WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION. PARTIES NICHOLAS RICHARD LYNAM, APPLICANT v. LATAGA PTY LTD, RESPONDENT CORAM COMMISSIONER S WOOD DELIVERED WEDNESDAY, 29 NOVEMBER 2000 FILE NO APPLICATION 555 OF 2000 CITATION NO. 2000 WAIRC 01410 _______________________________________________________________________________ Result Applicant unfairly dismissed; Contractual benefits claim granted Representation Applicant Mr G McCorry as agent Respondent Mr P Wilkinson _______________________________________________________________________________ Reasons for Decision. 1 This is an application pursuant to section 29(1)(b)(i) and (ii) of the Industrial Relations Act 1979 (hereafter referred to as the Act). The applicant Mr Lynam was employed by the respondent from 13 December 1999, when the respondent bought the business, until 27 March 2000 when he was terminated by Mr Wilkinson. He had earlier managed or worked in the store for the previous owners since October 1995. 2 Mr Lynam says that his duties were that of Stores Manager and Sales Manager, which included opening and closing the store, staff supervision, general shopkeeping and retail operations. 3 The respondent was amended at hearing, by consent, from Wesley CD Megastore to Lataga Pty Ltd. The latter, on the submission of Mr Wilkinson for the respondent, being the employer of Mr Lynam. 4 The respondent was not represented at hearing and albeit unfamiliar with the Commission’s processes decided to proceed with the matter rather than seek an adjournment. 5 The applicant says that he was unfairly dismissed on 27 March 2000 when he arrived for work. It is common ground that there was an ongoing dispute about the contract of employment as it related to overtime. It is common ground that when the new owner took over from the then administrator of the business on 13 December 1999, he agreed to pay the applicant on the same terms and conditions. It is the evidence of both parties that Mr Lynam was then paid his salary and overtime for the additional hours worked. The difference between the parties on this issue is that the respondent says that the applicant claimed and was wrongly paid for overtime he should not have received. The respondent says that the applicant should have continued, on transfer of the business, with his salary of $667 per week and no overtime. The applicant says that he was to continue on $667 per week but that he was paid overtime, queried it, and was told that the respondent intended to pay him overtime. 6 The applicant, in terms of denied contractual benefits, claims 40 hours unpaid overtime ($702) which he says he worked in the three week period prior to termination; and one week’s pay ($877.50) for the week prior to termination where he says he was stood down. The applicant says these are the agreed terms of his contract which he does not say is related to any award. The applicant is also claiming $17,500 being the maximum amount of compensation claimable given the applicant’s salary of $35,000 per year. This amount comprises 7 weeks and 2 days of lost wages at the base rate ($4,932); ongoing loss in his new position ($6,409); one month’s pay in lieu of notice ($3,510) and injury for suffering arising from the dismissal. 7 The applicant says that after the change of owners he was required to submit timesheets and was paid $667 by direct transfer into his bank account and paid by cheque WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 81 W.A.I.G. 300 for overtime for hours worked in excess of 38 hours per week. He says he queried this with Mr John Moore a representative of the respondent, and was told that Mr Wilkinson had approved it. 8 He says that he was asked to work six days a week from late January 2000 and had a conversation with Mr Wilkinson at that stage where they agreed that he would be paid overtime for all hours worked in excess of 38 hours per week. He says that he continuously worked 50 hours a week from then until he was terminated. He says that he was paid time and a half (ie $26.33) for each hour of overtime at first but then agreed with Mr Wilkinson to accept $17.55 (ie single time) for all of the 50 hours a week worked. 9 He says that he gradually lost duties to others. Ms Sonya Kahuri commenced as Promotions Manager and was then made General Manager effectively demoting the applicant. He says that he raised a pay issue with Ms Kahuri on behalf of another staff member and that this resulted in him being presented with a letter [Exhibit NL2] which he was asked to sign and which would have reduced his salary. He refused to sign the letter and was asked to take a week off and to return his store keys. 10 He says that he prepared a letter [Exhibit NL3] over the weekend, which he delivered on Monday to Ms Kahuri, as he was concerned that the week off not be deducted as leave. He says that she told him that he was not allowed to be in the store and to leave the store immediately, so he did. 11 He says that he returned to the store at 8.30 am the following Monday, could not get in, and was met at about 8.50 am by Mr Wilkinson and Mr Wayne Sheldon, the Warehouse Manager. He says that he was told by Mr Wilkinson that he was not wanted in the store anymore and was given one week’s notice and told to contact Mr Wilkinson to sort out a redundancy or termination package. 12 He says that he contacted Mr Wilkinson on the following Wednesday and in reply received a letter [Exhibit NL4] the contents of which he refutes. 13 Mr Wilkinson’s evidence of the events which took place on the day of dismissal aligns with that of the applicant. He says that he met Mr Lynam outside the store and as the contract issue concerning overtime was unresolved he could not allow Mr Lynam to continue working there and so terminated him and paid him one week’s pay for notice as permitted under the contract of employment. 14 In relation to the payment of overtime, Mr Wilkinson denies that this was ever rightfully approved by him or there was any conversation where he consented to a single rate of $17.55 for each hour worked. He says the contract was the same as Mr Lynam had worked under previously and that is $667 per week for whatever hours were required for the efficient running of the store. He says that Mr Lynam was not in a manager’s position. Finally, he says that Mr Lynam was paid bonuses for meeting sales targets. 15 The heart of the dispute concerns the payment of overtime. The key difference in evidence is whether this overtime was paid by cheque and whether Mr Lynam and Mr Wilkinson in discussion ever agreed to overtime. The respondent alleges that the applicant wrongly claimed overtime and effectively cheated his employer. The respondent does not deny that overtime was paid by the company, he simply says that it was not due under the contract, was not properly approved and was a mistake on the company’s part. The applicant agrees that he was not due overtime at the commencement of the contract, but that the employer later agreed to the payment of overtime and then further proposed that it be paid at a single time rate and that he, the applicant, agreed. 16 The respondent references a letter from the liquidator of the previous owner [Exhibit R2] as conclusive proof that overtime was not to be paid. It states— “We refer to your recent enquiry in the matter of wages and/or salary paid to Mr Nick Lynam by Tanbrook Holdings Pty Ltd (“Tanbrook”). We advise that during the appointment of Adminis- trators and subsequently Liquidators, that is, from 13 August, 1999 until the sale of the business in December, 1999, Mr Lynam was paid a weekly sal- ary of $662.00 with no additional amount paid in respect of any overtime that may have been worked. The former Office Manager of Tanbrook has advised that Mr Lynam had previously been paid a weekly wage and overtime up until approximately May-June, 1999 at which time he took over the position as Store Manager and subsequent to that time, was not paid overtime. The wages records of Tanbrook indicate that after 5 June, 1999, Mr Lynam was paid a gross salary of $507.00 per week to 7 August, 1999 which was in- crease to $662.00 gross per week thereafter with no overtime recorded/paid after 5 June, 1999.” 17 Mr Lynam agrees essentially with this letter except some of the dates and says that the amount should be $667. I find that on commencement of employment with the respondent, Mr Lynam’s contract was for a salary of $667.00 per week with no overtime paid. 18 The applicant’s claim in relation to overtime has been difficult to assess. The documents submitted on behalf of the applicant [Exhibit NL1] do substantiate the applicant’s evidence in part. These documents have no identifying references, but the applicant says were pay documents completed by Ms Helen Kay on behalf of the respondent, and this evidence is unchallenged. The applicant says that he was paid overtime at time and a half and then in late January 2000 made an agreement to be paid overtime at single time (ie $17.55 per hour). The handwriting on these documents appears to match that on the original group certificate for Mr Lynam and adds weight to their authenticity. 19 These documents show payments at time and a half in December 1999 and late January 2000, and at single time in early January 2000 and in February 2000. There are also some mixed payments in early January 2000 (ie single time and time and a half during one week). However, predominantly they support the view that a change to payment at single time was made in early February 2000. Mr Wilkinson gave evidence at page 89 of the transcript that on a timesheet dated in late February 2000 Mr Lynam asked whether the 50 hours could be paid by direct debit into his bank account. 20 Mr Lynam says that he was paid for overtime by cheque which Mr Wilkinson disputes. The cheque butts at [Exhibit NL6] when compared with the pay details at [Exhibit NL1] support Mr Lynam’s evidence. 21 Whilst both Mr Lynam and Mr Wilkinson appeared direct and honest in giving evidence, and under cross- examination, all the evidence I have just outlined supports and adds credibility to Mr Lynam’s evidence. For these reasons, although I do not deny the honesty of Mr Wilkinson, I consider Mr Lynam’s account of events more reliable and where it contradicts Mr Wilkinson’s account I would rely on Mr Lynam’s evidence. I do not need to go to Mr Mansfield’s evidence other than to say it adds some weight to Mr Lynam’s evidence that the pay documents were provided irregularly. 22 I find Mr Lynam was paid by cheque for additional hours worked at a single time rate of $17.55 per hour, and that the contractual arrangement was agreed with the respondent. 23 The events leading up to and including the day of termination are largely agreed. There are of course two versions of how heated the discussions were and the meaning of those discussions. Nevertheless it is clear from both Mr Wilkinson’s and Mr Lynam’s evidence that Mr Lynam was presented with the option to be paid $667 per week for all hours worked or $446 per week plus overtime. Mr Lynam wanted $667 per week plus overtime at a single rate which he had been receiving. When he rejected the employer’s unilateral proposal he was told to take a week off to consider his position. He tried to get paid for that week. He then tried to return to work and as WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 301 81 W.A.I.G. he would not agree to the employer’s unilateral proposal he was dismissed. 24 On Mr Wilkinson’s evidence the last conversation between Mr Lynam and himself, which was outside the store on 27 March 2000, was— “he’s standing outside the shop saying, “I want to go into work.” And I’m saying, “Well, I can’t let you into work until such time as this is resolved” and he said, “Well, I’m not going to work for less”. So I said, “Well, I’ve got no alternative but to give you a week’s notice and that’s exactly what I did.”” 25 If I apply the principles in Undercliffe Nursing Home -v- The Federated Miscellaneous Workers’ Union of Australia, Hospital, Service and Miscellaneous, WA Branch 65 WAIG 385 Mr Lynam clearly received far less than a fair go all round. His performance was not in question, he received no warning or indication that his employment was in jeopardy, there is no evidence to suggest that any discussion occurred as to why he had been receiving a higher rate of pay and why the unilateral change was warranted. The evidence of Mr Lynam which I accept is that shortly after querying a pay issue for Mr Mansfield, he was presented with a “sign here” letter altering his then pay arrangements. 26 Mr Wilkinson says following the events of 27 March 2000 he wrote to Mr Lynam inviting him to raise any query he might have and did not receive the courtesy of a reply. Mr Lynam however had clearly and abruptly been terminated and the time for proper discussion, explanation and negotiation by both parties was prior to the employer dismissing Mr Lynam. That was the fair and appropriate course of action. 27 I find for the above reasons that Mr Lynam was dismissed unfairly on 27 March 2000. There is no prospect whatsoever that an employment relationship could be re- established between the two parties. Both have expressed strongly adverse views of the other which I consider are not capable of being redressed. 28 I turn to the contractual benefits claimed. I accept the evidence of Mr Lynam that 40 hours of overtime worked has not been paid, and I would so order that the amount of $702 for the unpaid overtime be paid. The claim for payment for the week’s absence in the week beginning 20 March 2000 should also be paid as claimed, ie $877.50. In [Exhibit NL4] the respondent refers to this as due and relates it to the applicant being on stress leave. The respondent says that $460.13 is payable and the applicant says that $877.50 is payable. It is clear from the evidence that the original contract is for $667 per week. I have found that this was the case and that the contract was varied by agreement as claimed by the applicant to 50 hours per week at the single rate of $17.55 per hour. It is also clear from Mr Wilkinson’s evidence and [Exhibit NL4] that albeit Ms Kahuri at the meeting on 17 March 2000 attempted to unilaterally change the contract [Exhibit NL2] to $460.13 per week effective from 20 March 2000, Mr Lynam did not agree to the change and was sent away for a week to think about it. Hence $877.50 is owing and the total for contractual benefits to be ordered is $1,579.50. 29 Mr Lynam’s evidence, which is unchallenged and supported by [Exhibit NL5], is that he has actively sought employment since his dismissal. He found work some 7 weeks and 2 days after dismissal and has been earning less than his former position. The applicant calculates his lost income on the basis of a salary of $667 per week on the basis that the employer could have given Mr Lynam reasonable notice of a change to work 5 days per week. The applicant calculates his loss as $4,932 for the period up until he gained employment and $6,409 for ongoing loss over a 12 month period. 30 It is clear from the evidence of Mr Lynam and Mr Wilkinson that at the time of dismissal Mr Lynam did not want to work under the revised and reduced contract put forward by the respondent, even though this had been his contract on initial engagement on 13 December 1999. Mr Lynam’s evidence was that at that stage he did not think that any extra money was due and that he challenged payment of overtime. It is equally clear that Mr Wilkinson wanted to reinstate the contract as it was at the time of the transfer of the business. This was made plain to Mr Lynam on 27 March 2000, though not on 20 March 2000 when he was handed the letter marked [Exhibit NL2] which sought to reduce his weekly rate of pay. 31 In those circumstances Mr Wilkinson should have provided Mr Lynam with reasonable notice of change. However, I am convinced and I so find that the employment relationship was bound to terminate. I consider that in all the circumstances of the dismissal and given Mr Lynam’s age, that he had previously been a manager in the store and had worked there for over 4 years (although only a short period with the respondent) he should have been granted four weeks notice of the change. This is a total of $3,510.00 by way of compensation. I would not award Mr Lynam any monies for injury. His evidence is that he was aggrieved prior to the date of termination and I consider that this was due largely to him no longer managing the store. 2000 WAIRC 01507