Jones v Making Waves Design Pty Ltd

Industrial Relations Act 1996 LEGISLATION CITED: Employment Protection Act 1982

Shop, Distributive and Allied Employees' Association, New South Wales and W D & H O Wills Holdings Ltd [2000] NSWIRComm 98 (9 June 2000) CASES CITED: Huseyin Arslan and Others and Berkeley Challenge (Commercial) Pty Limited and Others [2001] NSWIRComm 45 (19 March 2001)

APPLICANT: Mr A Searle of senior counsel LEGAL REPRESENTATIVES: Mr C Fesel, Solicitor

RESPONDENT: Mr R De Meryck of counsel

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: McLEAY C 22 February 2005

Felicity Jones and Making Waves Design Pty Ltd Application by Felicity Jones re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 This is an application by Felicity Jones for unfair dismissal against Making Waves Design Pty Ltd pursuant to section 84 of the Industrial Relations Act 1996. The application shows that Ms Jones was dismissed from the position of graphic artist/production coordinator on 1 June 2004. The applicant had been employed by the respondent since 17 April 2000. The respondent is a graphic arts company that designs branding and packaging for food companies. 2 When the matter was not resolved by conciliation on 13 July, directions were issued regarding the filing and serving of witness statements. The matter was listed for hearing on 13 December 2004. 3 At the hearing, the applicant was represented by Mr A Searle of senior counsel, with Mr C Fesel, solicitor, who called evidence from the applicant herself and Mr Andrew Way. The respondent was represented by Mr R De Meryck of counsel, who called evidence from Mr David Kerslake, Mr Malcolm Kerslake and Ms Linda Kerslake. Mr Way is the applicant's partner and was formerly a Director of the respondent. Mr David Kerslake, together with his wife Suzanne, is a joint Director of the company. They are the parents of Malcolm and Linda who are both employees of the respondent. Ms Jones was the only employee of the respondent who was not a family member. CONSIDERATION 4 Mr De Meryck for the respondent argued that the applicant had abandoned her employment on 31 May 2004, and that the respondent had offered a payment, described as a redundancy payment, as a good will gesture. The applicant rejected the offer of payment. The applicant said she was dismissed by way of a redundancy, given verbally by Mr David Kerslake on 31 May, which she claimed was unfair. 5 The respondent had received a draft agreement dated 10 May from the applicant's partner, Mr Way. It provided that Ms Jones would cease her employment effective from 28 May and become a contractor to the company. It also provided for the payment of severance pay equal to one week's salary for every year employed (4 years). The draft agreement, dated 10 May, guaranteed that Ms Jones would be paid for 10 hours a week at $65 per hour, for 12 months and provided that she could retain the use of the company's laptop computer, including for private use, for the duration of the contract. The draft agreement provided by the respondent in reply was dated 25 May. It reduced the guaranteed minimum hours to 28 hours a month, reduced the hourly rate to $60, reduced the period of the contract to three months, and the laptop provided would be available only for work for the respondent. The applicant conceded that in a later conversation she offered to agree to a six month contract for a minimum of eight hours per week. Both Ms Jones and Mr David Kerslake agreed that the proposed contractual arrangement had not been finalised. 6 The exchange of documents described in the above paragraph commenced after a conversation on 3 May 2004, initiated by Mr David Kerslake, during which he told the applicant that the company could not afford to continue to employ her, as a result of a steady downturn in production work. 7 In his outline of a conversation on 31 May between himself and the applicant, Mr David Kerslake said that the applicant said "I want to go today but I am not resigning", to which he replied that the "only option" was redundancy. Shortly thereafter, he told his daughter Linda Kerslake that the applicant was leaving, and would be back when freelance work became available. 8 Ms Kerslake's evidence was that Ms Jones had told Mr Malcolm Kerslake that she was leaving on 31 May, prior to speaking with Mr David Kerslake. That evidence is consistent with the applicant deciding that she would leave. It is also consistent with Mr David Kerslake's evidence about the conversation later in the day.

9 Discussion had previously occurred about Ms Jones ending the employment relationship, but a date had not been set. I am satisfied on the evidence that the date of 31 May was agreed between the parties during the conversation that day, with redundancy being the reason for the termination of employment. According to her evidence, Ms Jones did not disagree with the redundancy at the time. While her preference was to remain in full time employment, that was not available and I am satisfied that what occurred was a genuine redundancy.

10 Under cross-examination, Mr David Kerslake said that he had not made the applicant's position redundant. However, the draft agreements had referred to severance and the itemised information provided at the time the cheque was offered for final payment referred to a tax exempt redundancy payment. This type of payment is usually an indicator of a bona fide redundancy. As with the Employment Separation Certificate discussed below, I accept that documents produced at or near the time of the events are more reliable than views expressed some months later. Mr David Kerslake does not have expertise in industrial matters and has relied on various sources of information. Having offered a tax exempt redundancy payment, the respondent put in place a situation which is difficult to turn around at hearing by claiming that Ms Jones voluntarily resigned. 11 It is not surprising that the applicant did not return to do freelance work under contract, given the reduced terms of the second draft agreement. However, the actions of both parties are consistent with their earlier discussions wherein the termination of the applicant's employment and her change of status to a contractor were discussed. 12 It is clear on the evidence that no deal was agreed in final terms. It follows that Mr David Kerslake did not renege on a deal during the negotiations between himself and the applicant or her partner. Whether any or all terms of the proposed contract were agreed is incidental to these proceedings. In fact, engagement as a contractor did not constitute alternative employment for the applicant, especially so where the proposed contract replaced full time ongoing employment with short term part time engagement as a contractor. 13 It is not necessary for me to comment extensively on emails sent to and from Mr Malcolm Kerslake, which the applicant found on the company's system. The questions that arise from the emails relate to issues which do not impact directly on the question before me. Those issues go to the applicant's intention in raising their content with Mr David Kerslake and Mr Malcolm Kerslake and whether they influenced the respondent's offer in regard to the proposed contract. In any event, discussions about the change from employee to contractor had been initiated by Mr David Kerslake prior to anyone having knowledge of the particular emails which became the subject of evidence. The emails may or may not have influenced the applicant's decision to bring the employment to an end on 31 May. In particular, by reading the emails of 28 May, the applicant became aware that Mr David Kerslake had caused to have inquiries made at 'Industrial Relations'. 14 Allegations of the applicant's earlier intention to leave the respondent's employ likewise do not require consideration, because the facts are that she did not leave prior to being terminated by way of redundancy on 31 May, and that discussions were continuing at the time about her entering into a contractual arrangement with the respondent. This would not have been practical if she were to leave for overseas as suggested, if only because of requiring the use of the respondent's laptop. 15 Nor is the material related to conversations and events on or around May 2002 significant. The differences between the parties as to the detail of events at that time have no relevance to the question before me. 16 Mr David Kerslake's decision to contact 'Industrial Relations' followed a period of tension or animosity between himself and the applicant and/or her partner, as reflected in her evidence and in an email received by Mr Malcolm Kerslake, which read in part as follows: What is it that you are worried about? Is it the effect it will have on your dads company because of financial reasons. Or that you get along with Felicity and don't like the animosity that is happening?

As at 28 May, Mr David Kerslake acknowledged that there was some animosity between himself and Mr Way, and between himself and the applicant. Neither the animosity or the decision to seek advice demonstrates any intention to dismiss the applicant, whether by way of redundancy or otherwise. While the applicant expressed concern that she was going to be dismissed, allegedly having been assured that her job was secure, I am satisfied that she had decided to leave on 31 May. Her own action resulted in her position being made redundant on that day. 17 As to the question of assurance, Mr David Kerslake said that he did not specifically assure the applicant that her job was secure, but took that fact as a given. He acknowledged that the cost to his company of the applicant being a contractor on reduced minimum hours was less than the cost of employing her, but he said that he was under the impression that the applicant really wanted to do freelance work. The evidence is not inconsistent with this view and I accept that he did expect a working relationship between himself and the applicant to continue. 18 Since the parties had been talking about part time engagement at that time, there is a clear inference that full time employment could not be sustained, even allowing that Ms Jones said such was not plainly stated to her. 19 The applicant's choice not to accept the cheque made available to her in the week of her termination is a matter of little or no consequence for these proceedings. The documents and the oral evidence show that the respondent was prepared to make a payment for redundancy, consistent with what was said both by the applicant and Mr David Kerslake in their separate versions of the discussion which took place on 31 May. They both stated that their conversation was about finishing on that date and about payment of redundancy. Ms Jones referred to attending the office of the respondent on 8 June to collect her "statutory entitlements and redundancy pay". Her refusal to accept the cheque related to the amount of payment rather than its nature as a redundancy payment. 20 On the evening of Sunday 30 May, Ms Jones contacted Mr Malcolm Kerslake by telephone, and told him that she had seen his emails and was aware that Mr David Kerslake had sought information from 'Industrial Relations'. She said that she thought she would be dismissed. However, the discussion with Mr David Kerslake the following day was initiated by the applicant and was consistent with a redundancy, with the potential future engagement of the applicant as a contractor. 21 Under cross-examination, Ms Jones said that the word 'redundancy' had never been mentioned except by Mr David Kerslake on 31 May. However, she agreed that notes tendered in evidence were in her own hand and had been written resulting from what she had been told by the accountant, Ms Suzanne Kerslake. Those notes included reference to retrenchment as well as outstanding holidays. Therefore, I prefer Mr David Kerslake's version of the conversation on 31 May between himself and the applicant, to her version. I am satisfied that the redundancy discussed on 31 May did not come as a surprise to the applicant. Rather, she had fully expected it. 22 As to payment, the respondent is a small company and as such was not required to make severance payment. Nonetheless, the offer of four weeks pay after four years service was made. Such an offer is not unreasonable, taking into account two factors in particular: the size of the company and the earlier exchange of documents reflecting one week's payment per year of service. The offer of payment also included final salary and an amount for annual leave, along with details being provided of superannuation payment, as appropriate on termination.

23 The Employment Separation Certificate provided by the respondent, dated 27 August 2004, is inconsistent with other evidence. I accept that it is consistent with the claim, set out in the Employer's Reply to the Application, that Ms Jones abandoned her employment, and Mr David Kerslake's claim that she resigned voluntarily, but those claims are rejected on the basis of the range of evidence to the contrary, the time lapse between the relevant events and the issue of the aforementioned documents. 24 Submissions on behalf of the applicant regarding any alleged procedural unfairness must fail, as notice was given of impending redundancy, the applicant herself chose the date of termination, and an offer of payment was made. That the applicant chose not to accept the offer of payment cannot, in itself, cause that offer to be deemed unreasonable. 25 Mr Searle for the applicant referred to well settled principles that a genuine redundancy may be found to be unfair, as in Shop, Distributive and Allied Employees' Association, New South Wales, and W D & H O Wills Holdings Ltd [2000] NSWIRComm 98 (9 June 2000). I note also DP Sams' comment in Huseyin Arslan and Others and Berkeley Challenge (Commercial) Pty Limited and Others [2001] NSWIRComm 45 (19 March 2001), where he said at [24]: Of course, a failure to properly, or exhaustively comply with each, and every one, of these obligations might not necessarily warrant an adverse finding against an employer. Each case will be determined on its own particular set of facts and circumstances.

26 In this case, I am satisfied that none of the principles enumerated in the decision of Sams DP have been contravened. Reasonable notice was not required in that the applicant determined that she would leave on 31 May; there had been adequate consultation and exploration of options; the option was fairly offered in that there was only one employee affected; a not unreasonable standard of benefit was offered in circumstances where the Employment Protection Act 1982 does not apply; ancillary services were not sought; there was no question about selection since the applicant was the only non-family member who was an employee and the only person employed in the role that was being made redundant. CONCLUSION 27 I find that the dismissal was a genuine redundancy, arising from a downturn in the respondent's production work. Ms Jones was the only employee who was not a family member. 28 At the time of the termination of the employment relationship, the applicant was negotiating with the respondent with a view to engagement as a contractor. Whether these negotiations were continuing or had broken down is not an issue for these proceedings, except in so far as the applicant preferred to remain as a full time employee if agreement was not reached about the terms of the contract. While her preference was known to the respondent, she eventually told him she would not stay, and he agreed that redundancy would take effect immediately. It is relevant that the applicant agreed that the respondent had indicated a 12 month contract could not be sustained because of the concern about the ongoing availability of work.

29 In all the circumstances, the dismissal was not harsh, unreasonable or unjust, either substantially or procedurally. 30 Accordingly, the application is dismissed. __________________

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