Olsen v Webb Bros Pty Ltd
[1998] IRCA 12
•08 April 1998
FOR GENERAL DISTRIBUTION
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
TERMINATION OF EMPLOYMENT - alleged unlawful termination of employment - Respondent embarked on deliberate strategy to obtain services of applicant - applicant dismissed in her absence from office while showing prospective purchasers around site - VALID REASON - not satisfied valid reason for termination of employment established after finding made of employment relationship established between applicant and respondent - EMPLOYMENT CONTRACT - SERVICES CONTRACT - Partner of applicant negotiated salary of himself and applicant with Director of Respondent - Agreement to pay salary to Company owned by applicant and partner - indicia of employment examined - weekly invoices for sales consultancy fees - office expenses paid by employer - LEGAL REPRESENTATION - applicant appeared on own behalf assisted by partner in presenting case - SALES CONSULTANCY - sham agreement for sales consultancy to avoid employment relationship and take advantage of taxation situation of private company - applicant advised after negotiations about salary payment complete - to be referred for further investigation by State and Federal Authorities - WAGES - assessed to include weekly amount for value of company motor vehicle - whole of increased salary attributed to applicant as respondent likely to try to retain her services - CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND - No opportunity to respond to allegation of poor sales performance - TERMINATION PAY - Award for failure to give required Period of Notice - DAMAGES - Compensation assessed by including amount for distress occasioned by termination and period of 13 weeks without employment - PRACTICE AND PROCEDURE - EVIDENCE - Evidence Act - no request made for protection provided by section 128 before applicant answered questions regarding her personal taxation returns and those of the Private Company - SUMMARY DISMISSAL - Applicant terminated without reason or explanation - message passed through partner of advice received from Director of Respondent while away from office - REINSTATEMENT - Impractical to reinstate applicant - certain level of sales to be expected from applicant - applicant failed to produce evidence that would achieve sales criteria in future - applicant in current employment and still bears a sense of injustice - DIRECTION OF COURT - Reasons for judgment, exhibits and transcripts of evidence referred to the Attorney General of the Commonwealth to facilitate investigation by appropriate state and federal taxing authorities.
Workplace Relations Act (Cth) 1996 (formerly known as Industrial Relations Act 1988) ss 170DB, 170DC, 170DE(1)
Evidence Act 9Cth) 1995 ss 60, 128
Superannuation Guarantee (Administration Act) 1992 (Cth)
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Zuijs v Wirth Bros Pty Ltd (1955)93 CLR 561
Federal Commissioner of Taxation v Barrett (1973)129 CLR 395
Humberston v Northern Timber Mills (1949) 79 CLR 389
Queensland Stations Pty Ltd v Federal Commissioner of Taxation v Barrett (1945)70 CLR 539
Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210
Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537
Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance (1968) 2 QB 497 at 526
Bertram Daniel v Real Estate Network Pty Ltd (1996) 71 IR 437
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454
Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375
Simon Eric Imberger v Video Classique Pty Ltd (unreported IRCA decision No. 547/96 Millane JR
Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371
Gibson v Bostik Pty Ltd (1995) 60 IR 1
Perrin v Des Taylor Pty Ltd (1994) 58 IR 254 at 256-7
Liddell v Lembke (1994) IRCR 466 at page 487
Burazin v The Blacktown City Guardian Pty Ltd (1995)(unreported IRCA (Full Court) decision No.606/96 dated 13 December 1996)
May v Lilyvale Hotel Pty Ltd (1995) 68 IR 112
JULIE HELEN OLSEN V WEBB BROS PTY LTD
NI 3370 OF 1995
MCILWAINE JR
SYDNEY
8 APRIL 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 3370 of 1995
BETWEEN:
JULIE HELEN OLSEN
APPLICANTAND:
WEBB BROS PTY LTD
RESPONDENTJUDICIAL
REGISTRAR:
MCILWAINE
DATE OF ORDER:
8 APRIL 1998
WHERE MADE:
SYDNEY
MINUTES OF ORDER
The Court declares:
The applicant was an employee of the respondent between 5 December 1994 and 4 August 1995.
The respondent has contravened section 170 DB of the act in that wages for one week were not paid in lieu of the period of notice required by the Act.
The Respondent has contravened Section 170 DC of the Act.
The respondent has contravened Section 170 DE(1) of the Act in that it did not have a valid reason for the termination of the employment of the Applicant on
4 August 1995.
It is impractical to reinstate the Applicant in any position with the Respondent.
It is appropriate to award compensation to the Applicant in the sum of
nine thousand eight hundred dollars ($9,800).
The Court orders:
The Respondent pay to the applicant within twenty one days the amount of six hundred dollars ($600).
The Respondent pay to the applicant within twenty-one days the amount of nine thousand eight hundred dollars ($9,800).
Any sum paid within twenty one days to the Australian Taxation Office, which the respondent is obliged to pay on behalf of the applicant or which can lawfully be made on her account, in respect of the sums ordered in paragraphs 7 & 8 shall be pro tanto satisfaction of the obligations of the Respondent under Orders 7 & 8.
The Court directs:
The District Registrar of the Federal Court of Australia, NSW District Registry, to forward to the Commonwealth Attorney-General a copy of these reasons for judgment and the evidence of the witnesses and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Commonwealth Attorney-General, the Commissioner of Taxation, or the Workcover Authority of New South Wales.
Kate Benson
Legal Assistant to
Judicial Registrar McILwaine
FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 95/3370
BETWEEN:
JULIE HELEN OLSEN
APPLICANTAND:
WEBB BROS PTY LTD C/-OYSTER COVE WATERFRONT
RESPONDENT
JUDICIAL
REGISTRAR:
MCILWAINE
DATE:
8 APRIL 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
APPLICATION
This is an application by Julie Helen Olsen the applicant, claiming unlawful termination of her employment under Division 3 Part VIA of the Industrial Relations Act 1988, (“the Act”), against her alleged former employer, Webb Bros Pty Ltd (ACN 010 709 074).
The applicant, was 39 years of age, at the time of the trial and in her claim records the work performed for her employer as “manufactured home village”. The applicant suggests she started work with the respondent on 5 December 1994 and completed her employment on 4 August 1995. The remedy sought by the applicant in her application was originally compensation. This was amended at the start of the hearing to include a claim for reinstatement. The application was filed in the registry of the court on 24 August 1995.
The respondent, Webb Bros Pty Ltd (ACN 010 709 074), which I will refer to in future as “Webb Bros Pty Ltd.”, is a private company. Mr Brian Webb as a Director of the respondent Webb Bros Pty Ltd declared in the notice of employer’s appearance, that “Budway Pty Ltd” (ACN 003 989 179), (referred to as “Budway Pty Ltd” in future), was the true employer of the applicant. This notice was supported by a facsimile message 30 August, 1995 addressed to the court as follows:
“Message,
Please note Webb Bros P/L is not the employer of these people.
Regards
Brian Webb”
The Court has a certificate issued by Deputy President Drake of the Australian Industrial Relations Commission at Sydney dated 20 November 1995 in the following terms:
“In accordance with subsection 170ED(2) of the Industrial Relations Act 1988, the Commission hereby certifies that it has been unable to settle this matter by conciliation.”
There was no objection to the certificate made by either party. In addition, no issue was raised before me as to the timing of the lodgment of the application. I therefore find the matter is properly before the Court.
This matter was heard in conjunction with the proceedings numbered NI 3371/95 John Ronald Robson v Webb Bros Pty Ltd. Mr John Ronald Robson (“Mr Robson”) is the partner of the applicant and a fellow Director of Budway Pty Ltd. Both applicants were unrepresented with Mr Robson providing the key speaking role throughout the proceedings. The decision in this case should be read in conjunction with the judgment in his case.
BACKGROUND
The case revolves around a development known as “Oyster Cove Waterfront Village” at Yamba, New South Wales. The project involved the establishment of a site upon which individuals could construct up to 154 relocatable homes. In return for the payment of a rental for the site the owner of the home is given the use of the swimming pool, sporting facilities and a “Residents Club.”
Earlier attempts to develop the site had not been successful and this was a relatively new type of development. Apparently the Webb Bros had acquired this site from a receivership of another business which appears to have had a different purpose for the area possibly involving the promotion of conventions.
It is not in dispute that the applicant and Mr Robson commenced their duties on 5th December 1994, and they were terminated on 4th August, 1995.
The job of Mr Robson was to market the homes supplied by the respondent and its associated companies, complete the sales and then to oversee and assist where possible the construction of the home on the allocated site. The homes were brought down from Brisbane in two separate parts and had to be joined on site, so local builders and tradespeople in Yamba were involved in the assembly process. Orders were prepared and signed by Mr Robson on behalf of the respondent to purchase goods and equipment where necessary to have the homes completed. There was also an administration section for the project located in an office on the development, which was managed by the applicant.
EVIDENCE OF THE APPLICANT
The applicant, although living at Maclean at the date of the initial hearing, was currently employed at Grafton as a training and development officer. Prior to her employment with Webb Bros Pty Ltd she was employed with a large department store at Grafton in the Lay-by Section. In this job the employer deducted the required Personal income taxation on a “PAYE” basis and it was a fulltime position.
The applicant had an earlier clerical career before becoming an Australian Federal Police Officer. Then the Applicant became a Personnel Consultant with Drake Personnel where she was involved in client contact. The applicant had also obtained first place in a world competition for Drake Personnel as the most successful Personnel Consultant. The applicant when previously employed by Drake Personnel as a Personnel Consultant had been paid wages plus bonuses. The applicant and Mr Robson had also been involved in a Florist business together.
The applicant said it was in early November when she first considered joining the Waterfront Village, Oyster Cove project. When she was approached by Mr Robson at the suggestion of Mr Michael Webb. The applicant first attended a meeting about the position at the premises of Metalway Pty Ltd in Brendale Brisbane. At that meeting she met Brian and Michael Webb and Mr Peter Reid, the General Manager of the complex. The applicant testified that at the start of the meeting she produced a resume of her career. During the initial part of the meeting the applicant says that the position was explained to her. The discussion was primarily pitched at how to sell the houses. There was then a tour around the complex and on return the job was offered to them and at that stage salaries were discussed.
The applicant maintains that she was talking with Mr Brian Webb at the time when salary negotiations were going on and that these arrangements had been left to her partner Mr Robson. The applicant says that she was not involved in the discussion between Mr Robson and Mr Michael Webb about the method of payment of their salary. This claim by the applicant is confirmed by the evidence of Mr Michael Webb. The applicant testified that she first learnt of the proposal to pay her by invoicing Budway Pty Ltd in the car on the way home from the interview.
The applicant confirmed that the figure of one thousand dollars per week had been reduced to nine hundred dollars per week in return for the supply of a motor vehicle. In his evidence Mr Robson testified that the make up of the thousand dollars was based on a calculation by the applicant and himself of six hundred dollars per week for services provided by Mr Robson and four hundred dollars per week allocated for the work to be done by the applicant. Mr Robson further testified that the figures were gross figures. This evidence was not disputed by the applicant.
It was agreed that they should start as soon as possible. With that in mind Ms Olsen said that she had to give notice and she informed the two brothers that it would be necessary for her to call back with a definite date for commencement. Subsequently, it was agreed that they could start on 5 December 1994, although the letter to Budway Pty Ltd dated 22 November 1994 (Exhibit 3) suggests a commencement date of 14 December 1994 as a guide.
The applicant and Mr Robson went to the site office on 5 December 1994 to be met by Mr Brian Webb, who introduced them to the Accountant from the Brisbane office. The Accountant showed the applicant through the accounting system while Mr Brian Webb went through the Sales Office details with the applicant. They also met Mr Mick Duke who was a foreman with the company, who instructed them on what to do when the houses arrived.
The Ford Fairmont, previously driven by Mr Brian Webb, was made available to them on the same day. The uniform shirts and jumpers which are exhibits in the proceedings were supplied by post. In addition business cards were paid for by the Respondent. At the site office at Oyster Cove, there were facsimile machines, mobile phones, stationery all of which were endorsed with the name “Oyster Cove Waterfront Village.” The applicant confirmed the evidence of Mr Robson that they incurred no personal expenses, as everything was done through the office. This claim also appears justified as no evidence was led from the Respondent to contradict these assertions.
After the commencement of their engagement, each day, they opened up the Residents Club as well as the Display homes and discussed with the maintenance people, and the two groundsmen what needed to be done on site and then issued any necessary orders for repairs or equipment. There were daily discussions with the Brisbane office about their work. Ninety per cent of these conversations were with Mr Michael Webb who provided marketing and sales advice whilst occasionally they spoke with Mr Brian Webb or Mr Peter Reid. Later on the applicant says she was informed that Mr Peter Reid was their manager. This claim was denied by Mr Michael Webb on the basis that Mr Peter Reid was not an employee of the respondent.
Initial conversations after her appointment were with an accountant from the Brisbane office of the respondent who showed her the books and how to do the accounts. It seems that the respondent had four bank accounts:-
(1) Metalway Pty Ltd ,
(2) For the Sports Centre: the Webb Bros Sports Centre account,
(3) A residents account and
(4) Webb Bros Pty Ltd.
The accounts were held with the ANZ Bank in Yamba. The applicant was made an authorised signatory for an imprest account with a limit of two thousand dollars on the accounts numbered (2)-(4) inclusive. The applicant was not a signatory to the account for Metalway Pty Ltd.
Part of her job was to reconcile the books at the end of the month. The accounts were basically to pay the day to day running costs of the Sports Centre and so she was in regular contact with the Brisbane accounting section speaking to Margaret Clark of that office. The applicant said that she understood her job to be backing up on the sales of houses, helping with the organisation of functions such as weddings. The applicant also assisted in showing prospective purchasers around when busloads of people arrived.
The applicant confirmed that a total number of six houses were sold during their period and there were a number of houses where deposits were taken subject to the sale of the existing homes of the purchasers. Sales in this category were estimated to be around sixteen in number. The applicant said that she worked on a Monday to Friday basis, basically arriving at the office at 8.00 am and leaving at 5.30 pm. The applicant confirmed that at the function two weeks before the dismissal Mr Michael Webb thanked both John and her for organising the party.
For the sake of convenience reproduced below is a relevant extract from the judgment in matter No.3371/95 John Ronald Robson v Webb Bros Pty Ltd concerning:
“VIDEO EVIDENCE
A video recording was tendered in evidence on behalf of the respondent and Mr Michael Webb maintained that the speech at the function occurred on 27th July, 1996.
The video shows a date of 18th January 1996 at 13.22 hours. This is obviously a reproduction as the original filming was done by a resident. Neither side disputed the contents of the recording. The video commenced by panning across the site showing the Residents Club, Sports Centre and the tennis courts. It then records the gathering for the anniversary party.
The reason for this function was described by Mr Michael Webb in his opening address of welcome:
“I would like to pay a tribute to the workers that we’ve got, the Sports centre and the positiveness that is, is occurring over there is, is just something that you ride on. There’s just a hell of a lot of enthusiasm in the whole place. I would like to pay a tribute to the work that has been done by the people in the sports centre. I would like to pay a tribute to John and Julie for the work that they have done.
Our numbers, our housing numbers are a little down at the moment but that’s just down on our forecast.
The main idea, the main point is of me sort of making this small, talk here is to make a presentation here to some of the residents who have recently occupied the Cove. So what I would like to do is ask these residents to come forward to receive our certificate of a seven year guarantee on the house together with a couple of T-shirts..”
In addition to the reference made by Mr Michael Webb about the applicant and Ms Olsen there are three positive comments by a resident and the President of the Residents Club.
Thelma: John and Julie and Peter and Tom and all the people who work here have been so helpful - I’d certainly recommend it to anybody who is contemplating the move to Yamba.
Michael Webb: Don is the president of the residents club.
Club President: I would also like to thank John and Julie, John Robson and Julie for the effort they’ve put in and the co-operation that they have shown as far as their short time here really.
The Webb Brothers and your representative down here - John and Julie - we thank you very much!
. . .
The address by a local dignitary, probably the Mayor or local Councillor gives an insight into what appears to have been a difficult background to the site.
Mayor: And certainly this building we are standing in now has been transformed from what it was originally designed as a convention centre, to a club for those residents.
. . .
On the other hand one of the residents testifies to the quality of the site.
Max: “and to me this is the best one that I have found in the whole of Australia, and as far as I am concerned this is the best one of the lot and the workmanship and the materials that are used as far as I am concerned is first class.”
. . .
Section 60 of the Evidence Act 1995 (Cth). allows the court to take into account the contents of this video in assessing the key question as to whether the applicant and Ms Olsen were employees even though it was tendered by the respondent for the purpose of rebutting the specific claim by the applicant that their work had been praised by Mr Michael Webb in his remarks to the gathering. The video does tend to show that the claim by the applicant was exaggerated. However it also amply demonstrates a failure by the representative of the respondent to take the opportunity to point out that the applicant and Ms Olsen were simply part of a sales consultancy and were not employees.
The silence of Mr Michael Webb is deafening as he does not say anything to correct the misrepresentation that they were employees or which disturbs the myth created by the uniforms and other indicia that in dealing with “John and Julie” the residents were dealing directly with employees of the owner of the sites of their new homes and not some unknown entity called Budway Pty Ltd. No written evidence was tendered by the respondent as to any sales being completed by Budway Pty Ltd or on the behalf of that company by the applicant and Ms Olsen.”
The applicant was more moderate in her description of what had been said by Mr Michael Webb about Mr Robson and herself at the function.
It is appropriate to include a further relevant extract from the judgment in matter No. 3371/95 John Ronald Robson v Webb Bros Pty Ltd regarding:
“METHOD OF PAYMENT
Tendered in evidence by the applicant were pages numbered from 55 to 87 of an ordinary style invoice book. Generally, the description on the invoice was as follows:-
“55
19/12/94WEBB BROS PTY LTD
Consultant Fee
4 WEEKS CONSULTANTADVISE
J. Robson
J. Olsen $900/week
$3,600
5/12/94 - 1/1/95Three thousand six hundred dollars Total $3,600”
The duplicate copy of Invoice No. 56 dated 15 January 1995 as follows :-
“ 56
15/1/95
WEBB BROS PTY LTD
BRISBANE
Consultant Fees
2 WEEKS ADVISE
J.ROBSON
J.OLSEN $900/week
$1,800
2/1/95 - 15/1/94
$1,800”
This Invoice also contains the notation cancelled. It was replaced by invoice:
57
15/1/95
WEBB BROS PTY LTD
BRISBANECONSULTANTS FEES
1 WEEK SALES & MARKETING ADVISE
J.ROBSON
J. OLSEN $900
2.1.95 TO 8.1.95
$900
Thereafter invoices were issued in a similar fashion on a weekly basis right through until invoice number 78, dated 1/6/95. Occasionally, the wording varied, however, the weekly amount of $900 remained the same until Invoice No. 79 dated 8 June 1995.
Because the arrangment for commission was not generating any additional income the applicant sought an increase in the weekly payments. This was acceded to by the respondent and from Invoice No. 79 to 86 the amount claimed was increased to $1100. The final invoice was numbered 87 and claimed payment from “31st July - 6th August”. It was dated “3/8/95” and was apparently issued before the termination on 4 August 1995. These invoices were paid by cheque issued on behalf of the respondent by its Brisbane office.”
The applicant admitted that she had filled out many of the invoices shown in the Invoice Book.
LIQUOR LICENCE
Mr Robson suggested to Mr Michael Webb that he would like to sell liquor on the premises occupied by the Residents Club. As a result of this discussion Mr Robson said he applied for a catering licence for the Residents Club. With the consent of Mr Michael Webb, Mr Robson engaged a solicitor, and applied for the necessary licence signing as an employee of the company. Mr Robson maintained that this was the only way in which he could get the catering licence.
The evidence from the applicant was that she was not involved in any aspect of the liquor licensing situation.
I am inclined to believe that the applicant played no direct role in the application to the licensing authorities. However, it is extremely unlikely that Mr Robson would have made the suggestion to obtain the licence at least without her tacit consent. Mr Michael Webb gave no evidence suggesting he had discussed the issue with the applicant.
SALES
The letter dated 22 November 1994, addressed to Budway Pty Ltd anticipated: “that a minimum of 25 homes be sold and settled by Budway and other agents in 6 month period 15th December, 1994 to 15 June, 1995.” The applicant confirmed the evidence of Mr Robson that only six homes were sold during the period of their engagement, with a further 16 deposits taken which were subject to purchasers being able to sell ‘their own home’. The taking of a conditional deposit is a form of sale which does not fall within the scope of the sales criteria set out in that letter.
EVIDENCE OF RESPONDENT
Mr Michael George Webb, a Director of Webb Bros Pty Ltd, gave evidence on behalf of the company in respect of both proceedings. The following is a further extract from the judgment in matter No.3371/95 John Ronald Robson v Webb Bros Pty Ltd:
“He advised the court that he was a co-owner of the company with his brother Brian and was one of the two directors. The company purchased a manufactured home park called Oyster Cover Waterfront Village and that was its primary business. Prior to December 1994 the work of promoting and selling houses was done by Metalway Pty Ltd. Metalway Pty Ltd was the company which had manufactured the homes and initially it was engaged to do the marketing of the homes and it employed Mr Noel Newton and Mrs Shirley Colrough.
Mr Newton was involved with taking sales, making sales calls from the Oyster Cove office and taking people around, who enquired, in an electric buggy. He performed a general liaison role with residents, and with the Sports Centre. Mrs Colrough was involved in administration duties and provided backup to Mr Noel Newton. Mr Michael Webb maintained that Webb Bros Pty Ltd did not have any say in the marketing of the homes by Metalway Pty Ltd.
Mr Webb agreed that the advertisement, (Exhibit 1), was approved by him and a number of replies were received. Mr Noel Newton interviewed those persons, recommending five people on a short list for interview. Mr Webb in his evidence confirmed the information which was provided by way of background material by the applicant. Asked by his counsel:
“Well, what did you tell him actually?” He replied: “I would say - I can’t remember every word that I would have said but I would have said that he would be required to do calls. We would provide marketing assistance that my company that I have in Mackay has, is able, and has the ability to produce promotional literature. And what is that company called? NQBE in Mackay and we can create coloured desktop publishing leaflets and coloured posters and various forms of marketing assistance. And I told him that I am currently assisting Metalway and Noel Newton in doing it, and I would continue that with John Robson, or whoever I was to employ.” (my emphasis)
Mr Webb testified that he had interviewed a number of other impressive people and had subsequently spoken to the applicant on the phone and asked him to go to the factory to see the houses as they were being manufactured, and have a meeting with his brother Brian. Mr Michael Webb maintained that he was not at this interview which involved his brother Brian. This evidence is at variance with that of the applicant. However, in the light of the subsequent evidence and the failure of Mr Brian Webb to give evidence nothing of any substance turns on the issue.
The version given by Mr Michael Webb then suggests that, a week later after the visit to the factory, he had rung the applicant, and told him he had not come over well in the discussion, and that they were preferring other people. He also maintained that in the course of the interview, he said he was quite impressed by the references the applicant had made to Ms Olsen, and he testified,
“And I said ‘ You may wish to speak to her, and she might - you both might like to make a joint application to us in Brisbane, and you speak to her and get back to me.”
Mr Michael Webb maintained that he had called the applicant on a number of occasions, speaking with his mother, on one occasion, and was unable to make contact. In one conversation he reported he pointed out to the applicant that he had to show a lot more enthusiasm about the position and that there was a necessity for a joint submission involving both applicants. It was agreed after this occasion that the both of them would come up to Brisbane and that the interview would be conducted at Brendale.
Both the applicant, and Mr Michael Webb confirm the evidence of Ms Olsen, that she had been shown around the factory by his brother Brian, and that they had been introduced to Mr Peter Reid and possibly a Mr Mick Duke.
Questioned about the terms of the engagement initially Mr Michael Webb made the following response:
“Well can you tell us what was discussed in terms of the - what you wanted from the arrangement? ---Well , I am in the habit of, when I employ people I take notes. And from those notes I write letters to those people confirming what I have said. So that they have a clear understanding of what was discussed and what I understood their duties to be. So that the letter that we raised after they left confirming their appointment, was an absolute replica of - to a point of what was discussed in that interview.”
However, Mr Webb immediately qualified this evidence, by saying he doesn’t keep the notes:
“ as they are just personal sort of reminders of the points that I have raised.”
Mr Webb also concluded, that in his view, Ms Olsen had much more ability in marketing and communication, particularly to retirees, than had the applicant. He also confirmed the evidence of the two applicants as to how the amount of $900 was agreed between the parties. He also conceded that the applicant was the person who was present and represented Ms Olsen in the negotiations on behalf of the two applicants.
Asked to explain how did ‘Budway Pty Ltd’ come into the arrangement by counsel for the Respondent, Mr Michael Webb replied:
“Well, I was aware that Budway was in existence, or a company was - I didn’t know whether it was called Budway, but that a company was in existence. And it came to a stage when we agreed at a figure of $900 per week, I asked John how he would like to have that paid. And he said, well, we have this existing company, ‘Budway,’ and I took down the details, and I wrote down Budway Pty Ltd. And that’s how I was able to even write this letter of confirmation of our discussion.”
Asked whether he suggested the monies be paid to Budwa;y Pty Ltd, Mr Michael Webb answered as follows :
“ Not at all, I asked him how he would like to have them paid? That seemed legitimate to me. We’d previously been engaging a Proprietary Limited Company and seemed legitimate to me - It was different to the way in which we had originally applied - put an advertisement in the paper, but that was going down a completely different road, and he was told that he had not come across well in that interview process and we had preferred other people. So, I don’t know of any more kinder way to tell someone that he was not going to get the job.”
In attempting to extricate himself from the difficulties about the employment situation of the applicant, it appears to me that in his evidence Mr Michael Webb has improved the position of Ms Olsen when this exchange occurred with counsel for the respondent:
“So you have come into a different arrangement? “ “Yes, we had agreed on a different arrangement where I at no time, did I ever say one has to do this duty. In fact, I made every possible encouragement in the interview for them to share their duties because I could see that I needed Julie out there talking to the people.”
He also suggested that the fourth meeting took about two hours, although he would not contest the three hour estimate of the applicant and Ms Olsen.
During the course of his evidence, Mr Webb made an allegation that the applicants abandoned their employment for a short period to take a trip to Sydney. However this allegation is not of much help to the court because the applicants were not given the opportunity of responding to the suggestion during their evidence. Some of the other allegations made in his evidence were also not put in cross examination to the applicant. This may have been due to the reliance on the employment issue as the main defence to the action.
Although Mr Michael Webb denies that there was daily contact with the applicants about the work situation he does concede in his evidence, that there was regular contact at least every few days. Although disputing the claim of the applicants that Mr Peter Reid was to be their Manager, Mr Michael Webb, in his evidence, disclosed that Mr Reid would often take enquiries about the homes from people in Brisbane, and sometimes they would be sent down to see the applicant, or at other times Mr Reid would accompany them. Furthermore Mr Michael Webb concedes that he told both of the applicants that they should listen to Mr Reid, because he (Mr Michael Webb), was impressed by some of the things he has achieved and his marketing expertise.
Following the termination of the applicant and Ms Olsen the company was successful in rearranging its operations so they were able to obtain a person at the cost of $700, being $500 advance commissions and $200 in wages. The administration of the centre being handled by a person coming down from Brisbane two days per week.
Ms Linnane, counsel for the respondent obtained in favour of Mr Michael Webb that he employed 24 people at his business NQBE Services Pty Ltd in Mackay, and that they paid income tax for those persons and workers compensation premiums, superannuation and annual leave. All of which were not paid in respect of the applicant and Ms Olsen in this enterprise.”
To a large degree the evidence of the applicant coincides with that of Mr Michael Webb.
A further extract from the judgment in matter No.3371/95 John Ronald Robson v Webb Bros Pty Ltd follows:
“SALES CONSULTANCY
Mr Webb denied that he had given any orders as to how the work was to be carried out apart from what was recorded in the letter dated 22 November, 1994 (Exhibit 3) setting out the terms of the alleged consultancy:
“OYSTER COVE ........ .....
WATERFRONT VILLAGE ........ ......
........ .......
........ ........ ...
YAMBA
____________________________________________________________________
22nd November, 1994
Att: Mr John Robson/Ms Julie Olsen
The Directors
Budway Pty Ltd
........ ........ ........ ........ ........ .
........ ........ ........ ........ ........ .
--------------------------------------------CONFIDENTIAL-----------------------------------
Re: Consultants for Oyster Cove Waterfront Village
Dear John and Julie
This is to confirm details as was agreed in our meeting of 18th November, 1994 at Castle Cottages, Brisbane.
Consulting Fees
- Budway Pty Ltd will receive consulting free (sic) of $900 per week plus a ‘basic’ company car.
- Sales bonus paid after six (6) months as follows:
I) House Sales 1-10 in 6 months ........ ........ ........ ...... Nil Bonus
(Includes houses sold by other sub-agents and does not include contracts sold by previous employees)
ii) House Sales 10 plus in 6 months
A marketing fee $2,000 has been allocated in the sale of each home. The consultant who handles the sale from first contact to completion receives the full $2,000. When the work is shared with other sub-agents or real estate agents the $2,000 fee is split between and agreed by both parties. As a guide $200 is paid for a referred name; $500 is paid to sub-agents for an appointment; $1,000 is paid to an established group of ‘real estate sub-agents who also assist in the sale of the person’s property; $1,000 or $1,500 is paid to the agent who works from Oyster Cove Sales Office and who also needs your assistance in completion of the sale. For each sale over ten (10) in a 6 month period, Budway Pty Ltd will be paid the related bonus, depending on their involvement and as agreed beforehand with the other party.
2. Sales Target
It is expected that a minimum of 25 homes be sold and settled by Budway and other agents in a 6 month period - 15th December, 1994 to 15th June, 1995.
3. Possibility of Marketing by Negative Gearing/Investment Seminars
In 1995 Webb Bros Pty Ltd may also consider engaging a firm of Gold Coast based consultants to assist in a different form of marketing houses outside the area. Budway Pty Ltd will be included in this discussion. The expected sales targets in (2) above do not include sales from these ‘Investment Seminars’.
4. Duties and Responsibilities Summary
Budway Pty Ltd to provide:
- Sales Management seven(7) days per week.
- All administration for the Village and the Sports Centre. One person from Budway will be authorised to sign cheques to a limited value.
- Co-ordinator with local contractors.
- Represent Webb Bros Pty Ltd in the area, liaise with media, councils, deal with existing residents.
- Co-ordinate activities and functions in Residents Club and negotiate on our behalf.
- Co-ordinate with maintenance and other employees.You should be aware that your main focus is to market houses. You should be constantly aiming at improving efficiencies in time management during a day so that more daily time is spent on sales and creative ‘follow up’ of interested prospects.
5. Monthly Reporting
A monthly report is to be sent to Webb Bros Pty detailing prospect management, forecasts for next month, marketing actions for next month, general recommendations and advice.
The results of all agreed advertising and promotions is to be closely monitored for effectiveness.
6. Current Procedures and Training
All initial training will be provided by Webb Bros’ staff. As with all new positions, the first few months will be the most difficult - learning the industry, procedures, handling objections, etc. Final arrangements and exact commencement date will be confirmed to you shortly (14th December, 1994 is a guide start date).
7. Review
After six (6) months we will review the success of our relationship.
8. General Comments
On commencement you will receive a very ‘healthy’ list of 500 plus enquires (sic) with over 90 prospects asking to view our Video, being completed by the 30th November, 1994.
We believe that large road signs, currently being placed on the Pacific Highway are also certain to increase the rate of walk in enquiry.
Congratulations! We realise you have both agreed to a very concentrated effort, particularly in the next twelve (12) months - at which time we believe (and hope) you have established a successful, long term relationship consulting to Webb Bros Pty Ltd. You will receive every support from Brian and I and you are free to call us anytime for our advice or direction.
We are looking forward to a very exciting year ahead.
Yours faithfully
(Signed)
MG Webb
CO-OWNERFor our records, our contact telephone numbers are as follows:-
Mike & Irene Webb Brian and Greta Webb
Work ........ ........ ..... Work ........ ........ ......Home ........ ........ .... Home ........ ........ .....
“
(Note: The letterhead also included the following endorsement: “OYSTER COVE WATERFRONT VILLAGE IS A WEBB BROS. PTY.LTD. (ACN 010 709 074) DEVELOPMENT.”)
Paragraph 4 amply sets out the duties and responsibilities of a position, that in my view applies equally to the applicant and Ms Olsen as employees. There is a much larger degree of control outlined in the document than would be anticipated in the case of a normal consultancy. The requirement, that “one person from “Budway” will be authorised to sign cheques to a limited value” shows a degree of control which would not normally be the case in relation to a true sales consultancy. A consultant would be expected to pay expenses out of its own funds subject, of course, to taking the risk that it may not be reimbursed in the case of a dispute. Other aspects of the agreement which raise concern, from the point of view as to whether it was a true consultancy, is the concept contained under paragraph 1. (ii) that other Real Estate Agents may be involved in splitting the fees.
It seems probably the letter follows a standard letter that is often used as a basis for a letter of employment as an employee. A careful reading of the document in paragraph 6 reveals the use of the phrase “as with all new positions.” “Position” is defined in the Macquarie Dictionary to include: “a post of employment.”
It appears likely, having regard to the use of such phrases, that the standard document has been changed to refer to the sales consultancy. In addition, in paragraph 7 reference is made to reviewing: “the success of our relationship” which equally applies to an employment situation as well as a consultancy. The overall impression gained from the letter is that it is an adaption of a standard form letter of employment.
The other issue which leads me to conclude the arrangement is a sham, inter alia, to avoid the employment provisions of the Act is the fact that in his evidence, the respondent uses the word “employ” whereas he would be more likely to use words such as to “engage” or “secure the services” if it had been a true consultancy. It seems quite likely that if the respondent really wanted a sales consultancy it would have adopted a limited tender process and no doubt some of the local Real Estate Agencies would have been in a position to put forward a proposition to the respondent, which included managing the complex as well as selling the homes.”
The evidence shows that the applicant was not a prime mover in this arrangement relying on Mr Robson and Mr Michael Webb to complete these details.
TERMINATION
The applicant was dismissed shortly after Mr Robson on 4 August 1995. On that day she had gone to the bank and then shown some people around the village. Her view was that these were good prospective clients who were very interested and might have resulted in a further sale. The applicant was not present when Mr Brian Webb spoke to Mr Robson.
The applicant testified that: “I came back into the office and John said,
“Get your bag. We’re going.” And I said, “What?” and I said, “You’re kidding!” “That’s exactly what I did - I was really upset.”
The applicant described what happened next:
“I was very upset, I went into the next room and I grabbed my handbag, I grabbed my two African Violets off the window sill, then what we did is they said what we were supposed to be out as quick as possible. I asked Brian Webb, “Do we get paid our last weeks salary?” and he said, “The cheque will be in the mail.” I said, “ No, I want the cheque now before we go, thank-you. Then Brian did write the cheque for us and what we did get the weeks salary.”
The applicant reported a conversation she had with Margaret Clark, from the accounts office in Brendale about the provision of a Separation Certificate. The applicant testified:-
“On that day before I left I actually rang Margaret Clark up in Brendale to ask for a Separation Certificate to be sent to us and she said she couldn’t do that. I said: “Margaret, we’ve just been dismissed, can John and myself have a Separation Certificate so that we can get unemployment benefits, because I was scared for not having any money coming in.” The reply was: “No, I can’t do that”, and the conversation was then ended.
DIRECTION UNDER S. 128 EVIDENCE ACT 1995
During the evidence of Mr Robson and after his objection I directed under s.128 Evidence Act, 1995, that the applicant answer questions from Ms Linnane, Counsel for the Respondent, regarding his taxation returns and those of Budway Pty Ltd. He is to be given the protection provided by that section. The applicant did not raise a similar objection when giving her evidence.
CREDIT OF APPLICANT
I am satisfied on the balance of probabilities that:
(1) the applicant was not initially involved in the discussions about the payment of her wages that is clear on the evidence of all three witnesses;
(2) The method of payment was explained to her in more detail by Mr Robson when she was returning from the interview;
(3) in the light of her private partnership with Mr Robson, it is understandable, though not justifiable, that she would wish to assist him to obtain employment by not objecting to this arrangement.
Accordingly I understand, although it was probably not justified, her adopting a stance whereby she determined to do nothing to overturn the agreement.
WAS THE APPLICANT AN EMPLOYEE?
I repeat the observations which I made with respect to my decision regarding Mr Robson: “The method of determining whether or not a person is an employee of another has been set out concisely by the High Court in Stevens v Brodribb Sawmilling Co. Pty Ltd (1986) 160 CLR 16. Reference is made to the following passage from the judgment of Mason J, at page 24 of the report.
“A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it: Zuis v Wirth Bros. Pty Ltd. (30); Federal Commissioner of Taxation v Barrett (31); Humberstone v Northern Timber Mills (32). In the last-mentioned case Dixon J. said:
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.”
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question: Queensland Stations Pty Ltd v Federal Commissioner of Taxation v Barrett (34); Marshall v Whittaker’s Building Supply Co. (35).
“Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee”.
In Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537 the NSW Court of Appeal again, considered the situation as to whether couriers were independent contractors rather than employees, and therefore outside the scope of the Superannuation Guarantee (Administration Act) 1992 (Cth).The leading judgment of Meagher JA at page 538 points out:
“ While it is also never an easy task to decide whether a given person is an employer or an independent contractor, there is no doubt as to what the legal tests are. The old test of ‘control’ is now superseded by something more flexible. This is made clear by the judgment of Mason CJ, in Stevens v Brodribb Sawmilling Company Pty Ltd, (1986) 160 CLR 16, and the earlier judgment of Dixon J in Queensland Stations Pty Ltd v FCT (1945) 70/CLR 539.
Meagher JA, then outlined the considerable measure of control which the company had over the couriers and continued:
“The cumulative effect of these conditions certainly gives the company a deal of control over its courier. However, a person may supervise others without becoming their employer.” There are several considerations which make me think that on balance the couriers are not employees. “ In the first place, they supply their own vehicles. (be they bicycles, motor-bikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers’ expenses are very considerable.
To quote McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance(1968) 2 QB 497 at 526:
“the ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company’s”, . . .
by a consideration which points to the couriers being independent contractors.”
An additional indication is relied on by Meagher JA at page 539.
“Another very important indicium is that the couriers receive no wage or salary. Normally, if they were true employees, one would expect a certain sum to be paid each day, week or month. The company’s documents provide for no such thing. They are paid a prescribed rate for the number of successful deliveries they make.”
The position of the courier drivers in the Vabu case and the applicants in this case is quite different. There is no evidence before me at any stage of the investment by ‘Budway Pty Ltd’, of any assets which could result in a risk of loss to the company, apart from the termination of the working arrangements of the two directors. In her submissions much was made, by Ms Linnane, Counsel for the Respondent, of the way the remuneration was being paid to ‘Budway Pty Ltd.’ It was submitted that this was an indicia of an independent contractor. However, when a careful examination is made of what has been said by Meagher JA, he shows an emphasis towards whether or not there was a weekly payment made to the couriers. In this matter it is without doubt that a weekly payment was made to the applicants whereas such payments were not made in Vabu.
It is true that the tax returns, as submitted to me by Ms Linnane, show that there are some discrepancies between the income and the expenses claimed by Budway Pty Ltd in those returns. However, there is no evidence from the respondent company, that any of these expenses were related to its business.
I cannot accept the submission of Ms Linnane that there was no obligation to work. It is quite clear to me that there was a large amount of control exercised by both Mr Brian Webb, and Mr Michael Webb, in the way the applicants went about their jobs. I am satisfied that there was a contract of personal services. The mere fact that the weekly wages were diverted to a company with the consent of all parties, so that personal income taxation was not deducted by the respondent, is not a sufficient ground to justify a decision that they were not employees. This one factor is outweighed by the other issues as previously outlined.
I am satisfied that payments were made to Budway Pty Ltd in lieu of recording those payments as wages or salary to which ‘PAYE’ taxation would be applicable on behalf of the applicant.
In this matter I agree with the general observations of Millane JR in Bertram Daniel v Real Estate Network Pty Ltd (1996) 71 IR 437, the relevant parts of which are extracted:
“In making this observation I have borne in mind Justice Lockhart’s description of this term in Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454 where he said:
“A ‘sham’ is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that it not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.”
. . .
In the course of the hearing the Court drew to the parties’ attention the obligation it has to protect the revenue of the Commonwealth (see the discussion of this matter by Wilcox J (as he then was) in Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375).
. . .
It follows from my finding that the applicant’s true wages were the sum of the two amounts paid to the applicant and his wife and my finding that the purpose of the arrangement was to reduce the incidence of taxation payable by the applicant on the income actually earned from his employment with the respondent, that this is a matter requiring the Court to take whatever steps are necessary to ensure that the revenue of the Commonwealth is protected. Accordingly, I propose to direct the District Registrar of the Court to forward to the Attorney-General a copy of these reasons for judgment and the evidence of the three witnesses and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised to inspect by the Attorney-General or by the Commissioner of Taxation.”
(See also the discussion in Simon Eric Imberger v Video Clasique Pty Ltd (ACN 006 375 284) an unreported IRCA decision No. 547/96 Millane JR).”
There is a stronger case for determining that the applicant worked largely under the control of the respondent. The applicant had regular contact with the Brisbane office and submitted the various accounts in accordance with instructions received from that source. The applicant signed cheques on behalf of the respondent following an authorising minute of the company. The invoices were also submitted as instructed by that office on a weekly basis.
Whether either party to these transactions has properly accounted for them is not a matter for this court to determine, I propose to adapt the direction given by Millane JR in Daniel (supra). The intention being that the State authorities are also entitled to investigate whether there has been a failure to fully disclose the wages bill for the purpose of avoiding such liabilities as Workcover premiums.
Accordingly, I propose to direct the District Registrar of the court to forward to the Attorney-General a copy of these reasons for judgment and the evidence of the witnesses and to make available, as may be required, the full transcript of the proceeding and the exhibits for inspection by any officer authorised by the Attorney-General, the Commissioner for Taxation, or the Workcover Authority of New South Wales.
CONCLUSION
I am satisfied that given the wording of the initial advertisement together with the way the interviews proceeded that this was in fact a contract of employment. The relationship of employee and employer was established between the applicant and the respondent.
The respondent had a viable alternative it could have readvertised and sought tenders from properly licensed Real Estate Agencies, to provide the sales consultancy service that has now been put forward, to the court as an explanation as to why there should be no contract of employment. I have no doubt that it was intended to establish an employment relationship. It should not be forgotten that the respondent could no longer rely on the employees of Metalway Pty Ltd to do the job.
Mr Michael Webb determined on a deliberate strategy to obtain the services of the applicant for his company.
There was then an agreement between Mr Robson and the respondent to pay the wages to a different entity I am satisfied on the balance of probabilities that this agreement was entered into as a sham arrangement. The advantage to the applicant and Mr Robson was that they would be able to take into account in their financial affairs, particularly for personal income taxation purposes, existing losses in the company ‘Budway Pty Ltd’.
It also suited Mr Michael Webb in that his real intention was to secure the services of the applicant. It was unlikely that this could be achieved without the involvement of Mr Robson. I am satisfied there may have been some other financial advantage to the respondent in entering into this sham arrangement. In addition to the obvious savings to the respondent of not having to pay annual leave, workers compensation premiums and superannuation there was the possibility of obtaining the services of the applicant at a rate which was less than would have been required if she had to be employed direct from her then employment with the major retail store. Moreover no provision needed to be made for the payment of Income Tax on a “PAYE” basis in respect of the employment of the applicant or Mr Robson. I find the applicant to be an employee of the respondent between 5 December 1994 and 4 August 1995.
WAS THERE A VALID REASON FOR TERMINATION?
Under the provisions of the Act, the respondent carries the burden of showing that at termination it had a valid reason or reasons for bringing the employment to an end summarily. In his decision in Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371, Northrop J describes the meaning of this phrase in the following way:
“Section 170DE(1) refers to “a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”. A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: “2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.” In the Macquarie Dictionary the relevant meaning is “sound, just, or well founded; a valid reason.”
In its context in s170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bostik Pty Ltd (1995) 60 IR 1, when considering the construction and application of s170DC.”
The defence of this case by the respondent was based on the concept that the applicant and Mr Robson were not employees. As I have found for the applicant on this issue it follows that the respondent then is required to prove that at 4 August 1995 it had a valid reason for the termination of the applicant. It seems that its reasons for dismissing the applicant revolves around the failure of Mr Robson,as it was his primary responsibility, to sell sufficient homes. I am not satisfied that at 4 August 1995 this could be properly established by the respondent. For instance, there was no evidence of a review of the sales situation being carried out after six months as required by paragraph 7 of the letter dated 22 November 1994.
Mr Michael Webb testified that he believed the applicant was better at communicating with the over 50s than was Mr Robson. This does not give the case for the respondent any basis for establishing that its decision to terminate the applicant was sound or well founded.
The evidence in this case leads me to the conclusion that there was not well founded or just grounds for the decision to terminate the employment of the applicant. There was not a valid reason to terminate the employment of the application.
SECTION 170DC: EMPLOYEE OPPORTUNITY TO RESPOND
Section 170DC is in the following terms:
“An employer must not terminate an employee’s employment for reasons related to the employer’s conduct or performance unless the employee
(a) has been given the opportunity to defend himself or herself against the allegations made or
(b) the employer could not reasonably be expected to give the employee that opportunity.”
In this matter Section 170DC(b) certainly does not need to be considered.
The applicant was not given the opportunity to defend herself against the allegations of a poor sales performance. At the very least section 170DC required Mr Brian Webb to set out in some detail his reasons for terminating the employment of the applicant.
In Perrin v Des Taylor Pty Limited (1994) 58 IR 254 at 256-7, Moore J said the following about the purpose of section 170DC:
“Its purpose is at least twofold. It is to give the employee the opportunity to demonstrate that the allegations have no foundation in fact or they should not be viewed as reflecting on the employee’s capacity. In the present case, the applicant may have been able to show that the complaints about slow delivery parts had no factual foundation or that there was an explanation for their slow delivery that did not relate to any want of effort on his behalf.
A second purpose of s170DC is that an employee with whom an allegation has been raised may be able to persuade the employer that, while the allegation is of substance, there are factors that should persuade the employer not to terminate the employment. They may be extenuating personal circumstances or they may involve undertakings about future conduct.”
Despite the fact that there was evidence that the applicant had frequent discussions with the representatives of the respondent, there was no evidence of any opportunity being given to the applicant to respond to the allegations made against her. It appears that Mr Brian Webb was convinced that he could rely on his view that the applicant was not an employee and she was therefore a person who could be terminated without notice. This can be the only logical conclusion as to why he would act in such a peremptory fashion.
In my view, the respondent breached section 170DC of the Act, in that it should have given the applicant the opportunity of making representations about the retention of her job. In addition, the applicant may have wished to give “undertakings about future conduct to” the respondent including ways in which the level of sales could be increased. In those circumstances there will be a finding against the respondent that there was a contravention of section 170DC of the act.
REINSTATEMENT : IS IT IMPRACTICAL?
On the question of reinstatement, the applicant said that because of the way she was dismissed she was very emotional at the time about the business. The applicant acknowledged that she was still emotional about it and felt she could not give full service to someone who treated her so roughly.
On the question as to whether it is impracticable to reinstate the applicant I refer to the observations of Wilcox CJ and Keely J in Liddell v Lembke (1994) IRCR 466 at page 487.
“The precise meaning of impractical in this context should be left to another day. The question is one of general importance. It was not fully argued in this case, but although impractical does not mean impossible, it means more than inconvenient or difficult. Imposition of such a stringent limitation on the court’s power to award compensation rather than order to reinstate is inconsistent with the notion that Parliament intended the court have an open discretion whether to intervene at all.”
This is also supported by Gray J in his judgment in that case at page 495. “Reinstatement is therefore required if it can be done. If the employer is still employing or able to employ someone to perform the same or similar tasks, then reinstatement will be practicable. Its practicability does not depend on the existence of grounds which would have justified termination but which were not relied on, because unknown to the employer at the time of termination.”
The only cogent evidence from the Respondent that would lead me to consider that it would be impractical to reinstate the applicant was subsequently given by Mr Michael Webb to the effect that he has lost confidence in the applicant. He had nothing of a more tangible nature to provide to the court. A lack of confidence by a former employer is not a sufficient ground to prevent reinstatement of the former employee.
I am satisfied that I have only a limited discretion not to reinstate the applicant where it has been found that there is no valid reason for termination of his employment. (See decision of Liddell v Lemke t/a Cheryls Unisex Salon (1994 IRCR 466 supra). However the applicant also failed to give any positive evidence that would support her claim that reinstatement is not impractical. In a case where the employee is to be placed back in a position of trust, and subject to meeting a sales criteria, it is necessary for the applicant to put forward some evidence as to how she would address those matters in the future. Mr Michael Webb during parts of his evidence gave the impression that he was willing to again employ the applicant in a position at the centre.
To some extent an obligation is imposed on the applicant to bring forward some evidence of her ability to meet the criteria required to be met in the job in the future. In her case too there was a failure to put forward any plan as to how to improve the number of “completed and settled” sales. The applicant is in current employment and still bears a sense of injustice. In the circumstances of this case I am of the view that the discretion should be exercised against the applicant. Therefore I find that it is impractical to reinstate the applicant.
There will be a finding that it is impractical to reinstate the applicant to the position in which he was employed immediately before the termination by the respondent.
DISTRESS
This was an extraordinary termination. The applicant had responded positively to the blandishments of the representatives of the respondent. At their request she had gone to Brisbane for an interview, left her secure position and at the time of the termination was apparently carrying out the duties assigned to her properly. Her performance being publicly approved by Mr Michael Webb before a gathering of the local community that included persons holding civic office. Her termination was carried out through the device of informing Mr Robson with the expectation that he would pass on the bad news. There was no fortitude shown by either of the Webb brothers. Mr Brian Webb did not even extend the courtesy of waiting for her to be present and then to perform the unpleasant task in person. This was a precipitate action that was open to all types of adverse interpretations in the small community in which she lived. As no explanation was given to her at the time of termination what could she truthfully tell her neighbours or a prospective employer about the incident.
I do not believe Ms Olsen to be a ‘shrinking violet’. This was amply demonstrated in her strong clashes with Ms Linnane, counsel for the respondent, during her cross examination. It was necessary for me to intervene between Ms Linnane and the applicant during this cross examination.
I have also taken into account her previous background as an Australian Federal Police Officer, but notwithstanding this factor, I am satisfied that she did suffer distress of the nature outlined in Burazin v The Blacktown City Guardian Pty Ltd (1995) case (unreported IRCA (Full Court) decision No. 606/96 dated 13 December 1996). In that case the full court, determined that in making an assessment of damages caused by stress suffered in a termination of employment restraint must be exercised in the level of damages.
In this matter I assess damages suffered through distress caused by the method of termination at $2,000 dollars. I make that assessment upon my observations of the applicant in giving her evidence, her description of how she felt at the time of her termination and the reaction which she illustrated in the witness box. This was a woman with an excellent career record. The applicant lived in a relatively small country town where the circumstances of her unexplained dismissal would quickly become common knowledge.
The applicant had been publicly thanked for her contribution two weeks before by Mr Michael Webb at the anniversary function. Shortly afterwards Mr Brian Webb terminated her employment through a third party. As Mr Brian Webb was not called to give evidence her description of the event goes unchallenged. I am satisfied that it did and will have a continuing adverse impact on her. Those circumstances justify taking that damage into account.
COMPENSATION
On the question of compensation generally the applicant gave evidence that she was able to obtain employment as from the 6th November 1995. The applicant got the job after registering with the CES and applying for a number of jobs. Her job was funded by the Federal government in relation to and as part of a labour market program to take in long-term unemployed people. The applicant described the security of her employment as being a very rare situation as a number of people had been retrenched in July 1996.
No doubt if things had worked out in terms of additional sales her income might have been in excess of the figure that she obtained in her employment from 6th November, 1995. However there was no evidence tendered which would enable me to make that prediction so accordingly I have not taken that prospect into account. In the circumstances I think that the appropriate level of compensation should be assessed on the period of thirteen weeks during which she was without work, from 4th August, 1995 to 6th November, 1995. I have adopted the figure of $600 per week by including the additional $200 in the calculation of her wage which was negotiated in the latter period of their employment. I note there is no direct evidence of this allocation between the parties but my reason for adopting that figure is that the respondent would have been more likely to increase her rate of payment as Mr Michael Webb felt there was some advantage in keeping the applicant rather than Mr Robson. In the circumstances there will be an award of $7,800 dollars for her. The amount of $2,000 which I have allowed for distress when added to this figure is less than the maximum allowed under the legislation and consequently the sum of those amounts is awarded.
The circumstances of the termination of the applicant were not dissimilar to those which applied to the applicant in May v Lilyvale Hotel Pty Ltd (1995) 68 IR 112). In that case Wilcox CJ, made an assessment of her future losses based on the difference in terms of the salary which the applicant was likely to receive and that which she would have received in her previous position in her former employment.
The calculation of that amount led to the amount of damages being in excess of the maximum amount of compensation allowed under the legislation. Accordingly the maximum amount was allowed. In the present case I do not have the necessary evidence as to future losses as it was not led from the applicant. Accordingly there is no evidence on which I can rely to make such a prediction. In the circumstances I am limited to assessment of the damages based on the evidence from the applicant for the period she was unemployed, together with the amount for distress which I have assessed earlier. It is therefore appropriate that there be an award of $ 9,800 dollars.
Finally there should be an award of compensation for the failure to give the required period of notice under Section 170DB of the act.
There will be judgment and orders accordingly.
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