T8234
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Australian Liquor, Hospitality and Miscellaneous Workers Union - and P & O Services Pty Ltd
Appeal against orders by Deputy President Johnson in Matters T7515 of 1998 and T7516 of 1998 issued 12.1.99 re termination of employment of David Mitchell and Peter Jones by P & O Services Pty Ltd - Article 12 of the ILO Convention - held that Deputy President should have taken into account Article 12 in respect of David Mitchell - appeal upheld in part - appeal dismissed in respect of Peter Jones - order in respect of David Mitchell varied - order in respect of Peter Jones confirmed REASONS FOR DECISION This is an appeal lodged pursuant to section 70(1) of the Industrial Relations Act 1984. It is against orders made by Deputy President Johnson on 12 January 1999 in respect of Matters T7515 of 1998 and T7516 of 1998 which were applications for dispute hearings made by the Australian Liquor, Hospitality and Miscellaneous Workers Union - Tasmanian Branch under section 29(1) of the Act. The applications alleged that David Mitchell and Peter Jones respectively had been unfairly dismissed by P & O Services Pty Ltd (P & O). Background to dispute
Findings of the Deputy President The Deputy President found that Mitchell and Jones were employees of P & O Services Pty Ltd and were covered by the terms of the Security Industry Award. He determined they were neither casual nor permanent employees, but full-time employees engaged, most likely, for a short term in anticipation that they would each sign a contract for service with P & O. The Deputy President went on to find that the actions of the employer "amounted to a termination of each individual's employment at the initiative of the employer". The Deputy President then found, in the case of Mr Mitchell that P & O "never perceived Mr Mitchell to be other than a contractor", and that once Mr Mitchell made it plain that he would not sign P & O's proposed contract in the form offered, it was open to P & O, at its discretion, to terminate his employment. The Deputy President found that, within the meaning of Article 4 of the ILO Convention concerning termination of employment at the initiative of the employer, there was a valid reason for the termination in connection with the operational requirements of P & O. In the case of Mr Jones, the Deputy President found that the termination was related to Mr Jones' conduct rather than his capacity as a worker, or to P & O's operational requirements, and that there was no valid reason for his termination which would satisfy Article 4 of the Convention. The Deputy President then applied his mind to Article 7 of the Convention and concluded that it had no application to the termination of Mr Mitchell's employment, but when he applied Article 7 to Mr Jones' circumstances, the Deputy President found that P & O had unfairly dismissed Mr Jones from his employment. As to remedy, the Deputy President found that Mr Mitchell should have been provided with a week's pay in lieu of notice in accordance with Clause 12(a) of the Security Industry Award. In respect of Mr Jones, the Deputy President determined that reinstatement was impractical and that compensation was appropriate. He assessed compensation at one week's pay and also determined that Mr Jones was entitled to an additional one week's pay in lieu of notice. Grounds of Appeal The grounds of appeal, as amended, were as follows:
Mr P Tullgren appeared with Ms P Shelley for the Australian Liquor, Hospitality and Miscellaneous Workers Union - Tasmanian Branch, and Mr R Brown and Mr D Dilger of the Tasmanian Chamber of Commerce and Industry Limited represented P & O Services Pty Ltd. Preliminary submissions As a preliminary matter Mr Brown submitted that appeal grounds 1, 3, 4, 6 and 8 should be "struck out". If that proposition was rejected, Mr Brown said, that a short adjournment would be sought in respect of grounds 1 and 3. A short adjournment in Mr Brown's view was of the order of seven days. It was submitted that ground 1 was "embarrassing", "imprecise", "ambiguous", and "too general" as it contained no particulars which could be responded to with any certainty. Mr Brown said the appellant should disclose in the application "each and every" part of the Deputy President's decision which was against the evidence or the weight of evidence. Grounds 4, 6 and 8 were claimed to be no different from appeal ground 2 and it was asserted were "duplicitous" and designed to "cloud the issues" and "pad out the appeal". In respect of ground 3, which Mr Brown also claimed to be "embarrassing", "imprecise", "ambiguous" and "too general", it was submitted that the appellant should have disclosed "each and every irrelevant consideration" that the Deputy President had taken into account and "each and every relevant consideration" that the Deputy President had failed to take into account. Mr Brown submitted that the appeal grounds should give the respondent and the Full Bench clear notice of what is to be appealed. The respondent should not have to "fill in the gaps", Mr Brown said. Mr Tullgren submitted there had been a request from the respondent for further and better particulars which had been provided prior to the hearing. He further submitted that the respondent's request was a "device" to "arm the respondent with the ability to seek a further adjournment" on the ground that the appellant would not disclose its case "in great detail". Mr Tullgren asserted that the appellant was not required to do that. He added that statements of claims or "pleadings" as referred to by the respondent were not appropriate in this tribunal or in appeal proceedings generally. But he observed that the State legislation, unlike industrial relations legislation in other States and the Commonwealth, did not require an appellant to lodge reasons with the grounds of appeal. As an alternative Mr Tullgren submitted that the respondent, if it was serious about such concerns, could have requested the President to give directions to the appellant pursuant to section 15 of the Act which could have required the appellant to provide, say, an outline of the case, an outline of authorities, and further and better particulars in relation to the grounds of appeal. In respect of the specific criticisms of the grounds of appeal, Mr Tullgren denied that ground 1 was deficient in any way, and submitted that grounds 4, 6 and 8 were different and separate from ground 2. He submitted that it was for the Bench to determine whether a ground of appeal was clear. In respect of the application for an adjournment, Mr Tullgren took the Bench to a number of authorities which dealt with a Court's refusal to grant an adjournment. After hearing those submissions the Bench decided (a) not to strike out any of the grounds of appeal, and (b) that the respondent's request for an adjournment would be dealt with at the conclusion of the appellant's primary submission. Appellant's submissions Mr Tullgren submitted that the main issue in the appeal was a narrow one. It was whether, in determining (1) that the two employees of P & O Services Pty Ltd were "conditional employees", and (2) that their continued employment was conditional on them voluntarily relinquishing their status as employees and taking the status of independent contractors, the Deputy President had (a) acted contrary to the evidence and the weight of evidence; (b) acted on irrelevant considerations; (c) acted contrary to law; (d) acted contrary to natural justice; and/or (e) constructively failed to exercise his "jurisdictional duty" to order reinstatement of the two employees. It was submitted that the finding that the two employees were "conditional employees" was not supported by the evidence in that the notion that the two employees were "conditional employees" was not conveyed to them by the employer at any time. Also in finding that the two men were "conditional employees", it was submitted that the Deputy President had introduced a "novel concept to employment law", and an irrelevant consideration to the matter at first instance. It was submitted that the notion was not supported by a reference to the award which regulated the terms and conditions of employment of the two employees. Mr Tullgren argued that there was no provision in the award for "conditional employment" as the award provided for full-time employees, part-time employees and casual employees only. Further, the award provided that, except for casuals, employment could be terminated by a week's pay in lieu of notice unless the dismissal was for misconduct, in which case termination could be without notice. Mr Tullgren then took the Bench to excerpts from the Deputy President's decision which referred in various ways to the finding that Mr Mitchell and Mr Jones had been engaged on the expectation of Mrs Button that they would sign P & O's proposed contract. Mr Tullgren also took us to segments of the transcript dealing with the evidence of Messrs Mitchell and Jones and Mrs Button concerning the alleged status of the two men. Sections of the transcript were identified which Mr Tullgren asserted showed that the men considered they were employees. He said they had never held themselves out to be contractors; they were "working within the parameters of information communicated to them by the employer"; and at a late stage found they had been misled. He submitted the men were "interested in propositions that were put to them (to be independent contractors) but they never agreed to anything". He submitted that the transcript showed there was never any "conditional employment proposition" and there was no evidence that Mr Mitchell and Mr Jones knew they would be terminated if they did not become contractors. He also submitted that the Deputy President had taken "into consideration what was in Mrs Button's mind" about conditional employment and that, he said, was an irrelevant consideration as there was no evidence to support that proposition. In the circumstances he claimed there was a continuing obligation on P & O to employ the men "under the award". He submitted that:
We were referred to Tsipas and Brimbank City Council1 which Mr Tullgren submitted clearly showed that an employer cannot terminate an employee simply because the employee will not agree to a change in his or her employment status. Mr Tullgren submitted that the employment of both men was terminated without them having the opportunity to defend themselves against "the allegations" and in that respect P & O "clearly failed" to meet the requirements of Article 7 of the ILO Convention. Mr Tullgren submitted that the "failure" of the Deputy President to reinstate both Mr Mitchell and Mr Jones "flowed logically from the erroneous finding relating to conditional employment" and that "amounted to a constructive failure to exercise jurisdiction". He submitted that if the "conditional employment finding" was allowed to stand an "unscrupulous employer", when faced with a dispute regarding a termination of employment could claim that it had been intended that the dismissed employee would become an independent contractor and "if they didn't agree ..." they could be terminated. Once the two men had been found to be employees, Mr Tullgren said, the Industrial Relations Act 1984, via section 48, ensured that the Security Industry Award became the "minimum floor of rights and obligations and duties". Mr Tullgren submitted that on the evidence before the Deputy President the dismissals were unfair and that the Deputy President "should have exercised his discretion" to reinstate both Mr Mitchell and Mr Jones. Mr Tullgren made it clear that although reinstatement was sought, if the Bench was not prepared to reinstate the two men they should be awarded compensation equivalent to the amount of money they would have lost since their dismissal up until the date of hearing of the appeal, viz. 18 May 1999. Material setting out the earnings of the two men since their dismissal, up until the day of hearing, was later forwarded to the Commission. It was submited there was no evidence to support the Deputy President's finding that reinstatement was impractical. He claimed there was an assertion by Mr Gates to that effect, but "no cross examination or questioning of either Mr Mitchell or Mr Jones or Mrs Button or Mr Bird". It was also submitted the Deputy President had not been provided with evidence going to the likelihood of continuing employment of Mr Mitchell and Mr Jones, and there was therefore no evidence that supported the Deputy President's finding that their "continued employment" would not have survived. Mr Tullgren referred to a number of other cases in respect of procedural fairness.2 The appellant asked that the Deputy President's decision and orders be quashed and in substitution that the two employees be reinstated. At this point the respondent was directed to proceed with its submissions. Respondent's submissions Mr Brown submitted that it was "never the intention of P & O to create an employer/employee relationship" with the two men and that position was known to all parties from at least 24 December 1997. He directed the Bench to page 53 of the Deputy President's decision where that finding was recorded. Mr Brown submitted that the engagement of Mr Mitchell as an employee was to last only until the proposed contract with P & O was rejected or accepted. He said Mr Mitchell had clearly indicated that he was not going to sign the contract in the form offered and that was a valid reason for his termination as had been found by the Deputy President. Mr Brown said that in those circumstances the Deputy President's order that Mr Mitchell be paid one week's notice was in accordance with the award and was not in error. In respect of the compensation awarded to Mr Jones, Mr Brown submitted that the Deputy President noted that neither party had referred him to the case authorities for assessing compensation and in the circumstances he had decided to take the general approach of considering what would have happened if P & O had not breached either Article 4 or Article 7 of the ILO Convention. Mr Brown observed that such an approach was, in fact, consistent with Nicolson and Heaven and Earth Gallery.3 He submitted that the Deputy President had stated his reasons for deciding on one week's pay as compensation at page 58 of his decision. Mr Brown submitted that the Deputy President took into account the relevant Articles of the ILO Convention in determining compensation for Mr Jones. In that respect we were referred to page 57 of the Deputy President's decision where the Deputy President mentioned his obligation to do so. He also referred us to the decision of a full bench of this Commission in Capital Hill4which contained the observation that determining compensation " is not an exact science" and that an "outcome will depend upon the facts and circumstances of each particular case". In that respect Mr Brown submitted that the Deputy President took into account no irrelevant considerations and that his conclusion was "reasonably open to him on the facts of the case". Mr Brown said that the Deputy President did not find that Messrs Mitchell and Jones were "conditional employees in terms of their engagement, but full time employees which is wholly consistent with the award". He argued such employees may be employed "for a fixed term" and that a fixed term may be either "a period of time or a fixed event". Mr Brown submitted that the Deputy President had not relied simply on "what was in the mind of Mrs Button but on the evidence of Mr Mitchell at page 25 of the transcript" where it is recorded that Mr Mitchell agreed, under cross examination, that as a result of a phone call from Mrs Button on 24 December he understood they (he and Mr Jones) "were to be contractors" and they were waiting for the company to provide them with a written contract. Mr Jones had said he was waiting for "paperwork" about their conditions. Mr Brown maintained that the Deputy President had determined the two men to be employees "by default". He said that situation was for "the intervening period of ten days or thereabouts", and that only occurred "as a result of contract negotiations not being finalised to the parties' satisfaction prior to P & O taking over the contract at or around the end of January". Mr Brown submitted that because of the failure to execute the proposed contracts, it was clear that such a relationship was not "going to last" for an "indefinite period of time". He submitted that reinstatement with P & O was not only impractical, but impossible as the company "does not employ any security industry employees in the State of Tasmania". He referred to the conclusion arrived at by the Deputy President at page 57 of his decision which was that "the best evidence before him, that of Mrs Button", was that P & O only engaged independent contractors to provide security services at the Royal Hobart Hospital. Accordingly, Mr Brown said, it was clear to the Deputy President that there were no positions to which the ex-employees could be reinstated. Mr Brown then submitted that if the Bench was of a mind to order the payment of additional compensation, monies earned by the two men in the period since 5 February 1998 should be offset against any compensation. Findings It is convenient to deal with this appeal in logical steps, beginning from the point in the Deputy President's decision at which both parties are in agreement. That is at the point that both parties now accept that the Deputy President was right in finding that for the period from 26 January 1998 to 5 February 1998 Messrs Mitchell and Jones were employees of P & O Services Pty Ltd. We also agree with that finding. The appellant argues that the Deputy President had determined that both Mr Mitchell and Mr Jones were "conditional employees". That was not a term used by the Deputy President but it was developed by Mr Tullgren to apply to the Deputy President's different descriptions of the tenuous relationship which existed between the two men and P & O. For example, the Deputy President found that "Mr Mitchell was a full-time employee engaged, most likely, for a short term in anticipation that he would sign P & O's proposed contract"; and that P & O had engaged the two men conditionally, on the basis of the company's expectation that both would quickly sign the proposed contract. Mr Tullgren submitted that those findings were not based on the evidence. Whilst we are uncertain as to the reason why the Deputy President used the words "most likely" in the first reference, we are satisfied, having examined the transcript, that on the evidence of the two men and that of Mrs Button that all three were aware that it was expected that the two would enter into contracts for service as independent contractors. We are also satisfied, having considered the evidence, that P & O never considered them to be anything other than potential contractors and we note that the evidence of Mr Mitchell himself was that, from no later than 24 December 1997, he was aware that P & O wanted to engage him as a contractor.5 We also note at the same time that as far as he was concerned he was an employee until such time as he signed the contract. From the evidence it is clear that both Messrs Mitchell and Jones were prepared to register a business and take out appropriate insurance as required by P & O. The sticking point in negotiations was clearly the rate of pay per hour. That an agreement could not be reached, at least in the case of Mr Mitchell, resulted in the Deputy President reaching the conclusion that there was a valid reason for the termination of Mr Mitchell. We consider, on the material before the Deputy President, that it was reasonable for him to conclude that for its operational requirements P & O wanted to engage contractors rather than employees. We note that because of some ambiguity in the advertisement for Security Officers placed by P & O, neither Mr Mitchell nor Mr Jones became aware that the company wanted contractors rather than employees until some time later. But we are satisfied they knew the company wanted contractors rather than employees before they commenced with the company on 26 January 1998. In those circumstances, and given that negotiations took place for a relatively short time, i.e. between 26 January and 5 February, we do not intend to interfere with the Deputy President's finding that there was a valid reason for the termination of Mr Mitchell's employment based on the operational requirements of the undertaking in the terms of Article 4 of the Convention. On that point we observe that an employer is entitled to restructure operations to allow work to be performed by independent contractors provided that all the relevant tests for distinguishing between employees and independent contractors are properly and fairly met, and there is genuine agreement between the parties. Returning to Mr Mitchell's circumstances, we note that whilst Mr Mitchell's termination was for a valid reason, the Deputy President considered that it was unlawful to the extent that Mr Mitchell was not given notice in accordance with the award and he ordered that appropriate notice be paid. We agree with the Deputy President on that point. The Deputy President then decided that Article 7, which deals with procedures to be followed when terminating employment because of a worker's conduct or performance, had no application to Mr Mitchell and we agree with that finding. The Deputy President then refused to apply Article 10 which, in conjunction with section 31(1B) of the Act, gives the tribunal power to consider reinstatement or compensation in lieu thereof where termination has been found to be unjustified. Since the reason for the termination was held to be valid we agree that Article 10 has no relevance to the circumstances of Mr Mitchell. However we consider that the circumstances of Mr Mitchell's termination, due as they were to the operational requirements of the undertaking, obliged the Deputy President to give consideration to Article 12 of the Convention which states, amongst other things, that a worker whose employment has been terminated shall be entitled to a severance allowance based on the length of service and level of wages of the dismissed employee. We consider the Deputy President was in error by omitting to address Article 12 of the Convention in the circumstances surrounding the termination of Mr Mitchell. Turning now to consider the particular circumstances applying to Mr Jones, we commence by noting that the parties accepted the Deputy President's finding that P & O unfairly dismissed Mr Jones. We also agree with that finding. The appellant argues in respect of Mr Jones that the Deputy President's refusal to order his reinstatement amounted to a constructive failure to exercise jurisdiction. In the alternative that the Deputy President's assessment of appropriate compensation was manifestly inadequate, and in error. The appellant submitted the Deputy President had fallen into error because he had found both Messrs Mitchell and Jones to be conditional employees. We have already discussed this assertion and, for the reasons stated, we consider that it was open to the Deputy President and reasonable in the circumstances to conclude the termination of Mr Mitchell was because of the operational requirements of the undertaking. Since Mr Jones was found to have been dismissed without a valid reason the alleged status of his employment, i.e. was his employment conditional, is irrelevant. The Deputy President examined whether or not it was impractical to reinstate Mr Jones. He concluded on the evidence of Mrs Button that P & O does not employ persons to provide security services at the Royal Hobart Hospital but engages only independent contractors for that purpose. As a consequence he found there were no positions of employment with P & O at the Royal Hobart Hospital to which Mr Jones might be reinstated and therefore he found that reinstatement was impractical. On the material before the Deputy President on the question of reinstatement we consider that that finding was open to him. We do not consider that the authorities referred to by Mr Tullgren on this point are of great assistance to us on the facts and circumstances of this case. Nor do we consider that the facts and circumstances of this case demand more than one week's pay as compensation for Mr Jones' dismissal. Having reached those conclusions:
Therefore in respect of appeal grounds 3, 4 and 7, and given the unique circumstances of this case, together with the short period of employment, we consider a severance payment equivalent to one week's pay is an appropriate severance allowance for Mr Mitchell and an order to that effect follows. Accordingly, pursuant to section 71(13) of the Act the order in respect of Mr Jones is confirmed; and again pursuant to section 71(13), we hereby revoke the order made by the Deputy President in respect of Mr David Mitchell in Matter T No. 7515 of 1998 and make the following order:
F D Westwood Appearances: Date and place of hearing: 1 A Tsipas and Brimbank City Council, AIRC Print A9442 |