Mira Asamovic v Star Maid Pty Ltd and Milena Bingula v Star Maid Pty Ltd

[1996] IRCA 71

DECISION NO:  71/96

CATCHWORDS

INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION -  whether refusal to work overtime amounted to termination for VALID REASON of CONDUCT OR PERFORMANCE - whether requirement to work reasonable overtime or overtime as and when required - whether termination HARSH UNJUST OR UNREASONABLE - whether PROCEDURAL FAIRNESS - COMPENSATION

Industrial Relations Act 1988, ss 170EA, 170DE(1) , 170DE(2), 170DC

Selvanchandran v Peteron Plastics Pty Ltd, unreported, Northrop J,  Industrial Relations Court of Australia, 7 July 1995, No. 329/95.
Gibson v Bosmac Pty Limited (1995) 130 ALR 245

MIRA ADAMOVIC v STAR MAID PTY LTD
VI 4308 of 1995

MILENA BINGULA v STAR MAID PTY LTD
VI 4310 of 1995

Before:  PARKINSON JR
Place:  MELBOURNE
Date:  4 MARCH 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4308 of 1995

B E T W E E N:

Mira ADAMOVIC
Applicant

A N D

STAR MAID PTY LTD
Respondent

A N D

VI 4310 of 1995

B E T W E E N:

Milena BINGULA
Applicant

A N D

STAR MAID PTY LTD
Respondent

MINUTES OF ORDER

4 March 1996  PARKINSON JR

THE COURT ORDERS THAT:

1. In matter 4308 of 1995 the respondent pay to the applicant compensation in         the sum of $ 1,885.67.

1. In matter 4310 of 1995 the respondent pay to the applicant compensation in         the sum of $ 1,929.18.

1. Time for payment is twenty one days from the date of order. 

NOTE:   Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4308 of 1995

B E T W E E N:

Mira ADAMOVIC
Applicant

A N D

STAR MAID PTY LTD
Respondent

A N D

VI 4310 of 1995

B E T W E E N:

Milena BINGULA
Applicant

A N D

STAR MAID PTY LTD
Respondent

REASONS FOR DECISION

4 March 1996  PARKINSON JR

This decision is in relation to applications made pursuant to s170EA of the Industrial Relations Act 1988. The applicants, Ms Adamovic (the first applicant), and Ms Bingula (the second applicant), are sisters and were employed as process
workers in the respondent’s plastics factory. The first applicant commenced employment in July 1992 initially on a casual basis, and from 28 August 1992 as a permanent employee engaged to work 38 hours per week. The second applicant commenced employment on 8 November 1994 as a permanent employee also working a 38 hour week on day shift. Both applicants’ hours of work were established as between 7.00 am and 3.00pm.

The termination of employment in these proceedings occurred after the applicants refused to work overtime for the employer. On 31 July 1995 the applicants were approached by their supervisor, Ms Cuk, and asked to work overtime that evening and for the following few evenings.  The overtime had been scheduled as a result of a decision taken that day as to urgent production requirements.

The evidence was that the applicants had rarely refused to work overtime and had generally complied with the respondent’s requests in this regard. The comprehensive wage records kept by the respondent identify the number of overtime hours worked by the applicants during the employment and the pattern of hours (4,967 ordinary hours and 648 overtime hours).  However, on this occasion the applicants responded by refusing to work overtime unless they were paid overtime at the proper rate. The evidence was that by “proper rate”, they meant time and 1/2 for the first three hours and double time thereafter. This rate accords with the amount prescribed in the Plastic Moulding Award (Vic) ("the former State Award"), although the second named applicant regarded it as the appropriate rate because that was what friends working elsewhere were being paid.

There was not a blanket refusal by the applicants to work overtime, but a refusal to work overtime for less than what, in their view, was the appropriate rate of pay. As a result of the refusal, Ms Cuk informed the production manager, Mr Boughey, who then spoke to the applicants and, after confirming the reason for the refusal, approached management about the overtime pay rate. 

The applicants were informed by Mr Boughey that they were required to work the overtime for the existing rate of pay, and that if they did not do so then they would be sacked. The applicants were given an opportunity to consider their positions, which they did, and did not change their minds. Mr Boughey approached them later in the afternoon and, after ascertaining that they maintained their refusal to work overtime for the rate the employer was prepared to pay, the applicants were handed documents formally providing notice of termination of employment (exhibits R1 and R2). The period of notice given related to their respective lengths of employment, and both applicants were required to work during the period of notice.

The respondent relies upon the refusal to work overtime as a valid reason for the termination of the employment. The respondent’s principal submission is that there was an obligation upon the applicants to work overtime as and when required. Alternatively, the respondent submits that there was a requirement to work reasonable overtime. The applicants deny there was an obligation to work overtime and submit that if any obligation existed, it was to work overtime which was reasonable. The applicants do not concede that the respondent had a valid reason for the termination of the employment, and further submit that the termination of the employment was harsh, unjust and unreasonable. It was further submitted that there was a failure to comply with s170DC of the Act.

Fundamental to the issue of valid reason in this proceeding is the question of what obligations existed between the parties in respect of overtime. If there was no obligation on the applicants to work outside the agreed normal hours, then such a reason for termination of employment is unlikely to constitute valid reason.

It is necessary to consider the manner in which the legal obligations arose between the parties.  This matter is complicated by the fact that there is no award governing the relationship, and the legal status of the former state award is in doubt. Unlike in Gibson v Bosmac Pty Limited (1995) 130 ALR 245 where a Federal award operated to impose mutual obligations by prescribing an obligation upon the employee to work reasonable overtime and an obligation on the employer to pay increased rates for overtime worked, in this case there is no clear prescription or regulation of the relations between the parties.

The employment relationships in this case are, at least to some extent, governed by individual employment agreements, however it is unclear on the face of those documents (exhibits R1 and R2) what additional terms form part of the conditions of employment, and there are no express provisions dealing with overtime obligations. There was an award of the Employee Relations Commission of Victoria operative in respect of the employment of the second applicant, at least until 1994.  It is also apparent from the wage and personnel records maintained by the respondent that it recorded that award as being applicable to the employment of both employees (exhibit R3).  However, the status of the award as a statutory instrument operating in relation to the employment is acknowledged by both counsel to be unclear. 

It is therefore necessary to determine the obligations existing between the parties, and to do so I approach the matter by having regard to the ordinary rules of contract and in particular whether, in the absence of any express obligation, there was to be implied any term relating to overtime and, if so,  the nature of that term.

Whether there was to be implied, as a result of the history and course of conduct between the parties, an obligation to work overtime is a question to be determined having regard to the evidence of the understanding reached between the parties as to overtime and the pattern and nature of any overtime worked. The evidence was that during the course of the employment both applicants had worked regular overtime. This overtime was often scheduled at late notice. The evidence was that the applicants had rarely refused to work overtime and had generally complied with the respondent’s requirements in this regard. Further, the applicants had themselves previously requested that overtime be made available to them, and the respondent had taken steps to accommodate that request. 

As to the terms of the arrangements as to overtime, Mr Boughey gave evidence that there was an obligation to work overtime as required, although he conceded that earlier in the year when there had been discussions as to overtime arrangements it was said that nobody had to work overtime if they did not wish to. Mr Cursio, the managing director of the respondent, conceded that the applicants were under no obligation to work overtime, and did not have to do so if they did not wish to.

A significant consideration in determining this matter is  whether, in the absence of the award operating to impose an obligation to work reasonable overtime, there is any obligation on the applicants to work beyond the hours which are provided for in the employment agreement.  This agreement prescribed the employment as being for 38 hours, permanent day shift. This agreement was signed by the applicants. Nowhere in this document is there any stated obligation to work overtime, reasonable or not. Whilst I am satisfied that the nature of the respondent's business was such that overtime was a regular occurrence, and that the employees came in the course of the employment to know this to be the case, it is clear that this was not the term upon which they were employed. The discussions between the parties as to overtime availability during the course of the employment did not alter the nature of the obligations which existed.  

Having regard to the provisions of the award and their application, at least on the face of the respondent’s records, to both employees and, in the case of the second applicant, operation at the commencement of the employment, together with the usual arrangements between the parties, I am satisfied that the agreement between the parties was to work reasonable overtime. I am satisfied that for the overtime to be reasonable, the rates paid for such overtime must also be reasonable. This may mean reasonable by some objective criteria, such as an award or industry standard, or reasonable because they are rates agreed to by the person required to work the overtime. 

I am not satisfied that a requirement that the applicants work overtime for less than the rate set out in the award which is identified in the employment documentation as being applicable to the employment, and at less than the rate which apparently applies in regulated sectors of industry generally, can be classed as a "reasonable" overtime. For there to be a valid reason for termination of employment, the reason relied upon must be “sound, defensible and well founded”. (See: Selvanchandran v Peteron Plastics Pty Ltd, an unreported decision of Northrop J, Industrial Relations Court of Australia, 7 July 1995). I am not satisfied that there was any failure on the part of the applicants to meet their obligations in respect of the employment. I am not satisfied that the respondent had valid reason to terminate the employment of either applicant. I find that there has been a contravention of s170DE(1) of the Act.

It is appropriate to briefly comment upon the application of s170DE(2) to this matter. There are additional factors in this case which, had I determined the question arising under s170DE(1) differently, would nevertheless have constituted the terminations harsh, unjust or unreasonable.

They include that it was harsh and unjust of the respondent not to negotiate, and to simply terminate the employment in circumstances where there was no award regulation and no express contractual term to identify clearly the rights and obligations between the parties,  and where the evidence was that the respondent was not in fact left without anybody to do the overtime that evening or on following evenings. The respondent had an alternative to requiring both applicants to work overtime and did exercise that alternative by utilising other employees who were willing to work the overtime for the rate of pay the respondent was prepared to pay.

It is clear that the respondent by its employee Mr Boughey discussed with the second applicant, Mrs Bingula, the matters of concern to it and the reasons for termination of employment. I am not satisfied that there was a failure to comply with the requirements of s170DC in relation to Ms Bingula. In so far as the first named applicant, Ms Adamovic, is concerned, in the course of all of the discussions between the parties, the second named applicant acted as interpreter on her sister’s behalf. She was responsible for conveying her own position and that of her sister. Counsel for the applicants submitted that there was a failure to give Ms Adamovic an opportunity to respond to the allegations against her because the conversations were not translated for her individually and the discussions took place via her sister, Ms Bingula.

I am not satisfied that there was anything unsatisfactory about the procedure adopted for the discussions with Ms Adamovic. This was the way in which Ms Adamovic elected to approach the respondent and to have her views conveyed to it. The respondent was entitled to assume that its position was being fully and properly conveyed to Ms Adamovic, as I am satisfied was the case. There was no contravention of s170DC of the Act. 

Having regard to my findings that there has been a contravention of the provisions of the Act I now turn to consider the question of remedy. The applicants contend that an order for reinstatement would, in all the circumstances, be impracticable. This is because they say the environment in the workplace would be unpleasant for them to return to. They further submit that since the termination of the employment, both applicants have obtained alternative employment which, whilst on a casual basis, provides for income in excess of that earned whilst they were in the employ of the respondent.  They have indicated to the court a desire to remain in that employment and a desire not to return to the employ of the respondent.

The respondent on the other hand submitted that there was no impediment to the applicants being reinstated. During the course of the proceedings an open offer was made by the respondent to re-employ the applicants, on the same terms and conditions as previously prevailed. This is relied upon by the respondent in relation to remedy and compensation. The difficulty that I have with this offer is that it was the very uncertainty as to the terms and conditions which applied, together with the dispute as to the applicants’ entitlements, which led to the termination of the employment and thus this application. In this case an order for reinstatement would in my view inevitably lead to further dispute as to those terms and conditions. Further the applicant Ms Adamovic is a recent immigrant to this country, arriving in July 1994. She speaks little English and is heavily reliant upon her sister for her day to day community and workplace dealings. She is in this sense isolated and unable to fully represent herself in respect of any such matters as to terms and conditions which may still be in dispute between the parties. There is a significant disability suffered by  her and I am not satisfied that to reinstate her to a position in the existing workplace environment, where there is no certainty as to terms and conditions, would be appropriate. Having regard to the above matters I am satisfied that an order for reinstatement would be impracticable.

I turn now to consider whether in all the circumstances an order for compensation ought be made. The applicants’ history of employment indicates that they had a regular work attendance pattern and a consistent employment history. They were both good workers, with no record of misconduct or failure to perform work satisfactorily.  I am satisfied that but for the termination of the employment they were likely to have continued in the employment for some time. I am also satisfied that there is no conduct on the part of the applicants which would suggest that, in all the circumstances, it is not appropriate to award a remedy in compensation.

There is one aspect of the conduct of the applicants relied upon by the respondent in relation to the issue of and quantum of compensation. The evidence was that on the day after the employees were notified of the termination of employment, Mr Cursio offered them an opportunity to reconsider their position regarding overtime and stay on with the respondent. The respondent says that their failure to do so aggravated the losses they suffered, and therefore compensation should be reduced or not lie as a result. This offer was not in fact an offer of reinstatement but a conditional offer of re-employment subject to the applicants’ compliance with the very demands which caused the termination of employment in the first place. The offer was illusory and is not a relevant circumstance to take into account as to whether compensation ought lie or as to quantum, and I do not do so.

I now turn to consider the amount of compensation.

It is necessary in this matter to assess the amount of loss suffered by the applicants as a result of the termination of their employment. The firstnamed applicant ceased employment on 14 August 1995, and the secondnamed applicant on 7 August 1995.  I am satisfied that between the date of cessation of work to the date of obtaining regular casual employment with their current employer, the applicants suffered loss in wages.

Having regard to the applicants’ indication that they were not prepared to work overtime in the employment and the respondent’s position in relation to the wage rate for overtime, I am satisfied that the applicants would have been unlikely to have worked ongoing overtime in any continuing employment. Therefore, the loss of income is to be assessed with regard to ordinary time earnings between the date of cessation of the employment after termination and the date of the commencement of employment with the current employer, which occurred on 2 October 1995. I am satisfied that the usual base weekly wage for the firstnamed applicant was $349.98 and for the secondnamed applicant, $ 367.08. 

The applicants are entitled to compensation in the amount of wages lost in that period, with a deduction being made for income from employment in that period. 
In the order for compensation I make an allowance of one additional week of compensation in recognition of the casual nature of the new employment. In the circumstances, the amount of compensation is to be a gross amount. This is because the uncertainty of the applicants’ ongoing employment, together with the period of unemployment their earnings in that time and any income rebates that may be available to them, makes their taxation status impossible to assess at this time,  and awarding a net amount with allowance for taxation is likely to result in the applicants receiving less compensation than that to which they would otherwise be entitled. 

I have calculated the amount of wages lost by the firstnamed applicant, together also with the weeks allowance, to be in the sum of $ 2,799.84. From that is to be deducted the amount of $ 914.17 which I am satisfied is the sum of her earnings in the period to 2 October 1995. The amount of compensation ordered in respect of the firstnamed applicant is $ 1,885.67.  I have calculated the amount of wages lost by the secondnamed applicant, together with the additional week allowance referred to above, to be in the sum of $2,936.64.  From that is to be deducted the amount of $1,007.46 which I am satisfied is the sum of her earnings in the period to 2 October 1995. The amount of compensation ordered in respect of the secondnamed applicant is $ 1,929.18.

The orders of the Court shall be:

1. That in matter 4308 of 1995 the respondent pay to the applicant      compensation in the sum of $ 1,885.67.

1. That in matter 4310 of 1995 the respondent pay to the applicant      compensation in the sum of $ 1,929.18.

1. Time for payment is twenty one days from the date of order. 

I certify that this and the preceding  eleven (11) pages
are a true copy of the reasons for decisions of
Judicial Registrar Parkinson.

Associate:
Date:  4 March 1996

APPEARANCES

Solicitors for the applicants:  Slater & Gordon
Counsel appearing for the applicants:  Ms J Patrick

Solicitors for the respondent:  Macpherson & Kelley
Counsel appearing for the respondent:  Mr P Harris

Dates of hearing:  30 & 31 January 1996