Sawyer v Cutler-Hammer Pty Ltd

Sawyer v Cutler-Hammer Pty Ltd - [2001] NSWIRComm 144 - NSWIRComm 2001 case summary — Zoe

[30]

23 Many of the authorities in this area are collected by Hungerford J in this Court in O'Brien v Australian Native Landscapes Pty Ltd (2001) NSWIRComm 145. His Honour said at para 78: Mr O'Loughlin denied on the facts that a situation of redundancy arose and relied upon what he described as the "classic definition" of redundancy formulated by Bray CJ in R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6 at p 8; [1977] 44 SAIR 1202 at p 1205, as follows : ... the concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone. That definition has indeed, as I understand it, been generally adopted: see Termination, Change and Redundancy Case [1984] 8 IR 34 at p 56; Re Australian Nursing Federation [1989] 31 IR 375 at p 378; Walker v Hussmann Australia Pty Ltd [1992] 44 IR 404 at pp 449-450; Re Government Cleaning Service (Privatisation) Award (No 3) (1995) 59 IR 348 at pp 360, 366; and Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australia Branch (1995) 63 IR 1 at pp 4-5. It is significant to note that in Government Cleaning Service (Privatisation) Award (No 3) a Full Bench of the Commission was required to determine whether dismissed employees were redundant when the dismissals arose as a consequence of the privatisation of the Government Cleaning Service - a situation of redundancy was found. In dismissing the appeal against the decision of Schmidt J ((1994) 55 IR 199) in this respect, the Full Bench (59 IR at p 366) approved her Honour's reasoning and the reliance by her Honour on the following extract from Re Clerks (State) Award [1976] AR (NSW) 417 at p 431: It can fairly be said that in industrial circles the term redundancy payment had come to mean compensation for losses of various kinds suffered by employees who have given substantial service to an employer and whose services are terminated because, for one reason or another, the employer no longer needs them. In Australian Nursing Federation (31 IR at p 378), a Full Bench of the former Industrial Relations Commission of Victoria expressed the view that "termination of employment as a result of the sale of a business falls within this commonly accepted definition of redundancy."

[32]

25 Mr Murphy of counsel who appeared for the applicant made detailed submissions in order to substantiate the applicant's claim that he had been made redundant. The evidence relied upon by Mr Murphy in making these submissions was largely circumstantial. Mr Murphy firstly focused on the fact that the advertisement inserted to attract potential replacements for the applicant contained particular requirements for the job which had not formed part of the applicant's job description and with which the applicant could not comply. Importantly these included "formal qualifications in engineering are essential." The advertisement also emphasised experience in the management of people in multiple functions and "demonstrable ability in business planning and performance management methodology." The advertisement indicated that the career development opportunity extended to the position of General Manager. Mr Gallagher assumed his position on 10 April 2000. In September 2000 it was announced that firstly the Engineering Manager would report to Mr Gallagher and secondly that the contracts groups would report to him with one limited exception. This was said by Mr Murphy to indicate a significant move towards implementing the Plant Manager position originally contemplated by Mr Trewin as far back as 1995. In addition, as at January 2001 Mr Trewin indicated that the Quality Manager would ultimately report to the Manufacturing Manager and that the Special Projects Manager would report to the Manufacturing Manager. Whilst under cross examination Mr Trewin said that the only point of distinction between the role currently performed by Mr Gallagher and that of Plant Manager was that Mr Gallagher did not have at that point of time responsibility for quality assurance. However he intended that if Mr Gallagher demonstrated sufficient capacity he would assume responsibility for quality assurance. Mr Murphy submitted that "for all intents and purposes, the applicant has been replaced by a person who was recruited to and currently performs the role of Plant Manager in accordance with the planned restructure of the management of the organisation which was disclosed in the 1997 document. One point of distinction between the current position and the original plan, namely non-responsibility for quality assurance, does not detract from the essential nature of Gallagher's position which is that of Plant Manager. In any event, it is conceded that it is intended that he will have this responsibility." Mr Murphy submitted in the general sense that the respondent had moved slowly to complete a management restructure which it had first mooted in 1995 and developed in 1997 and that the removal of the applicant and his replacement by Mr Gallagher was part of that restructuring exercise. Accordingly, it was said, the applicant's position was made redundant.

[44]

37 I have had some difficulty in understanding, on the basis of the evidence, precisely what is intended by the overall measurement of the applicant's performance within the Leadership Programme. Whatever the position, it is clear from the evidence that the applicant was made aware of the assessment which was made of him by Mr Trewin as part of a consultative process and which he accepted would apply to him with respect to his performance to be re-assessed at the beginning of 1999. The ratings ranging between marginal, competent and commendable applied to the assessment made in early 1999. At that stage the applicant was certainly aware that, in the eyes of Mr Trewin, he had some areas of difficulty, associated with his leadership role. However, the applicant said that firstly he disagreed with some of the assessments made by Mr Trewin and secondly that he understood the Leadership Programme to be a new programme which was designed to assist him in identifying problems and rectifying them rather than representing an overall assessment which impacted upon his future employment. Indeed, the assessment made within the Leadership Programme is in stark contrast to the overall competency applied as part of the annual employee assessment review, the results of which I have already referred to. Whilst it is clear from the documentation and the evidence that the applicant was assessed as not meeting Mr Trewin's standard of leadership competencies, his overall assessment as an employee made at the same time was one of competence. However Mr Trewin said that a rating of "competent" was "still an indication that there were aspects of performance that required improvement." In setting targets for employees, Mr Trewin said in cross-examination that it was always his intention that employees would exceed the targets set for them. However he conceded that nothing was ever put to the applicant that would suggest that his future employment might be in jeopardy if he were assessed as being "competent".

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WAS THERE ANY RELEVANT UNFAIRNESS? 56 I should at first observe that in determining whether there is any relevant unfairness it is only necessary that there be a finding in the circumstances of these proceedings that there was unfair conduct on the part of the respondent. It is not necessary that this conduct be related in any way to any terms of the underlying contract of employment or to any provisions of any arrangement or related condition or collateral arrangement. So much flows from the decision of the majority of the Full Bench of this Court in Reich v Client Server Professionals of Australia Pty Ltd (2000) NSWIRComm 143. The majority of the Bench (Wright J President, Walton J Vice President and Hungerford J) in a joint judgment held "In other words, it seems to us, in finding a contract (contract or arrangement, or any related condition or collateral arrangement) to be unfair, that may be supported because it became an unfair contract due to the conduct of a party at the time of the termination of the contract which enabled a finding that a contract which could or did so operate was relevantly unfair. It would then be open to declare the contract void or to make an order varying its terms in an appropriate way, with as to either form of relief a consequential order for the payment of money considered to be just in the circumstances. We have to say we find nothing surprising in that reasoning in terms of the operation of s 106 and, indeed, if it were otherwise then the whole jurisprudence developed in relation to the unfair contracts provisions in the industrial legislation over more than three decades would be effectively negated. Indeed, as to the conduct of parties, s 106(2) not only recognises such development in the cases but emphasises it by express statutory provision. (para 24) 57 This reasoning was repeated in the course of the joint judgment. For example at para 27 their Honours said in part: "….to us it seems an utterly arid exercise in semantics to find conduct as part of the operation of a contract to be unfair but not thereby to find also the contract to be unfair because such unfair conduct was not permitted by the otherwise fair contract - we think it should be stated as plainly as it may be, and as we think the authorities and s 106(2) do, that a contract may be found to be unfair because of any conduct of the parties." At para 28 their Honours said: A contract whereby a person performs work in an industry (including as here a contract of employment as a species thereof) has as an inherent feature the behaviour or conduct of the parties for the contract to be able to operate. It is difficult, we think, in conceptual terms to separate the contract itself from the conduct of the parties in performing it. As Priestley JA, with whom Kirby P and Meagher JA agreed, observed in Rothmans Distribution Services Ltd v Full Court of the Industrial Court of New South Wales [1994] 53 IR 157 at 160, "how the terms of the contract operated in practice … necessarily means looking at … conduct … and to conclude that a contract which could so operate was unfair". What a contract of employment does is set the terms and conditions to govern the employment relationship; the contractual relationship is another term which may be readily used to describe it. If a party in the course of operation of the employment relationship were to act in contravention of the contract of employment, particularly by committing a fundamental breach thereof, then that may only mean that the contract otherwise was unfair in so allowing or not preventing such unfair conduct or, indeed, in failing to make appropriate provision in the event occurring. In any of those situations, we think it clear that s 106 could be called in aid by the aggrieved party to obtain relief. We repeat, the section should not be construed to the contrary and as would protect the wrongdoer. (para 28)

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58 In my opinion there are a number of features of the conduct of the respondent, and in particular Mr Trewin, which create relevant unfairness for the purpose of these proceedings. They are as follows: 1. The payment of the equivalent of five weeks remuneration in lieu of notice in circumstances where, as I have held, reasonable notice was a period of fifteen months. The payment of remuneration calculated by reference to five weeks notice only is so short of the mark that it is not only unfair, harsh and unconscionable but also insulting. To the extent the written contract of employment provided for five weeks' notice, it was unfair. 2. In the absence of any specific change in the requirements of the position of Manufacturing Manager which can be drawn from the evidence given in these proceedings, there seems to me to be an element of unfairness in the manner in which Mr Trewin treated the applicant since the implementation of the Leadership Programme. Certainly, in cross examination Mr Trewin conceded that a number of other senior managers had been counselled by him concerning their performance and had been given clear notice in writing that their employment was in jeopardy. The only written communication given by Mr Trewin to the applicant was the letter handed to him on 21 January 2000, to which I have previously referred. That letter purported to give the applicant "one final opportunity" to furnish information to the respondent in connection with his performance but such an opportunity was prefaced by the following: "In view of the Company's intention to terminate your employment on notice ….". The letter concluded "would you please contact the undersigned to arrange a termination meeting." I do not accept this letter as furnishing any proper or appropriate opportunity to the applicant to take any action to seek to avoid the termination of his employment. Whilst Mr Trewin may have communicated orally to the applicant during the course of the various review processes to which I have earlier referred some concern or displeasure about the applicant's performance there was no indication given to the applicant that his employment was in jeopardy. As I have said, this is in stark contradistinction to the conduct of Mr Trewin with respect to other senior employees whose employment was perceived to be in jeopardy 3 The respondent failed to provide the applicant with any opportunity to undertake training or counselling directed to the remediation or improvement of those matters about which complaint was made by Mr Trewin. 4. The peremptory and summary manner in which Mr Trewin handled the termination of the applicant's employment. On the basis of the evidence Mr Trewin knew and had worked with the applicant since 1987. Mr Trewin had personally assessed the applicant continually, intensely and frequently over some years. If Mr Trewin had genuinely formed the opinion that the applicant should not continue to perform the role of Manufacturing Manager whether by way of sudden revelation or as an evolving matter of judgment, there were obvious ways of communicating this fact to the applicant in a more humane, civilised and decent manner than that utilised by Mr Trewin. There seems no reason why Mr Trewin could not have utilised the "quiet chat" or "tap on the shoulder" process which seems more appropriate to a relationship between a chief executive officer and a senior employee one step removed from that position in the respondent's employment hierarchy.

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JUST COMPENSATION 60 It is well established that the power of the Court to order just compensation under s 106(5) is broad. It is not confined to considerations of heads of damage which apply at common law. There are many instances where a range of factors have been taken into account in determining what is just compensation. One such instance is the decision of the Full Bench of this Court in David Jones Ltd v Cukeric, previously referred to. The Court said: "We have already concluded that the arrangement between the parties was unfair in that it failed, inter alia, to require that Mr Cukeric be given fair consideration of his position in the context of the company's reorganisation and it is therefore appropriate for his employment arrangement to be varied to reflect that deficiency. We are not prepared to vary the arrangement in the general way sought in the application, but propose to do so in a more limited way to reflect the unfairness so found. The contract will be varied ab initio to provide that the employment is not to be terminated as a result of any restructuring without fair consideration first being given to Mr Cukeric's future position in any new structure. We also conclude that it would be just in the circumstances to make a monetary order in favour of Mr Cukeric in connection with the arrangement as varied by us. The Company is to pay Mr Cukeric an amount of money (additional to that already paid) to reflect entitlements in respect of a further period of six months notice of termination. We have adopted this approach having regard to the payments already made to Mr Cukeric, the evidence in relation to his instant dismissal and the difficulties which flowed therefrom, matters such as Mr Cukeric's position in the Company, his personal circumstances, his seniority in the Company's structure, his satisfactory performance over a period of 35 years. Further, we have taken into account the evidence as to the Company's approach to restructuring, the demonstrated inadequacy of that approach and the period over which the new structure was devised." (at 462)

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