Roland William Maynard v Concept Computer Systems Australia
[1995] IRCA 58
•13 February 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1984 of 1994
BETWEEN:
ROLAND WILLIAM MAYNARD
Applicant
AND
CONCEPT COMPUTER SYSTEMS AUSTRALIA PTY LTD
Respondent
REASONS FOR JUDGMENT (EX TEMPORE)
(Revised from Draft Transcript)
13 February 1995 Judicial Registrar Murphy
This is an application under Section 170DE of the Industrial Relations Act whereby the applicant seeks compensation arising out of the termination of his employment by the respondent on 14 October 1994.
Background
The applicant is aged 60 and in late September 1994 saw an advertisement in The Age newspaper placed by a personnel consultant seeking a sales representative. The applicant has some years experience as a sales representative in the computer area. The applicant had a meeting with the consultant and was referred by the consultant to the respondent.
On 5 and 6 October, the applicant had two meetings with Mr David Smith, a director of the respondent and in the course of those meetings, they discussed possible employment between the applicant and the respondent.
In the course of the meetings, Mr Smith indicated that the terms on which any employment arrangement between them would come into effect would be set out in writing. The applicant at that stage was a contractor with another organisation and was expecting some moneys that were owing to him to be paid to him later in that week.
In the meeting on 6 October, Mr Smith, of the respondent, indicated to the applicant that before he was in a position to offer him employment, he needed to check with the personnel consultants. On Friday, 7 October, in a telephone call between the two parties, Mr Smith indicated that everything had been cleared with the personnel consultants and that the position was to be offered to the applicant but that at this stage he did not have the letter of appointment fully prepared. The applicant gave evidence that at that stage they had already discussed all the terms of the proposed engagement, including the remuneration arrangements.
Those remuneration arrangements were to be that a bank account would be opened at the Knox branch of the ANZ Banking Group Limited and that all moneys for sales generated by the applicant would be paid into it. The respondent would deduct from that bank account the cost of the product with the surplus being the applicant’s remuneration. Discussions ensued between the parties in relation to remuneration arrangements in the period before the applicant commenced to generate sales revenue. It was made clear to the applicant by Mr Smith that at all times he was to be subject to a sales budget which was to be agreed between the parties. That sales budget was discussed in the meetings of 5 and 6 October, and on 7 October Mr Smith indicated to the applicant that the arrangements between them were confirmed.
Mr Smith indicated in the conversation of 7 October that he wanted the applicant to commence as soon as possible. The applicant responded that he needed to receive the money from the organisation that he was involved with before he indicated that he was commencing with the respondent but that he expected to be in a position to commence on the following Tuesday. On the Sunday, the applicant, having received the moneys, contacted Mr Smith and advised him that he was in a position to commence on the Monday. Mr Smith indicated that Monday was not suitable but did make an arrangement to see him on the Monday afternoon and for him to commence on the Tuesday.
A meeting occurred on Monday, 10 October at which the earlier arrangements between the parties were confirmed and it was arranged that the applicant would commence at 11:00am on the following day. On the following day, 11 October, the applicant attended at the respondent’s premises and was handed a letter confirming the discussions between them.
That letter set out his duties and also set out a sales target for the forthcoming year and a sales budget. It also provided for the financial arrangements between the parties which were that for the first month the applicant was to be paid $500.00 per week, the second month, $700.00 per week, and the third month $900.00 per week, all paid fortnightly.
The letter also stated that if the sales budget was achieved, all weeks would be rounded up to $962.00 per week and paid in a lump sum. It gave details of the arrangement for the opening of a bank account I have referred to.
Mr Smith gave evidence that the applicant indicated to him that he had a company and Mr Smith took from that that the applicant was to be a contractor. The applicant denied that this was to be the arrangement between them and I accept the applicant’s version on this point. The letter of offer makes no reference to the arrangement between them being one of an independent contractor. The only aspect of the letter which could indicate that is the arrangement in relation to the remuneration.
This is not to say that at some stage further down the track the parties may have come to some contracting arrangement but I am satisfied that at the time the applicant commenced on 11 October, he was an employee of the respondent. The applicant commenced on 11 October and over the period 11 October until 14 October, carried out duties with the respondent. Another employee had commenced the day before and part of their duties were carried out together. The applicant was introduced to another director of the respondent and commenced to prepare a list of prospects as well as to follow up a proposed client by obtaining prices on component parts.
The applicant was required to prepare a sales plan in the first week but by the time that a sales meeting occurred at 1:00pm on Friday, 14 October, he had not prepared that plan. The applicant gave evidence that over the period of the Wednesday and the Thursday, he was still being introduced to some of the respondent’s computer products and that he intended to prepare the sales plan over the following weekend. On Friday, a meeting occurred at lunch time between the applicant, Mr Shand, the new employee, and Mr Smith of the respondent. The applicant gave evidence that at that meeting Mr Smith proceeded to terminate the employment of Mr Shand. Mr Shand was paid an amount of $500.00, being the sum that he was to be paid on a weekly basis and left the office.
Mr Smith said words to the effect, “You’re gone too”, and then stated that the applicant had not performed and obviously he was not suited to the industry and it might be better if they parted company. He gave as a reason that no sales had been achieved in the three days that the applicant had worked for him. He then told him he would write out a cheque for $400.00 being for the four days work. The applicant accepted the cheque and left the premises. The respondent did not really challenge what occurred at the interview of 14 October although Mr Smith claimed that he had offered the $400.00 for reimbursement of out-of-pocket expenses.
I do not accept that evidence and find that the $400.00 was explicitly stated to be referable to the original letter dated 10 October which refers to the applicant being paid $500.00 per week.
The applicant subsequently issued these proceedings and on 24 October, received a phone call from Mr Smith expressing surprise that he did not turn up for work on Monday, 17 October.
The applicant stated that he did not expect to turn up for work on that date because he had been terminated. He gave evidence that there had been no other contact between the parties between 14 October and 24 October. The applicant then received a letter from the respondent stating in effect that the job was still open and asserting that there had been no confirmation of the conditions set out in the letter of 10 October. It also stated that the applicant had not prepared his sales plan as agreed and requested confirmation that the applicant would be totally focussed on the respondent’s aims, directions and products.
Competing Contentions
The evidence of the respondent’s representative was that there had been no agreement between the parties, even though the applicant had commenced with the respondent. The respondent claimed in particular that the remuneration arrangements had not been finalised and thus there was no concluded agreement between them. I reject this analysis, and find that objectively there was a concluded agreement between the parties which was reflected in the letter of 10 October 1994.
The applicant gave evidence, which was not challenged, that he was handed this letter, he agreed to it, and that was the basis of the arrangements between the parties from then on.
The fact that mechanical details such as the opening of a bank account had not occurred does not alter the fact that there was a concluded arrangement. A further contention of the respondent was that the arrangement between the parties was that the applicant was to be an independent contractor rather than an employee. While the remuneration arrangements were to involve a system which would appear to be designed to put the applicant in an arrangement which did have some of the features of an independent contractual arrangement, the authorities state that mode of remuneration is only one of a number of indicia which are to be considered when determining whether an arrangement between parties is one of employer/employee or independent contractor.
From the evidence I am satisfied that the respondent exercised significant control over the applicant, and that except for the remuneration the balance of the employment relationship between the parties is more consistent with that of a contract of employment than that of an independent contractual arrangement. I therefore find that the applicant was employed by the respondent and that the court has jurisdiction in this matter. I further find that, contrary to what was asserted by the respondent, the employment arrangement was terminated by the actions of the respondent on 14 October 1994.
Has There Been A Breach Of Section 170DB Of the Act?
The unchallenged evidence of the applicant was that he was paid $400.00 upon termination. That was the amount based on four days’ work and calculated at the rate of $500.00 per week as contained in the letter of appointment. Section 170DB of the Act requires that an employer must not terminate an employee’s employment unless the employee has been given a period of notice as required. For an employee who has had less than one year’s service that period of notice is at least one week. It follows that I find that there has been a breach of section 170DB of the Act.
Has There Been A Breach Of Section 170DC Of The Act?
Section 170DC of the Act, as has been found by Wilcox CJ in Nicolson ‑v‑ Heaven and Earth Gallery Pty Limited, (1994) 126 ALR 233 imports into Australian labour law a fundamental component of the concept known to lawyers as natural justice, or more recently, procedural fairness. At 243 he said:
“The relevant principle is that a person should not exercise legal power over another to that person’s disadvantage and for a reason personal to him or her without first affording the affected person an opportunity to present a case.”
In this case the applicant’s employment was terminated because he had allegedly failed to make any sales in the first three days of his employment. The applicant had no opportunity to respond to that allegation, and on any view there was a failure to accord him procedural fairness. In the course of the proceedings the respondent attempted to rely on additional reasons justifying the termination, including the making of private phone calls by the applicant. These matters were never put to the applicant in the meeting of 14 October, and cannot be relied on to justify this termination. I find therefore that there has been a breach of section 170DC of the Act.
Did The Respondent Have A Valid Reason To Terminate The Applicant’s Employment?
Pursuant to section 170EDA of the Act the respondent carries the onus of proof that it had a valid reason to terminate the applicant’s employment. The reason given by the respondent at the time was the failure of the applicant to make any sales in the first three days of his employment. Given the applicant’s unchallenged evidence that it was only on the second and third day of his employment that he was given exposure to the products of the respondent, and that the type of products and services sought to be sold are not the type of products that can be sold easily, I find that the employer has not discharged its onus of proof that it had a valid reason to terminate the applicant’s employment as it did on 14 October. I therefore find that the respondent is in breach of section 170DE of the Act.
Remedy
The applicant did not seek the primary remedy which the court is empowered to grant under section 170EE, namely reinstatement. The respondent gave evidence that it had been from the time it received the application on 24 October to the present time willing to re-employ the applicant as a sales representative. The applicant’s evidence, on the other hand, was that he had lost all confidence in the respondent and would not be in a position to work for it again having regard to the events which have transpired. I accept the applicant’s evidence on this point and not without some diffidence find that this is not an appropriate case to order reinstatement.
It is now necessary to consider the question of compensation. The applicant gave evidence that despite attempts to obtain a position, including the one that he had surrendered to accept employment with the respondent, he had been unable to obtain any employment since his termination except some casual work lawn-mowing. The respondent argued, in effect, that the applicant had failed to mitigate his loss by refusing to accept the offer of employment made on 26 October. I do not accept that the applicant has failed to mitigate his loss by not accepting the position offered by the respondent given what had happened between the parties.
In determining any amount of compensation it is appropriate to have regard to events which may have happened had the unlawful termination not occurred. (Nicolson’s case (above)). In this case in my opinion there was a real risk that the employment may have terminated lawfully due to the failure of the applicant to meet sales targets. There was also a possibility that the employment relationship between the parties may have been converted into an arrangement whereby the applicant was an independent contractor, as clearly had been discussed, but only in general terms.
I have also had regard to the fact that the applicant was to be paid a sum of approximately $2,000.00 in the first month of his employment, $2,800.00 in the second month, and $3,600.00 in the third month. I have regard to the short period of his employment, the fact that the applicant gave up another position, is aged 60, and has been unemployed. Having regard to all the circumstances of this case an award of $5,000.00 compensation is appropriate and I propose to make an order in those terms.
Order Of The Court
That the respondent within 21 days of this date pay to the applicant the sum of $5,000.00.
I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of Judicial Registrar Murphy as recorded in the draft transcript and revised by the Judicial Registrar.
Associate:
Dated:
The Applicant in person:
Representative for the Respondent:
Mr David Smith
Dates of hearing:
13 February 1995
Date of Judgment:
13 February 1995
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - whether relationship that of employment - employment ceased after short period - whether opportunity to respond to allegations - whether failure to give proper notice - compensation - consideration of relevant factors.
Industrial Relations Act 1988, ss.170DB, 170DC, 170DE, 170EDA, 170EE.
Nicolson ‑v‑ Heaven & Earth Gallery Pty Limited, (1994) 126 ALR 233
ROLAND WILLIAM MAYNARD -v- CONCEPT COMPUTER SYSTEMS AUSTRALIA PTY LTD
NO. VI 1984 of 1994
Before: MURPHY JR
Place: MELBOURNE
Date: 13 FEBRUARY 1994
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1984 of 1994
BETWEEN:
ROLAND WILLIAM MAYNARD
Applicant
AND
CONCEPT COMPUTER SYSTEMS AUSTRALIA PTY LTD
Respondent
MINUTES OF ORDER
13 February 1995 Judicial Registrar Murphy
THE COURT ORDERS THAT:
That the respondent within 21 days of this date pay to the applicant the sum of $5,000.00.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
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