BEFORE THE WESTERN AUSTRALIAN

INDUSTRIAL RELATIONS   No. 812 of 1986.

COMMISSION

 B E T W E E N :

  FRANCIS JAMES SLADE

    Applicant

    - and  -

  GRAHAM HART HOLDINGS PTY LTD

    Respondent

Before Commissioner S.A. Kennedy

The 13th day of March, 1987

Mr G.C. Baldock (of Counsel) appeared on behalf of the Applicant

Mr B.D. Williams appeared on behalf of the Respondent

REASONS FOR DECISION

THE COMMISSIONER:  This application is brought pursuant to section 29(b) of the Industrial Relations Act, 1979.  The Applicant claims that his contract of employment with the Respondent was unfairly terminated and that he has not been allowed by the Respondent due contractual entitlements.  He seeks an order from the Commission that the Respondent pay him compensation and the sum of the claimed entitlements.  The Respondent denies that the Applicant's dismissal was unfair and denies that any entitlements are due.

The Applicant's claim as lodged was for compensation and entitlements totalling $4,021.00.  This total had four components - salary for the period April 18, 1986 to May 22, 1986 ($1,507.60); payment in lieu of the salary for the period May 23, 1986 to June 30, 1986 when the Applicant's notice of termination of the contract of employment was due to take effect ($1,684.00); payment in lieu of the petrol which would have been provided for his

private use for the period from May 22, 1986 to June 30, 1986 ($165.00); and a payment for pro rata annual leave ($665.00).

At the outset of proceedings in this matter counsel for the Applicant sought the leave of the Commission to vary the claim as lodged and to add two items.  The variations sought were to the first two items listed in the foregoing which would thereby become salary for the period May 1, 1986 to May 21, 1986 ($917.80); payment in lieu of salary for the period May 22, 1986 to June 30, 1986 ($1748.20).  These variations were allowed.  One addition sought was a claim for payment of salary for a two week period in November 1985 when the Applicant undertook work for the Respondent.  The other was for damages of $2,000.00 arising from an alleged failure by the Respondent to fulfill its contractual obligations to the Applicant with regard to a calf rearing project to be undertaken on the property, Culburra Downs.  The Respondent opposed these additions.

Having heard from both parties on the matter and having regard for all before the Commission, including the exchange of further particulars between the parties after the conference held pursuant to section 32 of the Act before the Commission as currently constituted, I concluded that only that additional claim pertaining to the calf rearing project should be allowed.

Mr Slade was employed by Graham Hart Holdings Pty Ltd as the manager of its farming property, Culburra Downs, in the Waroona District.  The usual and main activities of this farm have been and were at the relevant time the rearing of beef cattle for the production of baby beef, and also sheep for the production of wool and meat.

The Respondent company has seven equal shareholders, all being members of the one family.  It was the practice during the Applicant's period of employment for some or most of these shareholders and other members of the extended family to undertake various farming activities on Culburra Downs on weekends.  The Applicant's principal point of contact with the Respondent throughout was with one of the shareholders, Mr Richard Hart.  It was a contact duly established at the point of engagement.

The terms and conditions of the contract were matters discussed between the Applicant and Mr Graham Hart and his son, Mr Richard Hart, for the Respondent at a meeting at Welshpool in October 1985.  Prior to that some discussions over the telephone about the possibility of employment had taken place between Mr Richard Hart and the Applicant, who was then based in the Albury - Wodonga region.

It was agreed between the parties that the terms of employment included benefits to the Applicant of a salary of $16,000 per annum, a 10% bonus based on the nett farm profits, the use of a telephone free of charge, meat for his own consumption, petrol free of charge for his personal use and for use in his capacity as farm manager, a house which was to be repainted internally prior to his taking up residence, and four weeks' annual leave.

The Applicant claims there were other and additional terms.  These were that the hours to be worked per week were forty with no payment for overtime; that the house was to be renovated as well as painted; that the carpets in the house were to be cleaned or replaced; that new blinds and an electric stove were to be installed; that all plant and equipment on the farm was to be made available to the Applicant in good working condition, with the Applicant to be responsible as far as possible for its maintenance thereafter; that a Toyota FJ45 4 wheel drive vehicle was to be provided on the same basis; that "Normal holiday, sick leave, etc. provisions" were to apply and that the bonus of 10% of the nett farm profit was to be paid for each year of employment.  The Applicant also claims that it was a condition of his employment that the parties undertake a calf rearing project.  This last will be dealt with subsequently.

The Respondent counterclaims that in respect of annual leave it was a benefit which was to become due after 12 months' continuous service with no provision for any pro rata entitlement; that the 10% bonus of the nett farm profits was to be calculated on the basis of each financial year; and that no hours were stipulated but that the position of farm manager was at all times a full-time one.  All other claims were denied by the Respondent.

The scheme of the calf rearing project which the Applicant claims was a contractual entitlement may be briefly described.  It involved some 20 dairy cows belonging to the Applicant's family being placed on Culburra Downs.  Milk from these cows was to be used to feed 200 calves which were to be purchased by the Respondent.  Prior to marketing the calves were to be fed on pasture.  The Applicant was to receive 10% of the nett profits from the marketing of the reared calves with the remainder going to the Respondent.  According to the Applicant the refusal of the Respondent to comply with the terms of the contract of employment in this respect effectively denied him the sum of $2,000.00, that being 10% of the expected nett return based on prices current at the relevant time.  The Respondent acknowledges that the calf rearing project was discussed prior to the commencement of the contract of employment but denies it became a term of that contract.

I have considered the submissions and evidence of this aspect of the claim by both parties at great length.  It is my conclusion that it is unlikely that the Applicant would have accepted the position of farm manager with the Respondent unless he believed, after discussions with the Respondent, that the calf rearing project would occur.  However, that does not of itself establish that it was a term of the contract of employment or, if it was, that it would take place immediately.  Nor, in my view, can either be implied.

Given the previous experience of the Respondent with such a scheme when, albeit under a previous farm manager and with a different feeding approach, half of the calves involved died before the scheme reached fruition, it is reasonable to conclude that the Respondent would have been hesitant to commit itself to the expenditure involved by agreeing to it as a term of the contract of employment from the outset.  It is my view that at the point where the contract of employment commenced it was highly probable that if the Respondent was satisfied as to its viability the calf rearing project would proceed in the manner outlined in the foregoing, but that is all.  And clearly that is insufficient to establish it as a due entitlement pursuant to section 29(b)(ii) of the Act.

And for this part of the claim to suceed pursuant to section 29(b)(i) of the Act - i.e. by way of compensation awarded in the event of a finding of unfair dismissal, it is my view that it is necessary for the Applicant to demonstrate that such compensation was warranted by the damage suffered by the Applicant as a consequence of such dismissal.  But the facts are that the abandonment of the calf rearing project by the Respondent occurred in January 1986 and the Applicant gave notice of termination of the contract of employment early in May 1986.  Both events preceded the Applicant's dismissal.  There was no prospect of the calf rearing project proceeding in the period between when the notice of resignation was given and the date it was to take effect.  Therefore the contention that the Applicant suffered a loss, measured in terms of the calf rearing project, as a result of the dismissal has no substance.

The other aspect of the claim pertaining to section 29(b)(ii) of the Act is for a payment equivalent to pro rata annual leave.  But the reference in the Applicant's further particulars to "normal" holiday provisions was not taken much further by way of submissions or evidence.  In my view the Applicant has not established that it was a term of his contract of employment that he was entitled to annual leave on a pro rata basis.

It remains to consider the Applicant's claim that he was unfairly dismissed.

A number of facts leading to the dismissal are relevant.  Early in May 1986 the Applicant gave notice to Mr Richard Hart, for the Respondent, that he was terminating the contract of employment.  It was subsequently agreed between the parties that the contract would end on June 30, 1986.  The applicant was dismissed on May 22, 1986 by way of a letter delivered to him on that date.  Other events directly relevant to the dismissal are considered subsequently.

The Respondent made a number of allegations in the letter of dismissal.  These include references to excessive use of petrol and of the telephone, inadequate feeding of stock and neglect leading to stock deaths and, at least implicitly, misuse of stock feed.  But the most serious allegation was that by working "full-time" for one motor vehicle sales company from February 10, 1986 to May 2, 1986 and for another from May 5, 1986 without the knowledge and consent of the Respondent the Applicant had been disloyal and, it is implied, this action by the Applicant accounts at least to some degree for the other situations of which the letter complains.

There is no evidence which establishes that the Applicant was working elsewhere on a full-time basis during the period of his contract of employment with the Respondent.  However, that does not dispose of the issue of external employment entirely because the Applicant acknowledged that he was employed part-time as a motor vehicle salesman by an employer other than the Respondent  during his contract of employment with the Respondent.

According to the Applicant the total number of hours he worked in this other employment was limited to the period February 10, 1986 to May 2, 1986, and was only undertaken by the Applicant in the belief that Mr Richard Hart had condoned it.  This last point, according to the Applicant, was in the context of Mr Richard Hart's embarrassment about the vetoing of the calf rearing project by other shareholders in the Respondent company a mere three weeks after the Applicant commenced working for the Respondent.

The Applicant acknowledged that he did not tell any member of the Hart family, including Mr Richard Hart of the details of this other employment but he claimed this was due to the express preference of Mr Richard Hart.

Mr Slade gave evidence that his work with the motor vehicle sales company, which was located in Mandurah, was only performed when his farm duties permitted; that it never exceeded five hours on any one day including travelling time; that at no stage did he work on five days in any one week; that the hours in which he did this work were in the middle of the day when his farming duties for the morning were completed and his afternoon/evening farm duties were yet to begin; that he did not leave the farm at all if it appeared a cow was to begin calving, or he may be needed; that his son Byron competently acted as overseer in his absence; that the Applicant was always in a position to return to the farm in the event of an unforeseen need arising in his absence; and that responsibility for animal husbandry on Culburra Downs was at all times effectively and conscientiously carried out by him notwithstanding his other employment.

Mr Slade's evidence regarding the second motor vehicle sales company was that though he was "on its books" from May 5, 1986, this was a technical detail related to a franchise contract and he had not actually done any work for this company prior to his dismissal on May 22, 1986.

In his evidence Mr Richard Hart denied that any authority, implicit or otherwise, was given at any stage by the Respondent to Mr Slade to look for or undertake any other employment, including part-time employment, during his engagement as farm manager and that the first knowledge he had of it, other than suspicions raised with him by other members of the Hart family, was on May 15, 1986.

Having regard for all before he I have concluded that the question of whether the Applicant's actions in securing part-time external employment constituted misconduct is a proper one in these proceedings.  At this point it should be made clear that the question is not whether the Applicant had a right to undertake another contract of employment whilst engaged by the Respondent.  The question is whether, in all the circumstances, the Applicant's action in undertaking another contract of employment whilst engaged by the Respondent was such that it struck at the heart of his contract with the Respondent.

And I have concluded that that question alone is the crux of the matter for the following main reasons.

First, some of the Respondent's complaints in the letter of dismissal which may have constituted abuse of the contract of employment are not substantiated.  There is insufficient before the Commission to establish that the Applicant abused his right to the use of the telephone and of petrol.  Further, the question as to whether the Applicant misused stock feed is not one which the Respondent prosecuted with vigour and, in the absence of any detail of the terms of the arrangement between the Applicant and the Respondent on this matter and other circumstances of it, there is no finding here.

Second, the fact is that though there were stock deaths during the Applicant's period of employment, the Respondent did not terminate the contract at a relevant time.  It follows that for the stock deaths to be considered in the grounds for summary dismissal it was necessary for the Respondent to establish that these deaths or a significant number of them were attributable to the neglect of his duties by the Applicant as a direct consequence of his external employment.  In my view that connection has not been established.

I have carefully considered the evidence of the Applicant and Mr Richard Hart on the question of external employment and all other aspects of the case.  Both gave their evidence in a forthright, honest manner and I was left with the impression that if the management of the farm had simply been left to these two individuals, this matter would not have come before the Commission.  It is clear that from its outset the employment relationship was dogged by suspicion and criticisms of some of the other shareholders and members of their families.  It is equally clear that early on in the contract, and partially as a consequence of the foregoing, the Applicant was both disappointed and disillusioned by the situation in which he found himself.  The abandonment of the calf rearing project so soon after the commencement of his employment was one, and undoubtedly a major factor in this disillusionment.  But these observations do not significantly bear on the basic question in this matter.

The position of farm manager was always a full-time one.  It is clear from the evidence that neither the Applicant nor the Respondent defined this as a set number of hours per week.  Indeed, given the industry and the type of work entailed, it would have been surprising if they had.  Equally clearly the type of work involved entailed an "on-call" component, particularly in relation to calving.  In my view, any diminution of the Applicant's ability to respond to on-call situations, whether actual or potential, was a serious matter which the Respondent was entitled to have knowledge of and to give consideration to in the light of its contract with the Applicant.

I consider it unlikely that Mr Richard Hart would have agreed to the external employment situation as described by the Applicant for the period February 10, 1986 to May 2, 1986 had he known the details.  And I consider it likely Mr Slade knew this.  There are two main reasons for this conclusion.  The evidence is that the Respondent was always opposed to the Applicant's son having any managerial role or responsible position on the farm and this was known to the Applicant.  Second, the calving season was imminent and, while the parties agreed during the proceedings that the Applicant is very skilled in the work which may ensue, the application of these skills and his expertise in forecasting the calving process were not matters established by demonstration at the time the Applicant says he raised the general question of external employment with Mr Richard Hart.

Having regard for all before me I have concluded that in the circumstances the Applicant had a responsibility to detail the external employment to the Respondent.  In failing to so do he effectively abrogated the Respondent's rights in the matter.  In my view the Applicant's action was sufficient to warrant summary dismissal.

But that is not the end of the matter because it is a fact that a summary dismissal of the Applicant by the Respondent was not effected appropriately.  The Respondent allowed the contract of employment to remain on foot after discovering the Applicant's misconduct.

Mr Richard Hart's evidence was that he discovered on May 15, 1986 that the Applicant had employment external to his farming duties during the period February 10, 1986 to May 2, 1986.  As a result the Applicant's salary for the month of May which, in normal circumstances would have been paid into the Applicant's bank account on that day, was not so paid and the Respondent decided to terminate the Applicant's employment for misconduct.  But though salary was withheld, and continued to be, the Applicant was not immediately dismissed.  Mr Richard Hart's evidence is that it was intended to "break the news" of his dismissal to the Applicant on the evening of Sunday, May 18, 1986 "after the workload [of that day] had been completed".  But this did not eventuate either.  The further evidence is that on Monday, May 19, 1986, Mr Richard Hart discovered that the Applicant had entered into an employment relationship with another motor vehicle sales company on May 5, 1986.  A letter of dismissal dated May 19, 1986 was drawn up.  It was delivered by hand to the Applicant on the evening of May 22, 1986 by one of the shareholders of Graham Hart Holdings Pty Ltd, Mr David Hart, i.e. seven days after the Respondent became aware of the Applicant's action in taking external employment.

Clearly an employer, not having exercised its right under common law to summarily dismiss an employee for misconduct at the time when the misconduct justifying dismissal became known to it, cannot reserve that right for future use on the same grounds, and cannot thereby abrogate contractual entitlements.  It follows that the Respondent unfairly dismissed the Applicant in this instance.

The Applicant's claim regarding entitlements is threefold.  First he claims he is due salary up to the time of his dismissal.  Second he claims he is due payment from the point of his dismissal to June 30, 1986 when his resignation would have taken effect.  Third he claims he is due payment in lieu of the petrol he would have had available if the contract had remained on foot to June 30, 1986.

The Applicant was paid on the third Thursday of each month for that calendar month.  The last salary payment received by the Applicant was on April 18, 1986.  It follows that the Applicant received due salary for April 1986 but received no salary for any part of May.  In my view he is due salary for that period in May when he was employed by the Respondent, i.e. May 1, 1986 - May 22, 1986.  The question then is whether he is due payment in lieu of notice for the period claimed or a lesser period or at all.

I accept that it was an agreed term of the contract between the parties that notice of one month be given in the event of its termination by either party.  But it was not an agreed term that there be payment in lieu of notice.  Nor, in my view, does the occupation involved and terms such as the on-site residence by the employee allow of any implied term of payment in lieu of notice.  Similarly, I find that there was no contractual entitlement to payment of monies in lieu of the petrol provided under the contract of employment.

It remains to deal with the question of compensation for the unfair dismissal of the Applicant.  The Applicant is effectively claiming compensation by way of a money payment expressed in terms of the entitlements he would have been due if the contract had continued to June 30, 1986.

In considering this question I have had regard for all before me, including the fact that the Applicant continued to reside in the Respondent's house for a period after the dismissal and that he already had alternative full-time employment available to him at the time of the dismissal, and have concluded that the Respondent should pay the Applicant the salary he would have received from the period May 23, 1986 - May 31, 1986 had he not been dismissed.

An Order reflecting the foregoing will now issue subject to any speaking to the minutes.