T10984
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DECISION APPEALED - SEE T11081 TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Jacqueline Oliver and Lochnagar Services
Industrial dispute - a dispute over the entitlement to long service leave, or payment instead of any such leave - domestic or other pressing necessity found - order issued REASONS FOR DECISION (1) On 28 July 2003, Jacqueline Oliver (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 Lochnagar Services arising out of a dispute over the entitlement to long service leave, or payment instead of any such leave. [2] When this matter came on for hearing at the Supreme Court, Launceston on Monday 18 August 2003, the applicant was self-represented. Mr A Cameron, of the Tasmanian Chamber of Commerce and Industry Limited, appeared for the employer, together with Mrs J Monsour. [3] In this matter the applicant seeks the payment of a pro-rata long service leave entitlement. An entitlement arises for employees who have completed seven years', but less than 15 years' service and the termination occurs in certain defined circumstances. In this case Mrs Oliver relies on s.8[3][c] of the Long Service Leave Act 1976 which reads:
Background [4] Mrs Oliver commenced employment as a Medical Secretary in July 1992. [5] Mrs Oliver worked 20 hours per week. Her husband received a disability pension and Mrs Oliver received a part pension. Mr and Mrs Oliver owned their home in Riverside, Launceston, unencumbered by a mortgage. [6] In February 2002 there was a marriage breakdown and her husband left the family home. Mrs Oliver continued to live in the family home with her son. She was, however, advised to finalise a property settlement within a 12-month time frame. [7] Mrs Oliver's part pension ceased from the moment of the marriage breakdown. It is common ground that Mrs Oliver told her employer that, as a consequence of her diminished financial circumstances, she would need to seek full-time employment. Indeed Mrs Monsour actively assisted in this search. [8] The search for full-time employment was unsuccessful although in June 2002 Mrs Oliver did obtain a casual position of approximately four hours per week with a neighbouring medical practitioner. [9] Through changed circumstances in the practice, Mrs Oliver was offered an increase in hours to 32 hours per week, effective from 1 January 2003. This offer was accepted. [10] In March 2003 the matrimonial home was sold and the property settlement finalised. [11] For a short period Mrs Oliver lived in rented accommodation which, according to her evidence, was prohibitively expensive. [12] In April 2003 Mrs Oliver purchased a property in Evandale which she now occupies. This purchase was funded by the proceeds of the property settlement, together with a mortgage. Mrs Oliver undertook certain renovations to the Evandale property. [13] In May 2003 Mrs Oliver was offered and accepted a full-time position with another medical practitioner. She resigned her position with Mrs Monsour effective from 16 May 2003. [14] Mrs Oliver claims that the resignation was a consequence of "a domestic or other pressing necessity of such a nature as to justify the termination". [15] The respondent contends that the decisions taken by Mrs Oliver were essentially a matter of choice, and do not satisfy the criteria established under the Act. Evidence [16] Both Mrs Oliver and Mrs Monsour gave sworn evidence. [17] It is common ground that Mrs Oliver had always experienced financial difficulties and that Mrs Monsour was well aware of that.1 [18] This difficult position was exacerbated following the marriage breakdown, in that apart from anything else, her part pension ceased forthwith. Mrs Monsour said:2
[19] Mrs Oliver continued to work 20 hours per week at the rate of $12.72 ph. She continued to live in the family home free of mortgage or rental payments. [20] In June 2002 Mrs Oliver obtained a casual position with Campbell and Nguyen Pty Ltd, for a maximum of fours hours per week at the rate of $13.50 ph. She said that this position was only available until August/September 2003, which was confirmed by correspondence from Mr Hung Nguyen.3 [21] As a consequence of a voluntary reduction in hours by a fellow staff member, Mrs Oliver was offered an increase to 32 hours per week from 1 January 2003. In relation to her financial position at the time, Mrs Oliver said:4
[22] On 7 March 2003 the matrimonial home was sold for $149000. Mrs Oliver received approximately $78500 from this sale. [23] Initially Mrs Oliver occupied rented premises at a weekly rent of $175. Her evidence was that as she had no savings or family to fall back on, she obtained a $2000 loan to facilitate this move. [24] Mrs Oliver said that renting was never intended as a long-term proposition as "$175 per week [was] impossible on my salary".5 [25] In early April 2003 Mrs Oliver purchased a property in Evandale for approximately $100000 including costs. This purchase was financed by the proceeds of the earlier property settlement together with a 12-year mortgage of $50000. The required mortgage repayments were $135 pw, the amount, which Mrs Oliver said, she was paying. [26] A Valuation Report6 described the property in the following terms:
[27] The condition of the property was described as "good [external]" and "fair [internal]". The property, built in 1976, had not been renovated. The kitchen and bathroom were rated 6/10. [28] Mrs Oliver borrowed more than was needed for the outright purchase of the property. The difference was used in part to repay personal loans of approximately $6250. [29] A "substantial amount" of the balance of between 18 to 19 thousand dollars, had been spent on renovations to the bathroom and kitchen and carpet replacement. [30] Under cross-examination Mrs Oliver agreed that she was paying an extra $10 pw tax on a voluntary basis. Her explanation was:7 "My reasons for that, Commissioner, were purely so that I could save enough each year and that money at the end of the year would come in for me to pay things like my car registration and car insurances. That was the reason why I instructed her to take the money off the tax, as a savings purpose for myself." [31] And Later:8
[32] There was also evidence in relation to the financial contribution of Mrs Oliver's 24-year-old son. Relevantly, at the time of resignation Mrs Oliver's son was employed [albeit in a casual position] and paying board. Mrs Oliver said:9
[33] In May 2003 Mrs Oliver was offered a position with Mr David Lloyd. This position was full-time at the rate of $13.50 ph with a review following a three-month probationary period. Subsequently the rate was increased to $16 ph when the position became permanent. However this higher rate was not known to Mrs Oliver at the time of resignation, only that there would be a review. [34] Mrs Oliver said that the position involved some overtime, which was guaranteed.10 According to pay slips this overtime averaged 2.15 hours per week over a 10-week period and was paid at the rate of $20.25 ph.11 [35] Mrs Oliver accepted the offer and resigned from Mrs Monsour's employ with effect from 16 May 2003. [36] Asked to compare the two positions in financial terms, Mrs Oliver said:12
[37] Mrs Monsour also paid a bonus of $650 on a twice-yearly basis. Allowing for the annual leave loading which was absorbed in the bonus, this bonus equated to approximately $20 pw. [38] In response to a series of questions from the Commission, Mrs Oliver indicated that she was in "much the same" financial position when working 32 hours for Mrs Monsour plus four hours at another surgery and paying the mortgage, compared with working 20 hours per week without mortgage repayments. On reviewing the transcript I am satisfied that this comparison was in the immediate post marriage breakdown environment, rather than pre marriage breakdown, when, apart from anything else, Mrs Oliver received a part pension. [39] In relation to the availability of a full-time position with Lochnager Services, Mrs Oliver said in closing submissions:13
Closing Submissions Mr Cameron, for the respondent: [40] The appropriate test is that outlined in the Computer Sciences case.14 [41] It is necessary to distinguish between a termination arising from a pressing necessity as distinct from decisions based on choice. In Mrs Oliver's case, she had made a number of decisions based on choice or preferred lifestyle, rather than necessity. The following decisions support this contention:
[42] These decisions were of Mrs Oliver's own choosing. It is not open to then say she is, as a consequence, placed in a financial situation which compels her to accept a full-time position with Mr Lloyd and resign from the secure employment of Mrs Monsour, albeit with slightly less hours. [43] In terms of the Computer Sciences tests, Mrs Oliver's stated reason for termination was a rationalisation, and not genuinely held by her. [44] It is not sufficient to show that the perceived circumstances were such that it was thought to be a good move to leave, it must be reasonably necessary based on sound facts [see Cadbury Schweppes v Cunningham15]. [45] The well established tests have not been satisfied and the claim should be dismissed. [46] Mrs Oliver relied on her written statement and supporting documents tendered into evidence. Findings [47] In determining questions relating to domestic or other pressing necessity, the tests established in Computer Sciences and previously adopted by this Commission are as follows:
[48] In establishing these tests, the Full Bench had regard to an earlier judgement in Franks v Kembla Equipment Co. Pty Ltd whereby Sheldon J said:16
[49] It is well established that simply resigning from one position to accept a better paid opportunity, in order to enhance lifestyle, would not, ordinarily, satisfy these tests. [50] The position is well described in Cadbury Schweppes Pty. Ltd. v Cunningham, whereby Robinson DP said:
[51] Simply changing from part-time to full-time employment in order to improve one's financial position would not, on its face, constitute a pressing necessity such as to justify termination. There must be some other factor or event which occurs which changes an individual's circumstances and reasonably compels them to terminate their employment. [52] Mrs Oliver's evidence was that she had always had financial difficulties, even before the marriage breakdown. That is not the correct test. [53] The proper test is: what has changed so as to reasonably compel Mrs Oliver to resign? And secondly, were the decisions taken by Mrs Oliver reasonably necessary as distinct from simply a matter of choice? [54] The first profound change in Mrs Oliver's circumstances was the marriage breakdown in February 2002. Apart from anything else, this meant her part pension ceased immediately. It is also a reasonable assumption [although no evidence was adduced] that certain fixed costs associated with the household such as rates, electricity and heating, insurance, maintenance etc, would continue at a similar level, notwithstanding that Mrs Oliver's husband was no longer living in the family home. [55] The uncontested evidence is that following this event, Mrs Oliver made it clear to her employer that she would need to find full-time employment. Indeed the employer actively assisted in this quest. [56] Had Mrs Oliver been successful in finding such employment, and resigned from Mrs Monsour's employ as a consequence, it is likely that a claim for pro rata long service leave would have been successful at the time. [57] As it turned out, Mrs Oliver was unsuccessful in her pursuit of full-time employment. She did however obtain a casual position of up to four hours per week with Mr Nguyen. [58] From 1 January 2003 Mrs Oliver's hours increased to 32 per week. Mrs Monsour said she assumed that Mrs Oliver was happy with this extension. That was probably not an unreasonable presumption, given that it significantly enhanced Mrs Oliver's financial position. It must, however, be seen in the context of her evidence relating to the continuing absence of mortgage repayments at that time.17 [59] I accept that Mrs Oliver did not complain about her wages post January 2003 although there is no basis to assume that she had abandoned her quest for full-time employment. Indeed Mrs Monsour said that she did go for an interview and worked a trial day with another doctor some time after 1 January. [60] In March 2003 the family home was sold. Clearly that was not a decision of choice; it had to be sold to facilitate an orderly property settlement. [61] Mrs Oliver was then faced with a decision to either rent or purchase. She rented a property for a short period but found it financially prohibitive. She then purchased a property for approximately $100000 and expended something less than $20000 on renovations. [62] I turn now to the decisions taken by Mrs Oliver which Mr Cameron categorises as decisions of choice to enhance lifestyle. [63] I do not accept that the voluntary deduction of an additional $10 pw in tax is in any way detrimental to her claim. Her evidence was that she had no savings or family to fall back on and this was a method of forced savings to facilitate the payment of certain bills. This is a common practice and certainly not an indicator that Mrs Oliver had funds surplus to immediate requirements. [64] It is arguably true that there was no immediate requirement to repay two of the personal loans Mrs Oliver chose to extinguish. In essence Mrs Oliver was refinancing these loans through the medium of a mortgage. It is well accepted that a home equity loan is one of the cheapest forms of finance available. Far from being reckless, I conclude that Mrs Oliver was being financially prudent in acting as she did in relation to these loans. [65] I turn now to the Evandale property and the renovations. [66] Mrs Oliver's former family home sold for $149000. The purchase price of the Evandale property was $100000 to which up to $20000 in renovations should be added. [67] In my view there should be no requirement or expectation that an individual endure a substantially reduced standard of living if they have the opportunity to avoid such a scenario. Indeed it is not unreasonable for a person to seek to restore their former position, at least in terms of basic living requirements. It is when they go beyond that point that the question of discretionary choice is validly raised. [68] In this case, Mrs Oliver is, in dollar terms, still significantly short of owning a property which matched the value of the former matrimonial home. It would presumably have been open to Mrs Oliver to purchase a property for say, $120000, and which did not require renovation. In such hypothetical, but quite realistic circumstances, the argument about discretionary choice would not arise. [69] Mrs Oliver purchased a cottage of modest proportions, which, on the available evidence, required further additional renovation. I accept that it was reasonable for Mrs Oliver to view this expenditure as a requirement, as distinct from an optional choice. [70] I also accept that it was reasonable for Mrs Oliver not to rely on her adult son for financial support. His employment was of a casual nature, and the likelihood of longer-term residence in the property is problematic. [71] Contrary to the submission of Mr Cameron, I accept that Mrs Oliver was entitled to take into account the fact that the casual position with Mr Nguyen was coming to an end in approximately three or four months. On the evidence there can be no doubt that this was the reality. [72] In summary the "pressing necessity" which led to Mrs Oliver's resignation was one of financial stringency. This circumstance arose from the cumulative effect of the marriage breakdown, the requirement to obtain a mortgage and the imminent loss of her casual position with Mr Nguyen. [73] I find that this is a reason that falls within the relevant section of the Act. [74] There is no evidence to suggest that this reason was colourable or a rationalisation. [75] The evidence points to a working relationship which was both long-standing and harmonious. I suspect that financial stringency was the sole ground which motivated Mrs Oliver's resignation. If not, it was certainly the real or motivating reason. [76] I conclude therefore that the first three tests as outlined in Computer Sciences have been met. [77] I turn now to the "reasonable person" test. [78] Disregarding the casual position with Mr Nguyen which was coming to an end, Mrs Oliver was earning $407 pw. It the circumstances it is reasonable to add the twice-yearly bonus of $650, even though it is a discretionary payment on the part of the employer. After deducting the annual leave loading, this is the equivalent of an additional $20 per week, making a weekly income of $427 in total. The nett position after tax but before any other deductions would be $365 pw. [79] The position with Mr Lloyd offered $513 gross. Whilst this was to be reviewed after three months, the outcome of such review was not known at the time and should not be taken into account. [80] Similar to the bonus, it is reasonable to take into account a level of overtime, as this appeared to be more or less guaranteed. Allowing an average of two hours' overtime per week at $20.25 ph, this equates to a weekly income of $553.50 gross or $450.50 nett. [81] Thus the difference in nett terms is $85.50 pw. [82] I accept that it would be difficult to manage mortgage repayments of $135 pw on a nett income of $365 pw as well as meeting all other normal living expenses. [83] The financial advantage attaching to Mr Lloyds offer was substantial in that it would account for nearly two thirds of the mortgage repayment. [84] In the circumstances I accept that a reasonable person, faced with circumstances confronting Mrs Oliver, might feel compelled to terminate the employment contract. [85] I find that Mrs Oliver has satisfied the onus of demonstrating that she has an entitlement to pro rata long service leave. [86] Section 11[1] of the Long Service Leave Act defines "ordinary pay":
[87] The relevant weekly rate for the purpose of calculating the entitlement is $407 pw. [88] As neither party was able to identify the precise date in July 1992 when Mrs Oliver commenced, I have chosen 15 July 1992. The relevant period of service is therefore 10.83 years, equating to a pro rata entitlement of 9.39 weeks. ORDER Pursuant to Section 31 of the Industrial Relations Act 1984, I hereby order that Lochnagar Services, 26 Lyttleton Street, Launceston, Tasmania 7250, pay to Jacqueline Oliver, 16 Nile Road, Evandale, Tasmania 7212, an amount of three thousand eight hundred and twenty one dollars and seventy cents ($3821.70), such payment to be made not later than 5.00pm on 1 October 2003.
Tim Abey Appearances: Date and Place of Hearing: 1 Transcript PN 426 |