Whitmore v Graf-x Pty Ltd
[1996] IRCA 478
•03 October 1996
DECISION NO:478/96
C A T C H W O R D S
INDUSTRIAL LAW - Industrial Law - Termination of Employment-whether unilateral alteration of an employee’s contract of employment constituted termination of employment where employee refuses to accept such alteration - compensation.
.
INDUSTRIAL RELATIONS ACT 1988, ss.170DE, 170DC, 170EE
Strachan v Liquorland (Australia)Pty Ltd, 6 February 1996, Moore J, unreported.
Marriott v. Oxford [1970] 1Q.B. 187,
W. E. Cox Toner v. Crook [1981]I.C.R. 823,
Bashir v. Brillo [1979] I.R.L.R. 295
WHITMORE -V- GRAF-X PTY LTD
No. SA96/1064
JUDICIAL REGISTRAR: L FARRELL
PLACE: ADELAIDE
DATE: 3 OCTOBER 1996
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
SOUTH AUSTRALIA DISTRICT REGISTRY )
No. SA96/1064
B E T W E E N:
GRAEME WHITMORE
Applicant
AND
GRAF-X PTY LTD
Respondent
MINUTES OF ORDER
BEFORE: JUDICIAL REGISTRAR L FARRELL
PLACE: ADELAIDE
DATE: 3 OCTOBER 1996
THE COURT ORDERS THAT:
The Respondent pay to the Applicant the sum of $10200 pursuant to Section 170EE(2) within 21 days.
The Respondent pay to the Applicant the sum of $1700 pursuant to Section 170EE(5) within 21 days.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
SOUTH AUSTRALIA DISTRICT REGISTRY )
No. SA96/1064
B E T W E E N:
GRAEME WHITEMORE
Applicant
AND
GRAF-X PTY LTD
Respondent
BEFORE: JUDICIAL REGISTRAR L FARRELL
PLACE: ADELAIDE
DATE: 3 OCTOBER 1996
REASONS FOR JUDGMENT
This is an application for relief in respect of termination of employment. The application comes before the Court pursuant to the provisions of Section 170ED of the Industrial Relations Act.
The Respondent is a small printing company set up in 1993 following the demise of the Stock Journal and it’s subsidiary company, Lasercolour. The Respondent company was formed by Ms Cagney, who continues to be a director of the company and Mr S Mutton, who died in May 1994. Mr Mutton’s wife, Vanda, replaced Mr Mutton as director, however she has little to do with the day to day running of the business. Initially the company had 2 employees, I understand it now has 10 employees.
The Applicant, Mr Mutton and Ms Cagney had been employed at the Stock Journal and its subsidiary company.
Following the death of Mr Mutton and the departure from the Respondent of its scanner operator in August 1994, the Applicant commenced employment with the Respondent. One of the main issues of contention was whether the Applicant was a production manager for the Respondent.
From the evidence before me I am satisfied that the Applicant was employed by the Respondent with a view to him becoming a partner, that his duties can be described as scanner operator with some managerial responsibilities, but with no responsibilities relating to the management of staff.
My impression of both the Applicant and Ms Cagney was that their respective memories were selective in recalling the circumstances of the Applicant’s employment.
It appears that the Applicant’s desire for a partnership stake in the business and his perception of his role in managing the business were an ongoing source of aggravation for him.
In June 1995 the Applicant and Ms Cagney agreed to a change in the Applicant’s terms and conditions of employment. From then the Applicant was paid $850 per week and he was no longer paid overtime.
During December 1995 and January 1996 the Applicant took three weeks leave. During that time a casual operator replaced the Applicant. Ms Cagney gave evidence that she realised during this time that the Applicant was much slower at his work than the casual operator.
In late February 1996 at the instigation of Ms Cagney, she and the Applicant had a discussion concerning the staffing level of the Respondent, the Applicant’s relationships with other staff, his relationship with clients and a trial period of 1 month as production manager that was supposed to have taken place in late 1995.
On 1 March 1996 a meeting of all staff was held. The Applicant did not speak at the meeting. Ms Cagney allocated duties at that meeting.
On 12 March 1996 the Applicant requested a meeting with Ms Cagney. At the end of the meeting he left and was off work as a result of stress until 25 March 1996.
Ms Cagney gave evidence that she advised the Applicant at that meeting that she was changing his hours, his duties and his rate of pay. I do not accept that evidence. Having heard both the Applicant and Ms Cagney’s accounts of what occurred, clearly what took place was a heated argument where both were critical of the other. It seems improbable to me that Ms Cagney took such a decision and told the Applicant of it then and there. Particularly in view of the fact that the discussion was instigated by the Applicant and and in light of her admission that she was relatively inexperienced in management it seems to me to be unlikely that her account of what occurred could be accurate. I accept the Applicant’s version of what occurred at the meeting.
On 25 March 1996 the Applicant returned to work, working 4 hours per day and provided the Respondent with a claim for workers' compensation stating “Depression and anxiety neurosis caused by workplace issues”. On 26 March 1996 Ms Cagney gave the Applicant a memo that he scanned and handed back to her saying that he refused to accept it.
On 29 March 1996 the Applicant received the same memo by post. The text of the memo is as follows:
“The purpose of this memo is to confirm in writing the discussions we had on 21 February and 12 March regarding your future position with the firm.
1. As discussed at our most recent meeting on 12 March, you have been unable to handle successfully the combined workload of being a scanner operator and production manager. Scanning has suffered as a result. This was made particularly apparent during your three weeks’ annual leave over the Christmas period when a temporary scanner operator had to be brought in at short notice to cover your absence. The quality of his work and the amount of time he took to do scans was significantly better than on what you had been producing.
2. You have considerable difficulty interacting with some of the clients to the extent that there are clients who have asked specifically not to deal with you. Despite having been advised not to speak with a specific client (at his request), you continued to do so. This almost resulted in the firm losing this client.
3. You have difficulty in relating to your fellow employees, causing unrest within the firm.
4. When you commenced employment with the firm you informed me that you were interested in becoming a partner. I advised you then that Vanda and I would discuss this at a later stage. As a result of the problems above, it is obvious that this is not a course we can pursue.
You advised me some months ago that you were on medication for stress. I feel that changing your responsibilities will assist you in this area. This position of production manager is not a full-time job and the duties relating to it have been distributed amongst other staff members as appropriate thus making this position redundant. As discussed at our most recent meeting, we have therefore changed your duties to scanning only, thus transferring your present salary to the equivalent hourly wage paid to other members of the firm, ie $16.00 an hour for a 37.5 hours per week. This is effective as of 27 March 1996, giving you the required period of two week’s notice. I have discussed these decisions with Vanda, who supports them.
I was informed by Sandra Ward that you had called on Wednesday 13 March and advised that you would not be coming back to work until later this week. As you know, I am always contactable by telephone at home, work or on my mobile. I did not at any stage give my consent to you being away from work for this period of time.
We emphasise that we would like to see you successfully address the problems at hand. If, however, you are unable to do so to our satisfaction within the next six weeks, then we have no alternative but to terminate your employment.
Yours sincerely (signed) C. M. Cagney”.
The Applicant has not worked for the Respondent since 29 March 1996. He received sick leave payments up until 2 May 1996. On 4 April 1996 a meeting was held to discuss the possibility of the Applicant returning to work. By letter dated 10 April 1996 the Applicant’s Union advised Ms Cagney that the reduction in his wages was not accepted and indicated that proceedings for unlawful termination would be commenced if the matter was not resolved. By letter dated 2 May 1996 the Applicant requested payment of his outstanding annual leave.
In my view the memo of 25 March 1996 expressed Ms Cagney’s final view( in evidence Ms Cagney stated that she regarded the contents of the memo as being open to discussion but nothing on the face of the memo gives any indication of that), and was an incorrect reflection of the past events, (which was conceded by Ms Cagney in evidence).
The change of duties, hours and rate of pay as set out in the memo was a significant unilateral alteration of the Applicant’s contract of employment, which the Applicant refused to accept, both on 26 March 1996 and by his subsequent conduct and involvement of the Union.
In my view the action of the employer in delivering the memo to the Applicant by post can be regarded as the event which initiated the termination of the Applicant’s employment.
This matter can be distinguished from the factual situation in Strachan v Liquorland (Australia)Pty Ltd, 6 February 1996 (unreported) where Moore J found no termination of employment in the demotion of the Applicant. In that matter the applicant had accepted the unilateral alteration of the contract of employment.
I am satisfied in light of the English Authorities referred to by the Applicant’s representative (Marriott v. Oxford [1970] 1Q.B. 187, W. E. Cox Toner v. Crook [1981]I.C.R. 823, Bashir v. Brillo [1979] I.R.L.R. 295) that the Applicant’s conduct in subsequently accepting sick leave payments for a period of about 5 weeks and requesting his outstanding leave entitlements in the way that he did, ought not in any way alter the view that the Applicant refused to accept the variation in his contract of employment.
In my view the Respondent had no valid reason for the termination of the applicant’s employment.
The Applicant did not seek reinstatement. The Applicant’s Workers Compensation claim was settled on 27 August 1996 on the basis that the Applicant was paid weekly payments of compensation up to 2 July 1996. In my view it is improbable that the employment relationship between the Applicant and the Respondent would have lasted beyond a further six months having regard to the rate at which the relationship between Ms Cagney and the Applicant had deteriorated since the Applicant’s return from annual leave and the fact that it was by that time highly unlikely that the Applicant would have been allowed to join the partnership. I therefore award compensation to the Applicant in the sum of $10,200. The Applicant is also entitled to payment in lieu of notice pursuant to the provisions of Section 170DB. On my calculation the Applicant is entitled to $1700.
I certify that this and the preceding 4 pages are a true copy of the reasons for my judgment.
DATES OF HEARING : 22, 23 & 27 AUGUST 1996
FOR THE APPLICANT : MR S BLEWETT
FOR THE RESPONDENT : MR A CHISMEYSA
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