WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION. Industrial Relations Act 1979. The Australian Liquor, Hospitality and Miscellaneous Workers Union, Miscellaneous Workers Division, Western Australian Branch and Burswood Resort (Management) Limited. No. CR 159 of 1999. 22 October 1999. Order. HAVING heard Mr D.J. Kelly as agent for the Applicant and Mr R.L. Le Miere, QC, as counsel for the Respondent, the Commission, pursuant to the powers conferred on it under the Industrial Relations Act, 1979, hereby orders— THAT the application be and is hereby dismissed. (Sgd.) G. L. FIELDING, [L.S.] Senior Commissioner. WESTERN AUSTRALIAN MNDUSTRIAL RELATIONS COMMISSION. Industrial Relations Act 1979. The Australian Liquor, Hospitality and Miscellaneous Workers Union, Miscellaneous Workers Division, Western Australian Branch and Solid Concepts Pty Ltd. No. CR 366 of 1998. COMMISSIONER A.R. BEECH. 11 October 1999. Reasons for Decision. The claim brought by the union is that Solid Concepts Pty Ltd unfairly dismissed two of its employees, Rachel Wells and Jonathon Langan. I find the relevant facts to be as follows. Ms Wells commenced employment as a prototype technician on 9 April 1997. She was paid at an hourly rate of wage. Initially she was told she would be casual and employed on an on-call basis. Later she was required to work from Monday to Friday on a constant roster and for a constant number of hours She worked a 37 hour week. She worked continuously until the last day of her employment which was 11 December 1998. Mr Langan commenced as a console operator in June 1996. His employment with the company also started on an on-call basis. It then became continuous. He was initially paid at an hourly rate of wage and then after July 1996 at a salary. In mid- January 1997 he was given a supervisor role and an increase in salary. In approximately July 1997 he was again paid at an hourly rate of wage and was paid out any accrued leave entitlements. It was his understanding from that point on that he would not be eligible for payment for sick leave, holiday pay or overtime. He worked continuously until the last day of his employment which was also 11 December 1998. I find that both the two employees and Solid Concepts un- derstood that their employment was regular and ongoing. I also find that the two employees and Solid Concepts regarded their employment as “casual” because they were paid at an hourly rate as distinct from being paid a salary. They did not receive payment for annual leave nor public holidays. In these proceedings, Solid Concepts concedes that Ms Wells and Mr Langan were not casual employees in the sense of employees who had irregular or intermittent employment. For present purposes the events which have lead to this ap- plication by the union has its origin in the decision in approximately July 1998 by Mr Primon, the manager and owner of Solid Concepts, that it would be in the best interests of Solid Concepts for its business and employment contracts to be in writing rather than merely verbal. In relation to Solid Concepts’ employment contracts with its staff, Mr Primon, together with Mr Watson, who is the owner/director of an employment agency known as Forstaff, prepared formal workplace agreement proposals to be given to them. In the case of Ms Wells and Mr Langan the two workplace agreement proposals given to them generally reflected their existing conditions but Mr Primon had inserted a provision that any days off due to a shortage of work would be rotated between staff. It is agreed that this provision was not a term of their contracts of employment. There may have been other, and more minor, changes proposed to their contracts of em- ployment but Mr Primon was adamant that this provision should form part of their workplace agreements. Both Ms Wells and Mr Langan objected to this provision and Mr Primon’s insistence upon it made them reluctant to sign the workplace agreements. They did not refuse absolutely to sign a workplace agreement. They were prepared to sign a workplace agreement as such, but they were uncertain about the workplace agreements offered to them by Mr Primon and wished to negotiate the issue further. Importantly, both em- ployees refused to sign the particular workplace agreements offered to them and Mr Primon was insistent that they sign them with that provision in them. It was Mr Primon’s insistence that they had to decide whether or not they would sign the workplace agreements which brought the issue to a head. His insistence occurred at a time when Mr Primon also had to deal with issues arising from his recent illness and the expiry of Solid Concepts’ lease which required it to move premises. However, the significant issue is that he also believed that if Solid Concepts continued to employ both Ms Wells and Mr Langan on their existing terms and condi- tions of employment, that is, on an hourly rate, the company would be breaking the law. His belief is critical to what oc- curred later. His evidence is that he believed it because of advice he received from the Department of Productivity and Labour Relations. No evidence of that advice was produced before the Commission. In any event I suspect Mr Primon’s later evi- dence regarding that advice (transcript p. 151) is far more accurate. His later evidence of the advice received was to the effect that if Solid Concepts’ casual employees had been em- ployed on a regular basis for more than 6 months they were not casual employees as such. If that was the advice, it does not lead to the conclusion that if Solid Concepts continued to employ both Ms Wells and Mr Langan on their existing terms and conditions of employment, that is, on an hourly rate, the company would be breaking the law. Mr Primon had, however, also received a report he had com- missioned by a firm called “Workplace Relations and Management Consultants”. The report became exhibit 20. The report is undated. It contains on page 5 the following para- graph— “The existing practice of casual employment is techni- cally illegal and to safeguard Solid Concepts must cease. All current employees are permanent and as such must have employment contract (sic) that reflect this provi- sion.” Despite some reservation on the part of Mr Beedham, who appeared for Solid Concepts in these proceedings and is asso- ciated with the firm involved, it is unarguable that the above paragraph is quite wrong. It is noteworthy that the report does not attempt to explain why “the existing practice” is WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 79 W.A.I.G. 3462 “technically illegal”. It could not do so because it is not ille- gal, “technically” (whatever that word means in this context) or otherwise, to employ a person as a casual employee for any length of time. If I understood Mr Beedham correctly the concern which was sought to be addressed in the paragraph quoted above is a reference to the decision of the Full Bench of the Commission in Metals and Engineering Workers Union v. Centurion In- dustries (1996) 76 WAIG 1287. That case concerned an alleged breach of the Metal Trades (General) Award brought on be- half of an employee who was paid as a casual employee. Significantly, his employment was covered by that award and the question was whether or not the employee was truly a casual employee for the purposes of entitlements under the award. It was held that the employee was never engaged as or employed as a casual employee. That conclusion applied the reasoning of a long line of cases where courts and industrial tribunals have held that the true character of an employee’s employ- ment is to be determined by reference to all of the circumstances and not just the label given to it at the time by the employer or the employee. The issue frequently arises when a “casual” employee alleges unfair dismissal and seeks a remedy before the appropriate tribunal and the true character of the employ- ment relationship is raised as a defence to the claim (Serco (Australia) Pty Limited v Moreno (1996) 76 WAIG 937; Squirrell v Bibra Lakes Adventure World Pty Ltd t/a Adven- ture World (1984) 64 WAIG 1834; see Licensed Clubs Association of Victoria; Re Higgins (1988) 4 VIR 43, 30 AILR ¶497 and the references cited there). It can also arise where there is an issue regarding the application, for example, of statutory rights to workers’ compensation payments (Doyle v. Sydney Steel Company Ltd (1936) 56 CLR 545) or long serv- ice leave (Port Noarlunga Hotel v Stewart (1981) 48 SAIR 220). It may also arise, as it did in the Centurion Industries case, if the employee’s employment is covered by an award and there is an issue whether the employee is entitled to a benefit under that award. The need to properly identify the nature of an employee’s employment for particular purposes is certainly not new and hardly breaks the new ground that both parties in these proceedings seemed to indicate is the case. It can be stated with complete certainty that the Centurion Industries case does not support the paragraph in the report that Solid Concepts’ “existing practice of casual employment is technically illegal”. From the submissions made in these proceedings it appears that there is an issue between the parties whether or not Ms Wells and Mr Langan might have entitlements to annual leave under the Minimum Conditions of Employment Act 1993, be- cause they are not “casual” employees. On the evidence of Mr Maher, an organiser with the union and who gave evidence in these proceedings, the union seems to believe that Ms Wells and Mr Langan are more accurately described as part-time or full-time employees. That is an entirely separate matter and is an argument that will need to be tested in the appropriate ju- risdiction. However, the point to be made is that even if they do have such an entitlement (about which I pass no opinion whatsoever), that does not, and did not, make it illegal to con- tinue to employ Ms Wells and Mr Langan on an hourly rate at Solid Concepts and, with respect to Mr Primon, he was wrongly advised to think otherwise. Not only is there no law which prohibits employees being employed on an hourly rate for an extended period of time but also both the union and Solid Concepts agree that Ms Wells’ and Mr Langan’s employment was award-free and thus their continuing employment could not conflict with any award provision. Yet, as I now find, the issue for Mr Primon was the “legal- ity” of the situation and he was not prepared to continue with their employment unless they signed the workplace agreements. Upon their refusal to do so, he then put in place arrangements to “transfer” their employment to the labour hire company Forstaff. The idea of making these arrangements also seems to have originated from the report referred to earlier. It recom- mends on p.7— 1. All employees be employed on formal Workplace Agreements that are registered with the WA Commissioner of Workplace Agreements. and— 8. Any casual employment requirements to be accessed through Labour Hire companies. There was, of course, no reason in law why Solid Concepts could not have continued to employ is own casual staff. Nor was there any reason in law why Solid Concepts could not have continued to employ Ms Wells and Mr Langan on their existing conditions of employment. Nevertheless, on 8 De- cember 1999 Mr Primon wrote to Ms Wells and Mr Langan formally advising them that “we have arranged to transfer your employment to Forstaff Labour Hire as from Monday 14 De- cember 1998”. The evidence is that Solid Concepts had an arrangement with Forstaff such that Solid Concepts would only take casual employees from that agency. Further, the arrange- ment with that agency was such that Ms Wells and Mr Langan would be given the first choice of any work that was avail- able. On Mr Primon’s evidence, and I accept that evidence, they would have continued to have received the same wages and conditions, but not as employees of Solid Concepts. On this point the evidence of Mr Primon is clear: as from 14 De- cember they would be Forstaff’s employees, not Solid Concepts’ employees. It is also quite clear that neither Ms Wells nor Mr Langan consented to being transferred. Therefore, by Mr Primon’s action, he dismissed both employees from Solid Concepts’ employment. He did so by unilaterally purporting to transfer their employment to Forstaff. It is unarguable that an employer cannot unilaterally transfer an employee to a third party (Cramer v Hamersley Iron Pty Ltd (1984) 64 WAIG 1243 at 1244; Stones v Simplot Australia (1997) 42 AILR ¶3-594; Austin v Hannaprint Victoria (1998) 43 AILR ¶3-745(80); TCF Union v Bellechic (1998) 45 AILR ¶ 3-979(35)) and that is what happened on this occasion. Ms Wells and Mr Langan were left in no doubt by Mr Primon that unless they signed-on with Forstaff there would be no work for them on the follow- ing Monday 14 December. Unquestionably the two employees were dismissed by his action. The union claims that the dismissals were unfair and, un- questionably, the union has proven its case. Their dismissal was a consequence of their refusal to sign the offered workplace agreements. Due to Mr Primon’s belief that he could no longer continue to employ them on their current wages and condi- tions without breaking the law he dismissed them. The fact that he had some arrangement with Forstaff that it would as- sign them both to work at Solid Concepts the next working day does not alter the fact that he dismissed them both from Solid Concepts’ employment. Given that Mr Primon’s belief was mistaken there is simply no valid argument that Solid Concepts can use to defend the claims of unfairness. There is no reason of substance why Solid Concepts could not have continued to employ Ms Wells and Mr Langan on their exist- ing employment conditions. There is no suggestion in the evidence of any other reason at all why their employment would otherwise have ended. Mr Primon is quite open about his as- sessment that Ms Wells was a good employee and that overall the performance of Mr Langan also was good. Indeed, as his evidence shows, his intention had been for both of them to continue to work at Solid Concepts but not as its employees. Mr Primon hoped that some 3-4 months later they both would come to him saying they were now prepared to sign the workplace agreements and become permanent employees. There is little doubt on the evidence that if Mr Primon had been prepared to continue their employment past 11 Decem- ber, the preparedness of both Ms Wells and Mr Langan to discuss the matter further (as evidenced in their letters to him on 9 December) may well have resolved the matter. However, Mr Primon is quite clear in his evidence that by then it was “too late”. He had made up his mind. It is a tragedy that the company dismissed Ms Wells and Mr Langan when it regarded them as its most experienced employees and wanted them to remain at its premises, and when they both wanted to remain in Solid Concepts’ employment. Their dismissals were pat- ently unfair and constituted an abuse on the Undercliffe test of Solid Concepts’ right to dismiss them. The Commission turns to consider what is to be done about this sorry situation. The Commission is obliged to consider whether it is possible to reinstate Ms Wells and Mr Langan. There was a lack of direct evidence on the part of both the two employees and Mr Primon on this issue. However, there is evidence from which it is open to conclude that the relation- ship between the two employees and Mr Primon has broken down. For example, he did not trust them because of their WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 3463 79 W.A.I.G. reservations about the workplace agreements. He had shouted at them on one occasion. He changed the timing on their ac- cess cards. I find on the evidence that Mr Primon had said to both employees that he did not want them to continue to work in the company any more. Although Mr Primon denies saying those words I accept the evidence of Ms Wells which is sup- ported by the note of the conversation which she made afterwards (Exhibit 5) and the evidence of Mr Langan. For their part, I conclude that the two employees were quite un- certain about Mr Primon’s intentions towards them. Mr Langan interpreted one comment of Mr Primon’s as a threat against his continuing employment. I find that Mr Primon’s conduct towards them seriously damaged the relationship of trust and confidence an employee should have in her or his employer (Malik v. Bank of Credit and Commerce International [1997] 3 All ER 1; Burazin v. Blacktown City Guardian (1996) 142 ALR 144 at 151). Mr Langan has since found alternative em- ployment although Ms Wells remains unemployed. For all of these reasons, I find that reinstatement is impracticable. The Commission therefore turns to the issue of the compen- sation to be ordered. It is necessary to find the losses suffered by both Ms Wells and Mr Langan as a consequence of the dismissals. In that regard the union tendered a schedule which details the losses claimed. It is to be noted that although the union has included non-payment of an annual leave entitle- ment as a “loss”, it is clear that the union sees their entitlement to annual leave, if they have one, as deriving from the Mini- mum Conditions of Employment Act. As s.7 of that Act makes clear, the Commission is not able to enforce the Minimum Conditions of Employment Act and I therefore decline to con- sider the claim for loss under the heading of annual leave. I do find, however, that their respective losses will include the no- tional benefit of 7% superannuation and otherwise accept the schedule tendered by the Union. The evidence before the Commission is that had the dis- missals not occurred, Ms Wells and Mr Langan are likely to have still been working there. Indeed, not only was that Mr Primon’s evidence, it was also the evidence of Mr Watson that if they had been employed by his agency, they would both have worked at Solid Concepts virtually the entire period to the date of the hearing. I turn to consider the loss suffered by Ms Wells as a conse- quence of the dismissal. I find that she attempted to find alternative employment but without success. As a consequence of that lack of success, she has commenced a course of study in order to improve her position however she is still looking for full-time work. Her evidence is that if she finds full-time work she will reduce her studies to part-time. The only in- come she has received since her dismissal has been Austudy which operates as a loan and is to be repaid by her subse- quently. As such, it is not income in the accepted sense and should play no part in the assessment of compensation. Given that Ms Wells would have continued in employment at Solid Concepts to date, her loss is continuing and exceeds the limi- tation of 6 months’ remuneration imposed by s.23A(4) of the Act. The compensation to be paid to her therefore will be cut off at the six-month limit. Her loss is thus 26 weeks at her rate of wage plus the value of the superannuation lost to her. That is a sum of $16,431.18. In the case of Mr Langan, I am equally satisfied that he at- tempted to find alternative employment. I accept his evidence that he applied for approximately 8 jobs per fortnight, indeed, in excess of that, until he actually found alternative employ- ment. He found alternative employment, although at a lower rate of wage, some 21 weeks after his dismissal. Given that he too would have continued in employment at Solid Concepts to date, his loss is ongoing and will also exceed the limitation of 6 months’ remuneration imposed by s.23A(4) of the Act. His loss is therefore properly assessed as being the loss of his regu- lar wage for the first 21 weeks of his unemployment, and the loss to him of the difference between his regular wage and the wage in his new employment for a further 5 weeks, plus the value of the superannuation lost to him. That is a sum of $16,007.00. Solid Concepts, however, argues that even if it dismissed Ms Wells and Mr Langan, it did so in circumstances where it had arranged for them both to commence work the following Monday and work continuously from that point forward on their existing wages and conditions. It follows, according to Solid Concepts, that any loss suffered by Ms Wells and Mr Langan is effectively a loss of their own making because they did not take advantage of that arrangement. Thus, they should both be regarded as not having mitigated their losses. It is certainly the case that both Ms Wells and Mr Langan are expected to mitigate the losses arising from their dismiss- als (Growers Market Butchers v Backman (1999) 79 WAIG 1313 at 1316). However this does not mean that that they were obliged to return to work for their previous employer if it would be unreasonable for them to do so (Bamboo Creek Manage- ment Pty Ltd v. Fisher (1990) 70 WAIG 3928) nor were they obliged to accept the arrangement involving Forstaff. The rea- sonableness of an offer is to be judged at the time the offer is made. I have little doubt that the manner in which Mr Primon terminated their employment, both his unilateral action in that regard and also his manner towards them in his insistence about the workplace agreements, and their consequent lack of confi- dence in their respective positions, leads to the conclusion that it is quite unreasonable to have expected them to have never- theless signed on with Forstaff anyway. They both were perfectly within their rights to reject the purported transfer and the fact that Solid Concepts then dismissed them does not make it reasonable for them then to have to accept the trans- fer. Their trust in Mr Primon’s intentions had been damaged. I can see no room for the argument that even though they re- fused to accept the Forstaff arrangement of their own volition in the face of their dismissal, it was nevertheless reasonable for them to have done so after their dismissal. Accordingly, I find that their rejection of the Forstaff arrangement means that they did not fail to mitigate their loss. There is no reason in equity, good conscience or the sub- stantial merits of the case not to compensate Ms Wells and Mr Langan for their respective losses and the compensation to be ordered by the Commission for the loss and injury suffered by is as set out above. A minute of proposed order now issues. Appearances: Mr. J. Rosales-Castaneda on behalf of the ap- plicant Mr J. Beedham on behalf of the respondent.