Shostak v Specialty Coatings Australia
[1995] IRCA 90
•10 Mar 1995
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - Complaint of unlawful termination - summary termination - misconduct - allegations, unsubstantiated, not grounds for summary termination on basis of misconduct - termination on return to work after leave - Failure to give opportunity to respond - Procedural fairness, lack of - Limited future employment prospects, effect on compensation.
Industrial Relations Act 1988, S170DC, S170EA, S170EE
Nicholson v Heaven and Earth Gallery Pty Ltd [1994] 126 ALR 233
Chan v Maher Elias and Associates Parkinson JR 1 December 1994
SHOSTAK -v-SPECIALTY COATINGS AUSTRALIA
No. VI-2043/94
Before: Ryan JR
Place: Melbourne
Date 10 March 1995
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY Matter No VI 2043/94
B E T W E E N: ISAY SHOSTAK
Applicant
AND: SPECIALTY COATINGS AUSTRALIA
Respondent
RYAN JR
MINUTES OF ORDER
10 MARCH 1995
THE COURT ORDERS THAT:
That in terminating the employment of the applicant the respondent contravened S170DC of the Act.
That the respondent pay to the applicant compensation of the sum of $2,000.
That the time for payment be 21 days from the date of this order.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY Matter No VI 2043/94
B E T W E E N: ISAY SHOSTAK
Applicant
AND: SPECIALTY COATINGS AUSTRALIA
Respondent
COURT: RYAN JR
PLACE: MELBOURNE
DATE: 10 MARCH 1995
REASONS FOR JUDGMENT
APPEARANCES
The applicant seeks compensation for unlawful termination of employment.
He represented himself and was initially provided with an interpreter. Mr M McDonald appeared for the respondent.
At the conclusion of the first day of the hearing the interpreter sought and was granted leave not to attend for the remainder of the trial. The applicant has a good grasp of English and at no stage appeared to need the services of the interpreter.
DIRECTIONS
At a Directions Hearing on 31 January 1995 the applicant requested from the respondent the details of three persons (employees or former employees) in order that he might call them to give evidence. The Court ordered the respondent to provide those details.
At the Directions Hearing the applicant also submitted a written request for various documents. The Court was not prepared to order discovery of these documents or such of them as might exist but suggested to Ms Mercuri of Minter Ellison, then appearing for the respondent, that she discuss the request with the applicant and where practicable agree on documents to be produced.
At the Directions Hearing the application was listed for hearing on Monday 27 February.
At that Directions Hearing and at a later Directions Hearing on 14 February the Court indicated to Ms Mercuri and to the applicant that the respondent was on notice in respect of certain documents and if they existed they should be available at the trial so that speedy access could be provided if the Court was minded to so order.
At the Directions Hearing on 14 February 1995 the applicant sought an adjournment of the trial listed for 27 February 1995. At both this Directions Hearing and at the earlier Directions Hearing on 31 January 1995 the Court had indicated to the applicant that an adjournment of the listed trial was very unlikely and both parties were to proceed on the basis that the trial would commence as listed on 27 February 1995.
ACCESS TO DOCUMENTS
The trial proceeded on 27 and 28 February and on 6 March. At the commencement of the hearing the applicant indicated that he only proposed to call one witness. Counsel for the respondent indicated that certain documents identified by the applicant were available. The applicant did not call for these documents while pursuing his case but, by facsimile, on 1 March, after the second day of the hearing, he expressed concern that he had not been given access to the documents.
At the commencement of the third and final day of the hearing on 6 March 1995 the facsimile communication was shown to Counsel for the respondent and the Court advised that, while it was unlikely that leave would be given to the applicant to reopen his case at that stage, he would be given an opportunity to refer to the documents in his final submissions.
The applicant did not make any application to reopen and he did not directly refer to such documents in his final submission.
THE CLAIM
In an attachment to his application of 28 October 1994 the applicant states that:
he was employed by the respondent from 11 February to 22 July 1994
he obtained permission on 14 June 1994 to take leave for four weeks from 23 July to about 21 August
the leave was approved by the Manager, Mr Gordon Beardmore and a Director, Mr Liepnik
on 22 July he expressed concern to Mr Beardmore that his leave had not been endorsed in written form. His concern included a fear that he would lose his job when returning from his leave
at the meeting on 22 July Mr Beardmore said to him:
“do not worry, on your coming back we shall sit and discuss your problems”
the moment he returned on 22 August at 8:00 am Mr Beardmore declared that the applicant did not work with the respondent any more and that he (Beardmore) had arranged an interview for the applicant with the Commonwealth Employment Service
the reason for dismissal was stated on an Employment Separation Certificate as “unsuitability for this type of work” and this reason is invalid because, to use the applicant’s own words “I never failed to fulfil any of my duties, as far as they were feasible and required intelligibly”
During the hearing the applicant gave evidence of:
an induction checklist (Exhibit A1)
the job description for the position of Chemical Mixer/Colour Matcher as set out in an internal CES advertisement (Exhibit A2) and which reads as follows:
“a chemical mixer/colour matcher is required to mix water and solvent based chemical batches for coating fabrics”
the inclusion of the words “other duties as directed (permanent full-time position)” in the DEET CES Job Start Agreement Schedule
a series of menial cleaning and lifting and labouring duties which the applicant claims were inappropriately and excessively delegated to him primarily by his supervisor and, by inference, because the supervisor resented the applicant’s Russian qualifications as a Chemical Engineer
alleged discrimination in the form of the inadequate supply of overalls and face masks
the provision of inadequate equipment for measuring viscosity and for other purposes
the failure of the respondent to ever use the applicant as a colour matcher and his use instead “intensively...... for chores and diverse auxiliary tasks”
the failure of the respondent on request to provide adequate showering facilities
expressions of concern from his immediate supervisor and from Gordon Beardmore that he was working too slowly
10.allegations by the applicant of inaccurate formulations deliberately provided to sabotage his work and of drums deliberately prepared with inadequate mixing and variable viscosity again allegedly to sabotage the applicant’s work
It is conceded that the applicant sought and obtained leave from 23 July to 22 August to visit his ailing mother in Israel.
The Court accepts the applicant’s evidence that he was concerned about his employment prospects on return and that Mr Beardmore, the respondent manager, gave the applicant some reassurance at least to the effect that he and the applicant would discuss certain problems on the applicant’s return. The Court is satisfied that at that stage the respondent had not determined to terminate the employment and that the applicant would never have gone on leave had he thought that that was a possibility.
The substance of the claim is that the applicant was dismissed without valid reason and without warning or consultation soon after 8:00 am on 22 August on his return from his visit to Israel.
THE APPLICANT’S STATEMENT 11 JULY 1994
On 20 July the applicant delivered a signed statement (dated 11 July 1994) to Mr Beardmore’s office. (It is part of Exhibit A5).
The statement is an important document because the respondent relies on it entirely as grounds for terminating the applicant’s employment as soon as he returned at 8:00 am on 22 August 1994.
Because it is central to the case, the statement is reproduced below.
“Specialty Coatings (Aust.) Pty. Ltd
Reporting Note. From: Evening Shift Mixer
Chemicals Section.
Mr Gordon Beardmore,
Production Manager.
Re: Exploitation of Defects in QC System by East Asian Employees to Impede My Work.
Dear Mr Beardmore,
I feel very uneasy to consume Your time and perhaps upset You, but I think that in the best interests of our common cause should be to speak out. Inasmuch as I can see, no measure has been taken in connection with my memorandum of 24/06 to Mr Bland and You. Except for providing to Chemicals Section the Production Schedule, not always timely corrected in concord with the Diary instructions.
Meanwhile more and more difficulties to my work have been caused and there are more tokens that they have been imposed deliberately by my supervisor Nguen Tec Lou and his East Asian associates, bear systematic co-ordinated character and aim to discredit and thereby to displace me, in the manner they succeded in getting rid of my predecessor.
Thus youngster Tom (Chinese operator on Line 2) has been spitefully bawling at me that he does not care about the amount of chemicals needed for his operation but I have no more to do in evening shift; while having failed to warn me of ending roll as I activated drumful of PU, he was reading newspaper on the Line 2 control platform. That was immediate impulse for my abovementioned memo.
When Lou leaves to me misguiding instructions or unduly prepared compounds, leading me into troubles & problems (usually with massive deficit of time for correction), You may bet that none of his race-fellows will enable me to extricate from the predicament. Just on contrary, they press me to hurry, deprive of needed implements and demand instant relief for their meal, whereas I cannot afford even to go in toilet. Yet Lou reiterates that in any circumstances I must abandon all my businesses and relieve an operator, and then work in afterhours “till job has been finished”.
On the 7th inst. when both Tom and Qui operated Line 2, (and Mark was detached to slitting), they claimed, referring to uncorrected Production Schedule, that I prepared wrong chemical, although had perfectly known the Diary corrective instruction to coat 2700m Q7 with light blockout, and induced me to prepare unnecessary 3 drums of the dark compound, Tom watching to ascertain I was doing that. On my question the next day why they had done the bluff, Qui replied he could not decide, which instructions were valid: the Diary or the Schedule. What a naivety past 7-year experience within the Company! The same as in filling pump & filter to the brim with water on the Line 1 (I even helped him to wipe up the spill on the floor before I realised what is brewing) and then discharging all that water into the mix after the pump had been installed in it to recycling. After which Qui protested that compound had low viscosity and took a break, while I was repairing his mess.
In reality similar episodes occur almost every day, especially when Tom works in the night shift. Unfortunately Mark virtually connives to the Asians’ escapades, abetting them with his jokes and chiming in accusations towards me. E.g. 2nd of June he accompanies Tom in inquiry whether I am Jewish/Hebrew and on which side; 23rd of June, at the abovementioned Tom’s attack of abuse at me, Mark naturalistically demonstrated how I should be “kicked in the arse” out the Company’s gate, to the great delight of the Mongoloids.
I am intending henceforth to deal with personnel of the Production Lines in written form only and deliver coating compounds but after the viscosity and amount are confirmed by operators in documentation of Chemicals Section (log book for instance).
I earnestly ask You to pay attention to the described situation and to incept sensible formal checking and revision procedures for Production co-operation in order to stop the foul plays.
Yours sincerely Isay Shostak
11/07/94”
For completeness, given the reference in the first paragraph of the above statement to a memorandum of 24 June, the earlier memorandum of that date is also reproduced as follows:
“SPECIALTY COATINGS (AUST.) PTY LTD
For: Mr J. Bland, Manufacture Manager;
Mr G. Beardmore, Production Manager.
MEMORANDUM Re: Proper Sharing of Responsibilities Activities Between Sections.
Due to numerous disputes taken place recently as to the correct providing of coating compounds’ supply for the Production Lines (Machines No.1&2) and to the timely ensuring of the assigned value of its viscosity at the pump-filter output - I have to state the following.
1. Personnel operating the Production Lines, to control and carry out the process in accordance with the Manufacture schedule/programme, must know and monitor all main parameters, including the quantities of involved materials required. Therefore the information on the character (formulation), amount and the time of delivery of the chemical should be imparted to the Chemicals Mixing Section by the Production Line’s personnel sufficiently before critical moment in the form precluding misinterpretation.
To successfully determine the demand the Production Lines’ personnel should be provided with data on average usage rates for each coat of the processed product.
2. Chemicals Mixing Section in order to rationally organise and fulfil the compounds preparation should be provided with duly updated schedule for both day and evening shifts containing figures on each product’s volume, allowing calculation of amount of the compounds.
3. Values of viscosity of the coating compounds passed the feeding pump & filter significantly decrease by presence of remaining solvent or water inside them. When thus diluted compound is reversed through recirculation into the initial bulk, the whole lot of it could be diluted (drops its viscosity), for which defect and entailing delays in the production operation Chemicals Mixing Section cannot be blamed. Therefore before reversing the feeding output in recirculation the viscosity of the bulk should be checked as well as making sure that no considerable amount of solvent or water left inside the feeding system before its starting.
Chemicals Mixer
Isay Shostak.
24th of June 1994.”
RESPONSE TO MEMORANDUM 24 JUNE 1994
Gordon Beardmore admitted in evidence that he read the memorandum. He categorised the first request therein as a desire on the part of the applicant to change existing procedures. The second paragraph in the memorandum was part of the proposed change in procedures.
Those procedures were (and presumably still are) that a worker from the Chemicals Mixing Section (usually the applicant when he was on duty) is required to physically transport the chemicals and (when necessary) the instructions on formulation to the Chemicals Mixing Section prior to mixing.
The applicant suggested the chemicals, and presumably when necessary the instructions on formulation, should be brought to the Chemicals Mixing Section by Production Line personnel.
It is clear from the applicant’s evidence and from the evidence of Gordon Beardmore that the applicant believed he was under excessive pressure to mix the chemicals more quickly and he was suggesting the pressure would be relieved if the chemicals were delivered by Production Line personnel so that he would thus save the time spent transporting the chemicals and, by inference, have more time to mix the chemicals.
Gordon Beardmore rejected the suggested change in procedures. He was entitled to do so. He was Production Manager and the suggestion was further support of the respondent’s basic complaint that the applicant took far too much time mixing the chemicals and checking viscosity. However, in my view, no matter how difficult the applicant was proving to be in his approach to monitoring viscosity, there is no evidence that he was other than genuine in his desire to prepare mixtures with appropriate viscosity. He was entitled to some reply to his memorandum but Mr Beardmore admitted that he never replied to the memorandum and he never discussed the contents with the applicant.
Furthermore, Mr Beardmore dismissed the suggestion or claim in the third paragraph of the memorandum as, “of no substance”. The suggestion in that paragraph was that solvent or water in the feeding pump diluted viscosity. Again, Mr Beardmore was entitled to reject that suggestion especially as the experienced Manufacturing Manager, Bland, rejected that proposition in his evidence. Nevertheless, the applicant should have received a response to his suggestion even if that response was simply a patient explanation (or even an impatient explanation) that the claim was wrong and unsubstantiated. The possibility that earlier claims by the applicant of water or solvent dilution had been dismissed is no answer to the fact that the written memorandum of the 24 June was ignored in the sense that no reply was given orally or in writing to the applicant.
RESPONSE TO STATEMENT 11 JULY 1994
The response to this written statement is the key to these proceedings. While the heading of the statement contained a claim that “East Asian employees” impeded the applicant’s work, the heading also referred to “defects in the Q.C. (Quality Control) system”.
The first paragraph referred to the fact that the applicant had received no response to his memorandum of 24 June. The failure to respond to the earlier memorandum and the reference to the failure to respond is important.
Without doubt, the statement of 11 July contained allegations against a Chinese line operator (Tom), the Vietnamese employees (Qui and Luu) and against Gordon Beardmore’s son (Mark) and, while a number of those allegations were unsubstantiated, the applicant was given no opportunity whatsoever to respond to the conclusions which the respondent, and specifically Mr Beardmore, reached as a result of that memorandum.
It is clear that Mr Gordon Beardmore, after receiving the memo on 20 July, consulted his son, Mark, Luu, Qui and Tom and Mr Bland and discussed the contents of the statement with them. He also appears to have taken advice from Ms Helen Armstrong who can be described as the applicant’s Job Start supervisor. It is also clear that Gordon Beardmore showed the memorandum to Mark, Luu, Qui, Tom and Mr Bland.
It is quite understandable that Gordon Beardmore would consult Bland and the four employees against whom allegations had been made. The fact is they were consulted. The applicant was not consulted. He was given no opportunity to respond.
Mr McDonald pointed out that the respondent took time to consider the statement, considered it carefully and also considered alternative employment for the applicant and even contemplated applying the respondent’s disciplinary procedure or policy. However, the respondent rejected both alternative employment as an option and also decided against any application of the disciplinary policy.
Mr McDonald classified the discussions with Ms Helen Armstrong and arrangements to refer the applicant to an Industrial Psychologist as evidence that the respondent only acted to terminate the applicant after careful, and he would say, fair consideration.
THE RESPONDENT’S FINAL SUBMISSION
In a through final submission Mr McDonald claimed that the applicant had repudiated his contract of employment in making false allegations against fellow employees in the memorandum of 11 July 1994. He claimed the repudiation of the contract was accepted by the employer on 22 August when the applicant was advised of the termination of his employment. The circumstances of Mr Shostak’s dismissal were characterised as a dismissal on the grounds of misconduct.
The Court does not accept this characterisation of the termination.
Mr McDonald’s alternative submission is that the employer could not have reasonably been expected to give the applicant an opportunity to justify his action prior to effecting the dismissal. Mr McDonald identified and listed a number of allegations against Luu, Qui and Mark Beardmore. He categorised all of the allegations as false and claimed that each of the allegations justified instant dismissal and that taken together the allegations amounted to a repudiation of the contract of employment. The Court disagrees.
FINDINGS
The plain facts of the matter are that the conclusions reached and acted on in respect of the statement of 11 July were reached and acted upon without the applicant being given any opportunity to put his side of the case and without any application of the disciplinary policy whatever that policy was.
The policy was not detailed in evidence but the Court gained the impression that it was a policy or procedure which involved a series of formal warnings.
The applicant was never given any written warnings and only one warning could be described as possibly formal and the Court has some doubts about that. This is a reference to the evidence of Gordon Beardmore that on one occasion he told the applicant that if he did not speed up the mixing process and accept the instructions of his supervisor, Mr Luu, his employment could well be terminated.
More importantly, he was given no opportunity whatsoever to respond to the conclusions reached by the respondent. Those conclusions were that the allegations in the statement were all unjustified and the applicant’s attitude and the response of the employees were such that it was unreasonable to retain him and that he was too disruptive and that his conduct in writing the statement justified summary termination. No doubt the employer was in a difficult position. Having been shown the statement Luu, Qui, Tom and Mark Beardmore indicated that they did not want to work with the applicant.
The Court has reached the conclusion that some of the allegations in the statement had some substance, that others could not have been substantiated and that some were incorrect. However, even if all the allegations were unfounded and could be proved to be unfounded, the applicant should have been given an opportunity to respond. Opposition from other employees to the applicant’s ongoing employment does not justify a position which deprives the applicant of an opportunity to respond.
The failure to provide this opportunity was a breach of S170DC and the termination of employment immediately and without further consultation was harsh, unjust and unreasonable.
S170DC provides:
“An employer must not terminate an employee’s employment for reasons related to the employee’s conduct or performance unless:
(a)the employee has been given the opportunity to defend himself or herself against the allegations made; or
(b)the employer could not reasonably be expected to give the employee that opportunity.”
In this regard I refer to the decision of Wilcox CJ in Nicholson v Heaven and Earth Gallery Pty Ltd [1994] 126 ALR 233 at 243 where the Chief Justice, referring to S170DC(a) said:
“The paragraph does not require any particular formality. But this does not mean that it is unimportant or capable of perfunctory satisfaction. Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as “natural justice” or, more recently, “procedural fairness”. The relevant principle is that a person should not exercise legal power over another, to that person’s disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. The principle is well-established in public administrative law. It was accepted into international labour law when Article 7 was inserted in the Termination of Employment Convention. Section 170DC is directly modelled on Article 7. The principle is, I believe, well understood in the community. It represents part of what Australians call “a fair go”. In the context of S170DC, it is not to be treated lightly. The employee is to be given an opportunity to defend himself or herself “against allegations made”; that is, the particular allegations of misconduct or poor performance that are putting the employee’s job at risk. Section 170DC(a) is not satisfied by a mere exhortation to improve.”
COMPENSATION - LIMITED FUTURE EMPLOYMENT PROSPECTS
In respect of penalty Mr McDonald referred the Court to Chan v Maher Elias and Associates Parkinson JR 1 December 1994. In that case Parkinson JR found that the respondent did not accord the applicant an opportunity to defend himself and that the respondent failed to comply with S170DC.
At page 10 Parkinson JR stated:
“In determining the question of appropriate remedy, I have had regard to the fact that I have found that a valid reason existed, and that the termination was in all other respects not harsh, unjust or unreasonable. Having regard to the matters which I have found resulted in there being a valid reason for the termination, I am of the view that reinstatement would be impracticable.
In determining whether compensation ought be awarded to the applicant, I have had regard to the length of his employment and what period, if any, it was possible that the employment would have been extended had S170DC been complied with. Having regard to the reasons for the termination of the applicant’s employment, those being fundamental concerns about the applicant’s performance of his duties, I am not convinced that the period of employment would have extended significantly beyond the notice period. However, I am of the view that some compensation is warranted in view of the failure to give to the applicant an opportunity to raise any matters which might have mitigated or delayed the termination. I have decided to award the applicant compensation in the sum of $826.00, being a gross amount. This amount represents an amount equivalent to a further two weeks remuneration which the applicant would have been entitled to receive had he remained in the employment of the respondent.”
In this case I too have concluded that the applicant had no real future with the respondent. The applicant is obviously highly intelligent. The respondent, through Mr Gordon Beardmore and Mr Bland has accepted that the applicant is well qualified in a technical sense but it is quite obvious from his own evidence and behaviour that he does not accept the practical, commercially oriented and proven approach taken by the respondent’s employees in mixing chemicals and operating the plant with the intention of achieving effective and efficient production.
My observations of the applicant suggest that it was not unreasonable of the respondent to conclude that any lengthy and continued employment of the applicant was likely to be disruptive. Despite his intelligence he does not display a practical grasp of commercial and production realities and he seems unwilling to accept tried and true production methods.
In my view, if the respondent had accorded the applicant procedural fairness, and if the applicant had been given an adequate opportunity to respond to the conclusions reached in relation to him, nevertheless, his future with the respondent company was very limited indeed.
In the circumstances I have decided that compensation in the sum of $2,000 (which represents roughly four weeks gross wages) is adequate compensation for the breach of S170DC.
ORDER
The orders of the Court will be:
That in terminating the employment of the applicant the respondent contravened S170DC of the Act.
That the respondent pay to the applicant compensation of the sum of $2000.
That the time for payment be 21 days from the date of this order.
I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.
Associate :
Date : 10 March 1995
Appearances:
The Applicant : The applicant in person
Counsel for the Respondent : Mr McDonald
Solicitor for the Respondent : Minter Ellison
Date of Hearing : 27 and 28 February and 7 March 1995
Judgment : 10 March 1995
0
0
0