the way in which the applicant had been performing his duties.
The most important part of that interview was the discussion between the applicant and Mr Penfold concerning various categories of what are called in the various forms “skills evaluation”, under the following headings:
(1) Leadership;
(2) Supervision and Control;
(3) Organisation and Planning;
(4) Research and Development;
(5) Operational/Technical Knowledge;
(6) Income and Cost Consciousness;
(7) Promotion and Communication;
(8) Autonomy and Resourcefulness;
(9) Reaction to Supervision;
(10) Objectivity and Judgment.
There was also, in addition to those separate categories, an “overall skills rating.”
I find that the applicant was given a more than ample opportunity at that meeting to respond to any allegations in respect of his conduct or performance up to that point.
Therefore, up to that point, any complaints that the applicant might have had as to complaints being made about him and him not having an opportunity to respond to them were cured. In other words, up to 23 August 1994, the provisions of section 170DC had not been breached by the respondent because Mr Conroy had been given the opportunity to defend himself against any allegations concerning his conduct or performance.
Even though, up to 23 August 1994, the employer had not, at that stage, breached any provisions of the Act, that does not mean that something that happened after that date could not amount to a breach of the Act.
What happened after that date is important. In the week between that appraisal interview and the date of termination, namely 30 August 1994, Mr Penfold received complaints from other employees concerning the actions of the applicant in respect of his responsibilities to roster employees for the pool.
There were at least three such complaints.
Mr Penfold gave evidence that he considered these complaints over the weekend of the 27 and 28 August and that when he received a further complaint on Monday 29 August he decided to terminate the employment of the applicant.
The applicant (legitimately) was not at work on that Monday. He returned to work after being away for the Saturday, Sunday and Monday and was spoken to by Mr Penfold. Mr Penfold informed him that his employment was terminated, told him that there had been more complaints about the rostering and suggested that it would be better if he left straight away. It was those actions of Mr Penfold which were the termination of the employment of the applicant by the respondent.
The applicant was given no opportunity to respond to those particular allegations.
However, the respondent submits that, because there was an agreement between the respondent and the applicant that the applicant would be employed for a further but unspecified period of probation, that the provisions of section 170DC(b) apply, in that the employer could not reasonably be expected to give the applicant the opportunity to respond to those specific allegations.
I do not agree with that submission.
It would have been a simple matter for the respondent to give the applicant an opportunity to respond to the specific allegations concerning the rostering of other employees during that final week.
As it has turned out in the hearing of this case, there are two sides to those allegations and it may be that the respondent might not have terminated the employment of the applicant then and there if the applicant had been given an opportunity to respond and to explain them. The applicant may have persuaded the respondent that the matters were not as serious as the respondent thought.
The purpose of section 170DC is, at least partly, to give employees the opportunity to explain conduct or to suggest that the information received by an employer is wrong in some way. If I were to find that the “probationary” status of the applicant in this case meant that the employer did not have to give the applicant the opportunity to respond to those particular allegations, that would be to negate the purpose of section 170DC of the Act. To do so would be to create a division in the Act, between employees who are fully protected by s. 170DC, and employees such as the applicant, who, although not excluded by s.170CC, are somehow excluded from part only of the opereation of the Act. That cannot be right.
The respondent was therefore in breach of section 170DC of the Act, and the termination of the employment of the applicant was unlawful.
I now have to consider, having found that the termination of the applicant's employment was unlawful, what remedy is appropriate. The primary remedy for an unlawful termination of employment is an order for reinstatement. Compensation is a secondary or fall-back remedy. Section 170EE(2) of the Act says this:
“If the Court thinks, in respect of a contravention of a provision of this division (other than 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.”
Although the application filed by the applicant sought an order for reinstatement, the applicant in his opening remarks stated that he no longer sought reinstatement. In addition to that, the respondent has employed another person in place of the applicant in a job which, although not exactly identical to that which the applicant held, covers many of the substantial areas that the applicant covered in his former job. Furthermore, it is clear that the employment relationship between the applicant and the respondent has deteriorated and had deteriorated to such an extent that, now, the reinstatement of the applicant in his former position would be impracticable. I therefore find that the reinstatement of the applicant is impracticable.
The question then becomes: What compensation should be ordered?
The applicant seeks the maximum period of compensation, namely six months remuneration. He says that he is entitled to that because he was given to understand, shortly prior to his termination but after the assessment interview, that his employment was not threatened. He thought it was therefore secure, despite the use of the words “probationary period” at the end of that interview on 23 August.
He says that he believed up until his employment was terminated that his employment was not threatened. The principal reasons for that belief were that, some time shortly before 23 August 1994, he was told by Mr Wilson and Mr Penfold - Mr Wilson was, at the time, Mr Penfold's superior in the organisation - that it was safe for him to purchase a motor vehicle, and that Mr Penfold approved an application for leave so that Mr Conroy could go on an overseas holiday. Mr Conroy says that, because of those things, he thought his employment was secure and that he continued to think that despite the reference to a further period of probation at the conclusion of the interview on 23 August.
I accept what he says.
Mr Conroy, the applicant, also points to the fact that he has been unable to find employment since his employment was terminated; that he is now on unemployment benefits. He also gave evidence, as did his de facto wife, as to the shock that they felt when Mr Conroy's employment was terminated. I find, as a fact, that it was a traumatic event for the applicant when his employment was terminated.
I find, as a fact, that he has been unable to get further employment and that it is unlikely that he will obtain employment, particularly in this industry, within the reasonable future. One of the principal reasons why he is unable to obtain employment in the industry is because his employment was terminated and he cannot use his most recent employer as a referee.
The solicitor for the respondent, on the other hand, in respect of the level of compensation, says that if I am to award compensation it should be set at a figure considerably less than remuneration for the maximum period of six months.
He submits that it is appropriate to take into account the respondent's conduct up to and including the termination of the employment in determining the amount, and that in this respect it was not a “serious breach of the Act.” He says that that is relevant because, he submits, the period of six months referred to in section 170EE(3)(a) of the Act is the top of a scale: that is to say, that six months' remuneration is the top of the scale and only available for the “worst breaches” of the requirements of the Act.
In support of that argument he referred the Court to two decisions of the Industrial Relations Commission of New South Wales.
These decisions are: Matter number IRC2380/92, in the matter of a claim for relief relating to the dismissal of Wayne Lynton Barker by Brooks Panelect Fire Systems Pty Limited, an unreported decision of Commissioner Connor, dated Tuesday, 3 August 1993; and Matter number IRC2586/93, in the matter of a claim for relief relating to the dismissal of Peter Charles Luke by Handicapped Childrens' Centre, also an unreported decision of Commission Connor, made 16 March 1994.
In the first case Mr Sant relied on part of the decision on page 21:
“In the circumstances I believe that it would be appropriate to grant him monetary compensation of $15,372.50; ie. 26 weeks pay. I have been influenced in reaching my decision to grant Mr Barker the maximum amount of compensation available under section 250(3) by a number of factors: the circumstances surrounding Mr Barker's dismissal; the manner in which it was carried out; the specialist nature of the work which Mr Barker performed for Brooks Panelect; the difficulties which Mr Barker may therefore encounter in the current economic climate in finding comparable employment and the cost of representation which Mr Barker has been put to in pursuing his claim in the hearing before me.”
In the second decision of Commissioner Connor the respondent relied on this part of the decision:
“Full compensation under Section 250(1)(b) should, to my mind, be reserved for extreme cases of unfairness. I do not see the matter before me in this hearing in that light and appreciate that the Centre felt obliged to act as it did, on the basis of its own investigations.”
The Commissioner went on to say:
“Nevertheless, I conceded that a level of compensation under section 250(1)(b) is appropriate for Mr Luke and I have assessed that it should - - -”
And then the Commissioner went on to order the equivalent to eight weeks pay.
The relevant parts of section 250 of the Industrial Relations Act 1991 of New South Wales are as follows:
“Orders for reinstatement, re-employment or lost wages.
(1) (Order for reinstatement) The Commission may determine a claim relating to dismissal by ordering the employer:-
(a) to reinstate the applicant in his or her former position on terms no less favourable to the applicant than those that would have been applicable if the applicant had not been dismissed; and
(b) if the Commission thinks fit, to pay to the applicant, within a specified time, an amount stated in the order that does not exceed the remuneration the applicant would, but for being dismissed, have received before being reinstated in accordance with the order.
(2) (Order for re-employment) If the applicant has been dismissed and, when determining the claim, the Commission considers that it would be impracticable to reinstate the applicant, the Commission may order the employer;
(a) to re-employ the applicant, on terms and conditions determined by the Commission, in another position that the employer has available and that, in the Commission's opinion, is suitable; and
(b) if the Commission thinks fit, to pay to the applicant, within a specified time, an amount stated in the order that does not exceed the remuneration the applicant would, but for being dismissed, have received before being re-employed in accordance with the order.
(3) (Order for compensation) If the applicant has been dismissed and, in determining the claim, the Commission considers that it would be impracticable to make an order for reinstatement or re-employment, the Commission may order the employer to pay to the applicant, within a specified time, an amount of compensation not exceeding the amount or remuneration of the applicant during the period of six months immediately before being dismissed. If the applicant was on leave without full pay during any part of that period, the maximum amount of compensation is to be determined as if the applicant had received full pay while on leave.
(4) (Order not to dismiss) In determining a claim relating to a threat of dismissal, the Commission may order the employer not to dismiss the employee in accordance with that threat.
(5) (Assessment of compensation) When assessing any compensation payable, the Commission is to take into account whether the applicant made a reasonable attempt to find alternative employment and the remuneration that would have been payable if the applicant had succeeded in obtaining alternative employment.
The solicitor for the respondent submits that the New South Wales Industrial Relations Commission has determined that six months is the top of a scale only available for the worst breaches, and that I should apply the same principle to the Commonwealth Industrial Relations Act. I do not agree.
Section 170EE(2), which I have already quoted, gives the court a very wide discretion in respect of the amount of compensation. The court has the power to award compensation, "of such amount as the court thinks appropriate". No such terminology exists in the NSW Act.
The amount which the court may award is only limited by subsections 3 and 4 of the Act. There is no wording in the Commonwealth legislation which suggests that the word "compensation" should be viewed in any other way than compensation by way of damages assessed under common law principles, but subject to upper limits as set out sections 170EE(3) and (4).
I find that the maximum amount of six months remuneration or, alternatively, $30,000, is a cap, simply the maximum amount, beyond which the Court cannot go - not the top of a sliding scale, reserved for the “worst cases”.
The principal reasons why I make that finding are the very wide discretion invested in the Court by the use of the word "appropriate", and the absence of any wording limiting that discretion.
The respondent's solicitor also referred me to a decision of Judicial Registrar Parkinson in Victoria, a Judicial Registrar of this Court. That decision is Mallen v Beasam Pty Limited No VI 544 of 1994. In that case, in which the termination was a redundancy, Judicial Registrar Parkinson, firstly, found that it was impractical to order reinstatement, (as is the case here), and then went on to say:
“The question of the making of an order for compensation pursuant to section 170EE(2) of the Act therefore arises. In making such an order in the circumstances of redundancy it is relevant to take into account that despite the element of harshness which has been found to exist in relation to the procedural aspects of the termination, in all other respects the dealings of the respondent with the applicant has been just and fair.”
Mr Sant in particular relied on that part of the reasons for judgment.
But then the Judicial Registrar went on to say what she meant by the above passage:
“This is evident from the manner in which the respondent made arrangements for ongoing counselling and assistance for the applicant. The outplacement service provided by the respondent was available immediately the termination had been effected and was extensively utilised by the applicant for at least a period of 14 weeks. This counselling is also relevant to the assessment of the amount of compensation, if any, which ought result from the anguish suffered by the applicant as a result of the failure to accord in procedural fairness. In that regard I am of the view that the respondent did all it could to cure that deficiency by the out placement services it arranged.”
As I understand what Judicial Registrar Parkinson was saying, she was referring to the actions of the respondent in that case in mitigating the damages that otherwise would have flowed to the applicant by reason of the unlawful termination of the applicant's employment in that case. I do not regard what Judicial Registrar Parkinson was saying as a finding that the six months remuneration referred to in the Act is anything other than a cap, that is to say simply the maximum amount. She did not say and did not find that the six months remuneration was the top of a scale, reserved for “worst breaches” of the Act.
Accordingly, I assess the amount of compensation to be awarded to the applicant on the basis that the six months remuneration limit is a cap, simply the maximum amount, not the top of a scale, and I proceed to assess the compensation taking into account what I consider to be the relevant matters.
Firstly, I find that the applicant's employment by the respondent was not secure. The applicant had just completed a period of three months probation and, instead of being employed as a permanent employee, was put on “probation” again.
Although the period of probation was not specified and the applicant is therefore protected by the Act in the sense that he is not excluded by regulation 30B, I nonetheless find that the contract of employment between the applicant and the respondent included a provision that the applicant was on probation. It flows from that that his employment was not secure.
I also find that it was likely, in view of the history of the matter and what I find to be a history of failings by the applicant, in particular the way he related to the staff and the way he treated staff, that his employment would have been terminated at some date not too far in the future after 30 August. It is not possible to specify exactly when.
On the other hand, it is clear that the applicant has suffered considerable hardship and anguish as a result of the termination of his employment, simply because of the fact of what happened, and also because he expected his employment to continue.
These two factors balance each other to some extent. It is also relevant that the applicant has had considerable difficulty finding employment since the termination of his employment by the respondent. I find that it is unlikely that the applicant will find alternative employment before the end of a period of six months after 30 August 1994.
What then is an appropriate amount in these circumstances? I find that an appropriate amount is an award of compensation equivalent to four months remuneration, minus the two weeks pay in lieu of notice which the respondent paid the applicant upon the termination of his employment.
The amount of compensation is calculated as follows:
The applicant, it is agreed, was earning at the time of the termination of his employment, $32,000 per annum. Four months remuneration is one-third of that: $10,666.67. Upon the termination of his employment the applicant was paid two weeks pay in lieu of notice - $1,230.76 (gross) - from which tax had been deducted.
I therefore order the respondent to pay the applicant by way of compensation for unlawful termination of employment the gross sum of $9,435.91. It is not appropriate for me to specify in that order what arrangements are to be made for the deduction of tax. However, I note that that is a pre-tax figure.
That sum is to be paid within 21 days of today.
Finally, there was a great deal of evidence directed to the question of whether or not the termination of the applicant's employment was for a valid reason, or for valid reasons. I do not make a finding in that respect. It is unnecessary to do so because I have found that, in any case, the termination of the applicant's employment was a breach of section 170DC of the Act, in that the applicant did not have an opportunity to respond to the allegations arising in the last week of his employment.
COURT: D. Patch, Judicial Registrar
PLACE: Sydney
DATE: 16 November 1994
I certify that this and the preceeding eleven (11) pages are a true copy of the reasons for Judgment of Judicial Registrar Patch.
Associate: Julianne Taverner
Date: 9 December 1994
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