Santoro v Hoffman

[1998] IRCA 3

INDUSTRIAL RELATIONS COURT OF AUSTRALIA

INDUSTRIAL LAW -alleged UNLAWFUL TERMINATION - whether TERMINATION was voluntary - whether RESIGNATION.

Industrial Relations Act 1988 (now Workplace Relations Act 1996) - s 170EA.

Mohazab v Dick Smith Electronics Pty Ltd (No. 2) (1995) 62 IR 200
Carrigan v Darwin City Council (unreported, IRCA No. 101 of 1997, von Dousa J, 20 March 1997)
Woods v WM Car Services (Peterborough) Limited [1982] IRLR 347
Soto v Cecil Bros. & Suburban Pty Ltd (unreported, IRCA No. 519 of 1996, R.D. Farrell, 28 October 1996)

ANNA MARIA SANTORO -V- DR KETURAH HOFFMAN
WI 1036 OF 1997

JUDICIAL REGISTRAR:  R.D. FARRELL JR
DATE:  29 JANUARY 1998
PLACE:  PERTH

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WI 1036 of 1997

BETWEEN:	ANNA MARIA SANTORO APPLICANT
AND:	DR KETURAH HOFFMAN RESPONDENT
COURT:		RD FARRELL JR
DATE OF ORDER:		5 JANUARY 1998
WHERE MADE:		PERTH

MINUTE OF ORDERS

THE COURT DECLARES THAT:

1. The applicant’s employment was not terminated at the initiative of the employer.

AND THE COURT ORDERS THAT:

1. The application is dismissed.

1. The time within which the parties may make application arising from these orders shall run from the date on which reasons for decision are delivered.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WI 1036 of 1997

BETWEEN:	ANNA MARIA SANTORO APPLICANT
AND:	DR KETURAH HOFFMAN RESPONDENT

COURT:	RD FARRELL JR
DATE:	29 JANUARY 1998
PLACE:	PERTH

REASONS FOR DECISION

This is an application under Section 170EA of the then Industrial Relations Act 1988, now known as the Workplace Relations Act 1996 (“the Act”). The application was initially for compensation arising from the alleged unlawful termination of the employment of the applicant, Mrs Anna Maria Santoro (“Mrs Santoro”), by the respondent, Dr Keturah Hoffman (“Dr Hoffman”), on 22 November 1996. At a late stage in proceedings, the applicant indicated she also sought reinstatement. I reserved my decision on the basis that I would first decide whether there had been an unlawful termination and then hear further evidence and submissions as to remedy if the issue arose.

On 5 January 1998 I made orders dismissing the application. These are the reasons for that decision.

Background

Dr Hoffman conducts a medical practice in Dianella. Mrs Santoro joined Dr Hoffman as her practice manager in November 1994, and they developed a more than usually close working relationship over the years that followed.

I am satisfied that Dr Hoffman came to trust Mrs Santoro and to rely on her in a way that became closer to a friendship than a mere employment relationship.

In February 1996, Mrs Santoro had applied for and was offered a position with a specialist dentist, Dr Pat Henry (though the prospective salary had not been agreed). Mrs Santoro discussed the matter with Dr Hoffman, telling her that she liked her work with Dr Hoffman and didn’t want to take the other job, but that things weren’t working out and Dr Hoffman was making it difficult for her by not allowing her to do her job. Dr Hoffman recalls talking her out of leaving. Mrs Santoro says Dr Hoffman agreed to try to leave her to do her work, and Mrs Santoro decided not to take the other job.

In late 1995, Dr Hoffman and her husband, Daniel (who is also a medical practitioner), had decided to venture into the beauty industry. Dr Hoffman already performed medical procedures of a cosmetic nature in her medical practice, such as sclerotherapy, collagen implants and chemical peels. After considering other options for some months, they decided in mid-1996 to open a beauty salon in Beaufort Street, Highgate, to be known as “Keturah Body Care”. The salon would offer beauty treatments on the premises. A laboratory within the salon would also be used to manufacture a “Keturah” range of skin-care products for use in the salon and for distribution to other salons.

In September 1996, Mrs Santoro moved from her position as practice manager to instead manage the salon and to work there as a beautician. There was no dispute between the parties that Dr Hoffman remained her employer.

Dr Hoffman believed Mrs Santoro to be enthusiastic about the venture. Mrs Santoro had, of her own initiative, undertaken a part-time beauty therapy course on Saturdays from March 1996 to September 1996. Dr Hoffman had met a quarter of the $1,200 cost of the course. Mrs Santoro also completed a course on micro-pigmentation (otherwise known as cosmetic tattooing or permanent make-up). The $3,000 cost of the micro-pigmentation course was borne by Dr Hoffman. Mrs Santoro agrees that she would have said positive things to Dr Hoffman and Daniel Hoffman about their ideas for a salon, and says she would have told them that she would “be there for them” if they needed her. It is likely that the prospective autonomy of the salon manager’s role would have appealed to Mrs Santoro.

The salon began trading on or about Wednesday 11 September 1996. Its hours were 9.00am to 5.30pm.

Mrs Santoro worked full-time at the salon five days a week, assisted by:

• her daughter, Mrs Lucia Di Crescenzo, who worked part time as a beautician for two and, later, three days a week; and

• Mrs Beaulah Adler who worked at the salon as a beauty therapist on a consultancy basis for one to two days a week, specialising in waxing and massage. Mrs Adler was a senior lecturer in beauty therapy at the Australian College of Natural Health Sciences and had taught Mrs Santoro during her beauty therapy course.

Dr Hoffman and Daniel Hoffman also attended the salon from time to time. Dr Hoffman attended at least one morning and one afternoon per week to perform cosmetic medical procedures for clients and to manufacture the skin-care products. Daniel Hoffman, who was a co-owner of the salon, visited from time to time to assist Dr Hoffman with the skin-care products, among other things. He was chiefly engaged in his medical practice in Mirrabooka.

Mrs Santoro’s transition from practice manager to salon manager was not as smooth as Dr Hoffman had hoped it would be.

On about Tuesday, 10 September 1996, the day before the salon commenced trading, Dr Hoffman raised a concern with Mrs Santoro about certain hours for which Mrs Di Crescenzo was claiming payment from the practice. Mrs Santoro agreed to raise the matter with her daughter. She later contacted Dr Hoffman and told her that Mrs Di Crescenzo was upset about the matter and intended to resign. Dr Hoffman responded that it was Mrs Anna Cassella, the practice’s book-keeper, who had raised the matter. Mrs Santoro then indicated that she was considering resigning over the matter as well, on the basis that the staff of the practice were unhappy with her and her daughter. This prospect was of obvious concern to Dr Hoffman, given that the salon was due to open the next day. In the end, both Mrs Santoro and Mrs Di Crescenzo were persuaded to stay.

As practice manager, Mrs Santoro had been paid $16 per hour. Based on a forty hour week, that equates to an annual salary of $33,280, though she also received overtime payments. In the preparation for the salon’s beginning to trade, Mrs Santoro worked long hours and claimed considerable overtime. After considering the matter, Dr Hoffman and Daniel Hoffman advised Mrs Santoro that, instead of an hourly rate, she would receive a salary of $40,000 per annum, inclusive of any overtime. I accept that this proposal was implemented retrospectively. Dr Hoffman and Daniel Hoffman recall that Mrs Santoro seemed happy at the news and gave them a hug. Mrs Santoro recalls the matter being raised on the telephone and so doesn’t recall any hugs, but agrees she did not have any objection to the change at the time.

Mrs Cassella says that Mrs Santoro was initially happy about being put on salary. The next day, however, she became concerned about how many hours she might have to work. Ms Rachel Sebasta, another employee of the practice, recalls a telephone conversation in which Dr Hoffman was reassuring Mrs Santoro on this point.

The book-keeping at the salon became a problem. Mrs Santoro agrees that, at least in the short-term, she had undertaken the responsibility to do the banking, maintain the cash book and perform other usual bookkeeping tasks. Her understanding was that one of Dr Hoffman’s relatives, who was an accountant, would later be engaged to prepare the accounts. Mrs Santoro concedes that, other than the banking, she did not get time to perform the book-keeping tasks. Initially, when Dr Hoffman raised it with her, Mrs Santoro undertook to find time to get the books done. Later, when it became inevitable that Dr Hoffman would have to get the accountant in, Mrs Santoro became less concerned about her failure to do the books.

On 21 October 1996, Dr Hoffman sent a handwritten facsimile to Mrs Santoro from Sydney, where she was attending a conference. The facsimile broadly deals with two issues.

The first issue was Mrs Santoro’s level of autonomy. Dr Hoffman was aware of Mrs Santoro’s general wish to be “allowed to do her job”. She begins the letter by acknowledging that she may have been “breathing down (Mrs Santoro’s) neck too much”, and proposes an arrangement whereby Mrs Santoro is left to manage the salon from day to day, in accordance with policies and parameters set by Dr Hoffman and Daniel Hoffman as owners on a quarterly basis, with Mrs Santoro being accountable to them on a quarterly basis for any discretionary decisions made by her in the interim.

The second issue was Mrs Santoro’s workload. Dr Hoffman had become aware that Mrs Santoro was complaining that she was overworked. She therefore proposed two people as additional “back up” for Mrs Santoro. Both had worked at the practice and one of them was a qualified beautician. She proposed that one of the two be taken on for two days a week and asked Mrs Santoro to respond.

When Mrs Santoro rejected the proposition that more staff be employed, Dr Hoffman took her claims to be overworked less seriously.

On a Tuesday in late October or early November, Mrs Santoro was mopping the laboratory floor when Dr Hoffman and Daniel Hoffman were present at the salon. She expressed her disgruntlement at having to perform the task. Dr Hoffman responded that “it goes with the territory”; I accept that the tone of Dr Hoffman’s response was brusque. Mrs Santoro later approached Daniel Hoffman and told him that she had been hurt by Dr Hoffman’s remark and he made excuses for her. He says he did not raise it with his wife.

Mrs Santoro was also unhappy with other aspects of her job. I am satisfied, on the evidence of other witnesses with whom Mrs Santoro came into contact, that she would sometimes complain to them about her work. It was also clear, however, that she was usually reluctant to give Dr Hoffman any indication of her unhappiness. Often therefore, Mrs Santoro’s complaints would reach Dr Hoffman through other people.

On 5 November 1996, Ms Ruth Lavell Lee, a collagen representative who supplied collagen to the salon, visited the salon and brought Mrs Santoro some flowers for her birthday, which had been a few days before. She enquired what Dr Hoffman had given Mrs Santoro. Mrs Santoro says she responded that Dr Hoffman had forgotten, or chosen to ignore, her birthday, and that she “obviously didn’t count for anything”, because she didn’t even get a telephone call from Dr Hoffman. Mrs Santoro denies that she went on to complain about her working conditions.

Ms Lavell Lee did not give evidence. There was evidence, however, from Mrs Cassella that Ms Lavell Lee went on to the medical practice and told Mrs Cassella that Mrs Santoro:

• was upset because Dr Hoffman hadn't done anything about her birthday;

• was complaining that she was working long hours; and

• felt she wasn't appreciated by Dr Hoffman.

Dr Hoffman says Ms Lavell Lee told her in more general terms that Mrs Santoro was unhappy. Mrs Cassella later told her in more detail of the nature of Mrs Santoro’s complaint, as reported by Ms Lavell Lee. Dr Hoffman recalls that she was specifically annoyed that Mrs Santoro had spoken in this way to Ms Lavell Lee because up to that point it had only been staff members who had reported back to Dr Hoffman on Mrs Santoro’s unhappiness.

On 7 November 1996, Dr Hoffman raised the matter with Mrs Santoro asking her, "Please come to me with your problems if you have any. Don't go to other people", to which Mrs Santoro responded that Dr Hoffman hadn’t been very approachable, and walked off. Dr Hoffman assumed Mrs Santoro was in a bad mood. She says that she had on previous occasions asked Mrs Santoro whether she was happy or needed anything changed, and Mrs Santoro had responded, "I love my job. I don't mind the hard work, I don't mind the long hours, I just want to be appreciated."

Mrs Evelyn Hastings, who was subpoenaed by Dr Hoffman, gave evidence that Mrs Santoro complained to her about her work at the salon. Mrs Hastings runs her own beauty salon in Mandurah. Dr Hoffman attends Mrs Hastings’ salon every two or three weeks to perform medical procedures of a cosmetic nature for Mrs Hastings’ clients. Mrs Santoro had accompanied Dr Hoffman on those regular visits when she was practice manager. After Mrs Santoro became salon manager, she and Mrs Hastings kept in touch by telephone.

Mrs Hastings felt uncomfortable about Mrs Santoro’s complaints because, while Mrs Santoro was speaking to her as a friend, Mrs Hastings was also a business associate of Dr Hoffman, engaging her to treat clients and purchasing Keturah skin-care products for her salon. Mrs Santoro complained to Mrs Hastings about:

• being “used” and not being recognised by Dr Hoffman for her efforts;

• working long hours;

• the introduction by Dr Hoffman of a salary as the cheapest way to pay her, and in particular the retrospective nature of the salary’s introduction, so that Mrs Santoro did not receive overtime payments she had already earned; and

• being required, as salon manager, to scrub floors.

Mrs Hastings recalls Mrs Santoro calling Dr Hoffman a “bitch” on a couple of occasions when she was angry and, in the context of complaints about money, referring to “typical bloody Jews”. Mrs Hastings doesn’t believe Mrs Santoro meant the latter comment viciously or vindictively, and adds that Mrs Santoro would also praise Dr Hoffman when she was happy, so that Mrs Hastings didn’t take much notice of the comments.

This, and other parts of Mrs Hastings’ evidence to which I will refer later, was not put to Mrs Santoro, who was the first witness in the hearing. I am satisfied on Mrs Hasting’s evidence that the matters for which she was called did not come to the respondent’s attention until shortly before she was subpoenaed, and that counsel had a very limited opportunity to proof her. In any event, at the conclusion of the hearing, I gave counsel for the applicant the opportunity to recall Mrs Santoro so that she could respond to the matters raised by Mrs Hastings. She declined to exercise that opportunity. In those circumstances, I intend to have full regard to Mrs Hastings’ evidence.

Much of Mrs Hastings’ evidence, on this and other matters, was significant. While it seems she has an ongoing business relationship with Dr Hoffman, much of the flavour of Mrs Hastings’ evidence was defensive of Mrs Santoro. This was consistent with Mrs Hastings’ claim that she regarded herself as a friend of both parties to these proceedings. There were minor inaccuracies in Mrs Hastings’ recollection of incidental events and some confusions of chronology. This has led me to conclude that she was relying on her own unaided recollection of events. I do not accept that she had been coached nor that she had collaborated in her evidence with Dr Hoffman or any of Dr Hoffman’s associates, as was put to her in cross-examination. Therefore, subject to those slight inaccuracies and confusions, I have accepted Mrs Hastings’ evidence.

There is evidence that Mrs Santoro was contemplating alternative employment after the salon began trading. It seems Ms Lavell Lee recommended her for a position at the practice of another medical practitioner, Dr Jenny Martinick, who performed cosmetic medical procedures.

Dr Martinick’s husband and business associate, Mr Frank Kotai, swore an affidavit which was tendered by consent. The affidavit was produced at short notice. Mr Kotai was not available for cross-examination and his evidence raised matters not put to Mrs Santoro (though it would have been possible to recall her). I have accordingly placed less weight upon his evidence than would otherwise be the case. However, it bears notable similarities to the evidence of other witnesses and I will recount its substance.

Mr Kotai says he met with Mrs Santoro to ascertain whether she was looking for another job and whether she would be suitable for their needs. He says that she told him:

• she wanted to leave;

• she was under-rated, and did not get her “just desserts”;

• she was doing one and a half jobs and only getting paid for one;

• she was spending 40 hours running the salon and 25 hours doing the accounts;

• she was able to do the books up to the point that the accountant took over;

• she preferred selling cosmetic products but would be able to sell non-hospital cosmetic medical procedures; and

• she wanted to work four days for $40,000 per annum.

Mrs Santoro says she was uncomfortable about the “conflict of interest” involved in working for another medical practitioner in competition with Dr Hoffman. Mr Kotai believed she was out of their price-range and that her skills lay in selling cosmetic products, with which Dr Martinick’s practice was not involved.

They agree that no offer of employment was made at that meeting, nor subsequently.

A party was organised by Mrs Santoro for Thursday 14 November 1996 to celebrate the official opening of the salon. The consensus of the evidence was that it was very successful. Near the end of the evening, Mrs Santoro and Mrs Cassella were putting away the stock when Mrs Santoro complained of tiredness because of the hours she was working. She told Mrs Cassella that she had told Dr Hoffman earlier in the day that she was tired and that Dr Hoffman had responded that she was tired as well. Mrs Santoro commented with some vehemence to Mrs Cassella that it was Dr Hoffman’s business and that if she wanted to work long hours, she could.

That night Mrs Santoro also told Mrs Cassella that she had been approached to work somewhere else and that they had offered her the same amount of money. Mrs Cassella then managed to get her to confide that the offer was from a doctor, and that she had to let them know within a couple of days of her decision.

Ms Sue Koch, a former employee of Dr Hoffman’s, gave evidence of visiting Mrs Santoro at the salon for advice on the beauty industry. This was soon after the salon opening party. She says Mrs Santoro was upset and annoyed with a lot of things, and complained to her that:

• she wasn't being paid enough since she had been taken off the hourly rate and put on the $40,000 salary, and that Dr Hoffman was “almost getting her work for nothing”;

• she was being taken for granted;

• she wasn't going to clean floors because it wasn't her position and Dr Hoffman should employ cleaners instead; and

• she had an interview with Dr Jenny Martinick for a job which paid the same amount, at which she believed she would be treated better.

Ms Koch went on to the surgery and spoke to Mrs Cassella about this exchange. She says she did not give her account directly to Dr Hoffman, but recalls telling Dr Hoffman at some stage “Look, for $40,000 I'll do the job”. She noted at the time that it was more than a registered nurse received.

Ms Koch recalls that the fact that Mrs Santoro was dissatisfied was not “news” to Mrs Cassella, but thought that the information about the job interview was. Mrs Cassella says that she had known about the job offer since the opening, but that Sue Koch told her the identity of the doctor. This was passed on to Dr Hoffman.

It is apparent from this evidence that there were recurrent themes to Mrs Santoro’s complaints. However, another possible source of Mrs Santoro’s unhappiness suggested itself in the course of her evidence.

Dr Hoffman asserted in passing during her evidence that Mrs Santoro was not confident performing waxing treatments. While this was not specifically put to Mrs Santoro, she volunteered, in the context of her evidence concerning her efforts to obtain alternative employment, that she felt she was no longer confident enough to work in the beauty industry. Asked to elaborate, she explained that she had just qualified as a beautician, that she wasn’t confident in what she was doing and that she still needed a lot of guidance. This was particularly so with respect to micro-pigmentation. She felt she had been fortunate to have her former teacher, Ms Adler, available at the salon from time to time.

Later, she digressed in her evidence to give the following account of an experience with a client. Perhaps significantly, the incident took place on the morning of Friday 22 November, 1996, which was her last day at work:

“Were there any unusual clients or unusual things that occurred with your clients that day?--- On my part, yes. I had a Mrs ... (name deleted). I did lip tattooing on her - attempted to anyway.

Can you just describe briefly what the intent of lip tattooing is?--- It's to outline the lips to enhance them.

Yes. And what occurred?--- I started doing the procedure and I found that she was bleeding profusely and I couldn't understand why. I explained to her that she was bleeding and every time the needle was inserted, she'd bleed. By then proceeding to ask her more questions - and I said to her, "Have you been taking any aspirin or anything like that?", and she said, "No". The only thing was the Retin-A cream that she had applied to her face. I asked her then "How long have you actually been using it?". She said, "Over a number of years". I asked her if she'd stopped and she said, "Only over the last month". I felt that it was perhaps too soon to do the tattooing after that and I said that I would talk to Dr Hoffman about it. She said Dr Hoffman was aware that she'd only been off it for about a month and that it was quite okay for her to proceed with the treatment.

So what did you do then?--- I told her that I felt - because she was in a lot of pain I said, "I think we should stop". She agreed because she didn't want her husband to know that she was having the procedure done either and she was going out that evening. I felt a bit awful because of the bleeding and I said to her I didn't think it was going to take because the colour wouldn't stay. Because I felt so bad I said, "Instead of charging you the $200, I'll charge you 150, which would include the touch-up which", I said to her, "I think we should leave for a while". I asked her to come back the next day so that I could view the lip or get someone to have a look at it. I also then made her an appointment for the Saturday after in case she wanted to carry on with the bottom lip.”

Mrs Santoro still appeared somewhat unsettled as she related these events. It may be that her lack of confidence in performing some of her duties, reinforced by this incident, played a part in her actions later that day.

The Court also heard evidence from Mr Ian Goodwin, the principal of the Australian College of Natural Health Sciences, which conducted Mrs Santoro’s beauty therapy course.

Mr Goodwin was complimentary of Mrs Santoro and her abilities in his evidence. He described her as “a very, very impressive person”.

Mrs Santoro would sometimes discuss her problems at work with Mr Goodwin, in the context of seeking feedback and advice from him as an industry professional. He says she never elaborated very much, and never got down to specifics. He did not regard these discussions as inappropriate.

She told him:

• she wasn't altogether happy in the workplace;

• about the problem that arose regarding her daughter’s hours, and that other members of Dr Hoffman’s staff were concerned that Mrs Santoro and her daughter seemed to get given more privileges than others;

• that she worked long hours, in the context of enquiring what would constitute reasonable hours for someone in her position;

• that she had had an offer to work elsewhere in the industry (in the week prior to Friday 22 November 1996); and

• that she might leave the industry.

When he learned that she was considering leaving the salon, whether to take another position or to leave the industry, he offered her a position working with him. It was left on the basis that she would get back to him.

After Mrs Santoro left the medical practice to manage the salon, other members of the staff at the practice began to make known to Dr Hoffman various complaints and disparaging remarks said to have been made by Mrs Santoro about her work and about Dr Hoffman.

Finally, on Monday, 18 November 1996, Daniel Hoffman overheard a conversation between Mrs Santoro and Mrs Tanya Marshall (“the Tanya Marshall incident”). Mrs Marshall was a supplier of micro-pigmentation equipment and materials, and had trained Mrs Santoro in the technique. Mrs Marshall was also a prospective purchaser of Keturah skin-care products for her salons and was being trained by Mrs Santoro in their use.

There is a dispute as to the content of this conversation. Mrs Santoro says that Mrs Marshall raised the salon opening, saying that the party was lovely but that Dr Hoffman and Daniel Hoffman were particularly unfriendly and had ignored both her and her husband all evening. She thought it was very rude and couldn't understand it.

Mrs Santoro says she told Mrs Marshall not to take it too personally, and that she should keep business aside from personalities. Mrs Santoro says she acknowledged to Mrs Marshall that Dr Hoffman was very difficult at that point and very hard to talk to, and that Mrs Santoro was “a bit unhappy”. Daniel Hoffman contends that Mrs Santoro said, "Kit (Dr Hoffman) is a bitch and a bitch to work for". Mrs Santoro denies that she expressed her sentiments in that way.

Mrs Santoro told Mrs Marshall that if she had the money, she would pay Dr Hoffman back the $3000 that she paid for Mrs Santoro’s micro-pigmentation course, because she didn't want to be obliged to anyone for anything. She went on to ask Mrs Marshall, "If I was looking for work and came to you, would you offer me employment?" She says Mrs Marshall replied, "Oh, like a shot".

At that point, Mrs Santoro saw Daniel Hoffman behind the doors in the laboratory area, listening in on the conversation. She greeted him as he entered the room. She says the conversation stopped because Mrs Marshall was embarrassed and angry. Daniel Hoffman had again failed to acknowledge her.

Daniel Hoffman then called Dr Hoffman while she was at Mrs Hastings’ salon in Mandurah and reported to her that he had overheard Mrs Santoro describe Dr Hoffman as a “bitch” in a conversation with Mrs Marshall.

Dr Hoffman was shocked and upset to be told this. Ms Rachel Sebasta, the employee from the practice who had accompanied Dr Hoffman to Mandurah that day, gave evidence of Dr Hoffman’s demeanour immediately after the call and during the drive back to Perth:

“After she came out I could see that she was - really something was bothering her. She was stressed. I knew something bad happened. Then she saw a few other patients. We finished and on our way back she was half the way hardly talking. She was just very quite which is very unusual... I could see that Keturah was absolutely shaken and she just - she couldn't believe it. She was so disappointed and suddenly, you know, everything was coming to her. We were talking a little bit about it and she said, ‘Well, now I know what you meant when you were telling me all those things; like, consider that she may be not always saying the truth, and things like that’.”

Mrs Cassella also identifies this as the incident that “really got to” Dr Hoffman.

I am satisfied that, from that point on, Dr Hoffman felt that the special relationship of trust and reliance that she had had with Mrs Santoro was over. However, for the time being Mrs Santoro remained Dr Hoffman’s employee.

The unlawful termination provisions of the Act concern themselves with the employment relationship. Difficulties can arise where an employer and an employee also enjoy a close personal relationship of some sort. It will sometimes be the case that conduct by one of the parties will lead the other to choose to bring that personal relationship to an end, where that conduct would not necessarily amount to a valid reason for the employer to terminate the employment relationship. When making the transition from a close personal relationship to a more formal employment relationship, it is necessary for the parties take steps to adjust each other’s expectations under the new, more formal arrangement. The transition can be fraught with difficulties.

As it happens, in this case, the employment relationship between Dr Hoffman and Mrs Santoro had also ended by the end of the working week.

The End of the Employment Relationship

There is a dispute between the parties as to how the employment ended. This is an important question for the purposes of this application because the unlawful termination provisions of the Act only apply where there has been a termination at the initiative of the employer.

It is therefore necessary for me to consider carefully the circumstances in which the employment relationship ended, and to determine at whose initiative it ended. The onus lies on Mrs Santoro to establish that it is more likely than not that the termination was at the initiative of Dr Hoffman.

Dr Hoffman and Daniel Hoffman say Mrs Santoro had two specific opportunities to explain the Tanya Marshall incident.

Daniel Hoffman says he approached Mrs Santoro that day after Mrs Marshall had left, and asked her why she had talked about Dr Hoffman in that way. He says she responded by telling him that if he eavesdropped then that's the sort of thing he should expect to hear. He left the salon following this response. Mrs Santoro denies that such a conversation occurred between them.

Dr Hoffman went to the salon the next day, Tuesday 19 November 1996, to confront Mrs Santoro about her reported comments. She was accompanied by Daniel Hoffman, who says Dr Hoffman was very nervous. She agrees she felt stressed and under pressure. She immediately raised the Tanya Marshall incident with Mrs Santoro. Dr Hoffman’s recollection is that she began by saying “we've heard some comments you've made to Tanya that are unfavourable”. Daniel Hoffman recalls her asking “What's going on? What's the meaning of making these derogatory remarks about myself in the salon? I expect bit more loyalty for this, in return for our trust’, or words to that effect.

Daniel Hoffman left the salon and retreated to the nearby coffee shop for a coffee almost immediately after Dr Hoffman began speaking to Mrs Santoro. This was not planned, and resulted from an aversion to confrontation on Daniel Hoffman’s part which he characterised as “cowardice”. He recalls he sensed a degree of hostility in Mrs Santoro, and didn't want to be around for any possible “fireworks”. He hadn't wanted to come, but Dr Hoffman had made him accompany her for moral support. Dr Hoffman was not initially aware of his absence.

Daniel Hoffman does not recall hearing Mrs Santoro’s response, and says Dr Hoffman told him later that she had responded by shrugging her shoulders. Dr Hoffman’s evidence was that Mrs Santoro responded unapologetically, saying "Well, if you will listen through closed doors..." and "In this industry people are going to talk about you and you shouldn't let it get to you." Dr Hoffman says she was surprised at Mrs Santoro’s apparent lack of concern about what she'd said. She says that Mrs Santoro then walked off.

By that point, Dr Hoffman realised that Daniel Hoffman had left the salon, and she did not follow Mrs Santoro up on her response. Dr Hoffman says their exchange was fairly short in duration, taking “several minutes”. She concedes that Mrs Santoro may have made the comment about “listening through closed doors” to Daniel Hoffman the previous day, and that she may have heard it from him second hand.

Mrs Santoro again denies that any such meeting occurred, and certainly Daniel Hoffman’s memory of the meeting and the events surrounding appeared more than usually vague.

However, Mr Goodwin says that Dr Hoffman told him about such a meeting over lunch the following Friday, saying that she'd had some problems with Mrs Santoro, that she and Daniel Hoffman had had a previous meeting with her, but the problems hadn't been adequately resolved. There was no evidence of any other meeting where such problems were to be confronted to which they may have been referring.

The practice diary shows the following entry made by Dr Hoffman on 19 November 1996:

“Could you ring and check how I stand if I want to fire Anna? Is she a beauty therapist with no award or will she be entitled to sue me for unfair dismissal. What grounds etc.? eg, is plotting to harm the business grounds for dismissal? How far apart must warnings be? How many must be written?”

Dr Hoffman acknowledges that by then she had come to believe that Mrs Santoro was attempting to sabotage the business, elaborating that when one’s salon manager starts telling customers that the boss is difficult, it's likely to influence business.

Certainly, Dr Hoffman came to the view that aspects of Mrs Santoro’s performance, which she might previously have overlooked, were unsatisfactory.

From Mrs Santoro’s point of view, there was no evidence of anything in her work performance after 18 November 1996 to indicate that she was performing anything other than business as usual.

On the evening of Tuesday 19 November 1996 or Wednesday 20 November 1996, Dr Hoffman composed the following letter dated 20 November 1996. She caused it to be delivered to Mrs Santoro on Wednesday, 20 November 1996 by courier to Mrs Santoro’s home; Mrs Santoro gave a seminar that day, as part of her duties, and so the letter could not be delivered to her at work. The letter was mistakenly left by the courier with a neighbour, so Mrs Santoro did not read the letter until 7.30pm on Wednesday night. It read as follows:

“Dear Anna,

It is with regret that I have to inform you that your employment situation is being reviewed.

There are several issues of concern, the most important being loyalty. It has come to our attention, through six independent sources, that you have been complaining that you are not happy with your conditions, or your employers’ treatment of you. This is despite your own claims of loyalty, and your denial of significant problems with work. In addition, when we at first heard of these complaints and gently tried to reduce you (sic) hours, you resisted this, but continued to complain of overwork. On 7/11/96 you were directly requested to come direct to the employer with any problems you had because you had complained on 5/11/96 to Ruth Lavell-Lee about your conditions, stating that we are not good employers. Despite this, you repeatedly complained about the same things to people in the industry, but not involved in our salon, some of the statements being quite libelous. (sic)

Because of this your honesty has been called into question, and our trust in you has been destroyed. Of particular importance is the fact that you tell people different stories.

In addition, we believe that some of the statements that have been repeated back to us from you are damaging to our business, and certainly derogatory to your employers.

Regarding your representation of your abilities before we opened, you stated that you would be able to run the salon single handedly, with only 2 days per week help from Lucia, but after 4 weeks we were obliged to call in a bookeeper(sic), as the accounts were in a state of disarray. The money to pay for this was actually included in your salary, so now we find our expenses increased. Also we have had to do some cleaning and tidying that despite repeated requests had not been done.

You also required repeated reminders to contact patients requiring follow up, whereas this should never have waited long enough for us to notice it had not been done.

We have also noticed that your efficiency is poor, probably due to amount of time spent complaining to outsiders about conditions, during working hours.
In summary, you misrepresented your abilities, and are not doing the job we agreed to pay you for.

We have also found that you are resisting our wishes for the running of our business, including resisting all suggestions regarding employing new staff, including ones that are quite obviously necessary such as the bookeeper(sic), and that you are resisting training staff I ask you to train, or training staff with less than appropriate care - we have found the knowledge of many of the people you have trained to be lacking, in areas they claim never to have been informed, despite obvious relevance to the training.

You have also failed to keep us informed of important facts such as temporary alterations to opening hours, despite being told we would like to be kept well informed.

Going back further, you have twice threatened me with your resignation in order to make an impact, once in late 1995, and again immediately before the opening of the salon in September 1996, the latter of which you yourself described as a ploy for attention. All of these factors have led us to believe that you have not fulfilled your agreement regarding your work, and several of these factors are grounds for dismissal if persistent.

We would like you to consider your position, as we are aware you have been seeking alternative employment, and feel it would be detrimental to our business not to expedite matters and come to a speedy resolution of this unhappy situation. We intend to discuss these issues with you on 22/11/96.

Yours faithfully.

(Signed)”

Dr Hoffman says she regarded this letter as a warning letter. It is not as measured as it might have been, and in that respect I believe it betrays Dr Hoffman’s personal feelings about her falling out with Mrs Santoro.

It is perhaps surprising that there is no specific reference in the letter to the Tanya Marshall incident, but there are many general references in the letter to remarks of that sort. In any event, there is ample evidence that Daniel Hoffman telephoned Dr Hoffman and gave her his account of the conversation between Mrs Santoro and Mrs Marshall, and the failure to refer to the incident in the warning letter does not lead me to doubt Dr Hoffman’s state of mind on that point.

Counsel for Mrs Santoro submits that the last paragraph was intended to induce Mrs Santoro’s resignation. The letter appears, however, to also contemplate other outcomes. The employment is being merely “reviewed”. The penultimate paragraph ends by asserting that “several of these factors are grounds for dismissal if persistent” (my emphasis).

Dr Hoffman’s motives for writing the letter are unclear. There are at least three possibilities. It may be that Dr Hoffman was content that the employment relationship between herself and Mrs Santoro continue indefinitely, provided Mrs Santoro addressed the areas of concern to Dr Hoffman. Alternatively, it may be that Dr Hoffman had irrevocably decided to terminate Mrs Santoro’s employment, but believed that she was required by law to issue Mrs Santoro with three written warnings and was “going through the motions” prior to the inevitable dismissal; the diary entry lends some support to that proposition. Alternatively again, Dr Hoffman may have intended, through the letter, to induce Mrs Santoro’s resignation.

When I asked Dr Hoffman what she thought would happen after the letter, she responded as follows:

“I was actually hoping that she would apologise and say that she was under enormous stress for some reason... I was hoping that it was something other than work that was upsetting her and that she would explain it all away, and I would say: oh, why didn't you tell me about this earlier and we would forgive each other and everything would be back to normal fairly soon.

The other possibility I thought was that she could have significant concerns about the way things were going and would then air her grievances to me and tell me what it is I had done to upset her and how I can improve in my treatment of her. And I would then tell her what it is she had done that had upset me, and how she could improve. I had considered that she might be hostile and embarrassed and offended and so on, as a third possible scenario, and that she might be rude and defend her comments in an aggressive manner but, I thought that she might well agree to certain points where we could alter things and we would then have a sort of a truce situation over the next few weeks and we would see how she went. 

(If she had not resigned...) she would've been back at work on the Monday. We would've had a fairly uncomfortable time and I had already canvassed people to be there to observe because how does one put a manager on a work trial, - she was there by herself. So, I had to ask someone else to be there as well. And so I was expecting her to be back at work on Monday. Either apologetic, and resolving to start again, or, hostile but wanting to keep her job. And we would see how we went.”

Daniel Hoffman says he expected Mrs Santoro to break down and confess to some sort of problem, whether it was personal, medical or psychiatric in nature. They could then deal with it and the situation would resolve itself with Mrs Santoro remaining. He says Dr Hoffman mentioned the possibility of a work-trial to him, but did not discuss the details.

Mrs Santoro was upset to receive the letter. She was of the view that some of the assertions within the letter were untrue. She says that after reading the letter she believed Dr Hoffman wanted to dismiss her.

After considering all the evidence, I have concluded that, once it was clear to Mrs Santoro that Dr Hoffman no longer held her in high regard, she decided to leave the job. It may be that she assumed her eventual dismissal was inevitable. In any event she was not prepared to wait for it.

This conclusion is supported by the evidence of Mrs Hastings.

According to Daniel Hoffman, he suggested to his wife that she ask Mrs Hastings to be a go-between, because as Mrs Santoro’s friend she might be able to find out from Mrs Santoro “what was going on”. He says Dr Hoffman rang Mrs Hastings as he suggested.

Whether Mrs Hastings was enlisted to play such a role was not put to Mrs Hastings nor, surprisingly, to Dr Hoffman.

In any event, Mrs Hastings says she telephoned Mrs Santoro and told her that Dr Hoffman and Daniel Hoffman were very upset about Daniel Hoffman overhearing her conversation to Mrs Marshall, and suggesting that it was time to speak to Dr Hoffman directly about any concerns she might have.

Mrs Hastings says Mrs Santoro responded that she was sick of the way Dr Hoffman and Daniel Hoffman treated her. Mrs Santoro told Mrs Hastings that she felt that she couldn't work for Dr Hoffman any more, but that she wouldn't just walk out on her; she was going to give Dr Hoffman notice so she could find a replacement.

Mrs Hastings says her discussion with Mrs Santoro was before a meeting which Mrs Hastings understood had been arranged for Mrs Santoro and Dr Hoffman to get together and have a talk. I take this to be the meeting planned for Friday 22 November 1996. Surprisingly, Mrs Hastings does not recall learning about the warning letter until a discussion with Mrs Santoro sometime time later, after the employment had ended. She was under the mistaken impression that Mrs Santoro was given the letter during the meeting.

Mrs Santoro was not rostered to work on Thursday, 21 November 1996. She unsuccessfully sought to contact Dr Hoffman by telephone before resuming work. She believes Dr Hoffman avoided speaking with her during this period.

Mrs Santoro presented for work on Friday, 22 November 1996. She worked as usual, making appointments to see clients in the following days. Mrs De Crescenzo was working that day, but at about 2.00pm she learnt that one of her children was ill and she had to leave the salon to take him to hospital. Dr Hoffman also attended the salon that morning, dealing with a series of clients between 9.00am and 11.30am.

When Mrs Santoro tried to raise the letter with Dr Hoffman at the salon at about 11.30am, Dr Hoffman deferred any discussion until later that day. Communications between them were understandably awkward in the meantime.

At 11.30am, Mrs Santoro saw the micro-pigmentation client who had the bleeding difficulties in the incident referred to above.

At about 2.00pm, Dr Hoffman and Daniel Hoffman had a pre-scheduled luncheon meeting with Ian Goodwin at the cafe near the salon, dealing with issues concerning the beauty industry. The meeting had been requested by Mr Goodwin. He told them in the course of the meeting that he had offered Mrs Santoro employment. They told him that they’d had some problems with Mrs Santoro, that they had given her a warning letter and that they were going to meet with her later that afternoon. They added that they weren't looking forward to it. Mr Goodwin had volunteered some industrial relations advice to the effect that Mrs Santoro was entitled to three warnings, and must be given the opportunity to improve her performance.

After that meeting, Dr Hoffman and Daniel Hoffman met with Mrs Santoro at about 4.15pm to discuss the letter. This meeting took place in an office at the back of the salon.

There is some dispute about the content of their discussion. Dr Hoffman, Daniel Hoffman and Mrs Santoro all gave evidence of what occurred. Dr Hoffman had had the opportunity to hear Mrs Santoro’s evidence.

Mrs Santoro committed her version to writing in a letter to the Australian Industrial Relations Commission dated 2 December 1996. Dr Hoffman also made a note headed “Diary of Events”. While it bears no date of creation, Dr Hoffman believes she made her note on Monday 25 November 1996, in accordance with her usual practice where there is the possibility of controversy arising from her dealings with patients or employees. Dr Hoffman’s note is less helpful than it might have been; she concedes that it tends to paraphrase what was said at the meeting, and is not comprehensive. It also tends to focus on characterisations and conclusions without detailing the facts or events upon which those characterisations and conclusions are based.

The evidence about the meetings was as follows:

Dr Hoffman says that at some stage that day, though perhaps not at the meeting, Mrs Santoro confirmed having received the letter and complained that the courier had delivered it to her neighbour. Daniel Hoffman places that exchange at the beginning of the meeting.

There was an initial “awkward silence”.

Mrs Santoro then began by saying:

“I presume, from the contents of the letter, that you’re going to give me the bullet.”

Dr Hoffman’s response was either:

• “That’s a bit blunt, but yes, in effect that’s what it means”, as Mrs Santoro alleges; or

• “No, Anna, that's being a bit harsh, but we do have some big problems here”, as Dr Hoffman and Daniel Hoffman maintain.

Dr Hoffman’s note paraphrases her response, recording that “We agreed that the complaints listed in the letter would be exceedingly difficult to overcome”, and later, “We informed her that to continue in the present form would be totally unacceptable to our working environment.” The note later makes reference to a work trial.

Mrs Santoro recalls that she told them that she worked hard, and that she wanted feedback from them.

They recall her telling them that she knew her problem was that she required too much reassurance or appreciation and that they responded by agreeing that she did. Daniel Hoffman added that they were not able to give her any more appreciation or reassurance than they were already. Dr Hoffman believes Mrs Santoro responded that she knew that.

Dr Hoffman recalls that she or Daniel Hoffman went on to say that they were sad it had come to this and that things didn’t have to turn out badly.

They recall Dr Hoffman going on to stress that Mrs Santoro “had worth”, and complimenting her on the manner in which she presented herself and her demeanour, praising her sales ability and her skills in dealing with clients and generally listing her positive qualities.

Mrs Santoro recalls that they acknowledged that she was a hard worker. Daniel Hoffman concedes this is possible.

Dr Hoffman raised Mr Goodwin’s high assessment of her abilities. She recalls saying something like:

“Your name came up in conversation at lunch and Ian Goodwin was indicating intent to hire you should you be available to work in the salon at the beauty school and he was very keen on this idea because you already have a good working knowledge of the products".

Mrs Santoro recalls Dr Hoffman saying that she had another position for Mrs Santoro to go to, with Mr Ian Goodwin at his college to manage his salon, where she could promote the Keturah products. Mrs Santoro says she refused.

Dr Hoffman says she didn’t raise Mr Goodwin’s offer in an effort to place Mrs Santoro in alternative employment but rather that she wanted to make Mrs Santoro feel that her abilities were valued by others.

Dr Hoffman and Daniel Hoffman say that Mrs Santoro reacted with hostility to Dr Hoffman’s efforts to speak positively about her. Daniel Hoffman says that she threw her keys down on the table, and they agree she told Daniel Hoffman to “wipe that smirk off your face”.

They say Mrs Santoro went on to announce that she no longer wanted to work in the beauty industry, that she had discussed it with her husband and that she had decided she was going to stay home and work for him.

Mrs Santoro denies saying this.

It is agreed that Mrs Santoro asked whether they wanted her to leave immediately. On their account, this query flowed on from her previous announcement. On Mrs Santoro’s account, her query was prompted by Dr Hoffman’s earlier confirmation that she was to “get the bullet”.

Mrs Santoro says Dr Hoffman replied that she could finish that day at 5.30pm, the usual time. They say their response was “How about some notice?” and “Can you at least stay until 5.30pm”. They say she appeared reluctant to do so.

It is agreed that at about 4.30pm, the meeting broke up and Mrs Santoro attended to a client. Dr Hoffman went off to make up some skin-care product and Daniel Hoffman again retreated to the nearby cafe.

After attending to the client, Mrs Santoro stayed to do some cleaning up. During this time there were some further exchanges between her and Dr Hoffman.

Dr Hoffman says she was trying to make casual conversation, because she wanted Mrs Santoro to know that she was sad about the way things had turned out, and that there didn't need to be any grudges harboured.

Mrs Santoro says she told Dr Hoffman that she should communicate better with her staff, and make time to talk to them. She told Dr Hoffman that she had found her difficult to talk to and that she could “really be a bitch sometimes”. She says Dr Hoffman did not disagree, and offered explanations for these perceived shortcomings. Dr Hoffman’s evidence about this part of their conversation was broadly consistent with Mrs Santoro’s account.

Mrs Santoro complained about their failure to have her final pay prepared for her. She claims Dr Hoffman told her that she would be paid two weeks’ severance pay. Dr Hoffman disputes this, and says she told Mrs Santoro that they did not prepare her pay because they did not know she was leaving.

Mrs Santoro gave evidence of the following discussion with Dr Hoffman at this point:

“...Dr Hoffman was asking me what I was going to do. And I said things like, I don’t know: I’m going to try and be a grandmother. I just wasn’t sure. And she said: why don’t you go back into the beauty industry, open your own place. And I said: I’d just about finished with the beauty industry.”

Dr Hoffman and Daniel Hoffman were not asked to comment on this evidence. It has obvious parallels to their evidence about Mrs Santoro’s announcement of her resignation during the earlier meeting.

Finally, as Mrs Santoro was preparing to leave, she asked Dr Hoffman not to tell people “how it happened”. She says she meant by that that she didn’t want people to know that she had gotten the “sack”. Dr Hoffman assumed her to have been referring to their “falling out”. They agreed that Dr Hoffman would simply tell people that Mrs Santoro had retired to work with her husband.

At the door of the salon, Mrs Santoro saw Daniel Hoffman in the cafe. She says she remarked to Dr Hoffman that he should've wiped the silly smirk off his face and that he wasn't a man. Dr Hoffman says this was at least partly a reiteration of what she had said to his face earlier.

Mrs Santoro then left.

Mrs Santoro says in her letter to the Commission that, during the meeting, she tried to “justify some of the accusations made in the letter, but to no avail”.

It is interesting that her evidence was to the contrary. Dr Hoffman commented in her evidence that she was  surprised that Mrs Santoro had not been at all interested to discuss the issues in the letter and she hadn’t defended her behaviour in any way.

I will quote at some length Mrs Santoro’s explanation for not discussing the matters raised in the letter, as I believe it is indicative of her state of mind at the time:

“(I told her) ‘I'm assuming from this letter I've got the bullet’. She had every chance to turn around and say to me: Anna don't be stupid, or, I think you're misunderstanding what I've written in the letter. There are problems let's talk about it. But, there was none of that.

All right. So, you say she said, well, that is a bit blunt, but, yes?--- Yes.

You did not at any stage raise that you thought this was unfair, or that she was acting - you were entitled to an opportunity to improve or anything along those lines?--- The discussion it - it was very cold. It was like - I think almost the feeling that I got after I said: I assume from this I've got the bullet. It was almost as if I'd taken a load off their shoulders. It was like, relief. There was nothing - there was nothing for me to - to take a hold of, as in conversation in any way.

But, you could have discussed it with them on that occasion?--- It was for them - well, I suppose, yes, I could've. But, it was for them to also - I don't know, perhaps if they saw how upset I was and they say to me: Anna look you're being stupid or you're too hot tempered, or something, calm down, let's discuss this.

So, you have just said that you could have perhaps discussed it with them at that point in time?--- I - I would've discussed it with them had they - had they allowed me to.

Well, how did they stop you?---Well, after I said what I said, and as I said, it was almost like a - a load was lifted and they didn't want. It was real - no real like: oh, Anna come on, let's go and have a coffee next door. Let's shut the shop. Let's - you know, just calm down, let's talk this over....

I mean, presumably there was a corresponding load on your shoulders?--- No. I was - I'd never in my life been sacked. I - I felt humiliated. It was - particularly at my age it was something that I'd never - certainly never personally experienced and it wasn't a very nice feeling. And again, perhaps, pride came into it where if I'd said: well, you know, can't we talk about this first. Maybe - maybe pride got in the way. I don't know.

Now, you spoke about an awkward silence at the beginning of the meeting?--- Yes.

Of course, at that point in time you then had the opportunity to raise any matters in relation to the letter?--- ... All right. I didn't - I suppose I didn't even think to raise every individual matter.

But had you thought about it, then you could have done so?--- I suppose if emotions hadn't got in the way, probably.

So really you were very emotional, were you?--- Course I was, yes, was very upset.

Would they have realised you were upset?--- Yes.

How would they realise that?--- The look on my face, trying to get to talk to her at about 11.30. I remember when doctor first walk in - walked in the morning and there was no greeting.

Yes, but that does not mean to say that they knew that you were upset?--- They knew that I would be upset. Doctor knew my personality.

But certainly you would say that you were not precluded from raising your concerns at this meeting?--- Probably not, no.”

On balance, after considering the evidence concerning the events leading up to the meeting, the meeting itself and its aftermath, I have accepted Dr Hoffman’s account of the meeting.

There were some factors supporting Mrs Santoro’s version of events.

• Dr Hoffman had made some arrangements to ensure that additional staff were available for the salon over the next few days. However, given Dr Hoffman’s belief that Mrs Santoro was unhappy working at the salon and was seeking employment elsewhere, it would have been prudent for her to prepare for the possibility that Mrs Santoro might choose to resign. The arrangements would also have been consistent with a desire on Dr Hoffman’s part to enhance her capacity to monitor Mrs Santoro’s performance more closely, at least in the short term, during any “work-trial”.

• Mrs Santoro’s behaviour in presenting for work on Friday and making appointments to see clients in the following days suggests that she did not intend to resign immediately. It is not inconsistent, however, with an intention to serve out a notice period, as she told Mrs Hastings she would.

• Dr Hoffman made a note in the practice diary for Mrs Cassella on Sunday 24 November 1996 to “Please do Anna’s severance pay and post it to her urgently”. Dr Hoffman says she understood “severance” pay to be synonymous with “final” or “termination” pay, and not specifically relevant to dismissals rather than resignations. This is, in my view, a plausible explanation.

• Mrs Di Crescenzo says that in a conversation with Dr Hoffman on Monday 25 November 1998, she referred to her mother being “sacked”, and says Dr Hoffman did not contradict her. Dr Hoffman denies this. The terms of her denial are consistent with a letter written by her to Mrs Di Crescenzo the next day.

A number of factors support the proposition that Mrs Santoro chose to leave the employment.

• I have already referred to Mrs Hastings’ evidence about Mrs Santoro’s statement of intent prior to the meeting.

• Mrs Santoro may have assumed that her eventual dismissal was inevitable. She was familiar with, and indeed had previously advised Dr Hoffman on her approach to employees she regarded as unsatisfactory. I was referred to a “communications book” in which, in happier times, Dr Hoffman had written messages at times convenient to her for Mrs Santoro on matters connected with the management of the practice. Dr Hoffman’s messages are conversational in style. The book is candid and illustrates the trust Dr Hoffman placed in Mrs Santoro at that time. She sometimes complains, in colourful terms, about the difficulties attendant on conducting the practice and the shortcomings of some of her employees. She sometimes rehearses strategies for dealing with contingencies she believes may arise. On at least one such occasion, she refers to advice that she is required to give three written warnings to a particular employee she regarded as unsatisfactory, when it would appear that she wished to dismiss her. Such an assumption that her dismissal was inevitable may have prompted Mrs Santoro to resign, out of pride.

• Dr Hoffman believed that she was not permitted to dismiss an employee until they had received three warnings. The communications book confirms this. Mr Goodwin had reminded her of this perceived requirement immediately before the meeting. It is unlikely that she would have risked ignoring this requirement.

• Dr Hoffman had written an additional letter, dated 22 November 1996, which raised further matters. In the event, it was never produced at the meeting. It read as follows:

  “Dear Anna,

  Since our last letter to you, it has come to our attention that the Keturah Bodycare salon was not properly closed on 19/11/96 and 20/11/96, with lights and air conditioner left on after lock up.

  In addition I have been informed that on 20/11/96 the salon was left unattended yet unlocked for more than five minutes, with no response generated through the ringing of the bell. This is a completely unacceptable situation and could have resulted in theft, damage or loss of patronage.

  We have calculated the cost of the extra wages required to hire people to perform the duties you initially agreed to but have not been fulfilling at $15,000 per annum, including bookeeping(sic), cleaning and other support services. This is also an unacceptable increase in costs for us as your salary was calculated into our expenditure budget. This matter will need to be addressed.

  As far as verbal praise goes, we have been overeaching(sic) ourselves in this department, with staff at the salon being far more gently handled, and far more often praised than other staff in my employ, and yet our reward is to have continuous complaints of mistreatment and lack of appreciation.

  Please be aware that we no longer intend to treat any staff member with anything other than fairness and evenhandedness, and will not be concerning ourselves with providing excessive attention to any staff member, as it has already been seen as favouritism(sic) of salon staff.

  Yours Faithfully,

  (signed)”

This letter is again somewhat strident in tone, and may have been intended to serve as a “second warning letter” (though Dr Hoffman’s evidence was that it was meant as a supplement to the first warning letter). Importantly, however, the terms of this letter clearly contemplate an ongoing employment relationship, albeit on more formal terms.

• Diary entries made before 22 November 1996 concerning the engagement of additional staff are often written in terms which imply an assumption that the new staff would be working with Mrs Santoro, ie that her employment would continue.

• As was noted in the account of the events on Friday 22 November 1996, the termination pay was not made up.

• Mrs Santoro told Mrs Hastings in a later telephone call after the meeting that she was furious and “walked out”.

• Mr Goodwin says that when he spoke to Dr Hoffman on the telephone on or about the afternoon of Monday 25 November 1996, he asked how their meeting went with Mrs Santoro, and Dr Hoffman responded that the meeting hadn't gone as planned because Mrs Santoro walked out. Mr Goodwin doesn’t specifically recall Dr Hoffman saying Mrs Santoro resigned, but says that was what he understood her to mean.

• On Monday 25 November, Dr Hoffman told Ms Ros Matulich, a client of hers who works as book-keeper for Mrs Santoro’s husband, that Mrs Santoro had decided to go and work for her husband.

• By a letter dated 26 November 1996 to Mrs Di Crescenzo, Dr Hoffman describes Mrs Santoro as having “resigned”.

On Tuesday, 26 November 1996 Mrs Santoro received a cheque in the post for her termination pay. Mrs Santoro called Mrs Cassella and enquired why she had not received two weeks’ severance pay, by which she meant wages in lieu of notice. Mrs Cassella responded that she was not entitled to severance pay because she had resigned. Mrs Santoro denied that she had resigned, and threatened to sue Dr Hoffman if she did not receive the severance pay.

On 5 December, 1996, Mrs Santoro filed an application in the Australian Industrial Relations Commission which gave rise to these proceedings.

Dr Hoffman filed a notice of appearance on 11 December 1996, briefly summarising her defence as follows:

“Not terminated. She resigned.”

Whether Termination was Voluntary

I conclude that Dr Hoffman was of the view that Mrs Santoro’s performance as Salon Manager was unsatisfactory, and that after Daniel Hoffman’s report to her about the Tanya Marshall incident, she was no longer prepared to overlook Mrs Santoro’s shortcomings.

Dr Hoffman was aware that she should prudently advise Mrs Santoro of those shortcomings and give her an opportunity to improve her performance. She probably did not expect that Mrs Santoro’s performance would improve.

I am not however satisfied that it is more probable than not that Dr Hoffman had resolved to dismiss Mrs Santoro irrespective of her response to any warnings issued to her.

The most authoritative statement dealing with how the courts should determine whether there has been a “termination at the initiative of the employer” for the purposes of the Act is Mohazab v Dick Smith Electronics Pty Ltd (No 2.) (1995) 62 IR 200, a decision of the Full Court of this Court. While disavowing an intention to formulate an “exhaustive description” of what is termination at the initiative of the employer, the Court held, at 205-206, that:

“...an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.”

In Carrigan v Darwin City Council, (Unreported, IRCA No. 101 of 1997, von Dousa J, 20 march 1997) a recent decision of this Court, von Dousa J cited and expressly applied the following principles articulated by Brown-Wilson J in Woods v WM Car Services (Peterborough) Limited [1982] IRLR 347 at paragraph 17, which were upheld by the English Court of Appeal ([1982] ICR 693):

“In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee... To constitute a breach of this implied term, it is not necessary to show that the employer intended any repudiation of the contract: the Tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that it’s effect, judged reasonable and sensibly, is such that the employee cannot be expected to put up with it... The conduct of the parties has to be looked at as a whole and its cumulative impact assessed...”

Having cited Mohazab, von Dousa J went on to state that, in his view, it is in accordance with the approach of the Full Court to hold that the termination of an employee’s employment was at the initiative of the employer for the purposes of the Act if there has been a constructive dismissal arising from the breach of the implied term as to trust and confidence.

In determining whether Mrs Santoro left the employment relationship voluntarily, I must consider whether Dr Hoffman’s conduct was such that Mrs Santoro could not be expected to “put up with it”. I don’t believe it was.

As I observed in Soto v Cecil Bros. & Suburban Pty Ltd (Unreported, IRCA No. 519 of 1996, R.D. Farrell JR, 28 October 1996):

“An employee may sometimes genuinely believe that his or her employer has administered a warning or warnings as a preliminary step towards the employee’s inevitable dismissal. He or she may sometimes be correct in that belief. However, if that were enough to constitute the bringing about by the employer of a termination for the purposes of the Mohazab test, then employers would embark upon the counselling of their employees at their peril, because their employees might at any time precipitate a premature, and consequently invalid, termination. Such a result cannot be correct.”

Mrs Santoro had been unhappy for some time. The warning letter may have effectively been a catalyst for her decision to resign, but it was her choice to do so; the letter left her other options. Mrs Hasting’s evidence suggests that it was initially Mrs Santoro’s intention to serve out a period of notice. However as the day unfolded, with a problem patient in the morning and the stressful meeting with her employers late in the afternoon, Mrs Santoro was eventually ready to walk out and leave the salon that night.

I am satisfied that Mrs Santoro could have stayed in her position had she wished, albeit that she may have been placed on a work-trial. The possible imposition of a work-trial was not unreasonable in the circumstances, such that Mrs Santoro could not be expected to “put up with it”. Mrs Santoro’s decision to leave her employment was, therefore, voluntary, and not a termination at the initiative of the employer.

Conclusion

I find therefore that Mrs Santoro’s employment was not terminated at the initiative of her employer. Her claim under Section 170EA has therefore been dismissed.

I certify that this and the preceding thirty three (33) pages
are a true copy of the reasons for decision of
Judicial Registrar R.D. Farrell.

Associate:

Dated:            29 January 1998

APPEARANCES

Counsel appearing for the applicant:             Ms M Cullity
Solicitors for the applicant:  Edwards & Larke

Counsel appearing for the respondent:          Mr P Mendelow
Solicitors for the respondent:  Talbot & Olivier

Dates of Hearing:  6 - 8 May, 3 & 6 June, 18 & 31 July, and
  1 & 20 August 1997

Date of Order:  5 January 1998
Date of Decision:  29 January 1998