TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s.29 application for hearing of industrial dispute

Australian Municipal, Administrative, Clerical and Services Union
(T.4502 of 1993)

and

Crowther Richards Real Estate

Industrial Dispute - non payment of accrued annual leave

REASONS FOR DECISION

This application by the Australian Municipal, Administrative, Clerical and Services Union (AMACSU) concerned a claim for the payment of accrued annual leave by Crowther and Richards Real Estate (Crowther Richards) to Ms Karyn Johnson. The claim was contested by Mr Clues of the Tasmanian Chamber of Commerce and Industry Limited (TCCI) on behalf of Crowther Richards.

Mr Clegg appearing for AMSCSU specified the claim in the following terms:

Accrued annual leave	$821.14
less outstanding petrol account	207.18
Total claimed	$613.96

I was informed by Mr Clegg that Crowther Richards believed that Ms Johnson should have worked out one week's notice amounting to $257.40 and the claimed amount should have been reduced accordingly.

Mr Clegg advanced his submissions on the basis that Order No 1 of 1992 Consolidated, Clause 31 - Contract of Employment as it related to Salespersons and Managers, in the Estate Agents Award does not require the giving of notice. Similarly Clause 32 - General Conditions of that order does not refer to a requirement to give notice.

Clause 8 - Wage Rates, Division B, Salesmen and Managers, provides in subclause (b) that the minimum wage "shall be made to employees irrespective of the hours worked each week".

Mr Clegg submitted that Ms Johnson had fulfilled her obligations in respect of that particular provision.

To further support his position Mr Clegg referred the Commission to Order 2 of 1986 to Clause 23 - Termination of Employment which provided except for casuals, for the giving of one week's notice or the payment or forfeiture of one week's wages as the case may be. Mr Clegg made the point that Order 2 of 1986 did not contain any contract of employment provision and that termination of employment was subject to specific provisions. The same applied in subsequent orders i.e. 1 of 1988, 2 of 1988, 9 of 1989, 1 of 1990.

Having regard to the foregoing Mr Clegg submitted that up until Order 1 of 1990 termination provisions were contained in the award. However Order No 1 of 1992 which superseded 1 of 1990 did not contain a like provision. In 1 of 1992 the contract of employment clause does not make any reference to termination of employment requirements for Salesmen and Managers. Notwithstanding that employers in Division A, applicable to clerks, rent collectors and trainee valuers, continued to provide for the giving of one week's notice.

Mr Clegg was not aware why the requirement for the giving of notice was not contained in the award for Salesmen and Managers but he speculated:

"...when a sales consultant is given notice (or) if a sales consultant gives notice or are given notice ... they won't go out and list properties if they've got to work that week because ... in all instances, if they went out and listed a property and they were leaving at the end of the week, there's no financial incentive to them to list that property because they do not get the listing permission when they leave ..."

(In brackets mine) Transcript p11

Mr Clegg contended that was the reason why termination and the requirement to give notice was deleted from that part of the award applicable to Salesmen and Managers.

Mr Clues appearing for the Tasmanian Chamber of Commerce and Industry Limited (TCCI) detailed the amount of money owing by Crowther Richards to Ms Johnson in the following terms.

     Exhibit TCCI 1

In respect of the foregoing Mr Clues requested the Commission to determine that the deductions for leave taken in December 1992 and 1 week's wages in lieu of notice were valid.

On the question of whether or not three day's leave as set out in Exhibit TCCI1 should be deducted from Ms Johnson's annual leave entitlement, Mr Clues elicited sworn evidence from Ms Elizabeth Anne Richards who is a director of Crowther Richards. Ms Richards responded to Mr Clues' questioning by stating that Ms Johnson was not authorised to work over the December period in issue. She also indicated that there was no evidence of Ms Johnson having worked. Ms Richards said that Crowther Richards had -

"... received no listing, no contracts, no evidence of work coming in from the Claremont Office at all."

Transcript p17

Ms Richards answered Mr Clues by stating that she did not believe that Ms Johnson worked on December 29, 30 and 31, 1992.

In cross examination of Ms Richards by Mr Clegg, reference was made by Mr Clegg to a Statutory Declaration by an ex employee of Crowther Richards, Mr John Kara, to the effect that Ms Johnson had worked on the days in question. This was again refuted by Ms Richards. She said in her evidence that the Claremont Office -

"... was not manned by a receptionist. It had an answering machine there and as far as I'm concerned, as a director of the company, nobody was asked to work there."

Transcript p19

On questioning by the Commission Ms Richards agreed that Ms Johnson may have worked on the days in question without her knowledge and authorisation. Ms Richards also indicated that Mr Robin Smith also a director of Crowther Richards had also not given permission for Ms Johnson to work.

Having regard to the foregoing summary of the evidence, the Commission observed in the proceedings that the evidence was "inconclusive" (Transcript p22). Subsequently Mr Clues requested a short period of adjournment following which he submitted that:

"In order to assist the Commission we shall not contest the issues of whether Ms Johnson did or did not work ..."

and later

What we will be arguing is that if Ms Johnson did in fact work, then that work was not authorised. To that end we've heard sworn testimony from Ms Betty Richards that it was not authorised by her ... and that it may have been authorised by Mr Robin Smith."

Transcript p23

Mr Clues indicated that Mr Smith would be called as a witness. In the interim the Commission cautioned all of the parties concerning the giving of evidence and presentation of material and the potential for repercussions in the event the Commission was being deliberately misled. A further adjournment followed, subsequent to which Mr Clues submitted:

"If the Commission please, I'll endeavour to do what is commonly known a soft shoe shuffle. We intended to call Mr Robin Smith as a witness to indicate that he did not authorise the said employee to work on that particular day or those particular days in question. Having discussed the matter with him, to the surprise of all parties here - other than obviously Miss Johnson - the - there was in fact a request made by Miss Johnson to work to Mr Smith and in fact, Mr Smith did not dissuade or persuade and as far as I'm concerned a director who has been asked the question and does not say no, has in fact consented for the work to be done. Therefore we will not be pursuing to have the 3 days annual leave deducted from the annual leave entitlement:

Transcript p26

Having regard to the foregoing circumstances the Commission can take the view that at best Crowther Richards procedures concerning authorisation to work or not are in urgent need of review. It was not good enough for Ms Richards to come to the Commission to give sworn evidence only to find that the claim by Ms Johnson with regard to her working on December 29, 30 and 31, 1992, had to be conceded following discussions with Mr Smith. I would have anticipated that these discussions would have been held before the sworn evidence was given and would have taken place in the course of investigating Ms Johnson's claim. The fact that this apparently did not occur does not reflect well on Crowther Richards.

Turning now to the issue of notice of termination.

Mr Clues elicited sworn evidence from Mr Christopher John McGregor, Sales Manager who was directly in charge of Ms Johnson. His evidence was that Ms Johnson handed her resignation to him on Saturday 26 June 1993. He said in his evidence that the resignation had surprised him and that Ms Johnson indicated she would be starting with a new employer on the following Monday. Mr McGregor stated that he considered one week's notice would have been reasonable. The evidence of Mr McGregor also was that if Crowther Richards had initiated the termination then -

"... We generally would give a week's notice, but then we'd generally ask them to leave probably on that (same) day, but pay a week's payment ... for that."

(In brackets mine) Transcript p28

In cross examination of Mr McGregor by Mr Clegg it was clearly established that in circumstances where an employee resigns to work for another employer, the employer "generally would ask then to finish on the day" and "that would be the normal practice" (transcript p29). Other references in transcript show that Mr McGregor's evidence demonstrated consistently that employers ask employees, when notice has been given to leave on the same day. Mr McGregor said that this was "quite common" (transcript p32).

In his submissions Mr Clues acknowledged that the award at the time of Ms Johnson's resignation did not contain any provision relating to termination of the contract of employment. He said:

"Mr Commissioner, in relation to the question of notice, Mr Clegg seems to be relying upon a technicality. At the time of resignation there was not in fact any termination provision pertaining to Division B of the award. There was only contract of employment clause which required neither party to give notice."

However Mr Clues emphasised to the Commission that a termination provision was now back in the award. In that regard he said:

"Now Mr Clegg put justification on that being that the employers sought that variation to get rid of the notice because it then allowed them to finish people up without having them hanging around not doing any work and the like. The reality is that that provision is now back in the award by consent, that both parties are expected to give to the other party a week's notice, and as Mr Clegg's research has indicated, that has always been the case up until 1992 whereby virtue of what I would call just an oversight one addition of the award for a short period between 1992 and its recent overall, there was not in fact notice of provision."

and later

"What happened was during the structural efficiency exercise a new contract of employment clause was inserted into the award as a means of recognising the fact that this was a Commission based industry and there was an oversight that no reference was made in relation to notice, that was subsequently rectified by consent; not by arbitration, where the employer has now agreed that that was an oversight and it's been put back into the award.

It was never an issue of contention in 1992 because it wasn't something sinister; it wasn't that the union consented to it being deleted; it was just an oversight; nothing more and noting less, and that's why it is not on the transcript and that is why is has been re-inserted in 1993."

Transcript p33

In essence Mr Clues submitted that what he was seeking was that employers be treated equitably with regard to the giving of notice. He stated that as employers give notice to employees, employees should do the same having regard to:

(i)  custom and practice

(ii)  a common law requirement to give reasonable notice, and

(iii)  Section 47 of the Act provides for the giving of a week's notice, if wages are payable weekly.

A further aspect of the submission's advanced by Mr Clues was that if the Commission was not convinced that the omission of the termination provision in the award for salespersons was not a genuine oversight, then it? should have regard to the findings of the President when he determined that the Contract of Employment clause at the actual time was not capable of interpretation. Therefore Mr Clues submitted "one must fall back to common law because the award was uninterpretable." (transcript p37)

Mr Clues also relied on an extract from a CCH Employment Law Guide, Exhibit TCCI4, where at page 54-850 the following appears:

"Today the presumption is that, if no definite period is fixed by an award or a specific contractual provision, the contract may be terminated by reasonable notice."

It was submitted by Mr Clues that the above quote encapsulated what was in fact before the Commission. He submitted that as the award was silent on the question of notice, the Commission "must look at what is reasonable notice" (transcript p39). Mr Clues submitted that a week's notice is reasonable because that is what employers give to employees. Mr Clues acknowledged that an employer may not expect an employee to remain at work once notice had been given. He said:

"Now it is true to say that neither party would want to hang around the place, whether the termination was effected by either the employer or the employee. What I am indicating is that there is an expectation there, and Mr Clegg would as I said, sing quite loudly if the employer were to take an employee and not have given them a week's notice..."

Transcript p41

Mr Clues submitted, however, that employees do not have a unilateral right to leave the employer without providing the employer with the opportunity to retain the services of the employee for the week. He reinforced that submission by indicating that at common law it is expected that an employee provide reasonable notice to allow the employer time to find a replacement. He reiterated that a week's notice would have been reasonable in the circumstances.

Finding

The strength of the submissions advanced by Mr Clegg on behalf of Ms Johnson is in the absence of a specific award provision requiring the giving of one week's notice by an employer to an employee in the event of termination of the contract of employment. Also that it is custom and practice when an employee gives notice or is terminated by an employer, the employee is not expected to work out the notice period. The commercial reasons for that were discussed in this decision but essentially relate to an employee who has or has been given notice not being motivated to list properties on behalf of his previous employer.

Mr Clues strongly contended that it was an oversight that the award at the time of Ms Johnson's resignation did not contain a termination provision applicable to her. Therefore he contended that Section 47 of the Act should apply and also that the Commission have regard to common law where it is expected that reasonable notice be given. Further that the custom and practise was that employers gave notice to employees or paid them a week's pay in lieu of notice and the same should apply to employees.

This has been a difficult matter for the Commission to reconcile in that the arguments advanced by Mr Clues on the requirement to give reasonable notice, supported at common law and the Act, are compelling. However it is clear from the submissions of Mr Clegg and indeed acknowledged by Mr Clues, that employees who have terminated their employment are not expected to work out their notice. Having regard to that particular aspect this dispute really centres on the employer not having been given an option to decide that in the circumstances relevant to Ms Johnson, she should in fact work out the notice period. Accordingly it was contended that she should forfeit a week's pay in lieu of notice.

The evidence of Mr McGregor, Ms Johnson's direct supervisor, was that where an employee resigns the employer would in most cases ask them to finish on the day notice was given. Mr Clues confirmed that neither the employee or employer would want to "hang around the place" once notice had been given.

What the Commission is being asked to do is to enforce a common law obligation on an employee to give reasonable notice. Whilst I support that requirement I consider it also appropriate to give weight to what is accepted by me to reflect custom and practice that employers in this particular industry do not generally require employees to continue in their employment during the notice period. I consider that custom and practice to be compelling particularly in the absence of a specific award provision irrespective of why that circumstance arose. Also and having due regard to

the provisions of Section 47 of the Act and common law principle,I conclude on the basis of the evidence presented in this case, that I should support the custom and practice I have referred to.

Accordingly I am not prepared to find in this dispute matter that Ms Johnson forfeit one week's pay to be deducted from her accrued annual leave entitlement. A payment of $613.96 should be made to Ms Johnson by Crowther Richards no later than 28 December 1993.

R K Gozzi
COMMISSIONER

Appearances:
Mr S Clues with Ms W Spottswood for the Tasmanian Chamber of Commerce and Industries Limited
Mr R Clegg for the Australian Municipal, Administrative, Clerical and Services Union

Date and Place of Hearing:
1993
Hobart
October 28