Erduran v Menzies Group

Matter No IRC03/5294 Elaine Joyce Clough and Capital Steel and Pipe Pty Limited Application by Elaine Joyce Clough re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2004] NSWIRComm 76

1 This is an application pursuant to s84 of the Industrial Relations Act 1996 ('the Act'), filed by Elaine Joyce Clough ('the applicant') on 23 September 2003. The applicant claimed she was dismissed on 8 September 2003 from her position as a live-in housekeeper employed by Capital Steel and Pipe Pty Limited, at the family home of the company director, Mr Edward Studdy and his wife, Mrs Jodi Studdy ('the respondents').

2 In June 2003 the applicant had replied to an advertisement in the Sydney Morning Herald for a housekeeper's position with the respondents. She attended an interview with Mr Studdy on 10 June and a one and a half hour interview with both Mr and Mrs Studdy on 14 June. The conversation at this interview was contested and I shall return to the substance of it later.

3 On 15 June the applicant was given a letter expressed as follows:

Dear Elaine, This letter is to confirm your employment with us as a live-in housekeeper/carer, starting on Monday 23rd June, 2003.

Your salary will be $40,000 gross per annum, plus superannuation

Our family looks forward to a long and happy relationship with you.

4 The applicant duly commenced employment on 23 June 2003 - although her salary was $600 per week. The respondents claim that the applicant left her employment and resigned on or about 10 September 2003.

5 Notwithstanding her resignation, the respondents' primary submission was that the applicant's termination of employment occurred within a three month trial or probation period. Accordingly, the respondent argued that the applicant was prevented from bringing an unfair dismissal claim by virtue of s83(2)(b) of the Act and the Regulations. The applicant strenuously denied being on probation or trial.

6 The respondents' case relied on what was said to be common industry practice and a conversation during the interview on 14 June 2003. It is plain from the evidence that neither the advertisement for the position or the letter of 15 June acknowledged the position involved a probationary period. As to this letter, Mr Studdy's evidence was that the applicant had specifically asked for a letter, which did not mention a trial period, in order to secure a loan from the bank.

7 Notwithstanding the respondents' jurisdictional contention, the Commission attempted to resolve the claim through conciliation conferences on 15 October 2003. This proved unsuccessful. A finding pursuant to s87 of the Act was made and directions were issued for the arbitration of the jurisdictional issue. I note that the evidence filed in the case ranged beyond the strict jurisdictional issue and dealt with the applicant's period of employment and circumstances surrounding her termination of employment. This was understandable, given the applicant's self representation. However these matters are not necessarily decisive to my findings on the question of whether the applicant was on probation and prevented from lodging an unfair dismissal claim against the respondents.

8 Mr Studdy deposed to the following conversation he had with the applicant on 14 June: I then said: If we go ahead then you will initially be on a trial or probationary period for three (3) months to make sure that the working situation is suitable and works to everyone's satisfaction. I will telephone you tomorrow to discuss your application further. She then said words to the effect: That's fine.

9 Mr Studdy said he telephoned the applicant the next day and offered her the position. He claimed to have again mentioned a three month trial. The applicant asked for a letter confirming the arrangements so that she could apply for a home loan from the bank. She requested that the letter not mention a trial period.

10 Mr Studdy deposed that it soon became clear that the employment relationship was not working out. The applicant felt inadequate and unable to do the work. Mr Studdy said he gave her at least three verbal warnings, and they had an argument on 8 September. Mrs Studdy had an argument with the applicant the following day. Mr Studdy said that the applicant told him that she wanted to leave immediately. She did so and did not return to the house.

11 Mrs Studdy's evidence corroborated that of her husband and I need not repeat it.

12 Katherine Anne Frost is the respondents' solicitor. Her evidence was that she had contacted the following recruitment agencies involved in the placement of nannies, housekeepers and carers: Dial an Angel Pty Ltd Occasional and Permanent Nannies and Housekeepers Pty Ltd Mothercraft and Nannies Pty Ltd Sydney Nannies Pty Ltd Occasional and Permanent Elder Care

13 Each of these companies advised that nannies or housekeepers must undergo a trial period to assess whether the employee and the family are happy with the arrangement. Ms Frost asserted that the applicant had previously been placed by Occasional and Permanent Eldercare.

14 The applicant elected not to cross examine any of the respondents' witnesses.

15 It was the applicant's evidence that when Mr Studdy offered her the job he had said "Jodi and I would like you to joint (sic) our family on a long-term permanency".

16 The applicant accepted that she had asked Mr Studdy for a letter confirming her employment in order for her to secure a loan from the bank. She deposed that security of employment was very important for her and she would not have accepted a probationary appointment.

17 The applicant said that at no time, prior to her employment commencing, during the interview or in the letter of offer was the issue of a probationary period raised.

18 The applicant said that her position as a live-in housekeeper was more demanding than she had been led to believe by the respondents. She had felt inadequate and was working far more than her previous job for only $50 extra. She claimed that she had put up with it because she felt secure and loved the family. In oral evidence, she confirmed that she had felt overwhelmed by the amount of work she had to do.

19 The applicant claimed that at no time, was she given any verbal or written warnings. Indeed, Mrs Studdy had told her that she hoped she would stay for twenty years. Mrs Studdy had been very appreciative of the care the applicant had provided to the Studdys' disabled son, William.

20 Sometime towards the end of her employment, the applicant had expressed concern with the medication Mrs Studdy was giving to her son. She raised her concerns with Mr Studdy. Mrs Studdy was angry with her and told her it was none of her business.

21 On 9 September, the applicant said that Mrs Studdy screamed abuse at her and told her to get out of the house. The applicant said she was very upset and humiliated and left the house. The next day Mr Studdy called and told her that "things are not working out and Jodi wants you out of the home."

22 The applicant said she did not resign. She had been told by Mr Studdy that his wife did not want her to continue working for them.

23 In cross examination, the applicant agreed she understood the concept of probationary employment. She accepted that living in a person's home involved a position of significant trust.

24 The applicant said her statement for these proceedings had been prepared by a solicitor. She agreed that paragraph 23 relating to her hours of work and her letter of offer was incorrect.

25 The applicant also agreed that she obtained alternative employment on 15 September 2003 on a higher rate of pay ($900 a week) than she had been paid by the respondents. The applicant accepted that she had been paid two weeks' pay in lieu of notice - taking her pay up to 27th September.

26 The applicant was shown her s84 application and her statutory declaration accompanying the Form 7A. This statutory declaration was signed on 22 September and disclosed that the applicant claimed to be unemployed at that time. She explained the error as an oversight on her part.

27 For the respondents, Mr Cross of counsel submitted that the application should be dismissed for want of jurisdiction. He referred to the principles discussed in Nurhayat Erduran and The Menzies Group of Companies t/as Allcorp Pty Limited [2003] NSWIRComm 11. Mr Cross pointed to the evidence that it was standard practice in the industry to have probationary periods. This was so because the work involved a position of significant trust involving an employee being brought in to live in the family home.

28 This case turned, Mr Cross submitted, on the conversation between the applicant and the respondents on 14 June. It was agreed the meeting went for one and a half hours. The evidence of Mr and Mrs Studdy was not tested in cross examination and should be accepted. During her evidence, the applicant was only keen to put what was not said in the meeting.

29 In addition, Mr Cross put that the applicant's evidence was unclear and unresponsive. She had described herself as unemployed on 22 September, when she had in fact commenced alternative employment on 15 September. This evidence should raise significant concern with accepting the applicant's other evidence.

30 Mr Cross argued that the letter from Mr Studdy was no more than helpful assistance for the applicant in securing a bank loan. Including a reference to probationary employment, may have adversely affected the loan application.

31 It was the applicant's case that she went to work for the Studdys on a long-term basis and was assured the job was permanent. She referred to a favourable reference she had received from a Dr Chris Fenton.

32 In an unusual twist, the day after the case had concluded, the applicant wrote to the Commission and made further comments about the respondents' evidence. She reiterated her explanation for claiming to be unemployed when she wasn't. She said she was angry and deeply hurt and believed that Mr Studdy had taken away her security.

33 The Commission forwarded this correspondence to the respondents' solicitor and invited any further submissions. The respondents' solicitor replied on 3 March 2004. The respondents emphasised that the applicant had given evidence that she had signed the Form 7A application on 22 September 2003 at a time when she was clearly not unemployed.

34 Section 83(2)(b) of the Act exempts "employees serving a period of probation or qualifying period" from the unfair dismissal provisions of the Act. This section is to be read in conjunction this s6(1)(c) of the Industrial Relations General Regulations 2001. The relevant provision is expressed as follows: 6(1) Other exemptions from unfair dismissal provisions (1) For the purposes of section 83(2) of the Act, the following classes of employees are exempted from Part 6 of Chapter 2 of the Act: (a) … (b) … (c) employees serving a period of probation or qualifying period, if the duration of the period, or the maximum duration of the period, is determined in advance and either: (i) the period, or the maximum duration, is three months or less, or (ii) if the period, or the maximum duration, is more than three months - the period, or the maximum duration, is reasonable having regard to the nature and circumstances of the employment.

35 In Erduran v Menzies Group, I referred to the words "determined in advance" and held that the expression meant that the probation or qualifying period should be known to the employee prior to the commencement of the employment; see also Key v Stewart Upton Pymble (unreported, Bishop C, IRC98/5503, 19 April 1999).

36 In this case the respondents' evidence was that the applicant was informed at a meeting on 14 June 2003 and in a telephone call the next day that she would be on a three month trial or probationary period. There was no argument that she commenced employment on 23 June.

37 The applicant maintained that the issue of probationary employment was never raised with her at the interview, or at any other time prior to, or after commencing employment. I note that the applicant's affidavit does not make any reference to whether the word "trial" was mentioned. If I accept the respondents' evidence, the applicant was informed prior to commencing employment, thus meeting the test of the probationary period being "determined in advance." However it is not quite as simple as that.

38 Again, in Erduran v Menzies Group, I discussed the purpose of probation and said at paras 30 to 36: Kirby , P in Director General of the Department of Corrective Services v Mitchelson (1992) 26 NSWLR 648 referred to the usual purpose of probation when he said: The very purpose of probation will often be to consider by observation of the probationer's work performance under trial, whether he/she is suitable to enjoy the privileges attaching to permanency. In Creedon v Clarvon Ltd t/as Footrest Shoes, (unreported), Matter IRC98/5227, 16 June 1999, I observed that probationary periods serve a dual purpose: On the one hand the purpose of a probationary period is to test the employee's fitness and suitability for the position held. On the other, the employee can make an assessment of whether the position is really what was expected and, if not, conveniently resign. It is trite to observe that there are many more instances of probationary employees being dismissed by the employer, than those who willingly resign. See also Hazel Lang and Reid and Vasely. More recently, my colleague Glynn J in Burks v Zanmarl Pty Limited [2000] NSWIRComm 167 discussed the nature of probationary employment in much the same way, albeit in the context of s106 (unfair contract) applications. At para 108 her Honour said: The usefulness of the probationary period goes beyond such practical aspects as observing how competent an applicant actually is in a position to other matters such as seeing how the employee measures up in the workplace as to interaction with other people. A probationary period offers the utility of finding out whether, for instance "paper" qualifications that may have been offered are a true indicator of the effectiveness of the employee in the actual job or that claimed experience is actually demonstrated in practice. and at para 109: I do not accept the applicant's contention that the probationary period was unfair. It was one for the benefit of both parties. It allowed a reasonable period within which each party could assess his satisfaction either with the job itself and its conditions (the applicant) or, for the respondents, with the fitness of the applicant for the position. See also Follows v Knight Frank NSW Pty Ltd [2002] NSWIRComm 288. It is appropriate at this juncture to comment on the three cases referred to me by Mr Kennedy. With respect, the facts and circumstances of those cases are so far removed from the facts and circumstances here, as to be entirely unhelpful to the respondent's case. So, I turn then to the broader concept of probation; both as to its literal definition and what the ordinary bystander might understand the term to mean. The Macquarie Dictionary defines the word as: 1. The act of testing. 2. The testing or trial of a person's conduct, character, qualifications or the like. 3. The state or period of such testing or trial. The Shorter Oxford Dictionary definition is: 1. The action or process of testing or putting to the proof; trial, experiment; investigation, examination. 2. The testing or trial of a person's conduct, character, or moral qualifications.

39 I turn now to the issue to be determined in this case.

40 Leaving aside whether the applicant was told she was on probation, it seems to me that it is relatively important to consider whether the applicant would have had a reasonable expectation that, as a live-in housekeeper, she would be on probation or trial.

41 I accept unreservedly that a live-in housekeeper must have the absolute confidence and trust of the employer. After all, it involves a complete stranger entering the privacy of the family home. Moreover in this case, the applicant was required to care for a disabled child. If a trial or probation period was essential for any job, then surely it must be for one such as this.

42 In this regard, I accept Ms Frost's evidence (which was not disputed by the applicant) that the industry practice insists on trial or probationary periods for persons such as nannies, live-in housekeepers and carers. I would add that such evidence makes plain common sense and would be universally acknowledged.

43 I note that the applicant did not contest the evidence that she had in fact worked for one of the agencies contacted by Ms Frost. The applicant must have known what was standard industry practice and indeed, had worked under it. I find that the applicant knew the industry practice was for trial periods and that she could have been under no illusion that her employment was conditional on the trial working out.

44 Further, it is improbable that Mr Studdy would not have mentioned a trial or probationary period during a one and a half hour interview with the applicant. In fairness to the applicant, perhaps in the excitement of the prospect of a new job with much to discuss and consider, she simply didn't want to hear anything about a trial. From her demeanour in the witness box, she seemed to take offence at any suggestion that someone of her character and qualities would ever be thought to be on trial. However, on the balance of probabilities I accept that Mr Studdy would have mentioned a trial or probationary period at the meeting on 14 June 2003. I find accordingly.

45 The applicant stressed that the letter of 15 June from Mr Studdy corroborated her claim of not being on probation. I cannot accept that to be the case. The letter was sought by the applicant to secure a home loan. It makes perfect sense that it would be couched in the terms that it was. In any event, it was not a letter of appointment in the strict sense, as it did not mention critical employment conditions such as the hours of work. The letter had a particular collateral purpose. I accept that Mr Studdy did not include mention of the trial period in order to assist the applicant's request for a bank loan. Further, I note that the salary mentioned in the letter was much higher than what she was actually paid.

46 My determination of this matter can be concluded by the findings earlier made. However, in deference to the respective cases advanced by the parties, I would make some additional observations.

47 The Commission accepts that the applicant felt genuinely aggrieved by the circumstances of her termination of employment. She felt hurt and humiliated. While I make no specific findings on these circumstances, at the very least it might be said that the situation could have been handled somewhat differently.

48 However, even if the applicant had firstly, overcome the jurisdictional hurdle and secondly, established that her dismissal was unfair, I would not have been inclined to make any orders in her favour. I have arrived at this conclusion for the following reasons.

49 Section 89(6) of the Act requires the Commission in assessing any compensation payable to "take into account whether the applicant made a reasonable attempt to find alternative employment and the remuneration received in alternative employment, or that would have been payable if the applicant had succeeded in obtaining alternative employment".

50 On one view of it, the applicant actually benefited from her termination of employment. She obtained alternative employment on 15 September on a significantly higher salary than she was previously paid - $900 a week rather than $600. She had been on paid notice up to 27 September. In other words, the applicant suffered no economic loss from her termination of employment and, on her own admission, went to a better paid job.

51 I am most troubled that this evidence only emerged after a notice to produce was served on the applicant. The applicant made no reference to obtaining alternative employment in her affidavit filed on 17th December 2003; an affidavit which she acknowledged had been prepared with legal advice. I view this omission as most serious.

52 Of more concern was the applicant's statutory declaration accompanying her s84 application, dated 22 September 2003. She stated therein her occupation as "unemployed". This was untrue. I might be disposed to think that this was merely carelessness on the applicant's part. However, attached to her s84 application was a statement in which the applicant said: I feel I should be compensated by way of monies by Mr Studdy, until I can obtain further employment. Which I have been seeking since my dismissal. This situation has placed me in a serious financial situation, where I am currently at risk of losing everything I own.

53 The applicant claimed she wrote this statement a few days after her dismissal when she was unemployed. Even if this be so, no attempt was made to inform the Commission of the true position in her affidavit of 17th December.

54 These were serious errors which do not sit comfortably with the Commission. For these reasons, I would not have been inclined to make any orders in the applicant's favour (assuming the jurisdictional hurdle had been overcome).

55 Nevertheless, the Commission finds that the applicant in matter IRC03/5294 was a class of employee exempted from the unfair dismissal provisions of the Act. The application must be dismissed for want of jurisdiction. I do so.

56 Accordingly, these proceedings are now concluded.

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