Neils Christian Glimsholt and Australian Unity Friendly Society Trading as Australian Unity
[1994] IRCA 124
•9 Dec 1994
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - Complaint of unlawful termination - Capacity - Performance - Option of immediate termination or termination within one month - Termination an act of the employer - Reasons for termination - Opportunity to defend allegations - Counselling - Consultation - Mitigation - Compensation.
Industrial Relations Act 1988, S170DB, S170DC, 170DE, S170EA, S170EE
NEILS CHRISTIAN GLIMSHOLT AND AUSTRALIAN UNITY FRIENDLY SOCIETY TRADING AS AUSTRALIAN UNITY
No. VI 297/1994
Before: Ryan JR
Place: Melbourne
Date 9 DECEMBER 1994
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY Matter No VI 297/1994
B E T W E E N: NEILS CHRISTIAN GLIMSHOLT
Applicant
AND:
AUSTRALIAN UNITY FRIENDLY SOCIETY TRADING AS AUSTRALIAN UNITY
Respondent
RYAN JR
MINUTES OF ORDER
9 December 1994
THE COURT ORDERS THAT:
The termination of the applicant’s employment by the respondent contravened Division 3 of Part VIA of the Industrial Relations Act 1988.
The respondent pay to the applicant compensation in the sum of $22,500.
Such payment be made within fourteen days of the date of this order.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY Matter No VI 297/1994
B E T W E E N: NEILS CHRISTIAN GLIMSHOLT
Applicant
AND:AUSTRALIAN UNITY FRIENDLY SOCIETY T/AS AUSTRALIAN UNITY
Respondent
COURT: RYAN JR
PLACE: MELBOURNE
DATE: 9 DECEMBER 1994
REASONS FOR JUDGMENT
THE EMPLOYMENT
The applicant is an accountant. He qualified in his native Denmark. His qualifications may not be formally recognised in Australia but he has worked as a management accountant at least since 14 November 1987.
Initially his employer was the Manchester Unity Friendly Society. Later Manchester Unity merged with ANA Friendly Society to form the Australian Unity Friendly Society (trading as “Australian Unity”). The applicant has therefore worked with the respondent through a predecessor in law for six and a half years from 14 November 1987 to the cessation of the employment relationship in late April 1994.
THE CLAIM
The applicant claims that his employment was unlawfully terminated on 21 April 1994 (paragraph 2 affidavit in support sworn 30 August 1994).
He also contends that on 21 April 1994 a senior officer of the respondent business acting within the scope of his authority and on behalf of the respondent wrongly repudiated the contract of employment and/or unlawfully terminated the employment upon notice (paragraph 3 of contentions of fact and law 22 September 1994).
He further contends that on 22 April 1994 another senior officer of the respondent business acting within the scope of his authority and on behalf of the respondent wrongly repudiated the contract of employment and/or wrongly terminated the employment upon notice (paragraph 4 contentions of fact and law 22 September 1994).
The applicant further contends that on 26 April 1994 he accepted the repudiation of his contract of employment and ceased work or in the alternative ceased work in accordance with earlier directions given by the respondent (paragraph 6 contentions of fact and law 22 September 1994).
Finally the applicant contends that the repudiation(s)/alternatively the termination of the applicant’s employment by the respondent, was an unlawful termination contrary to the Industrial Relations Act 1988 in that:
(a) the respondent did not give to the applicant the period of notice required by s.170DB of the Act
(b)the termination was made without a valid reason or reasons connected with the applicant’s capacity or conduct or the operational requirements of the employer’s undertaking
(c)further or in the alternative, if the termination was a termination for reasons related to the employee’s conduct or performance, the respondent failed to give the applicant an opportunity to respond to the allegation(s) made
(d)further or in the alternative, if the termination was connected with the applicant’s capacity or conduct or the operational requirements of the respondent’s undertaking, the termination was nonetheless not a valid termination, by reason of the respondent’s failure to afford procedural and substantive fairness and/or to pay to him appropriate compensation
(paragraph 7 contentions of fact and law 22 September 1994)
THE RESPONSE
The respondent contends that on 26 April 1994 the applicant voluntarily resigned from his employment or abandoned his employment or repudiated his contract of employment entitling the respondent to accept such repudiation and treat the contract of employment as discharged.
The respondent further contends that if notice of termination was given as alleged by the applicant then prior to the termination of that notice the applicant unilaterally terminated his employment.
Finally, as a matter of law the respondent contends that the termination of employment was not a termination within the meaning of Division 3 of Part VIA of the Industrial Relations Act 1988 and the respondent did not terminate the applicant’s employment
(1)by failing to give a period of notice pursuant to Section 170DB(2) or by failing to pay compensation instead of notice
(2)for reasons related to his conduct or performance within the meaning of Section 170DC
(3)in the absence of a valid reason or reasons connected with the employee’s capacity or conduct or based on the operational requirements of the respondent
(4)harshly, unjustly or unreasonably
(5)for one, more or all of the reasons set out in Section 170DF(1).
THE ISSUES
The application turns on a disputed issue of fact. The issue can be summarised in the colloquialism - did he jump or was he pushed? Was this a resignation by the employee and in no way an act of the employer ending the employment? Was this, on the other hand, a termination of employment brought about by an act of the employer? If it was an act of the employer, what was the act which ended the employment and was it lawful? Was it fair?
THE APPLICANT’S CASE
The applicant gave evidence and his counsel, Mr Mc Garvie, called two other witnesses, a present employee, Mrs. Jennifer Connolly, and a former employee, Mr John Kenneth Jury.
The applicant states that about 3:00 p.m. on 21 April 1994 he was called into the office of his immediate superior, Mr Peter Murray. He says he was told to take a seat and the door was closed and that Mr Murray said something like
“I have some bad news.....your work is not satisfactory.....the options are that you can leave now with one month’s salary or work for a couple of months and we will try and help you find another job.....but while working you will have to put in reasonable hours and if your performance is not satisfactory you will be told to leave immediately”.
The applicant states that the conversation came as a complete surprise and without any prior warning and that he was in a state of considerable shock. The applicant cannot remember any specific reason being given other than that his performance was “not up to standard”.
The applicant requested time to consider the options put to him and he attended work again on Friday 22 April and he states that Murray again called him into his office and that he again advised Murray that he needed more time. Murray cannot remember this second meeting but the Court accepts that it took place.
The applicant gave evidence that about 4:45 p.m. on 22 April he was called into the office of Mr Murray’s immediate superior, Mr Gerald Smith, the Group Finance Manager.
I pause here to note that in his affidavit of 30 August the applicant simply states that “at approximately 4:45 p.m. (on 22 April) I had a conversation with Mr Gerald Smith”. Smith in his evidence denied that he called the applicant into his office. He states that the applicant came into his office uninvited “to discuss business issues”, that the applicant’s manner was “a bit sharp” and that he could “sense” that the applicant was tense or upset and that a conversation then ensued. As far as the court is concerned nothing much turns on that rather minor conflict in evidence. There are numerous other conflicts in evidence that are of much more significance.
The applicant in his evidence and in his affidavit implies that the conversation began with a discussion of progress in the preparation of the budget (for financial years 94/95). At least, in this aspect, this is consistent with Smith’s evidence that the conversation began with “business issues”.
The applicant in his affidavit and in his own evidence deposes that Smith then asked him whether he had made a decision in respect to the conversation the previous day with Murray. Again, there is some consistency in the evidence. Smith’s evidence is that he asked the applicant whether he had thought about the issues raised the day before with Murray.
The Court has concluded that Smith was asking the applicant for “a decision” and that the applicant wanted more time. The question of course arises as to what was the matter on which Smith expected a decision. If the evidence of the applicant is accepted, and it is not really contradicted by the evidence of Murray (the only other person present on 21 April), a decision was expected on whether the applicant was to leave then and there with a month’s pay or to work on for a finite and limited period during which time it had been suggested that assistance would be provided in an attempt to locate alternative employment. It seems quite clear to the Court that Smith expected a “decision” on whatever were the issues discussed by Murray the previous day even though Smith, in answer to a question from the Court, indicated that he had not been briefed as to the outcome of the discussion between the applicant and Murray.
Murray’s evidence is dealt with later but he stated quite clearly on oath that there was a decision which he assumed had been made. In cross-examination he admitted that he might have put options of leaving immediately or after a period although he could not recollect providing such options. Murray, at the end of his evidence in chief, stated that he did not ask the applicant for “an immediate decision” but that the applicant said that he (Murray) “was the best manager he (the applicant) had ever had”. Murray concluded his evidence in chief with an unsolicited and revealing comment that he took this to mean that the applicant “accepted the decision”.
In any event, the applicant went on to depose both in his affidavit and in his evidence in chief that he questioned Smith on the “terms” or “options” and that Smith indicated that the applicant could either leave with one month’s pay or work until 31 May. In his affidavit the applicant states
“It was made clear to me that there was no longer a position for me with Australian Unity”.
The applicant also gave evidence to the effect that, while he could not recall Smith referring to his work performance or to unsatisfactory work, Smith did indicate that the approach being taken was clearly a case of “being nice” to the applicant and that “the alternative would have been.....to take your keys immediately and walk you out of the office”.
After the discussions on 21 and 22 April with Murray and 22 April with Smith, the applicant (although not a member) contacted a representative of the Federated Clerks Union who was also an employee at Australian Unity, Jennifer Connolly (nee Gay). He also contacted Murray McInerny, the Group Administration Manager and his solicitor Ms. Felicity Walsh. He deposes that Ms Walsh advised him not to resign under any circumstances and that it was up to him whether he left his employment immediately or in one month’s time.
The Anzac day holiday fell on Monday 25 April and the applicant returned to work again on Tuesday 26 April. He went and saw Smith in his office and took with him Jennifer Connolly as a witness. While the applicant adopted his affidavit in its entirety in his evidence in chief I do not accept that his advice on this occasion to Mr Smith was couched in the formal terms appearing in paragraph 6 of the affidavit of 30 August 1994. However I do accept that the applicant in the presence of Mrs. Connolly indicated that he would take the option of leaving immediately and that he proposed to take legal action for damages on the basis that his termination of employment was unlawful.
The Court does not propose to deal with the evidence of the second witness for the applicant, Mr Jury, at this stage. It is more convenient to comment briefly on that evidence in the course of findings (see page 7).
There is no need to spend much time either at this stage on the evidence of Mrs Connolly other than to say that her evidence generally corroborated the position as put by the applicant.
THE RESPONDENT’S CASE
Counsel for the respondent, Mr. Kaufman, called three witnesses, Murray McInerny, Manager Administration, Peter Murray, Financial Controller and Gerald Smith, Group Finance Manager.
All three of these witnesses gave evidence to the effect that no one of them could individually terminate the employment of an employee on behalf of the respondent. The tenor of this evidence was that there was policy which required a termination to be approved by “the group manager” and that, in effect, a proposed termination by a senior officer required further endorsement or approval. All that can be said about that is that if there is such a policy no documented evidence of it was tendered. Even if it exists in written or unwritten form there is no evidence that such policy was known to the applicant or conveyed to the applicant and the Court finds that both Murray and Smith individually and possibly in concert were acting on behalf of the respondent in the discussions with the applicant on 21, 22 and 26 April.
McInerny gave evidence of a conversation with the applicant on 21 or 22 April in which the applicant told him that he had been told by Murray that he did not have the skills “to measure up as time went on” and that he was required to look for other work and that he could continue working for the respondent for a short period.
McInerny indicated that
he was shocked and surprised by the information provided by the applicant
Australian Unity had been through a blood letting process sanctioned by the Industrial Relations Commission
there had been an agreement to shed 100 to 150 staff before the end of 93/94 financial year with some persons obtaining voluntary departure packages and others being terminated involuntarily in February 1994.
His evidence was that it was his understanding that the process had been completed and he was not aware of any further staff redundancy program. He also indicated that the applicant had not applied for a voluntary departure package and he was not on the list of persons targeted for involuntary departure in February 1994. His evidence was that his reaction to the advice from the applicant was surprise at what he considered a suggestion of another chapter of redundancies.
McInerny indicated that in his view the applicant had shown great commitment and had put time into his job but that he deliberately avoided making any comments on the applicant’s skills or skills required in the organisation in the future and that he simply expressed the view the applicant had worked very hard.
Peter Murray gave evidence that
as financial controller he had come to Australian Unity from ANA
he had previously worked for Coopers and Lybrand
he and Smith had reviewed the Finance department and had determined that “certain people were not meeting standards”.
on 21 April he advised the applicant that his work performance was inadequate
he mentioned in this context management accounting but did not want to demean or humiliate the applicant by giving other examples of alleged unsatisfactory performance
he told the applicant that he could give examples of this alleged unsatisfactory performance but that he did not do so and was not asked to do so by the applicant
he advised the applicant that the respondent would assist in an attempt to obtain alternative employment
he “did not believe” that he had the individual authority to terminate an employee
he could not recall whether or not he had given the applicant the options of leaving immediately or in a couple of months but that it was possible that he did provide such options
while he could not recall doing so he might have also advised the applicant that he was not to tell other employees of the fact that he was required to leave employment with the respondent.
In cross examination Murray conceded that several former employees named by Mr Mc Garvie were terminated in April 1994 and that all of them were former Manchester Unity employees.
He indicated that he was familiar with Exhibit A2, Australian Unity Staff Circular No.24/94 31 March 1994 entitled “Working Conditions and Rates of Pay” and that in particular he was familiar with paragraph 7 of the circular which dealt with termination of employment including award requirements of notice for years of service.
Gerald Smith gave evidence of unspecified discussions on performance of Australian Unity employees and of the importance of meeting targets and objectives but he did not give any evidence on who was involved in the discussions or who set the targets and objectives or whether and how the targets and objectives were conveyed to staff.
He referred to a general aim to “sit down and discuss” with individual staff members standards and workloads. He agreed that in respect of the applicant the initial discussions were to be undertaken by Murray and that he was aware that Murray had spoken to the applicant on 21 April.
The Court has already dealt with Smith’s evidence in respect of the applicant attending his office on the afternoon of the 22 April to discuss “business issues” and the views expressed by Smith in respect to the applicant’s sharpness of manner and the applicant’s response when asked by Smith for his reaction to the issues raised the previous day by Murray.
Smith indicated that he had noticed the applicant’s door closed during the day and that he had apparently spent a lot of time on the telephone and that while he understood this behaviour in the short term that the applicant “had to act professionally”. He seemed to infer that acting professionally required the applicant to keep his door open and to spend less time on the telephone. He stated that the applicant asked him what he would do if he (the applicant) “kept doing it” (presumably a reference to acting unprofessionally or keeping his door closed or staying on the telephone).
Smith states that he then responded by providing a rather extraordinary example. His evidence is that he indicated to the applicant that if he thought the applicant was going to act in an unprofessional manner and, for example, “sabotage computer programmes” that “his keys would be taken from him and that he would be immediately escorted out the door”. In cross examination, Smith conceded that this was purely an example of unacceptable behaviour and it was given as such and that he never for one moment considered that the applicant was likely to undertake any form of sabotage.
The Court notes that the applicant does not recall this example of possible sabotage and that if such an example was given he has quite reasonably suggested that it is a matter that he would recall.
The Court has not found it necessary to call for a transcript of the hearing but notes of Smith’s evidence and description of the commencement of the meeting on 26 April are as follows
“The applicant and Jennifer Gay (Connolly) fronted unannounced.....both refused to sit.....the applicant said that he wanted to leave on the spot.....”
Smith is adamant that he told the applicant on several occasions that if he left immediately he would be resigning. He stated that he could not recall the applicant saying anything like
“I have been instructed not to resign in writing but I am leaving”.
Smith also stated that he “reeled off a number of things” associated with the applicant’s performance. The clear implication of his evidence is that he “reeled off these things” as examples of unsatisfactory performance.
When asked by the Court what were the “things.....reeled off” he gave the following examples
1.preparation of management accounts
2.budget process
3.management funds
4.chartered accounts
5.conversion of accounts to ANA
6.staff related issues
Mrs Connolly in her evidence confirms that the applicant told Smith that he proposed to take up the option to leave immediately and that Smith indicated more than once that that meant that the applicant would be resigning.
Mrs Connolly states the applicant made it clear he would be taking legal action and seeking damages and that at no stage did the applicant agree with Smith that he would be resigning.
Connolly states that Smith responded to the threat of legal action by indicating that the applicant would not get anywhere and that he (the applicant) had not been acting properly and that his work “was not up to scratch” and that could be proved by file notes and records.
FINDINGS
The Court has no reason to do other than accept the evidence of Mrs Connolly to the extent that she has recall of the meeting on 26 April.
The Court notes that no evidence, written or oral, has been tendered which supports unsatisfactory performance of duties by the applicant or any presentation of such alleged unsatisfactory performance to the applicant.
The applicant swears that he was never counselled or advised or directed about unsatisfactory performance.
Smith stated that he had discussed performance with the applicant on several occasions.
The Court does not accept Smith’s evidence on this issue.
The Court accepts the evidence of the applicant.
Smith’s claims were never put to the applicant while the latter was giving evidence. Indeed they were never mentioned in any affidavit material or raised until Smith gave evidence.
The Court has carefully considered the evidence of all six witnesses and notes conflicts of evidence between the applicant and Smith, Connolly and Smith and Jury and Smith.
It is not necessary to comment on the evidence of Jury other than to record that the Court accepts that Smith did indicate in the hearing of Jury and several other persons that “he had to let the respondent and others go”. This conversation took place on 29 April at the Cricketers Arms Hotel in South Melbourne.
The Court notes that the evidence of McInerny and Murray does not conflict with any of the applicant’s witnesses and where there is conflict between Smith’s evidence and that of any of the applicant’s witnesses it is the evidence of the latter which is preferred.
The following findings follow from those conclusions
(1)the respondent terminated the employment of the applicant
(2)the applicant did not resign or end the employment by his own individual action and decision
(3)on 21 April 1994, Peter Murray, Financial Controller, Australian Unity, acting on behalf of his employer advised the applicant that his employment was to be terminated on the grounds that his work was not up to a satisfactory standard
(4)the termination at that time was stated to be effective at the option of the employee immediately or within one or two months
(5)on 22 April 1994, Gerald Smith, Group Finance Manager, Australian Unity, acting on behalf of his employer, confirmed that the applicant’s employment was to be terminated on the grounds that his performance was not up to a satisfactory standard
(6)the termination at that time was stated to be effective at the option of the employee immediately with one month’s pay or by 31 May 1994
(7)after seeking and obtaining advice and after a further discussion on 26 April 1994 with Gerald Smith, a discussion held in the presence of a witness invited by the applicant, the applicant left the employment of the respondent in effect taking up the first option of an act of termination initiated by the employer
(8)the employer did not give the period of notice required by Section 170DB(2)
(9)the employer did not give a valid reason for termination under Section 170DE. Indeed, the employer denied that there was a termination but in fact the employer’s senior officers Murray and Smith purported to justify a termination of employment associated with the employee’s capacity, namely unsatisfactory performance
(10)the termination by the employer, although denied, was purportedly made for reasons related to the employee’s performance and the employee was not given the opportunity under Section 170DC(a) to defend himself against allegations of inadequate performance and the employee was given no prior notice of the alleged inadequate performance and was never counselled or consulted in respect of the alleged inadequate performance
(11)the termination was substantively and procedurally unfair and was indisputably harsh unjust and unreasonable
(12)the termination constituted several contraventions of Division 3 of Part VIA of the Industrial Relations Act 1988 and the Court finds reinstatement of the employee is impracticable
(13)the Court proposes to order the employer to pay the employee compensation
(14)the Court has had regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment
(15)the Court notes that the amount of compensation must not exceed, in respect of any employee, the amount of the remuneration that would have been received by the employee in respect of the period of six months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he received remuneration immediately before the termination took effect and that that sum is calculated at $22,500
(16)the Court notes from the applicant’s salary earnings from the time of leaving Australian Unity on 26 April 1994 that the loss of earnings up to 3 February 1995 will be of the order of $15,166.46
(17)the Court notes that the applicant has strenuously acted to mitigate his loss but that his present employment is not assured and that he is 48 years of age and his Danish accountancy qualifications are not recognised formally in Australia.
For all these reasons, the Court concludes that the maximum compensation available should be awarded to the applicant and compensation is awarded in the sum of $22,500. That sum is to be paid to the applicant within 14 days of the order today.
While it is not relevant to this determination the Court notes that the most likely reason for the termination of the applicant, if it could have been justified on objective grounds, might have been the operational requirements of the respondent following the merger of Manchester Unity and ANA.
The Court has no way of knowing whether the operational requirements could have justified the termination of the applicant but certain it is that no attempt was made to justify a termination on those grounds or on any grounds. There is no indication that any consultation took place with the applicant or that any form of reasonable process was adopted or even considered which could have led to a redundancy with fair and reasonable compensation.
Mr. McInerny referred to earlier retrenchments and redundancies and to a related process sanctioned by the Industrial Relations Commission. None of that occurred prior to the termination of Neils Christian Glimsholt and there is no evidence that it would have been an appropriate process.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.
Associate :
Date : 9 December 1994
Appearances:
Counsel for the Applicant : R.W. Mc Garvie
Solicitor for the Applicant : Cleary Ross
Counsel for the Respondent : L. Kaufman
Solicitor for the Respondent : Rigby Cooke
Date of Hearing : 17 and 18 November and 5 December 1994
Judgment : 9 December 1994
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