Telfer v. Dusmanovic [2005] NSWIRComm 1105

PARTIES: RESPONDENT Theo Dusmanovic

CATCHWORDS: termination of employment - retrenchment due to financial downturn - allegation of unfair dismissal

Employment Protection Act 1982 LEGISLATION CITED: Industrial Relations Act 1996

Re Barrett and the Crown Street Women's Hospital (1947) AR 565 Broken Hill Proprietary Company (No.2) Case (1943) AR 146 Busways v. Johnson (1994) 55 IR 255 Re Colliery Deputies &c (North Conciliation Committee (1935) AR 85 Crocker's Case (1983) AR 485 Re Dispute between the Australian Builders' Labourers Federation and F R Coyle Pty Limited (1962) AILR Rep.232 CASES CITED: Loty's Case (1971) AR 95 Neal v. Shaw McDonald Pty Limited [2003] NSWIRComm 298 Nowra Bomaderry Leafues Club Case (1986) 15 IR 463 Outboard World Pty Limited v. Muir (1993) 51 IR 167 Redundancy Award Case (1994) 36 AILR Rep.301 Tipping's Case (1957) AR 273

APPLICANT Jane Healey Lough Wells Duncan Lawyers LEGAL REPRESENTATIVES:

RESPONDENT respondent appeared in person

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Jonathon Telfer and Theo Dusmanovic, trading as Theo's Automotive Repairs

Application under S.84 of the Industrial Relations Act, 1996

1 Pursuant to the provisions of Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90], of the 1996 Industrial Relations Act, Mr Jonathon Telfer lodged an application concerning the termination of his services as a mechanic with Mr Theo Dusmanovic, trading as Theo's Automotive Repairs. Mr Telfer commenced employment on Monday, 11 August, 2003 and his services were terminated on Thursday, 18 November, 2004 due to a shortage of work, ie he was retrenched. There has been some concerns over Mr Telfer's abilities to perform the work he was employed to perform, however. He has sought his reinstatement or, alternatively, monetary compensation in lieu thereof.

2 The matter was allocated to me and it was the subject of a preliminary hearing on Wednesday, 9 February, 2005 in the Commission's premises at 90 Crown Street, Wollongong. There was no appearance by Theo's Automotive Repairs (whose representative had mistakenly attended Wollongong Court House and arrived after I had adjourned the proceedings). Nor had it given a formal response to Mr Telfer's Part 6 application (believing that it would be appropriate to lodge that formal response in the proceedings). I adjourned the proceedings for mentions (also in Wollongong) on Monday, 7 March, 2005 and Tuesday, 15 March, 2005. Conciliation had failed to settle the matter. I programmed it for arbitration in a hearing on Tuesday, 5 July, 2005. In the hearing Ms Healey represented Mr Telfer. Mr Dusmanovic was unrepresented in the proceedings. Both Ms Healey and Mr Dusmanovic were prepared to rely on their respective written evidentiary material and there was no evidence led independently in the hearing.

3 In the affidavit which formed the basis of his evidence in this hearing, Mr Telfer outlined the history of his employment with Theo's Automotive Repairs, as he understood it. He indicated that he enjoyed working for it and claimed that he received a number of compliments from management regarding his work which involved general repairs to car engines and associated duties. When Mr Telfer applied for the position he was asked if he held a drivers licence and informed Mr Dusmanovic that he did. 4 On Tuesday, 24 August, 2004 whilst pushing a light truck into the workshop with another employee, Mr Telfer slipped and sustained an injury to his back which took him off work. On Monday, 13 September, 2004, armed with a medical certificate for light duties, he presented himself for work to be told by Mr Dusmanovic:

"What are you doing. I've seen your medical certificate. There are no light duties for you. Go home."

Mr Telfer returned to work on Monday, 27 September, 2004 performing his pre-injury duties. 5 Mr Telfer at that time observed a new employee in the workshop whom he discovered to be Mr Dusmanovic's nephew who had been engaged as an apprentice. Mr Telfer claimed that the apprentice and other unqualified staff - a cleaner and a labourer - performed the work of a licensed mechanic without proper supervision and he complained to the leading hand. Mr Telfer claimed that his complaints went unanswered. He is suggesting in his affidavit that his complaints formed a basis for his ultimate retrenchment.

6 According to Mr Telfer on Thursday, 11 November, 2004 Mr Dusmanovic called a meeting of staff and told them:

"Due to hard times, I am going to have to let some people go."

And he was again approached by Mr Dusmanovic approximately a week later and informed that he was one of the employees selected for retrenchment. He was provided with a redundancy package - two weeks wages - a reference and a separation certificate. Mr Telfer has now found employment on a casual basis with another car repairer. He was out of work for ten weeks.

7 Mr Dusmanovic stresses that the termination of Mr Telfer's services only arose due to a downturn of the business. One of the factors which Mr Dusmanovic relied on was the fact that Mr Telfer had lost his licence for driving, apparently due to his being under the influence of alcohol whilst driving. Mr Dusmanovic asserts in his written statement that the holding of a drivers licence was important for Theo's Automotive Repairs since it is required to conduct car registration inspections. Mr Telfer had subsequently failed to disclose that he had lost his licence for DUI.

8 Mr Dusmanovic has outlined his reasons for his selection of Mr Telfer for retrenchment in a written statement, viz:

"...Unfortunately, from time to time I have had to experience the low side of my profession. Considering myself a fair man, when faced with having to lay off staff, I did what I thought was fair to my staff while doing what was best for the survival of my business. I told all staff weeks before making any final decision that the work was drying up and that if it did not pick up I would have no choice but to let some people go. That time drawing nearer, I could only think that I would have to somehow rate and evaluate each staff member of their abilities and job production.

It was/is unfortunate that there is always someone who is not going to like the outcome in decisions like these. Regardless I could not overlook the reality that Mr Telfer was an employee who was not able to carry out the duties for which he was employed. No New South Wales drivers licence meant that he was not able to allow me, as his employer, to make use of the Roads and Traffic Authority inspection qualifications he had used to gain his initial employment. I was not happy to have had to let Mr Telfer go but it was a necessary evil that I was required to do."

9 My principal task in this hearing remains to identify whether or not the termination of Mr Telfer's employment with Mr Dusmanovic was unfair, ie using the language adopted by Sheldon J of the former State Industrial Commission in Loty's Case (1971) AR 95 at p.99 whether he had received a "fair go". The words in S.84(1) on which any Part 6 application relies are "harsh", "unreasonable" or "unjust" [Busways v. Johnson (1994) 55 IR 255 at p.261] but those words are the same thing as a "fair go" for all practical purposes, in my opinion. Ms Healey carries the onus of establishing the unfairness of the dismissal [Tipping's Case (1957) AR 273 at p.279, Re Barrett and the Crown Street Women's Hospital (1947) AR 565 at p.566 and the Nowra Bomaderry Leagues Club Case (1986) 15 IR 463 at p.464]. And that assessment must be based on an objective evaluation of the circumstances under which the dismissal of an employee occurred. 10 For retrenched workers in this State there are two standards for redundancy pay, viz:

(i) the scale advanced initially by Fisher J - the President of the former Commission in Crocker's Case (1983) AR 485 - the so-called Fisher formula - which was adopted and incorporated in Reg. 5(b) to the 1982 Employment Protection Act; and

(ii) the scale prescribed by the Full Bench of the Commission (Fisher J - President, Glynn and Peterson JJ and Buckley CC) in the Redundancy Award Case (1994) 36 AILR Rep.301 which, upon application, has been inserted in State awards. In both cases, the established scale of redundancy payments cuts out for employers with less than 15 employees on their payroll at the point that the services of the retrenched worker are terminated. Mr Dusmanovic, employed less than 15 employees in his business at the time that Mr Telfer's services were terminated and therefore falls outside the prescribed scale of redundancy payments.

11 That is not to suggest that the legitimate retrenchment of an employee is outside jurisdiction under Part 6. It is not. In Outboard World Pty Limited v. Muir (1993) 51 IR 167 the Full Bench of the Commission (Cahill J - Vice President, Peterson J and Tabbaa CC) gave examples where that might occur, commenting (at p.182) that:

"...For example, it may be that in selecting employees for redundancy an employer unilaterally decides to terminate an employee of long and exemplary service over another employee. The facts of the case may demonstrate both redundancy of the position but unfairness as against the employee selected. Once that position is accepted then it follows that an employee is not necessarily incapable of suffering an 'unfair' dismissal in the context of a position becoming redundant…"

Firstly, Ms Healey claimed that the selection of Mr Telfer for retrenchment was influenced by his workplace injury. Secondly, she emphasises that Mr Telfer was chosen for retrenchment over other employees with less service with Theo's Automotive Repairs. 12 There is nothing before me by way of evidence to suggest that Mr Dusmanovic was unduly influenced by Mr Telfer's workplace injury, from which he appears to have fully recovered. I accept that when an employer is considering the retrenchment of staff, usually one of the fairest methods for him to adopt is the "first-on-last-off" principle [Re Dispute between the Australian Builders' Labourers Federation and F R Coyle Pty Limited (1962) AILR Rep.232]. But as Browne J - President of the former Commission indicated in Re Colliery Deputies &c (North) Conciliation Committee (1935) AR 85 at pp.99 and 100:

"....it seems to me essential that the manager should be quite untramelled in his choice of deputies so that he shall have a free hand to choose the most competent person available when appointing a deputy and to retain the most competent deputies on any reduction of the number thereof. The 'last to come' may be the most competent deputy employed at a mine, and I think the manager should be entitled on a reduction of hands to retain him in place of another whom he regards as less competent..."

13 I have no reason to doubt Mr Dusmanovic's genuineness in his assessment of the employees he chose for retrenchment. It is not appropriate for a member of the Commission to intrude into any decision of an employer, including a decision to retrench a particular employee, unless it can be established that the decision taken to retrench an employee is not made in good faith, where it shows bias against him or where he is being victimised in some manner in the process [the Broken Hill Proprietary Company (No 2) Case (1943) AR 146 at p.147]. I accept that Mr Telfer feels aggrieved by being singled out for retrenchment. I sympathize with him in that respect. But his retrenchment was dictated by the adverse financial position for Theo's Automotive Repairs - a situation which Mr Dusmanovic has indicated in the hearing has not improved - and not by any intention on Mr Dusmanovic's part to get rid of him.

14 Ms Healey has also raised for my attention the helpful guidelines for employers in retrenching staff which were laid down by Sams DP in his unreported decision of Friday, 12 September, 2003 in Neal v. Shaw McDonald Pty Limited [Matter No.IRC 607 of 2003 at p.17], viz:

(i) to give reasonable notice to employees and/or their unions;

(ii) to adequately consult with employees and/or their unions on the impact of the proposed changes;

(iii) to explore genuine alternative options for redundancy, such as redeployment or relocation;

(iv) to ensure such options are fairly offered to the affected employees;

(v) to provide reasonable standards of redundancy benefits;

(vi) to provide appropriate ancillary services, such as time off to seek alternative work, retraining opportunities, outplacement services or financial planning; and

(vii) to ensure employees nominated for redundancy are fairly selected on an objective and unbiased basis.

15 But it is a question of scale of the business on which such matters tend to rely. A large employer may be able to accommodate all of those guidelines for retrenchment of staff. A smaller business may not be able to effectively do so. The "reasonable notice" for retrenchment would differ from one employment situation to another. The level of redundancy payments would be dependent upon the scales of severance payments which, as I indicated earlier in this decision, exclude Theo's Automotive Repairs. The opportunity to provide "ancillary services" would be reduced for small business. I therefore do not believe that the guidelines of Sams DP were intended to be treated as concrete enforceable obligations in each case of retrenchment. Each matter should be considered in the context of its own particular facts. Each case is different.

16 In the circumstances, I see no grounds for my intervention in support of Mr Telfer and decline to do so. I dismiss his Part 6 application.

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