100421069

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES CHRIS TONCICH

APPLICANT

 -v-

 PEOPLE WHO CARE INCORPORATED

RESPONDENT

CORAM COMMISSIONER S J KENNER

DATE FRIDAY, 5 DECEMBER 2003

FILE NO/S APPLICATION 1566 OF 2002

CITATION NO. 2004 WAIRC 10538

_______________________________________________________________________________

Catchwords  Termination of employment – Harsh, oppressive and unfair dismissal and denied contractual benefits– Whether applicant resigned or was dismissed – Whether applicant denied reasonable notice of termination of employment - Principles applied – Lack of procedural fairness – Applicant harshly, oppressively and unfairly dismissed – Applicant denied reasonable notice – Application upheld – Order issued - Industrial Relations Act 1979 (WA) s 29(1)(b)(i), s 29(1)(b)(ii)

Result Application upheld. Order issued.

Representation

Applicant Mr G Bostock of counsel

Respondent Mr D Saunders

_______________________________________________________________________________

Reasons for Decision

1         The applicant was employed by the respondent as its chief executive officer from about 1986 until on or about 26 August 2002 when the applicant's employment came to an end in controversial circumstances.  On 26 August 2002, the applicant wrote a letter to the respondent purporting to tender her resignation, which had been communicated orally it seems, on or about 21 August.  The applicant claims that this “resignation” was involuntary and, in fact and in law, she was dismissed and dismissed unfairly. The applicant seeks compensation.  The applicant also says she was denied a contractual benefit in the form of reasonable notice of termination of employment.

2         Accordingly, the applicant has commenced these proceedings under s 29(1)(b)(i) and (ii) of the Industrial Relations Act 1979 (“the Act”).

3         The respondent by its notice of answer and counter proposal denies that the applicant was dismissed at all, in order to attract the Commission's jurisdiction.

Background

4         The salient facts are these. The applicant testified that she was employed by the respondent, which is a charitable organisation, in January 1986 initially as its development officer/fund raiser.  In 1994, as a result of an internal re-organisation, the applicant was appointed the chief executive officer of the respondent, which position she occupied up until the termination of her employment.  The applicant testified that her duties as chief executive officer included the day to day management of the respondent, and additionally, fund raising responsibilities which she had prior to becoming the chief executive officer.  The applicant was also a member of the respondent's board.  The applicant testified that as at 2002, she was paid a salary of $84,000 per annum, had the use of a motor vehicle and mobile telephone, and received seven weeks annual leave per year.

5         The applicant testified that at the time she was employed and subsequently, there was no discussion as to notice of termination of employment, and she always regarded her occupancy of the position as being secure until her retirement. 

6         The applicant gave evidence about events in July 2002.  At this time, she was on holiday in Bali.  Whilst in Bali, the applicant said she received a telephone call from Ms Milton, the respondent's finance manager.  The effect of the call was to advise the applicant that a full staff meeting had been called, from which she, Ms Milton, had been excluded.  This concerned the applicant which prompted her to call another staff member of the respondent, presumably to ascertain what was occurring.  The applicant testified that prior to her departure on holiday there were some “issues” in the workplace.

7         On the applicant's return from holidays, she telephoned the board chairperson, Ms Thompson.  The applicant informed Ms Thompson of her telephone conversation with Ms Milton and that she may receive a letter.  Apparently, Ms Thompson had already received a letter, which contained a number of staff grievances.  Ms Thompson advised the applicant that in light of this, she would call an extraordinary board meeting which was to take place at Ms Thompson’s home.  In the circumstances, the applicant was invited, along with Ms Milton, to attend the second half of that meeting.

8         The applicant testified that she subsequently attended this meeting which was on or about 2 August 2002, which was for the purposes of discussing an eight page letter of complaint by some of the respondent's program staff.  The applicant testified that she requested a copy of this document but this was declined.  The applicant said she was not told of any specific complaints at this meeting.  As a consequence of this board meeting, an independent reviewer was appointed to investigate the allegations.

9         Apparently, the reviewer undertook some inquiries within the respondent, in relation to the allegations raised in the letter of complaint.

10      The next material event on the applicant's evidence was a telephone call to her from Ms Thompson on or about 20 August 2002, requesting her attendance at a board meeting the following morning at 10.30am.  The applicant understood that the purpose of the meeting was to discuss the interim report of the reviewer.  As at that time, the applicant testified she had not seen any report prepared, which was to be discussed the next day.  The applicant attended the board meeting.  Present were Ms Thompson, and other board members Messrs Daly and Saunders.

11      The applicant testified that the meeting opened with Ms Thompson advising the applicant that as a result of the preliminary findings of the reviewer, the board of the respondent had lost confidence in the applicant as the applicant had lost the confidence of the majority of the program staff of the respondent.  She was informed that she was no longer required to work at the respondent.  According to the applicant, Ms Thompson handed her a letter of resignation for her to sign.  The applicant testified she could not believe what was occurring to her and asked Mr Saunders for a copy of the eight page letter of complaint.  This request was denied.  The applicant testified also that Mr Saunders said to her, in response to her statement that she could not believe what was occurring, words to the effect “Well believe it because I will be in your office tomorrow morning at 8.30.”

12      The applicant said she was in a state of shock and very upset.  She left the boardroom and went and told her assistant Mr Dikolli that “she had been sacked”.  The applicant then packed up her personal effects and went to put them in her car, assisted by Mr Dikolli.  As Mr Dikolli was putting the boxes into the applicant's car, Mr Saunders requested they be returned to the office so he could search them.  Additionally, the applicant was told that she could not take her motor vehicle and the respondent requested that she return the mobile telephone and the respondent's credit card.  A taxi voucher was given to her, and she left for her home shortly thereafter.

13      The applicant's evidence was she was very emotionally distressed and felt betrayed and frightened.

14      Later that afternoon, the applicant rang Ms Thompson as she had been requested by her to do, with her resignation by 5.00pm that afternoon.  The applicant's evidence was that she informed Ms Thompson that was she to understand that if she provided a letter of resignation, or signed the respondent's letter, she would get all of her entitlements and a reference.  Apparently, Ms Thompson started to respond but the applicant was too emotional to continue the telephone conversation.  The next day, the applicant received a copy of a pre-prepared letter in her name, to the respondent, dated 22 August 2002, tendering her resignation.  This letter was tendered as exhibit A1.  The applicant did not sign this letter.

15      Some five days later, on or about 26 August 2002, the applicant wrote to the respondent tendering her resignation.  She said that she did this, because she had received two letters of resignation to sign previously, and it was obvious that Mr Saunders had taken over her position.  The applicant testified that she was not going to get any money, she had three children and was scared.

16      Since the termination of the employment, the applicant said she has not worked.  She testified she had been unwell and has been receiving medical assistance and assistance from a psychiatrist.  The applicant testified she had been suffering from anxiety, stress and depression.  She said that this started to occur from about late June 2002.

17      In cross-examination, the applicant maintained that she had never received the detail of the allegations made against her.  She testified that she had not had the opportunity to properly deal with the allegations and considered the process was not fair or independent.  She did say however, that in the two meetings with the reviewer, she was aware of an allegation that she had bullied staff.

18      Mr Dikolli was also called to give evidence.  He testified that on the day the applicant left the respondent, when she came out of the board room, she appeared distressed and shaky.  He generally confirmed the account of events as given by the applicant.

19      Ms Godfrey of the respondent was called to give evidence.  She was the author of the letter of complaint.  However, as the respondent's case did not go to the merits of the issue, rather it confined itself to whether the applicant was dismissed or not, I do not deal with Ms Godfrey's evidence any further.

20      According to Ms Thompson, the chair of the respondent’s board, her response to the list of grievances she received about the applicant and staffing matters, prompted her to establish what she described as a mediation type of process.  Her evidence was that she appointed an independent reviewer, Ms Abbott.  When she saw Ms Abbott's interim report, Ms Thompson was very concerned and convened a board meeting to discuss it.  Arising from that meeting was a recommendation to meet the applicant, and to outline to her that she would be immediately relieved of her duties and a disciplinary inquiry established.  She testified that it was also raised as an option that the applicant be given an opportunity to resign.

21      Ms Thompson gave evidence about the board meeting on 21 August.  She testified that she relayed to the applicant, that she had lost the confidence of the board and the board had been misled.  The applicant was given the option of being suspended subject to a disciplinary inquiry, or she could resign.  Ms Thompson said that there was no suggestion of dismissal by the board, and the applicant requested time to consider her position, and she was given to the end of that day for that purpose.

22      Whilst in cross-examination Ms Thompson reiterated the options she said were discussed at the meeting, she accepted that a copy of a board minute put to her, only made reference to “releasing the applicant from her duties”, and there was no reference to the option of the applicant resigning.  Ms Thompson confirmed that it was the objective of the board, that from the meeting on 21 August, the applicant was to be removed from her position with the respondent.

23      Mr Daley to an extent confirmed Ms Thompson's evidence that at the board meeting on 20 August, concern was expressed about the reviewer’s interim report.  At the meeting the next day with the applicant, Mr Daley testified that the applicant was informed that she was to be removed from the position of chief executive officer.  When cross-examined about the option to resign, Mr Daley's recollection was not entirely clear but it seemed that this was put only somewhat higher than as an afterthought.

Consideration

24      On all of the evidence, I make the following findings.  I am satisfied and I find that as a consequence of a letter written by a staff member of the respondent, an internal review was conducted by an independent person, in response to complaints regarding staff management.  It seemed that some of these allegations, although not ventilated on the evidence, concerned the conduct of the applicant.  As a consequence, I find that the board, on reviewing the interim report, made a decision to remove the applicant from her position as chief executive officer of the respondent.  Whilst the evidence was not entirely clear on this issue, I accept the respondent's evidence that the question of resignation as an alternative to a disciplinary inquiry was raised in the board meeting of 21 August.

25      In relation to the applicant's position, I am satisfied and I find that she was not afforded an opportunity to view or consider the independent reviewer’s interim report.  That is, the applicant was not afforded an opportunity to respond particularly, to the content of the report, upon which the respondent’s board made its decision to remove the applicant from her position.

26      I also accept on the evidence, at the meeting on 21 August, and in the subsequent telephone discussion between the applicant and Ms Thompson, the applicant was in an emotionally charged state and was very distressed.  The applicant's distress was apparent even many months after the event, as she was giving evidence in the witness box.

27      I find that the applicant was requested to leave the respondent’s premises immediately, lost the use of her motor vehicle and mobile telephone, and on the evidence, was not paid any of her remuneration other than for her final week she was at work at the respondent.

28      I accept that on the evidence, the applicant, on the afternoon of 21 August in the telephone call to Ms Thompson, may have indicated that she had decided to resign, following the board meeting earlier that day.  On the evidence however, the telephone call was clearly very emotionally charged.  Subsequently, by letter of 26 August 2002, the applicant wrote to the respondent, tendering her resignation.

Was the Applicant Dismissed or Did She Resign?

29      The question of a resignation, truly voluntary, or a dismissal, is a jurisdictional fact necessary to be found by the Commission in order to ground jurisdiction in matters of this kind.  It is well settled that to attract the Commission's jurisdiction in claims of this kind, an employee must be “dismissed”: Gallotti v Argyle Diamond Mines Pty Ltd (2003) 83 WAIG 353 (IAC); (2003) 83 WAIG 919 (FB).  It is also the case, that in circumstances of a “resignation”, apparently tendered by an employee, those circumstances may be a dismissal for the purposes of the Act, if the contract of employment is not terminated truly voluntarily by the employee: Attorney - General v WA Prison Officers Union (1995) 75 WAIG 3156.  Furthermore, an employee may be “constructively dismissed”, in the event that the employer conducts itself by way of a breach of the contract of employment, going to its root, so as to justify its acceptance by the employee: Western Excavating (EEC) Ltd v Sharp [1978] QB 761 per Denning MR at 769.

30      For present purposes then, who really terminated the contract in this case?

31      It is clear from the evidence, that at least by 20 August 2002, the board of the respondent had determined that the applicant be “released” from her duties as chief executive officer.  It is also clear from the evidence of Ms Thompson, that the respondent considered it necessary to remove the applicant from that position forthwith.  Whilst it was not recorded in the board minute, I accept that as an alternative to a disciplinary inquiry, the question of the applicant resigning as an alternative was raised.

32      Considering this evidence and the relevant principles of law, in my opinion, the option given to the applicant was really no alternative at all.  In my view, it was quite plain that the respondent removed the applicant from her position as chief executive officer and required her to leave the premises of the respondent summarily.  The applicant was additionally, deprived of benefits under her contract, including the use of a fully maintained motor vehicle for these purposes.  Whilst I accept the submission of the respondent that the benefits such as the motor vehicle, mobile telephone and credit card were required for Mr Saunders to act in the chief executive officer position immediately, that fact cannot ignore the applicant's contractual arrangements with the respondent, which in my view, the respondent clearly breached.

33      Additionally, there was no evidence that the applicant received any payment at all, following her departure from the respondent premises.  There was no evidence that the applicant was suspended on full pay, or on any other basis.  I also accept that the applicant was told in the board meeting on 21 August, that Mr Saunders would be “occupying her chair” as chief executive officer, by 8.30am the next morning.

34      Taking the matter overall, if the act of announcing the respondent's intention in the board room and her subsequent deprivation of significant contractual benefits was not a dismissal at law, then in my view, the applicant's “resignation”, was not truly voluntary. There is little to distinguish in my opinion, a circumstance where it is said by the employer that police may be brought in for an investigation, unless an employee resigns, or a disciplinary inquiry is to be undertaken.  In both cases, the act of resignation is not truly voluntary, because it is an alternative to an obviously unpalatable course of action, proposed by the employer: Attorney - General v Prison Officers Union.  In my opinion and in any event, the subsequent resignation was really subsumed in the overall act of dismissal, which was at the respondent's initiative: Blaikie v SA Superannuation Board (1996) 64 IR 145 per Olsson J at 164 - 166.

35      Therefore, if there was not a repudiation constituting a termination of the employment contract, then in any event, the applicant was dismissed and she did not truly voluntarily resign.  

36      Having concluded that there was a dismissal, the issue then is whether it was unfair.  In my opinion, in all of the circumstances it was.  I appreciate that the respondent found itself in a situation they felt they had to deal with.   However, firstly, the dismissal was unlawful in that there was a breach by the respondent of the applicant’s contract of employment.  Secondly and more importantly in my view, the basis for the respondent’s decision to remove the applicant from her position was never put to her in detail.  She did not see the reviewer’s report or even on the evidence, become aware of the conclusions and/or recommendations in it in order to respond before she was removed from the position.  The only thing she was told was that she had lost the confidence of the board.  She was removed from the position and indeed the premises of the respondent, in a summary and humiliating manner in my view.  It is not at all surprising that the applicant was very emotional in these circumstances, as confirmed in the evidence of Mr Dikolli.

37      Furthermore, the applicant had, prior to these allegations arising, been in her position for a number of years.  In my view, the applicant was not afforded procedural fairness in all of the circumstances. 

Remedy

38      The applicant did not seek reinstatement and in my view in all of the circumstances, reinstatement or re-employment would clearly be impracticable.  I turn to the question then of compensation for loss.  The relevant principles in this regard are set out in the decision of the Full Bench in Bogunovich v Bayside Western Australia Pty Ltd (1999) 79 WAIG 8.  Prima facie, an unfairly dismissed employee is entitled to be placed back into the position, as far as possible in money terms, to that prior to their unfair dismissal. 

39      The applicant has not been able to seek alternative employment because of medical problems she has suffered since her departure from the respondent.  I am therefore satisfied that she has not been in a position to actively seek other employment.  I cannot be satisfied on the balance of probabilities however, that these problems are causally connected to the dismissal of the applicant as there was no direct evidence to this effect.  Neither the applicant’s medical practitioner nor her psychiatrist was called to give evidence.  In my view therefore, there can be no compensation for injury on this basis.  However, the applicant has suffered loss as a consequence of her unfair dismissal from 21 August 2002 to the date of the hearing and an ongoing loss.  At least to the date of the hearing that loss is some 14 months which at the remuneration of $84,000.00 plus the private use of a motor vehicle, to which I assign a nominal value of $10,000.00 per annum, I find that the loss for this period is in round terms $109,670.00.  Applying the cap of six months remuneration pursuant to s 23A(8) of the Act, leads to the sum of $47,000.00 and I find accordingly.

Contractual Benefits Claim

40      The only claim pressed by counsel for the applicant, was reasonable notice of termination of employment.   I am satisfied and I find that there was no agreed term in the applicant’s contract of employment for notice of termination of employment.  The law therefore implies a period of reasonable notice.  The principles in this regard are well settled and I merely advert to the discussion by the learned authors on this issue in Macken, O’Grady and Sappideen Law of Employment 5th Ed at pp-169-173.   Consideration is given to a range of factors or indicia, in determining what is reasonable in each case.  In the circumstances of the present case, given the applicant’s position, remuneration, age, length of service, and the nature of the respondent’s organisation, I consider a period of notice to imply as reasonable would be three months.  I assess this on the basis of the applicant’s remuneration as for compensation, in the sum of $23,000.00.

41      I order accordingly.