Key v Stuart Upton Pymble

1 This decision concerns an application filed on 3 February 2003, by Ms Jennifer Louise Doring (the 'applicant') under Pt 6 ch 2 of the Industrial Relations Act 1996 (the 'Act'). The applicant was employed by Spinout Pty Ltd (the 'respondent') as the manager of a Paddington retail fashion shop known as Five Way Fusion. The applicant commenced employment on 17 November 2002 and was dismissed on 13 January 2003. The reasons for her dismissal are not materially relevant for the purposes of this interlocutory decision.

2 The application came before the Commission for conciliation and directions on 7 April 2003. Mr A Parr (Solicitor) appeared for the applicant and Mr Dlakic (Solicitor) appeared for the respondent. Following unsuccessful conciliation conferences with the parties, the Commission made a finding pursuant to s87 of the Act. Directions were issued in preparation for the arbitration of an interlocutory issue; namely, whether the applicant was on probation and excluded from the jurisdiction of the Commission under s83(2) of the Act and the Regulations. At the applicant's request the matter was relisted on 20 August 2003. Mr Parr complained that the respondent had failed to file its evidence within the time frames set by the Commission's directions. Mr M Vaughan (Solicitor) now appeared for respondent. This matter was resolved during the proceedings on that day.

3 Affidavit and oral evidence was provided by the respondent's owner, Mr Michael Vaughan and the Financial Manager, Ms Irene Rainey.

4 Ms Rainey's evidence was that, prior to the applicant's commencement of employment on 17 November 2002, she had held several discussions with her about her duties, rate of pay and the qualifying or probationary period. These meetings were held around 12 and 13 November. At the same time Ms Rainey was liaising with Mr Vaughan as to the applicant's terms of employment.

5 Ms Rainey received an email from Mr Vaughan on 13 November. It was expressed as follows: I haven't had a chance to speak to Jennifer about her details of her employment yet but she's going to see you tomorrow at about 10 o'clock I understand. We should put her on a trial for three months, that is a probation period to make sure we have the right person and her base income will be $45,000 per year. Even though I haven't met her I'm excited by the prospect of new blood and new enthusiasm. Ever since you thing (sic) that it's made such a difference. Say a prayer for the sale. (Exhibit 2)

6 Ms Rainey said she gave the applicant a typed up letter of appointment dated the 12 November 2002. This date was the day after the applicant was supposed to have commenced her employment. For personal reasons the applicant didn't commence work until the 17 November. The draft letter of appointment relevantly provided as follows: I am pleased to offer you employment in the position of Manager of the Women's section with Spinout Pty Ltd trading as Five Way Fusion. Terms and Conditions: 1. The position reports to the owner Mr Michael Vaughan and is located at Five Way Fusion, 205 - 207 Glenmore Road, Paddington. Your job description is attached to this document. Reasonable requests to perform duties not covered by this job description may be expected of you from time to time. Note also that the location of your work place may be reasonably varied during the course of your employment without any penalty arising. 2. Your appointment will commence on November 11th 02. 3. You will be employed on the basis that the first 3 (three) months will be a probationary period. Your continued employment at Spinout Pty Ltd is dependant on your successful completion of the probationary period. Mr Michael Vaughan will decide your suitability for a permanent position during the course of the probationary period. Similarly you have the right to decide your view of the position. Termination of employment by either party during the probationary period is on the basis of one week's notice. 4. Your remuneration package will consist of: i) Salary $50,000.00 per annum plus 9% Superannuation. ii) After the probationary period a clothing allowance will be discussed. iii) 2% commission on your sales paid on a weekly basis.

7 Mr Vaughan had initially proposed a salary of $45,000. The applicant had disputed this amount. Ms Rainey discussed the salary with Mr Vaughan and it was agreed to offer the applicant $50,000.00 per annum.

8 On or about the applicant's second day of employment, Ms Rainey had asked the applicant for her resumè and references. It was intended that once the applicant brought in her references, Mr Vaughan would sign her letter of appointment. The applicant would keep a copy and send a signed copy back to the respondent. Ms Rainey said that this was the usual practice. However, the resumè and references were not provided, despite Ms Rainey continually asking for them. No signed copy of the letter of appointment was returned to the respondent for this reason. Ms Rainey said the applicant was dismissed as an unsatisfactory employee on 13 January 2003 at the conclusion of the probation period.

9 Mr Michael Vaughan described how the applicant came to be employed through a recommendation from Alain Schwerm. Mr Vaughan had instructed Ms Rainey to interview the applicant. Ms Rainey had said the applicant would be put on probation and she would check her resumè. Ms Rainey was to type the letter of appointment which Mr Vaughan would approve. He received a draft copy of the letter, but he did not sign it because the resumè wasn't provided.

10 The applicant gave evidence and represented herself during the arbitration proceedings. The applicant's evidence was that she had never discussed probationary employment with Mr Vaughan or Ms Rainey. She had never been provided with a letter of appointment and, in fact, had constantly asked for one.

11 The applicant said she had been recommended for the job with the respondent by an old colleague. On Sunday 10 November 2002 she had spoken to Mr Vaughan and outlined her experience in the fashion industry.

12 On Tuesday 12 November she met Mr Adrian Naimo, the part time menswear manager, and later met with Ms Rainey. She spent over an hour talking to Ms Rainey. Ms Rainey told her she was new to the business and had never been responsible for recruiting staff or setting their pay levels. The applicant said that she and Ms Rainey discussed, in vague terms, her role and salary expectation. Ms Rainey had said that Mr Vaughan would need to be consulted.

13 The applicant said she spoke to Mr Vaughan again on 12 November and told him she needed a few days before she could commence employment. Mr Vaughan had said she should meet with Ms Rainey to finalise the details. The next day she spoke again to Mr Vaughan who told her to meet Ms Rainey in order to fine tune her employment terms.

14 Ms Rainey met her on 13 November and showed her an email from Mr Vaughan telling her "what a great name I had and how glad he was I was joining FWF and how he loved my energy and enthusiasm." He mentioned a base salary of $45,000.00. The applicant challenged the salary as being too low. Ms Rainey agreed and said she was sure $50,000.00 would be okay.

15 Later that day, the applicant phoned Ms Rainey who advised her that Mr Vaughan had agreed to the terms and conditions they had discussed. Ms Rainey promised that an employment contract would be prepared. No resumè was requested. The applicant gave evidence that her conditions of employment were: i. Employed as womenswear Salesperson and Manager/Buyer of Five Way Fusion at initial salary of $50,000 per annum plus 2% commission on sales commencing 17 November 2002. My direct line of report was to MV only; ii. After a period of approximately 2-3 months, timing of which was due only to timing of overseas fashion shows necessitating my first buying trip overseas, I would also move into a buying role and re-negotiate my salary accordingly; and iii. After agreeing on a seasonal figure with MV, I would be able to take on an annual clothing allowance as part of my salary package. This sort of arrangement is common in fashion positions. There was no mention of a probationary period. The only period discussed was in relation to renegotiation of my salary and annual clothing allowance after I assumed buying responsibilities as well as management.

16 The applicant said her friends and partner recommended she request a written contract of employment. The applicant said that over the next six to eight weeks, she repeatedly requested a written contract of employment. While Ms Rainey showed her copies of other employee contracts, none was ever prepared for her.

17 Mr Vaughan submitted that the applicant was well aware that her employment was subject to a probationary period. He said the Commission should rely on the evidence of Ms Rainey, which supported the finding that a contract of employment was created for the applicant and she had received a copy of it. Mr Vaughan submitted that Ms Rainey had no "axe to grind" in relation to the applicant. Ms Rainey's role was to provide the applicant with all documents relating to her employment.

18 Mr Vaughan submitted that prior to the commencement of employment, Ms Rainey had discussions with the applicant regarding her conditions of employment and her remuneration. These discussions were evidenced by the fact that the applicant was able to negotiate her salary from $45,000 to $50,000. During these discussions the applicant was told that she would be on probation.

19 Mr Vaughan put that the applicant's own evidence referred to a two to three month period, after which she would move into a buying role and re-negotiate her salary package. It is this period, Mr Vaughan submitted, that the respondent relied on as further evidence of the probationary period.

20 The respondent did not have a signed copy of the contract of employment, because the applicant had not returned it. Mr Vaughan believed that the applicant retained possession of the document. He submitted that, in any event, the applicant was aware of the terms and conditions relating to her employment, which included a probationary period. Her unfair dismissal claim was without merit and should be dismissed.

21 Ms Doring accepted that she commenced employment with the respondent on 17 November 2002. She had never received a contract of employment and was not aware that her employment was the subject of a probationary period. She denied ever receiving a contract of employment or discussing its contents with the respondent. She said, at no time, did she agree to be placed on probation in relation to her employment.

22 Ms Doring observed that Mr Vaughan had not been able to adduce any evidence that an agreement had been struck with her in regard to the probationary period. She relied on the fact that the respondent was not able to provide the Commission with any signed copies of the contract of employment. Ms Rainey could not say when, or where she had given the contract to her. She added that it would have been impossible for the respondent to produce a contract, since she had first sighted the document at the commencement of these proceedings.

23 Ms Doring submitted that the respondent had "doctored" the contract of employment supposedly sent to her home address on 12 November 2002. This was so, she said because she had not provided the respondent with her residential address until several days after commencing employment, that is after 17 November 2002.

24 Ms Doring put that the alleged contract document contained many inconsistencies. It required her to sign and return it to the respondent prior to 1 January 2002. As she had commenced work in November of that year, the document could not have been drafted with her in mind. Further, the document referred to an earlier agreement. This couldn't be so, as there could have been no earlier agreements.

25 In addition, the respondent was not able to provide a copy of the contract, signed by either her or the respondent. Ms Doring submitted that this proved that no such document ever existed. Accordingly, there could not have been any agreement as to probation prior to the commencement of her employment.

CONSIDERATION The legislation and principles

26 Section 83(2)(b) of the Act identifies employees serving a period of probation, or qualifying period, as a class of employee who are exempted from the unfair dismissal provisions of the Act. The section is to be read in conjunction with Regulation 6(1)(c) which is expressed as follows: 6(1) [Classes of employees] 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: (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 3 months or less, or (ii) if the period, or the maximum duration, is more than 3 months - the period, or the maximum duration, is reasonable having regard to the nature an circumstances of the employment.

27 The first disputed question to be decided in this case is whether the applicant was in reality, on probation. If the answer is in the affirmative, the Commission is then required to consider the specific requirements of the Regulation to establish whether the applicant is a class of employee exempted by the Act from bringing an unfair dismissal claim.

28 Unfortunately, there was no definitive documentary evidence that the applicant received and acknowledged receipt of a letter of appointment which contained a condition relating to probation. It would have been more than helpful if there had been. In Sabeto v Waterloo Car Centre Pty Ltd (2002), 120 IR 394 Spencer, C of the Australian Industrial Relations Commission referred to the difficulties in determining matters such as this in the absence of signed documents. The Commissioner said at para 26: In the absence of the signed document setting out the probationary period, the matter has been difficult to determine, principally as both witnesses were credible. The onus lies with the respondent to establish that it was more probable than not that the applicant was serving a period of probation at the time of his termination of employment.

29 I am satisfied that the onus in this case has been appropriately discharged. This is so because there was a document which the applicant had seen, and which convinced me that she knew she was on probation. Reference to it can be found at para 13 of the applicant's affidavit, Exhibit A. In my judgement, this was the most critical and decisive piece of evidence in this case. I shall return to it shortly.

30 In addition, there was the evidence of Ms Rainey that, not only did she discuss probation with the applicant, but she gave her two draft letters outlining the applicant's conditions of employment. The terms of the letters were unequivocal. I note of course, that the applicant strenuously denied the version of the conversations with Ms Rainey and denied receiving any letters. However, on balance, I am inclined to accept Ms Rainey's version of events. Her demeanour in the witness box was calm and measured; inconsistent with a witness who was being deliberately untruthful or had been coaxed. I do not believe she was untruthful. However, there is the other decisive evidence I have earlier referred to.

31 This was the email from Mr Vaughan to Ms Rainey of the 13 November 2002. It contained this unambiguous sentence: We should put her on a trial for three months, that is a probation period to make sure we have the right person and her base income will be $45,000 per year. This was a clear instruction to Ms Rainey as to what the applicant was to be told the next day. I cannot accept that Ms Rainey would ignore, or fail to convey such express instructions. There can be no suggestion that this email was a fabrication. Indeed, I believe the applicant saw it when she met with Ms Rainey. This email would appear to be what the applicant described as what she was shown by Ms Rainey on 13 November 2002 (see applicant's evidence at para 14). It is curious that the applicant remembered that Mr Vaughan praised her energy and enthusiasm and had mentioned $45,000, but she did not notice the reference to probationary employment. A number of other matters fortify my view that the applicant knew she was on probation.

32 Firstly, the applicant acknowledged that she had at least two or three meetings with Ms Rainey in which they discussed her employment terms and conditions. A salary of $45,000 was proposed and later amended to $50,000. She was to be paid 2 per cent commission and "after a period of 2-3 months, timing of which was due only to timing of overseas fashion shows necessitating my first buying trip overseas, I would also move into a buying role and renegotiate my salary." I cannot accept that this reference to two to three months was referrable only to the applicant's first overseas buying trip. It seems to be an obvious reference to a trialling of the applicant before her responsibilities were expanded.

33 Secondly, the applicant was to be the manager of a high value women's fashion business. Despite repeated requests, the applicant provided no resumès or references. She did not deny that no resumè or references were provided. It is inconceivable that a person in such a position would not be on probation, particularly when no resumè or references were provided. Moreover, the applicant had long experience in the fashion industry. With this experience, she would not have found anything exceptional about being on probation.

34 Thirdly, the applicant claimed she had repeatedly asked for a contract of employment and that she had been encouraged by others that she should do so. It is to be observed that the applicant brought no corroborative evidence that she had raised this matter with any other persons.

35 Fourthly, the applicant sought to impugn the existence of the unsigned contract letter of 12 November 2002 by noting that it pre-dated her actual start date and contained a number of inconsistencies. It must be said that, in my opinion, the inconsistencies in the document reflect no more that it had been created as a draft. The fact that it was unsigned and the applicant claimed she would not have agreed to it, is not the point. The question is whether she was aware her employment was subject to a probationary period.

36 Fifthly, the applicant claimed that Ms Rainey could not be precise as to when, where and in what circumstances the unsigned contract was handed to her. Presumably, this was to prove that it didn't happen. It must be remembered that there were a number of meetings with the applicant on or about the 12 November 2002. The fact that Ms Rainey could not be precise, in no way proves it didn't happen; only that Ms Rainey could not recall exactly when or where.

37 As a result of the foregoing observations and conclusions, I am satisfied that the applicant was on probation for a maximum period of three months. Her employment commenced on the 17 November 2002. She was dismissed on 13 January 2003 - within the maximum period of three months.

38 Returning to the conditions expressed in the Regulation, the next question to be addressed is whether the probation period was "determined in advance". This expression has been interpreted to mean in advance of the employment commencing. As Bishop, C said in Key v Stuart Upton Pymble (unreported, IRC98/5503, 19 April 1999): It is not sufficient to establish that a probationary period was agreed after the commencement of employment. In this regard it would be my view that "in advance" means prior to the actual employment commencing. Thus agreeing to and signing in confirmation of a probationary period on the first day of employment must have been confirmed and accepted prior to the first day of employment. Whilst preferably this should be in writing, it is clearly not specified as being necessary in the Regulation. I respectfully concur with the Commissioner's interpretation of the expression " determined in advance ".

39 It will be gleaned from my earlier discussion that I have no doubt that on, or about 13 November 2002, the applicant was made aware her employment would be probationary. As she commenced employment on 17 November 2002, it follows that the probation had been determined in advance of her commencement of employment. That being so, the requirement of the Regulation, that the probation be determined in advance, is satisfied.

40 That consideration apart, it is not a relevant factor as to whether the applicant agreed in writing to the probationary period. The wording of the Regulation merely requires the probation to be "determined in advance."

41 As I said at the outset of this decision it is unnecessary to traverse the circumstances surrounding the applicant's dismissal. Much of the evidence, of course, was directed to that issue. However, that evidence is not relevant for the purposes of this interlocutory decision and was not taken into account. It follows that no finding is made on whether the applicant's dismissal was 'harsh, unjust or unreasonable' within the meaning of the Pt 6 ch 2 of the Act.

42 For all the aforementioned reasons, the Commission determines that the dismissed applicant is a class of employee for whom Pt 6 ch 2 of the Act does not apply. The applicant's claim of unfair dismissal must therefore be dismissed for want of jurisdiction.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.