Darin Vaughan Datson v English Style Confections [1995] IRCA 264

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1404 of 1995 B E T W E E N DARIN VAUGHAN DATSON Applicant A N D ENGLISH STYLE CONFECTIONS Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 6 June 1995 REASONS FOR JUDGMENT (Ex Tempore) (Revised from Transcript) This is an application under Subdivision C of Part VIA of the Industrial Relations Act whereby the applicant seeks compensation following the termination of his employment as a confectioner with the respondent. The applicant commenced employment with the respondent in 1990 as a kitchen hand and subsequently in October 1993 I find was appointed leading hand in one section of the respondent's factory. The respondent makes confectionery, and the applicant in his employment was required to supervise two other employees in making batches of product. The system of production was that on a weekly basis a list of batches to be made was given to the applicant and the employees would then proceed to make those batches following various written product formulae of the respondent. These proceedings concern four incidents where ingredients were not included in the batches resulting in losses of production. The first of the incidents occurred in May 1994 when a batch of product was found to be defective due to the lack of gelatine being added. At the time the applicant was spoken to by the factory manager, Mr Vanderhym, who emphasised the importance of quality control to the respondent and the losses that it was sustaining as a result of the incident. A further incident occurred in mid-December 1994 when gelatin was again not added to another batch of product. Mr Vanderhym interviewed the applicant who advised him that he had observed that the batch was low in the tank but proceeded to continue the next stage of production regardless. Again Mr Vanderhym emphasised the importance of quality control and the need to ensure that all ingredients were included. He advised the applicant that he should contact him in the event of any production difficulties. He was to ensure that he properly communicated with other members of the team so that the production process operated according to the product formulae. The applicant's evidence was that December and January are busy months in the respondent's factory, and also that there had been a number of changes to the personnel in the team that he supervised. It was also the applicant's evidence that he had not received any formal training or been given any proper procedures manuals in relation to his duties as a leading hand. The applicant is not yet 23 and this evidence was not challenged by the respondent. A further incident occurred on 10 January 1995 when colouring was not added to a particular batch. The incident did not come to the attention of the respondent for a couple of days, and Mr Vanderhym conducted an investigation into the duties that the various employees on the applicant's team were undertaking that day. Originally the applicant had said that he was not responsible for the omission, but after the other two employees who were working with him that day advised Mr Vanderhym that they were doing other duties, the applicant remembered in an interview with Mr Vanderhym that he in fact had been responsible for that part of the production process. Mr Vanderhym gave evidence that he called Mr Thomas, the Assistant Factory Manager, to his office along with the applicant and then proceeded to give the applicant an official warning. The precise words that Mr Vanderhym stated to the applicant were the subject of dispute. The applicant's evidence was that Mr Vanderhym said, "take this as an official warning and don't let it happen again". Mr Thomas' evidence was that Mr Vanderhym told the applicant, "I don't want this to happen again. This is your last warning". Mr Vanderhym's evidence in relation to the matter was that he could not remember precisely what was said, but the gist of it was that if there were any further mistakes, we would no longer be able to employ you, and further, "that the company couldn't afford for this to happen again". The applicant also said that Mr Vanderhym said that in the event of this happening again, "we would have to look at other options". The official warning was not reduced to writing by Mr Vanderhym. Mr Vanderhym gave evidence that the company had had a policy of reducing warnings to writing, but that following a seminar that he attended in late 1994 he was in the process of revising the company's procedures in relation to counselling and warnings. The applicant's evidence was that he was aware that a number of other employees had been given final written warnings, and indeed, he expected that in the event of a further incident he would be given a final written warning. Mr Vanderhym said that he had not implemented a system of formal written counselling in January 1995, but that he is in the process of implementing such a system now. After the warning of 13 January 1995 the applicant continued working and a further incident occurred on about 25 January when again an ingredient was omitted from a batch of product. This came to the attention of Mr Vanderhym on 31 January, and he called the applicant in and a discussion ensued. According to the applicant he was told that he was terminated. Mr Vanderhym's evidence was that he invited the applicant to explain what had happened and the applicant had not responded. At all events, the applicant gave evidence that he was told by Mr Vanderhym that he was being given a week's notice and he had the choice of working the week out in another part of the factory or leaving immediately. Mr Vanderhym denied stating that he gave him any exact period of notice, but did confirm that he invited him to finish his employment in another part of the factory. The applicant left that day. There was no evidence from Mr Vanderhym that he actually investigated who was responsible for the failure of the work team to ensure that each ingredient was inserted in that particular batch. The thrust of the respondent's case was that the applicant as leading hand was responsible for the work team to ensure that the product formulae were complied with. The applicant's evidence was that in the team situation he was working in there was always uncertainty as to which particular individual was responsible for each part of the process, and gave evidence that he would assign the other two employees to do part of the process. He would then proceed to do other parts of the process or mix other batches in the busy section of the factory that he worked in. The issues in the case The central issue in the case is whether or not the respondent had a valid reason to terminate the applicant's employment under s 170 DE of the Act, and if it did have such a valid reason, was that termination in breach of section 170DE(2) of the Act. There was no great conflict in relation to most of the matters in the evidence, and I find each of the witnesses truthful witnesses.

Was there a valid reason for the termination of the applicant's employment? I am satisfied that following the official warning in mid-January 1995 the respondent did have a valid reason to terminate the applicant's employment on 31 January for the reason that a further batch of faulty product had been produced under his supervision. I am therefore satisfied that given the evidence that the value of a batch of faulty product was approximately $4-5000 it has discharged its onus of proof under s 170 EDA that it had a valid reason under section 170DE(1) of the Act. Was the termination in breach of section 170DE(2) of the Act? It has been said that the words "harsh, unjust and unreasonable" are ordinary non-technical words which must be applied in a commercial and industrial environment. Here I conclude that the termination of the applicant's employment on 31 January 1995 did breach section 170DE(2) for the following reasons. First the respondent, on the evidence, had a system of written warnings. The applicant gave evidence that they were issued to other employees. This was not challenged. Further, Mr Vanderhym's evidence was that the respondent was moving to a system of written confirmation of counselling and warnings but that it had not been put in place. The Recommendation Concerning Termination of Employment at the Initiative of the Employer (Schedule 11 to the Act) provides at clause 8:

The employment of a worker should not be terminated for unsatisfactory performance, unless the employer has given the worker appropriate instructions and written warning and the worker continues to perform his duties unsatisfactorily after a reasonable period of time for improvement has elapsed. While there may be cases where it is not appropriate that a written warning be given, I am satisfied that this is a case where such a warning should have been given. The reason for that is that here the unsatisfactory conduct of the applicant was clearly that of inadvertence. He failed to add a colour when it was required. He failed to ensure that the recipe was complied with by his team of employees. He gave evidence that December and January are busy periods. Indeed, he stated that he was busy on the day that the incident occurred that he received what was on the evidence his first and only official warning. It should have been clear to the respondent that a proper system should have been put in place to ensure that these types of mistakes did not occur. The respondent relied on visual or sensory observations. I do not accept that this is satisfactory and note the evidence that the procedures are now subject to revision to attain a quality assurance standard. There was also a deficiency in the way that the respondent sought to ensure that the applicant properly performed his duties. He was told to check verbally with the other employees. He gave evidence that he did this. His employment was terminated on the basis that another batch had been unsatisfactory, but it may be that he was not directly responsible for that failure, although clearly he was the leading hand. Even if he was responsible the termination was in breach of the Act for reasons relating to a lack of a proper system within the respondent for production and some explicit instructions as to how he could ensure that it did not recur. Given his good work record, his relative youth and the inherent difficulties of working under pressure in a small team without proper check lists, it is harsh to terminate his employment when, on the employer's own evidence, there had been only one official warning. A further reason why it is harsh is that the failure to place the warning in writing makes me unable to find that the applicant was aware that his termination would be automatic. Mr Vanderhym was unable to recall the precise words. The applicant referred to his employment possibly being terminated. He also said he believed he would be given a final written warning. The reduction of warning to writing is to ensure that the parties know exactly what is the position and know exactly what change or improvement is required. A further reason why it is harsh here is that there was a failure to consider alternatives to termination, particularly given the nature of the unsatisfactory performance, again his youth and his prior good service. This should have been explored by the respondent and was not. Having found, for those reasons, that the termination was in breach of section 170DE(2), it is unnecessary for me to consider whether or not there has been a breach of section 170DC of the Act. Remedy The applicant gave evidence that he searched for work in the period after he was terminated but at that time was also seeking reinstatement to his position. He said he looked in the papers and finally obtained a job which he started a week or so ago. The respondent sought to argue that he had failed to mitigate his losses. I am not satisfied that he has failed to properly mitigate his losses, particularly given the state of the labour market and his actually achieving an alternative position. He thus has acted not unreasonably which is the test which is required. He claims that he has lost 17 weeks wages, being a total sum of $6686. I am satisfied that reinstatement to his former position is impracticable for the reason that he now has another position and he no longer wishes to be reinstated to the respondent. I am further satisfied that compensation is appropriate and I propose to award compensation in the sum of $6686. The order of the court is that the respondent pay to the applicant within 21 days the sum of $6686. THE COURT ORDERS THAT: 1. The respondent pay to the applicant within 21 days the sum of $6686.

I certify that this and the preceding nine (9) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: 20 June 1995 Representative for the Applicant: Mr Barry Megennis AMWU Food & Confectionary Division Counsel for Respondent Mr John Bailey Solicitors for Respondent Phillips Fox Representative for the Respondent: Australian Chamber of Manufactures Date of hearing: 6 June 1995 Date of judgment: 6 June 1995

C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - HARSH UNJUST OR UNREASONABLE - applicant in charge of production process - given official warning after a number of incidents - warning not in writing - further incident - employment terminated - alternatives to termination not explored. Industrial Relations Act 1988 ss. 170 DC, 170 DE, 170 EDA Darin Vaughan Datson v English Style Confections No. VI 1404 of 1995 Before: Judicial Registrar Murphy Place: Melbourne Date: 6 June 1995

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1404 of 1995 B E T W E E N : DARIN VAUGHAN DATSON Applicant AND ENGLISH STYLE CONFECTIONS Respondent

MINUTES OF ORDERS Judicial Registrar Murphy 6 June 1995 THE COURT ORDERS THAT: 1. The respondent pay to the applicant within 21 days the sum of $6,686.00. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.