T8047
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Rick Andrew Allie and Island Block and Paving Pty Ltd
Appeal against an order handed down by Deputy President J G King on 12 October 1998 in Matter T7941 of 1998 - decision revoked - reinstatement impractical - order issued REASONS FOR DECISION Background These proceedings concern an appeal by Mr R A Allie (the appellant) against a decision of Deputy President King in matter T7941 of 1998. That matter concerned a Section 29 application lodged by Mr Allie regarding alleged unfair termination of employment and severance pay. The circumstances that gave rise to the application related to a decision by Mr Allie's then employer, Island Block and Paving (the respondent), to restructure its operations. The brief facts of the matter are these. The respondent employed the appellant in a full-time capacity as Hobart Area Manager from 3 November 1994 until 14 August 1998. On 25 June 1998 the respondent informed the appellant that the Company proposed to change its business operations from 1 September 1998. One consequence of those changes, he was told, would be a significant reduction in his salary package. Mr Allie subsequently inquired about a redundancy payment. The respondent subsequently advised him that (a) he had such an entitlement and (b) he could apply for the restructured position when it was advertised. On 17 July 1998 the respondent terminated the appellant's employment, effective on 14 August 1998, on the grounds of redundancy and paid him severance pay on the basis of two weeks for each year of service. Mr Allie alleged that his termination was unfair. On 12 October 1998 King DP published his Reasons for Decision in respect of Mr Allie's application. The Deputy President dismissed the application on the grounds that although "the actions of the employer were far from appropriate, Mr Allie effectively terminated his own employment by not applying for the new position".1 Appeal Grounds The appellant, acting pursuant to Section 70(1)(b) of the Industrial Relations Act 1984, now appeals the Deputy President's decision, alleging that he erred: "1. By finding that the employer did genuinely reconstruct its business in Hobart and the position previously occupied by the employee was redundant as a result of the restructuring and a new position created. 2. By finding that the employee had terminated his own employment by not applying for the new position offered by the employer when that finding was against the weight of evidence. 3. By finding that the employer's preferred person to fill the restructured role was the employee when that finding was against the weight of the evidence. 4. By failing to provide weight or alternatively sufficient weight to the evidence regarding the discussion between the employer and the employee at a meeting on the 15th of July 1998 at which the employee's position was terminated. 5. By failing to give proper consideration to whether or not the employee had been offered suitable alternative employment by the employer. 6. By failing to find that the employee had been wrongfully terminated from his position with the employer." Appeal Principles In considering the appeal grounds and determining these proceedings we apply where necessary the well-known principles established by Dixon, Evatt and McTiernan JJ in the High Court case of House v The King (1936) 55 CLR 499 at 504-505. Approach Mr Turnbull, for the appellant, informed us that he proposed to deal with all six appeal grounds under the following two headings:
We adopt Mr Turnbull's approach in considering the appeal grounds. Appeal Grounds 1, 2, 3 and 4 M Turnbull for the appellant: The primary focus of these four grounds of appeal is essentially that reflected in Appeal Ground 1, ie that there was no genuine restructuring of the respondent's business. The remaining three grounds of appeal, of which Appeal Ground 4 is the most important, support that initial assertion. The Deputy President placed no significant weight at all on the meeting that occurred between the Company and Mr Allie on 15 July 1998. That was the meeting at which the appellant became aware that, because the Company proposed to change its business operations from 1 September 1998, there would be a significant reduction in his salary package and, effectively, a termination of his employment. The meeting was a particularly crucial part of the appellant's evidence. During the meeting Mr Allie told his employer that he might have an entitlement to a redundancy payment. At that point the employer's attitude towards Mr Allie changed significantly. According to Mr Allie's evidence, the Company's Managing Director (Mr W Fawdry) told him in colourful terms that he might as well finish up immediately. Mr Fawdry's evidence conflicts with that of Mr Allie. While Mr Fawdry admitted to swearing, he denied using the language assigned to him by Mr Allie and believed he did not tell Mr Allie that he had to finish up. The meeting of 15 July 1998 is central to the appellant's case. That is, the respondent terminated Mr Allie's employment as a direct result of his having raised the question of possible entitlement to a redundancy payment. There is evidence that reinforces that conclusion. On 20 July 1998 there was a telephone discussion between Mr Allie and a Mr P Thurlow, another senior executive of the Company. Mr Thurlow told Mr Allie that, had he not mentioned redundancy, he would still have a job. The evidence shows that, before the issue of redundancy arose, Mr Fawdry always considered that Mr Allie would be the person to fill the proposed new position. However, after mentioning redundancy Mr Allie believed he had no chance at all of obtaining that new position. In any event, the so-called "new" position was not really a new position at all. It was merely the old position with a different title. All of this was crucial evidence, yet the Deputy President made little reference to the meeting of 15 July in his Reasons for Decision. It is true that King DP mentioned (at page 2) that: "The Employer on the other hand, appears to have taken umbrage at the Employee asking about a redundancy and from then on adopted the stance; if he wants the job he can apply for it and win it against all comers." and further (at page 3) that: "I am also inclined to accept the evidence of Mr Fawdry that initially Mr Allie was the preferred person for the restructured role however, that option was substantially less attractive to him once Mr Allie raised the question of a redundancy." It is clear from these extracts that Deputy President King accepted the contention that Mr Fawdry regarded Mr Allie less favourably following his redundancy request. However, the Deputy President did not go on to evaluate Mr Allie's evidence about Mr Fawdry's violent outburst at the 15 July meeting and Mr Fawdry's conflicting evidence that his response was somewhat more sedate. The nature of that exchange between the parties was crucial, but the Deputy President did not consider it. An acceptance by the Deputy President of Mr Allie's evidence, for instance, would have thrown a far better light on what he had to say about Mr Thurlow's telephone comments of 20 July 1998, ie had he not mentioned redundancy, he would still have a job. All that evidence was before the Deputy President. There was also evidence before the Deputy President that tended to corroborate Mr Allie's evidence that the whole tenor of the meeting changed after he mentioned redundancy. For example, Mr Thurlow agreed that the mood of the meeting changed. He said Mr Fawdry was shocked and perhaps frustrated that the question of redundancy could have arisen in circumstances where, having talked about the proposed new structure and job, Mr Allie had signified he was happy with the proposition in principle.2 It is not possible to tell from the Deputy President's decision what regard he had to the exchange between Fawdry and Allie, what regard he had to what Mr Allie said Mr Thurlow told him on 20 July, and what regard he had to the corroborative evidence of Mr Thurlow that the mood of the meeting changed following Mr Allie's mention of redundancy. There is no way of knowing from his Reasons for Decision whether the Deputy President accepted Mr Allie's evidence or the evidence of Mr Fawdry and Mr Thurlow. All those considerations were crucial to the question of whether there was a genuine restructuring and, consequently, a genuine redundancy. In determining this issue, however, the Deputy President looked more to a comparison of the position profiles for the existing position3 and the proposed new position4 rather than to the actual meeting of 15 July 1998 and what transpired between the parties. That meeting was not about the need to change the Company's structure, but about the need to change Mr Allie's salary package. The proposed position profile did not come up until after the 15 July meeting. The appellant had little choice in what was occurring to him. He was simply told his future was at an end, that there was going to be a redundancy package paid to him, and that he could apply for the new position should he so wish. Mr Allie's mere mention of a redundancy package, as the Deputy President found, made him less attractive to the employer. It was that reason, rather than redundancy, that was the direct cause of the Company terminating his employment. Mr Fawdry's mind was made up - Mr Allie was to finish. Perhaps the appellant's mention of redundancy was the last straw for Mr Fawdry, who admitted in cross-examination that he had some concerns about Mr Allie's attitude and commitment.5 That evidence, too, does not appear to have been part of the Deputy President's considerations. Because he did not consider any of this crucial evidence, the Deputy President did not have the ability to properly consider and conclude whether or not there was a genuine restructure or redundancy. It follows that, because there is no certainty he gave this evidence its full weight, the Deputy President erred in terms of Ground 3 of the appeal, ie "by finding that the employer's preferred person to fill the restructured role was the employee ...". Those same considerations also apply to Appeal Ground 2. That is, the Deputy President erred "by finding that the employee had terminated his own employment by not applying for the new position offered by the employer ...". At page 3 of his decision the Deputy President concluded that the former position and the proposed new position are different. In that regard he found there was "no longer a responsibility for the management of an office, other staff, a budget and responsibility for the collection of monies". The profile for the proposed new position shows the presence of management responsibilities, ie "ensure that any advice given by yourself or K & D Sales Staff is within the area of expertise of the individual".6 That specification, however, is not very different from a similar requirement that appeared in the original position profile, ie "ensure that any advice given by your staff is within the area of expertise of the individual".7 Concerning budget responsibilities, the proposed new position profile refers to "together with the Sales & Marketing Manager review sales budgets for the Southern Region", whereas for the original position the specification was "review sales budgets for your Region". It is conceded that the proposed new position profile does not refer to collection of monies. However, such a function is not a measure of management responsibility. All the evidence points to the fact that the position profile for the proposed new job is indicative of a person who has managerial responsibilities. When one examines both position profiles it will be seen that they are, more so than not, corroborative of the fact that the positions are the same. The Company was simply asking Mr Allie to apply for a position that he already held. Consequently there was no genuine restructuring and no genuine redundancy. In the circumstances the profile for the proposed position, upon which the Deputy President placed some weight in determining that there was a genuine restructuring, does not appear to assist him in that regard. Had the Deputy President found there was not a genuine restructuring, such a finding would have inevitably led him to the conclusion that the Company did not have, pursuant to Article 4 of the ILO Convention, a valid reason for terminating the appellant's employment. In that context, having regard to the decided cases, a "valid reason" is one that is "sound, defensible or well-founded" - Selvachandran v Peteron Plastics Pty Ltd (1995) 61 IR 373, 373 and also Nettlefold v Kym Smoker Pty Ltd (1996) Industrial Relations Court of Australia 4 October 1996 (Unreported) and Kerr v Jaroma Pty Ltd (1996) Industrial Relations Court of Australia 7 October 1996 (Unreported). In the circumstances of the current case the Deputy President could not have found, having regard to those authorities, that there was a valid reason for Mr Allie's termination based on the fact that he raised the question of or asked for a redundancy. So much was put to the Deputy President at first instance.8 All the above considerations are those on which the appellant relies in support of Appeal Grounds 1, 2, 3 and 4. J O'Neill for the respondent: Appeal Ground 1: Based on the evidence that the Deputy President had before him, he correctly found that the employer had a genuine reason for restructuring its Hobart business. The Deputy President was also correct in finding that, as a result of that restructuring, the position occupied by the appellant would become redundant and that a new position would result. That basis for that conclusion appears clearly in the uncontradicted evidence of Mr Fawdry, who stated that:9 "We haven't really been profitable in Hobart. It's been a major concern to us and here's an opportunity to have somebody market our products and save money." In Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327 Beasley J of the Industrial Relations Court of Australia observed (p. 333) that a decision by an employer "to make certain positions redundant with the sole intention of increasing the profitability of an already profitable business" relates to the operational requirements of the business just as much as circumstances in which work is no longer undertaken by the business. Accordingly, the owners of Island Block & Paving had every right to restructure their business operations in Hobart and to make Mr Allie's position (Hobart Area Manager) redundant. The Deputy President also determined from the evidence that the existing and proposed positions were in fact different, ie "there was no longer a responsibility for the management of an office, other staff, a budget and responsibility for the collection of money".10 Mr Allie's responsibility to "ensure that any advice given by your staff ..." is significantly different from that proposed for the new position, ie "ensure that any advice given by yourself or K & D Sales Staff ...". The former indicates ownership and responsibility for staff whereas the latter is simply a watching brief to ensure that information given out is correct. Concerning budget and financial aspects, Mr Allie's role was to individually "review sales budgets for your Region". For the proposed position, however, the occupant was required to conduct such reviews "together with the Sales & Marketing Manager ...", a very different function. Finally, the "collection of monies" responsibility associated with Mr Allie's position, but not with the new position, was more than a mere clerical function in that it was the very different function of chasing up debtors. Appeal Ground 2: The Deputy President correctly found that Mr Allie terminated his own employment, a finding that was open to him on the evidence. In that regard the critical fact is that the appellant did not attend a meeting in Launceston on 21 July 1998, at which the Company proposed to discuss the new position with him. If they "could sort out what he wanted", according to Mr Fawdry's evidence, the Company intended to introduce Mr Allie to K & D management, saying "this is your man".11 It is important to note that Mr Fawdry's letter of 17 July in no way indicated that the Company was terminating Mr Allie's employment. The letter simply informed Mr Allie of the Company's intentions, gave details of his redundancy payment, expressed a view that the best approach would be to pay out his entitlements and start new arrangements in Hobart, invited him to apply for the new job, and asked him to attend the proposed meeting in Launceston. In short, there was to be termination of a contract, but not termination of employment. In the circumstances, because there was a substantial difference between the two positions regarding remuneration, but not as to general conditions of employment, the Company believed it was appropriate to make a redundancy payment. Mr Allie, after refusing to attend the Launceston meeting, continued to work out his notice period. During that time Mr Thurlow twice asked him what he intended to do, but Mr Allie appeared to be undecided.12 In the absence of any other action on the appellant's part - specifically a written application for the new position - the Company was entitled to believe that Mr Allie accepted the redundancy, especially since it was he who first raised the question. The Company was also entitled to assume that an agreement was in place because the appellant did not raise any issue of undue influence and he did not, as was the case in Flynn v The National Meat Association of Australia,13 dispute the amount of the redundancy payment. In the circumstances, the Commission should accept the respondent's contention that there was a fair bargain in place. Furthermore, when the Deputy President suggested to Mr Allie that things might have been different had he gone to the Launceston meeting, Mr Allie did not dispute that suggestion. However, he said he felt there was no need for a meeting at all because he had done nothing wrong.14 In all the circumstances it was clearly open to the Deputy President, who had the benefit of seeing and hearing the appellant give evidence on his own behalf, to conclude that Mr Allie effectively terminated his own employment by not applying for the proposed new position. Appeal Ground 3: It was open for the Deputy President to find, as he did, that Mr Allie was the Company's preferred person to fill the proposed new position. Mr Fawdry's evidence was that "if we could sort out what [Mr Allie] wanted, we could then say, well, this is your man and that was our intention".15 Mr Thurlow said "we had a meeting organised with [Mr Allie] just to discuss the new position - [his] new position with K & D". The same witness also agreed that had Mr Allie attended the meeting on 21 July and found the terms and conditions of the new position acceptable, the Company would have offered the job to him.16 The evidence clearly supports the Deputy President's finding. Appeal Ground 4: The Deputy President would have been wrong to attach any more weight than he did to the evidence surrounding the 15 July meeting. It is necessary to consider the confluence of both facts and evidence in order to arrive at a fair decision. That is what the Deputy President did. There was consultation about the proposed changes at an informal meeting between Mr Fawdry and Mr Allie in late June 1998. At that time the Company had taken no decision on the matter because the potential changes were still the subject of negotiation between the Company and K & D. The period between the end of June and 15 July is very important. Mr Allie was rightly very anxious about his job and he wanted details of the proposed new position. Unfortunately, because of the nature of negotiations with K & D, the Company could not provide those details to Mr Allie during that time. The Company did not withhold the information from Mr Allie - it was simply not available because there was no agreement with K & D. After the Company completed its arrangements with K & D - on 15 July - it also met Mr Allie to advise him of that fact and to discuss the proposed new position. The respondent concedes that there was some emotion at the meeting, which was going well until Mr Allie raised the question of redundancy. Mr Fawdry was a little bit taken aback by the suggestion. However, quite correctly, he concluded the meeting at that point so that the Company might take advice on the matter. Never at any time did Mr Fawdry act to terminate Mr Allie's employment. It would be drawing a long bow to say that an employer, who got a little emotional at a meeting, terminated the employment of an individual merely because the employer wanted to take advice on a claim for redundancy pay. To the contrary, the employer's response was correct. From 15 July onwards Mr Allie continued to work in his existing position. In fact nothing changed while the Company acted promptly to obtain advice about his severance pay entitlements. In the circumstances, the Deputy President attached appropriate weight to all the evidence. Findings: We accept the general thrust of the evidence of all those present at the meeting of 15 July that, following the appellant's request for a redundancy payment the mood of the meeting changed and, to use Mr O'Neill's words, Mr Fawdry got a little emotional. We also accept the evidence that shows the meeting ended very quickly after the appellant raised the matter of a redundancy payment. What actually happened at the end of the meeting, however, is the subject of evidentiary conflict. Mr Allie's evidence was that Mr Fawdry told him, in effect, that he might as well finish up immediately. Mr Fawdry denied making such a statement, a recollection shared by Mr Thurlow. Mr Turnbull argued that there was corroboration of Mr Allie's recollection in a subsequent telephone discussion on 20 July. During that discussion, according to Mr Allie, Mr Thurlow told him that had he not mentioned redundancy he would still have a job,17 ie "he [Mr Thurlow] made mention that like if I hadn't brought up this about my - mentioned about my redundancy that I wouldn't be in this predicament".18 Mr Thurlow's evidence is that, although he could not remember "what we discussed about redundancy", he could not agree with Mr Allie's recollection.19 The appellant's contention before us is that the evidence outlined above, notwithstanding the conflict, shows the Company terminated Mr Allie's employment, not because he was redundant but because he asked for a redundancy payment. For that reason, Mr Turnbull argued, the meeting of 15 July was crucial or central to the appellant's case, yet Deputy President King made little reference to that evidence in his Reasons for Decision. We accept the contention that, in his decision, the Deputy President did not deal directly with the meeting of 15 July or the evidentiary conflict that was before him in that regard. Nevertheless, it is clear to us that he was aware of the issue. That is because he noted Mr Fawdry appeared to have taken umbrage at Mr Allie's request for a redundancy payment and that he found Mr Allie substantially less attractive after that event. Consequently, we believe the Deputy President, in dealing with the matter as he did, evidenced a conclusion on his part that there was no need for him to consider that issue at all. We now turn to the Deputy President's decision to see why he formed that view. Deputy President King acknowledged that Mr Fawdry first informed the appellant on 25 June 199820 of the Company's impending agreement with K & D and the likely consequential changes regarding his employment. We also note there was some evidence from Mr Allie that he may have even known of the likelihood of those events a day or two before 25 June.21 In any event, it is clear to us that the appellant knew well before the meeting of 15 July that his job could become redundant should the Company's negotiations with K & D conclude with an agreement. That is to say, as King DP noted, "Mr Allie's job as Hobart Area Manager would no longer be required and a new position of Hobart Technical Representative was to be created".22 There is no doubt in our minds that the appellant understood the Company's advice because he acted on it. It is clear that the proposed changes were of concern to him because he asked for details in writing - which, according to Deputy President King, he never received23 - so that he could analyse the proposal to see if he could "make a go of it".24 It is also clear from the appellant's own evidence that, during the period between 25 June and 15 July 1998, he decided he might be entitled to a redundancy payment.25 The Deputy President's decision tends to give the impression that the Company concluded its agreement with K & D on or about 25 June 1998. However, the evidence shows quite clearly that the parties did not actually conclude the agreement until 15 July.26 Immediately after that event Messrs Fawdry and Thurlow called on the appellant at his office to inform him of the new arrangements. It was during the course of that meeting that the appellant raised the question of his possible redundancy entitlement, which resulted in the events already described above. Whether, at the time, Mr Fawdry actually said the words assigned to him by Mr Allie27 is, we think, beside the point - an observation we also make regarding what Mr Allie alleged Mr Thurlow said on the telephone some days later.28 We take that view because all the evidence before the Deputy President clearly pointed towards a termination by way of redundancy - a fact confirmed by the Company's subsequent acceptance of Mr Allie's claim and noted by the Deputy President in his decision.29 In our opinion the evidence before Deputy President King plainly allowed him to conclude, as he evidently did, that he did not need to deal with the events that occurred at the end of the 15 July meeting because they were irrelevant in respect of whether or not there was a genuine restructure and a genuine redundancy. For those reasons we find that the Deputy President did not err in the manner alleged by Appeal Ground 4. Concerning the genuineness or otherwise of the Company's restructure the Deputy President referred to Mr Fawdry's evidence, ie "the original position of Hobart Area Manager and the new position of Hobart Technical Representative were very different, with the new job designed to suit changed circumstances for the company's operation in Hobart." 30 He then compared the position profiles of both positions and concluded with the finding that "the Employer did have a genuine restructuring of its business in Hobart", that the appellant's position was redundant as a result, and that there was a new position created.31 We accept the appellant's contention that it is not apparent from the Deputy President's decision how he arrived at the conclusion that the Company's restructure, as distinct from the redundancy, was genuine. When we look at the evidence that was before the Deputy President, however, the position becomes substantially clearer. Mr Fawdry's evidence is that, in June 1998, he received an approach from K & D. Mr Fawdry then went on to say that:32 "... on my way back to Launceston I'm thinking about it and I'm thinking that we're really aren't profitable. We haven't really been profitable in Hobart. It's been a major concern to us and here's an opportunity to have somebody market our products and save money. Our costs to run Hobart were about $150,000 a year for the premises and the employees and ongoings and I thought if we marketed against them, we just wouldn't be competitive. Ourself, we would lose money in our own branch. My idea then was, it would be best if we could convince them to do all our marketing down here ..." The appellant, so far as we can see, did not challenge Mr Fawdry's explanation of the reason for the Company's decision to restructure its Hobart operations. We think it would have been preferable for the Deputy President to have referred to that evidence in his decision. However, because Mr Fawdry's evidence was unchallenged, the fact that he did not do so is not, in our opinion, fatal to his decision. In our view the Deputy President was entitled to rely on that evidence for the purpose of finding, as he did, that there was a genuine restructuring of the Company's business in Hobart. Accordingly, we reject the appellant's contention to the contrary. The appellant also asserted that the redundancy itself was not genuine because, in the Deputy President's words, "the restructured position is primarily the same as the one he occupied for some years".33 There was a considerable amount of oral and documentary evidence before the Deputy President on this issue. After considering that evidence and comparing the profiles of both positions he found that:34 "... the jobs are different. While many of the general requirements are the same for both positions particularly in relation to the technical responsibilities and skills there was no longer a responsibility for the management of an office, other staff, a budget and responsibility for the collection of monies. These are significant responsibilities, from the evidence not required in the restructured position." After reviewing the evidence and taking into account, also, the reason for the restructure we believe the two positions are sensibly different. In the circumstances, we are satisfied that the Deputy President did not mistake the facts in coming to the conclusion that he did. For all the above reasons we find that the Deputy President did not err in the manner alleged by Appeal Ground 1. The appellant also challenged the Deputy President's finding that he "effectively terminated his own employment by not applying for the new position".35 The contention before us was that the finding ignored the weight of the evidence. We have already concluded that all the evidence before the Deputy President clearly pointed towards a termination by way of redundancy. In our opinion, in the circumstances, the parties' dealings with each other leave little room to doubt that Mr Fawdry, by his actions if not by express words, effectively terminated the appellant's contract of employment for reasons based on the Company's operational requirements. The respondent, in rebutting the appellant's contention to that end, relied on Mr Fawdry's letter of 17 July 1998 to Mr Allie for the purpose of asserting that nowhere did it indicate that the Company was terminating the appellant's employment. To the contrary, in our opinion, the letter is replete with expressions that connote the ending of Mr Allie's contract of employment, ie "Due to the change in our Business Operation in Hobart", "the best option is for us to pay you out now all your entitlements and then we can start the new arrangements in Hobart with a Salary Package that will fit that position" and "Rick [Mr Allie], you are welcome to apply for that position". On 23 July Mr Fawdry sent the appellant a further letter in which he said "as discussed with you last Friday I expect you to finish employment ... on Friday 14th August, 1998". The "last Friday" in question was 17 July 1998. We believe the letters of 17 and 23 July confirm that there was a termination at the initiative of the employer, followed by an invitation to the appellant to apply for the new job and an offer to discuss that position in Launceston on the following Tuesday (21 July 1998). In the circumstances, we uphold Appeal Ground 2. In the course of his decision the Deputy President accepted the evidence of Mr Fawdry that "initially Mr Allie was the preferred person for the restructured role".36 The appellant challenged that finding, too, on the grounds that it was against the weight of the evidence. We have already indicated that we accept the evidence of all parties that the relationship between Mr Fawdry and Mr Allie changed immediately the latter asked about a redundancy entitlement. Nevertheless, since Mr Fawdry's evidence of his earlier preference for Mr Allie was unshaken in cross-examination, there is no basis upon which we might properly conclude that the Deputy President was wrong to rely on that evidence for purposes of making the finding that he did. In the circumstances we find that the Deputy President did not err in the manner alleged by Appeal Ground 3. In summary, concerning Appeal Grounds 1, 2, 3 and 4, we dismiss Grounds 1, 3 and 4 for reasons discussed above. In upholding Ground 2, we find that there was, on the facts, a termination at the initiative of the employer. Appeal Grounds 5 and 6 M Turnbull for the appellant: Even if there was a legitimate restructuring or redundancy, the respondent unfairly dismissed Mr Allie by not having a valid reason for dismissing him and by not treating him fairly. A reason for termination that relies on an employer's operational requirements does not become "valid" merely because the employer gives it that characterisation. A valid reason must be one that is defensible or justifiable on an objective analysis of the relevant facts - Kerr v Jaroma Pty Ltd. There is also a requirement for an employer to consult with employees who are to be made redundant. In The Law of Employment the learned authors observe that:37 "When considering termination of employment of an employee due to the position becoming redundant, the employer should consult with the employee and explore alternative to termination of the employment and provide the employee with the opportunity to make submissions as to why she or he should not be selected for redundancy. Failure to comply with an award provision concerning redundancy, or a failure to allow the employee to work out the notice period, or the provision of an inadequate severance payment, can render a termination harsh, unjust or unreasonable." In the present case the respondent was neglectful of the consultative requirement. The appellant submitted to the Deputy President at first instance that Mr Allie had no choice in the matter - he was simply told to finish up and he would receive a redundancy payment. Even if one were to accept Mr Fawdry's evidence altogether, there is very little in it that discloses any real consultation between Mr Allie and Mr Fawdry regarding his potential employment change. Mr Allie made a number of attempts to obtain information about the Company's intentions:38
There was no mention in Mr Fawdry's letter of 17 July that Mr Allie was an important part of the Company's future and that he was front runner for the new job. Mr Fawdry's approach fits in neatly with the views he expressed to Mr Allie at their meeting of 15 July. That is, that he could apply for the job but there was no guarantee that he would be successful. In cross-examination on that issue, Mr Fawdry admitted Mr Allie's job was not safe because it was a new job that he wanted to talk through with him. While he did say Mr Allie was ahead of any other applicant, Mr Fawdry never made that view known to him - even though he had advice to write Mr Allie another letter. The Deputy President was critical of Mr Fawdry on this point for his lack of communication.39 All the evidence points to little consultation between employer and employee. At its very highest Mr Fawdry's evidence shows he did not communicate with Mr Allie and consequently was remiss in his obligation at law to consult him regarding the proposed redundancy. The principles that the Commission should apply in the present circumstances appear conveniently in the Industrial Relations Court of Australia case of Powers v ANI Corporation Ltd (1996) 22 August 1996 (Unreported). In that matter, the Judicial Registrar explored a number of authorities concerning circumstances in which an employer's termination of an employee based on redundancy will be harsh, unjust or unreasonable.40 For example, noting the more significant points, those circumstances include failure by an employer to:
If one applies those principles to the facts of the present case it becomes clear that, in dealing with Mr Allie's redundancy, the respondent did not fulfil the requirements imposed on him by law. That conclusion gains support from the Deputy President's decision41 in which, while criticising both parties, he is certainly critical of the employer regarding consultation with the employee - a matter that goes right to the heart of the principles referred to in Powers. Mr Allie was the preferred person for the new job but the Company did not communicate that view to him. The Company gave no consideration to offering Mr Allie the job, but simply told him he could apply for the position. It would have been very easy for the employer to have found him alternative work, because the evidence shows that the job was there. In all the circumstances the decision to terminate Mr Allie was clearly unfair because of a general lack of consultation. The evidence discloses that Mr Allie faithfully served his employer for three and a half years. To his knowledge the Company regarded Mr Allie as a good employee, a fact recognised by his receipt of pay increases and greater levels of responsibility - all of which Mr Fawdry acknowledged in his evidence. The evidence shows that the employer's actions in dealing with Mr Allie were below the standard required of the Company by law. Accordingly, the Company's treatment of Mr Allie was unfair. At the very least the employer's actions were unfair because there was no valid reason for the termination. But, even if the Commission were to accept everything the employer said and disregard everything Mr Allie said, the employer's termination of Mr Allie was still unfair because of a lack of consultation. Those are the considerations upon which the appellant relies in support of Appeal Grounds 5 and 6. J O'Neill for the respondent: The Deputy President considered the issue of suitable alternative employment. In doing so he correctly concluded from the evidence that the appellant failed to avail himself of the opportunity to be considered for alternative employment. In order to find that the Company wrongfully terminated the appellant's employment, it would have been necessary for the Deputy President to also find, pursuant to the ILO Convention, that the termination occurred at the initiative of the employer. The Deputy President did not find that to be the case. To the contrary, he found that the employee had effectively terminated his own employment. In the circumstances there was no requirement for the Deputy President to consider whether, in accordance with Article 4 of the Convention, the employer had a valid reason for terminating Mr Allie's employment. The Deputy President found there was a genuine restructuring of the Company's operations, a matter that does not go to the issue of whether there was a valid reason for terminating Mr Allie's employment. That is because, in the circumstances of this case, the Deputy President found that Mr Allie effectively terminated his own employment. Concerning notice and severance pay - Articles 11 and 12 of the ILO Convention - the Deputy President expressed the view that Mr Allie's redundancy payment was not unreasonable having regard to this Commission's general standards. The Deputy President also considered that the notice period of four weeks was not unreasonable in the circumstances. Article 13 of the Convention, regarding consultation and suitable alternative employment, does not fall for consideration because the Deputy President found that there was no termination at the initiative of the employer. Consequently, there is no need to look into the reasonableness or fairness of the employer's actions. The facts do show, however, that there was a termination of one contract of employment and an offer to discuss a new position. In respect of that position the Company's invitation in the letter of 17 July to Mr Allie that "you are welcome to apply for that position" must be put in context. The respondent admits that the word "apply" was inappropriate. But the facts are that, having agreed that Mr Allie had an entitlement to redundancy pay, the letter went on to invite him to come to Launceston "to discuss the new position". At that time the new position had not been advertised and, in fact, was not advertised until 25 July 1998. In those circumstances the words "you are welcome to apply" are out of context in the sense that the Company had not then sought other applicants for the position. That was because Mr Allie was the preferred person for the job. In the end Mr Allie left his employment on 14 August 1998 because, having declined to go to Launceston to discuss the position, he left the Company with no option but to pay him his entitlements. It is abundantly clear in the circumstances that the Deputy President did in fact weigh all the relevant factors in the context of making his overall assessment. In doing so he gave appropriate weight to the evidence and exercised an appropriate discretion in making his findings. Any finding to the contrary would make a nonsense of the previous decisions taken by the Commission in cases where an employer has attempted to soften the impact of redundancy and has found or offered suitable alternative employment. Findings: In upholding Appeal Ground 2, we found that the facts of this matter disclose a termination at the initiative of the employer. Having regard to our earlier conclusions concerning genuineness of both the Company's restructure and resultant redundancy of the appellant's position, we are satisfied that, in terms of Kerr v Jaroma Pty Ltd, the facts disclose a valid reason for termination of the kind envisaged by Article 4 of the ILO Convention, ie it was one based on the operational requirements of the Company. In this regard the appellant's broad contention, covering both Appeal Grounds 5 and 6, is that the Deputy President erred by not finding that Mr Allie's termination was unfair because of the absence of real consultation. While Mr Turnbull did not specifically address us on the point by reference to decided cases in this Commission, he did refer us to a wide range of federal case law. It is, perhaps, arguable that the case history in each jurisdiction comes down to the same thing - but that is an issue on which we make no ruling. We believe it is preferable that, in the Tasmanian industrial jurisdiction, parties should refer to relevant decided cases of this Commission in addition to any other authorities that they believe may be applicable. In the present case, regarding the issue of consultation, the appellant contended that, although he made several attempts to obtain details of the proposed new position, he was unsuccessful on every occasion. The respondent did not challenge this assertion. According to the Company the relevant information did not come into existence until after completion of the agreement with K & D on 15 July 1998. However, even when the information did become available - apparently some time after 17 July - our understanding of the evidence is that the Company did not send it to Mr Allie for his consideration. All the Company did, as we see the evidence, was invite him to travel to Launceston on 21 July for the purpose of discussing the new position. The Deputy President was aware of the appellant's difficulties and remarked in his decision that Mr Allie "was unable to get appropriate responses from management".42 In addition it is also clear from the evidence that, while Mr Fawdry initially preferred Mr Allie for the new position, he never at any time told him of that view. All that evidence was before the Deputy President who found that "the Employer handled this matter badly and there was a complete lack of proper process leading up to the termination of Mr Allie".43 However the Deputy President did not pursue that finding in terms of the fairness of the appellant's termination, because he went on to find that Mr Allie "effectively terminated his own employment by not applying for the new position".44 The reason the Deputy President took that approach appears earlier in his decision, ie "As Mr Allie did not take up the offer to talk to company management, the Employer proceeded to fill the new position and terminated Mr Allie";45 "... each side adopted an entrenched position against the other, from the time the question of redundancy was raised";46 and "... Mr Allie did not apply for the position or at least seek to talk to Mr Fawdry about the future".47 It is clear to us that the Deputy President took the view that, because the appellant effected his own termination by refusing to apply for the new position, he was as equally responsible for his current circumstances as was the employer. That conclusion, of course, overlooked the evidence that the appellant's termination occurred at an earlier time, ie as we have found, at the initiative of the employer on Friday 17 July 1998. In coming to this conclusion we do not ignore the fact that Mr Allie, by his refusal to apply for the new position and to attend the Launceston meeting on 21 July, acted wrongly and greatly contributed to the Company's decision to look elsewhere for a person to fill the proposed position. Indeed Deputy President King's conclusion was that:48 "... Mr Allie must also accept responsibility for his actions. He knew enough about the industrial relations system to raise the question of redundancy, he should also have sought advice on the consequences of not applying for the new position." In all the circumstances, Mr Allie's actions notwithstanding, we echo the finding of Deputy President King that "there was a complete lack of proper process leading up to the termination of Mr Allie". Accordingly, we uphold Appeal Ground 5. Mr Allie's contribution to his own circumstances, we believe, are a consideration to be taken into account in determining remedy should we conclude, in response to Appeal Ground 6, that the employer wrongfully - which we assume means unfairly as distinct from unlawfully - dismissed Mr Allie. The finding of the existence of a valid reason for termination also involves, on the facts of this case, a consideration of Article 11 (Period of Notice) and Article 12 (Severance Allowance and Other Income Protection) of the ILO Convention. While Deputy President King did not specifically refer to the ILO Convention, he nevertheless considered the issues of notice and severance allowance. In the case of severance pay, or redundancy, the Deputy President found that a redundancy payment of two weeks for each year of service - which Mr Allie received - was not unreasonable, having regard to the general standards established in decisions of this Commission. In the case of notice Mr Allie received four weeks which the Deputy President also believed was not unreasonable in the circumstances.49 While the Deputy President came to his conclusions in light of a finding of "lack of proper process" he did so against the background of an employee initiated termination rather than a termination initiated by the employer. There is no doubt in our minds that all the decided cases, whether of the federal or State industrial jurisdictions, show that in a redundancy situation an employer must act to avoid unfair, unjust or unreasonable treatment of the employees involved.50 In the present case it is clear that details of the proposed new position did not become available until sometime after the Company concluded its agreement with K & D on 15 July. Consequently, the appellant was unable to assess suitability of the new position for him. When the details did become available the Company did not give them to the appellant for his consideration but, instead, invited him to Launceston to discuss the new position. As we see the evidence it was not the Company's fault that details of the new position did not become available at an earlier time. However, when they did become known we believe it was the Company's duty to make them available to the appellant so that he had reasonable time in which to see, to use his words, if he could "make a go of it".51 To the extent that Mr Allie was not given details of the proposed new position and a reasonable period of time in which to consider them, we believe the Company acted unfairly. In the circumstances, we uphold Appeal Ground 6. Summary of findings and order: We dismiss Grounds 1, 3 and 4 for reasons discussed above. In upholding Ground 2, we find that there was, on the facts, a termination at the initiative of the employer. In upholding Appeal Ground 5 we find that there was a complete lack of proper process leading up to the termination of Mr Allie. In upholding Appeal Ground 6 we find that to the extent that Mr Allie was not given details of the proposed new position and a reasonable period of time in which to consider them, the Company acted unfairly. In light of the above findings we revoke Deputy President King's decision, pursuant to the provisions of Section 71(13)(a) of the Industrial Relations Act 1984. Remedy: Given the above findings and order it becomes necessary for us to consider the issue of remedy. We note that, in the proceedings at first instance, the appellant claimed reinstatement. Because of our finding that the Company's restructure and the resultant redundancy were genuine, it is clear that there is no longer a position to which we might reinstate the appellant, even if we were of a mind to do so. For that reason we find that, in the circumstances of this case, reinstatement is impractical. Against our conclusion that the employer acted unfairly, we must balance the appellant's actions in refusing to attend the meeting in Launceston on 21 July. We have already mentioned that Mr Allie was wrong to act in the manner that he did. The question that falls for consideration in that light is whether Mr Allie's refusal serves in any way to mitigate the essential unfairness of the employer's actions. We think it does not. We have already found that, before it terminated the appellant's employment, the Company should have provided him with full details of the proposed new position and given him a reasonable period of time in which to consider those details. To the extent that the Company failed to take such action before terminating the appellant's employment with four weeks' notice, we believe that, in terms of Article 11 of the ILO Convention, the period of notice was unreasonable. In that regard, Article 11 provides that: "A worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof, unless he is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue his employment during the notice period." There was no suggestion put to us that the appellant was guilty of any serious misconduct of the kind referred to in the Article. Consequently, taking into account the fact that the appellant was aware of the likelihood of redundancy from at least 25 June 1998, a reasonable period of notice in the circumstances of this case would have been, in our judgment, not less than six weeks. Accordingly, because the appellant has already received a period of four weeks' notice, we will award compensation in lieu of notice of an amount equivalent to two weeks' pay at the appellant's assessed annual salary of $38,400.00.52 In terms of Article 12 of the ILO Convention and a severance allowance, nothing was put to us by the appellant that tended to show the payment actually made by the respondent was in any way unreasonable or in error. Accordingly we find, as did Deputy President King, that the amount of redundancy payment received by Mr Allie was reasonable in all the circumstances. ORDER PURSUANT TO the powers conferred on the Commission by Section 71(13)(b) and Section 31 of the Industrial Relations Act 1984 WE HEREBY ORDER that the respondent employer Island Block & Paving, PO Box 15, Perth, Tasmania 7300, in full and final settlement of the industrial dispute referred to in applications T No 7941 of 1998 and T No 8047 of 1998, pay to Mr Rick Andrew Allie, 49 Henley Street, Lindisfarne, Tasmania 7015 through his agents Ogilvie McKenna, Barristers and Solicitors, 209-211 Macquarie Street, Hobart, Tasmania 7000 a sum equivalent to two weeks' pay at the applicant's assessed annual salary rate of $38,400.00 as depicted in Exhibit T4 tendered in hearing of matter T No 7941 of 1998. The respondent employer must comply with this Order on or before the close of business on Thursday 19 August 1999.
F D Westwood Appearances: Date and place of hearing: 1 T7941 of 1998 Reasons for Decision 12 October 1998, p. 4. |