Thompson and Shop Distributive and Allied Employees Association v Franklins Ltd

[1996] IRCA 278

DECISION NO:  278/96 

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 5308 of 1995

B E T W E E N :

ELIZABETH THOMPSON and
SHOP DISTRIBUTIVE AND ALLIED EMPLOYEES’ ASSOCIATION
Applicants

AND

FRANKLINS LIMITED
Respondent

Before:          Judicial Registrar Murphy
Place:            Melbourne
Date:              31 May 1996

EX-TEMPORE REASONS FOR JUDGMENT

In these proceedings for a remedy under s170EA of the Industrial Relations Act (“the Act”), the Court is required to determine as a preliminary issue whether, as required by the operation of s170CB of the Act, there has been a termination of employment at the initiative of the employer. The first applicant (“the applicant”) bears the onus of proof on this issue.

The facts
At the relevant time the applicant was employed as an invoicing clerk at the respondent's Altona store.  On 27 September 1995, $500 went missing from the purse of a fellow employee, Rosa Carida.  The purse had been left on the applicant's desk.  On 5 October, $610 went missing from the purse of another employee, Rose Musu.  That purse had been left under the general office bench.  The applicant's handbag was observed directly under that bench around that time.  The Loss Prevention Department of the respondent was notified of the second incident and Mr Petrou, an investigating officer, was asked to investigate the matter.  He attended at the Altona store on 6 October and interviewed Ms Musu.  In the course of the interview, Ms Carida's loss was brought to his attention.  Mr Petrou formed the personal view that the applicant was the likely culprit.  He decided to install video surveillance in her office.  This occurred on 10 October.  On the morning of 11 October, Ms Carida contacted Mr Petrou.  She had been invited to do so by Mr Petrou at their earlier meeting.  She advised him that she had a large amount of cash on her that day and felt concerned.  Mr Petrou decided to take advantage of the situation by recording the serial numbers of the notes.  Ms Carida was performing work in the applicant's office that day.  Around 10 a.m. she left her purse in the applicant's office.  She then had to leave the office and returned a short time later.  At that point she was phoned by Mr Petrou and asked to check to see if any money was missing.  At that time, Mr Petrou was in the Ballarat area in the course of his duties.  Ms Carida then checked her purse and found that $400 was missing.

Mr Petrou was advised, as was his superior, Ms Gerbert.  They both attended at the store to investigate the matter.  Mr Petrou's view was that the applicant was the prime suspect.  When Mr Petrou reached Altona, he and another security investigator, Mr Horley, ascertained that the video surveillance had not been recording that morning.  A decision was taken to interview the applicant.  Present at the interview were Mr Blackman, the market manager, Mr Petrou, Ms Gerbert, and Ms Garth, the head cashier.  Ms Garth was asked to be present as an independent witness at the interview.

There was a large measure of agreement as to what happened in the interview.  Ms Gerbert took notes of the questions asked.  A few days later she and Mr Petrou expanded these notes to a typewritten record containing 39 questions and answers.  It was common ground that the applicant was asked whether she wished to have someone of her choice like a union delegate present.  The applicant declined and Ms Garth remained throughout the course of the interview.  I am satisfied that exhibit R3 records the questions that were asked of the applicant.  There was a dispute on the evidence as to whether Mr Petrou or Ms Gerbert was in charge of the interview and took the dominant role.  I am satisfied that it was Mr Petrou who took the dominant role. 

The interview proceeded with Mr Petrou asking the applicant what she knew about moneys missing from staff purses.  The applicant replied that she knew of one prior incident and had also lost money herself.  She advised the respondent that she had heard the previous day of one incident involving Ms Musu.  She could not shed any light on either that matter or the incident involving Ms Carida.  At a point early in the interview, the applicant was advised that the respondent had installed a surveillance camera in her office.  The applicant was shown the video picture.  Mr Petrou then asked her about the money missing that morning  The applicant advised that she knew nothing about it.  The respondent's witnesses maintained that after the video was raised, the applicant became tense and defensive.  At some stage during the interview, the applicant was asked whether she would have any objection to having her bag searched.  She said she had no objection.  Also at some stage also in the interview, the police were contacted to come to the premises.

The applicant's complaints about the interview: 

The applicant gave evidence that the respondent in the interview kept maintaining the line of questioning whether she knew anything about the missing money from Ms Carida that morning.  She kept saying no.  Mr Petrou denied repeating the questions or accusing the applicant of theft.  He said he had his suspicions but no proof against her.  The applicant said that at one stage Ms Gerbert pressured her by suggesting that she would have no hesitation in calling the police and that they had authority to strip search her.  The respondent's witnesses denied that the term "strip search" was used.  The respondent's witnesses maintained that, at all times, the tone of the interview was civil and that the applicant did not complain about her treatment. 

The actual length of the interview was of some dispute.  Exhibit R3 records that it commenced at 11.20 a.m. and ceased at 1.05 pm.  Ms Gerbert maintained that the actual questioning was for a much shorter period than this and that a considerable amount of time was spent sitting waiting for the police to arrive to search the applicant's belongings.

In the course of the interview, the applicant said she asked to phone her de facto spouse.  Ms Gerbert refused that request.  Ms Gerbert said that this was because, at that time, the phones were engaged and the request was not remade.  Mr Blackman suggested that the applicant was told she could make the call after the police arrived.  The applicant maintained that she made the request twice.  The applicant also requested to, and did speak to, her daughter, and said this occurred around 12.30 pm. 

When the applicant had been in the interview for some time she requested to go to the toilet.  Ms Gerbert asked whether she could wait and the applicant agreed.  The applicant made a further request and the response was that it would only be granted if she went accompanied by two people, and with the door open.  She waited for a further period and then made a further request.  The respondent's version of this matter was that the applicant was first asked could she wait until the police arrived.  When she was unable to do this, Ms Gerbert asked would she mind being accompanied and leaving the cubicle door open.  The applicant said "that was fine and she did not have a problem with that".

Ms Gerbert confirmed this account, as did Mr Blackman.  As the applicant, accompanied by Ms Gerbert and Ms Garth, entered the toilet area, she passed an area where staff hang their coats.  The applicant was seen to put her hand on a coat.  Ms Gerbert at that stage was arranging for women in the cubicle area to leave that area.  The applicant said she was required to stand and wait while the other staff left and she then entered the cubicle area with the door open.  She said she felt she was humiliated and degraded by this.

After the toilet visit she returned to Mr Blackman's office and waited for a short time before the police arrived.  The applicant then agreed to them searching her bag, herself and her office.  She said she felt humiliated.  She felt she had no choice but to agree to the search as she would be suspected if she refused.  A short time after this, the money was found in the pocket of a coat in the area outside the toilets.  The police were advised of this.  The applicant was shown a plastic bag containing the money.  She was told that the money would be the subject of forensic tests for fingerprints.  She assumed that she may subsequently be fingerprinted.  The police then left.

The second meeting: 
After the police left the applicant had a further meeting in her own office with Mr Petrou, Ms Gerbert and Mr Blackman.  At that point she said she was upset and crying and “could not believe it was happening”.  She said that Ms Gerbert was yelling and screaming at her.  The applicant then told the respondent to "take their job and stick it up their arse".  She said she felt degraded and persecuted.  "It was as if they had made up their minds I was guilty."  The applicant gave evidence that after she made the comment, Ms Gerbert asked Mr Blackman whether her resignation was accepted.  He said yes.

The respondent's version is that either Ms Gerbert or Mr Blackman said to the applicant that she was suspended on full pay pending the finalisation of the inquiry.  The applicant had said, in colourful language, she wanted to resign.  Mr Blackman had said that he would only accept it if it was in writing.  It was the respondent's evidence that it was only the applicant who was angry and loud at that meeting.  The applicant admitted in her cross-examination that she was angry, upset, confused and crying at this stage.  She said in her evidence that there was a muddled reference to suspension on pay.  She conceded that Ms Gerbert could have told her she was suspended on full pay.  The applicant's position on that day was that she could not return to the respondent and felt she had no option but to leave.  She packed her belongings from her office and left.

The applicant submits her written resignation: 
The following day, the applicant attended the respondent's office to "finalise her resignation".  She spoke to Mr Morabito, Mr Blackman’s deputy.  Mr Morabito said the applicant came in and said that she was at the office to hand in her resignation.  She had indicated to him that it was because of her treatment the previous day.  He understood at the time she was suspended on full pay.  He requested that she put her resignation in writing and she then wrote "I tender my resignation on the grounds of harassment effective immediately" (Exhibit A1).  Mr Morabito then processed the resignation and she was paid her entitlements.

Findings: 
The credit of the respondent's principal witnesses, Mr Petrou and Ms Gerbert, was the subject of sustained attack.  Both were forced to recant previous testimony.  On important issues however, their evidence was corroborated by Ms Garth and Mr Blackman.  Further, the applicant in her evidence did not seek to contradict the bulk of the record of interview.  Further, she was unable to recall full details of the second meeting and admitted that she was in a confused state at the time.  Having regard to these considerations, and having observed the demeanour of the witnesses, I prefer to accept the respondent's account of events in areas where there is conflict.  In particular, I accept that the tone of the interview was fair.  I find that the bulk of it was conducted by Mr Petrou.  I find that the applicant raised no objection to the arrangement for the visit to the toilet.  I accept that the applicant was told she could not contact her spouse at one stage, but she did not repeat the request.  I further accept the evidence of Ms Garth that the applicant raised no objection to her treatment at any stage.  In relation to the visit to the toilet, I accept the applicant agreed to the arrangements.  Further, I am satisfied that while it could not have been a comfortable experience, it was conducted reasonably in the circumstances by the respondent.  In relation to the second meeting, I accept that the applicant was advised that she had the option that she was suspended on full pay, but chose to advise the respondent she wanted to resign.  She was advised that it must be in writing.  She was not yelled at by Ms Gerbert. 

Termination at the initiative of the employer 
The applicant in cross-examination essentially conceded the interest of the respondent in a proper investigation of the missing moneys.  It was submitted however, that this was only consent to a reasonable investigation and not one that was oppressive or constituted harassment.  It was argued that the number of people in the interview, the lack of any truly independent witness, the refusal of the phone calls to the applicant's spouse and the toilet incident amounted to behaviour that constituted harassment.  The evidence that Ms Gerbert yelled at the applicant was also said to constitute harassment.

It was submitted that this led to a situation where the applicant had no choice but to submit her resignation.  Counsel for the applicant puts her case on the basis that this was a termination at the initiative of the employer because the employer had engaged in a course of conduct which entitled the applicant to tender her resignation on 11 October.  He submits that the employment relationship ended on that day as a result of the respondent's course of conduct on that day.  He places no reliance on anything that happened on 12 October.

The decision in Rheinberger v Huxley Marketing Pty Ltd (Moore J, 16 April 1996, unreported) is the most recent consideration of the issue of termination at the initiative of the employer.  It applies Mohazab v Dick Smith Electronics Pty Ltd.(No. 2) (1995) 62 IR 200. In Mohazab the Full Court at 206 endorses comments in  APESMA v David Graphics Pty Ltd (Wilcox CJ, 12 July 1995 unreported) as follows:

“I agree with the proposition that termination may involve more than one action.  But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.”

In Rheinberger (above) Moore J referred to the following statement in Mohazab (above at 205-206):

“In those proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly 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.”

Moore J then went on:

“However, it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of employment at the initiative of the employer.  Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect.  I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude.  I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer's conduct.”

Applying these comments, the question is whether the actions of the respondent would probably have the effect of bringing the employment to an end.  The applicant had an interest in her own exoneration.  She had an interest in co-operating with the investigators.  It was reasonable that the investigation included interviewing the applicant and, with her consent, searching her.  That course of action necessitated the need to prevent the possibility of destruction of evidence - so the need for the arrangements in the toilet.

When the circumstances are looked at objectively, the probable outcome here was not the resignation of the applicant.  Her own concession of the respondent's interest in investigating the matters shows that the respondent's actions remained consistent with its side of the contractual relationship.  It was not "follow(ing) a course of conduct with the deliberate and dominant purpose of coercing a worker to resign":Auckland Shop Employees Union v Woolworths (NZ) Ltd. [1985] 2 NZLR 372, 374, a decision cited in Mohazab (above at 208).

While the applicant maintained and believed that she was in effect persecuted by the respondent, I am not satisfied that she can point to any actions of the respondent that are predicated upon a determination to drive her to resignation.  Further, there were no actions that could be said to show that she was harassed.  I am satisfied that the respondent's actions could not be said on any reasonable view to “probably have (the) effect” (Rheinberger (above)) of bringing the employment to an end.  Any intervention between an employer and an employee may lead an employee to resign.  It is a different matter, however, to be satisfied that it would probably have that effect.  The respondent's actions do not have that character. 

A further consideration in favour of the respondent here is the applicant's own admission that the question of suspension on pay was discussed.  This offer is consistent with a desire to maintain the employment relationship.  It is consistent with the respondent not creating an environment in which the employee tendered a resignation.  It is consistent with the applicant not being singled out for unfavourable treatment, but rather being the subject of an investigation that any reasonable employer in the same position, with the same duties and obligations as the respondent, would have undertaken.

It was argued that this is remedial legislation and that, on a question of jurisdiction, it should be interpreted expansively.  While I accept these principles, I am not satisfied, having accepted the respondent's account of events, that there has been a termination at the initiative of the employer here.  The critical factor here was not the respondent's institution or conduct of the investigation.  The critical factor here was the applicant's decision, in the face of the offer of suspension on pay, to persist with her offer of resignation and then to confirm it in writing the following day.  That conduct initiated the termination of the employment relationship and it was formalised by her letter of resignation. 

It follows that the Court does not have jurisdiction in this matter and that the application must be dismissed.

I certify that this and the preceding nine (9) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:                 
Dated:  31 May 1996

Solicitors for the Applicant:          Wilson Potter Nicholson
Counsel for the Applicant:            Mr I Fehring

Solicitors for the Respondent:      Clayton Utz
Counsel for the Respondent:         Mr J Bourke

Date of hearing:  29, 30 May 1996
Date of judgment:  31 May 1996.

C A T C H W O R D S

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - JURISDICTION - RESIGNATION - whether employment terminated at the initiative of the employer - employee resigning after being questioned about missing money - whether conduct of employer’s investigation constituted harassment entitling employee to resign.

Industrial Relations Act 1988 ss.170CB, 170EA.

CASES:Rheinberger v Huxley Marketing Pty Ltd (Moore J, 16 April 1996, unreported)

Mohazab v Dick Smith Electronics Pty Ltd.(No. 2) (1995) 62 IR 200

Auckland Shop Employees Union v Woolworths (NZ) Ltd.  [1985] 2 NZLR 372

APESMA v David Graphics Pty Ltd (Wilcox CJ, 12 July 1995 unreported)

ELIZABETH THOMPSON and
SHOP DISTRIBUTIVE AND ALLIED  EMPLOYEES’ ASSOCIATION
-v-  FRANKLINS LTD

No. VI 5308 of 1995

Before:  Judicial Registrar Murphy

Place:  Melbourne
Date:  31 May 1996