Tupou v Daybrook Pty Ltd

[1996] IRCA 111

DECISION NO:  111/96

C A T C H W O R D S

INDUSTRIAL LAW - UNFAIR TERMINATION - VALID REASON - SERIOUS MISCONDUCT - HARSH UNJUST OR UNREASONABLE TERMINATION - claim for under payment of WAGES and bonus in accrued JURISDICTION

Industrial Relations Act 1988 ss.170DC, 170DE

CASES:          Gibson v Bosmac Pty Ltd (1995) 130 ALR 245

Byrne v Australian Airlines Ltd (1995) 131 ALR 422

MARTIN TUPOU -v- DAYBROOK PTY LTD

No. VI 5225 of 1995

Before:   Judicial Registrar Murphy

Place:   Melbourne

Date:   18 March 1996

INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VI 5225 of 1995

B E T W E E N :

MARTIN TUPOU

Applicant

AND

DAYBROOK PTY LTD

Respondent

MINUTES OF ORDERS

Judicial Registrar Murphy        18 March 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 5225 of 1995

B E T W E E N :

MARTIN TUPOU

Applicant

AND

DAYBROOK PTY LTD

Respondent

Before:            Judicial Registrar Murphy

Place:               Melbourne

Date:               18 March 1996

EX-TEMPORE REASONS FOR JUDGMENT

In this application for a remedy under Division 3 of Part VIA of the Industrial Relations Act, the respondent asserted that it had validly dismissed the applicant for refusal to obey lawful orders. The applicant in response denied any refusal and further claimed that his dismissal was harsh, unjust or unreasonable. The applicant also sought to recover certain amounts within the accrued jurisdiction of the Court.

Background. 

The respondent is a small manufacturer of retread material for tyres.  At its factory it employs about a dozen process workers from a wide variety of ethnic backgrounds.  The applicant, who is from Tonga, was introduced to the respondent by his cousin, Mr Henry Niu, who had in February 1995 been working there for about two years.  The applicant had an interview with Mr Peter Carter, the then production manager of the respondent.  The applicant gave evidence that at the interview, he was told he would be paid $312.00 clear per week and be paid a bonus each month.  Mr Carter denied any reference to a net wage.  He said that due to taxation variances, he only ever quoted gross wages to employees.  Mr Carter denied any unequivocal commitment to payment of a bonus because he said that the bonus scheme for employees was still being established, and whether any individual would be paid a bonus would depend on production figures for each month. 

The applicant commenced work in February.  He worked  within the factory where the process workers work interchangeably on various machines.  The team is led by a team leader.  The second in command is known as the quality controller.  The quality controller position involves the incumbent inspecting the various production processes to ensure that quality is maintained.  Another role for this position is to fill in when other employees are absent.  In June, Mr Carter, concerned that the incumbent quality controller was not performing, offered the position to the applicant.  He agreed to accept the position.  The matter was announced to a meeting of all employees a day later, at which time the applicant declined the position.  At the meeting, I am satisfied that he cited as a reason the fact that the team leader and many of the process workers were Samoan. 

A few days later the applicant agreed to accept the position as quality controller.  The applicant said that prior to accepting, he was told by Mr Carter that he would be paid $340 clear per week, in the position.  Mr Carter denied this, saying that all he advised the applicant was that he would be paid an extra $10 per week.  At the same time that the applicant was appointed to the quality controller position, Mr Pelulale Fitu, a Samoan, was appointed as team leader.  Mr Fitu gave evidence that the applicant refused to accept his authority in the position, requiring him to take the matter to Mr Carter on a number of occasions.  On three occasions Mr Fitu unsuccessfully tendered his resignation.  The applicant denied that he did not accept Mr Fitu's authority.

On 3 August, there was an incident between the applicant and another employee, Mr Epi Sione.  Mr Sione slapped or punched the applicant for leaving open a door of the factory.  The two then grappled and were parted by Mr Fitu.  Then the applicant and Mr Fitu shaped up for a fight before Mr Carter called on them to stop.  Later, he warned all parties that fights were forbidden.  The applicant worked the rest of the day.  The next day, he arrived and asked Mr Carter to terminate him as he said it was not safe to work there.  Mr Carter said he had no basis to terminate him.  The applicant sought to see the administration manager.  He was unavailable.  After advising Mr Carter that he was going to see his lawyer, the applicant left for the day.  A few days after this the applicant again reiterated that he would not accept orders from Mr Fitu, but only from management.   Mr Carter sought to accommodate the applicant by advising him that henceforth, he would perform the quality controller position and be under the orders of himself and his assistant, Mr Claudio Gattuso.  At the same time, Mr Carter advised the applicant that he would no longer be eligible for a bonus as he would not be actually involved in production.  The applicant denied receiving this advice. 

The bonus scheme of the respondent had been a source of contention for months since its attempted introduction prior to the applicant commencing employment.  The proposal was that employees would receive a bonus related to their success in bringing the level of waste rubber used in the production process below 5 per cent.  This was the scheme that was in place when the applicant commenced employment, but no payments had been made under it at that stage.

In June, the employees at a meeting expressed dissatisfaction with their inability to achieve a bonus.  A demand for a $50 per week pay rise was made and the applicant instigated a motion to go on strike.  Evidence was led of a threat by the applicant to one of the employees who would not join the proposed strike.  The applicant denied any threat.  The strike did not proceed but everyone agreed to re-double their efforts to achieve a bonus in July.  In July, a bonus was not achieved, although there was doubt as to whether due to measuring problems the waste rubber had been properly calculated.  In late August, the managing director, Mr Rotar, paid all employees, including the applicant, a $50 cash bonus.  At that time, Mr Carter was still of the view that the bonus system could be utilised to reduce waste rubber and provide money to the employees. 

He proposed that in September one employee, the applicant, should have the sole job of cutting excess rubber within the production process.  The applicant performed this duty in September but denied that he was told that the assignment was for September only.  Mr Carter went on leave on 25 September and left Mr Gattuso in charge of the factory floor.  Before he left, Mr Carter advised Mr Gattuso that at the end of September, the applicant would revert to his quality controller duties. 

Events in early October. 

On Monday, 2 October, Mr Gattuso asked the applicant to perform duties on the buffing line.  He refused.  On the same day, he asked him to perform duties checking weights of small treads.  He again refused.  The applicant denied these incidents.  He said that he was asked to work with Mr Sione on the extruder and refused because he did not feel safe.  On 2, 3 and 4 October, the applicant worked on the press.  On Thursday, 5 October, at about 7.45 am, Mr Gattuso asked the applicant to work on the press as some crew were missing.  The applicant offered to work on it on his own.  He was told he would have to work with another employee.  The applicant then commenced working on the press with another employee, Mr Niu. 

At 9.15 am, the applicant approached Mr Gattuso and said that the other employees would not let him cut rubber.  Mr Gattuso told him that rubber cutting was his job for September only and that he was now to work on the press.  The applicant refused the direction.  He said cutting rubber was his job.  He swore at Mr Gattuso.  Mr Gattuso then said that unless he desisted and performed duties as directed, he would have to give him a warning.  The applicant again abused him and refused to accept the direction.  Mr Gattuso told the applicant that unless he worked as directed, he would be dismissed.  Mr Gattuso then contacted an employer organisation to ascertain his legal position.  He returned to the applicant and told him that he was dismissed for refusing to work as directed.  The applicant refused to accept this and went off and performed some other duties. 

Around this time, the managing director, Mr Rotar, arrived at the factory and a discussion between him, the applicant and Mr Gattuso occurred.  In Mr Gattuso's words, Mr Rotar calmed the situation.  Mr Gattuso advised Mr Rotar that the applicant was refusing to listen to him, accept his directions, and was swearing at him.  The applicant agreed that this was said.  Mr Rotar proposed that he be asked to sign a written warning and return to work on the press.  Mr Gattuso then wrote out an official warning.  It read:

“2 October:  (1) refused to work on buffing line and refused to work on small sized tread and analyse weights.

5 October:  (2) refused to work on the press as directed.”

The applicant refused to sign the warning and returned to work.  Mr Gattuso's evidence was that at no stage did he say that he was prepared to go back to work.  He refused to sign the warning, saying at one stage that his lawyers had told him not to sign anything.  Mr Rotar's evidence was that he told the applicant that “If you don't sign it, you don't want to work.”

The applicant maintained in his evidence that the warning had not been completed by Mr Gattuso.  He maintained that he told Mr Gattuso and Mr Rotar that he was not signing the warning, as he was not refusing to work: “I was still working.”   He said that Mr Rotar said “If you don't sign, you are finished.  Clock your card and go.”  Mr Rotar denied saying this. 

The respondent produced two letters to the applicant dated 5 October.  One advised the applicant that he had been dismissed:

“... due to your frustration of employment by your refusal to perform normal duties on several occasions.  After being advised that you would be terminated if you continued to refuse, you continued your action of non-compliance.”

Another letter advised the applicant that he had been:

“... summarily dismissed for your refusal to comply with lawful directions.”

Mr Gattuso was confused as to whether the applicant had been shown either of these letters.  Mr Gattuso maintained that the first letter had been shown to the applicant on 5 October after he was dismissed.  It is endorsed “Refused to sign.”

The applicant denied seeing the letter but admitted that he had asked for the reasons for his dismissal on both 5 October and 6 October, when he attended to collect his final pay. 

Was the respondent entitled to dismiss the applicant? 

There was a stark difference between the respective versions of what happened on 5 October.  On the applicant's version, he was dismissed despite offering to, and performing, the duties he was directed to perform.  On the respondent's version, he was dismissed because he refused to perform the duties, as directed, on the press, and then refused to acknowledge this refusal or to indicate a willingness, by signing the warning, to perform duties as directed.  In determining whose version is to be preferred, the respondents counsel pointed to a volume of evidence corroborating its version and pointing to the probability that the applicant was refusing to work as directed on that day.  Leaving aside the demeanour of the witnesses, there was an inherent credibility in the version of events promulgated by the respondent.

The evidence revealed a pattern of failure to comply with directions by the applicant.  This resulted in new arrangements in early August for his direction.  In late August, he was given an official warning for failure to comply with a non-smoking policy.  Mr Fitu, Mr Carter and Mr Gattuso all gave evidence of the refusal by the applicant on occasions prior to 5 October to accept directions.  The applicant denied the substance of their evidence.  The evidence of the respondent's witnesses, Mr Carter and Mr Gattuso, was consistent with contemporaneous diary entries made by them and tendered in evidence.  The respondent's version of events on 5 October is consistent with the official warning and the two letters generated at the time. 

To accept the applicant's version of events of 5 October requires the Court to prefer his evidence over that of Mr Rotar and Mr Gattuso.  It also requires the Court to accept his evidence when, on a number of other issues, it had been contradicted by other witnesses whose evidence was also consistent with the only contemporaneous document in existence, namely the business diary kept by Mr Carter and Mr Gattuso.  To accept the applicant's version requires the Court to find that Mr Gattuso would record false entries in his diary on 2 and 5 October and then put a wrong version of events in the official warning on 5 October and in the two letters giving the reasons for dismissal.  Alternatively, it requires the respondent, after seeking advice from an employer organisation, to have dismissed the applicant for performing duties as he had been directed and when he was expressing a willingness to continue to do so.    There is an inherent unlikelihood in such a version of events.  Given the background to the events of 5 October, it is inherently more probable that the applicant in fact was disobeying a direction to work on that day.  This conclusion is fortified by a comparison of the demeanour of the witnesses ranged against the applicant.  All presented as credible, truthful witnesses. 

It follows from the above that I prefer the respondents version of events of 5 October and in all disputed matters.  I find that on that day the applicant had refused to accept the direction of Mr Gattuso, the production manager, that he work on the press, when he claimed his job was cutting rubber.  I find that he swore at and defied Mr Gattuso, who advised him that he would be dismissed if the refusal continued.  I find that he was given an ultimatum that he accept direction or he would be dismissed.  He refused and was told by Mr Gattuso that he had been summarily dismissed.  He ignored this.

When Mr Rotar arrived, I find that the termination was withdrawn.  I find that Mr Gattuso prepared a written warning that referred to the incident on 5 October, as well as the two other incidents on 2 October, which I find occurred.  The applicant was asked to sign this warning and return to work.  It was made clear that unless he did so, he would be regarded as abandoning his employment.  I find that the applicant refused to sign the warning.  I find that at no stage did he advise Mr Rotar or Mr Gattuso that he accepted the authority of the latter or acknowledged that he had failed to accept lawful direction.  I find that the applicant was aware of the respondent's system of official warnings as he had received one a month previously for breach of a no smoking rule.

I reject the argument that there was confusion as to the applicant's duties on 5 October.  I accept that he was no longer to perform duties cutting rubber, but was to work on quality control and as directed by Mr Gattuso.  He was directed to work on the press on 5 October and just as he had done on two occasions on 2 October, refused to accept the direction.  The applicant, by his actions on 5 October, evidenced an intention to no longer be bound by a fundamental term of his contract of employment, namely that he accept lawful directions and co-operate with his employer.  I am satisfied that it is proper to characterise his actions as gross misconduct.

The applicant had been asked by Mr Gattuso to acknowledge that he would work as directed.  He was asked the same thing later in the presence of Mr Rotar.  It is difficult to see how the events can be characterised as other than wilful.  It follows that the respondent has discharged its onus of proof under section 170EDA that it had a valid reason in the sense of a “sound, defensible or well founded reason" to terminate his employment. 

Was the dismissal harsh, unjust or unreasonable or procedurally unfair? 

The applicant carries the onus of proof that the dismissal contravened ss170DE(2) or 170DC of the Act. Here it was argued that given the applicant's generally good work performance, and the prior condonation of disobedience, the dismissal was harsh. I do not accept this argument.

While on 2 October Mr Gattuso took no action when the applicant defied him, he was entitled, when the matter recurred, to put that to the applicant as part of an official warning.  The applicant's assertion that the warning was blank when he was asked to sign it is rejected.  It follows that this prior incident was one that on the face of the applicant's defiance on 5 October, the respondent was entitled to rely on in the official warning. 

In terms of the reasonableness of the respondent's actions, the evidence of the applicant's prior acts is also relevant.  Mr Carter's evidence was that the respondent had accommodated the applicant's refusal to obey Mr Fitu.  It had put in place a system of written warnings and the applicant had been the recipient of one.

It was reasonable then for the respondent to require the applicant to acknowledge on 5 October, that he had failed to comply with directions, and to do that before he resumed work.  On the other side, the applicant with his implied duty to co-operate in the execution of the employment contract, had to acknowledge the authority of the respondent's management and agree to comply with it.  When he failed to do so he cannot complain that his dismissal was unreasonable.  Given the background evidence of the respondents accommodation of the applicant in the past, it was not unreasonable for the respondent to draw the line.  The line it drew was not unreasonable when the interests of both parties are considered.

Section 170DC.

It was argued that the respondent had failed to accord the applicant procedural fairness.  It was said that the matter had not been properly investigated by Mr Rotar and that the allegations had not been put to the applicant.  I reject these arguments.  The requirements of 170DC are substantive but do not require any particular formality.  The provision itself acknowledges that there will be circumstances where it will not be necessary to put the allegations before dismissal;  cf Byrne v Australian Airlines Ltd (1995) 131 ALR 422, 434 (HCA). Here the basis for the dismissal, namely the refusal to work as directed, was put orally by Mr Gattuso and in the official warning. The matter did not require any further investigation when the respondent was met with nothing more than a defiant response. The applicant, I am satisfied, like the employee in Gibson v Bosmac Pty Ltd (1995) 130 ALR 245, knew what was putting his position in peril. He received a "fair go". The respondent has not breached section 170DC of the Act.

Accrued jurisdiction claim. 

The applicant also claimed that during the course of his employment, he had been denied his contractual right to be paid a bonus.  As to the bonus, I accept the evidence of Mr Carter that there was no promise of a monthly bonus at the time that the applicant joined the respondent.  The evidence was that the bonus scheme was in place, but no bonus had been achieved.  It is inherently unlikely that Mr Carter would offer the applicant, ahead of the other employees, a right to a bonus.  It is more likely that the conversation at the time of engagement was to the effect that the respondent operated a bonus scheme, but no more.  I reject this part of the applicant's claim.

The applicant further claimed that when he assumed the quality control duties, Mr Carter promised him that his take home pay would increase to $340 per week.  He claimed back payment based on the difference between this wage and the lesser amount he had actually been paid from July.  Mr Carter denied any promise of any wage rises associated with the quality controller position other than the $10 per week extra that the position carried.  He also denied any reference to take home pay in any discussions with the applicant.  He said that the actual gross wage of the applicant had increased by $18 per week at the time as a result of the $10 for the quality controller position, and $8 per week as a general wage increase.

I find it inherently unlikely that Mr Carter would offer the applicant a wage increase of $28 net per week to encourage him to accept the position as quality controller.  This would have given the applicant a wage greater than that of the team leader.  I accept Mr Carter's denial of any promise, other than the $10 gross per week for the applicant to accept the quality controller position.  The applicant cannot succeed in this aspect of his claim. 

The applicant has failed to make out any breach of the Act or any claim in the Court's accrued jurisdiction.  The application must be 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 10 (ten) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:                   

Dated:   18 March 1996

Solicitors for the Applicant:                Maurice Blackburn & Co.

Counsel for the Applicant:                  Mr L Carter

Organisation for the Respondent:       Victorian Employment Chamber

of Commerce & Industry

Representative for the Respondent:   Mr G Reiffel

Date of hearing:   14 & 15 March 1996

Date of judgment:   18 March 1996