(c) Invoices are to be present and all return codes to be completed and correct.

(d) Invoices are to be passed to the shipper for re-checking prior to submitting to the cashier

(f) Drivers are to remain with the cashier until all cash is counted

(g) Drivers are to complete pay in slip ensuring drivers name, drivers number and the load number are included

(h) Separate pay in slips are to be completed for late payments with the relevant load number for such payment

(i) Bank notes are to be sorted face up and in denomination order

(j) Cheques are to be entered completing the last three digits adjacent to the relevant cheque amount

(k) Short payment are the drivers responsibility and drivers are required to provide full details to the Supervisor

(l) The Linfox Manager and the Coca Cola cashier will provide assistance to the driver in identifying and recovering short payments

(m) A daily report of shortage and overages will be available from the Linfox Manager and the Coca Cola cashier, along with the third and fourth copy of the pay in slip for each individual load

(n) The third copy of the pay in slip will be utilised as a clearance for the driver to commence his next load. The drivers pay in slip must be stamped with the appropriate Coca-Cola or Linfox clearance

(o) The fourth copy of the pay in slip will remain in the Linfox office. Upon the completion of a normal week (being Wednesday), all shortages and overages will be reconciled and made available to all drivers by Thursday

(p) Drivers will not commence normal duties on any day where a cash shortage of greater than $5.00 remains unresolved. Clearance may only be given by the Linfox Manager or Coca Cola Distribution Staff

(q) Failure to settle weekly shortages by 8.00 am Monday will render the responsible driver ineligible to commence normal duties until such shortage has been resolved.

The driver will be fully responsible for stock while vehicles are operative in the field and will be held accountable and assessed by The Management of Linfox and Coca Cola as follows:

1. Stock overages will be credited to Drivers on a monthly basis with payment due on the second Monday proceeding (sic) the prior month.

2. Stock shortages will be debited to Drivers on a monthly basis with payment due on the second Monday proceeding (sic) the prior month

3. In the event of a substantiated customer claim for short delivery, the offset is reversed

4. Offset applies for any pack sizes in the following groups:

[28] On Monday, 9 October 2000, Mr Bottomley in company with Mr Chaplin met with the applicant and his union representative Mr Toohey. Mr Bottomley invited the applicant to explain why, when he was first asked about the events of Wednesday, 4 October 2000, he did not admit giving CCA product to his friend. The applicant said that he was confused because of the time of the day and because Mr Chaplin had quoted the wrong load number. Mr Toohey intervened and made representations on the applicant's behalf. He referred to the protocol of staff accountability for shortages as stipulated in the enterprise agreement. Mr Bottomley said in response that the overages and shortages clause in the agreement was for when errors had occurred and not for theft. After some further discussion about the applicant's conduct and how it should be characterised, Mr Bottomley informed the applicant that the company considered his conduct amounted to theft and that his employment was terminated with immediate effect. Mr Bottomley then gave the applicant a letter dated 9 October 2000, that recorded, in part, Linfox have made it abundantly clear that misuse of our Customer's product will not be tolerated. You have chosen to ignore these warnings, having been made fully aware of the consequences, both through advice and similar incidents involving other drivers. Accordingly, your employment is terminated for misconduct with effect from Friday 6 October.[12]

[29] There was some dispute between the parties about the application of Schedule 4 of the enterprise agreement. Mr Bottomley in his evidence said that in the eight months preceding the date of the incident there has been no request to his knowledge by Linfox management for anybody to pay money in relation to stock shortages. This was because at that time drivers were no longer being asked to pay for stock shortages when the yard was over on stock. Mr Bottomley said that even though there was a shortage across the yard in October 2000, drivers were not asked to pay for shortages in stock then or at any other time in the preceding eight months period.

[30] The applicant said that he could not remember whether he had been asked to pay for shortages in the eight months before the incident in October 2000. Mr Dewan in his evidence said that no one was being asked to pay for shortages because the yard was 25 pallets of stock over. Mr Keane said that he could not remember when he was last asked to pay for stock shortages and that as far as he was concerned the provisions in the enterprise agreement for unders and overs is an offset situation for drivers when mistakes are being made.[13]

The policy, in Mr Keane's view, did not give a driver a right to give away stock, although drivers, including Mr Keane, have given "a slab" of drinks to forklift drivers and merchants who have loaned a driver a trolley to assist in unloading product for delivery, with the subsequent approval of the respondent's supervisors. In circumstances such as those Mr Keane's practice was to notify the supervisor at the site that he had given away product for assistance that he had received in his deliveries.

[31] An important issue that must be resolved before turning to the matters that I must address under s.170CG(3) is the nature of the applicant's conduct in giving away to a friend two cases of CCA product on 4 October 2000. If I accept the applicant's evidence on this point my conclusion would have to be that the applicant knew and intended, at the time that he gave his friend the CCA product, liability for payment for the product was his. Conversely, if I reject the applicant's evidence I would have to conclude, as did the respondent's management, that the applicant's disposal of the stock was unauthorised and contrary to his duty to properly account for the stock.

[32] There are a number of reasons why I should accept the applicant's explanation about his actions. There are objective facts that support the explanation. The enterprise agreement does expressly provide [t]he driver will be fully responsible for stock while vehicles are operative in the field and will be held accountable and assessed by The Management of Linfox and Coca Cola.[14]

The obligation in the enterprise agreement for drivers to pay for stock shortages also is unambiguous. And, finally, the applicant did pay for the stock that he gave to his friend.

[33] On the other hand there are factors militating

against the applicant's explanation. The applicant did not tell his supervisor of the transaction when he returned to the depot from his deliveries on 4 October 2000 and he did not mention the matter to anyone the next day. When Mr Chaplin confronted the applicant about the matter on the morning of 6 October 2000, it is apparent that he did not, even on his own version of events and allowing for the possibility of some confusion at the beginning of the conversation, mention his accountability and liability under the enterprise agreement as a reason or explanation for doing as he did.

[34] An examination of the evidence regarding Schedule 4 of the enterprise agreement suggests that, although the terms of the enterprise agreement about accountability are unambiguous, there is serious doubt about it operating according to its terms. Although the applicant disputes Mr Bottomley's evidence about the respondent's application of the agreement, and the applicant's witnesses in varying degrees supported the applicant on this point, I prefer the evidence of Mr Bottomley on the point. The applicant could not recall whether he had been asked to pay for stock shortages in the eight months immediately before his dismissal when that was put to him in cross-examination. The evidence of Messrs Dewan and Keane on this point was equivocal. Each conceded in cross-examination that they had not been asked to pay for stock shortages for some period of time. It was common ground that the respondent has not paid its drivers for "stock overages" as is specified in clause 4 of Schedule 4 of the enterprise agreement and as had been the practice up until about 8 months ago. It seems unlikely that the respondent could continue to expect an employee to pay for stock for which the employee could not account and yet not give credit for surplus stock that the employee has in his keeping after completing deliveries.

[35] One further matter that is relevant to my evaluation of the applicant's explanation about his actions on 4 October 2000 is his response to Mr Chaplin's questions on 6 October 2000, in the context of the entire conversation on that day. There is little difference between the two versions as far as the content of the conversation goes. Where they diverge is the point at which Mr Chaplin recognised the mistake he had made in quoting the wrong load number and the actual load number that was used. While I accept that the applicant may have been confused by the load number that was quoted in the first instance, it is difficult to accept that factor as a reason for suggesting that, as I find he did, the transaction on 4 October 2000 involved him making up a short delivery for a customer to whom he had delivered earlier that day. The difficulty arises on two fronts. The first being that the applicant could not identify the name of the customer who had been short delivered. The second point is that the applicant did not volunteer any information about that issue in his evidence in chief and when asked about it in cross-examination initially he said that he had offered that explanation believing the conversation to be about Tuesday, but later he conceded that he could not be certain that the suggestion had not been made after it had become clear that the conversation was about the load on the Wednesday. In the circumstances I prefer Mr Chaplin's evidence about the conversation between him and the applicant on 6 October 2000.

[36] On balance, and in the context of the evidence as a whole, the applicant's gift of CCA product to his friend on 4 October 2000 was unauthorised dealing with the product and tantamount to theft. As such it was serious misconduct.

Was the termination of employment harsh, unjust or unreasonable?

[37] The application for relief in this case is based solely on the ground specified in s.170CE(1)(a), namely that the termination of employment was harsh, unjust or unreasonable. In determining the application s.170CG(3) requires me to have regard to the matters set out in paragraphs (a) to (e) of s.170CG(3) [see par [9] above].

[38] Mr Niven for the applicant urged me to find that the applicant's conduct on 4 October 2000, did not constitute theft and, accordingly, that the respondent did not have a valid reason for terminating the applicant's employment. My role is to determine whether there was a valid reason for dismissal and not whether the reason, as characterised by the employer, was valid. I am satisfied that the applicant's unauthorised dealing with CCA product was a valid reason for his dismissal from employment with the respondent. I am convinced that the applicant knew the seriousness of his actions on 4 October 2000, when he was first asked about the matter on 6 October 2000. His attempts to conceal the true facts during his conversation with Mr Chaplin are an indication of his understanding of the unauthorised nature of his conduct. The ordinary relationship of employer and employee at common law is one importing implied duties of loyalty, honesty, confidentiality and mutual trust. This well established principle of law was affirmed in the recent case of Concut Pty Ltd v Worrell.[15] That was a case involving the dismissal of a manager for misconduct constituted by the manager's use of Concut's employees and property in the construction of his house at Beaudesert. Although the applicant in this case was not a manager he held a responsible position in respect of the product of his employer's customers. He held a position of trust. The applicant was in control of valuable property. He was not subject to close supervision and the employer, as a matter of necessity, put his trust and faith in the applicant discharging his duty honestly in the interests of the employer and not in his own interests. Kirby J at par 52 of his reasons for judgment in Concut case said [i]t is ... only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal.[16]

[39] There is nothing in the enterprise agreement to abrogate the common law position in this regard. If I had have accepted the applicant's evidence to the effect that the enterprise agreement allowed him freedom to use the CCA stock as he saw fit the situation might be different. As I have indicated earlier I do no accept his evidence in that regard. In all the circumstances the applicant's conduct provided a rational basis for the termination of his employment. There was a valid reason for the dismissal.

[40] Under this rubric I am required to determine whether the applicant was notified of the reason that I have found to be a valid reason for the termination of his employment. Mr Niven put submissions that I should not so find because at various times the applicant was told that the respondent considered his conduct as theft. On the day that he was notified of the dismissal he was informed that the dismissal was because of misuse of customer product and misconduct. The conflicting reasons given to the applicant make it impossible for the applicant, so it is said, to know the true reason for the termination of his employment.

[41] At the conclusion of the meeting between the applicant and Mr Chaplin on 6 October 2000, Mr Chaplin informed the applicant that, in light of his responses to the questions about the events of 4 October 2000, the respondent regarded his actions on 4 October 2000, as theft. Mr Chaplin then invited the applicant to give a written explanation for his actions. When Mr Bottomley met with the applicant on 9 October 2000, he informed the applicant that his actions were regarded as misconduct and, through his then present representative, that the respondent regarded the applicant's conduct as theft and misconduct. I note at this point that Mr Niven seems to have suggested that I should not regard the intimations to the applicant through his representative on 9 October 2000, in the applicant's presence, as any sort of notice to the applicant. Subsequently on 9 October 2000, Mr Bottomley gave the applicant a written notice of termination of employment in which the respondent informed the applicant that he was dismissed for misuse of customer's product and misconduct.

[42] I am satisfied that the applicant was notified of the reason for the termination of his employment. The applicant knew from the conversation with Mr Chaplin on 6 October 2000, that his employment was in jeopardy because the respondent regarded his actions as theft. He was left in no doubt on 9 October 2000 about the reason for the termination of his employment.

[43] The applicant was told of the allegations against him on 6 October 2000, and invited to explain his actions verbally and, subsequently, in writing. He was given a further opportunity to explain his conduct on 9 October 2000. I am satisfied that the applicant was given ample opportunity to respond and to explain the reasons for his conduct on 4 October 2000. The respondent seriously considered the responses and concluded that the applicant did not justify his conduct and decided that summary dismissal from employment was appropriate. Mr Niven conceded that the applicant was given an opportunity to respond to the allegations that were made against him.

s.170CG(3)(d) - opportunity to improve performance

[44] The applicant's performance was not an issue in this case. In fact the respondent acknowledged that the applicant was a good worker.

[45] The only other matter that Mr Niven submitted I should take into account in determining whether the termination of the applicant's employment was harsh, unjust or unreasonable is that the control procedures currently in place at Linfox and CCA

have created this scenario where trucks can go out, either short or overloaded. There is an impression from the applicant's evidence that the respondent's administrative procedures for the loading and dispatch of product at Clayton is not beyond criticism. However, I am satisfied that the load dispatch procedures do not excuse the applicant's conduct in this case. I am also satisfied that the procedures were not such as to mislead the applicant into believing that he was free to deal with the product for his own purposes. In any event the evidence of Mr Keane was that a driver should never leave the depot if there is some discrepancy in the count until the matter is reconciled.

[46] One other matter about which I am concerned, but which was not raised by the applicant, is the date of termination. The respondent told the applicant of the termination of his employment on 9 October 2000. It also gave him a letter on that day notifying him of the termination of his employment. The letter is dated 9 October 2000. However, it informs the applicant that his employment is terminated with effect 6 October 2000. The applicant was required to attend work on 9 October 2000. It is unclear from the evidence whether the applicant was paid for the day or any part of the day on 9 October 2000. The applicant's unchallenged evidence is that he never received a pay advice about the breakdown of his final pay. A lump sum simply was deposited to his bank account. The applicant did not know the components of the payment that he received.

[47] The notion of the termination of an employment contract retrospectively, as seems to be the purport of the letter of 9 October 2000, is inconsistent with the rule of law to the effect that the giving of a notice terminating a contractual employment, whether by employee or employer, is the exercise of the right under the contract of employment to bring the contract to an end, either immediately or in the future: Riordan v. War Office.[17] When the respondent called the applicant to come to work on 9 October 2000, and decided to terminate his employment, it was entitled to terminate his employment either upon notice or with immediate effect. It did neither of those things. It terminated his employment with effect from a prior date. It would appear that the applicant might have been deprived of one days pay as a result of the respondent's retrospective termination of his employment.

[48] In G A Stewart v University of Melbourne,[18]

Vice President Ross expressed the view that, for the purpose of s.170CG, a termination of employment may be:

* harsh, because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct;

* unjust, because the employee was not guilty of the misconduct on which the employer acted; and/or

* unreasonable, because it was decided on inferences which would not reasonably have been drawn from the material before the employer.

[49] To dismiss an employee with retrospective effect and deprive him of one days pay to which the employee was entitled at the time of dismissal from his employment, would have adverse consequences for the employee in my view. For one thing the applicant has not had the benefit of that money for nearly six months. To secure the lost pay entitlement the employee so deprived would need to institute expensive legal proceedings unless the employer agreed to pay the entitlement upon demand. The onus was on the applicant to prove his case. He was bound to satisfy me that he was not paid for attending work on 9 October 2000, in order to demonstrate that the termination of employment was harsh, unjust or unreasonable in that regard. Although the respondent did not provide the applicant with a breakdown of his pay at the time of dismissal or subsequently, the applicant could have secured that information by summons in these proceedings. On the other hand an employer who is dismissing an employee for a breach of duty ought itself observe its obligations in bringing the relationship to an end. In this case it had no right to retrospectively terminate the applicant's employment. It had a duty to provide him with the means by which he could know with certainty the elements of his final pay. In all the circumstances I consider that by terminating the applicant's employment with retrospective effect and failing to give the applicant a breakdown of his final pay the respondent has not given the applicant a fair go. Accordingly, I find that the termination of employment was harsh.

[50] In view of the finding I make about the termination of employment being harsh, I turn to the question of what relief, if any, is appropriate. The Commission is enjoined to refrain from making an order for relief until it has considered the following matters:

(a) the effect of the order on the viability of the employer's undertaking, establishment or

(b) the length of the employee's service with the employer; and

(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and

(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a

(e) any other matter that the Commission considers relevant.

In terms of the effect of an order on the viability of the employer's undertaking, establishment or service in this case, the only matter that falls for consideration is the respondent's loss of faith and trust in the applicant and the detriment to the goodwill between the respondent and the client CCA, should the applicant be reinstated. The applicant's length of service was five years. He was regarded as a good employee until the incident on 4 October. However, it is unlikely that the applicant's employment would have continued beyond 9 October 2000. The letter of termination of employment dated 9 October 2000, was ineffective to terminate the employment on 6 or 9

October 2000, being, as it was, an attempt to terminate the employment retrospectively. It is not a case like that in Green v Sommerville[19]

where the respondent was acting on an incorrect understanding of its contractual rights not amounting to a repudiation while at the same time insisting on specific performance.

[51] The termination letter, in the circumstances, was repudiation by the respondent and did not bring the contract to an end until the applicant accepted the repudiation. So much is evident from the observation of Denning LJ in Hill v C.A. Parsons Ltd[20]:

Then comes the important question: what is the effect of an invalid notice to terminate? Suppose the master gives the servant only one month's notice when he is entitled to six? What is the consequence in law? It seems to me that if a master serves on his servant a notice to terminate his service, and that notice is too short because it is not in accordance with the contract, then it is not in law effective to terminate the contract - unless, of course, the servant accepts it. It is no more effective than an invalid notice to quit. Just as a notice to quit which is too short does not terminate a tenancy, so a notice which is too short does not terminate a contract of employment.

[52] In the instant case the applicant must be taken to have accepted the repudiation by 19 October 2000 when the application for a remedy in respect of the termination of his employment was lodged. There is no evidence to suggest that the repudiation was accepted at some earlier point in time.

[53] As for the issue of mitigation, I am satisfied that the applicant attempted to mitigate his loss. The only other matters that I consider relevant to the issue of remedy are the fact that the applicant was deprived of his pay advice in respect of his termination pay, as well as the benefit of the additional days pay for 9 October 2000.

[54] I consider reinstatement to be inappropriate in the circumstances of this case. That does not mean that the applicant should not have relief for the harhness of his termination. Unlike the common law and its limitations to compensate a dismissed employee for the manner in which the dismissal was carried out; as to which see the House of Lords decision in Johnson v Unisys Limited,[21] the Commission may make an award to compensate an employee for the manner of the dismissal, notwithstanding that there was a valid reason for the termination of employment. Having regard of the matters to which I have adverted in the four preceding paragraphs the applicant is entitled to an order for an amount in lieu of reinstatement, being an amount equivalent to eight days pay. That is an amount that represents the remuneration that the applicant would have been likely to have received between the date on which the respondent informed him of the termination of his employment and the date that the applicant communicated his acceptance of the respondent's repudiation by lodging his application for relief in respect of the termination of his employment. I propose an order accordingly.

[55] In summary I find that the termination of employment was harsh. I will order that the respondent pay to the applicant an amount equal to 8 days pay less such amount as the respondent may be required by law to deduct and pay as taxation instalment to the Australian Taxation Office.

S 1

S 2

S 3

Letter from Linfox to Stevanovski re termination for misconduct

S 4

DOCUMENT MARKED TWICE (see S7)

S 5

S 6

S 7

Linfox Distribution of Coca-Cola Route Products (Transport Workers Agreement 1996)

S 8

Letter from Linfox to Linfox employees Re: Meeting Wed 19 June 1996

Linfox Staff Handbook plus Training & Qualification Record - Version 5 V1.0

Email from Allan Findlay to Neil Chaplin re driver issue

Letter to Allan Findlay re Commercial Road incident

Linfox Memorandum from Neil Chaplin to Steven Bottomley re Stevanovski incident

Handwritten letter from Robert Stevanovski to Steven Bottomley

Printed by authority of the Commonwealth Government Printer

1 Exhibit S7

2 Print Q1625; (1998) 84 IR 1

4 Exhibit S1 at paragraph 7

12 Exhibit S3

14 Exhibit S7

15 [2000] HCA 64 (14 December 2000)

16 Comments to like effect may be found in par 25 and 26 of the joint reasons for judgment of Gleeson CJ, Gaudron and Gummow JJ.

17 (1959) 1 W.L.R. 1046, per Diplock J

19 [1979] HCA 60; (1979)141 CLR 594 at 611 per Mason J

21 [2001] UKHL 13, 22 March 2001