T10298
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TASMANIAN INDUSTRIAL COMMISSION DECISION APPEALED - SEE T10697 Industrial Relations Act 1984 Kevin Lewis Winduss and Kentish Council
Industrial dispute - alleged unfair termination of employment - severance pay in respect of termination of employment as a result of redundancy - contract of employment - extension of contract - redundancy - order made REASONS FOR DECISION (1) On 10 July 2002, Kevin Lewis Winduss (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 with Kentish Council arising out of the alleged unfair termination of his employment, severance pay in respect of termination of employment as a result of redundancy and alleged breach of an award or registered agreement. (2) The matter was listed for a conciliation conference on 30 July 2002. Mr G Richardson appeared for the applicant. Mr S McElwaine appeared for the employer. (3) The initial conciliation conference failed to find a resolution to the dispute and the matter was set down for hearing on 6 November 2002. Following a further adjournment the hearing concluded on 13 December 2002. (4) Evidence was taken from the following witnesses:
(5) A considerable amount of the evidence went to the question of the performance of Mr Winduss. However Mr Holwerda agreed that Mr Winduss was not terminated "because of issues related to his capacity, conduct or performance".1 As Mr McElwaine submitted that the performance related issues were only relevant to the question of remedy, the initial focus of this decision will be limited to matters going to the contractual relationship between Mr Winduss and the Kentish Council. Structure of the Kentish Council (6) Up until recent times the Kentish Council was administered by an elected Council of 10 members. (7) For the past several years the Council was a party to a Joint Authority with neighbouring Council, Latrobe. The purpose of this Authority, which more recently changed to a stand-alone entity known as Mersey Works, was to provide works and maintenance services to both Councils under the purchaser/service provider model. (8) As a consequence the Kentish Council did not employ an outside workforce. Mr Winduss was responsible for the contractual arrangements between the Council and Mersey Works. (9) In September 2001 Latrobe withdrew from Mersey Works and the entity was subsequently wound up. As a consequence the Kentish Council re-engaged an outside workforce with effect from 15 October 2001. In total the council employs approximately 19 staff, of which six are outside employees. (10) In late February 2002 the Premier and Minister for Local Government suspended the elected Council, appointed an Administrator and established an Inquiry into the Council operations. In September 2002, the Premier dismissed the elected Council. Other than to provide context, the suspension and subsequent dismissal of the Council is not relevant to this application. Question to be Determined (11) Mr Winduss was employed as Works Manager, with effect from 17 January 2000. Mr Winduss was engaged on a two-year contract, with provision for extension. (12) Mr Winduss was terminated by the General Manager effective on 26 May 2002 with salary entitlements paid out until 28 June 2002. (13) The question to be determined is, firstly, whether Mr Winduss' contract had, at the time of termination, been extended for a further two-year period? If the answer to this is yes, then the next question is whether the termination was in accordance with the terms of the contract? The Contract (14) The minutes of the Council meeting held on 21 December 1999 record the following motion as being carried:2
(15) The preferred candidate was presumably Mr Winduss. (16) On 4 January 2001 both Mr Winduss and the Mayor of the day signed a Contract of Employment3. The contract took effect from 17 January 2000. (17) Clause 15 reads:
(18) No jurisdictional issues were raised by either side. (19) The following clauses are relevant to this application:
(20) Clause 9 provides for an annual performance review based on performance criteria to be found in a performance review agreement to be executed within one month of the commencement of the contract. The performance criteria were never formulated. Events Between May and September 2001 (21) In May 2001 the then General Manager, Mrs Christine Fraser, resigned. (22) According to Mr Harrex, a Council "workshop" meeting expressed concern as to a rumour that Mr Winduss may also resign. He said:5
(23) Mr Harrex said that Deputy Mayor Binny, Cr Jones and himself were authorised by Council to approach Mr Winduss with the view of negotiating a renewal of his contract. Authority for this approach was confirmed on the evidence of Mr Brown and Mr Ralph. (24) A meeting with Mr Winduss took place on 8 June with Cr Jones recorded as an apology. The outcome of that meeting is recorded in a document signed on 13 June.6 Relevantly this document reads:
(25) As Mr Winduss was about to proceed on annual leave, he signed the document at the request of Mayor Harrex. Effectively this was a statement of intent, with both parties clearly understanding that the agreement was subject to approval by the full Council. (26) It is not entirely clear whether this document was discussed at the next Council meeting although it certainly was not specifically endorsed. (27) The following motion was passed at the 19 June meeting:7
(28) Mr Brown said:8
(29) It would seem that the Council received advice from both the outgoing and incoming General Manager to the effect that Mr Winduss had not been subject to a performance review in accordance with his contract, and that this shortcoming should be rectified. (30) The meeting on 17 July records the following:9
(31) Crs Jones, Binny and Hughes were appointed as the subcommittee. (32) On 27 July Mr Winduss returned from leave and met with Mr Holwerda. (33) Mr Holwerda said that the matters discussed at the meeting were taken from a series of dot points in a file note.10 These items, 14 in total, included: employment position/structure; loyalty; future and restructuring. (34) On the matter of restructuring, Mr Holwerda said:11
(35) Mr Winduss had little or no recollection of discussing many of the items on Mr Holwerda's list. He was, however, moved to write to the Mayor that same day in the following terms:12
(36) Mr Holwerda denied that he had advised Mr Winduss at this meeting that his contract would not be renewed.13 (37) The performance review took place on 13 August. The review subcommittee [Cr Hughes an apology] met with Mr Holwerda immediately prior to the review taking place. Mr Holwerda was not present when Mr Winduss joined the meeting. (38) The outcome of that meeting relevantly reads as follows:14
(39) There was a considerable amount of evidence relating to the dot point concerning redundancy. In response to a question from the Commission, the General Manager indicated that this particular clause, if indeed it formed part of the contract, related to a redundancy arising as a consequence of amalgamation, as distinct from an internal restructure.15 This particular clause can therefore be ignored for the purposes of this application. (40) The minutes of the Council meeting held on 21 August record the following:16
(41) A review of the evidence of a number of witnesses suggests that it was more than likely that Cr Jones was reading verbatim from the Performance Review Outcomes record17 when she presented her verbal report. (42) Much of the debate centred on whether this amounted to a decision that was binding on the General Manager. Evidence relevant to this question is set out below: (43) Mr Harrex:
(44) Mr Ralph:20
(45) Mr Binny:
(46) Ms Willock:
(47) Mr Holwerda:
(48) In late September Mr Winduss' salary was increased to $65000 pa and back paid to 1 July 2001. At the same time an additional contribution was made to his superannuation and backdated to 1 July 2001. In both cases the amounts of money and operative dates coincided precisely with the in-principle agreement signed on 13 June and referred to in the Performance Review recommendations. (49) Mr Holwerda did not agree that the salary and superannuation adjustments referred to above were a consequence of this agreement.29 He indicated that the adjustments were in the nature of an annual review, following a generally favourable performance appraisal. (50) In relation to the recommendations of the review committee, Mr Holwerda said:30
(51) Whilst Mr Holwerda referred to the document as a draft, it was in fact a signed and dated letter on letterhead, and kept in the Council files. Relevantly the letter reads:31
(52) On 24 September [the day after the formal announcement re Mersey Works] the General Manager convened a staff meeting. Included in the agenda was advice of a major restructure of Council staff positions.32 Events Post September 2001 (53) On or about 4 October the General Manager advised Mr Winduss that his position would no longer continue and would be replaced with a new position titled Manager of Technical Services. This was part of a total restructure that would see five managerial streams reduced to three. (54) Mr Holwerda said the new position required a much higher technical and managerial input than had hitherto applied for the position of Works Manager. He also said:33
(55) Mr Holwerda said that he had given notice of the intended restructure at the 27 July meeting. The demise of Mersey Works brought forward that process.34 (56) Applications for the new position [internally advertised] closed on 12 October and there can be no doubt that Mr Holwerda encouraged Mr Winduss to apply. The question subject to considerable debate during the hearing, was the motivation behind Mr Holwerda's active encouragement. (57) Mr Richardson submitted that Mr Holwerda had created a position that he knew Mr Winduss could not possibly qualify for. He said:35
(58) Mr Holwerda's position is summarised in the following exchange:36
(59) And earlier:37
(60) When applications for the new position closed, none had been received. (61) Mr Holwerda said that as a consequence, he entered into an arrangement whereby Mr Winduss would continue in his role so as to ensure a smooth transition of the works function from Mersey Works to the Council.38 (62) Mr Holwerda said that he had many discussions with Mr Winduss between October 2001 and January 2002 whereby he expressed disappointment with his performance, reminded him that his contract expired on 17 January 2002 and that Mr Winduss was not part of his future plans for the Council. (63) On the matter of the Works Manager position being abolished, Mr Winduss said:39
(64) And later:40
(65) There can be little doubt that the relationship between Mr Holwerda and Mayor Harrex had deteriorated, perhaps to the point of being terminal. The following exchanges during Mr Harrex's evidence are revealing:41
(66) And later:42
(67) On 9 January Mr Holwerda wrote to Mr Winduss in the following terms:43
(68) On 17 January Mr Winduss responded indicating that, in his view, Mr Holwerda's proposal did not comply with his contractual arrangements.44 Mr Winduss also requested time to obtain legal advice. (69) Following several items of correspondence between Mr Winduss' legal advisers and the Council in the early part of 2002, Mr Holwerda wrote to Mr Winduss on 18 April 2002. The letter in part reads:45
(70) On 22 May 2002 Mr Holwerda again wrote to Mr Winduss advising "... that after careful re-consideration of your position, and taking into account your progress in clearing up outstanding projects, I have decided that your final finishing date will be brought forward to the 26th May 2002."46 Closing Submissions (71) Mr Richardson for the applicant: (72) The original contract was with the Council, not the General Manager. (73) The contract applicable to Mr Winduss at the time of termination was an extension of the original contract, with agreed amendments. It was not a new contract. It is not possible to change the parties to an existing contract. (74) The General Manager, in agreeing to accept the performance review recommendations, by implication indicated that he would implement the recommendations. (75) The General Manager is obliged under Section 62[1][d] of the Local Government Act to carry out the directions of the Council. (76) The General Manager embarked on a deliberate course of conduct intended to circumvent the elected Council's agreement with Mr Winduss. (77) The increased salary and superannuation is evidence of part performance. (78) Mr McElwaine for the respondent: (79) Both the General Manager and the elected Council have the power to appoint staff, but any ensuing contract is with the Council as a legal entity. (80) The Council did not make a decision to extend the contract. A subcommittee made a recommendation, which is not binding on the General Manager. (81) The acceptance by the General Manager of the review committee recommendations does not of itself result in a further contract for Mr Winduss. (82) The contract expired on 17 January 2002 and no offer of extension, pursuant to Clause 2.2 of the contract, was made. (83) No weight should attach to the draft letter of 11 September 2001, as it was never sent. (84) The termination of Mr Winduss is a straightforward case of redundancy arising out of a major restructuring. If there was no contract, then any severance payment would be modest. (85) If the Commission was against him on the contract extension, then Clause 3.5 would apply. This would require six months' notice or payment in lieu. In this case general notice was flagged on 27 July 2001 and more specific notice was given in October 2001. Either way, the six-month requirement was satisfied. (86) In the event that the dismissal was found to be unfair, reinstatement is impracticable. Based on the evidence relating to performance and capacity, there should be a very substantial discount on the maximum compensation allowable under the Act [refer Nicholson v Heaven and Earth Gallery principles]. Findings (87) I preface these conclusions with an observation. (88) It is clear from the evidence that Mr Holwerda and a section at least of the elected Council had diametrically opposed views as to how the Council should be managed. Indeed the evidence points to a complete breakdown in the relationship between the then Mayor and the General Manager. (89) It is not for the Commission to form or express any view as to who was acting in the best interests of the ratepayers. My only concern is the contractual relationship between the Council, as a legal entity, and Mr Winduss. (90) The primary question is the status of this contractual relationship at the time of termination. There are three possibilities: 1. The existing contract had been extended by a period of two years, or 2. A new two-year contract had been entered into, or 3. The original contract had expired and Mr Winduss was employed on a month-by-month basis. (91) To address this question it is necessary to look at the totality of the evidence rather than any single document or event. (92) If there is any doubt or ambiguity as to the nature of the performance review committee recommendations outlined at the 21 August Council meeting, then they are put to rest by Mr Holwerda's draft letter of 11 September. (93) Whilst this draft does not constitute an offer as it was never sent, it is evidence of Mr Holwerda's understanding of the review committee recommendations. This draft unambiguously provides for a two-year extension of the contract pursuant to Clause 2.2, together with salary and superannuation adjustments precisely in line with the review committee recommendations. (94) I find that on any objective measure, this draft letter accurately reflects the express recommendations of the review committee, and by inference, the wishes of at least a majority of elected councillors. (95) Taken in isolation, it is at least arguable that the relevant minute of the 21 August Council meeting does not constitute a "decision" of Council. However, this must be viewed in light of earlier meetings and events. (96) The Council meeting of 19 June carried a motion that the General Manager "... review the contract of the Works Manager and renegotiate the contract for a further term". (97) In any sense of the word that motion represents a clear decision of Council to the effect that the General Manager is to renegotiate the contract for a further term. What followed from this was a matter of process. (98) The July meeting of Council accepted the General Manager's recommendation to appoint a subcommittee to undertake a performance review. This occurred on 13 August with a "generally satisfactory" outcome. (99) The review committee duly reported to Council on 21 August and the General Manager indicated that he accepted the recommendations. If there is any ambiguity in the written report of the review committee, the intent was clearly understood by the General Manager. (100) I find that the 21 August minute reflects the final stage of a decision taken by Council as early as 19 June 2001, and, as such, the General Manager was obliged by virtue of Section 62[1][d] of the Local Government Act, to proceed to implementation. (101) The evidence of Mr Holwerda, that the salary and superannuation adjustments made in late September 2001, were a consequence of an annual review rather than the recommendations of the review committee, is untenable. I find that these adjustments to be evidence of part performance of a revised contract. (102) It is important to note that on the evidence of Mr Holwerda, the demise of Mersey Works was not the reason for the proposed restructure, but it "brought forward" the process. By inference the restructure would have happened in any event. It cannot be argued, therefore, that the demise of Mersey Works represented a profound change in circumstances, such that the only responsible course of action was to ignore the Council decision. On the evidence the only thing that had changed was timing. (103) I find it more likely than not, that Mr Holwerda formed the view, well prior to 4 October, that Mr Winduss did not have the skill set for the position of Manager of Technical Services. His evidence that "... from the time I started to firm up the future structure it was becoming very apparent that Mr Winduss's skills fit did not match what the future skills for the organisation and the new position would be"47, supports this conclusion. (104) Having regard to the totality of the evidence, I find that the existing contract was extended by two years by virtue of Clause 2.2, such extension to run from 17 January 2002. Further amendments relating to salary and superannuation attach to Schedule 2. (105) Having clearly stated that he accepted the review committee recommendations, it was incumbent on the General Manager to take the matter back to the elected Council, in the event that he changed his mind. To embark on the path he chose without doing this was not reasonably open to him, and certainly unfair on Mr Winduss. (106) In reaching this conclusion I have some sympathy with the position Mr Holwerda found himself in. His management style and that of Mr Winduss were diametrically opposed. Mr Holwerda was clearly and understandably frustrated by the direct communication between Mr Winduss and elected councillors, something that would not be tolerated in most organisations. (107) Nonetheless the evidence points overwhelmingly to a clear decision being made by the elected Council. If Mr Holwerda was unable to persuade the Council to an alternative position, he had a duty to implement that decision. (108) On the available evidence this is a clear case of redundancy. The position of Works Manager no longer exists. Under the terms of Clause 3.5 of the contract, this would require six months' notice or payment in lieu. (109) I do not accept Mr McElwaine's contention that this clause is satisfied by the general notice given in July 2001, or at worst, in October 2001. For notice to be enforceable, there must, in my view, be a precise date rather than a general indication that something might happen. (110) Whilst a precise date of termination was given in the letter of 18 April 200248, this was subsequently changed by the letter of 22 May 2002, and the latter must prevail. (111) In accordance with the terms of the contract, the appropriate remedy is payment of six months' salary. From this should be deducted one month's salary for the period between the date of termination and 28 June 2002. Order Pursuant to Section 31 of the Industrial Relations Act 1984, I hereby order that Kentish Council, High Street, Sheffield, Tasmania 7306 pay to Kevin Lewis Winduss, 10 Quiggins Grove, Ulverstone, Tasmania 7315 an amount of twenty seven thousand and eighty three dollars [$27083], such payment to be made not later than 21 days from the date of this decision.
Tim Abey Appearances: Date and Place of Hearing: 1 Transcript PN 1961 |