Australian Municipal Administrative Clerical Services Union v Greater Dandenong City Council

6 On 23 November 2000, those orders were stayed by a Full Court of this Court, pending the hearing of the appeal. On 4 April 2001, the appeal was dismissed (by majority) by the Full Court, which then made orders requiring that those employees who desired reinstatement should be reinstated by 4 May 2001. 7 There were then some further negotiations between the parties as to how to implement monetary adjustments for: (a) the employees who wished to be and were reinstated; and (b) those who did not wish to be reinstated. On 9 May 2001, the matter was re-listed before me when I gave directions for the preparation of these test cases. The test cases concern questions of: (a) repayment of the redundancy pay-outs received by those workers who were subsequently reinstated; and (b) claims for compensation by all the members and the extent to which any such claims should be offset by sums paid by way of the impugned redundancy. The aim of the test cases is to set principles by which issues of compensation and damages can be determined consentially by the parties for all the other employees and ex-employees. 8 After the commencement of the proceedings against the Council, proceedings were also commenced by the Union against Silver Circle in this Court, alleging that it was bound as on transmission of a business (pursuant to s 170MB of the Act), to pay the Council award rates. Subsequently, the rates in the Silver Circle award were increased. The net effect was to bring pay received by most of the transferred employees close to what they would have received had they remained employed by the Council and done the hours and types of work done at Silver Circle.

A practical approach 9 The court's present powers are defined by ss 298U(b), (c), (e) and (f) which are in the following terms: "In respect of conduct in contravention of this Part, the Court may, if the Court considers it appropriate in all the circumstances of the case, make one or more of the following orders: … (b) an order requiring the person or industrial association to reinstate an employee, or to re-engage an independent contractor; (c) an order requiring the person or industrial association to pay to an employee or independent contractor, or to a prospective employee or independent contractor, compensation of such amount as the Court thinks appropriate; … (e) injunctions (including interim injunctions), and any other orders, that the Court thinks necessary to stop the conduct or remedy its effects; (f) any other consequential orders." 10 In my opinion, in subs (e), the phrase "and any other orders, that the Court thinks necessary to … remedy its effects [that is, effects of conduct in contravention of Part XA of the Act]" is not limited to orders in the nature of injunctions. By the use of the term "and any other orders", after the spelling-out of a number of specific kinds of possible orders, in my opinion the legislature made a fresh start as to the kinds of principal relief which the Court might order: any reasonable curial order was authorised. It must be borne in mind that conduct contravening Part XA may be of many different kinds and may occur in many different circumstances. The statutory phrase is aimed at giving the Court maximum power and flexibility do what it thinks appropriate in the circumstances. Further, the phrase in section 298U(f); "any other consequential orders" in my opinion, refers to orders consequential upon any order of a kind falling within (relevantly to present purposes) subs (b), (c) or (e). 11 In my view, these powers are broad enough to indicate that, in a proper case, the Court is free to depart from strict common law principles of compensation which might otherwise possibly have been thought to be inherent in the term "compensation" used in s 298U. As will be seen, I depart from those principles to some extent and do so consciously and because of all the circumstances, to some of which I will refer. 12 My approach in this matter is firstly, of course, to attempt be fair to the parties, and secondly to apply a practical and admittedly a somewhat broad brush approach, without fine distinctions, except where these are unavoidable, and without trying to weigh matters on golden scales. The purpose of this approach is to assist the parties to sort out the questions of compensation and like issues in nearly 70 individual cases in a reasonable, expeditious and practical way. As I have already indicated, my approach falls short of awarding the sorts of exquisite compensation which might be found in a case for damages for very serious injuries negligently caused, and which has involved loss of earning capacity. Equally, however, the approach falls short of making exquisite allowances in the employer's favour, in some cases arising from the employees' actual or arguable failure partially or wholly to mitigate their losses.

13 The Union's claim, it may be noted, is in one respect conservative. It implicitly concedes that a failure to accept reinstatement in May 2001, when it was ultimately available, thereupon and thereafter necessarily involves a reasonable failure by a former employee to mitigate loss: otherwise the Union claimed there was no necessary reason to limit the amount of loss claimed up to the point at which reinstatement was possible. It might have been possible to argue a case that, for some employees, it was unreasonable to expect them to return to the Council at all, but no such case was mounted. The other aspect of the Union's approach that is worth mentioning is that it is a practical one, in principle, and I am attracted to it. The Union asks the Court, in effect, to set up a matrix of compensatory steps and principles which, hopefully, will be easy to follow for all concerned, and will simplify and expedite the processing of the employees' claims as well as the Council's cross-claims for repayment of the redundancy payments that have been made. 14 It is worth noting that, in each case, the claims in respect of each employee, where they are likely to result now in a net payment by the Council to the employee or in the payment of some monies by the employee back to the Council, are relatively small, although in total there may be involved some not inconsiderable sum for the Council.

A flat sum of $3,000 per employee 15 Each employee ought to be awarded a sum of compensation analogous to general damages, for the disturbance, disruption, loss of opportunity and loss of secure employment occasioned by the termination of their employment and breach of Part XA of the Act in May 1999: see generally for example Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 330-1 per von Doussa J. I think that a sum of $3000 per employee would be a suitable and appropriately modest figure. There is the occasional exception, but the picture is that, in the main, these employees had substantially committed themselves to employment by the Council, averaging between 20 and 30 hours of work per week. They also needed to keep themselves available at the times that they had nominated to the Council they would be available for work that might come their way, and for travelling time to their places of employment. This is a substantial work commitment. They received, in the main, substantial, if relatively modestly paid, remuneration. My view is that, if they were full‑time workers, the figure should have been about $5,000 and, doing the best I can, I think that something a little over half of that is appropriate. Each employee should be paid or credited with that sum.

Compensation for loss of income 16 I note at the outset that it has not been established in relation to any employee except Ms Hewitt that, apart from the breach by the Council of Part XA of the Act, the employee would not otherwise have remained in employment with the Council for the period 23 May 1999 to 4 May 2001. Accordingly, with one exception, each employee is entitled in principle to be awarded or credited with a compensatory sum referable to loss of income during that period. The exception is in respect of those who both indicated in November 2000 that they did not wish to be reinstated, and also did not, by 4 May 2001, seek reinstatement. For that (probably small) class of people (there is only one in the ten test cases) the period for which compensation is payable should be from 23 May 1999 to 10 November 2000. 17 Another introductory matter to this head is this: if it is truly the position that an employee made no effort after being dismissed by the Council to get work, or if any effort to work can be fairly seen to be something less than a reasonable attempt to find any work, then it cannot fairly be said that the loss of income after 23 May 1999 is the result of the Council's actions. It is really the result of the employee's preference to take the redundancy monies received and not work, and it should be so treated. Apart from the above mentioned "disturbance" amount of $3000, which in any case would be payable, no sum should be payable to such a former employee. 18 All calculations are to be done net of income tax paid or payable, and the parties have liberty to apply on 48 hours notice if any unforeseen difficulty arises in this regard.

Mechanism for determination of compensation 19 I proceed now to lay down various steps for the making of calculations. They are modifications of the steps suggested by the Union.

Step 1 - Calculate the employee's theoretical income that would have been earned had the dismissals not occurred 20 In order to calculate the theoretical income: (1) Have regard to the average number of hours worked by the particular employee during the 12 month period prior to the termination on 23 May 1999; (2) Take into account overtime hours regularly worked by the employee during that period while employed by the Council; (3) Include an assessment of the employee's travelling time between clients regularly worked while employed by the Council; (4) Exclude travel allowances calculated and paid as referable to vehicle costs per kilometre travelled and/or as a petrol allowance; (5) There is an exception to the last point. It applies in the case of Ms Cole, one of the ten test cases. In the alternative employment that she found after her dismissal from the Council, she was paid nothing at all on account of out of pocket travelling costs between clients, although she was employed in broadly similar work to that of the Council. Point 4 above is predicated on the assumption that, generally in the industry, employees are paid some compensatory amount for the use of their vehicles in travelling. At least that is so in the samples of the industry illuminated by the proceedings before me. It would seem that it is only the respondent Council that paid for actual travelling time.

Step 2 - Apply a discount or bonus to the theoretical income that would have been earned had the employee remained employed throughout by the Council, as and where necessary in accordance with the following: 21 In circumstances where it has been demonstrated that on employee, since May 1999, has worked fewer average hours than was the case at the Council, then an adjustment by way of discount may possibly be made. For example, an applicant who worked 30 hours a week while employed by the Council who has subsequently regularly worked only 25 hours a week because she chose to do so (but not, for example, where she was only able to find 25 hours work per week, despite reasonable efforts to find work for 30 hours per week), will have her theoretical Council income calculated at the rate of 25 hours per week for the period to be compensated, or for such part of that period as the facts make it proper to take such a discount into consideration. 22 In the case of employees who have worked a higher number of average hours in alternative employment since termination, and Ms Finucci furnishes an example, the position is not exactly the converse. Had she remained with the Council, she would have earned remuneration, let us assume, as for 30 hours per week. If thereafter she worked 35 hours per week, the choice is to balance remuneration for 35 hours worked with the new employer, as against what would have been received for 35 hours per week with the Council, or a notional 30 hours per week with the new employer as against the 30 that was worked with the Council. Since it is 30 hours that would have been worked with the Council, in the example given, it seems to me appropriate to stay with that approach, and so it is the pre-termination Council hours applied to the remuneration in the non-Council employment that should furnish the measure. 23 It is to be assumed that where supervening events, for example illness or family calamity, have occurred which have forced a reduction of hours worked, then the lower hours are to be used if: (a) the events are likely to have occurred had there been no termination by the Council; and (b) to the extent that the likely circumstances, if employment had continued with the Council, would not have lessened the reduction. An example may make this clear. In one of the ten test cases, the employee's mother became ill. She gave evidence that had she remained with the Council, the circumstances and probable arrangements there were such that she could have coped with her mother's illness by taking a half day off per week and calling on her sister to help attend to their mother. As events actually transpired, she had her redundancy monies and was less demanding of her sister's co-operation than she might otherwise have been. Also, if memory serves me, she could not so simply make arrangements for a half day off with the other employer, as she believes she would have been able to do with the Council. If her beliefs were valid, then it would be fair to discount the hours, for comparison purposes, only by the half day that would have been lost.

Step 3 - Calculate the employee's actual income since termination 24 This calculation is to be done by having regard to the statements and exhibits tendered without challenge at the trial before me. In relation to other employees, the Council is entitled to reasonable proof of such a matter and of other matters relevant to the claims and cross-claims. Although, as I understand it, the Union has, as it believes, tried to the point of near exhaustion, physically and financially, to negotiate these matters out, I am afraid that, if need be, some more work will have to be done.

Step 4 - Deduct the actual income from the theoretical income that would have been earned 25 This step requires the sum arrived at under step 3 to be deducted from the sum arrived at under step 1 (and where necessary, modified pursuant to step 2). The resultant sum will represent, subject to step 5, the compensation payable for loss of income to the employee concerned.

Step 5 - Assess whether any further discount is required to be made for failure to mitigate 26 It will be observed that step 2 is in the main a fashioning or adaptation of a mitigatory principle for likely common situations. There is no intrinsic necessity for double discounting. 27 A failure to mitigate will have been established only in circumstances where the respondent has demonstrated that the employee in question unreasonably failed to mitigate her losses on a particular occasion or occasions or by virtue of a particular choice or choices made by her. In general, I discussed this issue in Westen v Union des Assurances de Paris (1999) 88 IR 259, and I adhere to what I said in that case as to the appropriate principles. 28 The failure by an employee to accept the job offer made by Silver Circle in May 1999 cannot per se be regarded as an unreasonable failure to mitigate loss. The reasons for this include the following: · The offer was an offer to apply for a position with a three-month probationary period; · It was an offer of casual employment (the employees concerned had been permanent part-time employees, thereby entitled to pro-rata leave of various kinds); · It was an offer of inferior remuneration as to the terms and conditions of work, although initially, and it would seem on a continuing basis, most employees who accepted the offer would be performing the same work for the same clients as they had been at the Council; and · The offer was made to well-trained, well-experienced and well-thought of employees. 29 Where an employee failed to accept the job offer by Silver Circle, it would in my opinion be reasonable to compensate her for two months, being (a degree of the roughness and readiness may perhaps be forgiven) about one month to collect her thoughts after a traumatic experience, and about a month to find work. As I have indicated, the employees are apparently all well-trained, capable and experienced people, and the unchallenged evidence was that there was an active employment market for such employees, albeit that the remuneration seems to have varied a lot and that in the ten test cases, there was no evidence of an employer overall paying more than the respondent Council. 30 The failure by any employee not to seek reinstatement by the Council pursuant to the order of the Full Court of this Court on 4 April 2001 cannot be regarded as showing, with retrospective effect, as from the outset an unreasonable failure to mitigate her loss. That order was made some two years after the termination occurred. Life had gone on and choices had to be made in the intervening period. As I have already indicated, the Union recognises that failure to take reinstatement when ultimately available in April or May 2001 should, as a practical matter, operate as an unreasonable failure to mitigate loss for the future.

Step 6 - Add the sum arrived at under step 4 or the adjusted sum arrived at under step 5, to the sum of $3,000 ordered by way of general compensation

Step 7 - Calculate the employee's net adjusted redundancy package ("the ARP") and subtract the ARP from the sum referred to in step 6. 31 The ARP is the redundancy package paid to each employee minus the income tax deducted therefrom by the Council.

Step 8 - Payment of monies 32 If the result arrived at under step 7 indicates that monies are payable to the employee, they should be paid to her within 14 days of the ascertainment of the amount due.

Step 9 - If the calculation demonstrates that a reinstated employee owes the respondent money, the employee is to repay the resultant sum 33 Any money that an employee is required to repay to the Council will be at a rate agreed between the employee and the Council or at such rate as will not involve undue hardship to the employee. I direct the Council to take an appropriately sympathetic approach to this (although I have little doubt that that would be done without such a direction). Liberty to apply for further directions about that matter is given to both parties on 48 hours' notice. 34 I add the following matters.

Treatment of long service leave 35 An employee may, at her option, instead of paying back to the Council, actually or notionally, an amount received on account of or calculated by reference to long service leave entitlements, treat the Council's future obligations to her in respect of long service leave as partly satisfied by the amount so paid. This applies to persons who, at a relevant time, had between five and ten years service. However, if there should be an employee who has both, at the date of redundancy and at the date of the ultimate termination of her employment with the Council between five and ten years service, she must accept that upon termination she will have no greater entitlement to a payment calculated by reference to long service leave than if the redundancy had not occurred.

Mitigation 36 I have indicated that the rule as to mitigation is as stated by me in Westen's case. However, it was a feature of the test cases that, once they were examined, this issue pretty much fell into place and any differences between the parties were narrow and capable of ready compromised resolution. I believe that, in practice, this matter should present less difficulty than it might do by being examined merely theoretically.

Unemployment benefits 37 The treatment of this question is reserved with liberty to either party to apply on 48 hours notice.

Other out-of-pocket allowances 38 If there were any other allowances such as a laundry allowance which the employees received from the Council and were intended wholly or substantially to be by way of recompense for monies outlaid, then these are not to be taken into account in the calculation of what an employee's income would have been, but for the termination.

Interest 39 In my opinion, interest should be disregarded. The individual sums claimed, as I have indicated, are small. Insofar as interest might be payable to any employee, it may be noted that she will have had her redundancy pay and that her subsequent loss will have occurred progressively on a week-by-week basis. If interest were fairly calculated, it could not be a large sum. On the other hand, the aggregation might be moderately considerable for the Council. As the Council gets the benefit of this, it is only fair to indicate that the Council should have no right to interest, if it would otherwise be appropriate in any case, from an innocent employee who finds herself having to pay monies back.

Non-reinstated workers 40 Ms Cole found work at Select Services ("Select") on 5 October 1999. Between May and October 1999 the illness of her mother and of her daughter supervened and she was unable to work during that period. She had averaged 33 hours per week with the Council but averaged only 18 hours per week with Select. The reduction was due to a combination of reasons: Select offered her fewer hours and she had some ongoing care commitments to her mother. Of course all the problems with her mother and her daughter would have occurred, had she stayed with the Council. Accordingly, her theoretically lost income, in my view, should be for two months for the period 23 May 1999 to 5 October 1999, that is to say, a little over a third of that period, and thereafter from 5 October 1999 to 4 May 2001. However, it should be calculated as if she had worked 28 hours per week with the Council during those two periods. Ms Cole should, exceptionally, be entitled to bring into account the travel cost reimbursement allowances paid by the Council. 41 Ms Damiani worked at Silver Circle since her termination by the Council. At the Council she had worked an average of 30.7 hours a week including some Sunday work. At Silver Circle she averaged 26.3 hours per week. The main reason for this seems to be that she ceased to seek weekend work after the termination of her services by the Council. She should be compensated for the entire two year period, but the theoretical income should be calculated as if she had worked 26.3 hours per week. 42 Ms Hewitt did not apply for work with Silver Circle. She took a period of time to pull herself together: she referred in her evidence to her age, the emotional effects of the termination upon her, the loss of friends and tiredness. After a couple of months she sought alternative work unsuccessfully and for no long period. She agrees that her efforts to seek work ceased within a few months of the termination of her employment. She says that she would probably have stayed with the Council for another two years but agreed that there was a possibility that she would have decided at some stage during that two year period to cease home care work. In my opinion, she should be compensated on the basis that she needed some time to recover her morale (about one month) and did not spend any more than another two months in a serious quest for work. She should accordingly be compensated for three months in all. Her theoretical income with the Council presents no difficulties. 43 Ms Mason used to work a little under 26 hours per week with the Council. She was emotionally very affected by the termination. She had worked for 21 years with the Council. She was greatly disheartened and felt insulted by the Silver Circle offer of work for a three-month probationary period. She therefore did not seek work immediately. Illness supervened which rendered her unable to work in effect until she found work on 1 July 2000 with a home care provider called Southern Cross. She had in the meantime been medically advised not to work more than 20 hours per week. She has been willing and available to work 20 hours per week but has been allocated only 16 to 17 hours work per week by Southern Cross. Had she remained at the Council, she would have been able to access accumulated sick leave to the extent of 12 weeks leave. In my opinion she would have fallen ill even if she had remained at work with the Council. Therefore, she should be allowed for the period up to 1 July 2000 only three months but her theoretical income with the Council for that period, and for the period from 1 July 2000 to 4 May 2001, should be allowed at 20 hours per week. She should be given credit for the untaken sick leave. 44 Ms Anderson commenced on 6 July 1999 with Bayside Council where the wage rate was higher than that paid by Silver Circle. She, too, had something of an emotional collapse, but nevertheless found work within the two months period that I think was reasonable to expect most people who had suffered a bad emotional reaction to find employment. Her evidence was that with Bayside her travel time between clients was increased. Her average hours with the Council were 29 per week and there was no significant reduction in those hours at Bayside. She had made, in my opinion, significant efforts to mitigate her loss and her case presents no difficulty. Because she had indicated, in November 2000, that she did not desire reinstatement and subsequently did not change her mind, her loss should, only be calculated up to 10 November 2000.

Reinstated workers 45 As it happens, the five employees in the test cases that fall into this group all went to Silver Circle on termination from the Council. 46 Ms Challinor had been on 28 hours per week at the Council. She was obliged to seek from Silver Circle a reduction in her hours to 22 hours because of commitments to her children. However, she was only offered by Silver Circle hours ranging between seven and fifteen per week and accordingly has had significant loss. I am satisfied that she was well motivated and has done what could reasonably have been expected to increase her hours. Therefore, her theoretical income ought to be calculated over the entire two year period at the rate of 22 hours per week. 47 As to Ms Finucci, I have referred to her case above and it need not be considered further. 48 Ms Mansfield, although she went to Silver Circle, left there at the end of the three months probationary period. The reason for this was that Silver Circle then offered her and the other employees the option of transferring to permanent part-time work from the casual basis of their engagement during the probationary period but this entailed a lower hourly rate of pay. She had family in the United Kingdom and wanted to have paid leave to be able to visit them. She felt that she would be able to obtain better paid work than that at Silver Circle. Her family circumstances are such that she would appear motivated to seek a well paid job if one could be found. As it turned out, she was then out of work for some time before she found work with Southern Cross in December 1999. In my opinion, she is entitled to be compensated for the entire two-year period without discount. It has not been shown that she failed to act reasonably in trying to mitigate her loss. She had motivations of her own, regardless of any compensation claim, for trying to do so and she appeared to be a reasonable person. 49 Ms Phillips had worked an average of 30 hours per week at the Council. Her case represents an illustration of the way in which compensatory principles can work in ways that are not entirely happy. She was the union delegate and she had borne the emotional brunt and the greatest commitment of her time to representing the interests of her fellow employees and herself. She stated that, at the time of the changeover to Silver Circle, she asked to reduce her weekly hours from 30 to 22 because, as she said, she was exhausted and greatly emotionally affected by the events which had occurred. There is not the faintest reason to doubt this. A few months later, she recovered her spirits and advised Silver Circle that she would like to do 30 hours work per week. She thereafter made a number of requests for more work which issued in no result until she eventually tired of asking and ceased doing so. A person is not obliged to continue to address those who are unable or unwilling to grant reasonable requests. Her average hours with Silver Circle had been 23. Accordingly, her theoretical income ought to be calculated at the rate of 20 hours for the first six months and thereafter at the rate of 30 hours for the next 18 months. 50 Ms Whitten, since her reinstatement, has worked about 20 hours a week at the Council and has continued to work about seven hours per week with Silver Circle. Before her termination she averaged nearly 23 hours per week with the Council. Since the termination she has therefore increased the total number of hours per week that she works. A diminished need to spend time in the care of her child has enabled her to do this. She would likely have sought to increase her hours in the same way had she stayed at the Council. There is no certainty that she would have been able to fully do this, but she seems to have been keen to work and I estimate that she would have probably had some success. Therefore, I think her income should be calculated over the two‑year period at 25 hours per week.

Disposition 51 I will order and direct that: (i) The Chief Executive Officer of the Council and the Secretary of the Union, together with one lay adviser each, confer within seven days as to the means of applying the principles expounded by and inherent in this judgment to all employees and ex-employees for whom orders are sought, other than those who have been considered as test cases; (ii) The respondent Council take an appropriately sympathetic approach to determining a scheme for the repayment of any monies found, after the appropriate calculations are made, to be owing to it by any employee; (iii) The parties have liberty to apply on 48 hours notice as to any difficulties arising from any unforeseen impact of income tax and as to determination of the way in which any monies that are owing to the respondent Council be repaid; and (iv) The matter be re-listed for further directions on Thursday 16 August 2001 at 9:15am. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate: Dated: 7 August 2001 Counsel for the Applicants: R M Doyle

Solicitor for the Applicants: Maurice Blackburn Cashman

Solicitor for the Respondent: Maddock Lonie Chisholm

Date of Hearing: 30 & 31 July and 1 August 2001