Ronan Mallen v Beasam Pty Ltd

[1994] IRCA 85

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA  VI 544 of 1994
VICTORIA DISTRICT REGISTRY

B E T W E E N:

RONAN MALLEN
Applicant

A N D

BEASAM PTY LTD
Respondent

Reasons for Judgment - delivered ex tempore

26 October 1994  PARKINSON JR

This application is made pursuant to S170EA of the Industrial Relations Act 1988 in respect of the termination of employment of the applicant by the respondent. The applicant contends in his application filed on 24th May 1994 that the termination of his employment by the respondent contravened Division 3 of Part VIA of the Industrial Relations Act 1988 (“the Act”). The applicant sought by way of remedy a declaration that the termination did so contravene the Act, and compensation pursuant to S170EE of the Act.

Background and findings of fact:

The applicant in this matter was employed by the respondent in November, 1991 as a Systems Accountant. His position was subsequently altered to Group Systems Accountant.  The applicant’s employment was not governed by the operation of an Award or industrial agreement. The respondent is a company which performs servicing and management functions in respect of retail and wholesale petroleum agents and distributors. This often includes the purchase and operation of individual outlets by the respondent on behalf of its parent or associated company Shell Australia Pty. Ltd.

The applicant was employed by the respondent on a permanent basis. He was principally responsible for the installation, modification and maintenance of a major component of the respondent’s computerised accounting operations, including both software and hardware aspects. During the course of his employment his duties became more extensive and he took on much broader responsibility for the respondent’s interstate operations.

At the time of the engagement there were discussions between the parties as to the terms and conditions of employment. The applicant was provided with a letter of offer of employment which contained a position description and terms and conditions of employment (Exhibit K2). It is apparent from the evidence of the applicant that a consideration of some weight in deciding to accept the position with the respondent was the fact that it had prospects for advancement and was a career position.  That this was so is supported by the contents of Exhibit K2.  This view was confirmed by Mr. Raftery in his evidence. I am satisfied having regard to Mr. Raftery’s evidence that this was also the genuine expectation and intention of the respondent in employing the applicant. I do not accept that the respondent merely employed the applicant for the completion of a task that he had previously commenced whilst employed elsewhere, nor that it consequently, or otherwise intentionally, misled the applicant at the time of employment as to the position being a career position.   

During 1993 and 1994 the respondent underwent a program of re-organisation and restructuring of its operations. The evidence in the proceedings from Mr Raftery, the applicant’s immediate superior,
was that the restructuring involved a major review of the manner in which agents and distribution branches were serviced administratively.

The first major changes impacting upon the applicant occurred in December, 1993 when the decision was taken by management that the branch within which the applicant was employed was to be relocated from Melbourne to Dandenong. This relocation was implemented in February, 1994.  The applicant then continued to perform the functions referred to above.  The evidence of Mr. Raftery is that as part of the continuing process of restructuring, during March, 1994 attention was turned to the manner in which computer support services were delivered to the various branches, particularly having regard to the centralisation of the branches, and the reduction of their number to four.  At this time consultation took place with the managers of the branches as to the nature of services they anticipated they would require into the future, and how they might best be provided.

Mr. Raftery’s evidence, which I accept, was that it became clear that a number of elements of the service provision could be done more efficiently and at less cost by the engagement of contractors to perform many of the tasks that were then being performed by the applicant. This was because, by identifying contractors in proximate locality to the branches, the need to cost in travel time and expenses was removed. It was also apparent that many of the more fundamental tasks associated with the computer were now able to be performed on site by managers who by now had at least basic computer skills.  A decision was therefore made by Mr. Raftery and the General Manager of the respondent, that the majority of functions performed by the applicant would be sent to tender for outside contracting, and that as a result the position occupied by the applicant would no longer exist.

Mr. Raftery’s evidence was that inquiries were then made as to suitable options for alternative employment of the applicant. The evidence is that inquiries were made within the computing services area of the Shell Group of companies and in similar areas in associated companies.  Mr. Raftery, being aware that the applicant had expressed a desire to move into branch management areas, also had regard to the suitability of the applicant for a vacancy in the Canberra branch of the respondent. In this regard he had discussions with the branch manager as to his requirements for the position. His evidence was, however, that the position required a person who had hands-on experience in the transport industry and was more industry focused than administratively focused.  It was considered that the applicant was not suitably experienced for the only branch position available. This decision was made consistent with the respondent’s  own policies and procedures in relation to redundancy and redeployment of employees (Exhibit K7). 

No issue was taken by the applicant with the fact of these inquiries being made. Issue was taken, however, with the extent and range of inquiries made and the failure of the respondent to allow the applicant the opportunity to tender for the work which was to be contracted out. The respondent’s evidence was, however, that the work was to be contracted out on a national basis to a nationally operating organisation, and this in fact was the case.

I am satisfied in the circumstances, having regard to the extensive program of reorganisation and consequent redundancies affecting the respondent and the group of companies with which it is associated, that sufficient and adequate efforts were made by the respondent to attempt to locate suitable alternative employment for the applicant.

The evidence of the respondent is that the decision that the applicant’s employment be terminated was made approximately nine days prior to the actual termination being effected on 9th May, 1994. During that period, notwithstanding that arrangements were being made by the respondent to put in place the termination, there was no discussion or consultation with the applicant as to the matter.

The applicant’s employment with the respondent was terminated at a short meeting between the applicant, Mr. Raftery and the General Manager on 9th May, 1994.  That meeting lasted approximately two minutes, wherein the applicant was given advice of his termination in writing and asked whether there were any matters he wished to discuss. Various sums of money were paid to the applicant on termination, and other conditions were accorded him at that time, which I discuss later in this decision.

The respondent submits that earlier discussions and consultation with the applicant would have been fruitless in that they would not have advanced the applicant’s position beyond the inquiries already made by the respondent, and would have merely added to the distress of the applicant. However, the reason given by Mr. Raftery in evidence for the failure to discuss the matter with the applicant prior to termination was that the respondent was concerned to protect the integrity and security of its computer systems, he having previously had experience of sabotage in similar circumstances, although those circumstances were unrelated to the applicant.  The respondent says that it did, by its conduct at the termination interview, in any event accord the applicant an opportunity to discuss the termination.

The applicant contends that the failure to consult or forewarn or discuss options with him prior to the termination, and the manner in which the termination interview was conducted with the applicant, constituted the termination as harsh, unjust and unreasonable.

The respondent contends that it had no obligation to so consult pursuant to any Award or agreement or general applicable principle, and that its failure to do so did not amount to a failure to accord procedural fairness, nor did it constitute the dismissal as harsh, unjust or unreasonable. The respondent contends that any failure to accord procedural fairness must be looked at in the context of the effect that the failure had upon the termination of the employment.

Mr. Watson for the respondent sought to distinguish the decision of Gray J.  in Byrne & Frew v Australian Airlines Ltd (1994) 120 ALR 274 at 327-328 wherein his Honour said:

There is a trend in the law to imply an obligation to afford natural justice to a person whose rights may be affected by a decision....It is        odd that the same view has not been taken of a decision by an        employer to exercise a right to terminate a contract of          employment....I am of the view that a clause such as cl 11(a)          requires that an employer contemplating terminating the    employment of an employee is obliged to afford procedural fairness       to that employee. Not to do so would be “unjust”.  

Mr. Watson submitted that the according of an opportunity to an employee to propose other options to termination only usefully arose in circumstances of termination for reasons other than redundancy. I do not accept this submission. In my view, the words of Gray J. set out above are equally apposite to this situation. There is no basis for drawing a distinction between cases in which termination occurs by reason of redundancy and cases in which termination occurs for reasons other than redundancy in respect of the obligation to accord procedural fairness which arises out of the use of the words “harsh, unjust or unreasonable” in S170DE(2) of the Act. In this case, the respondent could not have known what options or considerations may have been raised by the applicant if he had been consulted in this regard prior to the decision to terminate his employment being implemented.

In view of the above matters I find that the termination of the applicant’s employment by the respondent was harsh having regard to the failure to consult with the applicant or to accord him an opportunity to be heard in relation to the termination prior to the decision being effected. 

Remedy - S170EE
Reinstatement is not sought by the applicant in these proceedings, and in view of the applicant having obtained and taken up alternative employment it would in my view be impracticable to order reinstatement.

The question of the making of an order for compensation pursuant to S170EE(2) of the Act therefore arises. In making such an order in circumstances of redundancy it is relevant to take into account that, despite the element of harshness which has been found to exist in relation to the procedural aspects of the termination, in all other respects the dealings of the respondent with the applicant has been fair and just. This is evident from the manner in which the respondent made arrangements for ongoing counselling and assistance for the applicant. The outplacement service provided by the respondent was available immediately the termination had been effected and was extensively utilised by the applicant for at least a period of 14 weeks.

This counselling is also relevant to the assessment of the amount of compensation if any which ought result from the anguish suffered by the applicant as a result of the failure to accord him procedural fairness.
In that regard, I am of the view that the respondent did all it could to cure that deficiency by the outplacement services it arranged.

In addition to this, the applicant was provided with extensive financial benefits upon termination of the employment. These included the following:

- one months pay in lieu of notice;
         - three months pay as severance payment;
         - an amount from the respondent’s superannuation fund of two and         one-half times the applicant’s contributions, which was the                 employer sponsored redundancy benefit in that fund.

In addition, the evidence is that the applicant engaged in consultancy work during the period in which he remained unemployed. That consultancy work averaging approximately 10- 12 hours work per week over the period until he obtained further employment on similar terms and conditions of employment to those previously enjoyed with the respondent.

Although S170EE (2) of the Act does not specify the matters to be taken into account in determining the compensation which may be awarded, I consider that all of the above matters, along with considerations of the likelihood of the applicant obtaining other employment, the fact that this was a termination for true and bona-fide redundancy, and the amount of financial loss incurred by the applicant, are relevant to my decision.

Having regard to all of these matters, I am satisfied that even had there been procedural fairness accorded the applicant there is little likelihood that the employment would have continued for a significant period of time into the future having regard to the restructuring and reorganisation of the respondent company and the nature of the redundancy. I am not satisfied on the evidence before me that the applicant has suffered financial loss as a result of the termination.  I do not consider there is in these proceedings a basis for the making of an order for compensation, and I so decide.

Application for leave to file out of time- S170EA(3):
It was the submission of the applicant that the application was filed within 14 days after the employee received written notice of the termination. The applicant was given written notice of the termination on 9th May, 1994.
The application to this court was filed on 24th May, 1994. It is my view that, in order to have complied with the time limitation contained in S170EA(3)(a), the application was required to be filed no later than 23rd May, 1994.

However, having regard to the nature and purpose of the provisions of Division 3 of Part VIA of the Industrial Relations Act, and having considered the submissions of the applicant and the lack of any prejudice to the respondent in these proceedings, I consent to the application by the applicant for the extension of time, and order that date for filing is extended to 24th May, 1994.

This court orders and directs:

1. That the termination of the applicant by the respondent contravened S170DE (2) of the Act in that the applicant was denied procedural
            fairness.

1. That the application for compensation pursuant to S170EE(2) of the
            Act be refused.

1. That the time for filing the application be extended to 24th May,    1994.

I certify that this and the preceding ten (10) pages
are a true copy of the Reasons for Judgment of
Judicial Registrar Parkinson.

Associate:

Dated:  26 October 1994

Solicitor for the applicant:  Mr. M. Kearney
Solicitor appearing for the applicant:                 Mr. M. Kearney

Solicitors for the respondent:  Freehill Hollingdale & Page
Solicitor appearing for the respondent:     Mr. G. Watson

Dates of hearing:  25 and 26 October 1994
Date of judgment:  26 October 1994