Mr Manuel Joy v Downunder Mining Pty Ltd

[2015] FWC 529

[2015] FWC 529

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Manuel Joy
v
Downunder Mining Pty Ltd
(U2014/11592)

COMMISSIONER CLOGHAN PERTH, 23 JULY 2015

Application for relief from unfair dismissal - jurisdictional objections.

[1] This is an application by Mr Manuel Joy (Mr Joy or Applicant) seeking a remedy for alleged unfair dismissal from his former employer, Downunder Mining Pty Ltd (Downunder or Employer).

[2] The application was made pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[3] In response to the application, the Employer asserts that the Applicant is not protected from the unfair dismissal provisions of the FW Act, because:

• he resigned from his employment on 4 July 2014;



• his annual rate of earnings is more than the high income threshold of $133 000;



• an enterprise agreement does not apply to his employment;



• a modern award does not cover the Applicant’s employment; and in any event,



• the business is a small business, and the dismissal was consistent with the Small Business Fair Dismissal Code (SBFDC).

[4] The Applicant was represented by Ms C Tsang of counsel. The Applicant gave evidence on his own behalf.

[5] The Employer was represented by Mr N Draper of counsel. Mr Doug Tolj, Board Chairperson, gave evidence on behalf of the Employer.

[6] At the hearing, both parties agreed that the Employer was a small business employer pursuant to s.23 of the FW Act.

[7] The Applicant conceded that an enterprise agreement did not apply to his employment.

[8] The Employer no longer pressed the assertion that the Applicant was dismissed in accordance with the SBFDC.

[9] As a consequence, the remaining jurisdictional objections to be determined are:

• was the Applicant dismissed or did he resign on 4 July 2014?



• what was the Applicant’s annual rate of earning? and



• did a modern award covered the Applicant’s employment?

[10] At the hearing, the parties agreed that the Fair Work Commission (Commission) should consider the threshold jurisdictional objection of whether the Applicant was dismissed from his employment in accordance with the meaning of dismissed in s.386(1) of the FW Act.

RELEVANT LEGISLATIVE FRAMEWORK

[11] The relevant meaning of dismissal is found in s.386(1) of the FW Act as follows:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

...”

RELEVANT BACKGROUND

[12] The Applicant was, at all material times, co-founder, director, shareholder and employee of Downunder.

[13] Mr Doug Tolj, who gave evidence for the Employer, was also a co-founder, director, shareholder and employee of Downunder.

[14] At the relevant time, the Downunder Board of Directors consisted of the following members:

• Mr Doug Tolj: Director and Chairperson;



• Mr Manuel Joy: Director and Company Secretary; and



• Mr David Tolj: Director.

[15] All three directors are employees of Downunder. Mr Doug Tolj is the Drilling Equipment Manager. Mr David Tolj is Sales and Technical Support. Mr Joy does not state in his witness statement his designation as an employee. The Employer’s organisation chart designates Mr Joy as the Finance and Administration Manager. Mr Joy’s Statement of Facts asserts that “immediately prior to his dismissal, the Applicant was employed by the Respondent as its Ventilation Division Manager pursuant to his Employment Contract dated 1 July 2012”. 1

[16] Mr Joy asserts that his employment was terminated on 4 July 2014 without notice 2.

CONSIDERATION

[17] On 9 May 2014, Downunder received a valuation report for the Company from Delloitte Touche Tohmatsu Limited.

[18] On receiving the Valuation Report, Downunder held a Board meeting on the same day.

[19] At the Board meeting, the directors discussed Mr Doug Tolj and Mr David Tolj (collectively the Toljs) purchasing shares held in the Company by Manuel and Sherly Joy, as trustees of the Joy Family Trust.

[20] Following the 9 May 2014 Board meeting, Mr Joy sent to the Toljs on 21 May 2014, an email entitled “Exit Plan” with a spreadsheet attached. The relevant content of the email is as follows:

“As soon as the share transactions are completed, I wish to retire from Downunder Mining in a dignified way. Now the value of the shares has been established by the professional firm.

However, when I look back from a retired person’s perspective every dollar I can save is important for the coming years of myself and my wife. My accountant confirmed that the dividend option is more tax effective in my situation. Therefore I would like to propose my exit plan as attached. Once we can come to an agreement on this matter, we can arrange for a meeting with Tony Macri to finalise the transactions so that it can be legally correct and other shareholders or ATO cannot question our transaction.

I consider it is important that all our transaction should be friendly and not affecting the operations of the company or giving any bad impression among employees, customers, suppliers and shareholders. For this reason, I was avoiding any discussion on these matters over the last few days. Once we agree on the exit plan’s terms, I believe that everything can go on as normal and I can retire in a most dignified way.

If you feel the proposal I have made is not fair and reasonable please make your suggestions so that we can come to a conclusion.” (my emphasis)

[21] The plain and ordinary meaning of the first sentence in the above email is that when “the share transactions have been completed, I wish to retire from Downunder Mining”.

[22] The Australian Concise Oxford Dictionary (ACOD) defines “wish” as “have as a desire or aspiration...want...one hopes for...express wish that one may have...request...implied command...hope for fulfilment”.

[23] Mr Joy specifically is seeking to “retire”. The ACOD defines retire as “...cease from or give up office or profession or employment...voluntary terminate”.

[24] Mr Joy also portrays his retirement into the future, and looking backwards from a “retired person’s perspective”.

[25] In the third paragraph of Mr Joy’s email, he introduces a further condition to his retirement, and that is, “agreement on the exit plan’s terms”.

[26] The Exit Plan spreadsheet attached to the email of 21 May 2014 , is divided into three components:

• Share Transfer;



• Employment Termination; and



• Proposed Retirement Date. 3

[27] On the same day (21 May 2014), Mr Doug Tolj responded to Mr Joy by email. The relevant parts are:

“If Joy Family Trust likes to sell shares to Downunder Mining and that and (sic) you wish to exit from the company, then company shall be prepared to assist you to choose the best option to minimize impact of tax imputation and to maximize your net income.

However, this must be conducted lawfully in accordance with…” 4 (my emphasis).

[28] Mr Joy, in his written evidence, refers to his email of 21 May 2014 and concedes that he put the proposal to retire on 14 July 2014 and sent it to Mr Doug Tolj 5. Mr Joy also concedes that the Employer never rejected the proposed retirement date of 14 July 20146.

[29] When it was put to Mr Joy that the email of 21 May 2014 was in effect his notice, he replied, “No – never” 7. Cross examination continued as follows:

“As soon as the share transaction is complete I wish to retire from Downunder Mining”. That’s on 21 May. Aren’t you saying there that once the contract for the transfer for the sale has been completed you are retiring?---No.

No?---No.

What do you mean to say? What are you saying there in respect of paragraph 2 of the 21 May letter?---You can proceed with the procedure for my retirement as an employee.

There’s nothing mentioned of procedure. You state you wished to retire. You are retiring on that date. That’s what you’re saying?---I haven’t given any notice. My understanding there has to be a notice.

This is a notice. “I wish to retire. Once the share transfers have taken place I wish to retire”. It’s unequivocal?---No, it was not a notice.

It may not be a notice but do you accept that it is interpreted as a form of notice. Although it may not be - - -?---No, I can’t accept that.

You don’t accept that. When you go on and talk about a retired person’s perspective in the following paragraph, that doesn’t tie in with the notice that you wish to retire and that you’re going to retire?---No. ” 8

[30] As I apprehend, Mr Joy’s submission, it is that his retirement was subject to the Tolj’s purchasing his family trust’s shares and what he describes as the “exit plan’s terms” 9. Alternatively, if that submission is found wanting, the Employer cannot rely on his email of 21 May 2014, as his intention to retire, because he has not given proper notice10.

[31] There is no dispute that Mr Joy’s family trust sold its shares to the Toljs.

[32] If Mr Joy’s retirement was subject to an agreed Exit Plan, a number of issues need to be considered.

[33] After a “director’s discussion”, it appears that the Directors agreed that the “Exit Plan” had to be carried out “in accordance with the correct tax laws, relevant industrial statutory regulations and not to the detriment of the company whatsoever” 11.

[34] From Mr Doug Tolj’s response of 21 May 2014, I do not accept Mr Joy’s evidence that “he [Mr Doug Tolj] accepted that exit plan”. By this, I mean that Mr Doug Tolj accepted the content of the spreadsheet with specific reference to redundancy 12. Plainly and clearly, Mr Tolj stated that the “exit plan” had to be legally sound, even going so far as to say that Mr Joy and Mr David Tolj should obtain legal advice to “insure (sic) that we are complying lawfully with [Mr Joy’s] proposal”13.

[35] It is notable that Mr Joy, up to 4 July 2014, was a Director and shareholder of Downunder. As a Director he had an obligation to the Company, and also ensure that there was no conflict of interest between himself and the Company.

[36] The “Exit Plan” contained payment for accrued but not accessed “personal leave” and redundancy payments. These matters will be discussed later.

[37] I now turn to Mr Joy’s other email of 19 June 2014. The relevant parts of the email, for the purposes of this Decision, are as follows:

“My [Mr Joy] intention was to come to office on Monday to submit the BAS statement and transfer the authorisation to David and Genevieve, so that they can submit the BAS statements from next month onwards.
…
Next week I may be taking few more days’ annual leave.

Regarding my employment termination, if you don’t require my services I can leave on the first week of July. I can come for one or two days to complete all the formalities of transferring all my duties and responsibilities.
…
I respect your decision not to pay any accumulated personal leave.

In my last proposal I have indicated that I would like to buy the car, computer and mobile phone.

I am not allowed to salary sacrifice accrued annual leave. Is it possible to buy the above items using the amount from my accrued annual leave?

Since I need to make a tax effective plan for the final payout, I would appreciate it if you can let me know your decision on this matter and the details of the termination pay.” 14 (my emphasis)

[38] Mr Joy informs the Employer he can “complete all the formalities of transferring all my duties and responsibilities”. Clearly, in the circumstances, this is indicative of a person ceasing employment.

[39] The Employer has informed Mr Joy that it will not pay out his accrued, but unused personal leave; the Applicant accepted this decision.

[40] The proposal by Mr Joy to buy the car, computer and mobile telephone are also demonstrative of Mr Joy’s employment come to an end.

[41] It should be noted that Mr Joy is seeking a decision and details of his “termination pay”.

[42] On 20 June 2014, Mr Joy forwarded correspondence to shareholders of Downunder which commences:

“After 17 years of service to Downunder Mining, and at age 67, Manuel Joy has indicated he is finally retiring...”

[43] While it is signed by Mr Joy, it was clearly drafted by another person. However, Mr Joy has not taken objection to the descriptor that he was “retiring” from “Downunder Mining”. Further, I do not accept his evidence that he understood the reference to “retirement” as retirement as a director. As a Company Secretary, long term director and presumably with the benefit of examining a draft Share Sale Agreement, he knew the difference between resignation as a director and retirement from employment.

[44] On 27 June 2014, the Toljs and the Joy Family Trust executed the Share Sale Agreement.

[45] On 4 July 2014, the Toljs purchased the second and final tranche of the Joy Family Trust shareholding pursuant to the Share Sale Agreement.

[46] On 4 July 2014, the Applicant resigned as a director of Downunder in accordance with the Share Sale Agreement.

[47] Mr Joy states, in his written evidence, “if the terms surrounding the cessation of my employment could not be agreed, I intended to continue my employment with the Respondent. Therefore on 27 June 2014 I prepared a Leave request Form to enable me to take leave from 6 July 2014 to 6 October 2014”.

[48] On 4 July 2014, the Applicant submitted an application for long service leave (LSL) at approximately 6:15 pm. The LSL was to commence on Sunday 6 July 2014, which is presumably meant to read Monday 7 July 2014. Mr Joy’s scheduled return from LSL is dated 6 October 2014.

[49] On 7 July 2014, Mr David Tolj sent an email to the Applicant entitled “Your Retirement”. The Employer rejected the application for LSL as Mr Joy had retired 15.

[50] On 7 July 2014, Downunder paid Mr Joy his accrued, but untaken, annual leave and LSL.

[51] On 8 July 2014, Mr Joy communicated, through his legal representative, to the Employer that:

• he remained an employee;



• he gave notice on 4 July 2014 that he was taking long service leave to expire on 6 October 2014; and



• denied that he retired. 16

[52] The dispute between the parties continued until 8 August 2014 when the Applicant’s legal representative advised Downunder that Mr Joy accepted the Employer’s repudiation of his contract and terminated his contract of employment with immediate effect. Mr Joy also advised that, to avoid doubt, he asserts that his termination of employment constitutes a constructive dismissal pursuant to paragraph s.386(1)(b) of the FW Act.

[53] The Employer primarily relies upon Mr Joy’s emails of 21 May and 19 June 2014 to contend that the employment relationship ceased, by the Applicant’s retirement, on 4 July 2014.

[54] As I previously outlined, the exit plan consists of three (3) components: Share Transfer; Employment Termination; and Proposed Retirement Date.

[55] The Share Transfer metrics are not relevant for the purposes of this Decision.

[56] Under the title “Employment Termination”, Mr Joy includes monetary entitlements of accrued but unused annual leave and LSL. In addition, Mr Joy includes two further amounts relating to “Personal Leave” and “Redundancy” which were to be treated as an Eligible Termination Payment. The Exit Plan also sets out “Salary Sacrifice” of a “car at book value, computer, mobile phone and an amount to superannuation”.

[57] The Exit Plan contains content which clearly indicates that Mr Joy is departing the organisation in its entirety. The conclusion, as set out by Mr Joy in the Exit Plan, is a “proposed retirement date”.

[58] According to Mr Joy’s evidence, if the terms of his cessation of employment could not be agreed, he intended to continue as an employee. If that was the case, there is no evidence that he took any action with the Employer of the lack of agreement, or any attempt to reach agreement on his termination payment. On the evidence, it would appear that he kept to himself the lack of agreement on the terms of his cessation of employment and his intention to continue as an employee. Alternatively, his application on 4 July 2014 for LSL was for other reasons.

[59] At 10:06 am on Monday 7 July 2014, the Employer sent an email to Mr Joy which, under the heading “Your Retirement” relevantly reads:

“as per your email from the 19th June, where you gave us notice your (sic) are retiring, we consider you retired from the organisation the 4th July 2014. As a courtesy to you on Friday, the company granted access to you the company vehicle so you can resolve some tax issues between you and your accountant.

Your application for leave is rejected as we consider you retired and the company has paid out today what your entitlements.”

[60] Mr Joy’s written evidence is that:

“On Monday 7 July 2014 I checked my bank account and the Respondent had paid my annual leave and long service leave entitlements.

I did not receive any payment for redundancy or pay in lieu of notice”. 17 (my emphasis)

[61] It is interesting that Mr Joy refers to “pay in lieu of notice” in his evidence when, according to his own proposed Exit Plan entitlements on 21 May 2014, it does not include “pay in lieu of notice”. Further, it is not referred to in any documentary evidence provided in the circumstances leading up to Mr Joy’s cessation of employment.

[62] I consider it reasonable to infer that the reason why Mr Joy did not include “pay in lieu of notice” as an “entitlement”, was due to his proposal to retire from employment. Alternatively, but similarly, the Employer had not given him notice of termination of employment, and consequently, Mr Joy was not entitled to compensation for being unable to work out his notice period.

[63] On 25 June 2014, Mr Joy sought information with regard to the “termination payment and salary sacrifice” as soon as possible. Mr David Tolj, on behalf of the Employer (of which Mr Joy was still a director) responded on 1 July 2014 that, “in cases of retirement the company is not liable to pay either redundancy or personal leave. It has not done so in the past and we will keep to this policy”. 18 There is nothing remarkable with the position adopted by the Employer.

[64] Whether it was Mr Doug Tolj who raised the issue of redundancy or not, it was clear that the cessation of Mr Joy’s employment was not a case of redundancy.

[65] Mr Joy’s written evidence is that, it was his “understanding that my services were no longer required and my position was therefore to be made redundant”. In my view, the plain and ordinary meaning of the Applicant’s statement is that if the Employer does not require his services, it would be convenient for Mr Joy to leave in the first week of July. The link is between the Employer no longer requiring Mr Joy’s services, and a convenient timing of his departure. The link is not of the Employer no longer requiring Mr Joy’s services because he had been made redundant, and the Applicant determining a convenient date to cease employment.

[66] Mr Joy properly, in my view, subsequently conceded in cross examination that he was not made redundant 19.

[67] For the reasons outlined immediately above, I am satisfied that if, as Mr Joy contends, his retirement was conditional upon the fulfilment of the Exit Plan – an exit plan which was legally compliant– such a condition was fulfilled.

[68] I now turn to the submission that if his email of 19 May 2014 was notice of his retirement, it was defective because of a lack of notice.

[69] Adopting the ordinary definition of wish and retire above in paragraphs [22] and [23], I am satisfied that Mr Joy wished to cease employment. I would have some concern if, on the evidence, it was not possible to ascertain the date of cessation of employment. However, in his “Exit Plan” clearly states that the proposed retirement date is 14 July 2014.

[70] While Mr Doug Tolj’s response, on the same day (21 May 2014), with the words “thank you for choosing a dignified way”, indicate more regarding the manner of the cessation of employment than acceptance of Mr Joy’s retirement. However, in the circumstances, I find that Mr Doug Tolj’s email of 21 May 2014 was an acceptance by the Employer of Mr Joy’s wish to retire, and retire on 14 July 2014.

[71] It is notable that the factors which Mr Joy included in his “Employment Termination” entitlements are amounts for accrued but unused annual leave and LSL, but not any payment in lieu of notice. I have already dealt with the purported payments for redundancy and personal leave. In my view, there can be a strong positive inference that payment in lieu of notice was not included because, Mr Joy’s “notice” was, at the time, nearly two months before his retirement.

[72] I have referred to notice in inverted commas to deal with the question of whether it was notice of retirement. In view of the unusual circumstances of Mr Joy’s retirement, I am satisfied from the context, that the email can be fairly construed as Mr Joy giving notice of his retirement and the due date of when it was to take effect.

[73] In summary, I am satisfied that an ordinary and reasonable interpretation of Mr Joy’s email of 19 May 2014 and Mr Doug Tolj’s response of the same day, evinces an intention of Mr Joy to retire at the future date (17 July 2014) subject to certain lawful conditions being met. The totality of the evidence demonstrates that these lawful conditions were met and I have no express statement, to the contrary, from Mr Joy up to and including the ordinary close of business on 4 July 2014.

[74] Further, as a matter of fact, after 19 May 2014, the Joy Family Trust, as part of the share sale agreement, “restrained” itself in a number of ways. This restraint is indicative of, not only the selling of shares but also of a severing of the relationship between Mr Joy and the purchasers of the shares, the Toljs.

[75] Mr Joy sought a change of mobile telephone ownership number dated 25 June 2014. Change of ownership was to commence on 30 June 2014.

[76] All these factors, on any ordinary and reasonable reading, are not of a person expecting to continue his employment but ceasing employment.

[77] An email from Mr David Tolj of 1 July 2014 indicated that he and Mr Doug Tolj have no objection to Mr Joy’s request to bring forward his retirement date to 3 or 4 July 2014. Further, the email contains the purchase price of the Company vehicle and various taxation matters relating to Mr Joy’s accrued entitlements.

[78] Notwithstanding all these facts, Mr Joy gave oral evidence:

“Until 4 July they did not give me any indication about my retirement or acceptance of exit plan. Then I decided I go for long service leave and when I come back discuss this again and come to an agreement.” 20

[79] Firstly, Mr Joy’s oral evidence is inconsistent with all of the documentary evidence.

[80] Secondly, Mr Joy, in cross examination, was asked why he should receive a redundancy pay, his evidence was that he understood that Mr Doug Tolj had accepted the “Exit Plan” inclusive of redundancy. To put it bluntly, Mr Joy cannot have it both ways – he cannot say that he went on LSL because there was no acceptance of the Exit Plan, and at the same time, claim redundancy payment because Mr Doug Tolj had accepted his Exit Plan.

[81] The inconsistency of Mr Joy’s evidence was compounded by the implausibility of the Applicant giving evidence that he considered an application for three (3) months LSL on a Friday, after business hours (6:15 pm) commencing on the following Monday was “done correctly” 21. Such evidence from a Company director defies belief.

[82] A finding as to whether or not there has been a termination of employment at the initiative of the employer is a finding of jurisdictional fact (Elizabeth Gorczyca v RMIT University (2002) RR922414 [19]).

[83] “Terminated on the employer’s initiative” requires the important feature that an act or actions of the employer resulted directly, or consequentially, in the termination of employment – and the employment relationship is not voluntarily left by the employee.

[84] If an employee voluntarily terminates the contract of employment, there is no dismissal and the employee has no remedy under the FW Act.

[85] I am satisfied, on the evidence, that from the time that Mr Joy’s Family Trust share transaction had been completed, he was to retire. On 21 May 2014, the intended date was to be 14 July 2014 which was subsequently changed to 4 July 2014.

[86] All the communications between the parties does not change gold into base metal.

[87] On 1 July 2014, when still a Director of Downunder, Mr Joy was told it was Company policy not to pay redundancy “in cases of retirement” 22. Mr Joy did not respond or take issue, because retirement and redundancy are entirely different concepts.

[88] Finally, on 19 June 2014, Mr Joy gives the Employer notice that he may be taking “a few more days annual leave” on the following week. However, he considers himself on LSL for three (3) months, when giving “notice” out of business hours on a Friday to commence LSL on Monday and not awaiting approval as a correct procedure.

[89] In conclusion, I find that Mr Joy gave notice of his intention to retire on 21 May 2014. The Employer agreed to Mr Joy’s request on the same day. Mr Joy’s retirement was subject to the completion of a share transaction and receiving his lawful employment benefits. Mr Joy was advised of his employment benefits up to and including on 1 July 2014. From the totality of the circumstances, I do not find the Employer’s rejection of redundancy payments, pay in lieu of notice or accrued but unused personal leave, as anything but normal in the circumstances.

[90] Mr Joy’s employment ceased due to retirement on 4 July 2014.

[91] For the reasons set out above, Mr Joy’s application must be dismissed as the Commission has no jurisdiction to deal with a matter where employment has not been terminated at the employer’s initiative. An order to this effect is issued jointly with this Decision.

COMMISSIONER

Appearances:

C Tsang of counsel for the Applicant.

N Draper of counsel for the Employer.

Hearing details:

2015:

Perth,

19 January.

 1   Exhibit A4

 2   Exhibit A6 (3)

 3   Exhibit A6

 4   Exhibit A6 (2)

 5   Transcript PN280

 6   Transcript PN284

 7   Transcript PN294

 8   Transcript PN295 to PN301

 9   Exhibit A6 (1)

 10   Transcript PN298

 11   Exhibit A6 (2)

 12   Transcript PN336

 13   Exhibit A6 (2)

 14   Exhibit R5 (2)

 15   Exhibit R5 (7)

 16   Exhibit A6(12)

 17   Exhibit A6

 18   Exhibit R5 (6)

 19   Transcript PN357 and PN360

 20   Transcript PN303

 21   Transcript PN399

 22   Exhibit R5 (6)

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