Wayne Blackley and Eleanor Pty Ltd

[1995] IRCA 12

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1422 of 1994

B E T W E E N :

WAYNE BLACKLEY
Applicant

AND

ELEANOR PTY LTD & ANOR
Respondent

Before:       Judicial Registrar Chancellor
Place:         Melbourne
Date:          11 January 1995

REASONS FOR JUDGMENT (EX TEMPORE)

This is an application by Wayne Blackley pursuant to section 170EA of the Act in relation to the termination of his employment by Eleanor Pty Limited on 10 August 1994.

The Respondent’s business is primarily that of a wholesale butcher with about ten per cent of the business involved with seafood.  A company director of the Respondent, Mr Geoff McDonald gave evidence that in mid-1993 the company decided to attempt oyster opening and supply as a new part of the seafood part of its business.

The company was moving into an unfamiliar area but was prepared to take the risk including establishment costs of approximately $3000 to see if it could gain market share, already having quite a significant commercial market for its butcher products in the Albury/Wodonga area.

An advertisement was placed in the local paper seeking a casual oyster opener.  Mr Blackley was successful in obtaining the position and commenced casual employment on 20 August 1993.  He knew that the oyster opening was a new part of the Respondents business that was being trialled and that if it did not work out he would no longer have a job. 

The work was initially quiet and Mr Blackley did some other work including prawn peeling, chicken boning and making pet food.  However in the period leading up to Christmas 1993 the oyster part of the business improved and occupied Mr Blackley for eight hours on most days, and even involved some weekend work.  Because he was working regular hours and days Mr Blackley asked Geoff McDonald if he could become a permanent.  Mr McDonald did the figures and told him he would make more money as a casual.  There was no discussion at that stage or indeed at any time as to the expected period of employment of Mr Blackley. 

After Christmas 1993 the oyster work dropped a bit and Mr Blackley did other work around the factory.  I accept Mr McDonald's evidence that Mr Blackley was not particularly skilled or productive in those other areas but he still let him help out with the other work as he knew Mr Blackley needed the money.

Mr Blackley suffered a work related foot injury and ceased work on approximately 22 April 1994.  The wage records indicate that between the week ending 1 September 1993 and the week ending 20 April 1994 that Mr Blackley worked an average of approximately 42 hours per week and the evidence indicates that this was primarily in oyster opening. 

I find that he was employed on a regular and systematic basis for a period of at least six months and that he had a reasonable expectation of continuing employment, there being no indication to the contrary by the Respondent.  Therefore, although a casual employee, he is not excluded from the requirements of the Act.  Mr Blackley was absent from work including a period of hospitalisation for foot surgery and in receipt of WorkCover payments at the rate of $423 gross per week from approximately 26 April 1994 until he returned to work with a full clearance certificate on 10 August 1994.

It was upon his return to work that he received his written notice of termination.  He was given a reference, a separation certificate, was paid up to and including 10 August and was given a letter, which in part stated:

“Due to severe financial circumstances we have no choice but to cease our oyster opening operations for the time being.  As you were aware we put you on as a casual employee to open oysters on a trial basis to see if the operation would be profitable.

Unfortunately in this economic climate we have found that due to freight costs, packaging and low returns due to competition both locally and in Melbourne, we have been unable to break even.”

The onus lies upon the Respondent to establish that it had a valid reason for the termination of the Applicants employment.  Mr McDonald gave evidence that the oyster opening section of the business was initially breaking even and he thought he would give it about six months in order to assess its viability. 

When Mr Blackley was injured he was almost immediately replaced by another oyster opener John MacKeen.  The wage records of Mr MacKeen indicate that he worked approximately half of the weekly hours that had been worked by Mr Blackley.  This was probably due to a number of factors - Mr MacKeen's greater speed, the fact that Mr MacKeen only worked on oysters, the fact that the winter months were probably slower months for oysters meaning that there was less work to be done, and perhaps also some downturn in the Respondent’s oyster business.

Mr McDonald gave evidence that by June 1994 he was very concerned about the long-term viability of the oyster section of the business and considered closing it down at that time.  His view was that if it did not start making a profit it would be closed down.  Mr MacKeen ceased employment in mid-June 1994 and another oyster opener, Mr Ludoff was employed.  He worked even less hours on oyster opening than Mr MacKeen had done.

In an attempt to improve profitability in mid 1994 Mr McDonald rang the restaurants and clubs that he supplied and advised that he intended raising the price of oysters.  Unfortunately this led to many customers changing their supplier.  For example, a major customer, The Commercial Club, ceased ordering oysters by August 1994.  Mr McDonald gave evidence that he decided on 9 August 1994 to close the oyster opening section.  He had become aware in approximately April of 1994 that he could purchase pre-opened oysters at a cheaper price than his company could open them.  Despite this, he attempted to keep his own oyster opening section operating.
The Applicant was terminated on 10 August 1994.  Mr Ludoff ceased as an oyster opener on the same date.  He continues to work for several hours per week for the Respondent as a maintenance man.  Mr McDonald produced to the Court a financial statement which he said mirrored one which he had prepared in August immediately to the termination.  This document was of little assistance as it worked on the Applicant’s gross wage figure when clearly a proportion of the gross wage earned related to non-oyster work activity. However, given the average price of one dozen oysters of about $4.00 and Mr Blackley's lowest possible average wage cost to open of 70 cents to 80 cents, it was still clearly more expensive to open as part of the business than it was to purchase pre-opened oysters.

Although Mr McDonald was fairly vague in relation to the exact figures, I am prepared to accept his evidence, in particular based on his lengthy business experience and his knowledge of the margins involved, that his company's own oyster opening section was simply not profitable.  I accept that his decision to close the oyster opening section was made bona fide and in good faith.  The oyster opening section was closed on 10 August 1994 and no oyster opener has been employed since that date. 
Those oysters that the business requires to satisfy its regular customers are purchased in a pre-opened state.

The Applicant argued that even if a valid reason existed, then the termination breached section 170DE(2) of the act in that the termination was harsh, unjust or unreasonable.

Even though a genuine redundancy may be established both the State Industrial Commissions and this Court have shown a willingness to intervene in circumstances where the redundancy can be shown to be harsh, unjust or unreasonable.  See for example Shearer v Action Mercantile Pty Limited 1993 AILR 281, Budget Couriers Equity Management v Beshara 1993 5 VIR 173, Palumbo v Commercial Butchers Pty Ltd - JR Ryan 30 August 1994, Fenton & Gallagher v Casey College of TAFE - JR Parkinson 8 December 1994.

In Beshara's case the Commission stated:

“the dismissal must be tested against substantive and procedural fairness. It is insufficient for an employer to raise the aegis of a genuine redundancy as a wand against this Commission intervening where the circumstances in which the redundancy was imposed are otherwise harsh, unjust or unreasonable. The obligations to consult, to provide adequate notice and to apply objective selection criteria in determining which employee is to be made redundant, are factors in determining whether a dismissal was harsh, unjust or unreasonable.”

In Shearer’s case the Commission stated:

“Contemporary industrial standards require that where a redundancy is being considered an employer should consult with and give as much notice to the employee . . . ”

In Mr Blackley's case I find that he was given no notice or indication at all of his impending redundancy.  To the contrary he was given every indication that he could expect to return to regular employment with the Respondent. When Mr Blackley submitted a light duty certificate in July 1994 he was told by Mr McDonald that he did not want him back until he was fully fit. Mr McDonald conceded in cross examination that he did not warn Mr Blackley that the oyster opening section was struggling nor did he warn him that he was considering its closure.

Mr McDonald's explanation was that it was a very hard thing to tell someone that a part of the business was winding down and he may be out of a job.  However, by failing to inform Mr Blackley of the situation the Applicant’s own situation was made even worse because he was given no opportunity to prepare for the end of his employment and no input as to whether there may be alternate work available to him in the business.

Although I accept that Mr McDonald may have considered the alternatives in his own mind, by failing to consult with Mr Blackley he did not have all the potential information as to the Applicant’s ability to carry out alternate jobs within the Respondent such as small goods, packing or front counter sales or to continue part time or casual work.  Although August may have been a quiet time for the company, there is no evidence that employment in the latter part of 1994 was considered or discussed.  I accept that Mr McDonald considered the availability of retraining and quite fairly concluded that it was not financially viable.

The Respondent submitted that the Award under which the Applicant was employed provided that casual employment was on an hourly basis and provided redundancy payments only in the case of permanent full time weekly workers.  In my opinion the Award provisions provide no assistance to the Respondent in a situation such as this where a casual employee is not excluded from the full protection of the Act.  I therefore find that the Respondent's failure to warn, failure to give notice, failure to consult and giving the positive indication to the Applicant that he could expect to resume regular employment on 10 August 1994 renders the termination harsh, unjust and unreasonable, and in breach of section 170DE(2) of the Act.

In relation to the question of remedy, I note that Mr Blackley has moved to Melbourne to live and will commence full-time employment either later this month or early next month.  He has had some casual employment in the intervening period.  Accordingly, reinstatement is impracticable and was not sought.

In relation to compensation I agree with the observation of Judicial Registrar Ryan in Palumbo's case that even if the award does not require or authorise severance pay in the case of redundancy, this does not diminish a legitimate claim to compensation. 

In considering the appropriate amount of compensation I take particular account of the following factors: the failure to give notice or make any payment in lieu thereof; the fact that the Applicant was a casual employee who admitted that if the oyster section got into financial difficulty he knew his job would finish; the fact that as a casual employee he may well work less than 40 hours per week and has reduced security in terms of work and hours; the financial and family disruption caused by the failure to give any warning or notice, the fact that the Respondent knew for at least two months that a decision to close the oyster opening section was probable; the fact that the Applicant will shortly recommence employment.  In all the circumstances I propose to order compensation in the sum of $2,800.00.

MINUTES OF ORDERS

THE COURT ORDERS:

1.The Respondent pay the Applicant the sum of $2,800.00 by way of compensation.

2.Stay of 28 days with respect to payment.

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 nine (9) pages are a true copy of the reasons for judgment of Judicial Registrar Chancellor.

Associate:  
Dated:  11 January 1995

Solicitors for the Applicant:    Messrs Belbridge Hague
Counsel for the Applicant:     Harold Cottee

Solicitors for the Respondent: Meat & Allied Trades Federation of   Australia (Victoria Division)
Counsel for the Respondent:   Leigh Johns

Date of judgment:                   11 January 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1422 0f 1994

B E T W E E N :

WAYNE BLACKLEY
         Applicant

AND

ELEANOR PTY LTD & ANOR
Respondent

MINUTES OF ORDERS

Judicial Registrar Chancellor  11 January 1995

THE COURT ORDERS:

1.The Respondent pay the Applicant the sum of $2,800.00 by way of compensation.

2.Stay of 28 days with respect to payment.

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