T6983
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Mr Andrew Martin Pearson and Gunns Limited
Industrial dispute - termination of employment - invalid - contrary to Articles 4 and 7 of the International Labour Conference, Convention 158 - reinstatement impractical - compensation awarded REASONS FOR FURTHER DECISION On 22 May 1997, Andrew Martin Pearson (the applicant), applied to the President, pursuant to section 29(1A) of the Industrial Relations Act 1984, for a hearing before a commissioner in respect of an industrial dispute arising out of the termination of his employment on 9 May 1997. At the time of notification the applicant sought reinstatement to his former position with Gunns Limited trading as Gunns Mitre 10 (the employer), however, Mr S McElwaine (of Counsel) for the applicant, foreshadowed that it would be his submission that subsequent events rendered reinstatement not practicable in the circumstances as required by section 70 of the Act and that it was appropriately a matter in which compensation should be awarded. The hearing commenced on 10 July 1997. However, when the hearing resumed on 22 August 1997, Mr C Gardner (of Counsel) for the respondent, after reviewing the transcript of the previous day's sitting, was of the view that the applicant was not seeking reinstatement, and therefore questioned the Commission's ability to order compensation, given the finding in New Town Timber & Hardware Pty Ltd v. Gurr and Gozzi (1995) 5 Tas SR 71. This issue also provoked the need to consider a second matter, i.e. whether this application should be heard and determined having regard for the Industrial Relations Act 1984, as amended by the Industrial Relations Amendment Act 1997 (Act No. 18 of 1997). After giving the parties an opportunity to present written submissions on these threshold matters, the Commission handed down a decision on 3 December 1997 which, simply stated, found the question of reinstatement of the applicant had been withdrawn and the applicant was only seeking monetary compensation and the Commission had no jurisdiction to entertain the application. New Town Timber & Hardware Pty Ltd v. Gurr and Gozzi (1995) 5 Tas SR 71. On the second question, the Commission found the amendments made by Act No. 18 of 1997 to section 3 and section 70 of the Principal Act were substantive in nature and therefore the application was required to be heard and determined in accordance with the legislative provisions as they stood at the time the application was first made. These findings were appealed in the Supreme Court of Tasmania and the matter was heard by Wright J on 1 May 1998. During that case no argument was advanced on the second question, that is, the amendments to the Act were only procedural in character. However, in his decision on that day, Wright J overturned my earlier decision in respect of the first issue on the question of jurisdiction. As a result of that case, an Order was issued remitting the matter back to the Commission for hearing and determination according to law. In accordance with that Order, the matter was relisted for hearing in the Magistrates Court, 16 Anne Street, Georgetown, Tasmania on Thursday, 9 July 1998. Simply stated, the dispute, being the subject of this application, arose after the applicant, who was the Store Manager at Gunns Mitre 10 Store, Youngtown, had his employment terminated on 9 May 1997, after senior management concluded that his involvement in the drafting of an internal memorandum was inappropriate behaviour for a manager. The memorandum, addressed to Gary Chilcott - General Manager, Merchandising, Gunns Limited, criticised the decision of senior management to appoint a new Sales Manager. The applicant's employment was terminated on 9 May 1997 and he received one months pay in lieu of notice. During the course of hearing this application on 10 July and 22 August 1997, the following persons gave evidence under oath: Andrew Martin Pearson - Applicant Stuart John Wainman - Manager of Gunns Mitre 10 Stores Neil Steven Philpott - Salesperson, Gunns Mitre 10 Store, Youngtown Jane Louise Bradford - Salesperson and Purchasing Officer, Gunns Mitre 10 Store, Youngtown Gary Chilcott - General Manager, Merchandising, Gunns Limited On 9 July 1998, Mr Pearson was recalled to give further evidence in respect to his employment status as at that date and Mr Wainman gave additional evidence about the practicability of Mr Pearson's reinstatement. Background The applicant, from August 1996 until his termination of 9 May 1997, was Store Manager of Gunns Mitre 10 Store at Youngtown. As such, he was an integral part of the management team and his position required him to participate in management decision making meetings. In April 1997 he attended one such meeting, at which it was decided that no position within the company would be filled without first being advertised internally. At the same meeting, decisions were also made on matters such as:
Arising out of that meeting, some restructuring took place, which gave rise to a number of retrenchments within the group, resulting in a climate of uncertainty among the staff, at least within the Youngtown store. Appointment of New State Sales Manager An internal memorandum, dated 7 May 1997, announced the appointment of a person to a new position of State Sales Manager This was done without any internal advertising of the position, as previously determined. On the evidence I am satisfied that the applicant:
According to the applicant, he went to see Mr Wainman, at head office, on the day the memorandum was distributed, and informed him that the staff at Youngtown were going to be very upset about the appointment. Mr Wainman, the applicant said, told him "Don't get involved in this, it's really nothing to do with you". (Transcript page 8) There was conflicting evidence surrounding this meeting, with Mr Wainman maintaining that, the first occasion he spoke to the applicant about the appointment was 8 May 1997. Memorandum Witness Philpott said, the applicant, on his return to the store, after a meeting at head office on Thursday 8 May 1997, informed him that a new Sales Manager had been appointed. He said the applicant was "fairly agitated" and described the new appointment as "terrible". This was confirmed by witness Bradford, who said the applicant told them that Mr Darren Rogers had been appointed to the new position of Sales Manager and he was "pretty upset about it". Witnesses Philpott and Bradford also recalled the applicant questioning the company's ability to pay for the new position, including the relocation costs. They said the applicant informed them of the possibility that staff members may lose their jobs to compensate for the new position. Mr Philpott said the applicant suggested, in the presence of himself, Ms Bradford and possibly another two employees, that the staff should write a memorandum to Gary Chilcott expressing their feelings. The applicant agreed that he made that suggestion. Later that day, the applicant volunteered to write a memorandum expressing the view that all the staff were upset about the new appointment. It was Mr Philpott's evidence that he saw the applicant, seated in what is known as the 'trade area', writing a letter which was later read to him. Whilst the memorandum was still in handwritten form, the applicant contacted two branches of the employer's business for the purpose, the applicant said, of establishing whether they had heard about the new appointment and to gauge the reaction of the staff. He said the Devonport and Glenorchy branches requested a copy of the memorandum and he did not force those branches to say or do anything. Miss Bradford said that the applicant, whilst in the trade centre, "was ringing up a lot of other branches". She said one of his conversations annoyed her because the applicant was telling one of the branch managers, that all the staff were upset and they wanted to write a memorandum. She said the truth of the matter was that it was not the staff who were upset and they definitely did not write the memorandum. She said the applicant "facilitated" it and he was the one that was upset. The staff, she said, were just concerned about their jobs. It was also Miss Bradford's evidence that the applicant volunteered to fax the memorandum to a person whom she believed to be Kerry Stubbs and he urged them [his staff] to also write a memorandum. She said the applicant was of the view that the fax would give them some ideas of what to write. The other matter that annoyed Miss Bradford was the fact that the applicant told Mr Stubbs that it was the staff's idea to write the memorandum, which she believed to be incorrect. The memorandum drafted by the applicant (Exhibit M2) contained what I would describe as strong and colourful language. In brief, it noted the company had done many things in the past for its betterment and growth and that employees were committed to remain focused on long term goals, nevertheless, it described the new appointment as "one of the most hurtful acts of double standards, two timing and betrayal that we have seen." After the conversation with the previously mentioned branch managers, the applicant took a draft of the memorandum to head office where it was typed by the company secretary. Delivery of Memorandum When that task was completed, the applicant met with Mr Wainman, whereupon he gave him a copy of an unsigned version of the memorandum. He explained to Mr Wainman that the sentiments expressed in the memorandum reflected the feelings of the staff at the Youngtown store. The applicant said Mr Wainman counselled him along the lines, that he (the applicant) could end up in trouble with it. However, the applicant said:
Leaving an unsigned copy with Mr Wainman, the applicant returned to his store and showed the staff members the typed version of the memorandum. Mr Wainman said, after reading the memorandum, he was advised by the applicant that he would be getting his staff to sign it, before presenting it to Mr Chilcott. Mr Wainman told the applicant that he saw this as the wrong thing to do and he asked the applicant, as a friend and his manager, not to take it any further. Mr Wainman requested a copy of the memorandum to enable him to discuss it with Mr Chilcott. Later in the day, Mr Wainman approached Mr Chilcott. He said that Mr Chilcott was shocked when he read the memorandum and he (Chilcott) was of the view that the applicant had undermined his position. Mr Wainman said that he explained to Mr Chilcott that, during the course of his conversation with the applicant, he had asked the applicant not to get the memorandum signed. Mr Chilcott and Mr Wainman, having considered the memorandum, then discussed it with the company secretary, Mr Van Der Kley who, it was said, was of the view that it was most inappropriate for a manger to represent his staff and formulate a formal letter disapproving of senior management's actions. His advice was to bring the memorandum to the notice of Mr John Gay, the Managing Director. The issue was later discussed with Mr Gay, the Managing Director, in the presence of Mr Chilcott and Mr Wainman. Mr Wainman said that Mr Chilcott informed Mr Gay that he felt the applicant had no confidence in the decisions being made at senior management level and he was obviously representing his staff as opposed to representing the views of management. This discussion, Mr Chilcott said, resulted in him recommending that no decision be made until the matter had been discussed with the applicant. It was Mr Wainman's evidence that, Mr Gay and Mr Chilcott had concluded that the applicant's conduct was very serious and he should be dismissed. However, he qualified that by saying the applicant was called to the meeting to explain his actions and there was still a possibility at that stage, depending on his responses, that he may not have been dismissed. Mr Wainman acknowledged, in answer to a question put to him by Mr McElwaine, that the applicant had two choices; he could resign with grace and dignity or, if not, he would be terminated for the reason that the memorandum undermined the authority, not only of his direct managers, but the managing director of the company. He said that no other course of action was appropriate, as it was impossible to have the applicant working as a manager representing the company, and because he incited the staff; he organised and formalised a memorandum representing his view; and arranged for the staff to sign that memorandum which, in Mr Wainman's view, was a most unfair thing to do. Mr Wainman was then instructed to arrange a meeting, with the applicant, the following morning. The purpose of the meeting, Mr Chilcott said, was to get to the bottom of the whole issue and to understand the logic behind the memorandum and discover its origins. Mr Wainman said, prior to phoning the applicant to request his attendance at the meeting, Mr Gay had received information that the applicant had contacted other stores, by a fax, to rally support. At approximately 9.00 am on 9 May 1997, the applicant received a phone call from Mr Wainman inviting him to head office to discuss the memorandum. The meeting took place at a later hour, by which time some signatures were on the memorandum. However, the employer, at no time during the course of the meeting inquired as to whether or not any of the staff at the Youngtown store had signed the memorandum. The meeting commenced with the applicant, Mr Wainman and Mr Chilcott in attendance. Mr Chilcott agreed that he opened the meeting by asking the applicant to explain - who wrote the memorandum; what was its purpose; who instigated the memorandum; and whether copies had been sent to other stores. The applicant responded with words to the effect that:
Mr Chilcott then informed the applicant of his disappointment at not being approached, in the first instant, to discuss the views held by the applicant and that of his staff. Mr Chilcott also questioned the applicant about his contact with other stores in the group and the appropriateness of that course of action. The applicant responded by acknowledging that he had faxed a copy of the memorandum to the Devonport and Glenorchy branches after they requested a copy, and that he did not force the branches to say or do anything. Mr Wainman said, Mr Chilcott told the applicant that he felt his actions were totally inappropriate and showed a lack of confidence in his general manager and, as a result, he (the applicant) should resign. Mr Wainman told the applicant, he was employed to represent the views of management, but on this issue he was representing the views of the staff, which, in his opinion, was wrong. Mr Chilcott said, he could no longer trust the applicant; he could no longer work with him; he could not be in the management team; and, he wanted the applicant to resign. The applicant would not resign, as he was of the opinion that he had done nothing wrong, nor had he broken any company policy. It was at this time Mr John Gay, the Managing Director, was requested to attend the meeting. Mr Chilcott again led the discussion. According to the applicant, Mr Chilcott advised Mr Gay that it was not possible to work with the applicant as he:
According to the applicant, Mr Gay was of the view that the applicant had put him in an untenable position and had done the wrong thing by him. As a result, Mr Gay requested the applicant resign from the company. During cross examination Mr Chilcott and Mr Wainman acknowledged that Mr Gay said to the applicant, words to the effect:
When again the applicant protested that he had done nothing wrong, Mr Gay allowed him until 2.00 pm on Friday, 9th May 1997 to consider his position At about 3.00 pm on Friday, 9th May 1997, Mr Gay rang the Youngtown store to speak with the applicant, however, he was unavailable at the time. Mr Gay rang back at 3.30 pm and asked the applicant, would he do the right thing by the company and resign? The applicant, once again, declined. The applicant contended that Mr Gay said: "Well, I can't have you working for the company, I'll have to terminate you." (Transcript page 11) The applicant then requested a further meeting take place with Mr Gay. Whilst Mr Gay was prepared speak with the applicant, he indicated, according to the applicant, that it was "not going to do any good." (Transcript page 11) During that meeting, Mr Gay told the applicant that he was prepared to tear up the termination letter if he would resign; once again the applicant declined. The applicant said Mr Gay then asked if there were any more copies of the memorandum in existence and he informed Mr Gay that he (the applicant) had the original signed by the staff. Mr Gay then informed the applicant his employment was terminated immediately. Reasons Given During the Hearing for Dismissal Mr Wainman was generally of the view that the memorandum was a "mutinous type of communication" (Transcript page 30) as it had been headed by a manager and he was convinced that it was not initiated by the staff. He also maintained that the applicant's participation in drafting the memorandum was not a "professional management course of action". (Transcript page 31) Mr Wainman said he could accept the staff getting together and formalising their opinion. However, he was of the view, the memorandum was organised, prepared and delivered by a manager, after a direction not to go any further with it once it had been seen by management. This, he said, was "a most serious error of judgment" (Transcript page 32) and justified dismissal. Mr Chilcott concluded that the applicant's responses to all the questions put to him at the meeting on 9 May 1997 led him to conclude that the applicant: was the one bringing forward the memorandum; the one driving it; and it was his interpretation of the feelings of the staff. Mr Chilcott said, it was not just a memorandum from the Youngtown staff, it was the way the applicant was trying to build up support throughout the group by sending the memorandum out and asking for support. Mr Chilcott formed the view that there was no alternative but to request the applicant's resignation because he (the applicant) could not see anything wrong with his actions; he felt they were justified as they were based on the staff members input and he was only voicing their feelings. When asked by the Commission to explain the precise nature of the wrongdoing on the part of the applicant, Mr Chilcott said there were three issues:
In relation to the applicant's contact with other stores, Mr Chilcott said that he had spoken with Mr Boucher at the Devonport store, who confirmed that there was a document 'floating around'. He said that Mr Boucher was not supporting it. Mr Chilcott also rang the Glenorchy store and he confirmed they put the memorandum in the bin. Mr Chilcott said that he had arrived at the conclusion that the applicant was drumming up support when the branches indicated that they had received the memorandum, via a fax, and had also received a phone call from the applicant. Mr Chilcott interpreted the applicant's involvement with the memorandum as a breach of confidence, leaving him with no alternative but to ask for the applicant's resignation. Mr Chilcott submitted, he wanted the applicant to resign because he felt he could not have him on the management team. Finding There is no doubt that the unsigned memorandum, set out in Exhibit E.2, was the principle document upon which the employer relied to terminate the applicant's employment. This was an internal memorandum addressed to Mr Chilcott and, in the view of the applicant, represented the views of the staff at the Gunns Mitre 10 Youngtown store. The memorandum expressed, in strong and colourful language, dissatisfaction of the appointment of a new State Sales Manager. During the course of hearing this matter, evidence was adduced which, in my view, did not form part of:
In particular, I refer to the evidence given by witnesses Philpott and Bradford, and some of the observations and allegations made by witnesses Chilcott and Wainman. That being the case, and in an attempt to establish whether the applicant was unfairly treated, it is appropriate that I only consider the facts and circumstances that were before the employer and the applicant at the meeting on 9 May 1997. Article 4 of the International Labour Conference, Convention 158, concerning the 'Termination of Employment at the Initiative of the Employer' (ILO Convention) states:
Article 7 states:
When the meeting got under way on 9 May, the employer only had an unsigned copy of the memorandum which was given to Mr Wainman, by the applicant, the day before. No attempt was made by the employer prior to the meeting to conduct an investigation to establish such things as :
During the course of the meeting, the applicant was asked some questions about his involvement with the memorandum and his contact with other stores. He also expressed his views about the new appointment. Nevertheless, I would have to conclude that no specific allegations were put to him about his conduct. This resulted in him being denied an opportunity to provide a considered response. In addition, the applicant was not told the real purpose of the meeting and that anything he said might affect his continuing employment with the company. This was especially important because, the day before the meeting took place, I am of the view that the management team had already made a prima facie decision to dismiss the applicant. On this point, I accept the evidence given by Mr Wainman, when he was being cross-examined by Mr McElwaine, wherein he responded to a series of questions in the following manner:
I accept the applicant played a role in drafting the memorandum and made contact with two branch stores, but in the absence of a proper investigation to establish the facts and circumstances, leading to clear and concise allegations being directed to the applicant, I am not convinced the evidence before the management team at the meeting on 9 May 1997 constituted sufficient reason to request the applicant's resignation, and later, when he would not resign, terminate his employment. For those reasons I determine that the employer's action did not conform with Articles 4 and 7 of the ILO Convention and the applicant's dismissal was unfair. Remedy Mr McElwaine, for the applicant, and Ms Carney, for the employer, submitted that it would be an improper exercise of the Commission's discretion to order reinstatement of the applicant, as there was uncontroverted evidence that the applicant had lost the trust and confidence of management, indeed, there had been a mutual breakdown in trust and confidence. In addition:
Given those submissions, and the evidence of Mr Wainman, I am satisfied that reinstatement is impractical. Having reached that conclusion, I consider it is appropriate to determine the amount of compensation to be paid to the applicant, in lieu of reinstatement. When assessing an appropriate amount, Mr McElwaine submitted that I should rely on Capital Hill Corporation Pty Ltd v. Terence James O'Connor (T6915 and T6918 of 1997) and Royale v. Arthur Yates & Company Pty Ltd IR Vol 38 at 247 and where, at pages 250 and 251, consideration was given to Chenery v. Klemzig Nursing Home (1988) 55 SAIR and at page 544 it stated.
On the other hand, it was Ms Carney's primary submission that guidance should be taken from the common law in relation to "reasonable notice". Her secondary submission was, that I should have regard for the Commonwealth Act, that is, The Workplace Relations Act 1996, with specific reference to the maximum amount to be awarded in unfair dismissal cases. This line of submission, I reject as an appropriate method for determining compensation in this jurisdiction. Many of the matters put to me, by Mr McElwaine, arising out of Chenery v. Klenzig Nursing Home, might be relevantly considered in relation to assessing the amount of compensation due to the applicant, in accordance with the Nicholson v. Heaven & Earth Gallery principle, and mentioned at pages 23 to 25 of Capital Hill. But, they appear to me to rely on the assumption that the applicant's employment would have continued for the balance of his working life. However, on the evidence before me, I am of the view that the applicant's employment would have been unlikely to continue into the future for any substantial period of time. I make this finding on the basis that, had the employer conducted a full investigation into the incident, the evidence put to me at this hearing would have been available to the employer and, it would have been sufficient to establish the applicant's involvement with the memorandum:
The evidence of witnesses Philpott and Bradford, satisfied me that they were advised by the applicant that a new State Sales Manager had been appointed, and he expressed disquiet about the appointment and raised the possibility that staff members may lose their jobs to compensate for the new appointment. This contrasted with the evidence given by the applicant, who was less than precise in detailing the views he expressed to the staff, after informing them of the new appointment. Whilst Mr Philpott and Miss Bradford essentially agreed with the comments contained in the memorandum, nevertheless, the potential loss of their jobs was of paramount concern, not necessarily the fact that a person had been employed. The assertion on the part of the applicant, that the new appointment could give rise to further job losses, was unnecessary and inappropriate for a person in his position. Such assertions create insecurity among employees, especially when it comes from their manager. Under those circumstances and, in a climate where the company had recently retrenched a number of employees, it was understandable they would have some concerns. There was no evidence before me that would enable me to conclude the applicant did anything to quell their fears. To the contrary, the uncontested evidence was that the applicant suggested, to at least some of his staff, they should write a memorandum to the General Manager expressing their concerns. It was also uncontested evidence, that the applicant:
In addition, the applicant, after composing the memorandum, and whilst still in a handwritten form, made contact with at least two other stores for the purpose, the applicant said, of ascertaining whether their managers had heard the news about the new appointment and to gauge the reaction of their staff. He then sent, by facsimile, the memorandum to the Devonport and the Glenorchy branches after, the applicant said, the branch managers requested to see a copy. It was Mr Chilcott's evidence that he contacted the two stores and established the memorandum had been sent to them, by fax, and they had been speaking with the applicant. After those conversations, Mr Chilcott concluded that the applicant had been seeking their support. The only other evidence on this matter comes from Miss Bradford, who overheard a conversation between the applicant and a person, whom she believed to be Mr Stubbs. She said the applicant advised Mr Stubbs that, all his staff were upset and they wanted to write a memorandum. She said the applicant wanted them to write a memorandum as well, and he said he would fax them a copy so they could get some idea on what to write. On this issue, I would have conclude that it was more likely than not, that the applicant's contact with other branch stores was, among other things, to seek support for the sentiments expressed in the memorandum. For all the foregoing reasons, I am of the view that the applicant's employment would not have continued beyond four weeks, and therefore, I am prepared to award him four weeks pay [based on the total of his salary package as set out below] as compensation in settlement of this dispute. There was consensus on the fact that the applicant's annual salary package was made up as follows: Base salary $46,000.00 TOTAL $59,220.00 pa. or $1,138.84 per week. Therefore $1,138.84 x 4 = $4,555.36 I hereby Order, pursuant to section 31(1) of the Industrial Relations Act 1984 that Gunns Limited trading as Gunns Mitre 10, pay Mr Andrew Martin Pearson of 12 Penwood Close, Launceston, an amount of Four thousand five hundred and fifty five dollars and thirty six cents in settlement of the dispute arising out of application T.No.6983 of 1997. Further, the amount be paid to Mr Pearson no later than the close of business on Wednesday, 30 September 1998.
R J Watling Appearances: Date and place of hearing: |