T7771
|
TASMANIAN INDUSTRIAL COMMISSION Decision Appealed - See T8170 and T8171 Industrial Relations Act 1984 Geoffrey Gerald Corrigan and Kelair Pumps Australia Pty Ltd
Industrial dispute - re termination of employment - seeking severance pay due to redundancy - compensation ordered REASONS FOR DECISION The uncontested background to this matter is that Mr Geoffrey Gerald Corrigan (the Employee) was employed by Kelair Pumps Australia Pty Ltd (the Employer) from 11 August 1986 and terminated on 3 July 1998 when the Hobart office of the Employer was closed. The Employee was initially engaged as a Sales Engineer and the Company name at the time was Douglas and Fraser. It was later taken over by Kelair Pumps Australia Pty Ltd. For the last twelve months of his employment he was employed as the Industrial Products Manager based in Hobart but with state wide responsibilities. His salary package at the time of termination was $42,262 and he had the private use of a company vehicle. On 22 January 1998 the Employee was advised by Mr Gibbons the Tasmanian Sales Manager for Kelair Pumps Australia that the Hobart office would be closed at the end of the financial year ie 30 June 1998 and that the decision was final. During the discussion which followed Mr Corrigan was offered a position in the Launceston office of the Company on the same salary level but without the use of a Company vehicle. The position did not require the on going use of a motor vehicle. Over a period of time up to 22 January 1998 the Employee had made it known to the Employer that he was planning to retire on 30 June 1999. In the light of that knowledge there was some discussion on 22 January 1998 on the possibility of the Employee taking early retirement. The Employee in his evidence describes his comments at the time:- Mr Cooper xn "....I was asked by Michael - in view of the fact that I was going to retire, or they thought I was going to retire in June 1999, would I consider retiring early. I said, I'll consider going, dependent upon what sort of package the company is going to offer me. After all, you're asking me to go 12 months earlier than I initially planned. Naturally there was 12 months salary short of any retirement planning." 1 In a further discussion on 20 February 1998. Mr Gibbons advised the Employee that the Employer was, in addition to accrued entitlements for long service leave and annual leave, prepared to pay a redundancy payment equivalent to eight (8) weeks pay at his ordinary rate of pay ie $42,262. In later discussions with Mr Gibbons on 10 March 1998 the Employee requested the offer of eight weeks redundancy be reviewed as he thought it was "paltry". On 20 March 1998 at Launceston the Employee gave Mr Gibbons a letter dated 19 March 1998 which he had prepared after seeking legal advice. Part of that letter reads:-
The above request for redundancy payment based on four (4) weeks for each year of service was rejected by the Employer at a meeting in Launceston on 31 March 1998. On 5 May 1998 Mr Gibbons made an offer of employment as Internal Engineer to the Employee, the position was in Hobart at his same salary level but without a car. In a letter dated 13 May 1998 3 the Employer was advised as follows:- "Mr Geoff Corrigan Dear Geoff We have decided to put in writing our offer of two (2) positions Kelair has offered you in the past four (4) months. In late 1997 we conducted a review of our Tasmanian sales operations. It was realised that in order for your position to be profitable, we needed you to move to Launceston. As a result, on 22 January 1998 we made an offer to you inviting you to move to Launceston. Relevant details of the position were:-
Unfortunately, you declined this offer, and instead suggested we cut some deal to allow you to retire. On reflection this is not our preferred option. We would like to retain your services. We see this as beneficial to both parties - you keep working and our younger staff benefits from your years of experience. Accordingly, on 5th May 1998 we put to you an alternative offer, which would enable you to stay in Hobart. Relevant details of the offer are:-
Unfortunately, you have rejected this second offer as well. We note we have received a letter from your solicitors containing an offer on your behalf. That offer is misconceived and completely unacceptable to us. Now that you appreciate that the proposal in your solicitor's letter will not be accepted, we suggest it is in your interest to review your attitude to the two offers we have made. Please note that we hereby formally repeat to you both of the two offers made previously as referred to above. That is, the offer of the Sales Engineer stationed in Launceston and the offer of Internal Engineer stationed in Hobart. Please note that both of these offers remain open until 21st May 1998 only. Obviously, you can accept only one of them. Should you need more time to deicide, please advise urgently, as we must otherwise put alternative plans in place. Yours faithfully KELAIR PUMPS AUSTRALIA PTY LTD These offers were not accepted by the Employee and as indicated earlier he terminated on Friday 3 July 1998. On Monday 6 July 1998 the Employee commenced work as Sales Manager for John Crane Australia Tasmania Branch at approximately the same salary level. It was submitted by Mr Cooper (of Counsel) for the Employee that the above offers were not genuine as the Employer had already announced (through an April newsletter) to all staff that the Employee was retiring in July 1998. It is true that the Employer had made the announcement to staff but in the absence of any clear evidence to support the claim by Mr Cooper that they were not genuine I accept them at face value. Other matters were debated and were the subject of evidence particularly the intending retirement date of the Employee ie. 30 June 1999. I won't detail these matters as I believe the critical facts have been detailed above. In relation to the intending retirement date I believe the evidence is clear that the Employee planned to retire on 30 June 1999 but that is not material to my considerations in this matter. Mr Cooper submitted that the facts are clear that the Employees position disappeared with the closing of the Hobart office, that the offer on 22 January of alternative employment in Launceston was unrealistic given the Employees age and family circumstances. The later offers made in writing in May 1998 were not genuine because the Employer had already made the decision that the Employee was "retiring" early. He submitted that the fact the Employee had obtained another job should not affect my considerations and I should determine an appropriate redundancy payment. Mr Hudson (of Counsel) for the Employer submitted that as the Employee had found another job "there is really nothing for him to be compensated for".4 He referred me to the C.C.H. Labour Law Reporter where it deals with the "Rationale for redundancy provisions" and in particular relied on a quotation from the Employment Protection Act case (1983) 7 IR 273; 1983 AILR 387, Fisher P of the New South Wales Industrial Commission, where he says: "Severance payments should be designed to assist the retrenched employee to maintain family living standards during the likely period of unemployment and to extend the period during which a search for re-employment can be conducted without serious erosion of family assets and living standards". He also referred me to T125 of 1985 the Tasmanian Industrial Commission "test case" on redundancy standards and relied on the Commissions refusal to award a specific provision for redundancy or retrenchment in favour of the case-by-case approach, with the individual circumstances and merit determining the outcome. He submitted that the fact that the Employee had been given in excess of five (5) months notice should also be a factor in my considerations as should the fact that he was offered alternative employment in Launceston or Hobart. In coming to a decision in this matter I accept from the evidence that the Employee was made redundant from his position in Hobart when the office was closed on 30 June 1998. I also accept that he was offered a position in the Company's Launceston office from July 1998, but a different position without a car. I also accept that he was offered a position in Hobart again a different position and without a car (see the letter dated 13th May 1998 earlier detailed). In accepting the Hobart offer as genuine I acknowledge there were some unanswered questions in relation to that position ie if the Hobart office was closed where would it operate from? The fact that the Employee had a new position to go to on Monday 6 July 1998 in the same office and basically at the same salary is also a matter which I cannot ignore and must mitigate against the Employee in terms of my ultimate order. However, I do not accept that the only relevant consideration in this case is loss of income and I refer to the same C.C.H. publication as referred to by Mr Cooper where it says:- "The underlying rationale for the provision of redundancy payments has in the past been the notion that long term employees have a "right" to their employment, and , if that right is taken from them without any fault on their part, then they are entitled to some form of compensation. This notion is similar to that espoused in the English case of Wynes v Southrepps Hall; Broiler Farm (1968) 1 ITR 407 where it was said that the "right" to employment was like a property interest. However widespread retrenchments caused by economic recession have seen the rationale for severance payments on retrenchment go beyond that of compensation for loss of long term employment to the provision of assistance to the retrenched employees in the practicalities of every day living whilst unemployed". The publication then goes on to record the comments on loss of income earlier reported. There are two components to the consideration of a redundancy payment; compensation per-se and compensation for loss of earnings. There is loss of earnings in this case some $262.00pa salary loss and the loss of private use of a car. My assessment of reasonable compensation in this case taking into account all of the matters dealt with above and the Employees age and length of service is eight (8) weeks pay at the Employees base salary at the time of his termination and accordingly I order Kelair Pumps Australia Pty Ltd to pay to Mr Geoffrey Corrigan of 10 Fleming Street, Glenorchy, Tasmania eight (8) weeks pay calculated at a salary of $42,262pa.
J G King Appearances: Date and place of hearing: 1 Transcript page 11 |