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TASMANIAN INDUSTRIAL COMMISSION Decision Appealed - See T11844 Industrial Relations Act 1984 Sally-Anne Shade and Willow Court Training and Construction Pty Ltd
Industrial dispute - alleged unfair termination of employment - jurisdiction - employment relationship found - procedural fairness denied - no valid reason for termination - order REASONS FOR DECISION [1] On 25 August 2004, Sally-Anne Shade (the applicant) applied to the President, pursuant to Section 29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Willow Court Training and Construction Pty Ltd arising out of the alleged unfair termination of her employment. [2] This matter was listed for a hearing (conciliation conference) on 14 September 2004, and a further conference by way of audio-link was held on 30 September 2004. Subsequently the matter was listed for hearing on 5, 7 and 14 October 2004. Ms Shade was self-represented. Mr C Green, solicitor, sought and was granted leave to appear on behalf of the employer, with Mr D Bromfield. Background [3] The employer, Willow Court Training and Construction Pty Ltd, is redeveloping the Willow Court hospital site at New Norfolk into a complex embracing accommodation, restaurants and retirement units. Mrs Barbara Cavanough is the principal shareholder of the company. [4] The development was described as a $20m project extending over five or more years. [5] Mrs Cavanough is a financial adviser specialising in self-managed superannuation funds. Whilst resident in Hobart, Mrs Cavanough usually spent most of the working week in Sydney attending to her financial services business. This included sourcing investment funds for the Willow Court project. Typically Mrs Cavanough would spend one day each week, usually Monday, on the New Norfolk site. [6] In the November/December 2003 period Ms Shade was engaged to work for the employer. The major difficulty with this case was the profound conflict in the evidence on almost any issue of substance. This included status (i.e. whether employee or contractor), terms of engagement and duties. It was, however, common ground that Ms Shade was responsible for the administration of the site, although the extent of this role was in dispute. [7] On 5 August 2004 Ms Shade's services were summarily terminated. She was given a letter, which read:1
[8] The applicant contends that she was unfairly terminated. Initially Ms Shade sought reinstatement. However during closing submissions she conceded that this was impracticable, and sought appropriate compensation. [9] Mr Green submitted that it was open to the Commission to find that Ms Shade was in fact a "contractor", and thus beyond the jurisdiction of the Commission. Leaving aside this preliminary question, Mr Green conceded that there were some procedural shortcomings associated with the manner of termination. Nonetheless, there was a valid reason or reasons for termination and the totality of the circumstances outweighed any case for compensation based on absence of procedural fairness. Evidence [10] Evidence was taken from the following witnesses: · Sally Anne Shade, the applicant. · Barbara Cavanough, majority shareholder of Willow Court Training and Construction Pty Ltd. · David Bruce Bromfield, initially engaged by the employer to undertake an audit role, and subsequently appointed General Manager of the company following the termination of Ms Shade. · Matti Virkotie, building contractor, responsible for the supervision of the construction site. · Kevin Shane Glass, accountant, appointed by the company following the termination of Ms Shade. Procedural Fairness [11] Ms Shade said that at no stage had she been warned that her employment may have been in jeopardy, or that her work procedures required change. She was not provided with any additional training. [12] On 5 August 2004 Ms Shade was called to a meeting with Mrs Cavanough. Also present were Mrs Cavanough's husband and son, and Mr Bromfield. Ms Shade's recollection of what transpired is a follows:2
[13] Mrs Cavanough said she had received advice that Ms Shade's behaviour amounted to misconduct and there was no requirement to give warnings. On the reasons for termination Mrs Cavanough said:3
[14] Ms Shade then prepared from the computer records a statement of entitlements owed. This was examined by Mr Bromfield and Mrs Cavanough. Subsequently Ms Shade was asked to sign a handwritten statement, which read:4
[15] Ms Shade was given a cheque and left the site. Valid Reason for Termination [16] The issues going to the question of whether there was a valid reason for termination can be divided into two categories. [17] In the first category, which can be conveniently described under the heading of "terms of engagement", is a range of allegations, which, if proven, would amount to deceptive or fraudulent behaviour on Ms Shade's part. [18] In the second category the allegations relate to performance issues. I deal with each category in turn. Terms of Engagement: [19] Ms Shade had been involved with the Willow Court site in one form or another since 1999. In November 2003 she was approached by Mrs Cavanough concerning certain work on the development project. Ms Shade said she discussed her charges with Mrs Cavanough and her husband Harold Adams and followed this up with a confirmatory e-mail as follows:5
[20] Mrs Cavanough denied that she ever received the e-mail. Further, a Statutory Declaration from Gizem Ertem was submitted.6 In summary Mr Ertem stated that he held a degree in computer engineering; that he had undertaken a thorough search of all possible computer and server sites and that there was no evidence that the above e-mail had been sent. [21] Initially Ms Shade worked on a casual "as needs" basis. By e-mail dated 25 November to Mrs Cavanough, Ms Shade states:7
[22] Ms Shade said that Mrs Cavanough then offered her the position as manager on a full-time basis. This was to take effect from 1 December 2004. She said:8
[23] On 1 December 2003 Ms Shade wrote to Mrs Cavanough in the following terms:9
[24] Mrs Cavanough said that she did not receive this letter. [25] Ms Shade said that following discussion with Mrs Cavanough, the per km vehicle allowance was subsequently changed to a flat rate of $174 per week. [26] Mrs Cavanough's evidence in relation to these matters was as follows:10
[27] And later:11
[28] Mrs Cavanough said she did not become aware of the $35 ph until after Ms Shade was terminated. However Mr Bromfield said he made Mrs Cavanough aware of the position on the morning of and prior to the termination of Ms Shade. He said he believed Mrs Cavanough was mistaken in her evidence as to the timing of this knowledge. I accept the evidence of Mr Bromfield. Performance Issues: [29] In closing submissions Mr Green summarised the performance related issues as follows:12
[30] Ms Shade said that initially only a few people were on site. This grew rapidly during the first part of 2004 and peaked at 60 staff and contractors on site. [31] In relation to the payment of accounts, Ms Shade said: 13
[32] And later:14
[33] Ms Shade said she prepared a document titled "Creditors - requiring payment soon". In explanation she said:15
[34] On 12 July 2004 Ms Shade sent a memorandum to Mrs Cavanough which she described as a "payables summary". This memorandum read in part:16
[35] Cross-examined in relation to this document, Ms Shade said:17
[36] Mrs Cavanough was aware that Ms Shade did not have formal accounting qualifications. She said:18
[37] On the funding arrangements for the project, Mrs Cavanough said:19
[38] And later:20
[39] Mrs Cavanough denied that Ms Shade regularly asked for funds. [40] Mrs Cavanough said that she was continually asking Ms Shade for accounts and that Ms Shade failed to deliver. This, she said, prevented a valuation of the site, which was necessary for future funding arrangements. Mrs Cavanough said:21
[41] A document titled "Barbara Cavanough Funding" was tendered by the respondent.22 No explanation was provided as to the author of the document, or what purpose it served. It must therefore be treated with some caution. [42] The document does record that a "request" for funding was made on 20 March, 10 May, 29 May, 9 June, 26 June, 6 July and 9 July. Up until 10 May amounts received closely matched amounts requested. Between 29 May and 9 July there appears on its face to be a shortfall between amounts requested and amounts received in excess of $300000. [43] Mr Bromfield, who initially was engaged in an audit role, described the state of the accounts as "virtually useless". [44] Mr Glass, a qualified accountant engaged subsequent to Ms Shade's departure, said he had "found lots of shortfalls in the accounting processes". In particular he highlighted the absence of bank reconciliations. He also said an examination of the bank statements revealed that there were sufficient funds to conduct normal trading. [45] Mrs Cavanough stated that Ms Shade was asked to lodge an application for a liquor licence following a meeting on 17 May. The application was not lodged until late July. [46] Ms Shade said she understood her role as providing assistance to the restaurant manager in obtaining the licence. The requirement for the potential licensee to attend a compulsory training course had contributed to the delay. [47] The respondent referred to correspondence from the ATO concerning the non-completion of BAS for the period November 2003 to February 2004.23 [48] Ms Shade said this was discussed with Mrs Cavanough at the time and some thought was given to engaging a local individual with expertise in the area. She also telephoned the ATO and explained that the previous accountant had been forced to retire on medical grounds. The BAS was purportedly lodged under cover of correspondence from Ms Shade dated 3 August.24 According to Mr Bromfield, the ATO had advised that these returns were not received until 30 August. [49] Ms Shade said she never had any expectation of handling taxation matters, as in her experience, this task was invariably outsourced. [50] The respondent raised a number of other issues including building licences, a storage charge and certain petty cash transactions. They have been noted, but are not of sufficient moment to warrant a detailed analysis in this decision. Finding [51] I deal firstly with the preliminary jurisdictional issue. [52] Mrs Cavanough said she understood Ms Shade to be a contractor. Aside from this, no evidence was produced going to the well-litigated tests associated with employee/independent contractor considerations. Even if Ms Shade chose to describe herself as a contractor (which she did not), the evidence points overwhelmingly to an employer/employee relationship. Whilst it is not a matter I need to decide, it would seem that the term "contractor" might in some instances be used somewhat loosely on this project. The mere identification of an individual as a contractor does not, in itself, create an independent contractor/principal relationship if the evidence suggests otherwise. [53] In this case I have no hesitation in concluding that Ms Shade was engaged in an employment relationship with the respondent. It follows that the Commission has jurisdiction to determine the application on the merits. [54] In relation to procedural fairness, the evidence indicates that Ms Shade was not at any stage warned or counselled that her employment might be in jeopardy, based on performance grounds. [55] She was called to a meeting without being provided with the opportunity to have someone of her choosing present (see s.30(8) of the Act). She was summarily terminated without allegations being put and an opportunity to respond. When she asked for reasons, none were given. [56] She was given a letter of termination citing "misconduct". The Employment Separation Certificate, lodged 25 days after the date of termination, also cited "misconduct". This certificate was subsequently withdrawn and modified following the initial conciliation conference. [57] It is difficult to imagine a more profound denial of procedural fairness and I find accordingly. [58] The remaining question therefore is whether there was a valid reason for termination, and if there was, do the circumstances taken as a whole outweigh the denial of procedural fairness? [59] As indicated at the beginning of this decision, the witness evidence was in fundamental conflict on almost every key issue. There was however no basis for the Commission to make an adverse finding as to witness credit, such as would enable me to prefer the evidence of one witness to another as a matter of course. In certain instances however, I have drawn conclusions based on the balance of probability. [60] I deal firstly with the matter of Ms Shade's terms of employment. There can be no doubt that the allegations grouped under this category, would if proven, amount to misconduct justifying summary termination. At the heart of this question is the hourly rate, and to a lesser extent the vehicle allowance and mobile phone. [61] If I am to accept the respondent's contention, then I must conclude that Ms Shade, probably post-termination, constructed an elaborate fabrication of correspondence and events aimed at legitimising what she had allegedly put in place without the approval of Mrs Cavanough. [62] There is simply no evidence that would allow me to reach this conclusion. [63] Nothing was put to me that demonstrates how it is possible to get an e-mail print out, showing the date and time sent, unless the e-mail was actually sent. That is not to say conclusively that it was actually received by Mrs Cavanough. [64] The e-mail of 25 November points to the need for a properly defined staff structure and is consistent with Ms Shade's version of events that followed. [65] On the evidence it is simply not possible to conclude whether or not the 1 December correspondence was sent and/or received. [66] I would at this stage make the following observations: [67] Firstly, it is normal practice for an employer to specify the terms of engagement in writing, particularly for a relatively senior position. Mrs Cavanough did not provide any such advice to Ms Shade. This can be contrasted with a quite extraordinary capacity for detail in other aspects of the project, eg Exhibit A16. [68] Secondly, matters such as use of a mobile phone and vehicle allowance are commonly provided by an employer in circumstances similar to this. This is not to be construed as a positive finding in favour of Ms Shade's evidence, simply an observation that it would not be unusual to find such arrangements in an employment package at this level. [69] Both Ms Shade's and Mrs Cavanough's version of events are open. I am satisfied that Mrs Cavanough and Mr Bromfield were, at the very least, aware of the $35 ph issue prior to the termination of Ms Shade. In the circumstances the allegation should have been put to Ms Shade and an opportunity provided for a response. This did not occur. [70] There are two other aspects which are of note, although do not necessarily lead to any firm conclusion. [71] Immediately following the termination Ms Shade calculated her termination entitlements on the computer. This document25 clearly shows that the calculations were based on a rate of $35 ph. In light of the evidence, it seems unusual that both Mr Bromfield and Mrs Cavanough accepted these calculations without query. [72] Mrs Cavanough's evidence was that Mr Glass, an accountant engaged some three weeks prior to the hearing, was paid $26 ph. Mr Glass said he was paid $30 ph. In closing submissions Mr Green sought to clarify this by stating that the $30 includes superannuation. Assuming Mr Glass is paid superannuation in line with SGC requirements (i.e. 9%), this simply does not add up arithmetically. It also raises the question as to why superannuation would be paid at all to an independent contractor. I attach no particular significance to this inconsistency in the evidence, other that to observe, that absent documentation, it is quite possible, indeed likely, that the specifics of employment packages will become increasingly blurred in the memories of individuals as time goes on. [73] I conclude that in relation to the terms of employment, the respondent has failed to satisfy the onus of proving that Ms Shade behaved in a deceptive or fraudulent manner. [74] I turn now to the performance related issues. [75] It is not for the Commission to unravel the complexities of the financial arrangements in place for this project, save to observe that I am not surprised that Ms Shade felt she was under constant cash flow pressure. Whether this perception was justified is another question and not one the Commission needs to answer. [76] I am satisfied that there were shortcomings in the accounting procedures adopted by Ms Shade, and I highlight in particular the absence of bank reconciliations. Ms Shade said her experience with MYOB was limited. Whether she conveyed something different to Mrs Cavanough prior to appointment is not clear from the evidence. Whether these shortcomings might have been quickly overcome through some additional training does not appear to have been addressed by the parties. [77] I am satisfied that Ms Shade did on a reasonably regular basis seek funding from Mrs Cavanough and that these requests were not always met either in full or in a timely manner. It is clear that creditors were constantly pressing Ms Shade for payment. This raises the question of what possible motivation would Ms Shade have in subjecting herself to this unpleasant pressure, if she was confident that the funds were available to pay accounts on a timely basis? [78] The issues relating to the BAS and liquor licence were potentially serious. However Ms Shade offered explanations that, on face value, appear plausible. [79] Clearly there were issues emerging as to the management of the project. Where the blame for these difficulties should be attributed is another matter. More importantly, what steps did the parties take to retrieve the position? It would seem precious few. [80] It is not for the Commission to retrospectively micro manage these difficulties. That is a matter for the parties. If there were shortcomings in the performance of Ms Shade, they should have been brought to her attention, ideally with constructive proposals to redress the problems. If her employment was in jeopardy, she should have been told and given the opportunity to meet the employer's expectations. [81] It would seem that none of this occurred. The problems were allowed to continue without being addressed. Then, without warning, Ms Shade was summarily terminated without reasons on the grounds of misconduct. In my view there was no evidence of misconduct. It is possible that handled differently, a valid reason for termination, based on performance, may have ultimately emerged. However that position had certainly not been reached on 5 August 2004. [82] Whilst it is a matter for conjecture, it is possible that the position became too large and/or broad for one individual to handle. I am reinforced in this view by the decisions taken subsequent to Ms Shade's departure. It would seem that she has been replaced by a full-time general manager with a degree in business administration, a full-time qualified accountant and increased hours for the two administrative assistants. [83] I find that the respondent has failed to prove the existence of a valid reason for termination. [84] It follows that I find Ms Shade was unfairly terminated. Remedy [85] Given the level of obvious animosity engendered by Mrs Cavanough towards Ms Shade, I am satisfied that reinstatement is not a practical option. I am however of the view that an order for compensation would be appropriate. [86] I do not accept that Ms Shade had a five-year contract. She had knowledge that the project would continue for five or more years, and, all things being equal, she had a reasonable expectation that she would have a role in the project for the duration. This however falls short of a binding five-year contract. [87] I do not accept that Ms Shade's purchase of a new vehicle is something that I should take into account. Whilst this purchase was a perfectly reasonable decision at the time, it was not something mandated by the employer. [88] I accept that the payment received on termination covered entitlements only and is not something I need to take into account. [89] I acknowledge and accept the possibility, that even if the employer had followed due process; a valid reason for termination might ultimately have emerged. The qualifications of the individuals who have effectively replaced her give weight to this possibility. [90] In determining compensation in this case the overriding consideration is the remuneration Ms Shade would have been likely to receive, had she not been terminated. [91] In my view a reasonable period to allow for due process, including any additional training and assessment, would have been eight weeks. ORDER Pursuant to s.31 of the Industrial relations Act 1984, I hereby order that Willow Court Training and Construction Pty Ltd, The Avenue, Willow Court Complex, New Norfolk, Tasmania 7140, pay to Sally-Anne Shade an amount of eleven thousand two hundred dollars ($11200), such payment to be made not later than 5.00pm on Tuesday 7 December 2004.
Tim Abey Appearances: Date and Place of Hearing: 1 Exhibit R17 |
