T6579
|
TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Michael Denis Flynn and The National Meat Association of Australia
Industrial dispute - termination of employment - finding of unfair dismissal - reinstatement impracticable - payment ordered in full settlement of the dispute - order issued REASONS FOR DECISION Following my decision in this matter dated 3 January 1997 that the application was within the jurisdiction of this Commission, the hearing resumed on Monday, 3 February 1997. Mr Holden confirmed that the primary objective of the application was to achieve the reinstatement of Mr Flynn. Mr Flynn was first employed by the National Meat Association of Australia on 21 January 1985, when he was elected as secretary of the Tasmanian Division of the Meat and Allied Trades Federation. The Federation subsequently changed its name to the National Meat Association. At some stage Mr Flynn's position title was changed to Executive Director. A copy of a letter dated 18 August 1995 from Mr S N Carroll, the then Chief Executive Officer of the Federation to Mr Flynn, the Executive Director, advised that Mr Flynn's remuneration package was to be $76,947 per annum as from the next pay period. (Exhibit H.4) Mr Holden tendered exhibits which were said to be extracts from Association documents dated May 1996 which dealt with the national body's concern about the reduction in services to Tasmanian members as a result of Mr Flynn's workload on a special project in Victoria and the national body's intention to continue providing a national office subsidy to Tasmania. The Tasmanian Division understood the subsidy to be $50,000 for 1996/97. It was claimed that this understanding encouraged the Tasmania Division to believe that the positions of Mr Flynn and two other employees in Tasmania were guaranteed at least until 30 June 1997. Exhibit H.8, being part of the minutes of the National Management Committee meeting in Adelaide on 21 August 1996, showed that the committee resolved to endorse recommendations to cease the subsidy to Tasmania immediately and to make arrangements for the Tasmanian Division to be serviced from Victoria. Tasmania and Victoria were to report back "on how to manage the issue". On 27 August 1996 the Tasmanian Division Management Committee resolved that the current office arrangements and membership servicing would continue until 30 June 1997; the $50,000 National Office subsidy, committed at the May 1996 committee meeting, would be maintained, and that a revised budget would be developed to ensure expenditure did not exceed the budget including the $50,000. At that point, Mr Holden said, Mr Flynn had his job until 30 June 1997. At the next meeting of the Tasmanian Division Committee on 3 October 1996, those circumstances had changed. A copy of draft minutes of that meeting was tendered, Exhibit H.10, which purported to deal with the severance and other payments which were to be made in respect of the applicant. The minutes also purported:
Exhibit H.11, a copy of a letter dated 4 October 1996 from the President of the Tasmanian Division to Mr Flynn set 1 November 1996 as Mr Flynn's termination date. The letter confirmed that the termination "was not in any way occasioned by your work performance but is a retrenchment based on the financial incapacity of the Tasmanian Division following National decisions to no longer provide a subsidy". An annexure to the letter set out "separation" benefits for Mr Flynn. These were:
The annexure contains the note that the actual calculations ".... will need to be completed by the National Office as they maintain all records. The above calculations are therefore approximate only". Mr Holden submitted that the agreed separation package was a "classic compromise". He said that 3 weeks' pay per year of service was in fact inappropriate for the position of Executive Director but the figure had been agreed because there was at that time a possibility of future consultancy work for Mr Flynn with the Association. At that point Mr Holden said "all was sweetness and light" between the Tasmanian Division Management Committee members and Mr Flynn. According to Mr Holden, on Friday, 11 October 1996, the day which the other two staff members were to have their employment terminated, Mr Johnston, representing the National Meat Association of Australia, visited Hobart from Sydney and provided Mr Flynn with a letter from the National President of the Association advising Mr Flynn that his employment was to be terminated with immediate effect and setting out the termination package. A copy of that letter, dated 10 October 1996, Exhibit H.12 was tendered. It is set out below in full:
Mr Holden said that Mr Flynn took legal advice before accepting the cheque and endorsed the National President's letter in the following manner:
Mr Holden submitted that Mr Flynn had been given no opportunity to answer any claims of incapacity or any "wrong doing". He also asserted that although the letter stated that the position of State Executive Director would not be replaced, Mr Curtain was still employed and had sent out a document under the title of Executive Director. Mr Johnston objected to that assertion. Mr Holden submitted that the package was "parsimonious by any standard of 1996"; "an insult to a senior executive", and that it was significantly less in terms of weeks per year of service "than that offered to the clerical assistant and the membership services officer"; both of whom had received two weeks' pay per year of service notwithstanding their "much lower level of seniority." The Tasmanian Divisional Management Committee had made a decision about Mr Flynn's termination which it believed it was authorised to do, but the redundancy requirement was a national direction, Mr Holden said. Mr Holden sought Mr Flynn's reinstatement to his former position from the date of his termination to the date of my decision and that ongoing employment be ordered on a full time basis if possible or if not with a partial redundancy payment. Mr Holden called as a witness Mr G V Pilgrim, a self employed butcher of Devonport, Tasmania, and President of the Tasmanian Division of the National Meat Association of Australia. Both Mr Pilgrim's evidence-in-chief and his evidence under cross examination elicited the following information:
In re-examination Mr Pilgrim said the Divisional Management Committee had explored options to balance the budget including keeping Mr Flynn full time or part time. Mr Flynn, in evidence, said he had delivered the details of his Separation Package to Mr Edwards of the Tasmanian Chamber of Commerce and Industry after it had been approved by the Divisional Management Committee on 3 October 1996. He had no part in deciding the actual entitlements. Mr Edwards was to draft a letter for the Divisional President to send to him (Mr Flynn) in due course. He had advised Mr Edwards about some of the requirements of the National Management Committee that should be in the letter. He said he felt the offer was being made by the Divisional Management Committee with "regret" and that the committee was not dissatisfied with his performance. He said the committee had asked him during the period of a month's notice to "sort out what's going to happen with the division in the future" which meant possibly "part time work or some form of consultancy".17 His notes of a telephone conversation involving Mr Caredes, Mr Pilgrim and himself on 26 September were:
On 1 October his notes of a conversation with Mr Caredes were:
He said the verbal legal advice he had received from Mr Ayliffe indicating that it was appropriate for the Divisional Management Committee to prepare and offer a redundancy package was changed and the Divisional Management Committee was later advised in writing that any package would require the endorsement of the National Management Committee. He also thought that Mr Caredes had empowered Mr Pilgrim to make an offer. On 11 October Mr Pilgrim had called to advise him that Mr Johnston was on his way to Hobart and had said "they're terminating you forthwith". He said he was given no reason for his termination apart from "a verbal from Mr Johnston". In cross examination, Mr Johnston asked whether the Association had overpaid Mr Flynn by an amount of $890 in relation to a mortgage payment. Mr Flynn replied that was possible. Mr Flynn was unaware whether or not previous executive directors had "cashed in" sick leave accrued. Mr Flynn said he could not recall whether the calculations for his redundancy payment were first delivered to him on the evening of 24 September at the Divisional Management Committee meeting at Prospect, in the car on the way back from the meeting, or the next morning. Nor could he recall how it was given to him. He did not consider that it was "appropriate" to pass on the figures for perusal by the national office as the Divisional Management Committee had requested that they remained confidential to himself and the Divisional Management Committee. Mr Flynn acknowledged that he had been aware that his position with the Tasmanian Division had been under threat since May 1996, and that it had been suggested to him that he look for another job. Mr Flynn acknowledged that without the $50,000 per annum subsidy from the national body the Tasmanian Division would "not survive" given his salary18. Mr Flynn admitted that it was to his benefit to have the Divisional Management Committee decide his separation package rather than the National Management committee which was likely to be less generous. Mr Flynn said he was not trying to "pump" the National Management Committee for more money; he wanted to get his job back because he believed he was one of the best people available to the Association for the job he was doing. In respect of Mr Flynn's desire to continue in employment with the Association, the following exchange occurred between Mr Johnston and Mr Flynn:
In re-examination Mr Flynn told Mr Holden that apart from discussing the matter with Mr Pilgrim he had made no effort to seek advice regarding "appropriate redundancy packages for other employees". He said he had not been accused of seeking to manipulate the Divisional Management Committee and was unaware of any claims of dissatisfaction about his work performance. Mr Flynn agreed that the increase in his salary from 1995/96 to 1996/97 was wholly in relation to work that was to be undertaken in relation to the Q award. In his evidence Michael Caredes, company director, Vaucluse, Sydney and president of the National Meat Association said he dealt with the presidents of the divisions in relation to issues the presidents or directors wanted to draw to his attention or that took his interest and that he was briefed constantly by national officers employed in the national office. Mr Caredes said that he sent Mr Johnston who was national director, human resources, to Tasmania on 11 October 1996 to deal with "the termination of the Tasmanian director, Mr Flynn". The National Management Committee had met and voted on the issue on 10 October 1996. The subsidy from the national body to the Tasmanian Division had been discussed at the May 1996 meeting of the National Management Committee; the matter was raised either by the Tasmanian Director or Tasmanian President, Mr Caredes said. He had been unable to give any guarantee that the subsidy to Tasmania would be available in the next financial year. The meeting of the National Management Committee on 21 August 1996 discussed arrangements for the Tasmanian Division to be serviced from Victoria and there was no doubt that the subsidy to the Tasmanian Division was to cease immediately. The Tasmanian President, Mr Pilgrim, was at that meeting, Mr Caredes said. Mr Caredes recalled speaking with the then chief executive officer, Mr Carroll, in the first half of 1996 concerning the Tasmanian Division and the position of Mr Flynn. Mr Caredes said that on 30 August Mr Pilgrim had told him that he felt that the Tasmanian Division would get over its "preliminary aggro" to the decision of 21 August. Matters were not progressing because the Tasmanian Division had not put a proposal to Victoria. The Tasmanian Divisional Management Committee was considering alternatives such as handing over the running of the Association to the Tasmanian Chamber of Commerce and Industry, he said. Mr Caredes said that it was being proposed that Mr Flynn work 2 ½ days for Tasmania and 2 ½ days nationally. The Victorian Executive Director had said that he could not work with him, and that he could not control him.20 Mr Pilgrim was to send him a copy of the options conveyed to the Victorian Division. The Victorian President had indicated that he wanted to service Tasmanian members from Victoria. Mr Pilgrim told him the Tasmanian members would be unhappy if controlled from Victoria. Mr Caredes had decided not to visit Tasmania, as requested by Mr Pilgrim, as he thought the Tasmanian membership was "still angry and agitated" and the meeting would be "counterproductive".21 He told Mr Pilgrim that a decision had to be made so that "Tasmania lives within its means".22 He estimated the Tasmanian operation was losing $3,000 per week. He said he told Mr Pilgrim that October 31 1996 was the date by which the matters had to be resolved. On 20 September arrangements were made for a meeting on "neutral territory with no emotions" between Victorian and Tasmanian representatives, and at the suggestion of Mr Pilgrim the Victorian and Tasmanian executive directors were excluded from the meeting. He said Mr Flynn had told him to discuss only urgent matters with Mr Pilgrim. On 25 September Mr Flynn had informed the National President by telephone that the Tasmanian Management Committee had met on 24 September and had instructed him to advise the National President at the earliest opportunity that he (Mr Flynn) was to be involved in all future deliberations regarding the Tasmanian Division. He said they had discussed options and funds for the Tasmanian Division and Mr Flynn's personal options. He had told him that "national duties were not a real option", and Mr Flynn had said that he would get advice from the TCCI on a "retrenchment package".23 Mr Caredes said he was unaware that the Divisional Management Committee had sought legal advice as to its role in termination matters. He said he understood that the Divisional Management Committee was not of a mind to talk about terminating Mr Flynn "other than some options of two and a half days a week".24 Mr Caredes denied previous assertions in evidence by Mr Pilgrim and Mr Flynn that he had given authority to the Divisional Management Committee to make decisions in relation to redundancy payments for Mr Flynn. He said that on 3 October Mr Pilgrim had told him that the Divisional Management Committee had decided to terminate Mr Flynn effective from 1 or 2 November 1996. He said he was not given the details which he wanted to pass on to the National Management Committee for consideration before they were confirmed to Mr Flynn. He said he told Mr Pilgrim: "I must have the details approved by the National Management Committee before you can offer them to Mike".25 Mr Caredes said that funds for any redundancy payment approved or considered by the National Management Committee would come from the national body. He said he was so concerned about the need for the details that he faxed a letter, dated 3 October 1996, to Mr Pilgrim (earlier tendered as Exhibit H 1). The letter ended with the following:
He said that he spoke with Mr Pilgrim on 4 October 1996 who said a termination package had been suggested; that Mr Flynn was to finish about 1 November 1996; that he hoped Mr Flynn had accepted the offer. Mr Caredes said he reminded Mr Pilgrim that the National Management Committee would "have a view on the size of the severance pay especially since the division (Tasmania) is incapable of paying"27. He said he asked Mr Pilgrim to warn Mr Flynn of that fact. Mr Caredes said Mr Pilgrim called him again that day and advised that Mr Flynn had accepted the offer. Mr Caredes said he reminded Mr Pilgrim that the Divisional Management Committee had no authority to make the offer "because the National Management Committee directly determines his (Mr Flynn's) employment". A third conversation with Mr Pilgrim that day was referred to by Mr Caredes in the following manner:
Mr Caredes said that he did not know of an executive of the Association being terminated or resigning with a redundancy package equivalent to one year's salary. In a subsequent telephone conversation with Mr Pilgrim on 8 October 1996, Mr Caredes had said the package was "beyond the legal entitlements and it's a huge amount of money."29 He said it would be referred to the task force for recommendation but Mr Pilgrim had insisted he was entitled to make the offer. Mr Pilgrim had then said he wanted nothing more to do with the matter, that he had done enough and he wanted Mr Johnston to take over. Mr Caredes said he discussed with Mr Johnston what were "fair and reasonable minimum terms" to put before the task force. Options for future staffing and service in Tasmania were also discussed and he said Mr Pilgrim had agreed that if all three employees of the Tasmanian Division were terminated there would be no corporate memory left in the Tasmania office. Mr Caredes said that on 9 October he spoke with Mr Pilgrim who had arranged with Mr Curtain to continue with the Tasmanian office for 2 days a week at $16,000 per annum based on a $40,000 full time salary. Mr Pilgrim had told him that he wanted "to get it over with" and wanted "Mike Flynn now to finish as soon as possible".30 A letter from Mr Caredes to Mr Pilgrim dated 8 October was tendered (Exhibit J.6) which, Mr Caredes said, confirmed his concerns about the events of 3 and 4 October. He had kept a note of a later conversation on 10 October was recorded suggesting that Mr Pilgrim had accepted that Mr Flynn leave the workplace earlier than 1 November 1996 so long as he lost no pay. He told Mr Pilgrim that he thought the National Management Committee "would probably want Mike Flynn paid up and gone. Some see him as divisive now. He's led us into confrontation. National Management Committee members say he is wrecking the place"31. Mr Caredes' notes record that Mr Pilgrim said to him:
And further that he and Mr Pilgrim
The latter point was, he said, "why we are in this room today". Mr Caredes said Mr Pilgrim told him it would be better if the National Management Committee made the decision so that it appeared the decision was imposed upon him. Mr Caredes said he rang Mr Flynn on 10 October in response to an "ultimatum about endorsing the offer that had been made". He said Mr Flynn had written to him by fax alleging that the contents of the letter of 8 October 1996 (Exhibit J.6) represented a "disturbing renege" on an offer made with his authority by the State President and the Divisional Management Committee. The fax alleged that the agreement had been reached following the National President's refusal to visit the division following several invitations and personal requests to provide assistance. It further alleged that the "termination was made with your (the National President's) knowledge and personal intervention, and I (Mr Flynn) now seek an undertaking in writing from you that the terms of that agreement will be met." Further: "Should your written undertaking to honour the agreement not be received further advice in respect of enforcement of same will be sought." Mr Caredes said he told Mr Flynn that he was most offended by that statement. On 11 October he said he rang Mr Pilgrim and told him that Mr Johnston was on his way to Tasmania to "finish up Michael Flynn as agreed". Mr Flynn was "not required to work out the time to 1 November, he (would) be paid in lieu and (Mr Johnston's) there to make arrangements with (Mr Pilgrim) and Terry Curtain about the future operations and to offer help with the announcement and any letter that he (Mr Pilgrim) might want to send out to members re the future of the association, ..."34 Mr Caredes said there was a record of a second phone call to Mr Pilgrim on the morning of 11 October35 regarding the National Management Committee recommendation. Mr Pilgrim had told him that he had to be seen to be voting against the recommendation, which he did. He said that Mr Pilgrim emphasised that he agreed with what was happening and that he would ring the Tasmanian office to tell them that Mr Johnston was on his way from Sydney. Mr Caredes said he had not been provided with the detail of the Tasmanian Division's offer until the fax of 4 October from Mr Pilgrim. The possibility of part-time or consultancy opportunities for Mr Flynn was not raised at that time. He said the decision to "terminate Mr Flynn was all about the lack of ability to pay for his services."36 Mr Caredes said he formed the view over the last five or six weeks of Mr Flynn's employment that there "was a stalling process; that there was a reluctance to grapple with what was the will and the wish of the management committee."37 When cross examined by Mr Holden, Mr Caredes said he believed the Tasmanian Divisional Management Committee wanted to keep Mr Flynn in employment with them although Mr Pilgrim had told him that the Committee was evenly divided on the matter and that as State President he would have to exercise his casting vote. Mr Caredes considered the redundancy package the National Management Committee had determined for Mr Flynn was reasonable in all the circumstances. He did not regard payment for the period between 11 October and 1 November as being "notice"; it was "simply payment in lieu".38 Mr Caredes said he believed that it would be possible for a working relationship to be re-established between the National Meat Association and Mr Flynn and added that Mr Flynn was "an effective representative of his people".39 He could see no impediment and had no objection to the proposition that such a relationship be re-established. At this point the examination of Mr Caredes concluded and Mr Holden proposed that the hearing should be adjourned to allow those present to discuss alternative solutions ranging from continuing employment to different redundancy arrangements. Mr Johnston responded by informing the Commission that the Tasmanian Division had to be self sufficient as no money would be available from the national office. I ordered Mr Flynn and his representative and representatives of the National Management Committee and the Divisional Management Committee into conference to endeavour to resolve the dispute along the lines of the suggestions put by Mr Holden. The conference was to conclude by 20 February 1997 and the hearing to continue on 24 February 1997 if no satisfactory resolution had been achieved. When the hearing resumed Mr Holden informed the Commission that the parties had met briefly and he was waiting on Mr Johnston to report on discussions between Mr Caredes and his Committee. Mr Johnston informed the Commission that Mr Caredes had consulted with the "majority of the members of the National Management Committee and the majority of the members of the Divisional Management Committee and it appeared to have been ... unanimous ... that the matter could not be resolved by the parties".40 Mr Holden submitted that, as he understood it, the Divisional Management Committee would have been "happy" to employ Mr Flynn on a "proportional basis", but it was not prepared to guarantee 12 months employment and the matter remained unresolved. He said the evidence of Mr Caredes made it clear that an ongoing employment relationship was possible so long as the Tasmanian Division met the cost; and the evidence of Mr Pilgrim was that the Divisional Management Committee was satisfied with Mr Flynn's performance and would be happy to re-employ Mr Flynn subject to "finance which they do not have".41 He further submitted that the position Mr Flynn had held had been made redundant, and that the Commission should order that Mr Flynn be reinstated to his former position without loss of entitlements. If the Commission found that the position no longer existed the Commission should order the payment of an appropriate redundancy severance package. He argued that the package should include a component that recognised the "unfair, unjust and onerous termination". The order should also recognise that the "compromise agreement" reached between Mr Flynn and the Divisional Management Committee which had included a "virtual guarantee" of ongoing work was "cast aside" by the National Management Committee, and he suggested that a 10% component should be added as a penalty to compensate for the manner in which the termination was effected. There was a "strong case", he submitted, for Mr Flynn to recover his costs in this matter. Mr Holden submitted a number of decisions and judgments in various tribunals to support his claim. In particular Jackson v. Atco Industries Ltd, Industrial Commission of South Australia, Stanley J President, I.10/1986 (Exhibit H.15) which Mr Holden said dealt with factors which compared substantially with this matter. He submitted that Stanley J had determined in that case that the dismissal was unjust and unreasonable because "the amount paid was inadequate." The Commission was referred also to
Mr Holden submitted that the original package approved by the Divisional Management Committee had been cut by approximately 70% by the National Management Committee and that Mr Flynn had been given no opportunity to respond to any alleged shortcomings in performing his duties. He claimed that Mr Flynn was entitled to three months' notice and four weeks' pay per year of service and pro rata for each completed month; such payments to be at full salary; and that annual leave entitlements should be paid at the same salary level. Mr Holden submitted that the payout of sick leave entitlements was "quite normal"; that the Association was party to two awards of this Commission which provided for the payment of accrued sick leave; and that Mr Flynn had endeavoured to keep his sick leave intact given his "parents' health history". The payment for sick leave was sought at the rate of $38.50 per hour. In respect of the submission that Mr Flynn was made redundant because the Association considered it could no longer provide the Tasmanian Division with a subsidy, Mr Holden tendered financial statements in respect of the National Meat Association for the financial year ended 30 June 1996, which he submitted showed that the Association could not sustain an argument that it would be incapable of meeting an order to pay Mr Flynn any additional monies. Mr Holden submitted that if the Commission refused to make such an order the Commission should order reinstatement up to a certain date and direct the parties to negotiate a "proper redundancy severance package". Failing the negotiation of an agreed package by a fixed date, Mr. Holden said the Commission should make an order for an appropriate package. Mr Johnston, in response, drew the Commission's attention to the application of the Federal Act to the National Meat Association and in particular to the Rules of the national organisation. Sub-rule (8) of Rule 26 provides the National Management Committee with the power to appoint and dismiss Executive Directors in each division and also provides that
Mr Johnston argued that it was not open for the Commission to order that Mr Flynn be reinstated, and that the "heart of the matter" was the difference between the package "allegedly offered by the Divisional Management Committee and what was finally decided by the National Management Committee."42 In respect of the National president's power to delegate to the Tasmanian Division the power to determine such a package, Mr. Johnston referred the Commission to Rule 77 which provides that, apart from presiding at meetings, the National President shall:
He said that nothing had been put to the Commission to show that the National Management Committee had said to the President "go and delegate the matter to Tasmania", and he said there was no such document. Although Mr Pilgrim and Mr. Flynn, in their evidence, said "the president gave us the power", Mr Johnston said Mr Caredes had denied it. He reminded the Commission that Exhibit H.1, a letter from the National President to the Divisional President contained three paragraphs at the end which referred to the need for these matters to be referred to the National Management Committee for endorsement. He said it was clear that the Divisional Management Committee did not have the authority to reach a conclusion on the matter; all it could do was to refer the matter to the National Management Committee for endorsement. Mr Johnston questioned the actions of the Divisional Management Committee and the applicant, given that the National President was not given any documents or figures for discussion prior to the offer being made by the Divisional Management Committee and accepted by Mr Flynn. He drew attention to the minutes of the Divisional Management Committee meeting of 11 September 1996, Exhibit J.8, which referred to the "termination of the State Director" and the resolution to forward to the State Director immediately after the meeting the "document which represents an offer to the State Director in the event of the full-time position of State Director being terminated, to remain confidential to the Divisional Management Committee and Mr Flynn until, or if, that situation eventuates".43 Exhibit J.9, minutes of the Divisional Management Committee meeting of 24 September 1996, was addressed and Mr Johnston submitted that figures for the redundancy payment were "put down" and were to remain confidential to the Divisional Management Committee and the Executive Director. Exhibit J.3, a copy of a letter from the Executive Director to Ayliffe and Ayliffe, solicitors, dated 25 September 1996, suggested that figure had been given to the Executive Director prior to that date but not to the National President. Further that the Tasmanian Director was preventing information "flowing back" to the National Management Committee. He suggested that if the Divisional Management Committee had been "performing its functions properly", rather than adopting a "conspiratorial and manipulative process (to) throw an umbrella around particular individuals in Tasmania and keep as much information from the National Management Committee as ... possible things might have worked out differently". 44 To elaborate this point Mr Johnston referred the Commission to a further quote from Exhibit J.3, which was:
Mr Johnston repeated his submission that "if you want a fair go, then come with clean hands". His Association's concern was that there were actions behind the scenes and manipulation by the Executive Director for his own legal benefit later on. He said the figures for Mr Flynn's package were known at least on 11 September 1996 and were not referred to the National President until 4 October 1996. He said the package should have been negotiated through the proper channels. He also referred to the solicitor's comments dated 8 October 1996, contained in Exhibit J.4 that:
He submitted that the Divisional Management Committee disregarded the advice. Mr Johnston said the cases relied on by Mr Holden were in the main consent matters and should not be relied on in matters to be arbitrated. He submitted that there was no basis for the redundancy package put to Mr Flynn of 4 October 1996 given the payments made to other executive directors of the Association. He said that on 4 October 1996 the applicant had accepted an offer to terminate on 1 November; then on 11 October the applicant was paid out for the remainder of the month and required to leave that day. He said that it was not an "accepted standard practice to offer executive staff a number of weeks per year of service across the board".45 He submitted the package paid to Mr Flynn was fair given that he was employed on a salary substantially in excess of the subscriptions raised by the Division and that the Association kept Mr Flynn employed as long as it could. It was submitted that Mr Flynn was simply seeking extra money from the Association (the difference between $111,000 and what was paid approximately $43,000) and that his case was not about reinstatement. On that point he relied on the New Town Timber and Hardware decision46 and in addition submitted that the Commission in effect, if it found in Mr Flynn's favour, would be making a declaration that the contract was unfair at termination. In respect of the Queensland Executive Director whose remuneration package was between $70,000 and $73,000 per annum, who had been employed for 12.9 years, and who was terminated in May 1995, the termination package had been 72% of total package for three months. The Chief Executive Officer of the Association, employed for just under 5 years, received 72% of his total package of $144,000 per annum for six months. He submitted that the South Australian case (Jackson and Atco) dealt with common law rights and accordingly was not relevant in this matter. He submitted that the claim for an extra 10% was unreasonable and outside the power of the Commission as was the demand for costs. Mr Holden said that Mr Pilgrim was genuinely of the view that Mr Caredes had delegated authority to him to negotiate the termination package for Mr Flynn and that the $50,000 would continue to be paid as a subsidy to the Tasmanian Division. He said that comparison between Mr Flynn's case and the cases of the Association Chief Executive Officer and the Queensland Executive Director were not appropriate as, of the latter two persons, one had been asked to resign and the other retired on his 60th birthday and their positions had been filled. In Mr Flynn's case he had been terminated and the position declared redundant. He said the notional 72% of salary package for termination purposes resulted in a redundancy severance payment of approximately one week's pay per year of service. He said his use of agreements and other decisions was simply to demonstrate to the Commission what were fair and reasonable standards. As to the Rule 26 (2)(a), Mr Holden said it was unconscionable and unenforceable and he disagreed with Mr Johnston's assertion that only the Australian Industrial Relations Court had the power to deal with disputed matters. He said the National Meat Association had made no genuine effort to resolve the Tasmanian situation and that the letter from the National President to the State President of 3 October 1996, which acknowledged that the Divisional Management Committee was to "take the difficult but unavoidable decisions", was a delegation of authority from the National President to the Divisional Management Committee. When asked why the second last sentence was included in that letter, Mr Holden replied that he thought "some of the people involved in this matter were confused"47 and he said:
He said he accepted that the National Management Committee would need to see the details, but if Mr Flynn was not to be reinstated the issue was what was a fair and reasonable redundancy package on the merits of the case. Mr Holden said that Mr Caredes as National President should have come to Tasmania if he thought there were "conspiracies going on" to sort the matter out as the power of the organisation was in the national body. He said the National Meat Association provided the Divisional Management Committee with no guidance as to the sort of package which should have been offered. He submitted that Mr Flynn was denied the opportunity to discuss his "termination" on 10 October. He said that one month's notice was inadequate but it had been negotiated as part of the failed compromise package and 13 weeks' pay for a person of Mr Flynn's length of service was also totally inadequate. FINDING I deal first with the employer's repeated claim that because the federally registered rules of the Association give the National Management Committee the power to dismiss employees, including Executive Directors, and prevent the reinstatement of such persons without the consent of the National Management Committee, that this Commission, or indeed any other State commission, has no jurisdiction to deal with dismissals which might involve the reinstatement of a dismissed employee. I have addressed these rules in my earlier decision on this matter dated 3 January 1997, and I am satisfied that the registered rules at Rule 26, Powers of the National Management Committee, do not absolve the Association from the normal responsibilities of an employer dealing primarily as they do with managing the affairs of the Association. Accordingly if I were satisfied that Mr Flynn should be reinstated in his employment with the National Meat Association, I believe that such an order would be within the jurisdiction of this Commission and have legal application to the Association. It follows that I do not believe Mr Flynn's application, which is based primarily on his desire to be reinstated, is rendered deficient by applying the tests contained in the New Town Timber and Hardware case. The Rules of the Association clearly give the National Management Committee the authority to employ and dismiss Executive Directors and in my opinion the Divisional Management Committee should have been aware that the National Management Committee had that power. From the evidence and in particular the Divisional Management Committee minutes of 11 September 1996, it seems that the Divisional Management Committee was aware of the possibility that the National Management Committee might intervene in its negotiations with Mr Flynn, particularly in respect of the amount of the package, and it decided that its offer to Mr Flynn would remain confidential to the Committee and Mr Flynn until his employment was terminated. The legal advice, sought when the package was confirmed to Mr Flynn on 24 September 1996, in my opinion correctly concluded that the redundancy agreement for the Executive Director ought to be ratified by the National Management Committee unless "clear instruction in writing from the national body giving state division control over the redundancy agreements ..." was obtained. However, notwithstanding the manoeuvring of both the National Management Committee and the Divisional Management Committee in respect of the termination of Mr Flynn's employment and the quantum of his separation package, I am satisfied that the National Meat Association, by virtue of the powers it confers on the National Management Committee, is the legal employer of Mr Flynn. The Commission is now required to settle the industrial dispute between Mr Flynn and the National Meat Association; that is, between a former employee and the employer in accordance with the provisions of the Industrial Relations Act 1984. The applicant alleges the refusal of the National Meat Association to honour the terms of the separation package previously agreed with the Divisional Management Committee was "harsh and/or unjust and/or unreasonable". Both Mr Caredes in evidence and Mr Johnston in submissions alluded to the quality of Mr Flynn's work performance, but it is clear that at the time of his dismissal that was not an issue. The reason for Mr Flynn's dismissal, contained in the letter from the National President dated 10 October 1996, was "that the financial position of the Tasmanian Division was disastrous" and the National Management Committee had decided "that it could not continue in (its) present form". All parties appeared to agree that was so and indeed the Tasmanian Division, although I do not accept it had the power to do so, was prepared to terminate Mr Flynn's employment for that reason, provided he received the agreed separation package, a package which the Tasmanian Division understood would be financed by the national body. In the circumstances the submission that Mr Flynn had not been given the opportunity to answer any claims of incapacity or wrong doing is misplaced and I have chosen to ignore that aspect of both parties' submissions. However I do not question the employer's right to decide that for one sustainable reason or another a certain position in its workforce is redundant, as seems to be the case with Mr Flynn's position. He was advised, in the National President's letter of 10 October 1996, that there would be no replacement. However in dispensing with a redundant employee's services the employer must have regard to a number of relevant factors. These are set out quite admirably so far as the question of notice is concerned in the decision of Stanley J. in the Jackson and Atco matter tendered by Mr Holden. I repeat Mr Justice Stanley's observations below on the question of what is reasonable notice and I consider these comments are pertinent both in respect of notice and separation entitlements generally.
There is no doubt Mr Flynn knew that his hold on his employment was tenuous, but the advice he had from the Divisional Committee, until 21 August 1996 at the earliest, was that funds for the State Division's continued operations would be available to allow all of the Division's employees to remain until 30 June 1997. In fact no formal notice from his legal employer was given to Mr Flynn about the termination of his employment until he received the letter from the National President dated 10 October 1996 which was handed to him by Mr Johnston on 11 October 1996. The letter referred to a "generous" notice package which included the period between 10 October 1996 and 1 November 1996. The letter implied that the termination payment of $25,649.00 was a notice package of 4 months at a notional salary of 72% of his total remuneration per annum of $76,947.00. The other payments for annual leave accrued and statutory long service leave entitlements were also based on the notional salary. If four months' notice at $76,947.00 per annum had been part of a total package which included some additional compensation in the form of severance payment, I would agree that the notice period was generous. However, in the absence of any payment other than contractual and statutory entitlements, I consider that the separation package provided for Mr Flynn is inadequate for a senior employee of his length of service and likely difficulty in finding other suitable employment. In the circumstances I consider Mr Flynn was unfairly treated at the time of his termination. Before deciding on whether or not to make an order pursuant to section 31 of the Act to settle this industrial dispute, I must take into account the standards of general application contained in Part II of the International Labor Organisation's Convention concerning the Termination of Employment at the Initiative of the Employer. I have given serious consideration to Mr Holden's submission that if the reinstatement of Mr Flynn to his original position is not practical I should refer the parties into conference to work out some alternative part-time reinstatement and partial redundancy payment package. However I am not satisfied, given the precarious financial situation of the Division, that such an arrangement would be of any lasting benefit to the parties, although I am sure that Mr Flynn would be able to re-establish a good working relationship in the Tasmanian Division. In the circumstances I regrettably find that the reinstatement of Mr Flynn in any format is not practicable. I must therefore consider the appropriate form of separation payment to adequately compensate Mr Flynn for the unfair nature of his dismissal. Part II of the International Labor Organisation's Convention referred to above provides in Division D, Period of Notice, Article 11, that "a worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof ..." In this case Mr Flynn knew that his position was in jeopardy for some time, although he had no formal advice this was the case, mainly I believe because of the lack of trust and open communication which appears to have developed between the National Management Committee and the Divisional Management Committee as referred to earlier. No clear position was put to Mr Flynn until the day of his termination, viz 11 October 1996, although he had already agreed to leave under conditions determined by the Divisional Management Committee on 3 October 1996, but he was still hopeful of working out a package between then and 1 November 1996 which would see him remain in employment with the Association. I accept his testimony on this point. Having regard to the evidence that the National Management Committee was looking at the Tasmanian position in May 1996, and the procrastination on what should be done about Tasmania which occurred between then and 21 August 1996, I consider that a period of at least two months' formal notice of his position being made redundant would have been fair and reasonable. I consider that such notice should be provided to Mr Flynn calculated on his rate of total remuneration, i.e. $76,947.00 per annum. The International Labor Organisation Convention at Division E, Severance Allowance and Other Income Protection, Article 12, provides that -
Given Mr Flynn's position within the Association, his length of service and experience, and the difficulty he is likely to experience in obtaining a similar salaried position, I consider that Mr Flynn should be paid in addition to two months' notice, a severance allowance equivalent to 3 weeks' pay per year of completed service. A week's pay to be calculated on his total remuneration package of $76,947.00 per annum. Mr Flynn commenced with the Association on 21 January 1985 and at the time of his dismissal had 11 completed years of service. The payment in respect of pro rata annual leave entitlements on termination must remain as identified in the separation letter which complies with the Senior Officers Remuneration Benefits Option Paper 1996/97, sent to Mr Flynn on 18 August 1995 from the Chief Executive Officer, Mr Carroll, and marked Exhibit H.4. I note that the options paper and the termination package apply the concept of a notional salary on termination only to annual leave and long service leave. The question of long service is of course a matter for another jurisdiction. There is no suggestion that Mr Flynn had not accepted these conditions and accordingly I reject Mr Flynn's claim that his accrued annual leave entitlements should be calculated on total remuneration package rates. I do not accept that an executive in Mr Flynn's position should be able to cash out untaken sick leave on termination unless by agreement with the employer. Such agreement certainly was not forthcoming in this case, nor was it flagged as an option in the Remuneration Benefits Options paper. That part of Mr Flynn's claim is rejected. Nor do I accept Mr Holden's submission that a premium of 10% (of what is not clear) should be added to any package to compensate Mr Flynn for the pain and suffering he might have endured as a result of the manner of his termination. The Tasmanian Industrial Commission is not a court of law and does not have the power to award damages of the kind sought on behalf of Mr Flynn. That part of Mr Flynn's claim is rejected Nor does the commission have the power to award costs, and accordingly Mr Holden's submission on this question does not find favour with the Commission. That part of Mr Flynn's claim is rejected In summary I find that -
I also find that the payments to Mr Flynn set out above are to have deducted from them certain amounts already paid to Mr Flynn as identified in Exhibit H.12. That is, the package of notice and severance payments determined above is reduced by the termination payment of $25,649 leaving an amount due of $36,007.25; the amount to which Mr Flynn is entitled in respect of accrued annual leave, i.e. $6,955.54, has already been paid and I make no finding in respect of the long service leave payment of $10,813.81. In the circumstances, pursuant to section 31 of the Industrial Relations Act 1984, I hereby order the National Meat Association of Australia, 1st Floor, 25-27 Albany Street, Crows Nest, New South Wales, to pay to its former employee, Michael Denis Flynn of 1 Takone Street, Geilston Bay, Tasmania, in settlement of this industrial dispute the sum of $36,007.25. Such payment to be effected by 15 July 1997.
F D Westwood Appearances: Date and place of hearing: 1 Transcript p.47 |