WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION. Industrial Relations Act 1979. Vincent Nolan and Harose Pty Ltd t/a Harding House Transporters. No. 1561 of 1990. COMMISSIONER S.A. KENNEDY. 11 October 1991. Reasons for Decision. THE COMMISSIONER: This application was filed pursu- ant to section 28(b)(ii) of the Industrial Relations Act 1979. Section 28(b)(ii) of the Act is as follows — 29. An industrial matter may be referred to the Commission — (a) ... (b) in the case of a claim by an employee — (0 ... (ii) that he has not been allowed by his employer a benefit, not being a benefit under an award or order, to which he is entitled. By this application as filed Vincent Nolan (hereinafter 'the Applicant') claimed that he is due the sum of $7,000.00 for superannuation benefits pursuant to a contract of employment with Harose Pty Ltd trading as Harding House Transporters ('the Respondent'). And he claimed a further sum of $2,480.76 which, he says, is equivalent to three weeks' pay and due him as the residue of payment in lieu of notice. The Applicant actually says that he was due one months's salary in lieu of notice on termination of the contract of employment but on termination was only paid the equivalent of one week's pay in lieu.When the matter proceeded to hearing the Applicant pursued only the claim for payment in lieu of notice. The Respondent denies that there is any contractual entitlement at all due to the Applicant. The Applicant gave evidence. Mr James Robinson who was the Respondent's accountant at the material time was summoned by the Applicant to give evidence and did so. And Mrs S.Harding gave evidence for the Respondent. At the material time the Respondent's business was the transportation of houses.This involved the purchase of houses for transportation. The Applicant was employed by the Respondent for a period of approximately 5 months. The employment commenced on the 11 July 1990 and ceased on the 18 December 1990. On termination of the contract the Applicant was paid a sum equivalent to one week's pay (S826.92 gross) and a sum based on a pro-rata annual leave entitlement plus a loading of 17.5%. The Applicant's duties included the valuation, purchase and relocation of houses for clients purchasing them and the marketing of this service to prospective clients as well as attendant paper work. Mrs Susan Harding, who is a joint owner of the Respondent company with her husband, also worked in the business on a day to day basis in the relevant period. The evidence is that the Applicant was employed by the Respondent as part of an arrangement which involved an understanding that he would subsequently buy into the business after a period of employment in it. The main details of this are set down subsequently. The position occupied by the Applicant was designated Manager but there is some dispute between the Applicant and the Respondent over the significance of the title in the light of the duties actually entailed. The Respondent says in effect that the contract of employment was always on the basis that the Applicant was going to be a future part owner of the business and that the arrangements entered into so far as title and remuneration were concerned reflected this and perceptions of a need to establish realistic standing with prospective employees more than any realistic correlation to the level of duties and responsibility. The Applicant asserts that the position was in fact a responsible one and is evidenced as such by the level of remuneration. It was agreed between the parties that the Applicant was to receive an annual 'package' amounting to $50,000 with $43,000 to be in salary and $7000 to be in the form of superannuation contributions. It appears that there was no entitlement for a vehicle to be provided but in the event one was supplied by the Respondent to the Applicant. There was no written contract at the time the employment commenced. The Applicant says that it was agreed between the parties that termination of the contract of employment would be by way of one month's notice given by the party terminating it. He says that this was agreed at a meeting between himself and the two principals of the Respondent Company, Mrs Susan Harding and her husband, Mr Roy Harding and the Respondent's accountant Mr James Robinson. He says the meeting occurred after the employment commenced and was, with other terms, to be produced in writing by the Respondent but never was. The Applicant further says that in the event that there is no finding that a month's notice of termination was an express term then that term should be implied into the contract of employment. He says that this is warranted by having regard for the level of remuneration for the position held and for the pay periods which, he says, were monthly. He also says that the Commission should take into account the manner in which the Applicant entered into the contract of employment, the instant nature of the dismissal, his record in the industry and his prospects for further employment in the industry. The Respondent says that the contract of employment was always contingent on an arrangement whereby the Applicant was to buy a half share in the business after a minimum of six months' employment. It says that it had previously had the business on the market but had been unable to sell it and when, approached by Nolan about the prospect of employ- ment/ownership arrangements, it considered that this was a suitable way to enable the owners, Roy and Susan Harding, to reduce their involvement in what was a 7 day a week operation. The Respondent acknowledges that a meeting occurred between the Applicant, the Hardings and Mr Robinson after the employment commenced but it says that a contract setting down the agreed terms of employment and the arrangements regarding profit sharing on the Applicant's buying into the business was presented to the Applicant for signature but not returned. The Respondent says that all decisions between it and the Applicant as to terms at this time were contingent on these being confirmed by signatures of both parties on the contract as drawn and presented to the Applicant. 3026 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 71 W.A.I.G. It is the Applicant's evidence that no such document was presented to him. This is emphatically contradicted by Mrs Harding. It is her evidence that following the discussion between the Applicant, Mr Harding, Mr Robinson and herself about the terms of the contract of employment/purchase, Mr Robinson provided her with a draft of these terms. She says she typed this up, got a copy, and presented both to the Applicant with a view to his signing both and the Respondent signing both. She says that the Applicant sought an opportunity to get some independent advice on the document; a course with which she agreed. She says that she never saw the documents again despite raising the matter with the Applicant subsequently. Mrs Harding told the Commission she could not remember if the document contained a term of notice or payment in lieu of notice. Mr Robinson gave evidence of his involvement in the meeting at which the terms were discussed and of drafting up the terms arrived at orally. He says that. ...the gist of the contract was that it was a base $50,000 salary. (The Applicant) was to get 7 per cent of any profit over and above $150,000 net profit. The $50,000 was to be split up on the basis of $43,000 plus $7,000 superannuation paid. The original arrangement was that Mr Nolan was to supply his own vehicle, but he did have problems with that. Consequently we did supply him with an '88 four wheel drive Nissan station wagon, plus a mobile phone, plus paid half his private phone at home. Part of the contract was that he had' to purchase, after a minimum of a six months period ... half an interest in the business, or prior. The contract also went on to stipulate that there was one month's notice to be given by both parties. It also stipulated that Mr Nolan was not to be employed in the house transporting industry for a period of three years within 50 miles of the GPO Perth... [Transcript: pp 38-9] Robinson went on to say that the one month's notice applied to any termination of the Applicant's position as manager. He says that the document included provision for four weeks' annual leave. He emphasized that it was his understanding that the document was to become binding on the parties when signatures of both the parties were added. He says neither party ever signed it to his knowledge. Mrs Harding's other evidence went to various criticisms of the Applicant's attitude and effort in relation to the work and to what was said to be a sharp deterioration in the business results since his advent on the payroll. In effect she said that she was given reason by these and by his negative comments in relation to queries about him taking the necessary steps to buy into the business to conclude that he had no intention or had ceased to have any intention of buying into the business. It is noted that a number of these criticisms were not put to the Applicant in cross examination and their probitive value in this consideration is accordingly negated. It is Robinson's evidence that he was contacted by Mr Harding who requested that he act to terminate the contract of employment between the Respondent and the Applicant. Further, it is his evidence that in carrying out this request he made the decision that the Applicant was to receive one week's pay in lieu of notice, an amount equivalent to pro rata annual leave and a loading of 17.5% which, he says, the Applicant was not entitled to but which he believed would be a way of terminating the contract "cleanly". There is no doubt that a contract of employment existed between the Respondent and the Applicant. I am satisfied that it was entered into by the parties on the understanding that at some point the Applicant would buy into the business and would continue to be employed within it. I am satisfied that the period of six months for employee status only without any purchase was agreed and that no later than this point the steps to institute part ownership by the applicant were to commence. There was no express term agreed at the time of entry into the contract for termination of it. I am satisfied that there was a discussion between the Respondent and the Applicant in the course of the employment which went into the terms and conditions of the arrangements between the parties for the employment and purchase of the business. I accept Robinson's and the Applicant's evidence that those terms included provision for one month's notice. Having regard for all before me, and in particular the evidence of Robinson, I am satisfied that that discussion resulted in verbal endorsement of the terms by the respective parties subject to these being confirmed in writing and endorsed formally by the parties. I am satisfied that Robinson, by agreement, subsequently produced a draft of the same and that Mrs Harding not only typed up that draft but presented it to the Applicant for his endorsement. In the event it was not endorsed by him nor, I believe, returned by him. Given the terms of that document in its entirety 1 have concluded that it is probable that the Applicant did not do so because he was not prepared to commit in writing to buy into the business at that point or subsequently. Thus, it seems to me that the reliance by the Applicant on a discussion between the parties as to the terms of an arrangement should not be distinguished by reference to only a part of the overall or exclusive of the further step required which was actually the actual endorsement of those formal arrangements. Thus the mutual expression of what was to apply, including the provision for notice of termination of the employment as well as the provision of taking up part ownership, was not formally endorsed as required pursuant to the discussion itself. But that does not dispose of the claim. The evidence is that the discussion itself was only a means of codifying the fundamental relationship between the parties already en- tered into. It is in this context then that the Applicant would have it that the discussion, so far as it went to notice, should be taken into account in implying a term of one month's notice into the contract of employment. The tests to be applied for implying a term into a contract of employment are well known [see, for instance, the reasons for decision of the Full Bench reported 65 WAIG 2039]. It is noted that the considerations which may go to a question of implying a particular term in a contract of employment are various. [See for instance, the unpublished decision of the Full Bench in Antonio Carlo Tarozzi v. W.A. Italian Club (Inc.), Matter No. 361 of 1991.] So far as the matter under consideration here is concerned I note the following. The Applicant is 37 years old. The evidence is that prior to entering into employment with the Respondent he was actively seeking other employment or opportunities because of dissatisfaction with his existing employment. I have concluded that the Applicant probably initiated and pursued employment/opportunities with the Respondent. The evi- dence of the early meetings between the Applicant and Mr and Mrs Harding suggests that his overtures were well received and that he was made privy then to documents about the functioning of the business and its financial position in order to encourage his entry into the business as a part owner. The level of remuneration agreed upon was relatively high. The designation of manager and the level of remuneration suggest that the position was regarded as relatively significant. The level of duties suggests that the significance of the position was related to the overall arrangements going to part ownership as well as to the role involving a significant responsibility for the generation of business. The Applicant gave a week's notice to his former employer. The business of the former (and now employer) involves the construction of kit homes and transport arrangements pursuant to sales. It is the evidence of the Applicant that the annual amount to be due was reduced to a weekly sum by simply dividing the total by 52. The payments to the Applicant per the Respondent's books were expressed in weekly amounts. Mr and Mrs Harding drew their wages on a weekly basis. Taxation was deducted from 71 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 3027 the weekly sums but was paid monthly. The designation of the remuneration in the books was "salary". The actual cheques drawn in favour of the Applicant in relation to his pay over the period of employment inclusive of the final payment totalled only five. There is no clear pattern to the drawing of these at all. The Respondent says that this is because the cheques were drawn when and as required by the Applicant after they were due. It says this was by arrangement with the Applicant. In my view this is the more likely explanation than that of the Applicant who asserts payments were monthly. In my view these indicia suggest on balance that it could be implied that the period of notice required at the time the contract was entered into was one week or payment of a sum equivalent to a week's pay in lieu. And I maintain this view notwithstanding the later conversation between the parties which included an agreement to a term of one month's notice for the following reasons. The evidence is clearly that the Respondent entered into the contract of employment with the Applicant on the basis that it would lead within a specified time to his buying into the business. Further and significantly, it was presumed that by virtue of his then experience the Applicant would be in a position to manage the business thereby freeing Mr and Mrs Harding from its day to day operations. It is reasonable to suppose then that at that point a greater period of notice would apply to give efficacy to that arrangement distinct from the one already in place. Thus, in my view, and notwithstanding the fact that the verbal discussion which occurred during the employment expressly endorsed some existing conditions, its purpose was to spell out the terms to apply to the prospective employment relationship with the advent of part ownership. There is another point to consider. It is on termination of that contract of employment that the consideration of the conditions for the implying of notice are based. There is evidence that at that time the employment relationship between the Applicant and the Respondent was foundering. A fundamental reason for this was, I believe, the Applicant's decision not to buy into the business at all. That is significant as it was the foundation on which the employment was mutually erected. In my view the Respondent, having reasonably reached this conclusion, was entitled in the circumstances to terminate the contract of employment and, in my view, considerations of efficacy would dictate in these circumstances that notice, should it be required at all, would not be extensive. Having regard for all before me I have concluded that there should be no intervention by the Commission in this matter to imply a term of one month's notice into the contract of employment between the Applicant and the Respondent in lieu of the one week's pay in lieu of notice already made by the Respondent. The claim will be dismissed. APPEARANCES: