Monaghan v Wiluna Gold Mines Pty Ltd

[1996] IRCA 238

DECISION NO:  238/96

CATCHWORDS

INDUSTRIAL LAW -  TERMINATION OF EMPLOYMENT - REDUNDANCY - offer of work on same terms and conditions - demotion - whether termination at the initiative of the employer

Industrial Relations Act 1988 ss 170CA, 170CB, 170DE, 170DF, 170EA, 170EA(1),

Strachan v Liquorland (Australia) Pty Limited (unreported, Moore J, Industrial Relations Court of Australia No. 48/96, 6 February 1996)
Siagian v Sanel Pty Limited (1994) 1 1RCR 1
Association of Professional Engineers, Scientists and Managers Australia v Skilled Engineering Pty Limited (1991) 1 IRCR 106
Leanne Brackenridge v Toyota Motor Corporation Australia Limited (unreported, Beazley J, Industrial Relations Court of Australia No. 162/96, 19 April 1996)

John Francis MONAGHAN -v- WILUNA GOLD MINES PTY LTD  -
WI 2584 of 1995

Before:                    BOON JR

Place:            PERTH

Date:                        4 JUNE 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY     

WI 2584 of 1995

B E T W E E N:  

John Francis MONAGHAN
           Applicant

A N D:  

WILUNA GOLD MINES PTY LTD
           Respondent

MINUTE OF ORDERS

4 JUNE 1996             BOON JR

THE COURT ORDERS THAT:

1. The application be dismissed.

   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
   WESTERN AUSTRALIA DISTRICT REGISTRY

   WI 2584 of 1995

   B E T W E E N:  

   John Francis MONAGHAN
              Applicant

   A N D:  

   WILUNA GOLD MINES PTY LTD
              Respondent

   REASONS FOR DECISION

   4 JUNE 1996   BOON JR

2. This is an application under Section 170EA of the Industrial Relations Act 1988. The applicant is seeking payment of compensation in respect of the alleged unlawful termination of his employment by the respondent.

3. The applicant, Mr Monaghan, alleges that the provisions of the Industrial Relations Act were breached in a number of ways. Firstly, it is said that there was no valid reason for the termination and that in any event the termination was harsh, unjust or unreasonable contrary to the provisions of Section 170DE of the Act. Further, it is alleged that the termination occurred because of the applicant's age contrary to Section 170DF.

4. The respondent, Wiluna Gold Mines Pty Ltd, denies that it has breached the provisions of the Act and says that this Court has no jurisdiction to hear the matter as there was no "termination at the initiative of the employer".  The respondent further argues that the applicant, in signing a document containing a release, has compromised his claim and the Court accordingly should not deal with the application.

5. There is an associated claim by the applicant for the payment of $2,499.52.  The applicant alleges that the respondent miscalculated the redundancy payment due to him upon termination.

BACKGROUND FACTS

1. Mr Monaghan is 54 years old and is a qualified fitter and turner by trade.  He has many years' experience in the mining industry and his most recent positions before being employed by the respondent were as maintenance planners or supervisors.  Mr Monaghan was employed by Wiluna Gold Pty Ltd on 8 November 1993 as a maintenance planner.  He continued in that position until 17 May 1995 when there was a restructure at Wiluna Gold's plant.  Three men, including Mr Monaghan, were then appointed to the positions of maintenance supervisor/planner at Wiluna Gold.  The Court heard evidence that Mr Monaghan and the other two men occupying similar positions would work on a rota basis doing one week of planning, one week as a supervisor and then have one week off work.

2. On 12 December 1995 when Mr Monaghan returned from his one week off work, he was summoned to see Mr Kenny, who was a contract chief engineer in charge of the engineering department at Wiluna Gold.  Mr Kenny explained to Mr Monaghan that Wiluna Gold was restructuring its engineering section and that it had decided to have only one maintenance supervisor instead of three.  The new maintenance supervisor was to be Wayne Lee, who had previously been a leading hand working in a position diagonally underneath Mr Monaghan in the company's hierarchy.  Mr Monaghan's position had been abolished.  Mr Monaghan, however, was offered the position of maintenance clerk on the same terms and conditions under which he had been employed as a maintenance supervisor except that his functions and responsibilities would change.  Mr Monaghan informed Mr Kenny that he considered this position to be a demotion.  Mr Kenny informed Mr Monaghan that the maintenance clerk's position was the only one available to Mr Monaghan.  The only alternative was to see Mr Brown, the resident mine manager, about arranging a redundancy payout.  Mr Monaghan told Mr Kenny that he wanted time to think about it.  He returned that afternoon and suggested a different structure by which he would be working beside Wayne Lee instead of technically under his supervision.  Mr Monaghan was advised that this was not possible.  Mr Monaghan then advised Mr Kenny that there was no way that he would work under Wayne Lee and that they should probably see Mr Brown. 

3. The Court heard evidence that the duties of the maintenance clerk involved some of the duties performed by Mr Monaghan as a maintenance supervisor or planner.  The difference was in the level of responsibility of the position and the fact that a maintenance clerk does not supervise other workers.  Although some of the respondent's witnesses suggested that it was a step sideways rather than a demotion, the weight of the evidence pointed to the fact that the position of maintenance clerk was, in the company's hierarchy, underneath that of a maintenance supervisor.  I am satisfied that what was being offered to Mr Monaghan could be considered to be a demotion, albeit on the same salary and conditions he enjoyed as a maintenance supervisor/planner.

4. Mr Monaghan felt aggrieved as he had not been consulted about the proposed change, he had not been able to provide any input into the decision as to who should be appointed as the sole maintenance supervisor and he felt that with his many years of experience and knowledge of the maintenance system, he should have been appointed to the position ahead of Wayne Lee.  Mr Lee was only 25 years of age and had previously been a leading hand.

5. Mr Monaghan's evidence was that he went to see Mr Brown on the afternoon of 12 December 1995 "to see about a redundancy package seeing I'd rejected the position of maintenance clerk".  The next day Mr Monaghan called back to Mr Brown who presented some documents to him.  Mr Monaghan read the documents and signed a letter in the following terms:

   "Mr Alan Brown

   Resident Manager

   Wiluna Mines Pty Ltd via Wiluna  WA  6646

Dear Alan

I refer to your letter dated 13 December 1995, advising of the company's restructuring at the Wiluna Gold operation and the termination of my employment.

I acknowledge having received payment from Wiluna Gold Pty Ltd of the net amount of $12,654.70 calculated in accordance with the schedule attached to your letter dated 13 December 1995.

In consideration of this payment, I release Wiluna Gold Pty Ltd, its officers, servants and agents in respect of all actions, claims or demands whatsoever which I have or may at any time hereafter have against Wiluna Gold Pty Ltd arising from or in any way related to my employment with Wiluna Gold Pty Ltd or the termination of such employment.

Yours sincerely

(Signed)John Monaghan"

1. The letter to Mr Monaghan from Mr Brown read as follows:

   "Dear John

   Re:  Termination

   We regret to advise you that, due to a restructuring of the engineering department at the Wiluna mining operation, the position of Maintenance Supervisor will become redundant with effect from 13 December 1995.

   Although alternative employment options have been considered, the company has no suitable position and therefore you will be retrenched and your service with this company will terminate on 13 December 1995.

   Details of your severance package are appended to this letter.  The package includes all your pay entitlements until the date of termination, one month's pay in lieu of notice and an ex gratia severance payment.

   We would like to thank you for your contribution to the company's activities at Wiluna Mines during the period of transition and development.

   You are asked to sign and return the attached letter in acknowledgment of your termination notice and acceptance of the severance arrangements.

   Yours sincerely

   A Brown

   Resident Manager"

2. Mr Monaghan's evidence in relation to the letter which he signed was that at the time he signed it he told Mr Brown that he was not happy with the final paragraph and he wanted to check the calculation of redundancy payments.  Mr Monaghan's evidence was that he signed this letter because he thought he would not get his money if he did not sign it.  Mr Monaghan was told by Mr Brown that the calculation of the redundancy payment was carried out in the Perth office and if he was not happy with it, he should speak to the people at head office.

3. Although the letter from Mr Brown to Mr Monaghan dated 13 December 1995 refers to a "termination" and says that no suitable alternative position was available, it is common ground that the position of maintenance clerk at the same terms and conditions was made available to Mr Monaghan and that this position remained open for him until the date of the hearing.  Mr Monaghan chose not to accept that position as he felt it was a demotion and he did not want to work underneath Wayne Lee.  It appears that Mr Monaghan did not bear any personal animosity towards Wayne Lee but felt that he himself should have been appointed to the position of maintenance supervisor.  Mr Brown's evidence was that the letter of 13 December 1995 to Mr Monaghan was worded in that manner so that Mr Monaghan could avail himself of taxation benefits related to redundancy payouts.

4. The Court heard evidence from Mr Gavin Croll, the maintenance engineer with the respondent, who is responsible for the day to day running of the maintenance of the engineering department.  He is also responsible for the organisational structure in the maintenance section.  Mr Croll gave evidence that after the restructure in May 1995 there was a continual process of evaluation.   A review process was set into place whereby the structure of the engineering department was reviewed by Mr Croll and by people external to Wiluna Gold.  Input was sought from employees of Wiluna Gold in this process.  Despite the evidence of Mr Croll in relation to the review process and consultation with Wiluna Gold's employees, there was no evidence which indicated that Mr Monaghan himself had been part of the consultation process.  There is no evidence that Mr Monaghan was consulted about a possible redundancy or restructure.  I accept Mr Monaghan's evidence that the first he knew of the restructure specifically relating to his position was when he was advised by Mr Kenny on 12 December 1995 that his job no longer existed.

5. The evidence of the witnesses in this case coincided in most material respects and it is not necessary for me to make any finding as to the credibility of one witness over another.

6. I am satisfied from the evidence of the respondent's witnesses that there was a situation of genuine redundancy in that the respondent had made a decision, based on its operational requirements, to no longer have three maintenance supervisors and instead only to employ one person in that position.  The respondent's witnesses gave evidence that in allocating positions under the new structure, each person's strengths were looked at.  It was felt that Wayne Lee was the most appropriate person to carry out the maintenance supervisor's position because of his perceived strengths at the tasks involved in that position.  As Mr Monaghan's strengths lay in the use of the computer system and he was the person most able, of the respondent's employees, at that type of work, it was considered appropriate that he be moved to the maintenance clerk's position.

7. It was stressed all along that this was not a case in which Mr Monaghan's performance at the position of maintenance supervisor/planner was in question.  He had performed his job well and the respondent expressed no dissatisfaction with his conduct or the manner in which he had carried out his job.  The respondent's witnesses stressed that they simply looked at the strengths of each person and allocated positions in the new structure accordingly.

WAS THIS A TERMINATION AT THE INITIATIVE OF THE EMPLOYER?

1. Section 170EA(1) of the Act states "A person ("the employee") may apply to the Court for a remedy in respect of termination of his or her employment". Section 170CA of the Act provides that the object of Division 3 of Part VIA is to give effect to the Convention Concerning Termination of Employment at the Initiative of the Employer and the Recommendation Concerning Termination of Employment at the Initiative of the Employer. Section 170CB states that an expression has the same meaning in the Division as it has in the Convention. The terms "termination" and "termination of employment" are defined in the Convention as meaning "termination at the initiative of the employer". This Court therefore only has jurisdiction if there was a termination at the initiative of the employer in this case.

2. In the case of Strachan v Liquorland (Australia) Pty Limited (unreported, Industrial Relations Court of Australia No. 48/96, 6 February 1996) Moore J considered the question whether demotion constitutes "termination" within the meaning of the Act. In that case the employee was demoted from a position as area manager to that of store manager. The employee accepted the position and afterwards instituted proceedings under Section 170EA of the Act. Moore J referred to the conflicting decisions of Wilcox CJ in Siagian v Sanel Pty Limited (1994) 1 IRCR 1 and Gray J in Association of Professional Engineers, Scientists and Managers Australia v Skilled Engineering Pty Limited (1991) 1 IRCR 106. Moore J reviewed the provisions of the Convention in the recommendation and said at pages 14-15 that they provided a "relatively clear indication of the intended scope of these international instruments in their entirety. They concern the loss of employment by an employee. They are not intended to relate to the demotion of an employee who remains in employment with the same employer. There is nothing in the Act that I can discern which suggests the expressions should have some other meaning in the Act, and in Section 170EA in particular, notwithstanding the provisions of Section 170CB". This decision was approved of by Beazley J in the case of Leanne Brackenridge v Toyota Motor Corporation Australia Limited (unreported, Industrial Relations Court of Australia No. 162/96, 19 April 1996).  That case, which also involved a demotion, was decided on the basis of an implied term in the applicant's contract of employment with the respondent.

3. The cases just referred to both dealt with situations in which employees remained in employment with the respondent following a demotion.  In this case, Mr Monaghan declined the offer of continued employment at a different level and chose to accept a redundancy package.

4. The respondent points to the fact that it has complied with Articles 19 and 21 of Recommendation No. 166, which relate to provisions concerning terminations of employment for economic, technological, structural or similar reasons.  It is the respondent's argument that it has sought to minimise the impact of the restructure on Mr Monaghan by offering to continue his employment on the same terms and conditions as he enjoyed prior to the restructure.   The respondent argues that as Mr Monaghan declined to continue in employment and instead accepted a redundancy package, this was not a case of termination at the initiative of the employer.

5. It was argued on behalf of Mr Monaghan that the restructure had the effect of abolishing Mr Monaghan's position of maintenance supervisor.  It was said that Mr Monaghan was given the alternative position of maintenance clerk on the basis that a termination would take place if he did not accept it.  The applicant relies on the letter from Mr Brown to Mr Monaghan dated 13 December 1995 which refers to the termination.

6. It is my view that the letter from Mr Brown to Mr Monaghan must be viewed in light of all the circumstances surrounding this case.   It was common ground that Mr Monaghan rejected the offer of another position with the company.   Just because there was a "termination" of Mr Monaghan's employment does not necessarily mean that it was a "termination at the initiative of the employer".  It is my view that it was Mr Monaghan's decision not to accept the position of maintenance clerk which terminated the employment relationship.  The offer of alternative employment remained open to Mr Monaghan right up to the date of the hearing in this matter.  In these circumstances, I consider that there was no termination at the initiative of the employer and this Court has no jurisdiction to hear the application.

THE QUESTION OF THE DEED OF RELEASE

1. Because of the finding I have made in relation to the question of termination at the initiative of the employer, it is not necessary for me to make a finding in relation to the effect of the document argued to represent a deed of release and a compromise of the claim by Mr Monaghan.  I maintain the reservations I raised with counsel for the respondent in relation to that document, namely, whether an employee could be held to the terms of such a document, particularly in light of the circumstances where Mr Monaghan expressed grave reservations about signing the letter and the fact that Mr Brown encouraged him to speak to the people at head office of Wiluna Gold in relation to the terms contained in it.

WAS THERE A BREACH OF SECTION 170DE?

1. If I am wrong about the question of termination at the initiative of the employer, I consider that there was in any event a valid reason for the termination of Mr Monaghan's employment.  This was a case of a genuine restructure.  Although there was a failure to consult Mr Monaghan in relation to the restructure, I do not consider that in all the circumstances the termination could be said to be harsh, unjust or unreasonable, primarily because there was an offer of alternative employment made to Mr Monaghan.

2. There was no evidence before this Court upon which a finding that the decision to terminate Mr Monaghan was made on the basis of his age. Further, even if there had been a breach of the provisions of Section 170DF, I consider that in all the circumstances of the case it would not have been appropriate to make an award of compensation, once again because of the fact that Mr Monaghan failed to accept the position which was offered to him on the same terms and conditions as his previous position. I understand why Mr Monaghan feels aggrieved by the decision to demote him and I sympathise with him. I do not consider, however, that it would be appropriate in this case, given all the circumstances, to make an award of compensation to Mr Monaghan.

THE REDUNDANCY PAYMENT

1. Mr Monaghan is seeking a payment of $2,499.52 which he alleges is due to him because of an alleged miscalculation on behalf of the respondent of his redundancy payment.  Mr Monaghan's evidence was that he was paid on the 25th of each month and the payment would be the same each month, regardless of the number of hours worked.  He received a $56,100 annual salary which was spread over 52 weeks.  Mr Monaghan says that as he only worked 32 weeks per year, the $56,100 annual salary should have been divided by the number of weeks actually worked.  The redundancy payment actually made to Mr Monaghan was calculated on the basis of dividing the $56,100 annual salary by 365 days to find out how much he earnt each day.

1. I do not accept Mr Monaghan's calculation because it does not concur with the terms upon which he was employed.  His pay did not vary with his rostered weeks off.

2. The application is dismissed.

I certify that this and the preceding eleven (11) pages
are a true copy of the reasons for decision of
Judicial Registrar Boon as recorded in the transcript
and revised by the Judicial Registrar

Associate:

Dated:

APPEARANCES

Counsel appearing for the applicant:                   Mr D Rice
Solicitors for the applicant:  Griffiths Rice & Co

Counsel appearing for the respondent:               Mr P Rutter
Solicitors for the respondent:  Mallesons Stephen Jaques

Dates of Hearing:  1 May 1996

Date of Judgment:  4 June 1996