Robert James Rayner v Ss Transport Agency Group Pty Ltd
[1995] IRCA 639
•30 November 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 3581 of 1995
B E T W E E N :
ROBERT JAMES RAYNER
Applicant
AND
SS TRANSPORT AGENCY GROUP PTY LTD
Respondent
Before: Judicial Registrar Murphy
Place: Melbourne
Date: 30 November 1995
EX-TEMPORE REASONS FOR JUDGMENT
This proceeding arose out of a personality clash between the Applicant, a tertiary trained transport Manager, and Mr Alex Weis (“Weis”), the Managing Director of the Respondent, a medium sized transport company. The issues in the case were whether the Respondent had a valid reason to dismiss the Applicant; whether the Applicant in the process of the termination of his employment had been accorded procedural fairness, and whether, if the termination contravened Part VIA of the Industrial Relations Act, (“the Act”) the Applicant should be reinstated to his position within the Respondent.
As a preliminary matter, the course of this hearing illustrates the good sense of the ruling in Selvachandran v Peteron Plastics Pty Ltd (Industrial Relations Court of Australia, Northrop J, 7 July 1995) that where an issue in the case is whether the employer had a valid reason to terminate the Applicant’s employment, the Respondent should commence. Here the Respondent, for what appeared to be logistical reasons relating to witnesses, was unable to commence first. Counsel for the Respondent, however, by way of an opening statement, formulated the reasons upon which the Respondent sought to rely. Those reasons were the general insubordination of the Applicant, his breaches of and failure to adhere to company policies, and his abusive conduct toward staff and management.
The generality of the reasons, and the fact that they were wider than the reasons contained in the only contemporaneous documents produced relating to the termination, resulted in the canvassing of a wide range of issues in the hearing.
Personality clashes lead to a dismissal.
The Applicant commenced with the Respondent in September 1992 as a sales representative. A particular focus of his position was to develop an interstate furniture removal business. His original salary package was $25,000 per annum plus a company vehicle.
In about April 1994 the Applicant assumed responsibility for the warehouse. His title then became Interstate Removals and Warehouse Manager. The Respondent employed some 25 people and its managerial structure consisted of the Managing Director, an Operations Manager, a Sales Manager, an Office Manager, an Administration Manager and the Applicant. It was a small team. In his roles the Applicant was responsible for a Sales Consultant, Mr Cumming (“Cumming”), and a Warehouse Supervisor, Mr Monahan (“Monahan”). Monahan supervised one or two other employees.
The immediate circumstances leading to the termination of the Applicant's employment commenced in May 1995. Around that time a management consultant was involved in restructuring the management structure of the Respondent and introducing a quality assurance program. A meeting of all managers, along with a couple of other employees, occurred that resulted in a heated exchange between Weis and the Applicant. Following that meeting, on 6 June 1995, Weis sent a memo to all his managers stating:
“It is with regret to inform you all that once again, I have changed my mind and make the following changes.
(a)That as of the start of business on Wednesday June 7, 1995 the roll (sic) of ‘Managers’ will cease.
(b)That all rolls (sic) of responsibility and decisions will only be made by myself.
The memorandum goes on to refer to reinstatement of all managers after they undertake a business course, and other matters. Weis claimed in evidence that the managers were told that they retained their positions but that Weis would be assuming responsibility for major decisions.
On 14 June an incident occurred in the warehouse. The Applicant asked an employee to clean up after a pallet broke or fell. The employee had other priorities, the work was not done. Weis queried why the employee had not been directed to clean up the mess.
The Applicant responded that as he was no longer a manager he could not direct the employee to perform the work. The Court then heard four versions about the exchange thereafter. The contest was mainly about the use of expletives: what was said and to whom. It is unnecessary to resolve what exactly was said. An exchange occurred and on the Applicant's own evidence, at one stage Weis said, "I'll do it all myself and if you ever speak to me again like that I'll sack you". The following day Weis issued a written warning to the Applicant. It read:
“It is with regret I give you an official warning in writing.
Your behaviour and comments in the presence of other staff members and carriers was disrespectful. As Managing Director of this company, I find you to be a very difficult person, who has trouble conforming with company policies and other staff members.
An assessment of your general behaviour and working performance will now be carried out on a regular basis.
I hope this situation will improve and I look forward to a better and more compatible working relationship.”
The Applicant's evidence was that on receipt of the warning he discussed with Weis in an amicable manner the letter and the memo of 6 June. Weis claimed that he had referred to previous verbal warnings to the Applicant when he delivered the written warning. I reject his evidence on this point. The proposition that the written warning had incorporated into it, when delivered, the previous verbal warnings was not put to the Applicant in cross-examination. Further, the existence of previous warnings is a matter that is likely to have been referred to in a written warning but was not.
Such an observation also flows from the evidence of Pamela Bell (“Bell”), the Administration Manager/Supervisor, who said that in late 1994 she had instigated a practice within the Respondent for warnings to be in writing and witnessed. The Applicant was familiar with and applied such a practice and procedure and I find would have raised the matter with Weis if he had been the subject of a formal discipline procedure. Weis' evidence was that when he issued the warning of 15 June he "was setting up an assessment program" for matters referred to in the letter. He said he would give the Applicant an opportunity to respond to the matters he had raised. Neither the Applicant nor Weis gave any evidence of any assessment of the Applicant's behaviour over the period 15 to 29 June.
The incident that led to the Applicant's dismissal arose out of difficulties with a customer, Mrs Scott (“Scott”). The Applicant was attempting to placate this customer in relation to her allegations of missing or damaged goods in the Respondent's warehouse. Late in the afternoon of 28 June Weis was involved in a three-way conversation with Scott and the Applicant. The Applicant's version was that he had indicated to Weis that the customer would be able to make a claim for the damage or loss. Weis had responded by suggesting that there was no basis for such a claim. Weis had subsequently told the Applicant that he had failed to protect him in the exchange. The Applicant denied this and Weis walked off.
Weis' version of the incident is dramatically different. He claimed that the meeting occurred the following morning, 29 June. Weis claimed that on that day he received a phone call from Scott on his mobile phone. He was upset about this because the number should not have been issued to a customer. He arranged to meet Scott at the warehouse at 8.30 am.
At that time the Applicant was not present and he rang the Applicant on his company-supplied mobile phone and left a message. He also rang the Applicant on his home phone and also left a message. When the Applicant returned the call on the mobile phone Weis queried where the Applicant was and why he had not rung on his home phone. The Applicant advised him that he was at home and that he had used the mobile phone because the Respondent had ceased paying the bills for his home phone. Weis was unimpressed with his sarcasm and demanded that the Applicant be in the office within 15 minutes or he would be sacked. The Applicant denied Weis said this but in any event was in the office in a short time. He got the message.
According to Weis then followed a conversation with Scott and the Applicant wherein the Applicant had told Scott that the Respondent was to blame for her loss of property. The Applicant had failed to suggest that the usual procedures for a claim for loss be followed and had embarrassed Weis in front of the customer. The customer had then been sent to consult with the accounts clerk. Weis had then confronted the Applicant and told him that he had embarrassed and degraded him in front of the customer and that he could no longer work with him and was firing him. The conversation was fiery and heated and went for 5-10 minutes. Weis had then arranged for a letter to be prepared and handed to the Applicant. He was in a hurry for an appointment that morning. He did not have time to discuss the letter. The Applicant had followed Weis to the car where he had tried to stop him leaving and an angry exchange occurred.
The Applicant denied that an exchange with Scott present occurred on 29 June. He also denied that the exchange after the interview with her had occurred. He said that when he attended on 29 June he had hardly spoken to Weis. A short time after he had arrived Weis had thrown a letter on his in-tray and told him that he had been dismissed.
The letter supports the Applicant's version that no exchange regarding Scott took place on the day of termination because the only reference to an incident is confined to the exchange over the mobile phone call. The letter reads:
“Our working relationship has deteriorated to an unworkable situation. As previously warned your attitude with company policies has always been different, hence causing many arguments with myself and many other staff members.
In relation to our telephone conversation of this morning, your smart comments caused another severe clash, I simply asked where you were and you replied "at home", the time was 9.30 am. I then asked why you were using the mobile phone and you replied "you are not paying my phone bill any more".
This unprofessional attitude has been unacceptable for a long time with many verbal warnings. You have made no effort to work in with the company system, procedure and structure.
I therefore terminate your employment and give you fourteen (14) days notice.”
Although Weis said that the letter was prepared in a hurry I prefer the Applicant's version that the conversation regarding Scott took place the night before. The Applicant's version that the exchange over Scott ended essentially amicably is confirmed by Weis when he said that the situation with Scott "was a very awful predicament to be in”. He had said to write out a quote and he would look at it. This indicated that Scott would need to attend again at the premises to complete the details. She did that the following day.
It follows from this that I prefer the Applicant's version of what happened at the office on 29 June 1995. I find that Weis was angry with what had happened that morning and in particular being contacted by Scott on his mobile phone and by the Applicant's sarcastic reference regarding payment for his home phone. These matters, combined with the sarcasm that led to the 15 June warning, were the straw that broke the camel's back. The Applicant was presented with the letter of termination as a fait accompli.
An angry exchange followed in the car park and ultimately the Applicant was paid two weeks' notice and accrued holiday pay.
Other conduct relied on by the Respondent.
The incident of 29 June was only one part of the reasons relied on by the Respondent to justify dismissal of the Applicant. Weis claimed that on at least six occasions he had given verbal warnings to the Applicant about a variety of breaches of company policy. Weis was unable to recall precisely the content of the warnings but maintained that they related to instances where the Respondent had agreed on a policy or procedure and the Applicant had gone his own way.
Weis said that the effect of the warnings was that what had happened was unacceptable and that the Applicant was "putting me in a very precarious situation" regarding his job. The incidents to which the warnings were said to relate included one where the Applicant was alleged to have reduced the Accounts Payable Clerk to tears when demanding that a particular account be paid at a date earlier than the Respondent's usual policy. Another area was the issue of clashes over sales leads between the Applicant and Cumming who reported to the Applicant. The Applicant had failed to accept the policy that had been laid down by Weis.
Other matters where the Applicant had allegedly failed to comply with policy were raised in the evidence. It is unnecessary to detail them. It is sufficient to say that Weis gave evidence that when matters were brought to the Applicant's attention a clash would ensue and the matter would ultimately be amicably resolved often through mediation of the Operations Manager, Mr Valenti (“Valenti”). After a short time the Applicant would revert to his old ways of failing to comply with policy. The tenor of the evidence of Weis and Valenti was that the Applicant was a loose cannon on the deck of the SS Transport.
The Applicant denied any warnings of the nature alleged by Weis. He admitted clashes and differences of opinion on management and operational issues, but denied that Weis had ever put his job on the line. The Court heard a volume of evidence of past and present employees of the interactions between the Applicant and Weis. On the basis of this evidence, and after considering the presentation and demeanour of the two principal players, I am of the view that the Applicant has understated the degree of his differences with Weis and other staff. I am satisfied, however, that Weis, while he may have expressed in forceful terms his dissatisfaction with the failure of the Applicant to follow various procedures, did not do so in terms that indicated that the Applicant was in danger of losing his job. Weis was also unable to produce any diary notes to support the alleged warnings and the written warning, as I have indicated, makes no reference to previous verbal warnings.
Support for the Applicant's generally good performance can be found in the fact that in the course of his period of employment with the Respondent his salary was increased to $43,000 per annum, his company vehicle was upgraded and his duties widened. Further, a commission structure was revised in May 1995
Were the Respondent's reasons sound, defensible or well-founded?
The reasons for termination alleged by the Respondent travelled far wider than the matters addressed in the warning of 15 June. The Respondent sought, in addition to the incident of 29 June, to bring in breaches of policy and instances of insubordination that occurred well before 15 June.
This presents a real difficulty for the Respondent. It has tolerated the Applicant's behaviour up until 15 June 1995. It then warns him and proposes to assess his "general behaviour and working performance...on a regular basis". It carries out no such assessment but terminates him on 29 June on the basis of his unprofessional attitude allegedly evidenced by what happened on that morning. The Respondent has shifted the goal posts. It has failed to conduct the assessment that Weis, on his own evidence, said was to be carried out. It has acted precipitately. Weis admitted he was angry.
To have a defensible reason to terminate an employee for a performance breach, the Respondent has to set out the standards it requires with some specificity. It has to give, in effect, a final warning that certain behaviour or non-performance, or failure to comply with policies, or continuous insubordination, must cease: Drury v BHP Refractories Pty Ltd, (Industrial Relations Court of Australia, Wilcox CJ, 16 June 1995). Here, even on its own version the Respondent cannot use the 29 June incident as a defensible reason for the termination as it was basically a minor matter that the Applicant was seeking to resolve on the Respondent's behalf. The sarcastic comments are not enough to justify dismissal.
The Respondent has therefore failed to discharge its onus of proof under section 170EDA that it has a valid reason under section 170DE(1) to terminate the Applicant's employment.
Was the Applicant given the opportunity to respond.
The informal but substantive requirements of section 170DC of the Act have not been met here. I have already rejected the Respondent's evidence that six verbal warnings were given. The Respondent's Counsel sought to argue that the requirements of section 170DC has been met by the conversation Weis alleged he had with the Applicant when he told him he was terminated. I have rejected the Respondent's version of the events of that day. Even on that version, it is difficult to see how section 170DC has been met given the wide range of reasons the Respondent sought to argue justified the termination.
Even on the narrow grounds set out in the termination letter, the Applicant can hardly be said to have been given a fair go in a heated conversation with an angry Weis. Something more calm and considered should, having regard to their prior interactions, have been afforded. An open door policy within the office, or an unexpressed willingness to reconsider a dismissal, cannot meet the requirements that an employee be afforded an opportunity to respond to the allegations that are to be the basis for a possible dismissal.
Remedy - Reinstatement in a small changed work place.
The Applicant did not seek reinstatement in either a solicitor's letter forwarded on 30 June nor in his application. He made application at the commencement of the trial. He was entitled to do this but it is relevant to the issue of practicability in this case. The Court proposes to follow the discussion relating to “impracticability” in Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 at 210. This approach has been widely followed within the Court.
The Respondent's evidence was that its management has been restructured consequent upon management advice that had been put in train well prior to the date of termination. The evidence was that there was no position within its management structure for the Applicant. The staff of the two areas in which he was formerly involved, sales and the warehouse, consist of about two people each. Evidence was led from a number of employees as to the improved harmony and productivity within the workplace since the departure of the Applicant and/or the restructure. While this type of evidence must be carefully scrutinised as self serving, I am satisfied on the whole of the evidence, including that of Weis and the Applicant, that there would be significant disruption to the Respondent's workplace should the Court order the reinstatement of the Applicant to his previous, or to an equivalent, position. There is no position.
I am satisfied that this disruption would occur both because of the tensions and embarrassments between Weis, the Applicant and other staff members who remain, and also because of the restructure that the Respondent undertook in ignorance of the Applicant's intention to seek an order for reinstatement. On this basis then I am satisfied that it is impracticable to reinstate the Applicant to any position within the Respondent.
Compensation.
The Applicant upon termination was paid two weeks pay in lieu of notice and accrued annual leave totalling $5867.90. He remains unemployed but has earned, in a short term position, $4305. In addition he undertook a previously planned five weeks overseas holiday in recent weeks. The Applicant's loss of remuneration, excluding the value of the car and any commissions he might have earned, and the employer’s 5 per cent superannuation contribution, was at this date approximately $17,930.
He remains unemployed, and given the forthcoming Christmas break faces the prospect of this continuing for the next couple of months. It is likely then that the Applicant's total loss of remuneration following his dismissal will exceed six months of his salary, (Section 170EE(3)(a)) - $21,190. I have excluded any amount he may have received by way of commission as there is no satisfactory evidence upon which to make an estimate.
In determining the amount of any compensation for a breach of the Act, Nicolson's case (above at 212) directs the Court to consider what would have happened had the termination not occurred.
Here, on the one hand, the employment may have continued with the Applicant, remaining on his substantial salary package of $43,000 per annum plus a car worth $8000 plus commission. On the other hand his employment may have come to an end by a lawful termination for misconduct, redundancy or some other reason, or by a resignation. It is difficult to avoid the conclusion that there was a significant chance that given the past stormy relationship the parties would have parted ways in the short to medium term.
The actions of the Respondent, however, have denied the Applicant the valuable opportunity to end the employment relationship on his own terms. Further, had the Respondent chosen to lawfully terminate the Applicant's employment it would have been necessary to give the Applicant as a matter of law a substantial period of reasonable notice. This is because I am satisfied that the Applicant would not have given the Respondent the opportunity to summarily dismiss him.
Weighing these competing considerations is not easy. The proper approach here in assessing compensation for the breaches of the Act is to deduct from $21,190, the Applicant's remuneration over a six months period, the amount he has already been paid, $5670.90, but to ignore his earnings of $4305. This leaves an amount of $15,322. The Respondent is ordered to pay that amount in compensation.
Counsel for the Applicant raised a query regarding certain superannuation moneys and the failure of the Respondent to indicate the amounts paid and details of any amounts in an account. The Court is unable to make any finding or order in relation to this matter.
MINUTES OF ORDERS
THE COURT ORDERS:
That the Respondent, within 21 days of this date, pay to the Applicant compensation of $15,322.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.
Associate:
Dated: 7 December 1995
Solicitors for the Applicant: Messrs Peter S Fraser & Co Pty
Counsel for the Applicant: Mr Mark Klemens
Solicitor for the Respondent: David I Chapman
Counsel for the Respondent: Mr Alistair McNab
Date of hearing: 28 & 29 November 1995
Date of judgment: 30 November 1995
C A T C H W O R D S
INDUSTRIAL LAW - UNFAIR TERMINATION - PROCEDURAL FAIRNESS - employer relying on wider reasons than contained in warnings as VALID REASON - REMEDY - REINSTATEMENT - COMPENSATION.
Industrial Relations Act 1988 ss.170DC, 170DE, 170EDA & 170EE.
CASES:Selvachandran v Peteron Plastics Pty Ltd (Industrial Relations Court of Australia, Northrop J, 7 July 1995)
Drury v BHP Refractories Pty Ltd, (Industrial Relations Court of Australia, Wilcox CJ, 16 June 1995)
Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199
ROBERT JAMES RAYNER -v- SS TRANSPORT AGENCY GROUP PTY LTD
No. VI 3581 of 1995
Before: Judicial Registrar Murphy
Place: Melbourne
Date: 30 November 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 3581 of 1995
B E T W E E N :
ROBERT JAMES RAYNER
Applicant
AND
SS TRANSPORT AGENCY GROUP PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Murphy 30 November 1995
THE COURT ORDERS:
That the Respondent, within 21 days of this date, pay to the Applicant compensation of $15,322.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
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