Abboud v The State of New South Wales

APPLICANT: Applicant appeared in person LEGAL REPRESENTATIVES: RESPONDENT: Mr P Edwards, (Agent) for the Broken Hill Chamber of Commerce

JUDGMENT: - 14 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 29 November 2004 Matter No IRC04/393

Daniel Adam Pearce and Paul John Sandford Application by Daniel Adam Pearce re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2004] NSWIRComm 360

1 Mr Daniel Adam Pearce ('the applicant') was employed as a part time shop assistant at the Red Robin Delicatessen ('the Deli') in Broken Hill. The Deli is a mixed business based on grocery lines, a sandwich bar and newsagency. The owner and proprietor is Mr Paul Sandford ('the respondent'). Mr Sandford has owned the business for two and a half years, having had no past experience in the retail food industry. He had previously been employed as a miner in Broken Hill.

2 The applicant commenced employment on 14 December 2001 and claimed he was dismissed on 23 December 2003 for refusing to work past the end of his shift and using foul language towards Mr Sandford.

3 On 30 January 2004, the applicant filed an unfair dismissal claim pursuant to the provisions of Pt 6 ch 2 of the Industrial Relations Act 1996 ('the Act'). The applicant did not seek reinstatement, but rather six months compensation amounting to $14,913.00. Attempts at conciliating the matter in March 2004 were unsuccessful. Throughout the proceedings the applicant represented himself and Mr P Edwards (agent) appeared for the Broken Hill Chamber of Commerce on behalf of the respondent.

4 As will be apparent, the applicant's claim was filed outside the 21 day time limit provided for in s85(1) of the Act. This jurisdictional matter and the merits of the applicant's claim were arbitrated concurrently on 5 October 2004 in Broken Hill.

5 It was the applicant's evidence that the reason he did not file his s84 application within 21 days was because he was owed monies by the respondent and he was worried he would not be paid if he lodged the claim.

6 This situation had arisen after the applicant had made inquiries with the Department of Industrial Relations and subsequently prepared two underpayment claims based on whether he was a casual employee or a permanent part time employee. He said that Mr Sandford would not agree to either calculation. However, the applicant had agreed to have Mr Sandford's accountant determine the correct figure. The accountant calculated an amount of $12,785.00 ($10,200.00 net). The applicant did not agree to this figure, but accepted it nevertheless on 12 January 2004.

7 The applicant deposed that after he was dismissed and before he had filed his unfair dismissal claim, Mr Sandford visited his home, verbally abused him and said "I was gonna give you your job back, but there's no chance of that now." The applicant said he received the amount owed in 3 separate cheques - the first on 13 January and the other two on 19 January. During this time, he had not received a separation certificate.

8 In oral evidence, the applicant said his original letter of demand (24 December) claimed an amount of $39,426.00. In that letter he had informed the respondent he had taken legal advice from the Union. The applicant agreed that after 12 January he was no longer in dispute with the respondent about back pay. He reiterated that he had made his decision not to file the unfair dismissal claim until he had received all the monies owing to him.

9 Mr Sandford gave evidence that the delay in paying the applicant was due to the absence of his accountant for two weeks over the Christmas period. Mr Sandford said he had not provided a separation certificate until all the monies owing had been agreed to. He had received this advice from the Department of Social Security.

10 Mr Edwards submitted that the applicant had informed the respondent on 24 December 2003 that he had obtained legal advice as to his rights, including making reference to filing for unfair dismissal. Mr Edwards contended that he must have been aware that there was a 21 day time limit. The applicant's excuse - that he was waiting to settle his claim of outstanding entitlements - did not stand up. He had settled this claim and agreed to the amount on 12 January. Yet he waited a further period, until 30 January, to file his claim of unfair dismissal.

11 Mr Edwards referred to the various authorities of the Commission which consider the discretionary power of the Commission to accept a s84 application out of time. I shall refer to these authorities shortly.

12 Section 85(3) of the Act is expressed in the following terms:

The Commission may accept an application that is made out of time if the Commission considers there is a sufficient reason to do so, having regard in particular to: (a) The reason for, and the length of, the delay in making the application, and

(b) Any hardship that may be caused to the applicant or the employer if the application is or is not rejected, and

(c) The conduct of the employer relating to the dismissal. 13 In deciding whether to exercise its discretion to allow an out of time application, the Commission must be satisfied that a "sufficient reason" has been made out. Consistent with each case being decided on its own facts and circumstances, sufficient reason is not defined in the Act, nor is it appropriate to do so. The Full Commission in Griffith Ex-Services Club Limited v Federated Liquor and Allied Industries Employees Union of Australia (NSW Branch) (1993) 51 IR 186 observed at 190: It is not appropriate to attempt to formulate any definition as to what constitutes a "sufficient reason". See also Martin v Nominal Defendant (1957) 74 WN (NSW) 121.

14 Nevertheless, the Commission is guided as to the matters to be taken into account by reference to sub clauses (a), (b) and (c) of s85(3). In a particular case, it is appropriate for an applicant to address each of these matters referred to. It may be, of course, that only one of these matters, two of them or all three, might be found to constitute a sufficient reason or reasons, for the Commission to be satisfied its discretion should be exercised in an applicant's favour. I emphasise that the onus is on the applicant to satisfy the Commission of the "sufficient reason" test.

15 There are, of course, general principles established by the Courts in respect to time limits and in particular the Commission's discretion to waive time limits. In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, McHugh J said at p551: The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates"… and at p552: The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost (26). Second, it is oppressive, even "cruel", to a defendant to allow an action to be bought long after the circumstances, which gave rise to it, have passed (27). Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them (28). Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period (29), as the New South Wales Law Reform Commission has pointed out (30)… and at p553 …In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. Against this background, I do not see any warrant for treating provisions that provide for an extension of time for commencing an action as having a standing equal to or greater than those provisions that enact limitation periods. A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case. The purpose of a provision such as s. 31 is "to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced". (35) But whether injustice has occurred must be evaluated by reference to the rationales of the limitation period that has barred the action. The discretion to extend should therefore be seen as requiring the applicant to show that his or her case is a justifiable exception to the rule that the welfare of the State is best served by the limitation period in question. Accordingly when an applicant seeks an extension of time to commence an action after a limitation period has expired, he or she has the positive burden of demonstrating that the justice of the case requires the extension.

16 More recently, a Full Bench of this Commission said in Hurrell and Queensland Cotton Corporation Limited [2003] NSWIRComm 139: 12] Having made that observation, a lack of knowledge of the 21 days time limitation specified in s 85(1) of the Act may well be a relevant consideration in determining whether to accept an application out of time. A failure to consider or to give any weight to such evidence may well amount to a failure to have regard to evidence relevant to essential aspects of the exercise of discretion. The discretion to accept an application out of time involves balancing a range of considerations, including an applicant's ignorance of the relevant time limit, whether an applicant has an arguable case and the applicant's prospects of success. In Griffith Ex-Services Club Limited v Federated Liquor and Allied Employees Union of Australia (NSW Branch) on Behalf of Vian (1993) 51 IR 186, the Full Commission considered the predecessor provisions to those now contained in s 85 of the Act concerning late applications for relief from unfair dismissal (see s 246(3) - (4) of the Industrial Relations Act 1991) in this way: Those subsections, in our view, are procedural and expressly grant the Commission the discretion to allow the lodgement of applications beyond the 21 days prescribed in s246(2). The applicant employee carries the burden of showing why the Commission should exercise its discretion to grant such an extension: Lucic v Nolan (1982) 45 ALR 411 at 416. The discretion, however, requires the formation of the view that there is a "sufficient reason". Factors going to the formation of a view of a sufficient reason are outlined in s256(4)(a) to (d). It is not appropriate to formulate any definition of what constitutes a "sufficient reason": see Martin v Nominal Defendant (1957) 74 WN (NSW) 121. However, the evidence of the proceedings before the Commissioner was relevant to be considered pursuant to the statutory requirements in regard to the formulation of the view. 13] Similarly, in Skelly v Prouds Jewellers Pty Ltd (1994) 53 IR 3 at 6, in the context of an application for the extension of time to appeal, the Full Commission emphasised the need to take all relevant factors into account in determining an extension of time application; see also the decision of Walton J, Vice President in Brady v Kennedy t/as "Sardines" (1999) 91 IR 258. In our view, the considerations discussed in those decisions are apposite to the exercise of discretion under s 85(3) of the Act. In particular, we would adopt the observations of the Vice-President in Brady, that "the ultimate exercise of discretion is governed by the requirements of justice in a particular case".

17 With these principles in mind, I have decided - albeit with some reservations - that the Commission's discretion should be exercised in the applicant's favour to accept his unfair dismissal application out of time. These reservations go primarily to my view that it was likely the applicant was aware on 23 December 2003, having sought advice from the Union and the Department, that a 21 day time period applied for the filing of an unfair dismissal claim. Moreover, I would observe that the applicant was no "shrinking violet" either in respect to pressing his claim of underpayment or when he appeared before me in these proceedings. He is an upfront, direct young man, fully conversant with his rights and presumably his obligations in respect to his employment circumstances.

18 On the other hand, I have been swayed to my decision by the following factors.

19 Firstly, the applicant, in my opinion, had a reasonable apprehension that the payment of the monies owed to him might have been in jeopardy or delayed by the filing of the unfair dismissal application. Mr Sandford was less than impressed with the applicant's conduct and behaviour. In making this observation, I do not, in any way suggest that the respondent would not have expeditiously complied with his legal obligations. I note that the applicant was paid the final amount on 19 January and he filed his unfair dismissal application 11 days later.

20 Secondly, the time from the date of dismissal to the filing of the claim was 38 days or 17 days out of time - a moderate, but not significantly excessive delay. Consideration might also be had for the Christmas/New Year period.

21 Thirdly, it was plain, on the respondent's evidence, that Mr Sandford was attempting to reach a compromise around the matter, given the applicant's father and sister worked for him. Mr Sandford made approaches to both the applicant and his father. In these circumstances, it is not entirely clear that the dismissal would stand. Reinstatement may well have occurred if the applicant had adopted a more conciliatory and contrite response in his letter of demand.

22 Fourthly, there could be no hardship for the employer in circumstances where the merits of the case and the interlocutory issue have been considered in the same short proceedings. See Staal and Tupene and Health and Research Employees' Association of New South Wales (on behalf of Nagy and Others) and Western Sydney Area Health Service [2004] NSWIRComm 27.

23 Having regard for these factors, I am satisfied that a sufficient reason has been established for the Commission's discretion to be exercised pursuant to s85(3) of the Act. I proceed now to consider the merits of the case.

REASONS FOR DISMISSAL Applicant's evidence

24 The reasons for the applicant's dismissal were said to be twofold. Primarily, it was because he had told Mr Sandford to "get fucked" when he was asked to work back on 23 December 2003. It was said, by the respondent, that this constituted serious and wilful misconduct justifying instant dismissal. A related reason was the applicant's refusal to work back as directed, and this, it was alleged, constituted a refusal to comply with a reasonable direction of the employer.

25 The applicant did not deny that he told Mr Sandford to "get fucked." However, he submitted that his outburst was understandable for the following reasons: Firstly, he had not received any reply for three weeks to his complaint of being under paid. Secondly, his outburst occurred at the end of a nine hour shift during which he had not had a break and for which no overtime was being paid. Thirdly, he was tired and hungry and had already worked 15 minutes past his finish time. Fourthly, he claimed, it was common place for himself and Mr Sandford to swear at one another. Fifthly, he said he had never been warned not to swear at work and it was commonplace for the staff to swear in the kitchen.

26 After telling Mr Sandford to "get fucked," Mr Sandford told the applicant to go home and not to bother coming back. When he rang back later, he was told by Mr Sandford that he was sacked.

27 The applicant believed the real reason he was dismissed was because he had made legitimate and well founded inquiries about underpayment of wages. He did not seek reinstatement because Mr Sandford had caused him stress and anxiety. Moreover, he said that Mr Sandford had abused him in front of his family and, in front of other staff members, he had been accused of stealing.

28 In oral evidence, the applicant agreed that in a small business, employees were required to work flexibly. He acknowledged that he had sought extra hours and Mr Sandford had found extra work, including on one occasion working for him at his house. The applicant accepted that the employer had gone out of his way to give him additional hours. Mr Sandford had also allowed him time off when it hadn't been accrued.

29 The applicant's father and sister both worked at the Deli. Mr Sandford had also purchased a hot water system for the family at a cost of $1100.00. When Mr Sandford had asked to have the monies owed to the applicant deducted for the value of the hot water system, the applicant had strongly resisted. He said it was an arrangement made with his father, not with him. When confronted with this request the applicant agreed he had told Mr Sandford to "get fucked" again. The applicant said he was also accused of stealing by Mr Sandford in front of other staff.

30 Mr Paul Sandford provided a statement and gave oral evidence. He said on the day of the applicant's dismissal, the Deli was short staffed and he had asked the applicant to stay back and help clean up. He said it was not uncommon for staff to be flexible and stay back to help out.

31 Mr Sandford said the applicant's response was to glare and start swearing. Mr Sandford had said, "there's the front door, I have warned you before and I'll see you later." The applicant stormed out with his father (who at the time worked at the Deli).

32 Mr Sandford agreed that the applicant called back later and asked if he'd been sacked. Mr Sandford told him he had.

33 In reply to the applicant's evidence, Mr Sandford denied that the back pay issue influenced his decision to dismiss the applicant. He further denied that the applicant was forced to work excessive hours. Rather, the applicant requested additional hours and on many occasions his father would leave work so he could have the additional hours. Mr Sandford added that he had not directed the applicant to work on, but rather had asked him to complete his tasks.

34 Mr Sandford denied he abused the applicant in front of his family. He conceded there had been a "heated exchange," regarding the letter of demand. He denied he was the only one yelling and screaming. Mr Sandford agreed that he called the applicant's father in an attempt to reach a compromise, but Mr Pearce (Snr) would not discuss the matter.

35 Mr Sandford agreed he had asked the applicant if it was possible to deduct the amount owed for the hot water system. The applicant had replied "go and get fucked and I will see you in court."

36 Mr Sandford denied that swearing occurred on a daily basis in the Deli. In fact, he had given the applicant a verbal warning on a previous occasion in front of a witness, Mr Peter Harvey (Mr Harvey provided no statement for these proceedings).

37 Mr Sandford denied threatening the applicant or his staff about providing a reference for the applicant. Mr Sandford further agreed that he paid the applicant for the use of his own vehicle.

38 In oral evidence, Mr Sandford said he had about eight employees working for him. After the issue of underpayment was raised, he had sought advice from the Broken Hill Chamber of Commerce and had now corrected all the rates of pay. Mr Sandford said that in two and half years, he had never dismissed an employee. He agreed, there was a significant turnover because people don't like working seven days a week. He said that all staff are flexible with their hours.

39 The applicant believed he was dismissed for inquiring about his wages. Three weeks later nothing had happened. Mr Sandford had asked him to work back on 23 December after a nine hour shift without a break. He agreed he had told him to "get fucked." Mr Sandford had told him to go home and not bother coming back. The applicant said it was common practice for staff to swear and tell each other to "get fucked."

40 The applicant said he was later accused in front of other staff of stealing. He had never received any pay slip and was denied a separation certificate. Mr Sandford had told the applicant he would never recommend him for another job. In a town like Broken Hill, this was very detrimental.

41 The applicant claimed he was liked and respected by staff and customers. He had thoroughly enjoyed his job. He had been trusted with large sums of money and with opening the store. He had never received overtime and used his own vehicle as a delivery van.

42 The applicant did not seek reinstatement, but rather six months compensation of $14,346.73. He now had a small part time job, having previously been on unemployment benefits.

43 Mr Edwards submitted that the respondent had no previous business experience prior to taking on the Deli and had paid the rates of pay he believed were correct. After proper advice, this was found to be incorrect and all outstanding adjustments were made.

44 Mr Edwards said on the day after his dismissal, the applicant made a grossly overstated demand. He said that if he was not paid he would take the respondent to the Department of Industrial Relations and file for unfair dismissal. Having agreed on an amount and having been paid that amount, the applicant still filed for unfair dismissal.

45 Mr Edwards submitted that in a small mixed business everyone works flexibly. It was not unrealistic or unreasonable to ask the applicant to complete his duties. See Ghunaim and CP & E Ting Pty Ltd [2000] NSWIRComm 272 at 53.

46 Mr Edwards said the evidence demonstrated that the respondent was a benevolent and good employer. Mr Sandford gave the applicant additional hours, time off when he asked, and assistance to his family.

47 Mr Edwards submitted that where an employee refuses a reasonable direction and further, tells the employer to "get fucked," such circumstances would constitute a fundamental repudiation of the employment contract, justifying dismissal. See Day v Lumley Life Limited (1999) 90 IR 70. Indeed, the applicant had misconducted himself again when he told Mr Sandford to "get fucked" a second time.

48 The applicant said that swearing was a daily occurrence in the kitchen, but not in front of customers.

49 I intend now to refer to the principles to be considered by the Commission in determining this matter.

50 In a case of summary dismissal for misconduct four questions usually arise for consideration. Firstly, was the conduct alleged against the dismissed employee proven? Secondly, if the misconduct was proven, did the seriousness of the misconduct justify summary dismissal? Thirdly, did the conduct constitute a fundamental and wilful repudiation of the contract of employment? Fourthly, were mitigating factors taken into account? I shall discuss each of these questions seriatim, in the context of the relevant authorities of the Commission.

51 In some cases of summary dismissal the employee will contest the allegations which led to the employer's decision to terminate the contract of employment. In such cases, the employer is required to prove the allegations. The Commission must be satisfied that the employer's onus to do so has been discharged and make findings, on the balance of probabilities, that the misconduct occurred. This question does not arise in this case, as the applicant, readily acknowledged that he had told Mr Sandford to "get fucked" - not once, but twice.

Did the seriousness of the misconduct justify dismissal?

52 In Byrne and Anor v Australian Airlines (1995) 61 IR 32 the High Court said a termination of employment "may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted" (p72). In Electricity Commission of New South Wales t/as Pacific Power v Crump (1993) 48 IR 296 at p302 the Full Commission said: The conciliation commissioner, therefore, in our view of his decision, was concerned that the ultimate sanction of termination of employment was too severe a penalty. That approach was properly open to the conciliation commissioner, notwithstanding his favourable finding as to the action of the appellant, is supported by the decision of Watson J in Metropolitan Meat Industry Board v Australasian Meat Industry Employees' Union, New South Wales Branch [1973] AR (NSW) 231 at 233 as follows : I fail to see why in applying this test to determine whether or not he should intervene, and having in mind the considerations referred to by Sheldon J in Loty's case [1971] AR (NSW) 95 at 99, the commissioner (or the Commission on appeal) is precluded from considering whether or not termination was too severe a penalty in all the circumstances - even if the dismissal was legally justified or even if, as Mr McDevitt put it, the point had been reached where at the particular time the employer's representative was faced with a situation which had developed to a stage where he had no other alternative. In some cases, the issue of unfairness has been resolved because of the way in which the employer has exercised his right to dismiss or because of the absence of adequate justification for dismissal. But even if there are grounds for terminating the contract of employment, it is still open to the tribunal to examine the severity or otherwise of the step of dismissal. The Commission, commissioners and committees have so acted in the past and have intervened to order reinstatement where because of mitigating circumstances or past good conduct, termination has been shown to be too harsh a consequence. See also Little v Commissioner of Police (No.2) (2002) 112 IR 212 , Busways v Johnson (1994) 55 IR 255 and Wells v Commissioner of Police (2000) 100 IR 106.

53 That it is plainly open for the Commission to review the decision of the employer and determine that a particular dismissal was too severe a penalty is, in my view, beyond doubt (see also my conclusions in Transport Workers' Union of Australia, New South Wales Branch, on behalf of Joseph Vallis, and TNT Australia Pty Limited, trading as TNT Express [2002] NSWIRComm 46; Federated Municipal and Shire Council Employees' Union of Australia, New South Wales Division, on behalf of Gregory Bowman and City of Sydney Council [2001] NSWIRComm 91 and Police Association of New South Wales on behalf of Adam Tregonning, and New South Wales Police Service [2000] NSWIRComm 14.

54 It is obvious that the summary dismissal of an employee for misconduct can have serious and sometimes long term implications for the employee. This will be a fortiori in a small regional city like Broken Hill. It is for this reason that the Full Bench in Franklins Ltd v Webb reminded employers of the need to be fully satisfied that the misconduct had been committed and that the conduct justified dismissal. The Full Bench said at p261: We consider that the significance of decisions by employers to dismiss employees in circumstances such as occurred here cannot be over-emphasised. Mr Webb is a man of advancing years with long service and an unblemished employment record. The consequences for him of the employer's decision to dismiss are considerable - not only pecuniary considerations arise but also issues such as loss of self-esteem and confidence, difficulty in obtaining future employment and loss of social standing; tremendous upset upon the individual concerned and his family, with serious consequences quite unanticipated at the time of dismissal, must also be taken into account. It is considerations such as those which seem to us to have motivated the Commission in Court Session to remind employers of the need to be fully satisfied after proper investigation that the employee has committed the conduct to support dismissal.

55 In Hill v Department of Juvenile Justice [2000] NSWIRComm 128, serious allegations concerning the supply of drugs to juvenile offenders, by a person in charge of their welfare were the alleged reasons for the employee's dismissal. The allegations had no basis in fact and could not be proven. I said at para 62-63: In Standley v Electronics Boutique Australia Pty Ltd , IRC 4516 of 1998, 18 March 1999, I considered the serious implications for an employee where allegations of misconduct are made. I said at p14: It hardly needs to be said that summary dismissal is the most serious form of sanction an employer can take against an employee. It can, not only serve as a means of punishing the employee for transgressions in the then existing employment relationship but can, and often does, jeopardise and diminish the employee's future employment prospects.

A finding by this Commission that a summary dismissal was justified, is a most serious matter which may unhappily burden and grievously harm an employee for years into the future.

See also my discussion of this matter in Thornton and Happy Hours Pre School Kindergarten , IRC5333 of 1999, 29 July 1999 and Taggart and Bell Sports Australia , IRC5224 of 1998, 10 September 1999.

The serious unproven allegations made against the applicant have gravely impugned his reputation. Left to stand unchallenged, these allegations would seriously hamper his future employment prospects, damage his reputation and more than likely, deleteriously effect his well being and that of his family. It is the Commission's duty - indeed, its obligation - to correct the injustices the applicant has so plainly suffered. I unreservedly intend to do so. See also my comments in Standley and Electronics Boutique Pty Ltd (unreported, Sams DP, IRC98/4516, 18 March 1999) ; Federated Municipal and Shire Council Employees' Union of Australia, New South Wales Division, on behalf of Bowman, and City of Sydney Council and Staal and Tupene and Health and Research Employees' Association of New South Wales (on behalf of Nagy and Others) and Western Sydney Area Health Service .

56 I do not believe any reasonable observer would characterise the applicant's misconduct as "gross" or "very serious." It certainly was not in the same category as alleged in the cases I have just referred to.

Was there a repudiation of the employment contract?

57 In my opinion, where an employee has been dismissed for misconduct, the conduct must be such as to constitute a repudiation of the contract of employment by the employee. There must be disclosed a wilful and deliberate intent by the employee.

58 Did the serious misconduct here alleged constitute a wilful repudiation of the contract of employment by the applicant? In deliberating on this question, I refer to four authorities: In North v Television Corporation Ltd (1976) 11 ALR 599, Franki J said at p616: It is clear that a single act of disobedience may be sufficient to justify dismissal on the ground of misconduct but it was held in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions. The 1959 English case referred to makes it plain that an act of disobedience or misconduct (justifying dismissal) requires also that the disobedience must be " wilful ": … I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is "wilful": it does (in other words) connote a deliberate flouting of the essential contractual conditions. (P288). Mr Edwards referred me to the decision of Hungerford J in Day v Lumley Life Limited (1999) 90 IR 70. There his Honour described the employment relationship as a serious contractual relationship involving rights and obligations on both sides: The employment relationship, I have to say, is a serious relationship with important incidents for both parties to it. It is a consensual relationship based on contract and with respective rights and obligations. It should not, I think, operate, or to be so seen, in practice in a way, which permits one party, here, the employer, to act in a one-sided manner contrary to the legitimate expectations and understandings of the other party, here the employee, and particularly where such action damages or detrimentally affects the career interests of the employee. Employees have a corresponding duty to act with fidelity and good faith. In Concut Pty Ltd v Worrell and Anor (2000) 103 IR 160, his Honour, McHugh J, dealt with the ordinary relationship of the employer and employee at common law: The ordinary relationship of employer and employee at common law is one importing implied duties of loyalty, honesty, confidentiality and mutual trust. At common law: "[c]onduct which in respect of important matters is incompatible with the fulfillment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal. ... [T]he conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises." In the present case, the findings at trial went beyond mere uneasiness as to the future. They necessitated, or at least warranted, a conclusion that the "confidence" essential to the relationship of employer and employee had been destroyed. Instead of pursuing the interests of the company and its shareholders, the employee had pursued his own private interests. Not only was the employee in breach of his duty of fidelity and trust owed to the employer, he had remained in breach of that duty to the date of the trial. Until that time he had not accounted for the benefits wrongly appropriated by him. Indeed, he had denied any wrongful appropriation. The issue so tendered at the trial was determined against the employee. He was then subject to the employer's counter-claim for an order to make a refund. Such order was duly made at trial. It was not contested on appeal. Given his senior status in the company's service and the nature and extent of the misconduct disclosed in the evidence and accepted by the primary judge, it was open to him to find that the employee had undermined the confidence essential to the ongoing relationship of employment. Prima facie, this had afforded a legal justification for the employee's summary dismissal. It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment. Other exceptions may arise where the breaches are ancient in time and where they may have been waived in the past, although known to the employer. Some breaches may be judged irrelevant to the duties of the particular employee and an ongoing relationship with the employer. But these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee like Mr Wells, will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal. See also Blyth Chemicals Limited v Bushnell (1933) 49 CLR 66; Transport Workers' Union of Australia, New South Wales Branch, on behalf of Joseph Vallis, and TNT Australia Pty Limited, trading as TNT Express and Hunt v Hornsby Shire Council [2001] NSWIRComm 242.

59 On one view, it is reasonably open to conclude that the applicant's outburst demonstrated a wilful and deliberate intent by him to repudiate the employment contract. However, as I later discuss, the misconduct must be seen in the circumstances in which it occurred and the reaction of the respondent to it.

60 It is generally accepted that an employer may take into account an employee's past conduct or warnings when making a decision to dismiss the employee. Authority for this proposition is found in John Lysaght (Australia) Limited and Federated Ironworkers' Association of Australia, New South Wales Division & Ors (1972) AILR 517: The union's argument in relation to this matter is not easy to understand. It suggests that although the record is not a satisfactory one, it should be overlooked because the company, except for a warning and a suspension here or there, allowed it to run on and in effect condoned or waived it. It further says that the record has to be looked at in the light of the fact that there is admittedly a good deal of absenteeism generally in the plant. If one were to take this argument to its full extent, it would involve the union in saying that Mr York should have been dismissed long ago. It is no doubt possible for the company to waive particular acts of misconduct that would otherwise justify dismissal without notice. These particular acts could not subsequently be used for this purpose once a decision was made not to rely on them. The act of misconduct however does not then disappear and become irrelevant when further misconduct occurs. It remains and makes up the continuing history and record of a man's service. That record may always be referred to for the purpose for which the company now points to it and the presence of incidents such as I have described will always be a relevant factor to be weighed in the balance by an employer when he comes to consider whether or not a further breach or other act of misconduct should not bring about dismissal. This will be all the more so where, as here, the dismissal is upon notice.

61 Of course, it is equally true that taking into account past performance works both ways. That is, it would be wrong for an employer to ignore an employee's otherwise exemplary record when weighing up all the factors in its decision to dismiss. I adopt the words of McLeay C in Paris v Bankstown City Council [1999] NSWIRComm 10: It is clear that no account was taken of mitigating circumstances, either associated with the misconduct (namely, that the applicant's supervisor was the instigator of the misconduct) or the employee's work record (which showed a good record of over forty years). It has long been accepted that the whole of an employment relationship is relevant to a question of dismissal (see John Lysaght (Australia) Ltd v FIA; Re York (1972) AILR 517 per Sheppard J). In my view, it is as unfair to ignore a good work record of long standing as it would be to ignore incidences of previous misconduct.

62 That is not to say that an unblemished record would mitigate completely against a particular act of serious misconduct. Each case will turn on its own facts and the gravity of the misconduct. Nevertheless, it is a factor, which might tip a dismissal either way if the decision is finely balanced. It follows therefore, that an employer should be cognisant of, and give appropriate weight to the employee's past record of employment, having regard for the seriousness of the misconduct.

63 Where the employer discharges the onus to prove allegations made against an employee, it is then incumbent on an applicant to discharge the onus of satisfying the Commission that his/her dismissal was harsh, unreasonable or unjust within the meaning of Pt 6 ch 2 of the Act (see Western Suburbs District Ambulance Committee v Tipping (1957) AR (NSW) 273). A finding of whether a particular dismissal is harsh, unreasonable or unjust is a mixed question of fact and law.

64 It is now well settled that each of the words - harsh, unreasonable and unjust - have their own discrete meaning and not all three descriptions of a dismissal are necessary for a finding of unfairness. In other words, a particular dismissal might be found to be "harsh" but not "unreasonable" or "unjust". This principle arises from the oft-quoted authority in Byrne & Anor v Australian Airlines where the expression "harsh, unreasonable or unjust" was considered in an Award clause. In their joint judgment McHugh and Gummow JJ said at p72: It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted. 65 The principle was further discussed in Outboard World v Muir (1993) 51 IR 167 where a Full Commission said: First we deal with the argument for the appellant that the Commission erred by applying the wrong test in connection with the dismissal: 'unfair' rather than 'harsh, unreasonable or unjust' dismissal. We agree with Mr Reitano's submission in this respect that the reference by the Commissioner to "unfairness" did not represent any misunderstanding of the correct test but was merely the use of a shortened form of expression intended to embrace the three relevant words. Whilst we recognise that there may be a natural tendency (recognised in the use even by the advocate for the Company before the Commissioner of the term 'unfair') to use the shortened form, we consider that it is preferable that a member of the Commission utilise the precise words provided by s246, rather than the catch-all heading, particularly when expressing the basis for a finding that a dismissal is within one or more of the heads provided by the section. We take this view because, even though there may be some circularity in the full phrase 'harsh, unreasonable or unjust', we detect scope for variation of meaning which may be critical to the determination of a particular matter and may be obscured by the use of the substitute term "unfair". Different but not wholly dissimilar words, "unfair", "harsh", and "unconscionable", are used in s275, power of the Industrial Court to Declare Certain Contracts Void, of the 1991 Act. In relation to those words, then appearing in s88F of the 1940 Act, the Commission in Court Session ( Perrignon , Cahill and Dey JJ) in A & M Thompson Pty Ltd v Total Australia Ltd [1980] AR (NSW) 399 at 418 Cahill J (delivering a separate judgment) said: The duty of the Commission is to reach a conclusion on the issues of whether the subject transaction is 'unfair', or 'harsh' or 'unconscionable'.

It has been said that those words are a 'tautological trinity' ( Davis v General Transport Development Pty Ltd ) [1967] AR 371) but we prefer to take the view that there is a perceptible difference between the meaning of the term 'unfair' and that of the terms 'harsh' and 'unconscionable'. What is unfair may not be so unfair as to be 'harsh'. But, whether this view be correct or not, once the transaction is found to be unfair the Commission may proceed to exercise its very wide power.

In much the same way, we consider that, while strict definitions of 'harsh', 'unreasonable' and 'unjust' may produce a degree of circularity of meaning, turning on the notion of 'fairness', it may be in a given case that a dismissal may be viewed as coming within the ambit of one of the three adjectives but not the others. To avoid the possibility of misunderstanding or error, the tribunal, when making that primary finding, should state explicitly the basis on which it is made.

66 A Full Bench authority reaffirming the distinction between the three words, and requiring the Commission to make a positive and specific finding on a dismissal is to be found in Bankstown City Council v Paris (1999) 93 IR 209: The Commissioner found that the dismissal by the Council of Mr Paris was 'harsh, unreasonable or unjust'. This phrase, contained within s84, is an important key to jurisdiction and does require some specificity of finding. As has been observed by the Commission on numerous occasions, a dismissal may be capable of being unreasonable but not harsh, or harsh but not unjust, other permutations may apply. In the present case, however, it seems to us that the dismissal of Mr Paris was capable of meeting not one or the other of those descriptions but each of them. Therefore, nothing turns upon the expression adopted by the Commissioner. We would observe that in a case where the conduct of the employer might satisfy one but not all of those heads, a positive and specific finding should be made.

67 I turn now to discuss the question of procedural fairness in the context of an unfair dismissal.

68 A recent Full Bench decision of this Commission stressed the importance of ensuring that an employee is afforded procedural fairness in the process leading up to a decision to dismiss an employee following allegations of serious misconduct. In Humphries v Cootamundra Ex-Services and Citizens Memorial Club Limited the Full Bench said at para 118: This matter demonstrates the very real problems that may arise where there is a failure to afford procedural fairness. The obligation upon parties to ensure procedural fairness is not a hollow one and must not be construed as having only technical significance. As the circumstances in this case demonstrate and the provisions of s88 of the Act establish, such considerations may have a very real impact on unfair dismissal proceedings and are of significance in identifying whether a termination was harsh, unreasonable or unfair. Indeed, in this case it is unlikely the matter would have traveled as far as it has if the records had been provided at an appropriate time during the interview process or at any other reasonable time prior to the hearing of the matter. In this context, we consider the denial of access to the actual documents forming the substance of the allegations to be most serious.

69 These observations are unremarkable and merely reflect the statutory instruction found at s88 of the Act and the relevant authorities identifying the matters the Commission may take into account when determining an unfair dismissal claim. These matters include, but are not limited to, whether: (i) a reason for dismissal was given.

(iii) the employee was given an opportunity to make out a defense or give an explanation of his or her behaviour.

(iv) any warning of unsatisfactory performance was given. (v) the employee sought, but was refused reinstatement or reemployment.

It is relevant to note that the Commission may take other matters into account which it considers relevant (s88(f)).

70 In Byrne & Anor v Australian Airlines, the High Court concluded that "it is clear that the use of an unfair procedure may result in a dismissal being 'harsh, unreasonable or unjust.'" To this authority may be added the weight of a number of Full Bench decisions of this Commission. In Antonakopoulos v State Bank (1999) 91 IR 385, the Full Bench said at p389: We agree with the conclusion of Hill J that procedural issues, that is failure to deal with the matter in a procedurally fair way, may, in certain cases, of themselves, constitute the basis for a determination that a dismissal is harsh, unjust or unreasonable. A failure to adopt a procedure which constitutes a breach of 'an essential prerequisite to, or inviolable limitation on, the exercise of the employer's right to dismiss' or a failure to afford procedural fairness which causes a 'substantial and irrevocable prejudice to the employee' will often vitiate the decision of an employer and warrant, in itself, a determination that the dismissal was harsh, unreasonable or unjust (and hence, establish the basis for a remedy under the Act). Further, a decision to dismiss made upon the basis of procedures which are unfair and where an innocent explanation or other appropriate explanation is reasonably available will normally constitute a firm basis for a determination that a dismissal, so effected, is harsh, unreasonable or unjust. and later, at page 390:

While the findings of the Commission in Buckman focus on the issue of warnings, the observations apply also to broader tenets of procedural fairness contemplated in s88 and to matters such as those raised in these proceedings. We agree that there is no obligation in the Act to follow any particular procedure when effecting a dismissal. However, a failure by an employer to adopt appropriate procedures when effecting a dismissal, or a failure to follow procedures prescribed in an industrial instrument, or in procedures laid down administratively by an employer, may be properly taken into account by the Commission as part of the consideration of an application brought under s84. Further, as we have noted, where procedures are specified in an industrial instrument or by administrative action, a failure by an employer to apply, or to properly apply, those procedures may in appropriate cases, of itself, support a finding that the dismissal was harsh, unreasonable or unjust .

71 The above reference to Buckman is Buckman v Burdekin (1998) 85 IR 415. In that case, the Full Bench said at p418: Section 88 of the Act contains a number of matters which may, if appropriate, be taken into account in considering whether a dismissal was harsh, unreasonable or unjust. There is, of course, no obligation imposed by the Act upon employers to give an employee a warning prior to effecting a dismissal. However, a failure to give prior or timely warnings is a matter which properly may be taken into account as part of the consideration of general issues of substantive and procedural fairness. See also Wilson v Department of Education and Training (2000) 100 IR 1 ; Burke v McGirr (1995) 87 IR 54; Oswald v NSW Police Service (1999) 90 IR 42; Johnson v Catholic Education Office, Diocese of Parramatta (1998) 87 IR 57; Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 and D & R Commercial Pty Ltd v Flood (2002) 113 IR 344.

72 I turn now to consider the particular facts and circumstances of this case.

73 There can be no doubt that the applicant had told Mr Sandford to "get fucked" and that this was the primary reason advanced for the applicant's summary dismissal. That being so, the Commission is obviously not required to make findings of fact as to whether the allegations have been proven.

74 At this juncture, I should say, that in my view, the applicant's outburst was insubordinate, unacceptable and totally out of line. I reject the defence that this type of language was common in the workplace and in particular, frequently used in conversations between the applicant and Mr Sandford. Even if it was - which I doubt in a workplace where customers are present - in this instance, the language was used in a heated, angry and insubordinate context. This is a far cry from the sometimes rough and tumble banter between workers in a workplace which might ordinarily be condoned. Moreover, the fact such deliberate language was used by an employee to his boss further demonstrates the nature of the misconduct. In my view, this behaviour, in most instances, would be a compelling basis for instant dismissal.

75 It was said that the applicant compounded his misconduct by again telling Mr Sandford to "get fucked." However, this outburst occurred after the dismissal and obviously was not a basis for the applicant's original dismissal. It confirmed however, that the prospects of restoring the employment relationship were negligible.

76 That being said, I am obliged, by reference to the relevant authorities earlier cited, to have regard for any mitigating factors and the totality of the circumstances in which the misconduct occurred. It is to those matters I now turn.

77 The applicant's behaviour must be viewed in the context of a number of prevailing factors. Firstly, his legitimate claim to under payments which had not been addressed for three weeks. Secondly, his working of a nine hour shift, allegedly without a proper break; and thirdly, his somewhat brash and argumentative disposition which I would put down to youth and inexperience. As to this last observation, I should say that the applicant would be well advised to curb his youthful exuberance and be appropriately respectful to persons in authority if he has any hope of retaining future long term employment.

78 In addition, I have also had regard for the fact that apart from Mr Sandford's earlier warning about bad language, (not conceded by the applicant) there do not appear to be other instances of insubordination or poor performance during the employment relationship. I note that the applicant was abusive again when he went back to the Deli to get his cheque. However, the applicant said it was because he was accused of stealing in front of the other staff. I do not consider it necessary to take this later incident any further.

79 Putting that aside, I am concerned that Mr Sandford, perhaps understandably, reacted hastily in dismissing the applicant, without allowing for the situation to calm down and the applicant to have time to reflect on his unacceptable conduct and apologise for his outburst.

80 Thus, I have arrived at the position that I do not believe the applicant's dismissal was harsh or unjust. However, I do find that the dismissal was unreasonable within the meaning of Pt 6 ch 2 of the Act. This finding relates to the procedural deficiencies I have just referred to, in that Mr Sandford acted too hastily. As I said, this may be understandable, given the nature of the misconduct and Mr Sandford's own inexperience in dealing with employment issues.

81 Having so found, I note that the applicant does not seek reinstatement. In view of the breakdown in the employment and personal relationship between Mr Sandford and the applicant, I consider reinstatement to be impractical.

82 Having regard for all of the circumstances disclosed in this case and the applicant's age, enthusiasm and relatively short service, I believe that compensation should be at the lower end of the scale. In addition, I note that no evidence was advanced by the applicant as to his efforts to obtain alternative employment; see s89(6) of the Act.

83 Accordingly, I propose to order payment of four weeks' salary as compensation for the unreasonableness of the applicant's dismissal.

84 Pursuant to s89(5) of the Industrial Relations Act 1996 the Commission orders that: 1. The respondent, Paul Sandford shall pay to the applicant, Daniel Pearce an amount of four weeks' pay based on $562.25 per week.

2. The amount so ordered shall be paid within 28 days. 3. These proceedings are now concluded.

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