Grazyna (Grace) Jankowski and Excellent Management Services Pty Ltd [2003] NSWIRComm 32

Industrial Relations Commission of New South Wales

CITATION : Grazyna (Grace) Jankowski and Excellent Management Services Pty Ltd [2003] NSWIRComm 32 APPLICANT: PARTIES : Mrs Grazyna Jankowski RESPONDENT: Excellent Management Services Pty Ltd FILE NUMBER: 3461 of 2002 CORAM: Sams DP Termination of employment - unfair dismissal - uncontested evidence - redundancy - reason for dismissal - whether dismissal harsh, unjust or unreasonable - procedural considerations - admissions of respondent - principles considered. CATCHWORDS : Held, state of evidence unsatisfatory - doubt as to redundancy as reason for dismissal - applicant received no warning - dismissal of applicant procedurally unfair - respondent admitted the process was unfair - dismissal harsh and unjust within the meaning of Pt 6 ch 2 of the Act - reinstatement impractical - applicant's age and attempts to secure alternative employment - four years of employment - no issue of performance - compensation ordered. LEGISLATION CITED : Industrial Relations Act 1996 Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385 Bankstown City Council v Paris (1999) 93 IR 209 CASES CITED : Byrne & Anor v Australian Airlines (1995) 61 IR 32 D & R Commercial v Flood [2002] NSWIRComm 88 Outboard World v Muir (1993) 51 IR 167 Shop, Distributive and Allied Employees' Association, New South Wales and WD & HO Wills Holdings Ltd [2000] NSWIRComm 98 Wilson v Department of Education and Training [2000] NSWIRComm 20 HEARING DATES: 02/11/2003; 02/12/2003 DATE OF JUDGMENT: 03/06/2003

APPLICANT: Mrs G Jankowski appeared in person LEGAL REPRESENTATIVES: RESPONDENT: Mr J Bassil, Director, Excellent Management Services

JUDGMENT: - 16 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 6 March 2003 Matter No IRC02/3461 GRAZYNA (GRACE) JANKOWSKI AND EXCELLENT MANAGEMENT SERVICES PTY LTD Application by Grazyna Jankowski re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

DECISION [2003] NSWIRComm 32

1 Grazyna Jankowski ("the applicant") was dismissed from her employment as an accountant/bookkeeper with Excellent Management Services Pty Ltd ("the respondent") on 31 May 2002. The applicant subsequently filed a claim, pursuant to s 84 of the Industrial Relations Act 1996 ("the Act"), seeking relief in respect to her alleged unfair dismissal.

2 Notwithstanding that the applicant was employed by Mr Joseph Bassil, through his company Excellent Management Services, her letter of termination is on the letterhead of Highrise Concrete Contractors (Aust) Pty Ltd, a company owned by the respondent's father, Mr Tony Bassil. On the face of it, the applicant had worked for Highrise Concrete for two years prior to Mr Joseph Bassil setting up his own business on 1 July 2000. Mr Joseph Bassil's company provided the accounting and book keeping services to his father's company. I shall say more about this business arrangement later.

3 The application was listed for directions and conciliation on 29 July 2002 - an earlier date having been vacated at the respondent's request. The applicant appeared unrepresented and Mr J Bassil appeared for the respondent, assisted by Mr Wilkinson.

4 The conciliation conference was adjourned to 9 August 2002. On that occasion, after private conferences with the parties, the matter remained unresolved. The Commission made a finding of unsuccessful conciliation pursuant to s87 of the Act, issued directions and set the matter for hearing.

5 On the first day of the hearing, Mr Bassil failed to attend and was not represented. After phone contact with my Associate, he explained that he had simply forgotten about the date. Fortuitously, the following day had also been allocated for the arbitration. I therefore directed Mr Bassil to attend the next day to respond to the applicant's case.

6 Both parties continued to be unrepresented at the hearing.

THE EVIDENCE

7 The applicant's affidavit was entered into evidence without objection. She was not required for cross examination.

8 The applicant deposed that High Rise Concrete Contractors first employed her on 1 July 1998 as an accountant/ bookkeeper. Mr Tony Bassil was a director of the company.

9 On 1 July 2000, Mr Tony Bassil established the company Excellent Management Services Pty Ltd and appointed his nineteen year old son, Joseph, as director. The new company provided services, including accountant services, to High Rise Concrete. Despite being employed by the new company the applicant's conditions, duties and place of work remained unchanged and she continued to report to Mr Tony Bassil.

10 The applicant gave evidence of the circumstances in which Mr Tony Bassil offered to do concreting work at the home of her daughter, Ms Kataryna Wrigley. The applicant did not wish to become involved in the matter. She was later told that there were problems with the concreting work. She said, despite Mr Bassil wanting her to speak to her daughter about the matter, she didn't wish to get involved.

11 The dispute over the concreting work remained unresolved and eventually litigation was commenced. Mr Bassil again asked the applicant if she would talk to her daughter about settling the matter, and again, the applicant told him she didn't wish to be involved.

12 The applicant deposed that in the second week of May 2002, Mr Bassil introduced her to Mr Vic Kirkalis. Mr Bassil informed her that Mr Kirkalis had been hired to find solutions in relation to cost cutting. In the next few days, the applicant formed the view that Mr Kirkalis was being eased into her position.

13 On 31 May, Mr Kirkalis informed the applicant that the company no longer required her services. She said she was taken aback by this decision. She did not want to speak to Mr Kirkalis about the matter as Mr Bassil was her employer.

14 The same day, the applicant phoned her daughter to inquire as to the state of the court case against Mr Bassil. Her daughter informed her that Mr Bassil received a "small judgment" but had to pay costs. Her daughter asked why she was inquiring. The applicant replied "I lost my job today." The applicant's daughter also attested to this conversation. The applicant later spoke to Mr Bassil on the phone, and in person, to express her disappointment at losing her job.

15 The applicant believed that the reason for her dismissal was because of her daughter's court case against Mr T Bassil.

16 The applicant had requested a reference for her four years of employment. Despite assurances it would be sent, nothing was ever provided to her.

Kataryna Wigley

17 Ms Wigley's affidavit dealt primarily with the circumstances relating to the concreting work performed by Mr Bassil's company at her home. The work had commenced on 20 February 2001. Shortly after completion, Ms Wigley and her husband noticed defects in the concreting and workmanship of the stencilling.

18 Ms Wigley claimed her mother was aware of these problems, but she had not wanted to get her involved. Ms Wigley and her husband could reach no solution with Mr Bassil and court proceedings were initiated in June 2001.

19 Ms Wigley confirmed that her mother had been approached by Mr Bassil to settle the matter, but neither she, nor her mother, believed she should be involved. Ms Wigley believed that her mother was uneasy about the situation, which is why she didn't want her to be involved.

Respondent's Evidence

20 Mr Bassil's evidence was that, as part of an overall review of the operating efficiency of the family companies, advice had been sought on cost cutting measures. This had included both "blue" and "white collar" workers. During 2000 and 2001 a number of blue collar workers were made redundant.

21 In about May 2002, after discussions with his father, it was decided that Mr Victor Kirkalis be engaged to review the operating efficiency of the office, including a review of bookkeeping. He said there were eight white collar employees, of whom five were family members. Mr Bassil believed his father introduced Mr Kirkalis to the office and to the applicant in particular.

22 After about two to three weeks Mr Kirkalis introduced a new computer system which consolidated various office functions. In late May, or early June, Mr Bassil discussed with his father the retrenchment of a number of office staff. The applicant was dismissed on 31 May 2002. Mr Bassil's brother, Simon, and another secretary were also dismissed.

23 In response to the applicant's evidence, Mr Bassil said that at no stage was he privy to any discussions involving his father and the applicant's daughter concerning the concreting work. The merits of their dispute did not influence him when looking after the financial interests of the company. He emphasised that the dispute had absolutely nothing to do with the decision to terminate the applicant's services.

SUBMISSIONS

24 Both the applicant and Mr Bassil put short submissions.

25 The applicant said her dismissal was not done in "a very proper way." Since 1998 she had reported to Mr Tony Bassil. She could not understand why Mr Kirkalis dismissed her, when Mr Bassil had said he (Mr Kirkalis) was not employed by the respondent.

26 The applicant said she was dismissed without notice because of the court case involving her daughter and Mr Tony Bassil.

27 The applicant put that she had been unemployed for five months and had difficulty finding alternative work. She had applied for sixty jobs and was registered with four employment agencies before securing alternative employment as an accountant/bookkeeper on 1 November 2002.

28 Mr Bassil conceded that the procedure leading to the applicant's dismissal "was not the best." She was, however, paid four weeks salary in lieu of notice. He claimed that he had not been contacted by any prospective employers and, if he had, he would not say anything bad about the applicant.

29 Mr Bassil said his relationship with High Rise Concrete was to provide employees to it. If High Rise didn't want the applicant's services, he could do nothing about it. As a result, he also had to terminate his brother and another engineer.

CONSIDERATION

30 Firstly, the state of the evidence in this matter was less than satisfactory. Mr Bassil who appeared for himself, did not object to the evidence of the applicant or her daughter. He did not seek to cross examine either deponent. Moreover, I found his own evidence to be sometimes confusing and contradictory.

31 It follows therefore, in stricto sensu, that the applicant's evidence should be accepted. However, Mr Bassil's evidence directly contradicted that of the applicant's as to the reason for her dismissal.

32 The applicant claimed that the reason for her dismissal was Mr Tony Bassil's loss of a court case against her daughter. Mr J Bassil maintained that the respondent had reviewed its workforce and had found it necessary to make certain employees redundant. The applicant was not the only one dismissed at this time - it included Mr Bassil's brother.

33 On one view of it, the coincidental timing of the applicant's dismissal with the outcome of the court proceedings, together with the fact she received no notice of her dismissal, must raise serious doubts as to the validity of the respondent's reason for dismissal. A fortiori, when one observes that her letter of dismissal of 31 May 2002 is on the letterhead of High Rise Concrete Contractors (Aust) Pty Ltd, a company owned by the respondent's father.

34 Further, the applicant was dismissed in the letter signed by Mr Kirkalis. There was no evidence that Mr Kirkalis was a person in such authority as to be responsible for dismissing her. Indeed, Mr Bassil's curious admission was that Mr Kirkalis didn't even work for him. Mr Bassil said he had not dismissed the applicant himself because he was too busy. I find this excuse to be unacceptable and disingenuous.

35 Even so, the state of the evidence makes it difficult for the Commission to conclusively establish the real reasons for the dismissal. However, a number of facts can be relevantly stated with absolute certainty.

36 Firstly, the applicant had four years' service with the respondent and other of his family's companies - seemingly without complaint as to her performance, competence or attitude.

37 Secondly, the applicant received no notice or warning of her dismissal for reasons of alleged redundancy - albeit she received four weeks pay in lieu of notice.

38 Thirdly, there was no attempt by the respondent to find alternative work for the applicant within his own company or the other family companies.

39 Fourthly, the applicant was not paid any redundancy pay, either for her two years service with the respondent, or for the total of four years she worked for the family related companies.

40 These considerations fall squarely within the principles discussed in cases which have dealt with the fairness of redundancies in a given set of circumstances.

41 As I said in Shop, Distributive and Allied Employees' Association, New South Wales and WD & HO Wills Holdings Ltd [2000] NSWIRComm 98 there are obligations on the employer in such situations: [66] A body of well settled contemporary industrial principles has developed from these, and many other, authorities. They may be summarised as follows. In redundancy situations an employer is obliged to: 1. give reasonable notice to employees and/or their Unions; 2. adequately consult with employees and/or their Unions on the impact of the proposed changes; 3. explore genuine alternative options for redundancy, such as redeployment or relocation; 4. ensure such options are fairly offered to the affected employees; 5. provide reasonable standards of redundancy benefits; 6. provide appropriate ancillary services, such as time off to seek alternative work, retraining opportunities, outplacement services or financial planning; 7. ensure employees nominated for redundancy are fairly selected on an objective and unbiased basis.

42 It is obvious the respondent, in large measure, whether through ignorance or deliberate intent, did not observe any of these obligations.

43 Viewed in this way, I do not find it necessary to make a finding as to the reasons for the applicant's dismissal. Accepting Mr Bassil's frank admissions leaves the Commission with no doubt that the process of dismissing the applicant was flawed and unfair. Notably, I refer to the following extracts from the transcript: At page 7: HIS HONOUR: Q. I think I have mentioned this to you before in conference, Mr Bassil, it was a rather odd way of going about dismissing someone. A. True. and at page 11: BASSIL: First of all I would like to say that, yes, she was right, one hundred percent, the procedure which I terminated her was not the best and as you have pointed out many times. further, at page 12: HIS HONOUR: ……but here on your own evidence there was no notice given, notwithstanding you paid four weeks, for a termination of employment where there is no issue of misconduct and no issue of poor performance but rather that you were dispensing with the functions of book keeping, that is what you say; so even on that basis, it was not done very fairly, don't you agree? BASSIL: Yes, but I would have thought because I terminated her on the spot and paid her four weeks in advance that would give her time to find a new job while she is still getting four weeks.

44 As I said to Mr Bassil during the proceedings, setting up a new business for the first time requires not only advice on such matters as taxation law, accounting and business reporting, but also on employment law. It seems that little or no attention was given to, or advice sought, on the latter. I trust he has learnt a valuable lesson from this experience.

45 Having said that, was the applicant's dismissal "harsh, unreasonable or unjust" within the meaning of Pt 6 ch 2 of the Act?

46 It is now well settled industrial law that each of the words "harsh, unreasonable and unjust" have their own discrete meaning and not all three descriptions of a dismissal are necessary for a finding of unfairness. In other words, a particular dismissal might be found to be "harsh" but not "unreasonable" or "unjust". This notion arises from the oft quoted authority in Byrne & Anor v Australian Airlines (1995) 61 IR 32 where the expression "harsh, unreasonable or unjust" was considered in an Award clause. In their joint judgment McHugh and Gummow JJ said at p72: It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.

47 This notion was further discussed in Outboard World v Muir (1993) 51 IR 167 where a Full Commission said: First we deal with the argument for the appellant that the Commission erred by applying the wrong test in connection with the dismissal: 'unfair' rather than 'harsh, unreasonable or unjust' dismissal. We agree with Mr Reitano's submission in this respect that the reference by the Commissioner to "unfairness" did not represent any misunderstanding of the correct test but was merely the use of a shortened form of expression intended to embrace the three relevant words. Whilst we recognise that there may be a natural tendency (recognised in the use even by the advocate for the Company before the Commissioner of the term 'unfair') to use the shortened form, we consider that it is preferable that a member of the Commission utilise the precise words provided by s246, rather than the catch-all heading, particularly when expressing the basis for a finding that a dismissal is within one or more of the heads provided by the section. We take this view because, even though there may be some circularity in the full phrase 'harsh, unreasonable or unjust', we detect scope for variation of meaning which may be critical to the determination of a particular matter and may be obscured by the use of the substitute term "unfair". Different but not wholly dissimilar words, "unfair", "harsh", and "unconscionable", are used in s275, power of the Industrial Court to Declare Certain Contracts Void, of the 1991 Act. In relation to those words, then appearing in s88F of the 1940 Act, the Commission in Court Session ( Perrignon , Cahill and Dey JJ) in A & M Thompson Pty Ltd v Total Australia Ltd [1980] AR (NSW) 399 at 418 Cahill J (delivering a separate judgment) said: The duty of the Commission is to reach a conclusion on the issues of whether the subject transaction is 'unfair', or 'harsh' or 'unconscionable'.

It has been said that those words are a 'tautological trinity' ( Davis v General Transport Development Pty Ltd ) [1967] AR 371) but we prefer to take the view that there is a perceptible difference between the meaning of the term 'unfair' and that of the terms 'harsh' and 'unconscionable'. What is unfair may not be so unfair as to be 'harsh'. But, whether this view be correct or not, once the transaction is found to be unfair the Commission may proceed to exercise its very wide power.

In much the same way, we consider that, while strict definitions of 'harsh', 'unreasonable' and 'unjust' may produce a degree of circularity of meaning, turning on the notion of 'fairness', it may be in a given case that a dismissal may be viewed as coming within the ambit of one of the three adjectives but not the others. To avoid the possibility of misunderstanding or error, the tribunal, when making that primary finding, should state explicitly the basis on which it is made.

48 A more recent authority reaffirming the distinction between the words and requiring a positive and specific finding is found in Bankstown City Council v Paris (1999) 93 IR 209: The Commissioner found that the dismissal by the Council of Mr Paris was 'harsh, unreasonable or unjust'. This phrase, contained within s84, is an important key to jurisdiction and does require some specificity of finding. As has been observed by the Commission on numerous occasions, a dismissal may be capable of being unreasonable but not harsh, or harsh but not unjust, other permutations may apply. In the present case, however, it seems to us that the dismissal of Mr Paris was capable of meeting not one or the other of those descriptions but each of them. Therefore, nothing turns upon the expression adopted by the Commissioner. We would observe that in a case where the conduct of the employer might satisfy one but not all of those heads, a positive and specific finding should be made. 49 It is trite to observe that no two cases will be exactly alike. Hence, the Commission is required to examine the facts and circumstances of each case and decide whether one or more of the words "harsh, unreasonable or unjust" can be applied to a particular dismissal.

Procedural considerations

50 There is abundant authority for the proposition that unfairness may be visited upon a dismissed employee, both as to the basis or merits of the dismissal and the process leading to dismissal. Put another way, it may be that dismissal was reasonably open to the employer, but the employer went about it in an unfair way.

51 For the relevant authorities on this subject I refer again to Byrne & Anor v Australian Airlines at p72: The distinction between procedure and substance is elusive. This is so even in those fields of private international law, the statute law dealing with limitations of actions and the effect of repeal upon accrued rights, and the Statute of Frauds, where it has an entrenched operation (217). In our view, it is unhelpful and contrary to the tenor of the Award to introduce it into cl.11(a). That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable (218). But the question under cl.11(a) is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking at the first issue before there is seen to be any need to enter upon the second . Brennan CJ, Dawson and Toohey JJ concluded at p43: Save for the prescription of periods of notice, cl 11 does not require the adoption of any particular procedure for the dismissal of an employee. However, it is clear that the use of an unfair procedure may result in a dismissal being harsh, unjust or unreasonable. For example, the failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being in breach of cl 11(a).

52 Two passages from Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385 are also apposite. The Full Bench said at p389: We agree with the conclusion of Hill J that procedural issues, that is failure to deal with the matter in a procedurally fair way, may, in certain cases, of themselves, constitute the basis for a determination that a dismissal is harsh, unjust or unreasonable. A failure to adopt a procedure which constitutes a breach of 'an essential prerequisite to, or inviolable limitation on, the exercise of the employer's right to dismiss' or a failure to afford procedural fairness which causes a 'substantial and irrevocable prejudice to the employee' will often vitiate the decision of an employer and warrant, in itself, a determination that the dismissal was harsh, unreasonable or unjust (and hence, establish the basis for a remedy under the Act). Further, a decision to dismiss made upon the basis of procedures which are unfair and where an innocent explanation or other appropriate explanation is reasonably available will normally constitute a firm basis for a determination that a dismissal, so effected, is harsh, unreasonable or unjust. and later, at page 390: While the findings of the Commission in Buckman focus on the issue of warnings, the observations apply also to broader tenets of procedural fairness contemplated in s88 and to matters such as those raised in these proceedings. We agree that there is no obligation in the Act to follow any particular procedure when effecting a dismissal. However, a failure by an employer to adopt appropriate procedures when effecting a dismissal, or a failure to follow procedures prescribed in an industrial instrument, or in procedures laid down administratively by an employer, may be properly taken into account by the Commission as part of the consideration of an application brought under s84. Further, as we have noted, where procedures are specified in an industrial instrument or by administrative action, a failure by an employer to apply, or to properly apply, those procedures may in appropriate cases, of itself, support a finding that the dismissal was harsh, unreasonable or unjust . See also D & R Commercial v Flood [2002] NSWIRComm 88 and Wilson v Department of Education and Training [2000] NSWIRComm 20.

53 As mentioned in the above passage, the Commission's statutory basis for considering procedural issues is found in s88 of the Act: In determining the applicant's claim, the Commission may, if appropriate take into account: a) whether a reason for the dismissal was given to the applicant and, if the applicant sought but was refused reinstatement or re-employment with the employer, whether a reason was given for the refusal to reinstate or re-employ, and b) if any such reason was given - its nature, whether it had a basis in fact, and whether the applicant was given an opportunity to make out a defence or give an explanation for his or her behavior or to justify his or her reinstatement or re-employment, and c) whether a warning of unsatisfactory performance was given before the dismissal, and d) the nature of the duties of the applicant immediately before the dismissal and, if the applicant sought but was refused reinstatement or re-employment, the likely nature of those duties if the applicant were to be reinstated or re-employed, and e) whether or not the applicant requested reinstatement or re-employment with the employer, and f) such other matters as the Commission considers relevant. 54 One can readily see that s88(f) does not limit the Commission to the matters referred to in the preceding subsections. The Commission is able to take into account such other matters which it considers relevant in determining a particular case.

55 In view of my earlier comments, I am satisfied that the applicant's dismissal was "harsh and unjust" within the meaning of Pt 6 ch 2 of the Act.

56 As a result, I now propose to consider what relief should be ordered in this matter.

57 I have given earnest consideration to reinstating the applicant, but have decided against this course for the following reasons.

58 The applicant does not seek her job back. She found a job commensurate with her skills in November 2002. She was therefore unemployed for a period of around five months. In any event, accepting the respondent's argument that the job she performed no longer exists would seemingly end the argument about the practicality of reinstatement.

59 Accordingly, I am satisfied that this is not a case in which reinstatement is practical or appropriate. I find accordingly.

60 Therefore, the Commission proposes to make an order for compensatory relief pursuant to s89(5) of the Act. In doing so, I have taken the following matters, inter alia, into account. The applicant said she applied for numerous jobs before she secured new work. I have no reason to doubt this evidence. I also accept that the applicant's age (52 years) may well have hampered her efforts to find alternative employment.

61 Whether the applicant was employed for two or four years was an issue during the proceedings. Without making a finding on the strict legal position, the applicant, in my opinion, had no reason to doubt that she was employed for four years by the group of companies associated with Mr Tony Bassil and his son. Her employment was not terminated prior to starting work with Excellent Management Services in July 2000. Her duties and work location did not change and she reported to one, or both of the Bassils over the four year period.

62 In light of these circumstances, I consider an order of sixteen weeks pay to be appropriate compensation for the applicant's unfair dismissal on 31 May 2002. The amount will be calculated on the weekly wage of $803.60 as recorded in the applicant's application. There was no challenge to this figure.

ORDERS

63 Pursuant to ss 89(5) and (6) of the Industrial Relations Act 1996, the Commission orders that: 1) The respondent Excellent Management Services shall pay to the applicant, Grazyna Jankowski, an amount of $12,857.60 as compensation for her unfair dismissal on 31 May 2002. 2) The amount in Order 1 shall be paid within 28 days of today. 3) These proceedings are now concluded.

Peter Sams Deputy President

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