The Australian Workers' Union, New South Wales and Carni Pty Limited t/as Gc's Hair, Health and Beauty [2003] NSWIRComm 1002 (4 February 2003)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Notification under section 130 of the New South Wales Industrial Relations Act 1996 by The Australian Workers' Union, New South Wales of a dispute with Carni Pty Limited trading as GC's Hair, Health and Beauty regarding long service leave

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This matter came before the Commission as a dispute notified by The Australian Workers' Union, New South Wales (the Union) pursuant to section 130 of The New South Wales Industrial Relations Act 1996 (the Act). During the course of proceedings a Small Claim pursuant to section 379 of the Act was filed on 7 June 2002 naming as the respondent GC's Hair, Health and Beauty (GC's) located at Erina. The Union claims payment of pro-rata long service leave on behalf of its member Ms Maureen Townsend.

The basis of the Small Claim is the Union's contention that Ms Townsend, who had been employed by GC's between July 1994 and October 2001, was entitled to pro-rata long service leave payment upon her resignation from GC's employment because the respondent was allegedly aware that Ms Townsend had resigned from her position due to her ill-health.

When attempts to settle the matter in conciliation were unsuccessful a Certificate of Attempted Conciliation pursuant to section 135 of the Act was issued and the matter proceeded to arbitration in November 2002.

The Union was represented by Mr P Sullivan, an Organiser for the Union, and the respondent was represented by Mr G Harris, an officer with The Professional Hairdressers' Association.

The Union specified the Small Claim to be for pro-rata long service leave, an entitlement pursuant to section 4 (2) (iii) of the Long Service Leave Act 1955, on account of the resignation by Ms Townsend due to her illness, namely diabetes. The amount claimed is $3,328.40 being wages applicable to 6 weeks and 8.5 hours.

In rejecting the Claim for pro-rata long service leave the employer and owner of the salon, Ms Cooke, noted that Ms Townsend had been employed by her on a part-time basis between July 1994 and January 1995 at which point Ms Townsend's employment changed to a full time basis until her resignation on 6 October 2001. Ms Townsend was manager of the salon.

It was Ms Cooke's evidence that on 3 October 2001 she was approached by an employee who advised her that Ms Townsend had altered the work rosters in order to give her daughter, Ms Jasmine Townsend, additional hours. When the employee approached Ms Townsend about this matter Ms Townsend allegedly advised her not to report the aleration to the roster to Ms Cooke. On Thursday 4 October 2001 Ms Cooke spoke to Ms Townsend about her unilateral decision to alter the roster without reference to Ms Cooke, whereupon Ms Townsend became agitated and briefly left the salon. She returned 5 or 10 minutes later and continued working until 8.45pm. Ms Townsend worked on Friday 5 October 2001 for 4 hours in accordance with her roster and after finishing her shift on Saturday 6 October handed to Ms Cooke a letter in the following terms:

I would like to tender my resignation as from today. After our conversation on Thursday I feel it would be better for everyone, I would also like to thank you for the good times.

I would like to arrange with you when to get my things.

It was Ms Cooke's evidence that she was taken aback by Ms Townsend's resignation and suggested to her that she might wish to reconsider her decision, however Ms Townsend declined that suggestion. It was Ms Cooke's further evidence that Ms Townsend at no stage stated that her decision to resign was due to her medical condition nor was any medical evidence offered to establish that her resignation was necessitated by a medical condition.

However, on 24 June 2002, some 8 months after Ms Townsend's resignation, a medical certificate was presented during the conciliation process. That medical certificate is dated 29 September 2001 from Dr David Darnell and refers to "diabetic foot problems" and simply recommends an appointment to see another doctor at St George Hospital in Sydney. In addition a letter was produced dated 14 August 2001 from Garry Brewin, who is a podiatrist at Erina, to Dr David Darnell which refers to Ms Townsend's foot problems. That letter also refers to the fact that Ms Townsend had returned from an overseas holiday on 1 August 2001. In addition, there is a doctor's certificate from the Erina Medical Centre dated 24 October 2001 which states that Ms Townsend "has diabetes and foot complications. She is unfit to work as a hairdresser because of her medical condition."

On 12 October 2001 Ms Cooke received a telephone call from Ms Townsend enquiring about payment of long service leave and it was Ms Cooke's evidence that she advised Ms Townsend that because she had not resigned due to illness or incapacity she was not entitled to payment of pro-rata long service leave. It was Ms Cooke's evidence that in that telephone conversation Ms Townsend stated:

"very well, I'll have to take this to the guy who got my long service for me last time."

Also on 12 October 2001, that is 5 days after Ms Townsend's resignation, an advertisement appeared in the Central Coast Express Advocate under the public notices in the following terms:

MAUREEN. Thank you to my clients and friends from GC's for their support for the last 8 years. Opening Salon soon. 4389 1306.

Ms Cooke's evidence is that when she saw this advertisement she came to the view that Ms Townsend intended to open her own business and had not resigned due to a medical condition.

On Friday 2 November 2001 a display advertisement appeared in the Central Coast Express Advocate for a business named ERINA HAIRPORT featuring photographs of Ms Townsend and Ms Tracey Vanderkley, who was one of Ms Cooke's former employees. Ms Cooke took the view that the advertisement for ERINA HAIRPORT confirmed that Ms Townsend was working as a hairdresser and furthermore that it appeared to contradict the 24 October 2001 certificate from the Erina Medical Centre which stated that Ms Townsend was unfit to work as a hairdresser because of her medical condition.

Ms Cooke further noted that in the letter from Erina Podiatry dated 14 August 2001 Mr Brewin observed that Ms Townsend had returned from an overseas holiday on 1 August 2001, however Ms Townsend had been paid 89 hours sick leave during August.

There was also a later edition of the Central Coast Express Advocate with a promotional display advertisement for ERINA HAIRPORT featuring a photograph of that salon's employees and Ms Townsend featured prominently in the advertisement.

Ms Cooke's evidence was that when Ms Townsends's daughter Jasmine was overseas in 2001 Ms Townsend advised Ms Cooke that if she failed to re-employ her daughter upon her return from London then Ms Townsend would resign from the salon.

In February 2002, Ms Cooke received advice from Inspector Higgins from the NSW Department of Industrial Relations that an investigation into Ms Townend's complaint regarding her long service leave was "complete and the Department had determined not to take any further action in the matter".

It was Ms Cooke's position that she was aware of relevant provisions in the NSW Long Service Leave Act 1955 in relation to circumstances under which pro-rata long service leave might be payable to persons with between 5 and 10 years service. She queried why Ms Townsend did not put forward her medical condition as a reason for resigning at the time of her resignation. In addition, Ms Cooke believes that Ms Townsend's activities in setting up the ERINA HAIRPORT are at odds with her medical certificate from the Erina Medical Centre dated 24 October 2001. For these reasons, Ms Cooke declined to pay Ms Townsend's pro-rata long service leave.

In her declaration tendered during proceedings, Ms Townsend declares that Ms Cooke was aware that she had seen her doctor on 2 October 2001. She claims that Ms Cooke enquired about the visit to the doctor and Ms Townsend had told her that she had been referred to a "diabetic surgeon" and that there was a possibility of amputation of her foot. Ms Townsend asserts that Ms Cooke was well aware of her illness as they had often discussed Ms Townsend's diabetes and further Ms Cooke had been a trained nurse.

Ms Townsend's evidence is that when the ulcer on her foot had failed to heal she had decided on Thursday 4 October 2001 to resign and had put this into effect on Saturday 6 October 2001. She had also discussed her decision to resign with fellow employee Ms Vanderkley. After Ms Townsend had tendered her resignation, Ms Vanderkley had suggested to her that they might set up their own business. In addition, her daughter Ms Jasmine Townsend, who was also a hairdresser, had recently returned from England and Ms Jasmine Townsend encouraged her mother to consider her future options. As a result the ERINA HAIRPORT venture was commenced.

Ms Vanderkley's evidence was that she had worked at various times over a 5 year period at GC's and had continued working there for 1 month after Ms Townsend had resigned. She claimed that all members of staff, including Ms Cooke, knew about Ms Townsend's feet problems and there had been occasions when Ms Townsend had simply attended the salon to answer the telephone and manage the salon as well as helping the workers, the inference being that Ms Townsend could not perform the full range of professional hair dressing functions due to the problems with her feet.

Ms Vanderkley claimed that she knew that Ms Townsend had no intention of working again after her resignation but she had spoken to Ms Townsend the day after her termination asking her what she intended to do in the future. The 2 ladies talked about future prospects for about a week and in the middle of October they decided to open the ERINA HAIRPORT which commenced trading in the first week of December.

Ms Peta Mead gave evidence stating that she had previously been employed at GC's for 9 months and had left in December 2001. She claimed that all of the employees at GC's, including Ms Cooke, were aware of Ms Townsend's health problems and that she had learned about Ms Townsend and Ms Vanderkley opening a new salon after they had both resigned. Ms Mead herself resigned after Ms Vanderkley approached her in early December 2001.

Ms Sarah Graham gave evidence that she is employed at GC's as a senior part-time hairdresser and she confirmed that when the work roster for the period 3 to 9 October 2001 came out she had been rostered by Ms Townsend to work on Friday 5 October from 12 noon to 9.00 pm inclusive. When Ms Townsend advised her that she wanted her daughter to work those hours she suggested that Ms Townsend should check with Ms Cooke before altering the roster. However Ms Townsend told her not to tell Ms Cooke. Subsequently, Ms Graham declined to take Ms Townend's advice and did report the roster change to Ms Cooke.

Mr Sullivan submitted that Ms Townsend resigned because she believed that she "was going to be incapacitated and not be any use to her employer" and this weighed heavily on her mind.

The incident on 5 October 2001 was described by Mr Sullivan as the "final catalyst" which caused Ms Townsend to resign as she could not cope with the stress of her illness and the pressure she felt in the work environment at GC's. He further submitted that the decision to resign was "a real and motivated reason". In addition, it was only following her resignation that she took the decision to continue working as a hairdresser. Mr Sullivan referred to the Decisions of the Commission in Court Session in Computer Sciences of Australia Pty Ltd v Leslie [1983] AR 828, Westbus Pty Ltd v Bartush [2000] NSWIRComm 26 and Peace v BHP Refractories Pty Ltd [2000] NSWIRComm 235.

In reply, Mr Harris submitted that the Union is basing its application on the provisions of section 4 (2) (iii) of the NSW Long Service Leave Act 1955. However he contended that the Union had not brought forward material evidence to substantiate its Claim. He stated that his client was not presented by Ms Townsend, upon her resignation, with supporting medical evidence which would carry a recommendation that she discontinue employment in the hairdressing industry and that would have been a reasonable expectation were Ms Townsend to validate her Claim that she had resigned due to her diabetes.

Mr Harris referred to the fact that, in partnership with Ms Vanderkley, Ms Townsend had set up a business partnership trading as ERINA HAIRPORT soon after her resignation and he referred to the advertisements in the Central Coast Express Advocate.

In tracing the relevant events of early October 2001, Mr Harris submitted that Ms Townsend's decision to resign was not related to illness but was motivated by the incident which occurred on 4 October 2001 when Ms Cooke spoke to her about the roster change. Mr Harris also noted that Ms Townsend had indicated that she would have been prepared to continue working for Ms Cooke until a replacement employee could be found and that she had not provided any supporting medical evidence of her alleged need to resign because she assumed that Ms Cooke would believe her.

Mr Harris submitted that at the time of resignation and subsequently Ms Townsend failed to provide any documentary evidence in relation to her health or any other reason that might preclude her from continuing in her occupation as a hair dresser.

Mr Harris further submitted that the Department of Industrial Relations, through Inspector Eric Higgins, had reported that the complaint before it had been examined and no further action taken.

Mr Harris submitted that Ms Townsend had resigned from GC's in order to "pursue options" and ultimately became the owner and manager of ERINA HAIRPORT. He referred to the case of Eyles v Cook and Others [1967 13FLR, 42 at 46] where the Commonwealth Industrial Court (Dunphy, Joske JJ) stated:

"None of the foregoing observations should be taken as any indication that an employee can escape the onus of satisfying a court that he has a real and genuine problem arising out of 'illness, incapacity, or domestic or any other pressing necessity. Indeed, the award requirement that the employee has to show that, whatever head he claims under, it is of such a nature as to justify such termination', presupposes that this is so and that his termination is not due to some ulterior motive. Leaving one job merely for the sake of getting a better one could not be regarded as justifiable in the context of the Long Service Leave Award, but nothing like this arises in the instant case."

Mr Harris posed the question "did the applicant produce satisfactory evidence to support her application?" and referred to the judgement in British Motor Corporation Australia (Aust) Pty Ltd v Chance [1965 IR364 at 382]:

"A worker who claims to be entitled to leave on the ground that he terminated his employment on account of illness must show, if his claim is to succeed, that an illness of his caused him to terminate his employment."

Mr Harris submitted that to succeed in a Small Claim such as that being prosecuted by the Union, the Union has to establish 2 facts, namely that at the time of the termination of the services the employee was suffering an illness and secondly that it was because of that illness that the employee terminated her services. He submitted that the Union carries the onus of establishing the 2 facts referred to. However it was submitted that it was abundantly clear that Ms Townsend had visited her doctor after her resignation because the Union had advised her to do so if she wished to claim payment of long service leave on the grounds of her illness. Mr Harris submitted that there was not positive and clear evidence put forward by Ms Townsend that her resignation was as a result of her medical condition. It was contended that Ms Townsend's resignation was sparked by the incident on 4 October 2001 when Ms Cooke queried her alteration to the work roster, to which Ms Townsend took umbrage.

Mr Harris also referred to the case of Franks v Kembla Equipment Co Pty Lt [1969 AL 17] submitting that the Court must be satisfied that the worker's illness was the course or factor for the termination of employment. However in the matter now before the Commission the question to be resolved he submitted relates to the "reasonable person test" and posed the question:

"would a reasonable person resolve the incapacity, allegedly facing Ms Townsend, by terminating their employment and then re-entering the hairdressing industry as an employer in their own right, responsible for not only clients who walk through the door, but the entire management of stock, employees, rosters and the payroll functions?"

Mr Harris suggested that the answer to this question is that Ms Townsend's resignation was not in fact due to illness but arose from the incident at the salon on 4 October 2002 as well as her desire to set up her own business.

Mr Harris took the Commission to Computer Sciences of Australia v Leslie and referred to the tests posed by the Court, the first being "was the reason claimed for termination one which fell within this section?" Mr Harris suggested that the answer to that question was "no". The second question referred to was: "was such a reason genuinely held by the worker and not simply colourable, or a rationalisation?". Mr Harris' answer to that question was that Ms Townsend did not wish to continue working for Ms Cooke and her reliance on her illness was a rationalisation after the event.

The next question addressed by Mr Harris was "although the reason claimed may not be the sole ground which actuated the worker in his decision to terminate, was it the real or motivating reason?". He submitted that the motivating reason for Ms Townsend's resignation was, as had been referred to earlier, the desire to be self-employed and to continue her involvement in the hairdressing industry.

The final question referred to by Mr Harris was "was the reason such that a reasonable person, in the circumstances in which the worker found himself placed, might feel compelled to terminate his employment?" He submitted that a reasonable person would be unlikely to set up a business for herself if the reason for her resignation was that she was a disabled worker, so far as on-going employment in the hairdressing industry was concerned.

Finally Mr Harris submitted that the fact that, in her letter of resignation there is no reference to illness or incapacity, establishes a lack of evidence of any illness or incapacity which might have precluded Ms Townsend from working. He referred to transcript of proceedings (page 44) when Ms Townsend stated "if I had known that, I would have got a doctor's certificate". Mr Harris referred to the certificate of 24 October 2001 from the Erina Medical Centre which, while indicating that Ms Townsend was unfit to work as a hairdresser the fact remains that she has continued in active employment as a hairdresser. Further, Mr Harris referred to Ms Townsend's evidence (page 56 of transcript) where, under cross examination, she stated "yes, I do cut hair, because my foot actually is really, really good, the best I've had it in 10 years".

Mr Harris referred to the case of Hagan v Brodbeck [1984 AILR 126] where the Commission described a "pressing necessity as requiring the existence of a state of affairs which compels, or necessarily requires, the employee to terminate their employment". Mr Harris submitted that there was nothing stated or implied or inferred in Ms Townsend's letter of resignation which falls within the ambit of qualifying for pro-rata long service leave. In addition the applicant has failed to discharge the onus of proving her case and on the evidence she displayed an active pursuit of alternative employment as a salon owner, manager and hairdresser.

In reply Mr Sullivan submitted that this matter concerned procedural fairness in that when Ms Townsend submitted her resignation she was not aware of her obligations under the Long Service Leave Act requiring her to state that her resignation was due to her medical condition. Ms Cooke was well aware of Ms Townsend's medical condition as it was no secret and he referred to Ms Townsend's mental state at the time of her resignation and he pressed for an Order in favourable terms.

I find on the evidence that Ms Townsend suffered from diabetes however her letter of resignation fails to refer to her illness as the reason for resigning.

I find that Ms Townsend claims that she had specialist medical advice that she could work for 4 hours per day in the hairdressing industry which contradicts the medical certificate from her general practitioner which stated that she was unfit to work as a hairdresser because of her medical condition.

There is undisputed evidence in the form of a copy of advertisements appearing in the Central Coast Express Advocate on 12 October 2001, that is 5 working days after her resignation, that Ms Townsend would soon be opening a hairdressing salon and there was a further undated public notice in the same newspaper indicating that Ms Townsend would be opening a hairdressing salon in conjunction with another person.

I find that Ms Townsend has not provided medical evidence, either at the time of her resignation or subsequent to the termination of her employment which categorically states that at the date of termination of employment she was unfit to work in the hairdressing industry. I further find that Ms Townsend has failed to provide evidence to support her contention that it was her medical condition that was the compelling reason for her decision to resign from the respondent's employment.

In my opinion there is a correlation between Ms Townsend's resignation on 6 October 2001, her daughter's requirement for employment upon her return from overseas and her announcement in the Central Coast Express Advocate on 12 October 2001 that she would soon be opening her own salon. This was not the action of a person who was medically unfit to continue working in the hairdressing industry.

The Court's judgement in Eyles v Cook and Others squarely places the onus on the employee of "satisfying the court that he has a real and genuine problem arising out of illness ...as to justify termination... and that his termination is not due to some ulterior motive."

For the foregoing reasons I am unable to find for the Union in this matter and the Small Claim is rejected.