Stelios Papadopoulos and the Colonial Mutual Life Assurance Society Limited

[1994] IRCA 16

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY          VI No. 437 of 1994

B E T W E E N:

STELIOS PAPADOPOULOS Applicant

AND:  THE COLONIAL MUTUAL LIFE ASSURANCE
  SOCIETY LIMITED
  (A.C.N. 004 021 809)     Respondent

COURT:  J.A. Ryan, Judicial Registrar

PLACE:  Melbourne

DATE:  16 August 1994

REASONS FOR JUDGMENT

THE APPLICATION

The applicant seeks

1.(a) an order declaring that his termination of employment by the respondent has contravened Division 3 of part VI A of the Industrial Relations Act 1988

(b)an order that the respondent pay compensation to the employee

2.such other orders as will put the applicant in the same position (as nearly as can be done) as if his employment by the respondent had not been terminated

3.an order extending the time in which the proceedings may be commenced.  (The applicant was 2 days out of time).

The applicant does not seek reinstatement.  Indeed, he is fervently opposed to it.  The request for orders to put him in the same position as if his employment had not been terminated
needs to be considered in that light.

APPLICANT'S HISTORY

The applicant was employed in the insurance industry for thirteen years and ten months from 3 September 1979 to 3 May 1994.  His employer was Scottish Amicable Life Assurance Society.  Scottish Amicable was absorbed into the Colonial Mutual Group in 1989 but maintained separate premises and was a separate business unit until late in 1993.

The applicant worked in the Superannuation Division of Scottish Amicable throughout his insurance career until October 1993.  At that time, the respondent concedes that the applicant's position or "role" as Technical Officer was identified as "surplus to operational requirements" because of the transfer of the superannuation business to another subsidiary company (paragraph 4 affidavit of response 31 May 1994).

After a short period of two or three years as a junior officer "writing policy documents" the applicant progressed to the position he held for about 10 years till October 1993.  The position is identified and described in a position description dated 30 October 1992 (Exhibit "R1").  The position bore the title of Technical Officer.  It was located in the Scottish Amicable Client Services Division.  The purpose of the position of Technical Officer is described on page 3 of the position description as:

"Provide professional and technical advice on Insurance and Superannuation Legislation and apply those legislative requirements into the business of providing superannuation services to the Company's customers.

Control the process of ensuring the Company's compliance with its legal obligation in respect of life insurance and superannuation legislation and regulations."

In October 1993 the applicant was seconded to work on a short term project with David Reynolds.  Mr. Reynolds had worked for 25 years at Scottish Amicable but in October 1993 he was Treasurer of the Colonial Mutual Group, a position he still held when the applicant's employment was terminated on 3 May 1994.

THE RESPONDENT'S HISTORY

The history leading up to what I have accepted as a genuine redundancy is as follows.

The respondent, The Colonial Mutual Life Assurance Society Limited, is a company that offers a variety of life assurance, insurance and financial advice to individuals and institutions throughout Australia.

In 1982, as part of the business of the respondent, a company called Jacques Martin Pty. Ltd. ("JM") was incorporated. JM then took over the majority of dealing with superannuation services that had previously been provided by the respondent.  Employees of the respondent worked for JM with the main office of that company being in Drummond Street, Carlton.  The respondent continued to deal with its own range of superannuation products which were not in substantial competition with the major schemes and programs operated by JM.  Essentially JM ran its own business within the Colonial Mutual group of companies.

In 1987 Jacques Martin Hewitt International Pty. Ltd.  ("JMH") was formed.  Originally JM dealt with all superannuation matters including industry and corporate funds.  JMH took over corporate funds.

In 1989 the Australian operations of Scottish Amicable were purchased by a company within the Colonial Mutual Group being Scottish Australia Financial Management Limited ("SAFML").  SAFML thereafter changed its name to Colonial Financial Management Limited ("CFML").  Up until that time Scottish Amicable had been a totally separate company from those within the Colonial Mutual Group and had operated in premises in Queen Street, Melbourne.  Scottish Amicable had its own superannuation department which dealt with a range of superannuation products from the large institutional policies through to  small superannuation products.  The superannuation department of Scottish Amicable provided a similar range of products to that offered by the respondent and JM up to that time.

After the purchase SAFML, or CFML as it was to become, remained in its premises at  Queen Street.  The applicant continued to carry out his duties at those premises with his contract of employment being with the respondent Colonial Mutual Life Assurance Society Limited as controlling company of the Colonial Mutual Group.  This was the same for all the employees working at SAFML.  From 1989 through to late 1993, the Colonial Mutual Group operated on the basis of a number of separate business units.  There were 3 separate superannuation operations within the Group being those operated by SAFML, the respondent and JM.

In October/November 1993 each of the 3 superannuation operations were merged and the corporate superannuation operations within the Colonial Mutual Group have since operated through JMH at 365 Lt. Collins Street.

The operations of Scottish Amicable were generally merged into the operations of the respondent and the offices at Queen Street were closed.  The offices of JM at Drummond Street are still open.  Industry superannuation work is conducted there.

THE MERGER

The applicant admitted in cross examination that he became aware of the proposed merger of the Scottish Amicable, J.M. and Colonial superannuation departments in July or August 1993 and he described the merger as "common knowledge" among Scottish Amicable  staff.  He also conceded that Vincenzo ("Vince") Camera, manager of the J.M. superannuation department  (and later manager of the merged superannuation unit), had briefed all Scottish Amicable staff prior to the merger.

Camera gave evidence and denied that he had assured the applicant that there would be "a spot" for him in the amalgamated superannuation unit.  I have concluded that Mr. Camera may well have given the applicant the impression that there would be a position for him in the new organisation.  When cross examined about staff reactions to the proposed merger Mr. Camera gave evidence to the following effect:

"At the time, (i.e. October 1993) everyone wanted to speak to me.  I think Steve (the applicant) may have approached me.  I spoke to all staff in groups of six.  I assured everyone I thought they had a role to play".

Such an assurance could have misled the applicant into believing his position was secure or that an appropriate role would be found for him in the new organisation.  Nevertheless, Reynolds gave evidence that at about this time in October, when he was discussing the possibility of seconding the applicant to a short term project, Camera had indicated that the applicant's position "would almost certainly disappear".

THE CLAIM

The essence of the claim is that the termination of employment is unlawful because it was harsh and without valid reason and with inadequate notice.

NOTICE

Written notice of termination was certainly not given until the day of termination on 3 May 1994 when a letter addressed to the applicant and signed by Reynolds as Treasurer of Colonial Mutual was handed to the applicant.  The letter began

"This letter confirms that your employment with Colonial Mutual will terminate on May 3 1994".

It appears from the evidence that between 7 and 14  days earlier the applicant had been orally advised that termination would occur.  The letter itself refers to "a folder of information which outlines the terms of your redundancy package".

The letter also refers to

"superannuation and other redundancy benefits"... and provision by Colonial Mutual of career continuation support through Coopers and Lybrand, career transition consultants in career management and job search, who will assist you in getting established in a new career".

Camera, in cross examination, gave the distinct impression that he was not free in October 1993 to divulge the details of the merger to the applicant or any other Scottish Amicable staff.  However, I accept the evidence of Reynolds that Camera told him in October 1993 that the applicant's position "would almost certainly disappear".

VALIDITY

I find that a valid written reason was given for dismissal on the day of termination.  The letter of 3 May referred twice to "redundancy" and included a folder of information outlining the terms of a redundancy package.  I find that this was a genuine redundancy created by the amalgamation of three superannuation departments.

The affidavit of response was made by Judith Maree Cougle, the respondent's Employee Relations Manager. In paragraph 3(b) she states

"the applicant was informed in writing that his employment was terminated as his role was considered to be surplus to the organisation's requirements".

Indeed, the applicant in paragraph 2(d) of his affidavit in support of the application also states that

"the reason given for the termination of my employment was surplus to the organisation's requirements".

No evidence was tendered to establish that there was written notice or advice using the words

"surplus to the organisation's requirements".

The letter of 3 May (exhibit R4) does not contain such a reference and neither the applicant nor the respondent provided evidence of the material which was apparently attached to the letter.

EARLIER CONSULTATION

I accept the evidence of David Reynolds, Treasurer of Colonial Mutual in 1993 and still Treasurer on 3 May 1994 and now Finance and Administration Manager for Colonial Funds Management.  Mr. Reynolds discovered in October 1993 that the applicant's position as Technical Officer in a superannuation unit was likely to become redundant.  He warned the applicant either immediately or at the latest in early January 1994.  Indeed, he counselled the applicant.  He helped the applicant search for other suitable positions in the Colonial Mutual Group and the applicant admits that Reynolds conducted several mock interviews to prepare the applicant to compete for other positions.

The concern displayed by Mr. Reynolds and the assistance he gave the applicant can be contrasted favourably with other employees in responsible positions in the respondent organisation who remained silent although they must have known of the likely redundancy as early as October 1993 and the certain redundancy from the time of a structural amalgamation approved by senior management on 16 November 1993.  (Exhibit "R6")  The structural amalgamation is described in the affidavit in response in paragraph 4 as the "business of (the Scottish Superannuation) Division...transferred to Jacques Martin Hewitt, a subsidiary of the respondent".

It is clear from the evidence of the applicant and from that of three of the four Colonial Mutual officers called by the respondent that in January 1994 the applicant was one of four employees who responded to an internal advertisement for a position which had been created following the merger of the three superannuation departments.  The new position was broader than the Technical Officer position occupied by the applicant prior to the merger but many of the duties were similar to those performed by the applicant in the Scottish Amicable superannuation department.

The internal advertisement read as follows:

"JACQUES MARTIN HEWITT - VICTORIA
  RESEARCH ANALYST - TECHNICAL RESEARCH"

Applications are invited for the position of Research Analyst  Technical Research, Jacques Martin Hewitt, located at 365 Little Collins street, Melbourne.  The Technical Research unit is responsible for collating, analysing and disseminating superannuation legislation and statutory requirements and general superannuation information to all parts of the Colonial Mutual Group involved in superannuation business.

Reporting to the Associate Director - Technical Research, the appointee will be responsible for:

-A complete understanding of all superannuation legislation, statutory and compliance issues.

-Keeping all areas of the Colonial Mutual Group involved in superannuation up-to-date with any legislative or other changes that may impact on their business or their client's business.

-Working effectively in a small team environment, analysing and preparing summaries of legislation, statutory and compliance requirements.

-Managing briefing sessions for those appropriate persons within the group and answering any questions that may arise.

The successful applicant will have:

-Previous experience and good knowledge of superannuation and its legislative background.

-Excellent written and verbal communication skills.

-The ability to comprehend and interpret legislation.

-Strong organisational skills that enable working to tight deadlines.

An attractive remuneration package, commensurate with experience and skills, is offered to the successful candidate.

If you are interested and believe you qualify for the above position, your written application containing details of qualifications, experience and referees (including nomination of an internal referee who you have worked with) should be submitted to your manager and marked with his or her approval prior to being forwarded to:

Sue Smith
           Personnel Manager
           Jacques Martin Pty Ltd
           100 Drummond street
           CARLTON  Vic  3053

by close of business Friday, 14 January 1994".

It should be noted that David Reynolds not only helped the applicant prepare for interview for this position he also acted as his referee.

In my view from the time he read the internal advertisement the applicant must have known that his old position had disappeared.  If he was reluctant to accept this as a reality I am convinced that Reynolds successfully led the applicant to accept that his old position was redundant.  The actions of the applicant from at least early January 1994, if not earlier, were those of a man who knew he had lost his former position.  He made inquiries about other positions in the respondent company.  He was interviewed twice.  He discussed alternative employment with Reynolds and Cougle.  He expressed interest in a redundance package.

THE RESPONDENT'S POSITION

Counsel for the respondent called Messrs. Reynolds and Camera, the Employee Relations Manager, Judith Cougle and the leader of the JMH research unit, Mark Jalovski.

The respondent asserts that a valid reason was given for termination namely redundancy.  I have found that this was a genuine redundancy and that, while formal written notice to that effect was only given on the day of termination, the applicant had been aware of that possibility from at least January 1994 and possibly from October 1993.

The respondent offered the applicant counselling prior to termination and access to an out-placement consultant for three months thereafter.  No evidence was tendered as to whether or not the applicant has taken advantage of the services of the out-placement consultant since termination.

The respondent also submits that efforts were made to locate a suitable position for the applicant, that he was carefully and fairly assessed for the position of Research Analyst in the Technical Services Unit and interviewed for that position and for one other.

The respondent points to eight weeks pay in lieu of notice and a redundancy package comprising three weeks pay for each year of service, pro rata long service leave, continuation of home loans for six months plus eight weeks in lieu of notice at concessional rates with three months at commercial rates, the option to purchase a company car, pro rata expense payments to date of retrenchment and the three month individual out-placement program.

The final thrust of the respondent's submission is that the applicant was accorded both substantive and procedural fairness, the termination was not harsh unreasonable or unjust and the failure to provide early and absolute notice of retrenchment was not unfair.  Indeed, earlier notice was impracticable because the option of termination was only made in the last week or two weeks of April 1994 when redeployment had been unsuccessful and the applicant had expressed clear interest in a redundancy package.

CASES CITED

This is a matter which turns on the facts. Counsel for the applicant submitted a written list of cases on which he relied in support of his proposition that the termination was in contravention of Division 3 of Part VIA of the Industrial Relations Act 1988 and warranted the maximum compensation of $30,000.

Counsel for the respondent undertook to submit a similar list.  He did not do so but in any event was content to rely mostly on the same authorities arguing that the fact situation was one in which there was no contravention of the relevant Division of the Act.

I have noted the definition of redundancy enunciated by Bray C.J. in R v The Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 44SAIR 1202 at 1205 where redundancy is defined as "a job becomes redundant when an employer no longer desires to have it performed by anyone".  This definition of redundancy was noted by the Australian Industrial Relations Commission in its decision in the Job Protection case 1984 AILR256 and in the Supplementary Decision to that case in 1985 AILR.

Counsel for the applicant specifically drew attention to Corkrey v General Motors Holden Ltd (1986) SAIR351; 1986 AILR439.  In that case it was suggested that where there is a failure to consult with the employee or the relevant union over the issue of redundancy the whole process should be considered unfair and set aside.

This possibility was also noticed in Hemmings and others v CPS Credit Union (1991) 58SAIR421; 1991 AILR323 and the principle was applied in Cheesman v Kinhill Engineers Pty Ltd (1992) 59SAIR168 and in White v Douglas Diagnostic (1993) 60SAIR142.

However, the principle was not applied in McLean v David Jones (Australia) Pty Ltd (1993) AILR98.  In these cases, although the employer had breached a clear requirement to consult with the employees prior to termination, the dismissals were not found to be unfair. The facts indicated that the dismissals were due to genuine redundancies, that selection for redundancy was made on fair and just criteria, and that even if discussions had occurred, the dismissals would still have taken place as and when they did.

I am quite happy to accept the proposition expounded in Needham v Shepparton Preserving Company Limited (1991) AILR395 that just because redundancy is the reason for dismissal does not mean that that dismissal may not be harsh, unjust or unreasonable.  In Needham the Industrial Relations Commission accepted the following view of redundancy set out in Bunnett's case (1989) AILR356

"a redundancy has been described as a situation where the employer no longer requires to have the work done by anyone; see Termination, Change and Redundancy case (1984) 8IR34. However it is not necessary for all the work to have disappeared. Organisational restructuring may result in a position being abolished and the functions or some of them being given to another or split amongst others".

In Needham the commission said:

"the Commission does not accept the inference in (the company's) submissions that necessarily there can be nothing unfair about a genuine redundancy when the employer has no other alternative and the redundant employee is paid in excess of the TCR standard.  The applicant has raised the question in relation to his dispute with the company over his dismissal for reasons of redundancy as to whether that dismissal was harsh, unjust or unreasonable.  The Commission is obliged to consider all the facts presented to it in determining that question.  Because a redundancy is said to be the reason for dismissal does not exclude this matter from the Commission's consideration".

Counsel for the applicant cited Shearer v Action Mercantile (1993) AILR281 as an example of a case in which an employee was terminated on the grounds of redundancy with inadequate notice and the dismissal was found by the Employee Relations Commission of Victoria to be harsh, unjust and unreasonable.

I have no difficulty with the proposition in Shearer that

"an absence of substantive fairness will invariably lead to a finding that the dismissal was harsh, unjust or unreasonable.  An absence of procedural fairness, although not inevitably leading to such a finding, may lead to a finding that a dismissal was harsh, unjust or unreasonable".

However the circumstances in Shearer were vastly different.  In that case there was no notice at all of termination.  The Commission found a total absence of procedural fairness and that the applicant was afforded neither procedural nor  substantive fairness.

In that case the Commission also found that the respondent

"failed to carry out any objective analysis of the comparative strengths and weaknesses of the applicant, and did not establish any criteria that can be objectively assessed as fair and reasonable.  No adequate inquiry was made by the respondent of either the applicant or of any other person who had any actual knowledge of the duties that the applicant performed regarding his skills and experience and the range of skills he could bring to any proposed restructuring".

Those circumstances are quite different to the circumstances in this case where the applicant was assessed (and in my view thoroughly and fairly) for the position of Research Analyst in the Technical Services unit.  He was not successful but he was rated second in a field of four.

Finally I note the following statement from Shearer

"where a redundancy is identified by an employer as the reason for dismissal and the Commission is satisfied that the employer has genuinely has decided to make the position redundant, the Commission will generally be reluctant to intervene.  However, where exceptional circumstances arise which raise the issues of procedural and substantive fairness, the Commission will not hesitate to intervene".

CONCLUSION

I find that

(1)the redundancy was genuine and a valid reason for termination

(2)there are no exceptional circumstances indicating procedural or substantive unfairness

(3)the applicant knew his previous position had disappeared by early January 1994 or possibly as early as October 1993

(4)the applicant was given assistance and advice and applied for two other positions in the respondent Company

(5)the applicant adopted the position from mid February 1994 that he wanted a redundancy package if an appropriate position was not available for him

(6)the redundancy package offered to the applicant was well in excess of the termination of service clause - clause 19 of the Insurance Officers (Clerical Indoor Staffs) Consolidated Award 1995

(7)the redundancy package offered to the applicant and accepted by the applicant was in excess of the TCR provisions inserted in many Awards since the Termination, Change and Redundancy Case (1984) 8I.R.34

(8)the termination of employment was not harsh, unjust or unreasonable and did not contravene Division 3 of Part VI A of the Industrial Relations Act 1988

(9)the time in which the proceedings may be commenced should be extended to 19 May 1994

(10)the application under Section 170EA should be dismissed.

COURT:  J.A. Ryan, Judicial Registrar

PLACE:  Melbourne

DATE:  16 August 1994

MINUTES OF ORDER

THE COURT ORDERS THAT

1.The time in which these proceedings may be commenced be extended to 19 May 1994.

2.The Application under Section 170EA of the Industrial Relations Act 1988 be dismissed.

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

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.

Associate:  :

Date  :          16 August 1994            

Appearances:

Counsel for the Applicant         :          Bruce G. Shaw

Solicitor for the Applicant         :          Gregory Antippa
  2 Collins  St
  Melbourne

Counsel for the Respondent     :          F. Parry

Solicitor for the Respondent     :          G.S. Ray
  330 Collins St
  Melbourne

Date of Hearing            :          9 August 1994

Judgment  :          16 August 1994