Paul Anthony Walsh v Wayne Motors
[1996] IRCA 92
•21 Mar 1996
DECISION NO: 92/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - REDUNDANCY - difficult economic circumstances - lack of consultation - HARSH, UNJUST OR UNREASONABLE - distress - BREACH OF CONTRACT - COMPENSATION
INDUSTRIAL RELATIONS ACT 1988 Ss 170DE(2), 170EA, 170EE(2), 430
Mitchell-Collins v La Trobe Council (1995) 60 IR 480
Quality Bakers of Australia Limited v Goulding & Anor (1995) 60 IR 327
Corkery v General Motors Holdens Limited (1986) 53 SAIR 531
Cheeseman v Kinhill Engineers Pty Ltd (1992) 59 SAIR 168
Sinclair v Anthony Smith & Associates Pty Ltd, unreported, IRCA No. 663/95, Von Doussa J, 1 December 1995
Karambelis v Compack Packaging Pty Ltd, unreported, IRCA No. 178/95, Murphy JR, 14 May 1995
Allia v Plumbing World Limited, unreported, IRCA No. 453/95, Boon JR, 7 September 1995
Hockey v Multiskip Pty Ltd, unreported, IRCA No. 557/95, Marshall J, 29 September 1995
Gregory v Phillip Morris Limited (1988) 80 ALR 455
Aitken v CMETSWU - WA Branch, unreported, IRCA No. 352/95, Lee J, 7 August 1995
Walker v Ken Vidler Surfsports, unreported, IRCA No. 665/95, R Farrell JR, 30 November 1995
PAUL ANTHONY WALSH -v- WAYNE MOTORS - WI 95/2203
BEFORE: RITTER JR
PLACE: PERTH
DATE: 21 MARCH 1995
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 95/2203
BETWEEN: PAUL ANTHONY WALSH
- Applicant
AND: WAYNE MOTORS
- Respondent
MINUTE OF ORDERS
BEFORE: RITTER JR
PLACE: PERTH
DATE: 21 MARCH 1995
THE COURT DECLARES AND ORDERS THAT:
The respondent terminated the employment of the applicant in contravention of Section 170DE of the Industrial Relations Act 1988.
The respondent pay to the applicant $575 in compensation pursuant to Section 170EE(2) of the Industrial Relations Act 1988.
The respondent pay to the applicant the sum of $675 in damages for breach of the contract of employment between the applicant and the respondent.
The amounts referred to in orders 2 and 3 be paid by the respondent to the applicant within 14 days.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 95/2203
BETWEEN: PAUL ANTHONY WALSH
- Applicant
AND: WAYNE MOTORS
- Respondent
BEFORE: RITTER JR
PLACE: PERTH
DATE: 21 MARCH 1995
REASONS FOR JUDGMENT
This is an application:-
under Section 170EA of the Industrial Relations Act 1988 ("the Act") alleging that the respondent terminated the employment of the applicant in contravention of Part VIA of Division 3 of the Act; and
for damages for alleged breaches of the contract of employment by the respondent. The Court had jurisdiction to hear this matter as it was associated with matters in which the Court has jurisdiction; Section 430 of the Act.
The applicant gave evidence in support of his case. Mr Wayne Banducci, a director of the respondent, and Mr Robert Heijstraten, who was the general manager of the respondent at the relevant time, gave evidence for the respondent.
The respondent operated retail tyre franchise, motor vehicle mechanical servicing and sale of car audio equipment businesses on the one site. It is agreed that the applicant was employed by the respondent as the tyre, mechanical and car audio manager during the period 18 July 1995 to 10 October 1995. Whilst it was agreed that this was the position for which the applicant was employed, as it turned out the applicant's primary responsibility was to manage the retail tyre franchise with a lesser responsibility in managing the mechanical servicing section of the respondent. The applicant had little involvement with the car audio section of the respondent. During the period of the applicant's employment the respondent had a workforce of about 11 or 12 in total, although this varied from time to time.
Mr Heijstraten worked at the same premises as the applicant. Mr Banducci was at the time of the applicant's employment not involved with the day to day running of the respondent. Mr Banducci was primarily involved in running a car hire business which was operated from a site next to that of the respondent's businesses set out above.
UNLAWFUL TERMINATION OF EMPLOYMENT CLAIM
It was agreed between the parties that the respondent terminated the applicant's employment on 10 October 1995. It was also agreed that the applicant's employment was terminated because of the operational requirements of the respondent. There was a need to reduce the costs of the respondent because of its difficult financial position. In mid September 1995, Mr Banducci received from his accountant the financial statement for the 1994-95 financial year. This indicated that the respondent had operated at a loss of a little under $90,000 in that financial year. By the end of September trade creditors were owed an amount of $90,000. The respondent's account with its bank was overdrawn about $112,000. The respondent's overdraft limit with its bank was $50,000.
The applicant's counsel, in his closing address, accepted that the respondent had discharged its onus, under Section 170EDA(1) of the Act, of proving that it had a valid reason connected with its operational requirements, for terminating the employment of the applicant. He submitted, however, that the applicant had discharged the onus of proving that the termination of employment was harsh, unjust or unreasonable and therefore not valid under Section 170DE(2) of the Act. This submission was based primarily on the lack of communication with the applicant by the respondent prior to the termination.
Mr Schapper pointed to the following features of the termination:-
The applicant was given no prior notice of the fact that the respondent had difficult financial circumstances and therefore was considering cost cutting measures including the termination of employment of staff members, which could mean that the applicant would lose his job.
There was no consultation with the applicant about the financial circumstances of the respondent or the applicant's possible termination to see whether the applicant could offer any alternative suggestions.
The applicant was not offered the possibility of alternative employment with the respondent, prior to the termination of his employment.
Each of these factual assertions is a correct analysis of the evidence. The applicant received no warning prior to his termination on 10 October 1995 that his employment could be terminated because of the financial difficulties of the respondent. The respondent did not consult the applicant prior to that time to see whether he had any alternative suggestions. Further, whilst Mr Banducci said that he offered the applicant a position in the mechanical servicing workshop, a contention which was disputed by the applicant, it is clear that this offer was made after the termination of employment was effected by Mr Heijstraten.
I have mentioned the financial information that Mr Banducci received about the respondent's business in late September 1995. The combined effect of this information was explained at a meeting with Mr Banducci's accountant and bank manager on 29 September 1995. Mr Banducci was not directly involved in the finances of the respondent. This was the responsibility of Mr Heijstraten. Mr Heijstraten was meant to attend the meeting but for some inexplicable reason did not do so. The bank manager advised Mr Banducci that if the overdraft remained in excess of $110,000 the cheques of the respondent would not be honoured. The bank manager offered the opinion that the respondent was heavily overstaffed and that Mr Banducci should consider returning to work for the respondent. After the meeting with the bank manager, Mr Banducci had a further meeting with his accountant. The accountant said that the financial problems should be addressed immediately. Mr Banducci said in evidence that he was devastated that Mr Heijstraten was not at the meeting. This was because Mr Heijstraten was employed to "handle" the finances of the respondent.
Mr Banducci returned to the respondent's business. He said that he was very upset and spoke to the applicant. Mr Banducci said that he told the applicant that Mr Heijstraten had left things in a mess, that there were financial problems and that he would have to address the problems. However, Mr Banducci did not claim that he specifically raised with the applicant the possibility of termination of employees as a part solution to the problem. The applicant in his evidence said that he could recall Mr Banducci returning from the bank in September and being upset and irrational. He said that Mr Banducci was upset with Mr Heijstraten and told the applicant that Mr Heijstraten had not given correct figures to the bank. The applicant did not recall Mr Banducci saying that the respondent had big problems but said that it was possible that this was said. He elaborated by saying that Mr Banducci often said things on the spur of the moment.
I am satisfied that the extent and possible consequences of the respondent's financial problems were not clearly relayed to the applicant that day. In particular, there was no mention that the financial problems were such that Mr Banducci would have to consider cost cutting measures such as the termination of employment of staff.
Mr Banducci's evidence was that the conversation with the bank manager and the applicant took place on a Friday. On the Monday he had a conversation with Mr Heijstraten and his accountant. The accountant put forward two solutions to the financial problems. One was to "close up" the business which he did not recommend and the other was that the respondent attempt to trade out of its difficulties. Mr Heijstraten suggested that the respondent was "top heavy" with employees. He suggested that Mr Banducci return to running the business of the respondent and that he (Mr Heijstraten) and the applicant leave the employment of the respondent.
Mr Banducci said that he "stewed on" these suggestions with Mr Heijstraten for about a week. During this time there was no discussion or consultation with the applicant about the matter. Mr Banducci then made the decision that he would accept Mr Heijstraten's recommendation, that Mr Heijstraten would leave the employment of the respondent and that the applicant would be retrenched. Apart from the applicant and Mr Heijstraten, the other employees of the respondent would remain. Mr Banducci would return to manage the business.
Mr Banducci instructed Mr Heijstraten to tell the applicant that because of the financial problems of the respondent they could no longer afford to pay his wages. Whilst he did not specifically say so in evidence, this instruction included the obvious inference that Mr Heijstraten was to effect the termination of the applicant's employment. Mr Banducci gave these instructions to Mr Heijstraten during the morning of Tuesday, 10 October 1995.
Mr Heijstraten agreed in his evidence that he had met with Mr Banducci and the accountant. He said that this occurred on a Sunday but little turns on this. He also said that the accountant suggested that the respondent go into liquidation; however little turns on this matter either. Mr Heijstraten said that his view was that with careful planning the respondent could trade out of the financial difficulties. He said that costs (and impliedly wages) had to be decreased. It was discussed that the best person "to go" would be the applicant. This was because he was a sales manager. He was not productive in the sense that he did not do physical work which could directly earn the respondent income. There was also a receptionist who answered telephone calls, did "paper work" and was involved in selling audio equipment. It was considered that the applicant was a better choice for the person to leave the respondent's employment rather than the receptionist. Mr Heijstraten agreed that after about a week it was agreed with Mr Banducci that the staff would immediately be reduced by one person, being the applicant. (Mr Heijstraten left the employment of the respondent about two weeks later).
Mr Heijstraten's evidence did not differ from that of Mr Banducci with respect to the issues of whether there was any discussion or consultation with the applicant prior to his termination of employment. He also agreed that it was he who first spoke to the applicant about his employment being terminated.
The applicant said in evidence that his termination was effected at the end of Tuesday, 10 October 1995. Mr Heijstraten called him into his office and said that they needed to talk. He said that they had to let someone go and that the applicant's name had come up. The applicant said "You're joking". He asked Mr Heijstraten what had happened. Mr Heijstraten then shrugged his shoulders and said "Nothing", the applicant had done well, he'd cleaned up the place and the place was looking good. The applicant said he asked what was "the story" and Mr Heijstraten had shrugged and said "It was Wayne" (Mr Banducci) and that he (Mr Heijstraten) couldn't "do anything for you". The applicant said that he said to Mr Heijstraten that he had worked his "guts out" and worked long hours and "this is what he got". The applicant said he got angry and threw his keys on the bench. He then said that if this was how it was going to be then he (Mr Heijstraten) could make up his pay. There was then a discussion about his termination pay.
The applicant's evidence was that he had not been given a specific reason why his employment was being terminated, other than Mr Heijstraten saying that they had to let somebody go.
Mr Heijstraten disagreed with this. He said that he told the applicant that he had to be let go because things were tight and the business was not travelling well. He said that he also mentioned that another employee may be leaving as well, without specifying who that was.
I prefer the evidence of Mr Heijstraten on this point. I think it likely that he would have informed the applicant of the reason why his employment was being terminated. Both he and Mr Banducci thought that the applicant was a good worker and there is no reason to think that Mr Heijstraten would not have tried to soften the blow of the applicant's termination by at least informing him that the reason was to do with the financial circumstances of the respondent.
After the conversation with Mr Heijstraten, the applicant spoke to Mr Banducci. The applicant said that he told Mr Banducci that Mr Heijstraten had informed him that he was sacked. He said Mr Banducci said he would not call it that, but "that was the way things happen". The applicant told Mr Banducci that he would take legal action and Mr Banducci said "Don't come at that with me. You're lucky to get paid." Again, it was the applicant's evidence that Mr Banducci did not make any specific reference to the reason why his employment was being terminated. Again, Mr Banducci's evidence differed on this. Mr Banducci said that he told the applicant that the respondent was in financial problems and the applicant was lucky that he was getting his pay. He said that he told the applicant he hadn't been paid for a number of months and that they were not able to keep the applicant on.
Again, I prefer the evidence of Mr Banducci on this issue. For the same reasons as stated above, I think it likely that Mr Banducci would have informed the applicant of the reason why his employment had been terminated. Mr Banducci said that after the applicant threatened taking legal action he asked the applicant whether he would work on the workshop floor. This was in the mechanical servicing section. Mr Banducci said that the applicant declined this offer.
The applicant said that this offer was not made and if it had been made he would not have accepted working on the workshop floor because of medical reasons. He did not specify what the medical reasons were and this was not pressed in cross examination. I am unable to determine whether this offer of re-employment was made or not. Both the applicant and Mr Banducci gave their evidence in a reasonably straightforward way and I do not think that either was particularly prone to exaggeration. Ultimately, it matters little whether this offer of re-employment was made or not.
The basis upon which the applicant alleges that the termination of employment was harsh, unjust or unreasonable has been set out above. The main complaint is the lack of prior warning or consultation about the possibility of the applicant becoming redundant. The applicant asserts that the applicant's views upon possible solutions to the financial problems should have been canvassed. The applicant asserts that this was particularly so given that the applicant was part of the management team of the respondent. Mr Banducci had discussed with him possible expansion of the business including a Joondalup tyre franchise and a truck which could perform a mobile tyre checking service. The idea was that this truck would travel to car yards and perform a free service of checking of tyres. If the tyres were not up to standard then the hope was that the car yard would purchase the tyres from the respondent's business. Furthermore, there had been discussions between Mr Banducci and the applicant about the applicant at some future stage purchasing shares in the respondent.
Cases decided under the Act have accepted that even where there is a genuine redundancy, the termination of employment of a particular employee may be harsh, unjust or unreasonable. In Mitchell-Collins v La Trobe Council (1995) 60 IR 480 at page 490, Spender J stated that a failure to consult with an employee or union about the issue of redundancy may mean that a termination on that ground is harsh, unjust or unreasonable.
Beazley J in Quality Bakers of Australia Limited v Goulding & Anor (1995) 60 IR 327 at page 334 said that:
"The need for consultation with employees and, if applicable, the employee's union, in the case of workplace change or restructuring, has consistently been recognised as an essential element of fairness in the relationship between employee and employer".
At page 336 her Honour said that:
"There have been a number of recent cases in this Court where the requirement of consultation in the case of redundancy has been emphasised."
Her Honour cited two decisions of Judicial Registrars in support of this proposition. Earlier in this decision, her Honour quoted with approval a number of judgments which had emphasised the need for fairness in all aspects of the employer/employee relationship. Her Honour referred to the decision of Corkery v General Motors Holdens Limited (1986) 53 SAIR 531 at 538 where Stanley J stated a number of "basic principles" which should apply in the case of a redundancy. One of these was that the employer should give as much warning as possible of impending redundancies so as to enable the union and the employees who may be affected to take early steps to inform themselves of the facts, to consider possible alternative solutions and if necessary to find alternative employment either with the employer or elsewhere. At page 336, Beazley J referred to the observation of Perry C in Cheeseman v Kinhill Engineers Pty Ltd (1992) 59 SAIR 168 that such guidelines are equally appropriate to a redundancy arising in circumstances of economic stringency.
In Sinclair v Anthony Smith & Associates Pty Ltd, unreported, IRCA No. 663/95, 1 December 1995, von Doussa J made comments on the issue of consultation in the context of an award which required discussions with employees prior to termination for redundancy. However, his Honour's observations are apposite in relation to matters which fall to be determined by the Act, irrespective of such a requirement being contained in an award. At pages 7 and 8, his Honour commented:
"The requirement for consultation is in the award not only to permit the possibility of arriving at some arrangement of the workplace which has lesser consequences than dismissal, but also to allow time for the employees to deal with the emotional, family and domestic stresses that are likely to descend upon them when their employment is brought to an end. The importance of these non workplace personal factors cannot be underestimated, and finds expression in the reasons of various tribunals that have had to consider clauses of this type. To put it into colloquial terms, it is desirable, as the award recognises, that employees whose security of employment is about to be shattered be let down gently. If they are forewarned and counselled they are more likely to be able to accommodate to their new situation, to adjust themselves to the search for other work, and the like. Moreover, it is generally recognised that if an employee is in work and is given time off to go and look for other work, the prospects of finding employment are somewhat better than if the person concerned is required to seek work as an unemployed person on social security. The failure to consult is a significant matter in this case. In my view it was also significant that no forewarning was given, and significant also that no counselling was provided. Those are matters that should have been attended to, to render the dismissal in the circumstances of this case, reasonable and fair".
The comments of von Doussa J are appropriate to this case as the applicant accepted in his cross examination that he would have had no cause for complaint if his dismissal was on the basis of the economic circumstances of the respondent and this had been fully explained to him. The early warning of such a possibility would have assisted the applicant's acceptance of his termination.
In Karambelis v Compack Packaging Pty Ltd, unreported, IRCA No. 178/95, Murphy JR cited a number of cases which the Judicial Registrar said:
"represent strong authority for the proposition that in the usual course, even in the case of a genuine redundancy based on the operational requirements of an employer, an employer must consult with the employee ... in order to avoid the termination breaching Section 170DE(2) of the Act." (page 7)
This observation was quoted with apparent approval by Boon JR in Allia v Plumbing World Limited, unreported, IRCA No. 453/95, 7 September 1995, page 7.
Marshall J in Hockey v Multiskip Pty Ltd, unreported, IRCA No. 557/95, 29 September 1995 at page 10, has gone as far as to say:
"It is well established in this Court that a termination of an employee's employment on redundancy grounds will be harsh, unjust or unreasonable where there is no prior consultation with an employee before that employee's employment is terminated on redundancy grounds".
On how to judge whether a termination of employment is unreasonable, Jenkinson J said in Gregory v Phillip Morris Limited (1988) 80 ALR 455 at 457:
"The question whether the termination was unreasonable is, I think, one of fact. This question requires a determination, by reference to moral values and prudential considerations current in the community, and what the tribunal of fact thinks a reasonable employer in the circumstances would have decided to do at the time when the respondent terminated the appellant's employment".
This passage was quoted with approval by Lee J in Aitken v CMETSWU - WA Branch, unreported, IRCA No. 352/95, 7 August 1995 at page 15 and Spender J in Mitchell-Collins v La Trobe Council at page 491, both of which were cases dealing with whether terminations on the basis of redundancy had contravened the Act.
Bearing in mind each of the principles referred to above, I am of the view that the termination of employment of the applicant was harsh, unjust or unreasonable. I think that a reasonable employer would have warned the applicant of the possibility of redundancy as soon as this was being considered as a real possibility and would have consulted the applicant prior to making the decision to terminate his employment, as to any possible alternatives that the applicant could suggest, to the termination of his employment. Even accepting, as R Farrell JR did in Walker v Ken Vidler Surfsports, unreported, IRCA No. 655/95, 30 November 1995, that the principles concerning redundancies need to be applied in a not unconsidered manner to small work places (page 11), there is no reason why the warning and consultation I have referred to could not have taken place with the applicant. The requirement for consultation has been emphasised, as the above review of authorities has indicated.
Accordingly I find that the applicant's employment was terminated in contravention of Section 170DE(2) of the Act in that the applicant has discharged the onus of proving that his termination of employment was harsh, unjust or unreasonable.
In closing, the respondent suggested that because of a number of circumstances, which were detailed in the evidence, the applicant knew or ought to have known of the fact that the respondent faced financial difficulties. I am not satisfied that this was the case, but even if it was, this would not have been sufficient to avoid the contravention of the Act which I have found. The applicant not only needed to know that the respondent was in financial difficulties but be warned that this could lead to the loss of his employment and consulted as to whether he could suggest an alternative.
REMEDY
The applicant and respondent both agree that it would be impracticable for the applicant to be reinstated with the respondent. Section 170EE(2) of the Act relevantly provides that if the Court thinks, in respect of a contravention of a provision of Division 3 of Part VIA of the Act, constituted by the termination of employment of an employee, the reinstatement of the employee is impracticable, the Court may if it considers it appropriate in all the circumstances of the case make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.
In this case, the applicant was unemployed for three weeks before he commenced employment with Skipper Mitsubishi as a service adviser. The remuneration of the applicant from Skipper Mitsubishi is greater than that he received from the respondent. Therefore there is not likely to be any ongoing loss of income due to the applicant's termination by the respondent.
When the applicant's employment was terminated he was paid one week's wages in lieu of notice and one week for holiday pay. Therefore there was in fact only one week for which the applicant was not paid prior to his employment with Skipper Mitsubishi. I think it appropriate in all the circumstances of the case to compensate the applicant for this loss. At the time of the termination of his employment with the respondent the applicant's weekly wage was $575 gross. He will therefore be awarded this amount in compensation for the unlawful termination of his employment.
Mr Schapper also submitted that the applicant should be awarded an amount of compensation for the hurt felt by the applicant following his termination. Although Lee J in Aitken, cited above, suggested that compensation could be awarded for distress, this has recently been doubted by Madgwick J in Burazin v The Blacktown City Guardian, unreported, IRCA No. 660/95, 15 December 1995.
In this case, whilst I accept the applicant's evidence that he was angry and hurt after his dismissal, lost face with some people in the industry and had the embarrassment of telling his family about the situation, this would have been ameliorated by the applicant finding a good job with better remuneration within such a short period of time after his termination. Whilst the applicant also spoke of changing the date of his wedding to 1996 and deferring house renovations because of his unemployment, the applicant's subsequent employment in a position with better remuneration means, in my opinion, that there is an insufficient causal connection between the termination of employment and the deferral of his wedding and renovations to warrant an award of compensation. In all the circumstances I do not think it appropriate in this case to award compensation for the distress suffered by the applicant because of the termination of his employment.
BREACH OF CONTRACT
The applicant alleged that a number of the terms of his contract of employment had been breached by the respondent giving rise to a claim in damages.
(a) Motor vehicle claim
The applicant alleged that the respondent had refused or neglected to provide him with a motor vehicle as had been agreed as part of the contract of employment. In closing, Mr Schapper for the applicant conceded that the evidence did not establish the breach of such a term of the contract.
(b)Bonus claim
In the evidence this was also referred to as a claim for a commission.
The applicant alleged that in breach of the contract of employment, the respondent had refused to pay to the applicant a bonus that had been agreed to. In the applicant's statement of facts it is asserted that one of the terms and conditions of the employment contract was that the applicant would be paid a minimum bonus of $400 per month. The respondent disputed there being any such term of the contract.
In his examination in chief, the applicant said that he had two interviews with Mr Heijstraten prior to the contract of employment being entered into. In the first interview, the applicant said that Mr Heijstraten had asked him what income he would be expecting if he was successful in his application for the position. The applicant told Mr Heijstraten that he had been earning more than $30,000 per annum and so he was looking for something between that and $35,000 per annum. He said that Mr Heijstraten told him that income would be discussed further if he was the successful applicant. Mr Heijstraten also indicated that there would be discussion about a commission. The applicant said that Mr Heijstraten did not give much detail of the commission except that it was based on a gross profit.
The applicant said that he was later telephoned by Mr Heijstraten who asked him to come in the next day, which was a Monday. The applicant was advised that he was the successful applicant for the position. At this meeting the applicant said that he and Mr Heijstraten discussed his salary. The applicant said in evidence that Mr Heijstraten had "come up" with $550 per week. The applicant told Mr Heijstraten he was looking at $600 per week. Mr Heijstraten replied that he would start at $550 per week and see how it would go from there. There was also discussion about a commission. The applicant said that Mr Heijstraten informed him that the commission would be between $400 and $600 per month. He said that Mr Heijstraten said that with their clientele the applicant was guaranteed a commission of about $400 per month, but as the tyre sales manager the level of the commission was really up to him.
After the applicant commenced employment he said he took up with Mr Heijstraten the issue of payment of commission. He did this because staff had complained to him that they had never received the commission. Upon approaching Mr Heijstraten he advised the applicant that the matter was in progress, however, there was a difficulty with getting the relevant figures from the computer. The applicant indicated in his evidence that this type of reply was received on a number of occasions from Mr Heijstraten. Mr Heijstraten in his evidence explained he was having problems with the respondent's computer system for an extended period.
Mr Heijstraten prepared a memorandum to all staff dated 30 August 1995. This allocated a budget to the various departments within the respondent for the month of September. The budget for the tyre section was $40,000. The memorandum said that "There is an incentive for you to achieve your target. This will be announced on Friday". However, there was no announcement of the incentive. Mr Heijstraten in his evidence also said that he had not decided what the incentive would be. The applicant's evidence was that some interim sales figures were provided to him during the month by Mr Heijstraten. Using these interim figures plus what he thought the sales were in the last week of September, the applicant said that the tyre department exceeded their target of sales. Mr Heijstraten in his evidence said that the tyre department did not exceed the sales budget. I was not provided with any sales figures documentation upon which this dispute in the evidence could be resolved. I am not prepared to find, simply on the basis of the applicant's evidence, that the budget figure had been exceeded by the tyre department.
In cross examination, the applicant was asked a number of times about the conversation(s) with Mr Heijstraten prior to his employment commencing which discussed commissions and bonuses. The applicant said that Mr Heijstraten said that there was a commission payable which was based on gross profits. He said that Mr Heijstraten told him the commission system was in place and that all members of the staff could benefit from it. The applicant was asked whether if there was no gross profit there would therefore be no commission. The applicant agreed with this. The applicant said that Mr Heijstraten indicated to him he could hope to earn between $400 and $600 in commission per month. The applicant agreed that the bonus and commission payment was not explained in any detail. The applicant agreed that he did not know how the gross profit was to be determined. Later the applicant again agreed that if there was no profit there would be no bonus but said that this was not properly explained to him.
Later again in cross examination, the applicant said that it had been agreed between himself and Mr Heijstraten at the interviews that the applicant would be paid $550 per week and a commission on gross profit. The applicant then indicated that he took the amount of $400 per month mentioned by Mr Heijstraten as a guaranteed amount of commission. Later again, the applicant also referred to his commission as being guaranteed at $400 per month.
In his re-examination, the applicant again referred to the $400 per month commission being guaranteed by Mr Heijstraten.
In his evidence, Mr Heijstraten denied that any figure of $400 per month was mentioned in the discussions about commissions with the applicant at the interviews. He said the applicant was simply told that if a profit was made there would be a bonus for all of the employees of the respondent.
Having considered all of the evidence set out above, I am unable to conclude that there was a term of the employment contract relating to commissions or bonuses that has been proved to have been breached. The evidence does not disclose a term of the employment contract relating to a bonus or commission which was clearly defined and agreed upon. Even if this were the case, there is insufficient evidence of a breach of the term of the contract. In part of his cross examination, the applicant accepted that the bonus would be paid when there was a gross profit. However, there was no evidence that there was a gross profit, or even how this expression was defined. The evidence of Mr Heijstraten and Mr Banducci was that no gross profit had been made by the respondent during the period in which the applicant was employed. Even if there was a gross profit, there was no evidence as to the amount or percentage of commission or bonus that would be paid if a gross profit had been achieved.
In his closing submissions, Mr Schapper made reference to the statement by Mr Heijstraten to the applicant that the commission would be in the region of $400 to $600 per month. I am satisfied from the evidence that such a statement was made by Mr Heijstraten. However, I do not think that such a statement became a term of the contract of employment. I think that the statement by Mr Heijstraten was an optimistic statement of hope. It was not a statement that was binding upon the respondent. As the applicant understood, the payment of the bonus was dependent on gross profit.
In his closing address, Mr Schapper suggested that there was a representation by Mr Heijstraten that a bonus of $400 per month would be paid and that as such a representation had induced the applicant to enter into the contract, the representation became a term of the contract. I am not satisfied that this is the case. As stated, I consider that this was not so much a representation as an expression of hope. The applicant appeared to understand that the amount of the bonus depended on gross profit. Further, the statement by Mr Heijstraten lacked the precision necessary to make it a term of the contract. For example, the applicant's evidence was that Mr Heijstraten indicated that he thought that a bonus of between $400 to $600 could be earned.
Overall I am not satisfied that there is any basis upon which the applicant can claim that his contract of employment was breached by the failure to pay him an amount by way of bonus or commission.
(c) Claim for non payment for hours worked
The applicant's statement of facts asserted that the applicant was employed to work a 38 hour week from Monday to Friday, 8.00 am to 5.30 pm with half an hour for lunch; and 8.15 am to 3.30 pm Saturday with one paid weekday off per week in lieu of working on Saturdays. The statement of facts claimed that the applicant had to work approximately 19 to 22 hours unpaid per week in addition to these hours. In his opening, Mr Schapper clarified this claim to be a claim for 15 hours per week for nine weeks to be paid at the rate of $14.38 per hour. Mr Schapper explained that the claim was based on the assertion that these hours were required to be worked from week 3 to week 11 of the 11 week period of employment of the applicant with the respondent.
I am not satisfied that the applicant's evidence supports such a claim. The applicant in his evidence did not assert that it was agreed that his hours of work would be 38 hours per week. He also agreed that he was employed as part of the management team. He agreed in cross examination that there was a difference between being part of the management team and working on the workshop floor. He agreed that mechanics were generally paid per hour. It was put to him that there was no such agreement in relation to his position but he was to be paid in effect a salary. The applicant appeared to accept this but stated that he hoped that the commission that he would be paid would make up for this. The applicant also said that when he accepted the employment he did not know what was involved concerning hours, although he was informed of the retail operating hours of the respondent. The applicant also agreed that overtime was not mentioned in his pre-employment discussions with Mr Heijstraten.
I am not satisfied that there was any agreement that the applicant would be paid for time worked outside the hours referred to above. The applicant was employed as part of the management team of the respondent. The applicant was to be paid, in effect, a salary rather than at an hourly rate. As part of the management team I think it was expected and tacitly agreed that the applicant would work the hours required to get the job done rather than being paid for any particular number of hours and overtime after that. The applicant's evidence does not suggest any agreement that he was to be paid for working a longer day than the retail opening hours of the respondent. Indeed, during his cross examination the applicant said that he did not think he was entitled to be paid overtime for working "extra hours".
Mr Schapper submitted that in the alternative the applicant was entitled to be paid for the extra hours worked on the basis of quantum meruit. I do not accept this submission. As stated above, I think it was expected and tacitly agreed that the applicant would receive his wage for working the number of hours required to get the job done. This was not a situation where it was agreed that the applicant would be required to work longer hours than the retail opening hours of the respondent but that it had not been agreed what the applicant would be paid for such work. The situation was that the applicant was to be paid his weekly wage for all hours worked, irrespective of whether this exceeded the retail opening hours of the respondent.
(d)Claim for payment in lieu of rostered days off
The applicant claimed that he was entitled to an amount to be awarded to him on the basis that he had not been allowed all of the rostered days off which he should have been pursuant to the contract of employment.
The applicant said that he discussed the days to be worked with Mr Heijstraten at the second interview. The applicant said that he informed Mr Heijstraten that he was not interested in working on Saturdays. It was put to him that he would be required to work from 8.00 or 8.30 am to 1.00 pm on Saturday. The applicant said that this later changed to working to 3.00 or 3.30 pm on Saturday. The applicant said that Mr Heijstraten agreed at the interview that, because he had to work on Saturdays, the applicant would receive one week day off per week. This was not to be a set day of each week but could vary, presumably according to the business requirements of the respondent.
The applicant said that after he commenced employment with the respondent a chart of rostered days off was prepared for the employees. The applicant said that this was in place for about one to two weeks but then the applicant's name was taken off the roster. The applicant's explanation for this was not entirely clear but he said that it related to some employee's leaving and others working in different positions. The applicant said that over his 11 week period of employment he worked all but two or three Saturdays. Most of them he worked to 3.30 pm. The applicant said that he had a total of two to three rostered days off during his period of employment.
Mr Heijstraten's evidence was that the applicant had approximately six to seven rostered days off during his period of employment. He said that he understood that the applicant's rostered days off were spent on activities such as attending to work on his house renovations and his wedding arrangements.
On the issue of how many rostered days off the applicant took, I prefer the evidence of the applicant. I also accept the evidence of the applicant as to the discussion with Mr Heijstraten before the contract of employment was entered into about the applicant having rostered days off instead of working on Saturdays. I accept that it was a term of the contract of employment that the applicant would work a five day week including Saturday and would have one rostered week day off per week.
The applicant's evidence was that he worked all but two or three of the Saturdays during the 11 weeks that he worked. This would entitle the applicant to eight or nine rostered days off. The applicant's evidence was that he had two to three rostered days off. Using these figures, the applicant was entitled to between five and seven rostered days off which he did not receive. It seems appropriate to take the average number, six days, as being the number of days that the applicant should have received as rostered days off but did not.
The next question is the remedy that the applicant can claim for this breach of his contract of employment. An entitlement to damages is theoretically available for any breach of contract on the part of the employer: The Law of Employment, Macken et al, 3rd edition, page 297. In this case the breach of contract was that the applicant did not receive six rostered days off which he ought to have. If he had been given these days off he would have been paid for them in the sense that he was receiving his weekly wage for a working week which included the rostered day off. Although the breach was in the failure to give the day off, rather than a failure to pay the proper weekly wage, it seems appropriate that the applicant receive in damages an amount equal to that which he would have been paid whilst having the rostered day off.
The applicant's weekly wage was initially $550 per week but increased to $575 per week during the contract of employment. For the purposes of assessing damages I will take the half way point between these amounts, being $562.50 as the weekly wage. This amount was to be paid for a five day working week, taking into account the rostered day off. This gives a daily amount of $112.50. Six days' wages are therefore $675. This is the appropriate amount of damages to be awarded.
I order that the amounts of compensation and damages to be paid to the applicant be paid to him within 14 days.
The orders and declarations that the Court will make are:
The respondent terminated the employment of the applicant in contravention of Section 170DE of the Industrial Relations Act 1988.
The respondent pay to the applicant $575 in compensation pursuant to Section 170EE(2) of the Industrial Relations Act 1988.
The respondent pay to the applicant the sum of $675 in damages for breach of the contract of employment between the applicant and the respondent.
The amounts referred to in orders 2 and 3 be paid by the respondent to the applicant within 14 days.
I certify that this and the preceding 22 pages are a true copy of the Reasons for Judgment of Judicial Registrar Ritter.
Associate
Date:
Counsel for the applicant: Mr D H Schapper
Solicitors for the applicant: D H Schapper
Counsel for the respondent: Mr A Mizen
Solicitors for the respondent: A Mizen
Hearing date: 15 & 16 February 1996
Judgment date: 21 March 1996
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