100424057

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES BEVERLEY AVRIL GOLDING

APPLICANT

 -v-

 P.I.H.A. PTY LTD

RESPONDENT

CORAM COMMISSIONER J L HARRISON

DATE OF ORDER MONDAY, 11 OCTOBER 2004

FILE NO/S APPLICATION 1712 OF 2003

CITATION NO. 2004 WAIRC 12971

_______________________________________________________________________________

Catchwords Termination of employment – Harsh, oppressive and unfair dismissals – Whether applicant terminated due to redundancy – Termination found to be due to redundancy –  Applicant unlawfully terminated –Failure to meet all requirements of s 41 of the Minimum Conditions of Employment Act 1993 and requirement to afford procedural fairness – Applicant unfairly dismissed – Reinstatement/Re-employment impracticable – Determination of quantum of compensation – No loss demonstrated – Compensation for injury ordered – Industrial Relations Act 1979 (WA) ss 26 and 29(1)(b)(i) Minimum Conditions of Employment Act 1993 (WA) ss 41 and 43

Result Application alleging unfair dismissal upheld.  No compensation ordered. Compensation for injury awarded.

Representation

Applicant Ms B Golding on her own behalf

Respondent Mr R Woodrow

_______________________________________________________________________________

Reasons for Decision

1          This is an application by Beverley Golding (“the applicant”) pursuant to s29(1)(b)(i) of the Industrial Relations Act 1979 (“the Act”).  The applicant alleges that she was unfairly terminated from her employment with PIHA Pty Ltd (“the respondent”) on 12 November 2003.  The respondent denies that the applicant was unfairly terminated and maintains that the applicant was terminated due to a genuine redundancy situation.

Background

2          It was not in dispute that the applicant was employed by the respondent as an internal sales consultant between 14 October 2002 and 12 November 2003 and the applicant’s terms and conditions of employment were outlined in a written contract of employment (Exhibit A2).  The parties also agreed that the terms and conditions of the Shop and Warehouse (Wholesale and Retail Establishments) State Award 1977 (No R32 of 1976) (“the Award”) formed part of the applicant’s contract of employment.  The applicant’s duties were as follows:

“1. RESPOND TO FAX, PHONE & EMAIL REQUESTS FOR QUOTATION FOR GOODS & SERVICES.

2. FOLLOW UP AND REPORT ON CUSTOMER QUOTATIONS.

3. PROCESS ALL REQUIRED PAPERWORK ON RECEIPT OF CUSTOMER PURCHASE ORDERS.

4. LIASE (SIC) WITH WORKSHOP AND DESPATCH STAFF ON A DAILY BASIS TO ENSURE CUSTOMER ORDERS ARE COMPLETED WITHIN THE REQUIRED TIME FRAME.

5. PROVIDE TECHNICAL INFORMATION TO CUSTOMERS AS REQUIRED.

6. GENERATE SYSTEM BASED INTERNAL SALES REPORTS AS REQUIRED.

7. PROMOTE PIHA FITTINGS AND INSTALLATION SERVICES TO NEW AND EXISTING CUSTOMERS.

8. PROVIDE INFORMATION AND SUPPORT TO ALL ACCOUNT, PROJECTS AND PURCHASING STAFF AS REQUIRED.

9. OTHER DUTIES AS REQUIRED.”

(Extract from Exhibit A2)

3          The applicant gave uncontradicted evidence that no performance issues were raised with her by the respondent throughout her employment.

4          During her employment the applicant had substantial periods of leave due to non-work related illnesses.  Between March 2003 and October 2003 the applicant took approximately 66 hours of paid sick leave and 42 hours of unpaid leave as she had no sick leave entitlements left throughout the period July 2003 through to the end of August 2003.  When the applicant was terminated she was paid four weeks’ pay in lieu of notice plus four weeks’ pay as a redundancy entitlement (Exhibit R1).

5         On 17 November 2003 Mr Scott Parker was employed by the respondent as a Project Sales and Business Coordinator.  Mr Parker’s job description is as follows:

“1. Respond to Fax, Phone, Email & Personal requests for quotation for goods & services predominantly in the Project/Large Scale supply & manufacture arena.

2. Comprehend & Analyse detailed engineering drawings & plans highlighting relevant components using Trade background skills.

3. Understand Tender documentation including Legal requirements & complex Terms & Conditions utilising Project Management skills & systems.

4. Build customer realationships (sic) by face to face meetings, by providing accurate data regarding products & services, by following up quotations & tenders and by using own well developed skills to understand the wide scope of requirements from various companies & industries.

5. Produce detailed production & shipping schedules for project requirements.

6. Attract and recruit new customers using previous industry knowledge & contacts.

7. Assist customers in rationalising their project requirements by advising & offering improved solutions using cutting edge methods & technologies and from prior experience.

8. Promote PIHA as a “Whole Solution” organisation for all project requirements within the Mining, oil, Gas Water & Industrial market place.”

(Extract from Exhibit R4)

Applicant’s Evidence

6         The applicant relied on a detailed statement that she lodged with her application outlining background relevant to her termination.  In April 2003 the applicant had a hysterectomy and was advised by her doctor to take up to eight weeks off work.  As the applicant was concerned about taking so much leave she raised the issue with the respondent’s General Manager Mr Bozenko Gavranich who reassured her that the amount of leave required to be taken was acceptable to the respondent.  However, as the applicant had only recently commenced employment with the respondent she only took three weeks’ sick leave after the operation before returning to work.

7          In mid June 2003 the applicant had a car accident during her lunch break and severely injured her hand.  Even though the applicant was upset and incapacitated by the incident she continued to work as normal.  The applicant had to attend a number of specialist appointments as part of her rehabilitation programme and as the appointments were at a public hospital she had no control over the dates of these appointments.

8          The applicant gave evidence that she was required to attend an appointment with a plastic surgeon on 14 July 2003 which conflicted with her work colleague Mr Andrew Bayly wanting time off that day to attend to a personal commitment.  This conflict led to an argument with Mr Bayly and subsequently a meeting was convened between Mr Gavranich and the applicant and at the meeting Mr Gavranich assured the applicant that “I shouldn't have any worries, I've just got to get myself well and return back to work.” (Transcript page 9).

9          The applicant stated that on or about 30 October 2003 she had a brief meeting with Mr Gavranich and he advised her that Mr Parker had been employed by the respondent and at the same time Mr Gavranich advised her that she may hear rumours but that she need not be concerned about her job.

10       As she was concerned about her ongoing employment the applicant initiated a meeting with Mr Gavranich which took place on 4 November 2003.  The applicant stated that at this meeting Mr Gavranich reassured her that her job was safe, that Mr Bayly would be moved out of the internal sales area and both the applicant and Mr Parker would remain in sales.  The applicant stated that work continued as normal after this meeting until late in the afternoon on 12 November 2003 when the applicant was asked to attend a meeting with the respondent’s Workshop Manager Mr Jim Carton and the respondent’s Human Resource Manager Ms Rachel Woodrow.  At this meeting the applicant was advised that her job had been made redundant as her sales had not been progressing due to the time she had off with the hand injury.  The applicant stated that she was shocked and upset by these comments and subsequently became angry.  The applicant then signed a document acknowledging that she had been made redundant and accepting receipt of notice and redundancy payments (Exhibit R1).  The applicant stated that she was insulted when she was required to immediately pack up her personal effects and was watched whilst doing so.  The applicant stated that prior to this meeting she was given no indication that she was to be made redundant or that the respondent had concerns about her performance.

11       As the applicant is a single parent with three dependent children she immediately looked for another position.  The applicant gave evidence that she was very worried at this time as she had to have another operation on her hand.  The applicant subsequently found alternative employment commencing on 1 December 2003 earning the same rate of remuneration as she was paid by the respondent.  The applicant stated that subsequent to her termination she had Bell’s palsy as a result of suffering stress in the period after her termination.  The applicant submitted a number of references in support of her good employment history (Exhibit A3) and a letter from her medical practitioner and medical reports (Exhibits A4 and A5) confirming the applicant’s medical issues throughout 2003 and 2004.

12      Under cross-examination the applicant agreed that the respondent granted her time off to attend medical appointments and advanced her annual leave entitlements as her sick leave accruals had run out.  When asked why she did not work additional hours to make up some of the time she took off the applicant stated that she was unable to drive due to the severity of the hand injury and as she had to rely on getting lifts to and from work this did not allow her to be flexible with her start and finish times.  The applicant stated that notwithstanding these restrictions she was able to commence employment at 7.00 am on some occasions.

13      The applicant stated that she only became aware that Mr Parker had been recruited by an employment agency after being told this by the respondent prior to the hearing.  The applicant maintained that Mr Parker was a friend of Mr Bayly as she shared an office with Mr Bayly and their conversations reflected this friendship.

Respondent’s Evidence

14       Mr Gavranich is the respondent’s General Manager and has been employed by the respondent since September 1993.  Mr Gavranich stated that the applicant was employed to assist Mr Bayly in inventory and equipment control and that her main role was to sell off-the-shelf fittings.  Mr Gavranich stated that as sales of off-the-shelf fittings reduced in 2003 it was uneconomic to continue to employ the applicant.  Mr Gavranich gave evidence that an increasing number of the respondent’s clients were requiring goods to be manufactured from drawings and the respondent needed someone with expertise and background in this area of sales.  As the majority of the respondent’s future work would require an awareness of technical skills necessary for the fabrication of special components compared with selling off-the-shelf stock the respondent decided to make the applicant’s position redundant as she was not qualified to undertake the new position.  Mr Gavranich stated that the respondent’s sales had substantially improved since the change to selling purpose made products.

15       Mr Gavranich confirmed that he did not discuss the respondent’s decision to make the applicant’s position redundant with the applicant prior to her termination.

16       Mr Gavranich informed the applicant in late October 2003 that the respondent had decided to employ Mr Parker.  Mr Gavranich maintained that he did not assure the applicant that her employment with the respondent was secure at any stage.

17       It was put to Mr Gavranich under cross-examination that the applicant could have fulfilled the requirements of Mr Parker’s position if given sufficient training.  Mr Gavranich stated that it was his view that the applicant could not undertake this role given her background and given the necessity for relevant trade qualifications to undertake this role.  When asked about whether or not he had assured the applicant in April 2003 that she could take as much time off as necessary Mr Gavranich stated that he could not recall stating this to the applicant.  Mr Gavranich stated that he did not tell the applicant at a meeting held in July 2003 not to worry about anything and that her job was safe.  Mr Gavranich confirmed that when he advised the applicant that Mr Parker would be commencing employment with the respondent he told her that he would talk to the applicant about his appointment but this meeting did not take place.  Mr Gavranich could not recall meeting the applicant on 4 November 2003.

Submissions

18      The applicant maintains that she was unfairly terminated as she was not advised that her job was at risk, she maintains that she should have been given the opportunity to continue being employed by the respondent and that Mr Parker’s position is the same position she had been undertaking.

19      The respondent maintains that as the applicant was not qualified to undertake the new role required in the internal sales section, which was different to that of the applicant’s existing position, and as there were no other positions suitable for the applicant with the respondent it was appropriate to make the applicant’s position redundant.  The respondent argued that because the applicant was given eight weeks’ pay at termination she was treated more than generously.

20      When asked about the respondent’s notice of answer and counter proposal that referred to the applicant being considered for redundancy because of her poor performance the respondent was unable to specify the basis upon which this claim was made nor was the respondent able to clarify why the notice of answer and counter proposal referred to the respondent making a decision in June 2003 to make the applicant redundant.

Findings and Conclusions

Credibility

21      I listened carefully to the evidence given by the applicant.  In my view she gave her evidence clearly, honestly and to the best of her recollection and her evidence was not broken down during cross-examination.  I therefore accept the evidence given by the applicant.  Even though Mr Gavranich was forthright when giving his evidence he did not answer some questions directly.  I also conclude that Mr Gavranich was not convincing when giving evidence about his discussions with the applicant at the end of October 2003 and early November 2003.  On this basis where the evidence given by the applicant and Mr Gavranich is inconsistent I prefer the evidence given by the applicant.

22       I turn now to the principles in relation to these matters and my findings and conclusions.

23       Redundancy is itself a sufficient reason for dismissal (Amalgamated Metal Workers and Shipwrights Union of Western Australia and Other v Australian Shipbuilding Industries (WA) Pty Ltd (1987) 67 WAIG 733).  Despite the requirement to accord procedural fairness, not every denial of procedural fairness will entitle an employee to a remedy.  No injustice will result if after a review of all the circumstances of the termination it can be said that the employee could be justifiably dismissed (Shire of Esperance v Mouritz (1991) 71 WAIG 891; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 430 per Brennan CJ, Dawson and Toohey JJ and at 466 per McHugh and Gummow JJ).  If a decision is made to make an employee redundant based on the operational requirements of the company that can be a valid reason for the dismissal.

24       I have concerns about the varying reasons given by the respondent to terminate the applicant.  Mr Gavranich stated at the hearing that the reason for the applicant’s termination was that the respondent decided to change its sales direction however, this was different to the reasons outlined in the respondent’s notice of answer and counter proposal which claimed that the respondent decided in June 2003 to make the applicant’s position redundant due to the applicant’s poor sales record.  Furthermore, having accepted the applicant as being a credible witness I find that on 12 November 2003 the applicant was told that she was being terminated due to poor sales and excessive time off work and not due to a decision to restructure the respondent’s sales section.  Notwithstanding these discrepancies however, I am of the view that the respondent has demonstrated that the applicant was terminated for a valid reason.  Having reviewed the duty statements of the applicant and Mr Parker I accept Mr Gavranich’s evidence that the respondent restructured its internal sales section due to a requirement to cater for selling custom made goods as opposed to goods sold off-the-shelf and as a result of this change Mr Parker was employed, effectively displacing the applicant’s position.  I also accept Mr Gavranich’s uncontested evidence that this change boosted the respondent’s sales.  I therefore find that the respondent re-organised its sales section in October 2003 which eventuated in the applicant’s position ceasing due to a redundancy situation.

25       Having said that it is appropriate to consider any unfairness in relation to the process used in effecting a redundancy, as well as all of the circumstances surrounding the termination of the employment having regard to s26 of the Act.  The question to be determined by the Commission is whether the legal right of the respondent to dismiss the applicant has been exercised harshly or oppressively against the employee so as to amount to an abuse of that right (Undercliffe Nursing Home v The Federated Miscellaneous Workers’ Union of Australia, Hospital, Service and Miscellaneous, WA Branch (1985) 65 WAIG 385).

26       The provisions of Part 5 of the Minimum Conditions of Employment Act 1993 (“the MCE Act”) are implied into the applicant’s contract of employment and a failure to comply with the mandatory requirements under s41 of the MCE Act is a factor to be taken into account in deciding whether a dismissal is unfair (Gilmore v Cecil Bros and Ors (1996) 76 WAIG 4434, per the President at 4445; WA Access Pty Ltd v Vaughan (2000) 81 WAIG 373 at 378 and cases cited therein).

27       Section 41 of the MCE Act provides:

“41.  Employee to be informed

(1) Where an employer has decided to — 

(a) take action that is likely to have a significant effect on an employee; or

(b) make an employee redundant,

the employee is entitled to be informed by the employer, as soon as reasonably practicable after the decision has been made, of the action or the redundancy, as the case may be, and discuss with the employer the matters mentioned in subsection (2).

(2)  The matters to be discussed are — 

(a) the likely effects of the action or the redundancy in respect of the employee; and

(b) measures that may be taken by the employee or the employer to avoid or minimize a significant effect,

as the case requires."

28       Section 43 of the MCE Act provides:

“43. Paid leave for job interviews, entitlement to (sic)

(1) An employee, other than a seasonal worker who has been informed that he or she has been, or will be, made redundant is entitled to paid leave of up to 8 hours for the purpose of being interviewed for further employment.

(2)  The 8 hours need not be consecutive.

(3)  An employee who claims to be entitled to paid leave under subsection (1) is to provide to the employer evidence that would satisfy a reasonable person of the entitlement.

(4)  Payment for leave under subsection (1) is to be made in accordance with section 18.”

29       Section 41 provides that where an employer has decided to make an employee redundant the employee is entitled to be informed by the employer as soon as is reasonably practicable after the decision has been made of the redundancy and discussions are to be held with the employee about the likely effects of the redundancy and measures that may be taken to avoid or minimise its effect.  In this case these requirements were not met.  It is clear on the evidence that discussions did not take place with the applicant about the effect of the redundancy on the applicant and alternatives to termination were not canvassed soon after the respondent decided to restructure her position.  In fact, the opposite occurred.  I accept the applicant’s evidence that on at least three occasions she was assured that her employment with the respondent was secure.  For this reason, in my view, I consider that to the extent the applicant was not consulted in relation to her dismissal and discussions were not held about measures to minimise the impact of the termination on her, the applicant’s termination was unfair.  It is also clear on the evidence that s43 of the MCE Act was not complied with as the applicant was deprived of any ability to avail herself of paid leave to attend job interviews and in my view this leave should have been made available to the applicant prior to her termination.

30       In my view the applicant was denied procedural fairness given the manner of her termination.  The applicant was terminated without any notice and her termination was clearly sudden and unexpected.  Further, the applicant was not given an opportunity to argue for being placed in the restructured position.  It is also my view that the respondent was dishonest in its dealings with the applicant when it told the applicant that she was being terminated because of her poor sales record due to taking excessive time off.

31       In all of the circumstances I find that the applicant was unfairly terminated as she was not given a fair go all round.

Compensation

32       I am satisfied on the evidence that the working relationship between the applicant and respondent has broken down such that an order for re-instatement or re-employment would be impracticable.  The applicant is not claiming re-instatement and in my view given the particulars of this case re-instatement or re-employment is impracticable.

33       I am required to assess whether or not in all of the circumstances compensation is due to the applicant.  In a recent Full Bench matter Budget Airconditioning v Steven Rainsford Penn (2004) 84 WAIG 2171 at 2177 Smith, C reviewed the relevant authorities when determining compensation in a case of this nature.

“In Garbett v Midland Brick Company Pty Ltd (2003) 83 WAIG 893 Heenan J (with whom Parker J agreed) at [85] observed:

".... Leaving aside cases where an order for reinstatement might be made, which are likely to be rare where there has been dismissal for genuine redundancy, issues of the claimant's entitlement to the payment of any moneys due under his contract of employment, or to compensation for the loss or injury caused by the dismissal are discretionary under s 23A of the Act. There can be little doubt that the discretion should be exercised in favour of the claimant where actual loss or damage can be proved, but where no loss or damage is proved, or where any entitlement to damages or compensation is adequately covered by payments made by the employer to the employee at the time of termination, whether as wages in lieu of notice and/or for other accrued benefits, will always be a matter for investigation. If no loss or damage, nor entitlement to compensation for the former employee is established beyond payments which have been made by the employer then there would be no entitlement to redress because the powers conferred under s 23A are intended to compensate the employee who has been harshly, oppressively or unfairly dismissed in respect of losses so caused and no more. They are not a means for punishing the employer or for conferring any windfall gain upon the claimant. This does not mean that the compensation which the Commission may order under s 23A(1)(ba) of the Industrial Relations Act (sic) is restricted to the damages which might be recovered at law for wrongful dismissal, but it does mean that payments ordered under s 23A must be in respect of a lawful entitlement and/or as compensation for a demonstrated loss or injury caused by the harsh, oppressive or unfair dismissal.”

In relation to Mr Garbett at [101] Heenan J held:

" In my view, this decision will require a finding to be made about whether the failure of the respondent to observe its contractual obligation to inform Mr Garbett of the action on the redundancy and to discuss the matters required by the term of the contract imported by s 41(2) of the MCEA resulted in any identifiable loss or damage for the appellant, such as the loss of a real opportunity to take up some alternative position with the respondent, or to apply for, or obtain, another employment opportunity elsewhere. It also seems to require a finding to be made whether the likely effects of the redundancy might have been avoided or minimised by any discussion which the employer should have initiated but, in breach of its contract, failed to do.”

In Hooker v The Owners of Strata Plan 5679 Kashmir (2003) 83 WAIG 3948 ("Hooker's case") Mr Hooker was employed by the Respondent as a caretaker. The reason for termination was that his employer no longer had funds to employ him. There was a finding that the employer made no attempt to comply with the requirements of s 41(2) of the Minimum Conditions of Employment Act (sic). The Application and the Notice of Answer referred to some residual cleaning duties continuing at $75.00 per week. However, no evidence was given by either party that that was the case. It was argued on behalf of the (sic) Mr Hooker that he was entitled to claim a loss of an opportunity to obtain alternative employment with the Respondent and compensation should have been assessed on that basis. The Commission at first instance found that the Appellant would not have undertaken the residual cleaning duties if they were offered to him. The President, with whom Coleman C.C. and Gregor C agreed, held at paragraph [54] that the onus is on the Appellant to establish he had suffered a loss caused by the unfair dismissal, in this case a loss of an opportunity to obtain alternative employment from his employer or to obtain other employment elsewhere.  Mr Hooker's evidence was that he might have taken a position if it was a "Strata Act" position. At [59] the President held, "... it was not established by Mr Hooker that an opportunity existed on the balance of probabilities which he had lost by the breach of the implied s 41 term of the contract by the employer and by the unfairness of the dismissal occasioned by that breach."  Accordingly the appeal was dismissed.

In Hooker's case the Appellant was unable to prove that he suffered a loss as a result of the employer's failure to comply with s 41(2) of the MCE Act. In facts (sic) of this matter are, however, are different (sic). Mr Penn was deprived of continuing employment with the Appellant, that is, as a refrigeration mechanic at a salary of $36,000 per annum. His position of service manager/refrigeration mechanic at a salary of $44,000 was made redundant. It is clear that he could not have continued in that position. The consequence of these findings is that Mr Penn's loss, caused by the unfair dismissal, was the loss of the opportunity to take up the position as refrigeration mechanic at a salary of $36,000 per annum and his loss should not be assessed on the basis of $44,000 per annum. Accordingly, I am of the view that Ground 4 of the Grounds of Appeal is made out.”

34      Even though I have found that the applicant was unfairly terminated it is my view that when taking into account the relevant authorities, the applicant is not entitled to any compensation as she has failed to demonstrate that she has suffered any direct loss as a result of being made redundant.  The applicant has not demonstrated that another employee should have been made redundant instead of her, I accept that the applicant was not qualified nor sufficiently trained to undertake Mr Parker’s position and she has not demonstrated that she has suffered any loss as a result of the lack of opportunity to have discussions about the effects of the redundancy on her and measures that may have been taken to avoid or minimise the effect on her of the termination.  I therefore conclude that compensation is not due to the applicant.

Injury

35      The notion of injury must be treated with some caution (AWI Administration Services Pty Ltd v Andrew Birnie (2001) 81 WAIG 2849).  In AWI Administration Services Pty Ltd v Birnie (op cit) at  2862 Coleman CC and Smith C observed:

“It is accepted that there is an element of distress associated with almost all employer initiated terminations of employment.  For injury to be recognised by way of compensation and thereby fall outside the limits which can be taken to have normally been associated with a harsh, oppressive or unfair dismissal there needs to be evidence that loss of dignity, anxiety, humiliation, stress or nervous shock has been sustained.  Injury embraces the actual harm done to an employee by the unfair dismissal.  It comprehends ‘all manner of wrongs’ including being treated with callousness (Capewell v Cadbury Schweppes Australia Limited (1998) 78 WAIG 299).”

36      Further, there will be a degree of distress in most dismissal cases (see Nicholas Richard Lynam v Lataga Pty Ltd (2001) 81 WAIG 986).

37      Given the way the respondent handled the applicant’s termination in this instance I find that the applicant suffered injury over and above that which is normally associated with a dismissal.  I accept that the applicant was shocked and humiliated when she was terminated given that her termination was summary and unexpected and given the way in which she was supervised when she was required to pack up and leave the respondent’s premises straight after her termination.  I also take into account that the applicant was upset when she was told that she was terminated due to poor performance and excessive time off when this issue had not previously been raised with her.  I consider that the respondent’s treatment of the applicant was callous and in the circumstances warrants an award of $500.00 for injury being made to the applicant.

38       A Minute of Proposed Order will now issue.