T13180
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TASMANIAN INDUSTRIAL COMMISSION
Industrial Relations Act 1984
Terry Leigh Clayton
and
CK & S Farquhar trading as CK & S Farquhar Carpet and Vinyl
Industrial dispute - termination of employment - severance pay - alleged breach of award or registered agreement - long service leave – Order issued
REASONS FOR DECISION
[1] On 11 July 2008, Terry Leigh Clayton (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 CK & S Farquhar trading as CK & S Farquhar Carpet and Vinyl (the respondent) arising out of a dispute in relation to termination of employment; severance pay in respect of termination of employment as a result of redundancy; alleged breach of award or registered agreement; and, a dispute over the entitlement to long service leave, or payment instead of any such leave, or the rate of ordinary pay at which any such leave or payment is to be paid. [2] The matter was listed for hearing at the Supreme Court, Cameron Street, Launceston, Tasmania on 1 August 2008 (Conciliation Conference) and 28 August 2008. [3] The applicant was employed from 20 September 2007 to 25 June 2008 by the respondent as a carpet and vinyl layer. The applicant asserted he was unfairly dismissed from his employment. He further alleged that the respondent withheld two days pay, one week’s holiday pay and 39 hours’ overtime. [4] It was agreed that the applicant had available one week’s accrued annual leave. It was also agreed that the respondent had paid $405.00 for dental treatment for the applicant. [5] The applicant sought to be reinstated and to have his overtime, outstanding salary and accrued annual leave paid out.
BACKGROUND
[6] The applicant claimed he had been dismissed because he had been ill. He asserted he had been injured at work on 26 May 2008 and was on Workers Compensation until on or about 20 June 2008. He returned to work for one day, but stated that he was ill and took the next day off. He returned to work on the following day. He asserted he went to his doctor that same day and was given a medical Certificate to be off work for the rest of the week. The Certificate was backdated from Monday of that week. The medical Certificate from Dr M Kulinski formed part of the application. [7] The applicant asserted he received a text on his telephone from the respondent’s son, Mr R Farquhar, on Wednesday, 25 June 2008 informing him he was sacked and to pick up his pay and tools. [8] This was not disputed by the respondent. [9] At page 5, line 40 of transcript, the respondent asserted the applicant had “… had over 50 days off in the first five months of this year …” Further he asserted the applicant had only worked one full week in that period. He alleged the applicant had two or three days off for some reason every week. [10] Mr Farquhar’s son, Mr R Farquhar, an employee, gave evidence as to the poor attendance record of the applicant and was corroborated by Mr Matthew Varga, another employee, who attested “… I’d say he averaged about three or four days a week …”. (Transcript p.27, L.25) [11] The respondent alleged that the applicant had taken so much time off on sick leave that he had run out of paid sick leave entitlements early in the year. He further alleged that the applicant had six days off as sick leave early in the year which was not disputed. [12] The applicant stated:
“I probably had six days off, but every day I had off I never, ever got paid for it.” (Transcript p.20, L.20)
[13] The respondent claimed he had indeed paid the applicant for that time. He asserted that he paid a consistent wage each week to the applicant. [14] The applicant disputed the payments yet concurred with the respondent regarding the constancy of wage:
“The only time I got paid was a 550 cheque every single week and I worked for that money.” (Transcript p.18, L.18)
[15] Mr R Farquhar stated that the applicant had taken six days off and sought to be paid, although he had no accrued sick leave entitlements due to him:
“He asked whether he could get a week’s pay because he had no money and we paid him for it.” (Transcript p.25, L.43)
[16] The Commission was provided with overtime and attendance records as well as an example of a record of debit owed to the respondent by way of correspondence from the respondent on 18 August 2008. [17] The record indicated a very poor attendance by the applicant. It also indicated where he was paid a full week’s wages although he had not worked a complete week. [18] The Commission sought clarification to know why the applicant had retained his job for so long, given the attendance record alluded to by the respondent. The respondent asserted that his son had asked him the same question, to which he said he replied “… you’re better off with him two days a week than none at all, we need the work done.” (Transcript p.8, L.30) [19] The respondent asserted, and the applicant agreed, that they had an arrangement whereby overtime hours which were accrued could be offset against debt or paid out at ordinary time, cash in hand.
“… firstly, the arrangement I made to pay his overtime cash was an arrangement between me and Terry.” (Transcript p.18, L.35)
[20] And:
“… I paid him his overtime cash in hand, full rate, no tax deducted.” (Transcript p.18, L.40)
[21] The applicant asserted he had worked more hours’ overtime than the 39 nominated by the respondent. However, he could not produce a means of verifying his assertion. [22] The respondent produced a record of the overtime worked by five employees over a seven-month period. It indicated the hours worked, and where the individuals had “cashed in” overtime. [23] The respondent asserted the applicant had selected two rugs from stock at a cost of $250.00 each. He further asserted that he had withheld a sum of $500.00 from the applicant’s entitlements to pay for the rugs. [24] The applicant denied ever having received the rugs. [25] The applicant asserted he did not get “proper” pay slips each week. However, he did acknowledge that he was in possession of a Group Certificate for the year concerned. [26] The documentation provided by the respondent showed monies owed to him. Those showing overtime and the applicant’s attendance were for his use and did not form part of any submissions required by Australian Taxation Office. [27] The respondent gave the applicant a hand-written note (Exhibit A1) outlining the applicant’s entitlements and deductions made by the respondent, in summary he wrote:
“I owe you 2 days pay $220.00 Holiday pay 1 week $550.00 Overtime 39 hours $702.00 Total $1472.00
You owe me 2 rugs $500.00 Dentist $405.00 6 days pay $660.00 Total $1565.00 $1565.00 - $1472.00 Total $93.00 you owe me”
FINDINGS
[28] The details of this application are difficult to verify for want of documentation on the part of the applicant. Also, the respondent relied on a number of documents the veracity of which cannot be confirmed. However, they are consistent with his assertions and the evidence of the witnesses. [29] I turn to the matter of unfair dismissal. [30] The evidence of Mr Rodney Farquhar and Mr Matthew Varga paint a picture of an unreliable employee who consistently took time off work. [31] The applicant’s own admission, he had used up all his sick leave by early 2008, and that he had another six days off around that time, in my view, supports the witness’s observations. It should also be noted that the Commission has given no weight to the period of time where the applicant was off work and legitimately received Worker’s Compensation in the instant matter. [32] The respondent’s assertion that he had endured the applicant’s poor attendance because he needed him to work is plausible. The fact that the respondent eventually came to the conclusion that the applicant’s lack of reliability was unacceptable is, in my view, a reasonable conclusion to arrive at. [33] Clause 30 (5) of the Act, states:
“Where an employer terminates an employee’s employment, the onus of proving the existence of a valid reason for the termination rests with the employer.”
[34] The respondent had a legitimate reason for terminating the employment of the applicant, in turn satisfying the requirements of the Act. The applicant was not unfairly dismissed, I so find. [35] I now turn to the matter of the applicant’s entitlements. [36] It was acknowledged by both parties that the applicant had accrued one week’s annual leave. It was also acknowledged the applicant was owed payment for the two days he had worked in the last week, 23 and 25 June 2008. [37] Although the applicant disagreed that he only had 39 hours overtime accrued, there is no contrary evidence or claim therefore I accept the 39 hours as being accurate. The applicant is entitled to 39 hours at overtime rates, and I so find. [38] In essence the applicant was summarily dismissed. The applicant was subject to the Furnishing Trades Award, No. 1 of 2007 (Consolidated) (the award). At Clause 14(e)(i) of the award it stipulates:
“Employment shall be terminated by a week’s notice on either side, given at any time during the week or by payment or forfeiture of a week’s wages, as the case may be. ….”
[39] The applicant is entitled to one week’s ordinary time wages in lieu of notice, and I so find. [40] It was confirmed by both parties that there was an arrangement whereby overtime worked would be paid at a flat rate, cash-in-hand or used to pay off debts owed by the applicant to the respondent. This agreement is a verbal contract; the parties have in effect contracted out of the award which is a breach of the Act. [41] At Part VIII, Clause 85(1) of the Act it states:
“Any provision of an award … that is inconsistent with a provision of a contract of service prevails over the latter provision to the extent of the inconsistency.”
[42] For the purposes of this affecting an outcome in this matter, the arrangement has no validity. [43] I turn to the offsets the respondent made to recover debts owed to him against entitlements due to the applicant. [44] It is not open to the respondent to offset debt against the applicant’s entitlements. He cannot deduct the cost of the disputed rugs from the applicant’s entitlements. In the same vein, although the applicant has acknowledged the debt, the respondent cannot deduct the fees paid to the dentist from the applicant’s entitlements. The respondent must find reparation for these debts in another jurisdiction. [45] Finally, I turn to the offsets the respondent made against wages paid to the applicant for the six days he had not worked, against entitlements due to him. [46] I am convinced by the evidence of Mr R Farquhar and, to some extent, the time sheets provided by the respondent, that the applicant did have six days off work and that he was paid for them. [47] Indeed, it was the applicant’s own admission that he probably did have six days off and that he was always paid the same amount “week in, week out” supports the respondent’s position. [48] The deal struck between the two parties may well have been that the applicant would work time off by doing overtime, and I have addressed that practice above in the context of a breach of the Act. [49] Shelley DP, in her decision[1] Steven John Matthewson v The Egg Marketing Board Tasmania, dated 14 March 2003, provided a comprehensive treatise on the legality of offsetting award entitlements for purposes other than those for which they were intended. [50] In her decision Shelley DP relied on authorities that addressed the issues of offsetting over-award payments and allowances against other award obligations. The conclusions were quite clear, in that payment for one purpose, for example an allowance, cannot be offset against another purpose, for example overtime. [51] The instant matter is somewhat different. We have a situation where an employee requires time off work for which he claims illness but has no sick leave left. The employer agreed to maintain his wages for that period. The employee had accrued, overtime, wages and annual leave which the respondent, on sacking the employee, has offset against the payments for time off. [52] Consistent with the principles held in the decision T10165 of 2002, overtime payments are for overtime worked, wage payments are for wages earned and payment in lieu of notice is a statutory obligation in the instant circumstance. It is not open to the respondent to offset payment for days not worked, but paid against these entitlements. [53] Prima-facie, one could assert that annual leave is annual leave and should be used for that purpose. However, the applicant could have sought to take annual leave for that period of six days, albeit he had not accrued it at that point. The award at Clause 46(g) allows for leave to be taken before the due date. It states:
“An employer may allow annual leave to an employee before the right thereto has accrued …”
[54] It is not uncommon for employees, particularly if suffering a prolonged illness, to take annual leave to cover the period for which they would not normally be entitled to sick leave. [55] In my view it is not unreasonable for the respondent to debit the applicant’s annual leave balance to offset leave taken “before the due date”. Although six days were paid, only five can be offset against the available annual leave. [56] The applicant was paid at a rate of $690 for a 38 hour week.
ORDER
I hereby Order, pursuant to s.31 of the Industrial Relations Act 1984, in full and final settlement of the matter referred to in T13180 of 2008 that CK & S Farquhar trading as CK & S Farquhar Carpet and Vinyl pay to Terry Leigh Clayton the sum off two thousand and twenty eight dollars and sixty cents ($2,028.60) by close of business on 19 December 2008 made up as follows:
One week’s pay in lieu of notice 5 days
Total 14.7 days
James P McAlpine
Appearances: Mr C Farquhar for CK & S Farquhar trading as CK & S Farquhar Carpet and Vinyl
Date and Place of Hearing:
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