PR926718 PR926718 Download Word Document AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Workplace Relations Act 1996 WR 170CE application for relief in respect of termination of employment Kelly Jane Ritchie and Rosbi Pty Ltd (U2002/2177) COMMISSIONER MANSFIELD MELBOURNE, 16 JANUARY 2003 Termination of employment. DECISION [1] On 15 April 2002 Ms Kelly Ritchie lodged an application under S170CE of the Workplace Relations Act 1996 in which she claimed that her termination of employment by Rosbi Pty Ltd was harsh unjust and unreasonable. [2] Ms Ritchie was employed by Rosbi Pty Ltd [Rosbi] in a clerical administrative capacity. [3] Ms Ritchie's application was listed for conciliation proceedings before Mr. K. Williams on May 20, 2002 however no progress was achieved as the respondent did not appear. On the same day correspondence addressed to Mr Peter Hornsey, Rosbi Pty Ltd was sent by the Commission to the offices of Rosbi asking for reasons for non attendance. No reply is contained in the relevant file of the Commission. [4] It should be noted that the sole owner and Director of Rosbi Pty Ltd is in fact Mr Joseph Russo. Mr Russo provided computer membership database services to Mr Hornsey's gymnasium company (now called Trainstation ). Mr Hornsey and Mr Russo are well known to each other and Mr Hornsey regularly attended Mr Russo's office. It was alleged by Mr Hornsey (the advocate for Mr Russo) that the incorrect addressing of correspondence was at least partly responsible for the respondent failing to appear in the proceedings. [5] On June 11 2002 Ms Ritchie lodged a notice of election to proceed to arbitration copies of which were forwarded to Mr Hornsey, Rosbi Pty Ltd. [6] The matter was listed for arbitration on several occasions (September 4, September 26, October 4, December 5, and December 17) but due to a variety of reasons it did not proceed. Following consultation with the parties the hearing went ahead on January 3 and (substantively) on January 10, 2003. [7] Ms Ritchie's employment commenced in October 2001 and was on clerical duties with Rosbi Pty Ltd. Her primary work was managing the membership database services which Rosbi provided to three gymnasiums, two of which were owned by Mr Hornsey. [8] In February 2002 Mr Hornsey advised Mr Russo that his membership database services were no longer to be required as he intended to introduce more modern member database software using his own staff. [9] Mr Russo's evidence was that prior to going on holiday in March 2002 he spoke to Mr Hornsey to determine whether he could possibly employ Ms Ritchie as, with the forthcoming downturn in the volume of work, her position with Rosbi would become redundant. Mr Russo stated that Mr Hornsey agreed to take Ms Ritchie on as a trial whilst she continued in the employment of Rosbi and she was taken-on by a gymnasium belonging to Trainstation while one of its staff was placed in Rosbi to train on the new software. [10] On March 5, 2002 Ms Ritchie was advised by Mr Russo that she would be transferring that day to the Frankston Gymnasium of Trainstation to undertake reception and other duties. A staff member of the gymnasium was to transfer to Rosbi's office to train on the new software. Ms Ritchie was not advised that this was a trial to see if she was suitable for further employment and in her evidence stated that she believed it was only for a period of a few weeks after which she would return to Rosbi. [11] No substantial evidence was presented regarding Ms Ritchie's work with Trainstation (where she undertook reception and other duties) however it does appear that there were differences between the gymnasium manager and Ms Ritchie. [12] Ms Ritchie's evidence stated that on March 26 she was feeling ill and was advised by the gymnasium manager to go home. On March 27 she attended a doctor who gave her a medical certificate to remain off work until March 29. Ms Ritchie states that on March 28 Mr Hornsey, acting on behalf of Mr Russo, contacted her by telephone and advised her that her services were being terminated. Ms Ritchie's evidence was that no reason was given for the termination. [13] Mr Hornsey, for Mr Russo, stated that rather than leaving the workplace due to illness on March 26 Ms Ritchie had had an argument with the club manager and "walked out". He also proposed, in a question to Ms Ritchie that during their telephone conversation of March 28 he had explained the reason for her termination as a redundancy related to the introduction of his new software. Ms Ritchie disagreed strongly with both of these assertions. [14] Ms Ritchie gave evidence that she had attended the office of Rosbi on March 28, following the telephone advice of her termination of employment and left a letter of request addressed to Rosbi Pty Ltd seeking details of the reasons for her termination however no reply had been received. In reply Mr Hornsey stated that no letter had been received by Rosbi. [15] Evidence was given by Mr Russo that when the contractual arrangements for membership database services provided to Trainstation came to an end Ms Ritchie's work would no longer be required. In cross examination the timing of the finish of the substantive contract with Trainstation was questioned and it appears likely that this would have occurred sometime in April/May 2002. [16] In submissions for Ms Ritchie it was argued in part that: i. No genuine redundancy situation existed at the time of Ms Ritchie's termination. ii. No consultation or information was provided regarding Ms Ritchie's future employment prior to it being terminated on March 28. iii. That the circumstances justified the dismissal being accepted as harsh, unreasonable or unjust. iv. That compensation be paid to Ms Ritchie. [17] In submissions for Rosbi Pty Ltd it was argued in part that; i. The transfer of work from Rosbi back to Trainstation meant that the work previously undertaken by Ms Ritchie was redundant. ii. That the work provided in the gymnasium run by Trainstation was a positive attempt to provide assistance to Ms Ritchie due to her redundancy. iii. That the two week's pay provided in lieu of notice was not required to be paid but was a good-will gesture by Rosbi. [18] In regard to Ms Ritchie's termination of employment my conclusions from the evidence are that: i. It appears clear that at some point Ms Ritchie's services would no longer be required following the introduction of new software by Trainstation. ii. There was no consultation with Ms Ritchie regarding her future employment with Rosbi following the transfer of work to Trainstation. iii. Ms Ritchie was not alerted to the fact that her transfer to Trainstation was a trial of her suitability for employment with that company. iv. On March 28 it appears highly likely that while on sick leave Ms Ritchie was advised by telephone that her employment was terminated forthwith with no explanation as to why this was occurring. v. On March 28 Ms Ritchie delivered a written request to the offices of Rosbi seeking a reason for her loss of employment. No reply was provided. The Workplace Relations Act 1996 [19] Section 170 of the Workplace Relations Act 1996 deals with applications to the Commission for relief in respect of termination of employment. [20] Section 170CE(1)(a) states that: (1) Subject to subsections (5) and (5A), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment. (a) on the ground that the termination was harsh, unjust or unreasonable; [21] In this matter there was no resolution during the attempts at conciliation and following the issue of a certificate by SDP Acton the applicant elected to proceed to arbitration. [22] Section 170CG (1) states in relation to arbitration; (1) If: (a) the Commission has issued a certificate under subsection 170CF(2) regarding conciliation of an application relating to a termination of employment; and (b) the applicant has made an election under subsection 170CFA(1), (2), (3) or (5) to proceed to arbitration to determine whether the termination was harsh, unjust or unreasonable; the Commission may so proceed to arbitrate the matter. [23] Section 170CG(3) set out matters which the Commission must have regard to in determining whether a termination was harsh, unjust or unreasonable. (3) In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to: (a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and (b) whether the employee was notified of that reason; and (c) whether the employee was given an opportunity to respond to any reason related to the capacity of conduct of the employee; and (d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and (da) the degree to which the size of the employer's undertaking, establishment or service would be likely to impact on the procedures following in effecting the termination; and (db) the degree to which the absence of dedicated human resource management specialists or expertise in the undertaking, establishment or service would be likely to impact on the procedures followed in effecting the termination; and (e) any other matters that the Commission considers relevant. [24] In relation to the matters set out in S170CG(3) my findings are as follows: i. Was there a valid reason for the termination? The evidence presented established that there was to be a significant reduction in the work load of Rosbi due to the cessation of the contract from the two gymnasiums operated by Mr Hornsey. It appears clear that at some point Ms Ritchie's services would no longer be required following the introduction of the new software and the training of the staff of Trainstation, the owner of the gymnasiums. ii. Was the employee notified of the reason for termination? The evidence presented established to my satisfaction that the termination was not accompanied by any information as to why Ms Ritchie was not continuing her employment. Her subsequent effort to obtain reasons for her termination by way of correspondence to Rosbi were not responded to. iii. Was the employee given an opportunity to respond to any reason related to capacity or conduct? There was no reliance on capacity or conduct issues by the respondent. iv. Did the termination relate to unsatisfactory performance? No evidence was presented suggesting unsatisfactory performance during Ms Ritchie's employment by Rosbi Pty Ltd. On one occasion whilst working at the Trainstation gymnasium she received counselling in relation to aspects of her work. v. The size of the employer's undertaking and the impact on the procedures followed. The employer is involved in a small business employing five people at the time Ms Ritchie was employed. Whilst the size of the undertaking precluded ready access to qualified human resources personnel there should have been better procedures in relation to advice regarding her employment prospects following the introduction of the new membership software and the purpose of the work she was undertaking with Trainstation gymnasium. Conclusion as to merit [25] It is my view that the failure of Rosbi to consult or provide information or advice to Ms Ritchie in regard to the following matters related to the termination of her employment represents an outcome for the applicant which was harsh, unjust or unreasonable; · the effect of the transfer of membership database work to Trainstation on her future employment prospects, · the proposed redundancy, its timing and any possible alternatives to the cessation of employment. · the intention underlying her "trial" work for Trainstation at the Frankston gymnasium. · the reason for her termination of employment on March 28 · the lack of response to her hand delivered letter of March 28 Conciliation Proceedings [26] During his submission in regard to non attendance at the conciliation proceedings Mr P Hornsey for Rosbi stated in part that "Again, we have to determine what resources we place where and conciliation on a matter as simple redundancy for an employee who had been there five months and had been given an opportunity to find another job with our efforts simply add to the costs associated with this whole affair and hence our non-appearance until arbitration." (P190) [27] I share the view expressed by Commissioner Smith in the matter of Betts and Madafferi Haulage Pty Ltd (U No. 31918 of 1997) where he stated in relation to the purpose of conciliation proceedings; "Indeed, the role of conciliation can not be underestimated. The process is a valuable one and must be taken seriously. The objective is to genuinely seek to avoid arbitration, not to behave in a manner which effectively threatens the cost of arbitration as an inducement to abandon an application. This is not to say that parties will reach agreement and that they are not entitled to refuse to reach agreement. However, the purpose of issuing certificates is to allow parties to pause and consider the prospects before proceeding to arbitration. This is clearly the scheme of the WPRA." [28] These comments by Commissioner Smith related to an application for costs to be awarded and the respondent, Rosbi, by its actions potentially left room for such an application to be made in this matter. [29] Despite the direction of the notices to Mr Hornsey it was not disputed that Mr Russo was aware of the proceedings in the Commission. Had Mr Russo (or Mr Hornsey as his representative) participated in the conciliation proceedings it is not unlikely that the application could have been resolved at that stage. As was stated by Commission Smith above "the objective is to genuinely seek to avoid arbitration..." and to ensure that any proceedings associated with an unfair dismissal application are undertaken as efficiently as practicable. Remedy [30] Remedies on Arbitration are set out in S170CH of the Workplace Relations Act 1996 . In this matter the applicant has taken account of her personal circumstances and has sought a remedy of an amount in lieu of reinstatement. The relevant part of S170CH states: (1) Subject to this section, the Commission may, on completion of the arbitration, make an order that provides for a remedy of a kind referred to in subsection (3), (4) or (6) if it has determined that the termination was harsh, unjust or unreasonable. (2) The Commission must not make an order under subsection (1) unless the Commission is satisfied, having regard to all the circumstances of the case including: a) the effect of the order on the viability of the employer's undertaking, establishment or service; and b) the length of the employee's service with the employer, and c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and e) any other matter that the Commission considers relevant; 6) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement. 7) Subject to subsection (8), in determining an amount for the purpose of an order under subsection (6), the Commission must have regard to all the circumstances of the case including: a) the effect of the order on the viability of the employer's undertaking, establishment or service; and b) the length of the employee's service with the employer, and c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and e) any other matter that the Commission considers relevant; 8) In fixing an amount under subsection (6) for an employee who was employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds the total of the following amounts: a) the total amount of remuneration: i) received by the employee; or ii) to which the employee was entitled; (whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay); and b) if the employee was on leave without pay or without full pay while so employed during any part of that period - the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations. 9) In fixing an amount under subsection (6) for an employee who was not employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds; a) the total of the amounts determined under subsection (8) if the employee were an employee covered by the subsection; or b) the amount of $32,000 as indexed from time to time * in accordance with a formula prescribed by the regulations; whichever is the lower amount. *now $40,000 [31] As set out in S170CH several factors are relevant in regard to setting an amount in lieu of reinstatement. These include; · The viability of the employer's undertaking. No evidence was presented in regard to a lack of capacity to meet an amount ordered in lieu of reinstatement. Taking account of the ongoing operation of the undertaking I consider that the amount which has been awarded should not affect the ongoing viability of Rosbi Pty Ltd. · Length of service of the applicant. Ms Ritchie was employed for a little over five months however her evidence was that she enjoyed and was challenged by her work and that she had anticipated it continuing for the foreseeable future. · Remuneration of the applicant. Ms Ritchie gave evidence that her fortnightly remuneration was $1,288.00 · Efforts to mitigate loss, Ms Ritchie had actively attempted to find other work and had obtained casual work in the hospitality area. She had recently obtained part-time temporary work. Income from this work will offset the amount awarded by way of remedy. [32] Whilst reinstatement is the primary remedy, the applicant is not seeking reinstatement and I am satisfied that, in the circumstances of this case, reinstatement is not appropriate. However, after having regard to the matters referred to in section 170CH(2) above as well as the factors set out in subsection (7), I consider that it is appropriate to make an order for payment of an amount in lieu of reinstatement. [33] As to the requirements of section 170CH(7)(c), the principles applicable to determining such an amount were dealt with in Sprigg v. Paul's Licensed Festival Supermarket [Print R0235] and were affirmed in Ellawalla v. Australian Postal Corporation [Print S5109]. [34] The first step in the process is to make an assessment of remuneration. Ms Ritchie's remuneration was $644pw and, in my judgement, taking account of all the evidence she should receive eight weeks gross pay. As she has already received two weeks pay in lieu of notice the amount is six weeks at $644pw or $3,864.00 [35] The second step in the process requires the deduction of monies earned. Ms Ritchie has supplied information that in the eight weeks following her termination of employment she earned $794.00. This should be subtracted from the relief proposed making a net amount of $3,070.00 [36] The third step is to discount the remaining amount for contingencies if appropriate. There was nothing before me that satisfied me that I should discount the amount for contingencies in the particular circumstances of this case and, hence, I do not do so. [37] I have considered the impact of taxation but leave this to the parties to settle. [38] The provisional amount resulting from these steps will be under the legislative cap and so no adjustment for that purpose is necessary. [39] I take account of the principles outlined in Sprigg v. Paul's Licensed Festival Supermarket and affirmed in Ellawalla v. Australian Postal Corporation and have determined that the proper relief in lieu of reinstatement in this matter should be eight weeks gross pay at the rate of $644 pw. The adjustments to this amount are set out above. The relief required to be paid by Rosbi Pty Ltd to Ms K. Ritchie is $3,070.00. An order relating to this decision is set out below. ORDER [40] Further to my decision, I hereby order that Rosbi Pty Ltd pay Ms K. Ritchie the amount of $3,070.00 subject to necessary taxation deductions. [41] I further order that the amount set out above be paid within 14 days of the date of this order. BY THE COMMISSION: COMMISSIONER Appearances: B. Redford Job Watch Inc. K. Ritchie P. Hornsey J. Russo Rosbi Pty Ltd Hearing details: 2003 Melbourne: January 3, 10. Printed by authority of the Commonwealth Government Printer <Price code D>