Robert Cummins v Sunraysia Rural Water Authority

[1995] IRCA 539

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 2209 of 1994

B E T W E E N :

ROBERT CUMMINS
Applicant

AND

SUNRAYSIA RURAL WATER AUTHORITY
Respondent

Before:       Judicial Registrar Staindl
Place:         Melbourne
Date:           3 October 1995

REASONS FOR DECISION

It is unusual for someone to remain with the one employer (or its successors) for almost 30 years.  It is more unusual for such a person to be selected for redundancy with one of the reasons being that the person’s performance of his/her duties has been unsatisfactory over a lengthy period of time.  That is the situation in this case.

Robert Cummins (the applicant) commenced work in 1965 with the State Rivers and Water Supply Commission.  It became the Rural Water Commission, then the Rural Water Corporation and finally (insofar as the applicant is concerned) the Sunraysia Rural Water Authority.  This Authority came into existence on 1 July 1994 and was the employer respondent in the present proceedings.

Background
In September 1993 a report was prepared for the Board of Directors of the Rural Water Corporation concerning that Corporation’s Sunraysia Region.  It was known as the “Wheeler Stobel Report” and recommended a restructure of the (then) Corporation’s activities in the Sunraysia Rural Water Authority as the basis of a restructure.  The report recommended the introduction of teams or work groups within the Authority’s Customer Services Department.  Two separate work groups were to be established within this Department, the Customer Support Group and the Systems Operations and Control Group.

Prior to the restructuring, the applicant had worked in the Customer Support Group area.  The appointment of teams pursuant to the restructuring took place on 5 September 1994 although it was anticipated that some further restructuring would occur following automation of certain procedures.  The applicant applied for one of the positions in the Administration team within the customer support group.  He was appointed to this position and the applicant relied heavily on this fact given that it occurred only two months prior to his termination. The other members of the team appointed at this time were Sue Andriske and Michael Malcotti.  A fourth member of the team, Fiona Heley, was appointed on about 3 October 1994, although she had previously worked with the respondent’s predecessors between 1977 and 1986. None of the team members had anything approaching the applicant’s length of service.

In a newsletter of the respondent dated 18 August 1994 reference was made to the selection process of the teams and it was said:-

“In many cases, the number of nominations for positions will be equal to the number of available positions.  Therefore, provided all have the skill levels required, those teams will have been largely self appointed.”

The applicant relied on the second sentence of this extract to argue that he must have had the skill levels required for the position, although this was vigorously contested in these proceedings.

Circumstances of termination
In November 1994 - two months after his appointment  - the applicant was told that his position was redundant.  I set out the text of a letter dated 9 November 1994 addressed to the applicant:-

“Murray Sunraysia Water has recently modified its organisational structure to provide an enhanced customer focus and separation of operational activity from maintenance activity.

You will be aware that as part of this process we have introduced a “team” structure.

As a result of a review of the customer support team, fewer people than currently employed will be needed in the future.

Consequently I have to declare your position redundant and advise you that your employment with MSW (Murray Sunraysia Water) shall cease as of Tuesday 28 February 1995.

As a surplus employee, you will, of course be eligible for a termination package.  Details can be obtained from Janet Dawes.

Should you wish to discuss any aspect of this matter, or wish to separate earlier than February 28, please advise me.

Yours sincerely

CHRIS STOLTZ

Chief Executive Officer

Murray Sunraysia Water”

The applicant had no warning that consideration was being given to making his position redundant.  In fact he was told of this decision while he was attending a trade union course in Melbourne.  More will be said about this letter.

A letter in indignant terms was sent the following day by Mr Boness, an industrial officer with the Community and Public Sector Union (CPSU), the applicant’s union, to Mr Stoltz.  An application under s.170EA of the Act was filed in this Court on the following day, 11 November 1994.

When the applicant tried to resume his work duties the following week he was told that he was not wanted there.  In fact Mr Stoltz subsequently told the applicant that he didn’t want him working there any more because he’d made an application in the Industrial Relations Court.  The applicant agreed that he would not attend at work but would receive full pay for a short period, until a meeting occurred in late November between an official from the CPSU and Mr Stoltz.  This meeting did not take place and the next event of significance was a conciliation conference which occurred on about 20 December 1994.

Following the conciliation conference a meeting was held at the respondent’s offices.  The applicant attended along with Mr Boness, his union representative.  From the respondent’s side Mr Stoltz attended along with Mr Peter Hartshorn (the customer support co-ordinator) and Brent Godkin (customer services manager).

Compromise of Proceeding
It was argued on behalf of the respondent that the parties reached an agreement at this meeting and accordingly the proceeding ought to be permanently stayed.  The respondent led evidence in support of this argument from Mr Stoltz, Mr Godkin and Mr Boness, and the applicant gave evidence in reply.  The argument was put very forcefully on behalf of the respondent and the issue has troubled me.  I will therefore deal with the evidence on the point in some detail.

Mr Stoltz gave evidence that he said that he was concerned to ensure that the applicant was given a fair go and that the respondent would do everything it could to assist him in redeployment and would financially compensate him according to the normal redundancy procedures.  The applicant stated that he wanted his job back but Mr Stoltz, said that was not an option.  Mr Stoltz said words to the effect that he was not going down the path of the redeployment process if it was still going to result in a court hearing.  He gave evidence that the understanding reached at the meeting was that the matter would be settled by allowing the applicant to participate in the redeployment process and, failing that, to be given some sort of separation package.  He was then shown a copy of a letter dated 21 December 1994 from the CPSU to the respondent which he said confirmed the agreement.

Mr Godkin’s evidence was far less clear.  He did not recall any mention of the court proceedings by Mr Stoltz.  He said that if certain undertakings were carried out by Mr Stoltz then there would be no requirement to proceed in Court. These undertakings were that Mr Stoltz would facilitate the applicant’s inclusion in the redeployment process and secondly that a sum of money would be offered in settlement of the redundancy. He also said that money sums were not discussed at the meeting.  He said further that Mr Boness stated that he would get back to Mr Stoltz and confirm the outcome of the meeting in writing.

As previously noted, Mr Boness, the applicant’s representative at the time, was called to give evidence on this point by the respondent.  He gave more detailed evidence about what was said at the meeting than other witnesses, and from this point of view his recollection gains credibility.  In his evidence-in-chief Mr Boness said very clearly that it was stated at the meeting if the package of arrangements were made available to the applicant then he would seek to defer a listing in the Court of the unfair dismissal application.  When asked specifically by Counsel for the respondent what was to eventually happen to the proceeding he replied that “Well, we just left that in abeyance at that particular point in time.”  He was asked in another way by the respondent’s Counsel as to his understanding of the future of the Court proceedings and he replied that he really didn’t consider (it), but that there had been agreement on a process.  When asked whether Mr Stoltz had said anything at the meeting about the Court proceedings he replied:  “I can’t recall, but I do know that as part of the understanding we reached that day that I was to notify the Commission that we would defer a listing - which I did.”  He then sent a letter dated 21 December 1994 to confirm the arrangements which “would assist all of the parties to clearly understand what it was that we had arranged at that meeting.”

Mr Boness said that at the meeting Mr Cummins was told emphatically by Mr Stoltz that he wouldn’t be getting his job back, but that nothing was said about the applicant wanting to pursue it.  Nothing was to be done about the Court proceedings except to seek a deferment at that stage.

In cross-examination Mr Boness agreed with the proposition that if there had been a settlement reached on 20 December then he would have filed a Notice of Discontinuance.  He also agreed that the applicant wanted to stay employed and if he did not obtain another job he would be able to pursue reinstatement.

Mr Boness’ evidence in re-examination seems to me to be inconsistent with his earlier evidence.  He stated that the applicant had a choice:  either to participate in the redeployment process or go to the Court (although the unfair dismissal claim was still “as per the letter”).  He gave two different reasons for not withdrawing the application:  firstly that he wanted to ensure that the process was actually commenced and then secondly because it was “an oversight”.  He stated that following the meeting there was still a possibility in his mind that the application in this Court would have to come back on.  But as at 28 February he was satisfied that “the agreement” was implemented and it would have been appropriate to withdraw the application.

The applicant’s evidence on this meeting was brief.  He gave evidence that Mr Boness stated that he would have the union defer the listing of the application to the Court, and it could be brought on at a later date if there was no satisfactory resolution to the applicant’s employment.

It is trite to say that people’s recollections of events differ.  So it is here.  In such situations contemporaneous written records are all the more important, and in this regard Mr Boness’ letter dated 21 December 1994 to Mr Stoltz is noteworthy.  It reads:

“Thank you for your cooperation and assistance on Tuesday 20th December 1994.  Please find for your consideration and endorsement the “without prejudice” process discussed.

This process is not intended to prolong an outcome but to ensure that Mr Cummins has every opportunity to secure ongoing employment through redeployment.

1.Mr Cummins will apply for and remain on recreation leave until mid-January.

2.On returning from leave Mr Cummins will actively participate in the redeployment process with the assistance of Sunraysia Rural Water Authority and the Government Sector Workforce Management Unit.

3.During redeployment if necessary, Mr Cummins will be supported with respect to:

·counselling

·retraining

·career transition assistance

·financial planning

4.Community and Public Sector Union undertakes to review, with Sunraysia Water at a mutually agreed time during 1995, Mr Cummins circumstances.

5.CPSU will also inform the Australian Industrial Relations Commission that the parties to this dispute have met and agreed to work constructively through consultation to settle the matter and defer listing a date for hearing.

6.I will also seek the assistance of Mr Ian Singleton of Rural Water Corporation to provide particular advice.

I will contact you by telephone to discuss the above.

Yours sincerely

Roger Boness
         Industrial Officer”

Counsel for the respondent submitted that there had been accord and satisfaction reached at the 20 December meeting. I do not think that is right. If the agreement had been concluded at that time there would have been no need to seek a deferral of the applicant’s unlawful termination application. It could have been withdrawn and any breach of the agreement dealt with under normal contract law. This letter was sent to Mr Stoltz. I find it surprising that if Mr Stoltz had considered there to be a concluded agreement that he did not raise a concern about the application simply being deferred. It seems to me likely that no proper thought was given to the possibility that the applicant might not be able to find a job through the redeployment process. It was assumed that he would find a job. I do not accept that there was any agreement or meeting of the minds at the meeting that should the applicant elect to participate in the redeployment process then he would be unable to pursue his application in this Court. Although Mr Stoltz may have believed that this was the understanding reached, on balance I do not think it was. It seems to me that Mr Boness’ evidence in chief on the point was more credible: i.e. that the applicant’s application was “left in abeyance” at that time. His evidence in re-examination as to the reasons for not withdrawing the application are unconvincing. To the extent that this later evidence is inconsistent with this, I reject it.

My findings also deal with the respondent’s alternative argument that there was an executory accord. I accept there was agreement that the applicant’s application would be put on hold, or deferred, but this agreement did not extend to the allegation which was made to the effect that if the respondent allowed the applicant to participate in the redeployment process (and failing that pay him an undefined separation package) then the application would be withdrawn. Despite negotiations and correspondence between the parties in January and February 1995 there is really nothing to indicate that part of the agreement was that the applicant would not be able to continue with his application. I should perhaps mention one letter in this regard in which Mr Boness wrote to Mr Stoltz and to the effect that the union had represented the applicant and that he had decided to pursue redeployment. Mr Boness said that the union would continue to assist the applicant through this process “but will not be initiating another unfair dismissal claim on his behalf”. I do not accept that this letter meant that the applicant would be prohibited from pursuing his application as part of the agreement.

Valid Reason for Termination
The respondent argued that it had a valid reason for the termination, being the respondent’s operational requirements. It argued that it became apparent to the three other members of the team that they could do the work formerly carried out by the four of them. Although the applicant was only appointed as a member of the team on 5 September there was no guarantee that there would not be further restructuring.

The applicant replied that when people were appointed to teams there was an expectation that the numbers in that team would remain constant. Reference was made to a newsletter of the respondent dated 18 August 1994 in which it was said that once teams were established then team members couldn’t become redundant: if a vacancy arose it would have to be filled. Only those not in a team would have the opportunity to seek a redundancy package.

In my view the respondent has demonstrated that it had a valid reason for the termination pursuant to S170DE(1) of the Act.

Events since 9 November 1994 have confirmed this to some extent. The applicant has not worked in his job since that date and I am satisfied that the remaining team members have been able to cover the workload. Although a further person has been working as a receptionist for the respondent this has not been for all of that time and she is only employed part time under a job training programme (and for a limited period).

Was the termination harsh unjust or unreasonable?
S170DE(2) provides that a reason for termination will not be valid if the termination is harsh, unjust or unreasonable. The circumstances of this case provide a clear example of a dismissal which is harsh, unjust and unreasonable. The applicant had worked for the respondent (or its predecessors) for 29 years, his whole working life. His position was made redundant without any advance warning or consultation. The reasons for his selection as the person to lose his position related to his performance of duties and ability to operate as a member of a team. None of these matters was put to him to enable him to answer the allegations and/or comment on possible improvements that he could make. From the introduction of teams there had only been one meeting - on 12 October 1994 - which involved the applicant and related to his performance of duties. At this meeting the applicant was told that he was spending too much work time on union business. However I do not consider that this could be viewed as a formal warning which the applicant was entitled to expect would be in accordance with the disciplinary procedure in the relevant award. (I deal later with the applicability of an award).

Furthermore in cases of redundancy the award provides that the respondent will consult with the union and the affected employee(s). Clearly this was not done. In most cases failure to follow a procedure set out in an award which provides for consultation prior to redundancy will result in a finding that that has been a breach of S170DE(2).

Thus I am of the view that the termination of the applicant’s employment was harsh, unjust and unreasonable and I now turn to consider the question of remedy.

Remedy
I have considered at length the appropriate remedy in this case. Reinstatement is the primary remedy under the Act, and this is what the applicant sought. He is a long-serving employee who has lost his employment in a country centre. Given his age (54), work history and understandable desire to remain in the Mildura district, his future employment prospects must be rated as slim. These factors weigh very heavily on me. In addition the applicant gave evidence that his superannuation entitlements would be significantly less if he failed to achieve 30 year’s service. However on the evidence I am not satisfied that this is the case.

On the other hand I am convinced on the evidence that the applicant would not adjust to working in a team. He agreed that the teaming concept was critical to the implementation of the Wheeler Strobel report and I think this is correct. The predecessor of the respondent was in need of restructuring and the introduction of teams was an appropriate method for the respondent to organise its structure. As the concept of teams suggested, it required the members of a team to work co-operatively together. Team members would be expected to perform a broader range of tasks so as to give far greater flexibility to the respondent. Teams were to have the freedom to adopt practices which they felt would get the job done efficiently and effectively. Teams would have the autonomy to plan, alter and schedule their work so as to suit the skills of its members and the demands of its role. The team concept required initiative from team members.

The evidence of both the applicant and other witnesses leads me to conclude that the applicant did not fit in with his team, and in fact at times he was openly critical of the concept (rather than just the operation of his team). His attitudes showed an inflexibility which would have been inimical to the proper functioning of the team. To reinstate the applicant would mean that the customer service administration team would cease to function effectively.

These findings lead me to the view that reinstatement is impracticable, despite the factors earlier set out which point strongly in the applicant’s favour. Furthermore evidence led by the respondent leads me to conclude that there is no other suitable position to which the applicant could be appointed.

At this point I comment about one aspect of the evidence before me. A great deal of time was spent in the hearing concerning the applicant’s performance of his duties over a period of years. It was argued by the respondent that this evidence was relevant in showing that reinstatement was impracticable (should I get that far). In my view such evidence was relevant only insofar as it related to the applicant’s ability to function as a member of a team. It was difficult to separate such a consideration from the evidence which criticised the applicant’s performance of his duties. However, in my view much of the evidence led by the respondent was irrelevant, especially when the incidents complained of went back several years.

Compensation
The amount of compensation which should be ordered in cases such as this is notoriously difficult. But for the breach of the Act the applicant’s employment would in all likelihood have considered for a considerable period of time. This factor is important in assessing compensation in this case. In addition the applicant has lost the ability to continue accumulating some of the benefits of a long-serving employee. He is highly unlikely to again qualify for long service leave. He has lost in excess of six months accumulated sick leave, although I note that this factor was taken into account by the respondent when it made an additional termination payment to him. I am satisfied that the applicant attempted to find work during the redeployment process but was unable to. Given the factors previously referred to concerning his personal circumstances it will be difficult for him to find other employment.

Taking all of the above factors into account I am of the view that the applicant should receive compensation substantially in excess of six month’s remuneration. However, under S170EE(3) the amount of compensation able to be ordered is limited to the six months. The applicant earnt $540.18 per week. Multiplying this figure by 26 gives an amount of $14,044.68 and the applicant is entitled to this amount. This amount is additional to any amounts already received by the applicant on termination.

Long Service Leave/Annual Leave
The applicant filed a second application under S170EA on 14 March 1995 (the first application having been filed on 11 November 1994). In the second application the applicant sought reimbursement for long service leave and recreation leave for a period during which he was “stood down”. This claim was dealt with in these proceedings.

I have earlier set out what occurred after the applicant received the letter dated 9 November 1994 terminating his employment. He continued to be paid until 30 November 1994 although he was told not to attend work. Following this he was directed to take outstanding long service leave and/or annual leave up until 28 February 1995, although he did in fact apply for annual leave for two weeks in early January 1995. I am satisfied on the evidence that the applicant was willing to work during this period but that he did not do so because Mr Stoltz did not want him at the workplace. In this regard I note the letter dated 18 November 1994 to the applicant in which Mr Stoltz says, “Commencing Thursday December 1 you will take recreation leave and/or long service leave”.

It was submitted by the respondent that there was no material before the Court which established the basis upon which annual leave or long service leave could be taken. Consequently, it was argued, if the respondent had directed the taking of the leave there was no evidence that it was not entitled to do so.

There are provisions dealing with annual leave in the Rural Water Corporation Award 1993. However the respondent argued that it had not been shown that this award did apply to the respondent. This submission has no merit. In its terms the award applied to the Rural Water Corporation. Under S149(1)(d) of the Act an award applies to the successor, assignee or transmittee of the business or part of the business of an employer which was bound by the award. Furthermore I am satisfied on the unchallenged evidence of the applicant that this award applied to the respondent. In addition the respondent’s own material sets out that the award applies to it. In a circular dated July 1994 concerning the introduction of teaming it was noted that the respondent would continue to operate under the award.

Having found that the award applies, I refer to clause 12 concerning recreation leave. There is nothing in it to suggest that an employer can direct an employee to take this leave at a time when the employee does not want to take it.

The position with long service leave is not so clear. The applicant gave evidence that long service leave is dealt with in an agreement under s134 of the Act. Unfortunately this agreement was not tendered but the applicant did give evidence that there were no provisions in the award to allow the applicant to be stood down and made to use up any outstanding long service leave. Although in this evidence the applicant referred to the award, he later identified the s134 Agreement which was attached to the award as being the source of the provisions dealing with long service leave. I accept this unchallenged evidence and in doing so note that the applicant had held a number of important positions in his union and displayed a detailed knowledge of industrial matters.

Given these findings, in my view the respondent was not entitled to direct the applicant to use up his outstanding leave for the period 1 December 1994 to 28 February 1995. The applicant however agreed to take two week’s leave during this period, leaving a period of about 11 weeks for which he should be paid. This is an amount of $5,941.98.

There is one further matter. The applicant argued that one of the reasons for his termination was on the ground of his union membership and/or participation in union activities. This is a prohibited reason under S170DF(1)(b) and the respondent bears the onus of proving that it was not a reason for the termination. Given my conclusion that the respondent breached S170DE(2), it is unnecessary to make a finding on this point. I only add that had I found in favour of the applicant on this point it would not have altered my conclusion as to the appropriate remedy.

THE COURT ORDERS:

1. That the respondent pay to the applicant the sums of $14,044.68 and $5,941.98, a total of $19,986.66 within 21 days.

I certify that this and the preceding 18 pages are a true copy of the reasons for judgment of Judicial Registrar Staindl.

Associate:            
Dated:  3 October 1995

Solicitors for the Applicant:      Mrs Leah Billeam of
  Peter H MacSporran

Solicitors for the Respondent:   Clayton Utz
Counsel for the Respondent:     Mr Peter Harris

Date of hearing:  5, 6, 7, 8 & 9 June & 24 June 1995
Written submissions filed 7 July 1995
Date of judgment:  3 October 1995

C A T C H W O R D S

INDUSTRIAL LAW - Termination of Employment - Compromise of proceeding - Operational requirements of Employer - Lack of Consultation - Harsh, unjust and unreasonable - Reinstatement Impracticable - Compensation. Claim for payment when applicant directed to take leave during period of notice.

Industrial Relations Act 1988 ss.170DE(2), 170EE

ROBERT CUMMINS -v- SUNRAYSIA RURAL WATER AUTHORITY

No. VI 2209 of 1994

Before:  Judicial Registrar Staindl
Place:  Melbourne
Date:  3 October 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 2209 of 1994

B E T W E E N :

ROBERT CUMMINS
Applicant

AND

SUNRAYSIA RURAL WATER AUTHORITY
Respondent

MINUTES OF ORDERS

Judicial Registrar Staindl  3 October 1995

THE COURT ORDERS:

1. That the respondent pay to the applicant the sums of $14,044.68 and $5,941.98, a total of $19,986.66 within 21 days.

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