Pam Coker-Godson and National Dairies Ltd

[1995] IRCA 61

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 262 of 1994

BETWEEN:

PAM COKER‑GODSON
Applicant

AND

NATIONAL DAIRIES LTD
Respondent

REASONS FOR JUDGMENT

1 March 1995  Judicial Registrar Chancellor

This is an application by Pamela Coker‑Godson in respect of the termination of her employment by National Dairies Ltd on 30 March 1994.

The applicant was first employed at the Drouin Butter Co‑Op in 1988 when it was controlled by the Petersville Sleigh Group.  Previously she had been working with that Group in Warragul.  From late 1988 she was secretary to the Manager at the Co‑Op, Mr Michael Murnane.  As his secretary she was privy to confidential information in relation to industrial relations and other corporate matters.

A number of changes in the corporate control of the Drouin Butter Co‑Op took place over the years and eventually the respondent took over in 1991.  There had always been continuity of employment through the various take overs.

In late January 1993 Mr Murnane became Operations Manager and the applicant again became his secretary.  Their working relationship from that time was most unsatisfactory.  It appears that Mr Murnane was moody, picked on the applicant and made life generally very difficult for her.  This was confirmed in evidence by a work mate, Helen Donnelly, who said that the applicant was continually harassed on petty matters and that the treatment of the applicant was unnecessary.

This lead to a meeting being called on 17 September 1993.  Present were the applicant, Helen Donnelly, Mr Sasse, the Human Resources Manager of the respondent, and another company representative.

Following the meeting Mr Murnane made a job offer to the applicant.  This involved her being moved from the position as Mr Murnane’s secretary to a farm liaison/typing/relief position.  Although the respondent argued that this position was an important position and not a demotion, I accept the views expressed by the applicant and Ms Donnelly that the applicant was regarded as the most senior of the secretarial staff and that the job offer represented a downward step although at the same rate of pay.

The events leading up to the meeting of 17 September and the subsequent job proposal had a profound effect on the applicant who became severely depressed and stopped work as a result of her illness on 20 September 1993.

Apart from the difficulties with Mr Murnane the applicant was involved in two ongoing areas of dispute which placed her under further stress in 1993.  From January 1993 she had become involved in a de facto relationship with a fellow worker at Drouin, Max Nottage, who also happened to be the Transport Workers’ Union (“T.W.U.”) representative at the Drouin site.  There were many sensitive industrial matters in dispute between the respondent and T.W.U and the respondent was concerned of the potential conflict of interest with the applicant being privy to at least sensitive, if not confidential, information of the respondent which no doubt would have been of considerable interest to the T.W.U.  This was probably a significant part of the reason for the job offer in September 1993.

Matters were further compounded because the applicant had joined the T.W.U., certainly by early 1993, to assist her in a relocation allowance claim in relation to her move from Warragul to Drouin in 1988.  The respondent was unhappy because it felt it was inappropriate that the applicant should be represented by the T.W.U., it felt the applicant was not entitled and also because it had yet another industrial issue involving the T.W.U. on its hands.

The applicant stopped work on 20 September 1993 and lodged a work cover claim which was initially denied.  She commenced receiving sick pay.  The respondent wrote to the applicant on 3 November 1993 indicating that the T.W.U. had claimed (presumably in relation to the relocation allowance) that the Transport Workers’ (Bulk Milk Carters) Award applied to the applicant’s sphere of activity in the Drouin work place.  The letter pointed out that accrued sick leave under the award entitlement had expired, but if the applicant were to be treated as a non‑award salaried member of staff then much more generous sick leave entitlement were available.

A meeting was held on 18 November 1993 at which the applicant, Mr Sasse, Maryanne Krummell from the T.W.U. and one other Union representative attended.  The applicant was in a highly distressed state and has little recollection of the meeting.  The matter of reinstatement to her position as secretary to Mr Murnane was certainly discussed.  Mr Sasse said it was to happen, Maryanne Krummell felt that it was subject to Mr Murnane agreeing to it, but whatever the case it is likely that upon the applicant’s return to work it would have been to her original position.

As a result of the meeting it certainly seems to be the case that the applicant would be treated as salaried staff and not an award employee, and indeed she continued to receive sick leave payments up until her termination.  There was some uncertainty as to whether the Union still held the right to represent the applicant after that meeting but it is unnecessary for me to determine that matter.

Mr Sasse said that the Union asked that Mr Sasse not contact the applicant directly and given her stressed state it is likely that such a request was made.

The applicant did not attempt to return to work prior to the date of termination.

In January 1994 and probably sometime before that, negotiations were taking place between the respondent and Bonlac Foods Limited for the sales of assets at Drouin and also at Granville in N.S.W.  Agreement for the sale of the Drouin and Granville sites was completed and was to take effect from 1 February 1994.

Mr Sasse gave evidence that he was involved in discussions with Bonlac regarding the transfer of employees.  There was an obligation under the agreement to provide sufficient trained and qualified employees to run the Drouin and Granville sites.  Mr Sasse said that this meant that some sales and administrative staff may be in excess to Bonlac’s requirement.  He said the applicant’s position was very briefly discussed with Bonlac in late January 1994.  The essence of the discussion was that the Drouin site had been run despite the applicant’s absence for most of the time since June 1993, the applicant having been overseas on leave from June to August 1993.  The site was performing nicely without her standard secretarial role since September 1993.

It appears that on the basis of that advice Bonlac indicated that it did not require an additional person if the existing staff numbers were coping successfully.  Mr Sasse said this was confirmed by Bonlac very close to 7 February 1994.  Agreement was reached that the applicant’s employment would not be transferred to Bonlac.

Despite the fact that Mr Sasse knew the applicant was not to be transferred, the applicant received a letter from the Managing Director of the respondent dated 7 February 1994 which said in part:

“I wish to advise that National Dairies Limited has agreed to sell its Drouin and Granville operations to Bonlac Foods Limited.  The effective date was 1 February 1994.  Under the agreement, Bonlac will be offering employment to all full‑time permanent employees at Drouin and Granville.  This agreement also provides for terms and conditions that will be substantially no less favourable than provided by National Dairies.”

A media release from Bonlac and the respondent dated 7 February 1994 said in part:

“Bonlac will offer employment to all employees on the site who are directly associated with the businesses.”

Mr Sasse said in evidence that the applicant was not a full‑time permanent employee on the site at the time and by inference that the letter did not apply to her.  To allege that someone who had worked continuously on the site for many years and who happened to be absent as a result of a work related illness was not a “full‑time permanent employee” is an unacceptable assertion which is both a self serving and unreasonable interpretation of that phrase.

Mr Sasse indicated that subsequent to 7 February 1994 the respondent reviewed all of its human resource requirements throughout Australia.

He said the applicant was terminated because the respondent no longer had operations at Drouin or in Gippsland and her position was redundant.  He said that he was not influenced in that decision by her temporary absence due to illness or her union membership and activities.

Effectively, once she became the only member of the administrative staff at Drouin not to be transferred in her employment from the respondent to Bonlac her redundancy became a fait accomplis.

I accept the respondent’s submission that the termination was for a valid reason connected with the operational requirements of the respondent in that it was by then a genuine redundancy.

WAS THE TERMINATION HARSH, UNJUST OR UNREASONABLE?

On 30 March 1994 the applicant received a letter dated 21 March 1994 advising her that her employment with the respondent was terminated due to her position becoming redundant.

In June 1994 the respondent by Notice of Motion had argued that the termination of the applicant’s employment did not contravene the provisions of the Act because the termination occurred before Division 3 commenced.  It was submitted that all the acts, facts and circumstances and indeed the decision to terminate occurred prior to 30 March 1994.  Keely J found that the termination did not occur until 30 March 1994 i.e. the day on which the applicant received the letter notifying her of her termination.  He concluded “it follows that the Court could not be satisfied that the termination of the employee’s employment contravened no provision of Division 3, the relevant part of the Act”.  (Keely J, Transport Workers Union of Australia -v- National Dairies Limited, 21 June 1994).

I adopt his reasons in this matter in which it is now Mrs Coker‑Godson and not the Union who is the applicant.

The respondent submitted that I should not take into account its conduct in its negotiations with Bonlac over the transfer of employees, and the effect of those negotiations on the applicant when considering this matter.  It submitted that these negotiations took place prior to the time Division 3 was in force and were not acts related to the termination of the employee but to her non‑transfer to Bonlac.

I reject that submission and take the view that I am entitled to take into account all matters directly related to the termination.  The respondent’s position is essentially that once the applicant was not transferred it had no other option but to terminate.  In those circumstances there could not be a more direct relationship between the non‑transfer of the applicant and her termination.

At the time of the transfer negotiations the respondent made no attempt to contact the applicant, either directly or indirectly, to find out when she would be fit to return to work.  She may have been willing to work at Bonlac within a short period of time.  There were six secretarial/administrative/support staff at Drouin although one of them probably had more expertise.  In any case of the five remaining employees I find, after hearing the evidence of the applicant, Helen Donnelly and Mr Sasse, that their positions involved similar skills and could be successfully handled by any one of the five.  It was therefore the case that four employees out of five were to be transferred to Bonlac.  The respondent made no attempt to apply any objective selection criteria.  I find that the applicant, being in the mid to upper range of salary and having lengthy service and experience and having being told that she would return to the position of secretary to the Operations Manager would almost certainly be one of the four transferred if any objective criteria had been applied.  There was no evidence of any attempt being made by the respondent to consult any of the five employees involved nor to explore the possibility of a voluntary departure package by any one of them.

For the respondent to say that the applicant was ill at the time (although it did not make specific enquiries at the time) and that Bonlac did not want to take her amounts to an abrogation of its responsibility to its employee.  I do not accept the proposition that the respondent would have been unable to negotiate this matter in its negotiations with Bonlac, even if it were to be the situation that the applicant would be off work for a further period of time.  The mere fact that the applicant was absent ill as a result of a work related illness seems to have been the determining factor.

I find that the applicant was denied procedural fairness at the time of the transfer of employees and that this directly lead to her termination.  I therefore find that the termination was harsh, unjust and unreasonable and in breach of section 170DE(2) of the Act and probably also a breach of s.170DF(1)(a), although it is not necessary for me to decide that matter.

It was common ground that once the applicant had not been transferred in her employment that there was no warning, no notification of impending redundancy, no counselling and no offer of assistance in obtaining re‑employment.  Indeed, having received the letter of 7 February 1994 the applicant believed her employment was secure.

The respondent continued to pay the applicant sick pay up until her termination, approximately $12,500.00 in all.  This was a generous payment but one to which she was entitled once being accepted as a salaried employee.  Upon her termination she was paid pro rata long service leave, four weeks severance pay, and a redundancy payment of three weeks pay for each of her seven years of service, a total gross payment of $18,554.45.  Mr Sasse said that this was about standard for manufacturing industries generally.

Mr Sasse gave evidence that he did not consult with the applicant because there was no longer a business in the area and therefore nothing to consult about.  However, there was evidence that the applicant certainly would have been willing to travel to the respondent’s site at Chelsea Heights, which was some forty‑five minutes from Drouin, and perhaps also to the South Melbourne Head Office if it meant her remaining in employment.

The respondent submitted that concepts of procedural fairness and natural justice are fluid and this was a case in which very little was required from the respondent because in its view there was effectively nothing that could be done to maintain the applicant’s employment once she was left on her own in Gippsland.

I agree with the proposition that the concepts are fluid and that the appropriate procedural steps to be taken vary according to the circumstances of each case.  However, given the circumstances of the respondent’s failure to negotiate the applicant’s transfer in employment, and the fact that she had been left in such a precarious situation, it is my opinion that a great deal could fairly have been expected from the respondent in this case.  Although it was argued by the respondent that this Court should be reluctant to intervene in cases of genuine redundancy in my opinion this is not such a case.

By failing to consult with the applicant the respondent knew nothing of the applicant’s state of health or willingness to travel further a field to obtain work.  The respondent did not give itself the opportunity to find out if the applicant had other skills which it may have used or other work which she may have been prepared to do.

It is true that the respondent was also winding back its operations at Chelsea Heights.  The evidence was that four or five secretaries had been reduced to two by March 1994, it appears by way of resignation.  It may have been that consultation between the respondent, applicant and remaining two secretaries may have meant that that applicant would have been preferred on the application of objective selection criteria given her length of service, skills and experience or that another employee may have taken a voluntary departure package.  Further, Mr Sasse said that at the present time there is a third secretary at Chelsea Heights although the administrative part of Chelsea Heights is about to be significantly wound down.

The South Melbourne Head Office had four to five secretaries in February/March 1994 and the applicant may have been considered for a position there at that time.  This would inevitably been short lived as the Head Office moved to Sydney in October 1994.

It is true that the respondent paid the applicant quite a generous termination package but it is also the case that the applicant, particularly in view of her age (50) and more limited chance of re‑employment, would have preferred to remain in employment.

I find that the respondent denied the applicant procedural fairness when making its decision to terminate in March 1994 and that the termination is harsh, unjust or unreasonable and in breach of section 170DE(2) of the Act.

REMEDY

The applicant sought reinstatement.  The respondent has closed its operations in Gippsland and South Melbourne.  The Chelsea Heights administration is about to be further wound down.  In the circumstances I find that there is really no where within reason that the applicant could be re‑employed by the respondent and that reinstatement is impracticable.

In the alternative the applicant sought compensation.  If the applicant had been properly considered for transfer to Bonlac I have little doubt that she would have been transferred and have remained in employment for a number of years.  The Court is to have regard to the remuneration the employee would have been likely to have received if the employer had not terminated the employment.  This remuneration would have been substantial and it is therefore appropriate to award compensation in the maximum amount allowable under the Act - in this case six months remuneration being $15,499.90.

Even if I am wrong in taking into account the effect of the failure to transfer the applicant, I still feel that compensation is payable in this case.  I find that it is possible that if consultation and adequate selection had taken place that the applicant may have obtained and remained in employment at Chelsea Heights at least until early 1995 when the administrative operations are to be further wound down.  This would represent at least twelve months of additional employment and even taking into account the generous termination package it is still appropriate to award the maximum of six months remuneration by way of compensation - $15,499.90, given what I have found was a clear breach of the Act in relation to the redundancy decision.

I reject any suggestion that the twenty‑one weeks paid by way of redundancy package should be deducted from the maximum of twenty‑six weeks compensation when in my view the applicant’s employment would have continued for twelve months or more.

THE COURT ORDERS THAT:

1. The respondent pay the applicant compensation in the sum of $15,499.90.

2. Stay of 21 days.

I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment of Judicial Registrar Chancellor.

Associate:

Dated:  1 March 1995

Representative for the Applicant: Counsel for the Applicant:	Transport Workers’ Union of Australia Mr N. Kenyon
Solicitor for the Respondent: Counsel for the Respondent:	Arthur Robinson & Hedderwicks Mr Wheelahan
Dates of hearing:	16 & 17 February 1995
Date of Judgment:	1 March 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 262 of 1994

BETWEEN:

PAM COKER‑GODSON
Applicant

AND

NATIONAL DAIRIES LTD
Respondent

MINUTES OF ORDER

1 March 1995  Judicial Registrar Chancellor

THE COURT ORDERS THAT:

1. The respondent pay the applicant compensation in the sum of $15,499.90.

2. Stay of 21 days.

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