X Were there "grounds based on the operational requirements of TDR"?
55 Since TDR is relying on cl 12.3 to justify its termination of the contract, the burden is on TDR to show that the circumstances predicated by that clause did in fact exist. While an employer who has dismissed an employee on the ground of misconduct is entitled to defend a wrongful dismissal claim by reliance on misconduct of which the employer only became aware subsequently (see Boston Deep Sea Fishing Co v Ansell (1888) 39 ChD 339), cl 12.3 in my view operates differently. To illustrate by an extreme example, if TDR were to terminate employment on the grounds of alleged misconduct and it subsequently emerged that the employee was totally innocent, TDR could not then say "Well, in any case there were operational requirements".
56 The expression "operational requirements" appears in the Industrial Relations Act 1988 (Cth). It was considered by Lee J sitting as a judge of the Industrial Relations Court of Australia in Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370. At the time relevant to his Honour's decision s 170DE(1) of the Industrial Relations Act 1988 provided:
"(1) An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service."
57 His Honour said (at 373):
"The Act does not define the term 'operational requirements'. Obviously it is a broad term that permits consideration of many matters including past and present performance of the undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of an undertaking if the action of the employer is necessary to advance the undertaking and is consistent with the management of the undertaking that meets the employer's obligations to employees."
58 This last mentioned concept was earlier discussed by his Honour in terms which approved the statement of Lord Denning in Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 that it is an implied term of an employment contract that an employer be "good and considerate" to its employees. Lee J continued (at 372):
"By giving effect to the [ILO] Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer."
59 The employee in Nettlefold was a young woman employed as a kitchen hand/waitress at an hotel. Her employment was terminated because, as his Honour found, the employer engaged a new chef who wanted to arrange for some other person to do the work she had done. His Honour said (at 374):
"In this case the regular and systematic nature of Ms Nettlefold's work, the expectation that if she carried out her duties as required the employment would continue, and the adverse impact of dismissal upon a young person for whom redeployment would not be certain, required Smoker in the exercise of good management to assess whether the allocation of Ms Nettlefold's duties to the person engaged by the new head chef justified the termination of Ms Nettlefold's employment."
60 However the Industrial Relations Act 1988 was legislation concerned with the workforce at large, most of whom are not employed under contracts for a fixed term. The traditional protective approach reflected in the judgment in Nettlefold is not necessarily appropriate in a setting like the present case where a three year contract for employment at a relatively high remuneration is individually negotiated with professional advice. Moreover, the hardship which might occur by termination on the grounds of operational requirements is tempered by the obligation on the employer to make the Sch 4 payments. So in the present case I think the context suggests the expression "operational requirements" is to be construed in a way that gives considerable latitude to the employer to make decisions as to how the enterprise might be better run in the light of changing external conditions and internal management policies. In particular, I do not think "operational requirements" necessarily requires consideration as to the possible redeployment of the employee concerned: see Cosco Holdings Pty Ltd v Do (1997) 150 ALR 127 at 146. However, in the present case that possibility is relevant to other issues, including the practical consequences of complying with the obligation as to one month's notice, or consultation under Sch 11 article 19(1).
61 Counsel for Mr Martin argued that
(i) the operational requirements of TDR as a whole had to be considered;
(ii) the Corporate Plan listed many responsibilities of Mr Martin that continued to be an important part of TDR's functions;
(iii) Mr Martin was effective, hard working and highly regarded by those within TDR and by clients;
(iv) if the emphasis was to change from outward to inward trade missions, Mr Martin was already, under the Corporate Plan, the responsible officer for the latter and was well qualified to manage them;
(v) in any case Mr Martin had wide ranging responsibilities, by no means confined to trade missions;
(vi) at the date of the hearing all Mr Martin's tasks were still being carried out within TDR;
(vii) there was no financial imperative; an extra $1 million was available for staff and the Premier's letter did not suggest financial stringency in the DSD's area;
(viii) Mr Kelly did not consult the Corporate Plan and considered it as having no relevance;
(ix) Mr Kelly was not aware of the Premier's letter;
(x) Mr Kelly did not consult the budget review papers;
(xi) Mr Kelly did not read Mr Martin's contract;
(xii) Mr Kelly did not attempt to match up Mr Martin's duty statement with the reorganisation of TDR;
(xiii) Mr Kelly made no enquiries as to Mr Martin's job performance; Mr Kelly considered that irrelevant; and
(xiv) Mr Kelly did not consider redeployment of Mr Martin.
62 With the exception of (i), all the foregoing are factual propositions which are sufficiently supported by the evidence. I make findings accordingly. However, I do not think it follows from their acceptance that TDR's grounds for terminating the contract were not "based on (its) operational requirements".
63 There was some forceful criticism by counsel of the quality of Mr Kelly's decision-making process. However, it is not my function to review the merits of Mr Kelly's decision or the way it was reached. Rather I have to be satisfied that the grounds for the termination were based on - that is to say related to or caused by - the needs of TDR for the carrying on of its operations, as seen by Mr Kelly as its Chief Executive. I am concerned with what were the actual grounds. If, for example, the true grounds were personal malice then it would not matter if the label of "operational requirements" were attached.
64 I do not find any basis for attributing Mr Kelly's decision to malice against Mr Martin. There was some evidence of an incident at a work-related social gathering at which Mr Martin went up to a group of people including Mr Kelly with the object of congratulating him, but Mr Kelly construed this as a rude interruption on Mr Martin's part. However, at most this was a mutual misunderstanding of a trivial and transient nature.
65 Certainly Mr Kelly could have handled Mr Martin's termination in a more sympathetic and civilised fashion. Mr Martin was a loyal and competent officer of TDR. His only crime was to be successful in a form of activity - outward trade missions - which Mr Kelly thought no longer useful. The treatment Mr Martin got was little better than might be afforded an employee caught thieving. Mr Martin and his family were caused anguish and distress which was quite unnecessary. Nevertheless, I am satisfied that no part of Mr Kelly's decision was motivated by personal animosity or ill-will towards Mr Martin. To the extent that Mr Kelly treated Mr Martin in an unnecessarily humiliating fashion, the explanation is more likely to be Mr Kelly's insensibility to the human feelings of those affected by his actions. The reasons Mr Kelly gave in evidence relating to the reasons for termination - essentially to achieve a flatter management structure and to change the emphasis to inward trade missions - were genuinely held by him. In particular, in cross-examination Mr Kelly forcefully conveyed his strong conviction as to the preference for inward missions. I conclude these were in fact operational requirements. I do not think cl 12.3 should be construed to mean that TDR's operations must, as a matter of unavoidable necessity, dictate the termination.
66 Nor do I think "operational requirements" necessarily involved an obligation on TDR to consider whether Mr Martin could be re-deployed.
67 I find that, had the requisite notice been given, there would have been grounds based on the operational requirements of TDR, within the meaning of cl 12.3.