Seneviratne v Gribbles Pathology

[1996] IRCA 464

DECISION NO: 464/96

C A T C H W O R D S

INDUSTRIAL LAW - termination of employment - redundancy - whether breach of award - vitiated valid reason for termination

Industrial Relations Act 1988 ss.170DE, 170EA

CASES:

Kenefick v Australian Submarine Corporation (No 1) (1995) 62 IR 107

Selvachandran v Peteron Plastics Pty Limited (1995) 62 IR 371

APESMA v Deniliquin Council (1995) Moore J, 134 ALR 267; IR 451

Kenefick v Australian Submarine Corporation (1996) Full Court decision, 65 IR 366

Byrne v Australian Airlines Limited (1995) 131 ALR 422

Gibson v Bosmac Pty Limited, (1995) 60 IR 1

EARLE SENEVIRATNE -v- GRIBBLES PATHOLOGY

No. VI-1264 of 1996

Before:  Ryan JR
Place:  Melbourne
Date:  20 September 1996

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI-1264 of 1996

B E T W E E N :

EARLE SENEVIRATNE
Applicant

AND

GRIBBLES PATHOLOGY
Respondent

MINUTES OF ORDERS

Judicial Registrar Ryan  20 September 1996

THE COURT ORDERS:

1. That the application is dismissed.

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

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI-1264 of 1996

B E T W E E N :

EARLE SENEVIRATNE
Applicant

AND

GRIBBLES PATHOLOGY
Respondent

Before:      Ryan JR
Place:       Melbourne
Date:         20 September 1996

REASONS FOR JUDGMENT
Delivered Ex Tempore

The Applicant worked as a medical laboratory technologist for 35 years.  He worked for a predecessor of the Respondent from 1988 to 1990 and with the Respondent from August 1990 to 19 January 1996.  Throughout his 5½ years with the Respondent, he worked night-shift from 4 pm until midnight, and possibly later.

On 19 January 1996, at the start of the night-shift, probably about 4.15 pm, the manager of the Frankston laboratory of the Respondent told the Applicant that the Respondent's National Operations Manager, Mrs Fay Shelton, had instructed him to give the Applicant a letter of redundancy. The Applicant initially refused to accept the letter, stating that he had been employed by the Managing Director, Wallis Cameron, and that if he was to be dismissed it was Mr Cameron who should do the deed.  Later in the shift, he collected the letter.  The letter reads as follows:

“Dear Earle

Due to restrictions imposed by the Health Insurance Commission, Gribbles Pathology (Vic) Pty Limited has found it necessary to restructure staff in several of its laboratories.

Therefore, I regret to inform you that the evening Haematology shift at the Frankston site has been made redundant.  The details of your redundancy package are enclosed.

Yours sincerely

Fay Shelton

National Operations Manager”

Attached to that letter was a statement of termination pay which indicated in round figures a payment in lieu of leave of approximately $4,800; a payment in lieu of notice of approximately $3,450, and severance pay of eight weeks, approximately $5,500, a total of $13,837.36 and a net total, excluding tax, of $11,272.30. 

The Applicant claims unlawful termination of employment and seeks reinstatement.  Mrs Shelton, now General Manager of the Respondent company, gave evidence of the restrictions which she claims were imposed by the Health Insurance Commission.  A Commission letter of 18 December 1995 seems to have allocated 84 units of entitlement to the Respondent as an approved pathology authority for the year commencing 1 February 1996.

At a meeting of senior management on or about 15 and 16 December 1995, it is claimed that the Respondent decided that it was necessary to reduce licensed collection centres from 95 to 83, and that most, if not all, of that reduction was to come out of a Victorian component of about 84 centres. 

Mrs Shelton states that the Respondent anticipated that the Health Insurance Commission licensing requirements might possibly reduce fee  revenue and/or pathology work in any or all of the areas of chemical analysis, micro pathology, histopathology, cytopathology and haematology, and counsel for the Respondent seems to go further and assert that the changes would and did reduce fee revenue.

Decisions were taken to reduce staff expenditure, including the closure of the Blackburn laboratory and a reduction in the laboratory workforce of 0.5 EFT at Footscray and 0.5 EFT at Reservoir, and up to or close to a reduction of 2 EFT at Frankston.

The result of that last decision was that the laboratory night staff at Frankston was to be reduced from two positions to one position, primarily by relocating the routine haematology work performed by the Applicant to the head office laboratory at South Yarra.  The consequent result of that decision was to render the Applicant's position redundant, he being almost, but not exclusively, employed in routine haematology analysis.

Counsel for the Applicant has challenged this as the real reason for the termination of the Applicant's position, and has suggested that the Respondent was really motivated by a need to make savings to provide for salary increases negotiated pursuant to a Health Services Union/Employer Enterprise Agreement, which agreement, it is asserted, prohibited any redundancies being created as a result of the salary increases which seem to have been agreed about August 1995. The Court notes that the union represented the Applicant but did not produce the Agreement on which the assertion is founded.

Counsel for the Applicant at least implies, and perhaps expressly asserts, that the fact that the Health Insurance Commission licensing changes did not result in a decrease in fee revenue or workload, and the lack of predictions of economic impact, support her contention that the operational requirements of the Respondent were not, on this occasion, a valid reason for the termination of the Applicant, and that the Applicant was not lawfully terminated on grounds of a genuine redundancy. In fact, counsel goes further and asserts that none of the restructure at Frankston or elsewhere was founded on the operational requirements of the Respondent.

The view I take is that, irrespective of whether the Health Insurance Commission licensing changes resulted in a drop in fee revenue and/or workload, the Respondent was entitled to alter and restructure laboratory analysis and processing to achieve savings and perform work more efficiently.  The Respondent was not, in my view, taking an unreasonable approach in anticipating, if incorrectly, that the Health Insurance Commission changes would adversely impact on revenue and/or workload.

In any event, S170DE(1) is designed to inhibit capricious termination, not to put the Court in the employer's managerial chair: Kenefick v Australian Submarine Corporation (No 1) (1995) 62 IR 107 at 116. In my view, the Respondent had a sound defensible and well-founded reason for the restructure which resulted in reductions, including the redundancy of the Applicant's position. And I rely there on Selvachandran v Peteron Plastics Pty Limited (1995) 62 IR 371 at 373.

No evidence was presented which satisfied me that the real reasons for the redundancy of the Applicant and the complete restructure was to meet the costs of the Enterprise Agreement salary increases.

Counsel for the Applicant has, however, in the alternative, mounted a narrower attack on the validity of the reason for the termination of the Applicant, and relies for that on APESMA v Deniliquin Council (1995), 134 ALR 267; 63 IR 451 and on Kenefick v Australian Submarine Corporation  (No 2) (1996), 65 IR 366. I accept her assertions that the valid reason for termination must apply to the particular employee terminated in each and every occasion, and that the question that S170DE(1) requires to be answered is whether the employee's termination was for a valid reason relating to operational requirements and that it is not just a question of whether a valid reason existed to abolish a position occupied by an employee.

In this case, I find that the Respondent had, and has demonstrated, a sound defensible and well-founded, and therefore a valid, reason to abolish the Applicant's position, and that the valid reason extended to and embraced the Applicant, and that it was a valid reason legitimately based on the Respondent's operational requirements.

I do not accept that articles 19 and 21 of Recommendation No 166, the Recommendation Concerning Termination of Employment at the Initiative of the Employer, imposed such an obligation to minimise the impact of termination by various options, including retraining, as to vitiate what I find to be a valid reason for termination.

It is conceded by counsel that the Respondent's lack of consultation with the Applicant and his union, breached the Health Services Union of Australia Private Pathology Victoria Award 1993, and specifically clause 37(a) of that award.  This is unfortunate. The Respondent deserves censure for that breach.  If it were practicable, and it might be found impracticable, the union could most certainly proceed against the Respondent for such breach.  Having said that, the Respondent has complied with award requirements in respect of termination pay and severance pay.

I will not go so far as to say that a breach of award cannot vitiate the validity of a reason or reasons for termination. Indeed, I can envisage circumstances in which breaches of award would suggest no valid reason for termination and a definite breach of S170DE(1). However, given the dicta in Byrne v Australian Airlines Limited (1995) 131 ALR 422, I have concluded that this is not such a case.

I have also  concluded that compliance with the award, and indeed with common decency (both of which suggested this loyal and long serving employee deserved and should have been afforded open consultation) would nevertheless have altered nothing.

Given the limitations in the Applicant's breadth of qualifications, but not in his loyalty or application, consultation would not in my view have altered the employer's decision, a decision taken for valid reason, and based on operational requirements.

I conclude with the following from Selvachandran v Peteron Plastics, at 373

“in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between employer and an employee, where each has rights and privileges and duties and obligations conferred and imposed on them.”

The provisions must be applied in a practical, commonsense way, to ensure that the employer and employee are each treated fairly, and Northrop J, there referred to Wilcox CJ in Gibson v Bosmac Pty Limited, (1995) 60 IR 1. The requirements of section 170(d)(e)(1) should not impose a severe barrier to the right of an employer to dismiss an employee.

This employee should have been treated with more consideration and dignity, but the termination did not breach S170D(1) and the application must be and is dismissed.

MINUTES OF ORDERS

THE COURT ORDERS:

1. That the application is dismissed.

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

I certify that this and the preceding 4 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.

Associate:          
Dated:  30 September 1996

Solicitors for the Applicant:           Ryan Carlisle Thomas
Counsel for the Applicant:            Ms J Patrick

Solicitors for the Respondent:      Schetzer Brott & Appel
Counsel for the Respondent:                 Mr J Bourke

Date of hearing:  20 September 1996
Date of judgment:  20 September 1996