Helen Hartley v MGICA

APPLICANT: Mr J P Phillips of counsel Solicitor: Mr P Hayward Haywards Solicitors LEGAL REPRESENTATIVES: RESPONDENT: Mr R M Goot of senior counsel Solicitor: Ms L Constantine Blake Dawson Waldron

JUDGMENT: - 30 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J 21 September, 2001 Matter No IRC 2864 of 1999 HELEN HARTLEY v MGICA PTY LIMITED Application under s 106 of the Industrial Relations Act 1996 Judgment

1 Helen Vivian Hartley ("the applicant") was employed by MGICA Pty Limited, a lenders' mortgage insurance company. MGICA is the respondent in these proceedings. The applicant was employed as an account manager at the time of the termination of her employment on 30 April 1999.

2 The respondent had restructured its business and, as a consequence, the position of account manager became redundant. The applicant was offered employment in other roles but declined. Ms Hartley alleged that the abolition of the position of account manager amounted to termination of her employment. She was not given any redundancy pay. The applicant alleged that other employees were provided with redundancy pay. The applicant claimed that pursuant to s 106 of the Industrial Relations Act 1996 her contract of employment with the respondent "was and is unfair, unconscionable and contrary to the public interest". The applicant sought the following orders: 1. An order declaring void in whole or in part or varying in whole or in part either from its commencement or from some other time the contract of employment between the applicant and the respondent under which the applicant performed work in an industry. 2. Further, in addition, an order that the contract of employment between the applicant and the respondent under which the applicant performed work in an industry is unfair, harsh and unconscionable and contrary to the public interest. 3. Further, in addition, an order varying the contract of employment between the applicant and the respondent from its commencement so as to include the following terms: (a) upon termination of employment for any reason the respondent shall give to the applicant 3 months notice of termination or payment in lieu of such notice of termination. (b) upon termination of employment for reasons of redundancy the respondent shall pay to the applicant in addition to notice under (a) above a redundancy payment calculated in accordance with the redundancy policy applied to award covered employees (a) (sic) for the purpose of (a) and (b) above payment in lieu of notice shall be calculated by reference to the total value of all benefits that the applicant would have received during the notice period. 4. Further, in addition, an order that the respondent pay to the applicant such amount of money in connection with the contract so avoided or varied as may appear to be just in the circumstances. 5. An order that the respondent pay to the applicant interest upon such amount of money as is ordered to be paid to the applicant in connection with the contract as varied at such rates and from such time as this Honourable Commission considers appropriate. 6. An order that the respondent pay the applicant's costs of these proceedings. 7. Such further or other orders as this Honourable Commission considers appropriate. 3 The amount sought by Ms Hartley in respect of redundancy pay entitlements was $160, 797.

Account Manager v Relationship Manager 4 The respondent had employed the applicant since 23 March 1987. Initially, the applicant had been engaged as a claims controller. In 1989 the applicant took up the position of senior services officer and in 1994 she was appointed an account manager. Mr John Clive Scott who was the Regional Manager, North Eastern Region for the respondent and who gave evidence for the respondent, agreed that Ms Hartley was "A very good employee". Indeed, he agreed that any employee who could achieve a bonus of 17.5 per cent, which Ms Hartley had in 1998, would have to be regarded as an "exceptional employee".

5 Ms Hartley deposed that the main functions/key result areas of the role of account manager were:

· Customer relationships; · Customer service; · Risk management; · Best practice and team performance. 6 Ms Hartley was remunerated by way of a base salary plus bonus. In 1999 her annual income was $77,981 comprising base salary of $59,842, superannuation (salary sacrifice) of $3,023, bonus of $10,581 (attributable to the 1998 year) and an employer superannuation contribution of $4,535. The bonus was payable at the employer's discretion, although as an account manager the applicant had always received a bonus. The criteria for determining the amount of bonus were:

· Customer service responsibility; · New business development; · Arrears/default management; · Performance appraisal. 7 With the restructuring of the business the position of account manager ceased to exist. In cross-examination Ms Hartley agreed that she was invited to register an interest in three alternative new positions, namely, relationship manager, regional portfolio manager and senior underwriter. She indicated to the respondent that she had no interest in any of these alternative positions. In relation to the regional portfolio manager and senior underwriter roles, Ms Hartley said that these only encompassed one facet of the account manager role. The applicant agreed in cross-examination that she did not articulate her concerns about the limited compass of the two new roles to the respondent.

8 In respect of the position of relationship manager, the applicant deposed that Mr Scott informed her on 30 March 1999 that she had been selected as one of the relationship managers. Ms Hartley said in her affidavit: The role offered to me as Relationship Manager is noticeably different from my previous role as Account Manager in the following respects: (a) I would no longer have any underwriting authority. (b) I would no longer have any responsibility or control over Default Management Processes. (c) I would no longer have authority to approve new applications under the policies. (d) I would no longer have any responsibility for risk management. (e) I would no longer have any responsibility for default management. 9 The applicant saw the role of relationship manager as "essentially one of marketing and sales." Additionally, Ms Hartley deposed that there was a significant difference in the remuneration packages applicable to the two roles, especially in the area of bonus. The applicant said that based on her 1998 income, the bonus system applying to the relationship manager's role would have resulted in $5,000 - $6,000 less than what she had received as an account manager.

10 The applicant indicated to Mr Scott that "I will not be accepting the position as it is not in my best interests or my career."

11 In relation to the differences between the account manager and relationship manager roles, Mr Scott in his evidence agreed that:

· Underwriting was a significant part of the account manager's role; · The relationship manager no longer had the authority to underwrite loans; · The key focus of the relationship manager's role was marketing and sales; · The relationship manager had no direct control over managing defaults and processing defaults and claims; · The relationship manager did not have authority to approve new applications; · The relationship manager had a contributory, but not primary, responsibility for risk management; · There was "a fundamental difference" between the roles of account manager and relationship manager.

12 Mr Petar Rastoka was the principal of Mercer Cullen Egan Dell, a firm of human resources management consultants. Mr Rastoka gave evidence for the respondent that his firm was engaged by the respondent in 1999 to provide it with remuneration advice on five new positions, including the position of relationship manager. In providing this advice Mr Rastoka said his firm carried out detailed evaluations of each of the new positions. Further, that since his firm had on previous occasions carried out an evaluation of the role of account manager for the respondent, he was able to provide an assessment of whether the role of relationship manager was a reasonable alternative for the role of account manager.

13 The methodology used by Mr Rastoka's firm was to evaluate the major components believed to be present in all jobs, which were grouped into three main factors, namely:

· Expertise - the knowledge, skills and experience required for the job, as well as the breadth of functions and interpersonal skill demands; · Judgement - the policies and guidelines which exist and impact upon the reasoning and thinking challenges faced by the position; · Accountability - the measured outcomes expected from the position. 14 The "job size" of the respective positions as they were evaluated by Mr Rastoka's firm, in terms of total points, were:

· Relationship Manager - 393 points · Account Manager - 261 points. 15 The higher point score for the relationship manager represented amongst other things "a higher level of accountability and judgement required to perform the role, in comparison with the Account Manager" and, therefore, the relationship manager's position was recommended to attract a higher level of remuneration. Mr Rastoka indicated in his evidence that the difference in point scores would probably translate into a difference in remuneration of approximately $8,000 at the mid-point of the performance range.

16 The advice of Mr Rastoka's firm to the respondent also expressed the opinion that: Within MGICA (PMI) the Relationship Manager role provides opportunity for the individual that previously held the Account Manager position to develop and broaden their experience and skills as the role is significantly closer to the Regional Manager position, and could be seen as the obvious internal successor to this role. 17 Under cross examination Mr Rastoka indicated that regardless of the size of jobs as measured by points, the jobs themselves could be totally different. In other words, as I understood Mr Rastoka's evidence, even if there were only a few points difference between two jobs this did not mean the jobs were similar - they could be quite different.

18 Kelly Francis Beverley was the manager, human resource development for the respondent and gave evidence for the respondent. In relation to the issue of the differences between the role of account manager and relationship manager, Ms Beverley deposed that the relationship manager had a greater level of responsibility than an account manager and that the former "has more impact and work value" and a "higher status" than the latter. Under cross-examination, Ms Beverley:

· Agreed that underwriting was a key function of the account manager; a primary role of the job; · Agreed that default management was a key function of the account manager role; · Agreed that the two new roles of underwriting manager and relationship manager "sprang from the role of account manager"; · Explained that the "account manager role was essentially concerned with maintaining relationships with existing customers and with underwriting, with default management, the relationship manager role was concerned with winning of new customers…".

19 Ms Beverley did not accept that the role of relationship manager was essentially one of marketing and sales but was a "far broader and complex" role.

20 The reason expressed by Ms Hartley for refusing the offer of relationship manager was that the move was "not in my best interests or my career." Under cross-examination the applicant conceded that those elements of the account manager's role that were important to her, for example, underwriting, default management, risk management, and which presumably she wished to retain to further her career in that direction, did not constitute a significant proportion of the roles she had occupied subsequent to leaving the respondent's employ. Hence to that extent, since leaving the employ of the respondent, the applicant had not enhanced her career.

21 On the question of remuneration, the applicant had said to the respondent that it was her view that "my earnings will be considerably less" as a relationship manager. This view appears to have been based on a belief that her bonus earnings under the new arrangements were likely to reduce by 10 per cent. The respondent maintained that it had indicated to the contrary. In a letter expressing his disappointment that the applicant had declined the role of relationship manager, Ian Graham, the respondent's managing director, said on 29 April 1999: It is not correct that your earnings will be less than as an Account Manager. Your base pay and the remuneration range for the Relationship Manager role is higher than that offered in your current position. You have commented that the new bonus structure available will not be as lucrative. As you are aware, bonuses are based on performance and as such are not guaranteed. Notwithstanding any reservations you may have the base and fixed remuneration components together will provide higher levels of remuneration than current arrangements where objectives are met or exceeded. 22 The evidence in respect of remuneration was that the remuneration range for the account manager position was $56,379 to $68,908. The remuneration range for the relationship manager was $68,450 to $83,650. Ms Hartley's fixed remuneration as an account manager was $67,400. Her fixed remuneration as a relationship manager, if she had accepted the appointment, was to commence at $68,450. The "maximum variable reward" (bonus) that could be achieved by an account manager was 22.5 per cent of "fixed remuneration" (Base salary plus salary sacrifice superannuation). A relationship manager could receive up to 20 per cent of their fixed remuneration, although a target of 10 per cent bonus was payable on meeting agreed objectives. In her evidence Ms Beverley deposed that "The new bonus program is not as discretionary as the variable performance reward program, as the guidelines or objectives are set by the employee and the manager so the employee has control over what they will achieve during the year. MGICA sets a "target" of where it expects the average of our people to perform." I note that Ms Logan, who accepted the role of relationship manager with the respondent, received about "10 to 11 per cent" by way of bonus for the 1999 year. Between 1992 and 1998 Ms Hartley's bonus varied between 17.5 to 22.5 per cent.

23 On 18 March 1999 Ms Hartley indicated to Mark Anderson, who at the time was the respondent's state manager - NSW and ACT, that she had no interest in the new positions. On 29 March Ms Hartley had a telephone discussion with Mr Scott regarding the relationship manager role. She explained a number of her concerns about the role and asked Mr Scott what the respondent would be offering if she failed to accept the new position. Mr Scott indicated to the applicant "there is no redundancy option". After informing Mr Scott on 30 March that she would not be accepting the role of relationship manager Ms Hartley had a conversation with Mr Anderson who advised her "there was no prospect of redundancy". On 13 April the applicant had a conversation with Ms Beverley where, once again, she was informed that she would not be entitled to a redundancy package if she did not accept the appointment to the position of relationship manager and resigned.

24 Subsequently, Ms Hartley made several requests for a copy of the respondent's redundancy policy but, curiously, was informed that details of that policy were only available for people who had been made redundant. On 21 April, at the applicant's request, she met with the respondent's managing director, Mr Graham. Further discussion occurred about the restructuring of the business and the role of relationship manager. During the discussions the applicant made a further request for a copy of the redundancy policy and was told she already had a copy that had been given to her by Mr Anderson in about November 1998. Ms Hartley was surprised that this one page document was all there was to the respondent's redundancy policy. The document provided by Mr Anderson only contained the entitlements of an employee whose position had become redundant. A further document headed "retrenchment policy", which included in it a redundant employee's entitlements, was later given to the applicant by Ms Beverley on 22 April. The respondent's retrenchment policy provided as follows: RETRENCHMENT POLICY

Objective : As Company needs change MGICA may from time to time need to retrench employees. This will always be an action of last resort and will only occur after any opportunities for redeployment have been fully explored. Where an employee's position is no longer required by MGICA and it becomes clear that the only viable option is for the employee's services to be terminated then MGICA will ensure that: Employees are treated fairly and are able to leave MGICA with dignity. Financial and other support is provided to minimise the impact of retrenchment A common set of standards, providing reasonable benefits, fairness and compliance with relevant legislation, apply across MGICA.

Defining Retrenchment : Retrenchments may arise when work circumstances have changed to such an extent that the company is no longer able to provide a role which will productively utilise the skills and capabilities of an employee.

Retrenchment circumstances may occur where : The role filled by an employee is no longer required by the business, or The employee's role has changed such that he or she no longer has the skills to fill the role and could not acquire the skills within a reasonable period of time, and There is no other suitable role for the employee

An employee is terminated for poor performance in their role, or The employee is offered but declines to take a reasonable alternate role Application : All permanent employees

Payments: Retrenchment payments include A. 8 weeks pay in lieu of Notice (reduced by any period of notice given) B. 3 weeks pay for each full year of service (pro rata for incomplete years) C. Normal withdrawal benefit from the MGICA Ltd Staff Superannuation Plan D. Maximum withdrawal benefit (sic) form the MGICA Ltd Staff Superannuation Plan

The payment is equal to A + B + C or A + D whichever is the greater Long service leave for 10 years or more Accrued annual leave entitlements Outplacement: Outplacement assistance, paid for by MGICA, will be offered to an employee through a recognised provider chosen by MGICA to assist the employee in finding alternative employment. The outcome of this assistance will remain confidential between the employee and the program provider. 25 In a letter from the applicant to Mr Graham dated 22 April the applicant said: As you are aware, it is my view and the view of my solicitor that a consequence of the restructure of MGICA is the redundancy of my position of Account Manager and accordingly results in the termination of my employment. Put another way, the termination of my employment is a consequence of the restructure. You have offered me a position in the new structure as Relationship Manager which is a quite different role and which has a bonus structure which would not on any realistic view allow me to achieve the significant bonus earnings I have achieved over the past 5 years. Accordingly, on any view, the job is quite different and my earnings will be significantly less. Even if you were entitled to unilaterally direct me to take up a new and different role (which I doubt), you are not entitled to do so while at the same time reducing my income. The redundancy policy entitles me to a significant redundancy payment and I require you to make that payment. I appreciate you have a different view of the matter, however, to ensure that I can preserve my rights and MGICA can proceed with its restructure, I propose that I cease employment on 30th April 1999 which is the last business day before the restructure. 26 Mr Graham responded to the applicant's letter on 29 April. I have already referred to Mr Graham's response in the context of the issue of remuneration, where Mr Graham denied that the applicant's remuneration would be lower in the new role. Mr Graham went on to say in his letter: You have also stated that the redundancy policy entitles you to a '"significant redundancy payment". This is not the case. The Policy in fact states quite clearly that "retrenchments may arise when work circumstances have changed to such an extent that the company is no longer able to provide a role which productively utilises the skills and capabilities of an employee". Certainly, the restructure means "work circumstances have changed". However clearly this has not been to the extent that MGICA is unable to provide you with a role that productively utilises your skills and capabilities. In fact the policy makes it clear that retrenchment will always be an "action of last resort and will only occur after any opportunities for redeployment have been fully explored". Further it states "Retrenchment provisions do not apply where: …the employee is offered but declines to take a reasonable alternate role." Our policy is aimed at providing ongoing employment for our people and therefore having been provided with a Relationship Manager role, there is no entitlement to any redundancy payment in your circumstance. You have understood that our view of your circumstances and entitlements on you choosing to cease your employment with MGICA on 30 April 1999 is quite different to that communicated in your letter to us (sic) 22 April. As you have advised your last date of employment is Friday 30 April I have arranged for you to be provided with termination payment on that day. If you have any questions in regard to these calculations please discuss them with Kelly Beverley.

27 The evidence revealed that the respondent made redundancy payments to three employees. The first was Ms Diana Logan. Ms Logan had been designated as a relationship manager under the old structure. Ms Logan accepted an offer to take up the position of relationship manager under the new structure and although her title remained the same, her role changed. In a letter from Ms Beverley dated 1 April 1999, Ms Logan was offered the position of relationship manager under the new structure at a "total employment cost" of $68,450 per annum plus bonus. The achievable range for the bonus was 10-20 per cent with a target of 10 per cent payable on the employee meeting agreed objectives. The letter indicated that the commencement date for employment in the new position was 3 May 1999. Ms Logan was also provided with a redundancy payment of $153,073.78 in accordance with the respondent's retrenchment policy. The payment included 8 weeks' pay in lieu of notice, notwithstanding that Ms Logan was to commence in her new role in 4 weeks' time. The reason given by the respondent for paying Ms Logan a redundancy payment was that the relationship manager role under the new structure was not considered a "reasonable alternate role" in terms of remuneration, capability and status. Ms Logan's "total remuneration" (i.e., base salary plus salary sacrifice for superannuation) in her old position was $75,593 and in the new position it was $63,674. Ms Hartley's "total remuneration" as an account manager was $60,465 and as a relationship manager, $63,674. The two other employees who received redundancy pay without any break in the continuity of their employment were Keith McKenzie, an account manager who was appointed to the position of underwriting officer, and Mark Anderson, who was the State Manager and accepted the role of regional portfolio manager. In respect of both of these employees it was considered that, like Ms Logan, the positions offered to them under the new structure were not reasonable alternate roles and, therefore, it was said that redundancy pay was payable under the respondent's retrenchment policy.

28 I was informed that because the role of relationship manager offered to Ms Hartley was considered by the respondent to be a reasonable alternate role, even if she had accepted the position, unlike the other employees I have referred to, Ms Hartley would not have received redundancy pay.

Consideration 29 These proceedings involve a not uncommon situation where, as a consequence of a company undertaking a restructuring of its operations, an employee found her job was to disappear and she was asked to accept a new role. In this case, the applicant declined to accept the new role as being unsuitable. Upon termination of her employment the applicant sought redundancy pay, which was refused on the grounds that she had been offered a "reasonable alternate role" in accordance with the employer's retrenchment policy and had unreasonably refused to accept it.

30 The issue, of course, is whether in the particular circumstances of this case, the contract or arrangement between the applicant and her former employer was unfair, harsh or unconscionable for the reasons alleged in the summons for relief, but more particularly, for the reason that on termination of the contract or arrangement, the applicant was not paid redundancy pay.

31 A general industrial principle that has applied for nearly 20 years now, underpinned by safety net arrangements in awards and/or legislation, is that where an employer restructures its business so that the job an employee had been doing no longer exists and, as a consequence, the employee's employment is terminated, a special payment is made to the employee. The payment is variously described as "severance", "redundancy" or "retrenchment" pay. The payment is in addition to other payments to which the employee might be entitled, such as leave entitlements. The rationale for redundancy payments is generally agreed to be compensation for the inconvenience and hardship occasioned by unexpected job loss not through the fault of the employee and for the loss of non-transferable credits such as long service leave and sick leave that an employee would have continued to accrue if he or she had continued in his or her employment.

32 Principles that might be said to be associated with an entitlement to redundancy pay were summarised by Sams DP in Shop, Distributive and Allied Employees' Association, New South Wales v W D & H O Wills Holdings Ltd [2000] NSWIRComm 98 (9 June 2000) at pars 66 and 67: 66 A body of well settled contemporary industrial principles has developed from these, and many other, authorities. They may be summarised as follows: In redundancy situations an employer is obliged to: 1) Give reasonable notice to employees and/or their Unions; 2) Adequately consult with employees and/or their Unions on the impact of the proposed changes; 3) Explore genuine alternative options for redundancy, such as redeployment or relocation; 4) Ensure such options are fairly offered to affected employees; 5) Provide reasonable standards of redundancy benefits; 6) Provide appropriate ancillary services, such as time off to seek alternative work, retraining opportunities, outplacement services or financial planning; 7) Ensure employees nominated for redundancy are fairly selected on an objective and unbiased basis. 67 Notwithstanding the employer's obligations, there are certain reciprocal obligations on employees when confronted with genuine efforts by the employer to minimise the impact of potential redundancy. These obligations include: a) A willingness to participate in consultation with the employer; b) Genuinely participating in exploring alternatives to redundancy; c) Not unreasonably refusing to accept retraining, alternative employment, redeployment or relocation. 33 Sams DP also referred to the decision of Merriman C of the Australian Industrial Relations Commission in Clothing & Allied Trades Union of Australia v Algray Pty Ltd (1988) 31 IR 365: In considering all of the aspects of these two claims, the company seeks relief on the basis that neither former employee was actively seeking a commitment to employment or cooperating with the company as to future employment. The company's contention in this matter is supported by a decision of the Industrial Commission of SA in the matter of the Milk Processing and Cheese Manufacturing Etc (Appeal) case. In its decision the Full Commission said:

Like the Australian Commission, we agree that, if employment of a suitable nature and returning a comparable remuneration can no longer be found or is not arranged for by the employer, then it is appropriate to require special provision to be made. It goes without saying that any employee who unreasonably either declines such employment or fails to cooperate in mitigating any disadvantage in an appropriate manner can scarcely be heard to seek the same special treatment as those who do.

I certainly support this decision that in a redundancy situation where the employer is genuinely attempting to find alternative employment an employee should cooperate in every way to accommodate the alternative employment efforts. 34 I do not think there can be any criticism of the respondent in providing adequate notice to employees of the proposed restructuring arrangements and informing them of the effect of the changes on their jobs. The respondent also undertook a program of consulting employees.

35 The evidence was that realistically, the applicant had the opportunity to nominate for one of three new positions, namely relationship manager, senior underwriter and regional portfolio manager. On 18 March 1999 the applicant said that she had no interest in the positions in the new structure. Consequently, the applicant took no steps to request to be considered for any of the positions.

36 In relation to the senior underwriter position, this was less senior and the remuneration level was lower than that of account manager and relationship manager. I think it is understandable that the applicant did not regard this position as acceptable. As for the regional portfolio manager's position, this essentially replaced the state manager's position albeit on a lesser salary. Mr Anderson, who had been the state manager prior to the restructuring of positions, was appointed to the position of regional portfolio manager. In my view, it is clear from the evidence that although the applicant was advised that she could apply for the position of regional portfolio manager, she felt that to do so would not be worthwhile. Furthermore, as an account manager, she was encouraged to apply for either the relationship manager or the senior underwriter positions. The applicant was certainly not encouraged in any way to apply for the regional portfolio manager's position. In discussions the applicant held with representatives of the respondent, almost exclusively the focus was on the position of relationship manager. At the point where it must have been patently clear to the respondent that the applicant was not prepared to accept the role of relationship manager, there was no fulsome attempt to explore with her the alternatives of senior underwriter or regional portfolio manager. In the circumstances, I do not consider that it could seriously be contended that the applicant failed to reasonably consider the alternative positions of senior underwriter or regional portfolio manager.

37 On 29 March 1999 the applicant had a conversation with Mr Scott about the applicant's suitability for the role of relationship manager. In that conversation, the applicant said to Mr Scott "I think the new relationship manager role is fundamentally different to my current responsibilities. There is no risk management function involved."

38 On 30 March 1999 the applicant was informed that she had been selected for the position of relationship manager. The applicant responded by saying "I will not be accepting the position, it is not in my best interests or my career." The applicant was asked to reconsider, as there was no prospect of redundancy pay.

39 The applicant maintained her position that the role of relationship manager was not something that she wanted or was willing to perform. This was despite the fact that on a number of occasions she was told by various representatives of the respondent that on the basis that the relationship manager's position was regarded as a reasonable alternate role to that of account manager, redundancy pay would not be payable if the applicant's employment was terminated. Further, that if she did not accept the position her only option was to resign.

40 This brings me to a central issue in the proceedings, that is, whether or not the relationship manager's position in the new structure was "a reasonable alternate role." In her evidence the applicant explained why she did not consider the relationship's manager's position to be a reasonable alternate role. The respondent took a different view, notwithstanding that it was accepted by the respondent that the account manager role was different from that of relationship manager. Indeed, Mr Scott agreed that the roles were "fundamentally different". Ms Beverley was not prepared to make such a concession but she did accept that there were differences in the roles and she agreed that aspects of the former role, which the applicant regarded as important, did not constitute any part of the latter role.

41 The firm of consultants engaged by the respondent to carry out detailed evaluations of each of the new positions expressed the opinion that … the Relationship Manager role provides opportunity for the individual that previously held the Account Manager position to develop and broaden their experience and skills as the role is significantly closer to the Regional Manager position, and could be seen as the obvious internal successor to this role. 42 This opinion seems to have fortified the respondent in the view that the relationship manager's position was a reasonable alternate role for the applicant. Furthermore, there was no suggestion that the applicant could not perform the role of relationship manager, even if additional training was required in relation to some aspects of the role. The consultant's opinion was based only on an analysis of the job and not on the person filling the job.

43 The applicant's objection to accepting the position was that relationship managing was something she did not wish to follow as a vocation yet it was sought to be imposed upon her; it did not meet her needs or aspirations as far as work and a career were concerned; she had been an outstanding account manager, consistently earning the highest bonus. The respondent, on the other hand, adopted the view that the applicant was capable of doing the work, albeit perhaps with some extra training; the remuneration level was higher than that of account manager; the position of relationship manager was a stepping stone to regional manager; that the respondent had properly consulted with all employees about the new positions and had sought to minimise any hardship and inconvenience; and that it was unreasonable for the applicant not to accept the position.

44 There are some parallels between the circumstances of this case and those in Gala v State Bank of New South Wales Ltd t/as Colonial State Bank (No 2) (1998) 84 IR 216. In Gala the appellant had been employed by the respondent as Treasury Audit Manager, a position that demanded high standards of honesty, integrity, independence and diligence. As a consequence of an amalgamation it was proposed to transfer the appellant to the position of Funds Transfer Pricing System Administrator. The appellant indicated that she was not prepared to accept the position. She regarded herself as a career auditor and was not interested in a position outside that field. Moreover, she considered that she did not have the skills to fill the new position. At first instance, Marks J, while sympathising with the appellant's length of service, her senior position, the abruptness of the notification that her long-held position had been made redundant, decided that it was not unreasonable for the employer to require the appellant to undertake the new position. In arriving at this view his Honour put great store in the fact that the appellant would not give the new position a trial because she was not interested in any job not within the auditing field. The appeal against his Honour's decision was upheld. The Full Bench (Cahill VP, Maidment and Hungerford JJ) said at 224-225: We have reached the firm conclusion, with due respect to his Honour's findings, that the respondent's conduct was not justified in terms of cl.7 of the Service Agreement. The respondent's direction that the appellant should immediately take up the new position specified and perform the duties entailed in that position was not a reasonable requirement under that clause. In the particular circumstances of the case we consider that that conduct on the part of the respondent was unfair and that it rendered the contract between the parties unfair. To our mind, features of the unfairness include the following: * There was an absence of notice or warning that the appellant's long-held, senior position was to be abolished and that, as a consequence, the appellant would no longer be able to work in that position. * Together with the giving of advice that that was indeed the case was the requirement that the appellant should transfer, virtually immediately, to another position in an area other than auditing, the appellant's only area of employment and in which she specialised, the duties of which were not able to be spelt out to the appellant in detail. * There was no attempt by the respondent to obtain the appellant's views on the proposed deployment before the decision to that effect was made. It was a "take it or leave it" situation. * There was unfairness in the options put to the appellant of, on the one hand, take up the new job, or, on the other, resign, be deemed by the respondent as having abandoned employment, or take the job, try it, and, if dissatisfied, then resign. * There was unfairness in the respondent's failure to give proper appreciation and consideration to the appellant's disinclination to take up the new position and the appellant's reasons therefor. Those reasons were expressed verbally to officers of the respondent and spelt out in the appellant's letter to Mr Neville on 2 September 1996. In our opinion, those reasons are both substantial and understandable, and should have been given considerably greater weight by the respondent than was actually the case. 45 As to the reliance by Marks J on the fact that the appellant would not give the new position a trial because she was not interested in any job not within the auditing field, the Full Bench said: We differ from his Honour in the weight to be given to that factor. As we have stated, we think that the respondent's (sic - appellant's) attitude was well-founded, understandable, reasonable and justified, and should be regarded in that light in weighing up the various factors of relevance in the matter. 46 Whilst there are, indeed, parallels between the present case and Gala, there are also important differences. Firstly, it could not be said that in relation to the applicant there was an absence of notice or warning that her position would be abolished. Secondly, it could not be said that there was a requirement on the applicant to transfer to the new position virtually immediately. Thirdly, it could not be said that there was no attempt on the part of the respondent to obtain the applicant's views on the proposed deployment before the decision to that effect was made. What can be said, however, is that there was a single-mindedness on the respondent's part about the new structure and an unwillingness to countenance any departure from it which, I believe, led to a failure by the respondent to give proper appreciation and consideration to the applicant's disinclination to take up the new position and her reasons for taking that position. For example, there was no attempt by the respondent to consider alternative roles that might have been acceptable to the applicant and, unlike the situation in Gala, no proposal was put to the applicant to at least trial the new position. The only option she was given was to resign. In that sense, the applicant faced a stark "take it or leave it" proposal.

47 The respondent sought to make a point about the fact that the applicant, upon leaving her employment, did not take up employment in the areas in which she professed a career interest. This may be so, but in the absence of evidence that the applicant did not actively seek employment in her areas of interest, it does not detract from her evidence that she did not want to take on the role of relationship manager with the respondent for the reason that it was not in her interests or the interests of her career. It may have been the case that, in seeking to further her career after leaving the respondent's employment, the applicant was unable to find a suitable position and was left with no choice but to accept the employment that she in fact did and which did not involve underwriting and default management.

48 I am moved to observe that if there were no other considerations in this case, it may be that the proper outcome would have been a finding of unfairness. But I would have been equivocal about making money orders pursuant to s 106(5) of the Act to the extent of ordering redundancy pay in accordance with the respondent's retrenchment policy. Whilst I have referred to the respondent's single-mindedness, that trait was not lacking in the applicant either. I did detect an inflexibility of approach by the applicant to the circumstances confronting her. Moreover, in cases such as these, it seems to me that a legitimate and necessary consideration is that where an employer restructures its operations and offers an employee a new position that he or she is capable of performing, albeit with extra training, and the position carries with it equal or greater remuneration and benefits, the employee avoids the hardship and inconvenience of being unemployed and preserves any accrued employment entitlements.

49 Each case, of course, has to be determined on its own facts and the attitude of an employee to any offer of continued employment in a new position has to be taken into account in the employee's favour provided it is "well-founded, understandable, reasonable and justified".

50 I have referred to other considerations. One of them is the level of remuneration. There did not appear to be any issue with the fact that the applicant's annual salary including superannuation and excluding bonus would be about $1,000 more per annum in the new position with the ability to progress to higher levels of remuneration. There was an issue about the bonus. As an account manager the applicant received about 17.5 to 22 per cent of her base salary by way of annual bonus in the five years prior to the termination of her employment. With the introduction of restructured remuneration arrangements the applicant was informed that a bonus would continue to be paid in the range of 0 to 20 per cent. Details of the bonus arrangement had not been fully determined at the time of the applicant's termination but employees were informed that a target of 10 per cent bonus was payable on meeting agreed objectives. I also have the impression from Ms Beverley's evidence that any new bonus scheme would be subject to stricter criteria than the previous scheme and any bonus payable to employees would not be so easily earned.

51 The applicant was also advised by Mr Graham that: As you are aware, bonuses are based on performance and as such are not guaranteed. Notwithstanding any reservations you may have the base and fixed remuneration components together will provide higher levels of remuneration than current arrangements where objectives are met or exceeded. 52 It was put by the respondent that this statement by Mr Graham was some type of assurance to the applicant that she would receive more pay in her new role than previously was the case. I must say I find it hard to interpret Mr Graham's statement as an assurance of the type contended by the respondent, given the qualification of "where objectives are met or exceeded." The "assurance" was that if the applicant met or exceeded objectives, which were yet to be defined, the applicant would receive a higher remuneration as a relationship manager than what she received as an account manager. I think that there was a reasonably based apprehension on the applicant's part that her total remuneration including bonus, at least in the early part of her employment in the new position, would not have been as high as that she was earning as an account manager. In rejecting the position of relationship manager, it was a reasonable consideration on the applicant's part that her total remuneration, including bonus, might not be as high as what she received as an account manager.

53 The other, more important, consideration goes to the issue of redundancy pay. The respondent relied heavily on the terms of its retrenchment policy to contend that the applicant was not entitled to redundancy pay because the role of relationship manager offered to the applicant was a "reasonable alternate role" that the applicant declined to accept.

54 In December 1998 when the restructuring proposal was first announced by the respondent the applicant deposed that Mr Anderson, in response to a question, said: … Account Managers would have a good case for redundancy because their roles moving forward would be so different. 55 The applicant subsequently asked for a copy of the respondent's policy on redundancy and was provided with it. That policy did not contain any conditions on an employee's entitlement to redundancy.

56 In March and April 1999, after being informed that redundancy was not an option because she was being offered a reasonable alternate role, the applicant asked for the latest version of the respondent's redundancy policy. She was initially told she could not have a copy because she was not being made redundant. When the applicant was eventually provided with a copy of the policy, it was in different terms to the one previously provided and included the condition that if an employee declined an offer of reasonable alternate employment, the employee would not be paid redundancy pay.

57 Notwithstanding the fact that the applicant was belatedly made aware of a revised retrenchment policy, a policy evidently determined unilaterally by the respondent, the applicant maintained that she would not accept the role of relationship manager.

58 Upon termination of her employment the applicant was, of course, not paid redundancy pay. However, three other employees of the respondent were paid redundancy pay and I described the circumstances by which that came about earlier in this judgment. If I take Ms Logan's situation as an example, she was paid a considerable redundancy payment calculated in accordance with the formula contained in the redundancy policy, which included eight weeks' pay in lieu of notice, notwithstanding that Ms Logan was to commence in her new role in four weeks' time. The fact of the matter was that in respect of Ms Logan's employment there was no break in the continuity of her employment. The reason given by the respondent for paying Ms Logan a redundancy payment was that the relationship manager role under the new structure was not considered a "reasonable alternate role" in terms of remuneration, capability and status. As to status, I note that Ms Logan's title remained the same.

59 There can be no criticism of the respondent in providing to employees a generous payment as an inducement for them to accept new positions at reduced rates of pay and at a lower status. The difficulty I have though is in accepting the favourable treatment given to one group of employees and not to the applicant. Despite the generosity of approach by the respondent towards its employees in circumstances of a restructuring of its business, the respondent appears to have had a blind spot when it came to Ms Hartley. On the one hand, Ms Logan accepted a lower position in terms of pay. Her salary, excluding bonus, was reduced by about $12,000 per annum. However, this was more than offset, in my opinion, by the fact that Ms Logan suffered no interruption to her employment, she received a lump sum redundancy payment of over $150,000 and, over time, could conceivably have returned to her previous salary, or higher, given the salary range for relationship managers. I note that Ms Logan and the other two employees who received handsome redundancy payments in April 1999 resigned from their employment with the respondent within 12 months of taking up the new positions.

60 The applicant, on the other hand, was a person with 12 years' service. Mr Scott described her as an "exceptional employee". It was acknowledged by Mr Scott that the work of the relationship manager was fundamentally different from that of account manager. The applicant did not regard acceptance of the position of relationship manager as in her best interests or in the interests of her career. Her opinion in this regard was reasonably held. The applicant was apprehensive about whether she would earn sufficient bonus to maintain the income she was earning as an account manager. The apprehension was reasonably based. Despite her service and exceptional record, she was given no other option but to resign. She received nothing on termination other than statutory entitlements and superannuation.

61 I acknowledge that the three employees who received redundancy were asked to accept new positions at lower rates of pay and in respect of Mr Anderson and Mr McKenzie at a lesser status, whereas it was contended that the applicant's salary increased and her status was not affected. Excluding bonus, the applicant's salary increased by a minimal $1,000 per annum. Moreover, whether she could maintain her bonus earnings so that there was no reduction in her overall income, was decidedly unclear. Beyond this, despite the fact that it was abundantly clear to the respondent that the applicant did not want the position of relationship manager, the applicant was offered no incentive or inducement to accept the position. Whilst the other employees did take a cut in salary, the fact that they were paid significant sums of money by way of redundancy pay without a break in the continuity of their employment, in my opinion, meant that by comparison the applicant was treated unfairly.

62 It was submitted for the respondent that even if the applicant had accepted the relationship manager position she would not have received redundancy pay because the position was a reasonable alternate role and the applicant would have received an increase in her salary, excluding bonus, of about $1,000 per annum. This only serves to highlight the unfairness visited on the applicant. The respondent effectively put to the applicant that regardless of whether she wanted to perform the work of a relationship manager she could either accept the position or resign. There were no other options. If she accepted the position, unlike her three colleagues, she would receive no consideration for doing so and certainly not the generous payments made to her co-workers. If she resigned, she would also receive no redundancy pay.

63 The respondent submitted that the applicant was treated according to its retrenchment policy and that, prior to resigning from her employment, the applicant was aware that the policy provided that if the employer offered a reasonable alternate role and the employee declined, no redundancy pay was payable. This was so, although I note the reluctance of the respondent to share with the applicant, details of her employment conditions in relation to retrenchment and the lateness of the decision to provide the applicant with the relevant information. If the respondent's submission is that the applicant made her decision with her 'eyes open' it does not alter the unfairness of the situation the applicant found herself in.

64 During the course of proceedings a number of references were made to the Insurance Industry Award 1998, an Award of the Australian Industrial Relations Commission in the context of its application to the respondent. The respondent indicated, however, there was no contest to the Court's jurisdiction to deal with the summons.

Conclusions 65 I find that the contract of employment in the present case was a contract whereby work was performed in an industry; the retrenchment policy was a related condition or collateral arrangement to the contract of employment. Alternatively, the contract of employment and the retrenchment policy constituted an overall arrangement whereby work was performed in an industry. The contract or arrangement answers the relevant description within the meaning of s 106 of the Industrial Relations Act. Specifically as to those aspects of the contract and/or arrangement that I find to be unfair under the section, I identify them as follows: 1) There was unfairness in the options put to the applicant of, on the one hand, take up the new position or, on the other, resign. 2) There was unfairness in the respondent's failure to fully appreciate and give proper consideration to the applicant's decision not to take up the new role and her reasons for adopting that position. Those reasons were properly based and understandable. 3) There was unfairness in the respondent's failure to give proper consideration to proposing a trial period for the applicant in the new position or to proposing redeployment in some other role within the respondent's business. 4) There was unfairness in the uncertainty surrounding the issue of whether the applicant would maintain her level of total remuneration, including bonus, in circumstances where she was faced with the option of either accepting a job she did not want or resigning her employment. 5) There was unfairness in the differential treatment of the applicant as opposed to other employees who were appointed to new positions in the respondent's business in that the other employees received redundancy pay including pay in lieu of notice, notwithstanding there was no break in the continuity of their employment whereas the applicant, despite her good service, received no consideration upon the termination of her employment.

66 In light of the findings I have made, I propose to make appropriate orders under s 106(1) of the Industrial Relations Act varying the contract of employment to remedy the unfairness therein.

67 I have given close consideration to the question of money orders under s 106(5) of the Act. In my opinion, the unfairness suffered by the applicant warrants compensation. The issue is whether in ordering compensation the applicant should be paid the full entitlement of redundancy pay in accordance with the respondent's retrenchment policy. The issue arises because it might well be argued that in being compensated to the full extent of the entitlement under the respondent's retrenchment policy, the applicant would end up receiving more favourable treatment than those other employees who received redundancy pay but at the expense of having to accept a lower paid job with less status.

68 The applicant, however, had reasonable grounds for declining the alternative employment offered by the respondent and was left with no other option than to resign. Over twelve months after she resigned, the applicant was receiving less by way of salary in other employment than what she had been receiving as an account manager. On balance, therefore, I do not propose to discount any entitlement to redundancy pay except to the extent necessary to avoid double counting.

69 I have decided to make money orders under s 106(5) of the Act to the effect that the respondent will pay to the applicant redundancy pay calculated on the basis of what the applicant would have received if she had been retrenched from her employment in accordance with the respondent's retrenchment policy as evidenced by the document that was annexure "U" to exhibit "F" in the proceedings, less any payment that was paid to the applicant on termination of her employment which, if it were not deducted, would amount to double counting. To this amount should be added interest from the date of filing of the summons in this matter (i.e., 7 June 1999) up to judgment on the basis of the rates prescribed in Sch J of the Supreme Court Rules 1970.

70 The respondent should pay the applicant's costs of the proceedings.

1. The contract of employment between the applicant and the respondent is varied by inserting a provision, operative as from 1 April 1999, that on termination of the applicant's employment upon her position of accounts manager becoming redundant the applicant shall be entitled to redundancy pay calculated in accordance with the respondent's retrenchment policy that is set out in annexure "U" to exhibit "F" tendered in proceedings in matter No. IRC2864 of 1999, less any payment that was paid to the applicant on termination of her employment which, if it were not deducted, would amount to double counting. 2) The respondent shall pay to the applicant the amount calculated in accordance with order 1 hereof together with interest as from 7 June 1999 to date on the basis of the rates prescribed in Sch J of the Supreme Court Rules 1970. 3) The respondent shall pay the applicant's costs as agreed or assessed.

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