T6563
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TASMANIAN INDUSTRIAL COMMISSION Decision Appealed - See T6915 and T6918 Industrial Relations Act 1984 Terence James O'Connor and Capital Hill Corporation Pty Ltd
Industrial dispute - termination of employment REASONS FOR DECISION This application by Mr Terence James O'Connor alleged unfair termination from two positions he held while employed by Capital Hill Corporation Pty Ltd. The Managing Director of Capital Hill Corporation Pty Ltd was Mr Mervyn Lee. Mr Lee and Fiona Lee were said to own or control the other companies with which Mr O'Connor was associated from June 1993. The first dismissal, which it was alleged occurred on or about 1 March 1996, was from the position of Group General Manager of Trident Consolidated Industries Pty Ltd. The second dismissal was from the position of Business Manager of the Storage and Distribution Division of Trident Consolidated Industries Pty Ltd which occurred on or about 26 September 1996. Mr O'Connor had held positions with other companies in the same group commencing with Trident Seafoods Pty Ltd; the Managing Director of that company, Mr Mervyn Lee, appointed him as Financial Controller on 15 June 1993; he was seconded to Hazell Pty Ltd as Finance Director on 2 May 1994 (but with a continued involvement in Trident's ongoing business) and he was put on the Board of that company. He was appointed Managing Director of Hazell Pty Ltd from June 1995 on a salary package of $150,000 per annum (Hazell Pty Ltd was later acquired and renamed Trident Consolidated Industries Pty Ltd). He was appointed Group General Manager Trident Consolidated Industries Pty Ltd some time about the end of October 1995, employed by Capital Hill Corporation Pty Ltd; his remuneration was unchanged. From 1 March 1996 he became Business Manager, Storage and Distribution Division of Trident Consolidated Industries Pty Ltd, still employed by Capital Hill Corporation Pty Ltd but on a salary package of $102,000 per annum. Mr P Evans, solicitor for Mr O'Connor, submitted that his client had been dismissed from his position as Group General Manager, Trident Consolidated Industries Pty Ltd with effect from 1 March 1996 and had no alternative but to accept the position of Business Manager, Storage and Distribution Division. Section 29(1B) of the Industrial Relations Act 1984 requires applications relating to termination of employment to be made within 14 days of termination. Accordingly, Mr Evans sought an extension of time to allow the claim alleging unfair termination of 1 March 1996 to be heard. Before that aspect of the matter was developed, Mr O'Farrell, solicitor for the employer, submitted the Commission lacked jurisdiction to entertain the application. He said a written contract existed between the applicant and Capital Hill Corporation Pty Ltd in respect of the more recent position; the applicant was not subject to an award; the applicant was not a member of, nor was he represented by, an organisation of employees; and no other employees were involved. The Commission was referred to the judgment of Zeeman J. in Gurr v. Gozzi and Newtown Timber and Hardware1 and other cases dealt with in this Commission which had relied on the latter judgment.2 3 4 It was submitted that a simple claim for reinstatement was not sufficient to give the application the necessary industrial character to confer upon it the status of an industrial dispute. Mr Evans submitted the Act had been amended since the circumstances of the Newtown Timber and Hardware matter had been before the Supreme Court. He said that the Act was now very clear and a dispute relating to the termination of employment or reinstatement of an employee was an industrial dispute for the purposes of the Act. He said the judgment related to a time when the Act did not contain the provisions of section 31(1A), which made it clear that the standards set out in the International Labor Organisation's Convention concerning the Termination of Employment at the Initiative of the Employer were to be taken into account by the Commission when making an order under section 31. In addition, he said, there was a claim for reinstatement which had been absent in the previous matters. I indicated to the parties that I agreed with Mr Evans on the main points he had made and in particular that I considered that the feature present in this matter which had been absent in all the other matters referred to was the claim for restoration of the employer/employee relationship. The fact that the applicant was not an award employee is, in my opinion, of no relevance for the purposes of dealing with applications regarding termination of employment. This is because an "employee" being a private or a State employee as defined, is not confined to a person covered by an award. In addition section 85 envisages employees being engaged under a contract of service. That section provides that once an award comes into operation it prevails over the terms of contract except where a contract provides more favourable conditions. There is no doubt in my mind that Mr O'Connor is a former employee for the purposes of the Act and is entitled to make an application whether he had a written contract of employment or not. In respect of the employer's reliance on the lack of involvement of an employee organisation in the dispute, the Act expressly confers upon a former employee the right to make an application under section 29 without the involvement of such an organisation. That right was not present in the Newtown Timber and Hardware matter. In my opinion, the absence of other employees from the dispute does no damage to the application, particularly given the applicant's claim for the reinstatement of the employer/employee relationship which existed prior to the terminations. The requirement that the Commission, in making an order pursuant to section 31, must take account of the ILO standards to which I have referred seems to me to add support to the contention that Parliament intended this tribunal to deal with applications from individuals as well as organisations. Additionally I consider a distinction between this matter and the Australian Commission cases referred to by the employer is that the Commonwealth Act, at the time of the matters referred to, particularly R v. Staples; Ex parte Australian Telecommunications Commission (1980) 143 CLR 614, did not provide an individual with the right to make an application and the legislation was based on the requirement that for a dispute to be found it had to have an interstate character. Those features are not to be found in the Tasmanian Act. Given the provisions of the Industrial Relations Act 1984, particularly the definitions in section 3 of "industrial dispute" and "industrial matter", and the wording of section 29, together with the enjoinder to take account of the ILO Convention, I am satisfied that so long as a former employee seeks reinstatement with his or her former employer within 14 days (or such other time as the Commission on application considers reasonable) of termination the application is within the jurisdiction of this Commission. Following my verbal ruling on that preliminary point, Mr O'Farrell requested an adjournment, which was granted, to enable him to take further instructions. On resumption Mr Evans further addressed the need to seek an extension of time if the Commission was to make a finding in respect of the first alleged unfair termination. Mr Evans submitted that the matters to be considered were whether there was merit in the application, whether there was an acceptable explanation for the delay and whether there was any prejudice to the other parties to the application. Mr O'Connor gave evidence as to the statement of claim which he had prepared. In respect of the first determination Mr O'Connor said he was given no period of notice. He said that his termination from the position of Group General Manager, Capital Hill Corporation Pty Ltd was effected "basically (by) an announcement made by Mr Lee, the owner and managing Director of the company" (transcript p.14). He said that he considered his dismissal from the position should have been dealt with as a redundancy followed by an offer of alternative employment and that he had raised the question of whether he should be offered a redundancy package; "but that was refused and it was take it or leave it" (transcript, p.15). He said that he was of the opinion that the offer of the position of Business Manager, Storage and Distribution Division of Trident Consolidated Industries would have been withdrawn if he had approached the Commission in respect of his first termination. Mr O'Connor said that due to his family and financial commitments he had reluctantly accepted the lesser position. In respect of the second termination, he said that no suggestion had been made that his service was unsatisfactory. No attempt had been made by the employer to find an equitable position within the organisation. The employer had refused the request for some form of redundancy or other appropriate remuneration. Mr O'Connor had no other suitable employment to go to and he had decided to establish his own consultancy practice. An estimate of his loss of income in gross terms as a result of the first termination was tendered and attested to and the witness said he would welcome reinstatement. Under cross examination Mr O'Connor confirmed that at the time of his first dismissal he knew he was entitled to approach the Commission and he denied that he was not serious about seeking reinstatement. He said he had discussed the continued operation of the Storage and Distribution Division with Mr Lee in January 1996, although he knew Mr Lee would have preferred to dispose of the Division. He said he had proposed that he should take direct responsibility for the Division while it was struggling. During cross examination, a copy of a document purporting to be the minutes of a meeting dated 3 January 1996 of the Executive of Trident Consolidated Industries Pty Ltd was tendered by Mr O'Farrell. Mr O'Connor expressed some reservations about it and particularly the fact that the minutes recorded that the position of Group General Manager would become vacant and that he had proposed his full time appointment as Manager of the Storage and Distribution Division. The transcript, at page 27, records the following exchange between Mr O'Farrell and Mr O'Connor:
And later, at page 32 of transcript, in an answer to Mr Evans during re-examination on the same topic:
Mr O'Farrell questioned Mr O'Connor on a number of exhibits he tendered purporting to deal with the financial results and prospects of those parts of the company for which Mr O'Connor had responsibility. Mr O'Connor agreed in many respects with the financial figures they contained. Mr O'Connor claimed he had not been in control for the full period of 1995/96 and that in the previous financial year the company had suffered a $3 million loss compared with a loss of $63,000 for the year in which for a time he had had responsibility. Mr O'Connor acknowledged he had presented an estimate of approximately $500,000 profit for that year but said that the end result was due to the failure to recover the full assessed value of items of plant sold in that period. It was not disputed that immediately prior to the second alleged dismissal Mr O'Connor had been negotiating to purchase the Storage and Distribution Division, and that Mr Lee had wanted to keep certain contracts of value to the company and the negotiations were not concluded before the division was sold and his employment terminated. Mr O'Connor said he understood that he had been expected to bring the transport division into profitability and he disputed the claim that he had failed to do so. He said he had suspicions at that time that Trident was increasingly becoming likely to restructure but he had not been involved in any "open and frank discussions" about it. He said it had been understood that should Mr Lee ever decide not to retain that part of the business that he would be allowed first option to acquire it. In re-examination of the witness by Mr Evans the following appears in transcript at page 35 in relation to Mr O'Connor's expectations for the division:
Mr O'Connor said that it was his understanding that the sale of the assets was less than he had offered Mr Lee for the business. He said he had had little contact with Mr Lee or Mr Hanley, the General Manager of Trident Consolidated Industries Pty Ltd, from March 1996 onwards. Mr O'Farrell argued that there was no case for an extension of time in respect of the first dismissal. He submitted that there had been no adequate explanation given for the delay in applying to the Commission particularly since Mr O'Connor had known at the relevant time that he could access the Commission. He also claimed that his client was prejudiced by the delay. He said again that the mere claim for reinstatement was not sufficient to provide the dispute with the industrial character required having regard to the Newtown Timber and Hardware judgment, and therefore there was no arguable case for the employer to answer. Mr O'Farrell said that Mr O'Connor knew in early January 1996 that he was to take direct responsibility of the Division and that the position of Group General Manager was to become vacant. He submitted that it was open to the company to conclude that Mr O'Connor was failing to perform and "that notwithstanding his recommendations or predictions that the company would go into profit, none of them were fulfilled". (transcript p.43) As to the second dismissal, Mr O'Farrell submitted that Mr O'Connor had no better right than that which was conferred by the letter of his appointment, dated 1 March 1996, which provided for termination by either party by giving one month's notice in writing. He said section 47(2) of the Act provided for notice in respect of termination of employment for employees not covered by an award and that Mr O'Connor should not be entitled to any better notice period. Mr O'Farrell submitted that there had to be considerations which would entitle Mr O'Connor to compensation over and above the period of notice available. It was submitted that Mr O'Connor was at such a high level of employment and of such a high level of education that it was reasonable to expect that he should be able to negotiate his own contract of employment and that it was not unusual for severance or redundancy provisions to be included in the employment contracts of such persons. He said that Mr O'Connor had been required to perform at a certain level which he had not reached and that it was reasonable to conclude that he had failed to perform to the level of the employer's expectations. Indeed he said none of Mr O'Connor's predictions that the Hazell's company would go into profit had been fulfilled. Mr O'Farrell said that if any error had been made by the employer it had simply been one of procedural fairness. He said:
(Transcript p.43) However he asserted Mr O'Connor had been consulted and that there had been a continuing process of review and reporting at management level. Mr O'Farrell submitted that since Mr O'Connor considered that Mr Lee had been "less than fair, less than honest with him", and that "he essentially has no trust in Mr Lee", reinstatement would be completely inappropriate. (Transcript p.43) Mr O'Farrell said the dispute was "barely more than a personal dispute between Mr O'Connor and Capital Hill", and that the "personal dispute had been resolved by the payment of notice and that the company should not be ordered to do any more than that". (Transcript, p.43) He said:
(Transcript, p.43) In response, Mr Evans claimed that no witnesses had been called to contradict the evidence given by Mr O'Connor or to attest to the documents tendered on behalf of the employer, and there had been no suggestion that the other persons involved in the matter were not available. He submitted there was no evidence of a valid reason for the first termination and the applicant had been given no opportunity to be heard on the matter. Mr Evans relied on the ILO Convention to support the claim that if reinstatement was not pursued then the only other remedy was compensation. He argued that Article 11 of the Convention required a reasonable period of notice or compensation in lieu thereof. In that respect he sought one month's pay in lieu of notice for the first dismissal. Mr Evans submitted that Article 10, which dealt with adequate compensation where a termination was unjustified, and Article 12, dealing with severance allowance or other separation benefits, were unrelated to the question of payment in lieu of notice. He sought a severance allowance of 3 weeks per year of service which, on a salary of $150,000, he calculated to be $28,800. He said that the severance allowance should apply to a justified termination but if the termination was found to be unjustified the compensation should be as set out in Exhibit E.4 which detailed the estimated total loss of earnings from 1 March 1996 to 26 October 1997 of $120,432. A similar process was advocated in respect of the second termination which, using a salary of $102,000 per annum, would result in a severance payment based on 3 weeks pay per year of service (by my calculations 3 and 4/12 years by 3 weeks per year or part thereof; 10 weeks at $1,961.54 = $19,615.40), and compensation for loss of earnings (by my calculation for the period 26 October 1996 to 26 October 1997 as per Exhibit E.4, $29,400), a total claim in respect of the second termination of $49,015.40. It was submitted that in determining what compensation and severance payments, if any, should be awarded, the Commission should bear in mind "how non transportable" Mr O'Connor's position was and how difficult it was for him to obtain alternative employment. Mr Evans drew the Commission's attention to an extract from The Law of Employment 2nd Edition 1984 (Law book Company) at Chapter 5, pages 77 and 78, dealing with the period of notice. FINDINGS The first termination and extension of time: The Commission has been requested by the applicant to grant an extension of time in respect of the termination which occurred on or about 1 March 1996. The grounds put forward on behalf of the applicant which it was agreed must be established when seeking an extension of time were categorised as being whether or not there was an arguable case; whether there was an acceptable reason for the delay in lodging an application, which, to meet the requirements of section 29 (1B) should have been lodged by 15 March 1996; and whether there was any prejudice to the employer by the delay. I agree those are the central criteria. More specifically, however, the principles to be followed when determining whether or not an extension of time should be granted can be found in the decision of Wilcox J. in Hunter Valley Developments Pty Ltd v. Cohen (1984) 3 FCR 344, 349. Those principles may be summarised (and I am indebted, for this purpose to Marshall J. of the Industrial Relations Court of Australia5) in the following manner:
Having considered the evidence presented and the submissions on behalf of the former employee and the employer, I am satisfied that Mr O'Connor effectively was dismissed from his position of Group General Manager, Capital Hill Corporation Pty Ltd as from 1 March 1996. I accept that he attempted to negotiate a redundancy package but was rebuffed by Mr Lee. To me his alternatives were clear; they were to accept the lesser paid position or to suffer the termination of his employment with the company and seek whatever remedy was available to him. I can understand Mr O'Connor's reluctance at that time to take action against his employer for reinstatement or compensation. However I do not believe that Mr O'Connor was coerced into a position where he had no choice. It is clear from his evidence that Mr O'Connor understood the requirement that an application in respect of termination of employment had to be made within 14 days of the termination occurring and it seems to me that he decided to wait and see how things turned out in his new position before approaching the Commission. There is no evidence to suggest that Mr O'Connor raised his concern about or actively contested the first termination with his employer once his last appointment commenced. Having made the decision to accept his new appointment with the same employer and allowed more than fourteen days to pass before taking any action, I consider he relinquished his entitlement to make an application pursuant to section 29(1A) of the Act in respect of his previous position. In these circumstances, I am not satisfied that Mr O'Connor has an acceptable explanation for the delay in making application to the Commission. Whilst there might well have been merit in Mr O'Connor's case in respect of the first termination, his lack of action and his apparent acceptance at the time of the new position heavily weigh against the granting of an extension of time. The question of prejudice to the employer is a neutral factor in this matter. The sixth factor is not relevant to this case. Accordingly I refuse the request to extend time for the purpose of considering Mr O'Connor's application in respect of the first termination. That part of the application is dismissed and I so order. The second termination: Mr O'Connor was appointed, Mr O'Farrell suggested he could well have been seconded, with effect from 1 March 1996, to manage the Storage and Distribution Division of the former Hazell Pty Ltd which was renamed Trident Consolidated Industries Pty Ltd. Advice of that appointment/secondment was conveyed to Mr O'Connor by letter (Exhibit E.2) dated 1 March 1996 from the General Manager of Trident Consolidated Industries Pty Ltd, Mr J Manley. The letter, amongst other things, set out the salary to apply, the requirements demanded of the employee, and the provision for one month's notice in writing on termination. The letter specified that Mr O'Connor's "employing entity will remain as Capital Hill Corporation Pty Ltd". Mr O'Farrell confirmed that fact. Mr O'Connor was formally notified of the "cessation of (his) employment with the Group ... effective 26 September 1996", by letter dated 27 September 1996 from Mr Lee, the Managing Director of Capital Hill Corporation Pty Ltd (Exhibit E.1). A cheque for one month's pay in lieu of notice was enclosed, together with accrued entitlements. The letter informed Mr O'Connor that "redundancy allowances" were not applicable in his case. It suggested "that consideration to independent arbitration by the State Industrial Commission be given should (he) not concur with this decision". It is apparent from the submissions and the evidence of Mr O'Connor that nothing was said to him by his superiors to suggest that his performance as manager of the Division was unsatisfactory and in fact Mr O'Connor felt he had done "a very good job in the circumstances" (transcript, p.17). However, on behalf of the employer, Mr O'Farrell endeavoured to demonstrate that Mr O'Connor had not performed at the level required by his employer, although he acknowledged that Mr O'Connor had not been told that his performance was not satisfactory. He asserted that Mr O'Connor had not been made redundant and argued that in accordance with the letter of employment, dismissal could be effected for any reason so long as one month's notice in writing was given. No witnesses were introduced by Mr O'Farrell to substantiate any of the employer's claims and the Commission is left to balance the evidence of the applicant against the submissions of the employer's representative. My assessment of Mr O'Connor as the witness was that he responded thoughtfully and honestly to all questions put to him and I accept his testimony. Article 4 of the ILO Convention on Termination at the Initiative of the Employer states:
Article 7 states:
Article 10 states:
Article 12 states in part:
Accordingly, taking into account the terms of the Convention, I have come to the conclusion that:
Given the material put to me, I do not accept that Mr O'Connor's termination was justified on the grounds of poor or unsatisfactory work performance. From the evidence and the submissions of Mr O'Farrell it is clear that no allegations of poor or unsatisfactory performance were put to him, nor was he told he would have to improve his performance. It appears that Mr O'Connor was simply told on one day that he was to finish up the following day. Accordingly I find that Mr O'Connor was denied procedural fairness in that he was not provided an opportunity to defend himself and I further find that in those circumstances Mr O'Connor was unfairly dismissed from his employment with Capital Hill Corporation Pty Ltd. From the evidence and submissions it is clear that most of the assets of the Division had been disposed of by the end of October 1996, the end of Mr O'Connor's notice period, and most of the staff were relocated or made redundant. It seems to me that the position of manager of the Division also became redundant, although the employer asserts that Mr O'Connor had not been made redundant from any position. I accept that submission given that Mr O'Connor was an employee of Capital Hill Corporation Pty Ltd, not Trident Consolidated Industries. I also accept the submission put by Mr O'Farrell that reinstatement is not an appropriate remedy in this case, notwithstanding the claim that Mr O'Connor would welcome reinstatement. I am satisfied that the relationship between the employer and Mr O'Connor is broken to such an extent that it would not be fair or practicable to impose reinstatement by order on these parties. Therefore I am satisfied that Articles 4, 7, and 10 should be taken into account in determining the remedy to settle this matter. Given the circumstances of this case and having taken into account the standards of general application set out above, I find that Mr O'Connor is entitled to a compensation payment to be based on his total length of service with the companies associated with Capital Hill Corporation Pty Ltd commencing in June 1993 and ending on 26 October 1996; approximately 3 years 4 months. In this particular case, having regard to factors such as the method of calculating redundancy payments for other employees of the Group, the high level of Mr O'Connor's appointments with the company and the difficulty he is likely to experience in obtaining alternative similar employment, I determine that the appropriate compensation payment in respect of Mr O'Connor's termination is to be 4 weeks pay for each year of service, or part thereof, with Capital Hill Corporation Pty Ltd and the other companies referred to above. Therefore the payment due to Mr O'Connor, calculated on his annual salary of $102,000, is 4 weeks x 3 and 4/12 years x $102,000 ÷ 52 weeks = $26,153.85. Such payment is to be in addition to all other payments otherwise due and made by Capital Hill Corporation Pty Ltd to Mr O'Connor. Accordingly in full settlement of this dispute between Terence James O'Connor and Capital Hill Corporation Pty Ltd pursuant to Section 31 of the Industrial Relations Act 1984 I do hereby order Capital Hill Corporation Pty Ltd to pay to Terence James O'Connor the sum of $26,153.85. Such payment to be effected by close of business on 16 April 1997.
F D Westwood Appearances: Date and place of hearing: 1 Full Court, Supreme Court of Tasmania A44 of 1995 |