Stephens v Lifetime Home Improvements Pty Limited

[1996] IRCA 190

DECISION NO:  190/96

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY

No. NI 4641 of 1995

BETWEEN:

Gregory STEPHENS
Applicant

AND:

LIFETIME HOME IMPROVEMENTS PTY LIMITED
trading as THE FIBRE GLASS KING
Respondent

REASONS FOR JUDGMENT
(Delivered ex tempore-revised from transcript)

26 March 1996  PATCH JR

This is an application under section 170EA of the Industrial Relations Act 1988 ("the Act").

The application was filed by fax on 28 November 1995, although date-stamped 29 November 1995 by the registry.  The difference between 28 and 29 November matters not in the circumstances of this case.  The applicant's employment was terminated with written notice on 12 May 1995. 

As is readily apparent, the application is well outside the 14-day time limit set down under section 170EA of the Act. The applicant has applied for an extension of time in which to file his application and did so informally, but nonetheless clearly enough, by way of an addendum to his application. Although strictly speaking a notice of motion supported by an affidavit is required, in the circumstances of this case, the applicant being unrepresented, and the respondent being on notice by virtue of its receipt of the application, I give leave to the applicant to move for an extension of time informally in the way that he has done.

I move now to the question of whether leave should be given for an extension of time.  The respondent has been unable to point to any particular prejudice that it has suffered as a result of the delay and the applicant has, in my opinion, given a good explanation for the delay.  He said that he accepted the reasons that were given by his employer for the termination of his employment as set out in his termination letter, exhibit 1, and therefore took no action.

As it has turned out, those reasons are not completely accurate. When the applicant was given information by a former employer of the respondent, which put him on enquiry, he took steps fairly promptly to find out his rights, being careful to make sure that he had a case before he filed an application (which was a responsible way to proceed).  Eventually, an application was filled out by a lawyer at the Hawkesbury Community Legal Centre and faxed to the Court on the evening of 28 November 1995. 

In those circumstances, I find that there is an acceptable reason for delay.  As there is no prejudice to the respondent, and as there is an arguable case for the applicant on the merits - and in fact I intend to uphold the applicant's claim - I give leave to the applicant to file his application out of time by 29 November 1995. 

I now move on to the merits of the case itself.

Background Facts 

The respondent company, trading under the name of the Fibreglass King was, from about the last few months of 1994, experiencing a financial downturn.  A related company in the same building, trading under the name of Outdoor King was also experiencing financial difficulties.  Therefore, from about January 1995, staff meetings involving the staff from both related companies were held.  The need for improvements was discussed, the financial difficulties of the companies were made reasonably clear, and the possibility of retrenchments was made clear in a general way-in the sense that if the position of the companies did not improve retrenchments were a real possibility.

March and April were particularly bad months in respect of the turnover of the respondent company.  In March 1994 the turnover for the respondent company had been $141,961 - in March 1995 the turnover was only $75,531; in April 1994 the turnover had been $105,240 - in April 1995 the turnover was only $75,892.  January and February had been reasonably good months for the respondent company but the previous 3 months - October, November and December, particularly October and November - had been quite poor.  So, overall, the trading position of the respondent company was clearly in a trend of decline. 

As a result of that trend, and, in particular, as a result of the March and April figures, Mr Phillip Robinson, the owner of both of the companies, decided that something had to be done. 

In April the manager of Outdoor King, Michael Brennan, resigned.  As a result of that resignation, an ad was placed in the Sydney Morning Herald seeking his replacement.  That ad appeared in the paper on 22 April 1995, and became exhibit 3 in these proceedings.  I accept that this was an ad for Mr Brennan's position, not an ad for the applicant's position.  I accept Mr Brennan's evidence and Mr Robinson's evidence about that.  The applicant gave no contradictory evidence.  He had his suspicions but could not put it any higher than that. 

Mr Brendan White, who at the time was living in Canberra, saw that advertisement and applied for the position.  However, according to Mr White's evidence, Mr Robinson said that he - Mr White - was too young and inexperienced for the job as advertised.  In the meantime Mr Brennan, before his job had been filled, asked to come back because he had become dissatisfied in his new job.  Mr White was then offered a job as a salesperson. 

Mr Robinson had seen the chance to save $140 per week in wages.  The applicant was earing $650 per week (gross) and the position that Mr White was offered had a gross salary of only $510 per week (gross).

Mr Robinson, relieved of the responsibilities of running the Outdoor King that he had taken over when Mr Brennan had resigned, could move into Fibreglass King, literally next door in the same building, and could take over the applicant's management responsibilities and other responsibilities as well in Fibreglass King.  A junior employee, Todd Hetherington, could be relieved of the sales responsibilities that he had had, to some extent, to that time, because he was not very good at that sort of thing.  The applicant would be dismissed. 

The void in sales left by these movements - namely Mr Brennan coming back, Mr Robinson taking over the applicant's position, Mr Hetherington being relieved of the sales responsibilities that he had had and the applicant being dismissed - would be filled by Mr White at $510 (gross) per week. 

The number of staff was not reduced.  Their overall cost was. 

This is, I should say, ignoring the increased cost to the group as a whole of Mr Brennan.  It is proper in my opinion to ignore the fact that Mr Brennan came back at $60 per week more than before, because he was employed by a different company, which is and was not the respondent company in these proceedings.  I therefore do not take that fact into account at all in my decision.

The decision to dismiss the applicant was made no later than 8 May 1995, which was the date of Mr White's letter of appointment to the salesperson job, exhibit 6.  The decision was possibly made earlier than that time. 

The termination of the applicant's employment was a classic summary dismissal.  He was called into the office, given his termination letter and cheque and told that he could leave if he wished to straightaway.  There was nothing particularly unpleasant or confrontational about it, but, nonetheless, it was abrupt and to the point.

In particular the applicant was not given the opportunity to propose alternatives to the termination of his employment.  In fact, on the evidence, there was an alternative.  It was not necessary to dismiss the applicant to save the $140 which Mr Robinson had in mind.  I accept the applicant’s evidence that, if he had been consulted he would have suggested that he take a cut in pay and work as a salesman, if that was the scenario that Mr Robinson had put to him. 

This case illustrates quite well the rationale behind the long history of many decisions of industrial law courts and tribunals (which well precedes the Federal laws which came into effect in 1994), pointing out the desirability of consulting employees.  Sometimes employees will have ideas to contribute about their future.  In this case the employee would have had an idea to contribute in respect of his future - namely, that he take a cut in pay.

There was no valid reason for the termination of the applicant's employment, as it was not necessary for the operational requirements of the company. The termination of the applicant's employment therefore was in breach of section 170DE(1) of the Act, and unlawful.

Even if I am wrong in respect of the question, in my opinion the termination of his employment was “unjust” within the meaning of section 170DE(2) of the Act.

Not all failures to consult necessarily render a termination of employment unjust within the meaning of that section of the Act, even if that termination is for the operational requirements of a business - for example retrenchments. Whether or not a termination of employment in any particular case is unjust depends on the circumstances of that case. There is no blanket rule that a failure to consult necessarily renders a termination of employment unjust. It may or it may not. It depends.

Here, there was a summary dismissal and there was no opportunity to suggest alternatives-in circumstances where there was in fact an alternative.

In my opinion, that rendered the termination of the applicant's employment “unjust” within the meaning of section 170DE(2) of the Act. It is therefore deemed to be for no valid reason, and unlawful.

In my opinion, in the circumstances of this case, the termination of the applicant's employment was also “harsh” within the meaning of section 170DE(2) of the Act. The applicant had come to Sydney, having been offered the job by Mr Robinson when the applicant's business in a country town had failed. The applicant's family, in particular his wife, also ran a cafe in that same town. Although it was not clearly established on the evidence it was probably an act of well-meaning kindness by Mr Robinson to offer the applicant that position.

The applicant's family business, the cafe in that town, was sold and the applicant brought his wife and family to Sydney, because the applicant had a job.  He had a job with the respondent.  That security made it possible to bring his family to Sydney.  For that reason, even if I am wrong on all of the other matters, the other findings I have made, I would find that the applicant's termination of employment would be “harsh”.

Note:  At this point, due to a recording malfunction, nothing further was recorded.

________________________________

I certify that this and the seven (7) preceding pages are a true copy of the Reasons for Judgment of Judicial Registrar Patch, insofar as those Reasons were recorded.

Associate:     Renee Cauchi
Date:              20 May 1996

Appearances:

Applicant in person
Representative for the respondent:  Ms Lyndall Dean, Retail Traders   Association.

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY

No. NI 4641 of 1995

BETWEEN:

Gregory STEPHENS
Applicant

AND:

LIFETIME HOME IMPROVEMENTS
trading as FIBREGLASS KING
Respondent

BEFORE:     PATCH JR
PLACE:       SYDNEY
DATE:          26 MARCH 1996

MINUTES OF ORDER

1. Leave be given to the applicant to file his application out of time, by 29      November 1995.

1. That the respondent pay the applicant the gross sum of $9,000.00 in compensation for the unlawful termination of his employment within 21 days of today, less the tax payable on that sum as an eligible termination payment.

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