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T747

 

IN THE TASMANIAN INDUSTRIAL COMMISSION

Decision Appealed - See T845

Industrial Relations Act 1984

 

T747 of 1987 IN THE MATTER OF A REFERRAL BY THE DEPARTMENT OF LABOUR AND INDUSTRY PURSUANT TO SECTION 11(2) OF THE STATE EMPLOYEES (LONG SERVICE LEAVE) ACT 1950 FOR HEARING AND DETERMINATION OF A CLAIM FOR PAYMENT OF PRO-RATA LONG SERVICE LEAVE BY MR LEIGH NOEL BEHRENS BY THE TASMANIAN GOVERNMENT INSURANCE OFFICE

 

DEPUTY PRESIDENT ROBINSON HOBART, 10 June 1987

REASONS FOR DECISION

APPEARANCES:
For Mr L N Behrens - In Person
For the Tasmanian Government
Insurance Office
- Mr R W Sewell
For the Department of Labour 
and Industry
- Mr J Wyton
DATE AND PLACE OF HEARING:
21 May 1987                Hobart

 

This matter concerns a dispute between Mr L N Behrens and Tasmanian Government Insurance Office (TGIO) which was referred to the President by the Secretary for Labour, for hearing and determination pursuant to Section 11(2) of the Act.

The matter was subsequently referred to me by the President pursuant to Section 15(1)(e) of the Industrial Relations Act 1984.

Mr Behrens was continuously employed by TGIO from 14 February 1977 until 19 September 1986, i.e. more than 7 years, but less than 10. At issue is whether the circumstances which led to him terminating his own services were on account of domestic or other pressing necessity and thereby bestow a right to pro-rata payment under the State Employees (Long Service Leave) Act 1950.

The only evidence relied upon by both parties was the statement of facts presented to the hearing by Industrial Officer, J. Wyton of the Department of Labour and Industry.

A summary of the most relevant facts is that:-

  • Mr Behrens was employed by the Tasmanian Government Insurance Office, 144 Macquarie Street, Hobart as an `Underwriter'.

  • Mr Behrens was employed on a full time basis as an Insurance Officer Grade 3, and on termination received an annual salary of $19,411.00 gross.

  • Dates of employment cover the period from 14 February 1977 to 19 September 1986.

  • Mr Behrens informed the Department of Labour and Industry that at the time of resignation he could not continue in his position due to financial commitments, a fact he claims was made known to TGIO approximately May 1986.

  • Subsequently he was moved from a northern office to Hobart office. This move improved his financial position by about $15.00 per week, he however claims this was not enough to enable him to support his wife and small child (aged 1 year).

  • On 8 September 1986 Mr Behrens tendered his resignation in writing to Mr Chivers (TGIO).

  • Such letter states that he had accepted alternate employment with the Royal Yacht Club of Tasmania, and asks that resignation as Senior Clerk in the Underwriting Department take effect as of 19 September 1986.

  • Whilst it is claimed that the financial state had been made known verbally, no mention of it appears in the letter at the point of resignation.

  • On 10 September 1986 Mr R D Sewell (Acting General Manager) wrote to Mr Behrens indicating acceptance of resignation and expressed good wishes to Mr Behrens in the new position.

  • On 11 September 1986 Mr Behrens made application in writing for the consideration of Pro-rata Long Service Leave payment on the grounds of financial hardship.

  • He also at this point indicated a full break-down of his weekly commitments for a normal week.

At the time of resignation the break-down in full was as follows:-

  • Gross fortnight salary
    Tax
    Deductions
    Nett paid
    $746.58
    $170.20
    $267.48
    $308.90
  • One deduction was for the amount of $176.00 to Savings and Loans for use for the payment of accounts.

  • This makes the nett fortnightly monies available $484.90.

  • Mr Behrens claims that at the relevant time each week his normal running expenses were thus:-

  • Mortgage
    Rates/Taxes
    Motor Vehicle
    Groceries
    House Maintenance
    Power/Telephone/Heating
    Clothing
    Travelling
    Miscellaneous Expenses
                                        TOTAL
    $75.00
    $15.00
    $30.00
    $100.00
    $10.00
    $25.00
    $10.00
    $10.00
    $15.00
    $290.00 per week
  • If $290.00 is taken from $484.90 the remainder is $194.90 to meet expenses the second week, some $95.10 short to meet those expenses indicated.

  • On the information provided in this case, Mr Behrens would require a nett amount of monies per fortnight amounting to $585.00 to meet expenses.

  • Mr Behrens claims to have been seeking alternative positions for some time with an improved salary, in order to support his family in some comfort.

  • Mrs Behrens had been employed in a full time capacity as a School Teacher, but she left on 2 August 1985 due to a pregnancy and she gave birth to a child on 13 October that year.

    Full pay ceased in November 1985, and half pay continued up to 12 December 1985.

  • Mr Behrens was the sole earning person in the home from that date until Mr Behrens by necessity returned to the work force in a part-time capacity for two days per week, and received for this work $169.00 nett per week.

  • This employment by the wife was not of a permanent nature, due to at some stage the desire to increase the family, which Mr Behrens stated would place even more financial burden upon the home.

Additional information arising from the hearing was that:-

  • The family home is valued at approximately $120,000, but has a mortgage, taken out over a period of nine (9) years.

  • The mortgage is being paid off at the rate of $75.00 per week, and has a further six (6) years to go before being finalised.

  • Whilst there is every likelihood of any request to lengthen the period of repayment to reduce weekly payments being favourably considered, Mr Behrens preferred not to exercise this option because of the negative factors (ie paying more interest).

Decision

This case is relatively uncomplicated in that the facts are clear.

Furthermore there is but one relevant question to be answered, ie whether the financial circumstances of Mr Behrens constituted "domestic or other pressing necessity of such a nature as to justify the employee's resignation". Section 7 of the State Employees (Long Service Leave) Act 1950 provides, inter alia:-

7(1)  Where an employee, having completed the requisite period of continuous service -

(a) . . .
(b) . . .
(ba) resigns from his employment on account of domestic or other pressing necessity, that the prescribed authority certifies, in writing, is, in his opinion, of such a nature as to justify the employee's resignation;

(c) . . .
(ca) . . .
(d) . . .
(e) . . .
(f) . . .

but not otherwise, that employee or, in the case of his death, his personal representa tives, shall be entitled to the payment of an allowance calculated in accordance with subsection (5), and, upon the receipt of the appropriate authorization, the Treasurer shall pay that allowance to the employee or to his personal representatives, as the case may be.

Where the prescribed authority is not prepared to issue a certificate and a dispute arises, it may then be investigated by the Secretary for Labour and if not resolved, a report sent to the President to permit a hearing and determination of the question at issue.

Mr Behrens was clearly less than satisfied with the level of his remuneration and had made his employer aware of that fact. He had also been on the look-out for another, higher paid job for some time.

The aspirations of the employee in wishing to pay off his home as soon as possible and allow his wife to give up work so that they may have more children are understandable and indeed commendable. It would seem to be a desirable and sensible decision for Mr Behrens to have taken up a new position with The Royal Yacht Club which offered a significantly higher salary. This is particularly so since, apart from the financial aspects, it would appear, prima facie, that the new job would also be more interesting, given that Mr Behrens testified that his hobby is sailing.

The question is not, however, whether the resignation of Mr Behrens from TGIO was simply desirable in all of the circumstances, but whether it was a necessity of the kind contemplated by the provisions of Section 7(ba) of the Act.

The Industrial Commission of NSW in Court Session was faced with a similar case to the present one in Computer Sciences of Aust. Pty Ltd v Leslie (Watson, Bauer & Glynn JJ.), 2 November 1983.

The learned judges were dealing with a case where a worker left his employment voluntarily after 9½ years continuous service and claimed to have terminated on account of "domestic or other pressing necessity". The court was required to consider an appeal against the decision of the Chief Industrial Magistrate to award payment to an employee who resigned to take up a better paid position with greater career opportunities.

In dealing at length with this matter the Court quoted from other cases. At page 189 of the report it said in relation to the "subjective test":

In a joint judgement in Eyles v. Cook (1967) 12 F.L.R. 42, Dunphy and Joske JJ. of the Commonwealth Industrial Court referred to a decision of the Commission in Court Session in Clancy v. David Jones Ltd (1965) A.R. (NSW) 383, and said of that decision: "This latter case is important mainly because it demonstrates that the Commission judges considered that the test of what is a `domestic' or `pressing necessity' should be decided by a subjective and not an objective test and this was also the basis of the decision by Dethridge J. in Crennan's case (1962) 17 I.I.B. 799. It was also the test adopted by both the present members of this Bench in Franks v. Kennedy (1964) 7 F.L.R. 162 at 172, where, in a joint judgement, we said: "Obviously the award, when it refers to `urgent necessity', has regard to urgent necessity from the point of view of the employee". This was not a long service issue but the factual problem was a similar one and it involved an interpretation of a comparable phrase. None of the foregoing observations should be taken as any indication that an employee can escape the onus of satisfying a court that he has a real and genuine problem arising out of `illness, incapacity or domestic or other pressing necessity'. Indeed the award requirement that the employee has to show that, whatever head he claims under, it is `of such a nature as to justify such termination' presupposes that this is so and that his termination is not due to some ulterior motive." (See also Wall v. Wescott (1982) 1 I.R. 252 per Watson J. and the words of the learned author of the annotated New South Wales Industrial Laws, 4th ed. at 610).

Underlining mine

I agree that the onus of the applicant is to show that a real and genuine problem exists.

To my mind Mr Behrens has not been able to highlight what the problem was, in that if he did not resign there would have followed some particularly undesirable consequence.

Rather the applicant in this matter tried to paint a picture where he could not meet all of his reasonable financial commitments although he was not at all extravagant. Yet whilst he had contemplated ways of reducing the level of his mortgage payment as one way of easing the burden, other factors prevailed, including, it was said, that $75.00 per week was not felt to be a significant rate of repayment.

If it can be afforded, of course $75.00 per week is not a lot to pay out on a mortgage of a house worth $120,000 by a young couple. Conversely, however, such a sum could be a burden to a lowly paid worker with other heavy financial commitments requiring urgent attention.

The details of other recurrent financial commitments each week related to ordinary day to day living expenses such as food, electricity, car running expenses, etc. There was no evidence of unfortunate debts such as unforeseen medical expenses or such like, which would have created a real problem needing urgent solution.

Nor did Mr Behrens really acknowledge the notion that, at the time he terminated his services, his wife's net income was $169.00 per week, and that, combined with his income, more than covered weekly living and associated expenses. Yet the expenses were combined family expenses.

In these circumstances I do not believe it is appropriate to ignore the income of the employee's wife, even though there may be social reasons for doing so in other circumstances.

In coming to this conclusion I am mindful of the need to not overly apply too stringent a test as to what constitutes `pressing or other domestic necessity of such a nature as to justify termination of services'.

In the Computer Science case the Full Bench refers in this regard to the test applied by Sheldon J. and agrees with it after commenting on a number of other cases, quote:-

"the question of the test to be applied to establish the validity of the claim as falling within s 4(2)(a)(iii) his Honour said at 18: "The test, I would suggest, is whether there is a really serious problem in the home, although not necessarily a crisis. On the one hand the colourable and frivolous should be rejected but on the other overexacting standards should not be adopted. After all what is being dealt with is not a sphere-shaking issue but a reason for terminating employment and a material consideration must be whether a domestic situation is such that a reasonable man might feel compelled to seek its solution by terminating his employment". (Our italics) His Honour was obviously not attracted by refinements based on a "subjective" approach, in whatever sense that term may be said to have been intended in Eyles v. Cook and British Motor Corporation v. Chance are to be read as implying that the test is a "subjective" one in the sense that the worker's view is to prevail even though a reasonable person would not have felt compelled to seek a solution to the problem by terminating his employment in the same circumstances. If that were the conclusion to be reached by reference to those cases we would, with respect, disagree. We would prefer the simple and characteristically well expressed exposition of Sheldon J. in Franks' case above."

Underlining mine

Four tests were applied by the Full Bench to finally determine the validity to the claim before it, and I intend posing the same question.

Question 1:

Was the reason claimed for termination one which fell within the section?

Answer:

I accept that economic necessity can amount to "pressing necessity", depending on the circumstances. (see Eyles v. Cook & Others (1967) 13 E.L.R. 42, Crennan v. Oliver Furniture Pty Ltd (1962) 17 I.I.B. 799 (Victorian Appeals Court).

However in the present case it is a matter of fact that while Mr Behrens would have encountered a degree of difficulty in living on $19,411 gross per annum, it was not a pressing necessity that caused him to give up his employment because his wife also worked part time and earned $169.00 per week nett. The combined income then met all of their reasonable needs. Mrs Behrens previously worked full time, left for a period and was able to select part time work. This work of the wife was but one of the options open to the couple as an alternative to Mr Behrens resigning his job.

Question 2:

Was such reason reasonably held by the worker and simply not colourable or a rationalisation?

Answer:

In my view the worker concerned in the case wanted to maintain a level of income for himself and his family by increasing his own level of remuneration to a level which would enable his wife to give up work and increase their family, yet still pay off a mortgage within six years. Also, prima facie, Mr Behrens would have found the work more interesting in his new job.

As commendable and laudable as those reasons are, they represent the exercise of a reasonable choice between two sets of circumstances, as opposed to a compelling situation. To this extent therefore the reason was in this context a rationalisation.

Question 3:

Although the reason claimed may not be the sole ground which actuated the worker in his decision to terminate, was it the real or motivating reason?

Answer:

The real or motivating reasons have already been described in answering question (2).

Simply increasing the husband's earning capacity to replace that of the wife's, does not solve the family's financial problems if they exist. It follows that if financial problems were being equated with "pressing or other domestic necessity" as it was, then the voluntary termination was not solving the problem described.

I was told quite unequivocally that financial problems were the sole reason for quitting the TGIO job and therefore domestic necessity was not argued in any other context.

Question 4:

Was the reason such that a reasonable person in the circumstances in which the worker found himself placed might have felt compelled to terminate his employment?

Answer:

I have little doubt that any other sensible worker would weight up the advantages and disadvantages associated with changing jobs and probably the long term advantages in the present case would outweigh the disadvantages.

As I see it the financial disadvantages would be foregoing the right to long service leave which would be otherwise due in about 9 months, together with possible loss of sick leave credits and superannuation entitlements.

The advantages would essentially be a better paid job for the worker concerned and the opportunity for his wife to give up her job for family reasons.

In my view there could be no reasonable expectancy of pro-rata long service leave pay out after voluntary termination of services, given the present circumstances because the worker was not compelled to terminate his own services.

Having taken all of the circumstances into consideration and then applying the usual tests, I am of the view that this is a case which does not satisfy the requirements of Section 7(ba) of the State Employees (Long Service Leave) Act, 1950. An employer required to grant the substantial benefits of this legislation is entitled to have the worker complete the minimum unconditional qualified period unless the contingencies provided with respect to earlier retirement are clearly met.

This is not a case where, in my opinion, that has occurred.

For all of these reasons the claim for pro-rata long service leave payment against TGIO is dismissed.

 

A Robinson
DEPUTY PRESIDENT