Bates v Sullivan Nicolaides Pty Ltd [2006] QIRC 164 (2006) 183 QGIG 1009

[Extract from Queensland Government Industrial Gazette, dated 22 December, 2006, Vol. 183, No. 21, pages 1009-1011] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 - s. 276 - power to amend or void contracts Bruce Douglas Bates AND Sullivan Nicolaides Pty Limited (B/2005/367) COMMISSIONER EDWARDS 8 December 2006 DECISION Mr Bates (applicant) commenced employment with Far North Pathology Pty Limited trading as Cairns Pathology on 27 November 1995. Cairns Pathology was a business owned and operated by Dr Max Stewart. The business was acquired by Sullivan Nicolaides Pty Limited (SNP/respondent) in September 2001. By letter dated 17 August 2001 Mr Bates received a formal notification from SNP confirming that an agreement had been made to acquire the business and to offer "ongoing employment in the business". Clause 15 of the Business Acquisition Agreement required that the Purchaser offer in writing to all employees (except one) continuing employment on terms no less favourable than the terms on which they were employed by the vendors and on the basis that the purchaser will treat the employment as continuous. In evidence, Mr Bates outlined that he accepted the offer. Following the acquisition a memorandum was distributed to all staff on the subject "strategic direction and management structure". Mr Bates was appointed Laboratory Manager reporting to Dr Max Stewart (owner of Cairns Pathology prior to takeover) and to SNP Management in Brisbane - Mr Tony Badrick and Ms Marita Barnes. Dr Stewart resigned and left the practice in August 2004. He was replaced by Dr Jan Kencian who took up her position in mid-December 2004. Mr Bates acquired supervisory responsibility for all scientific matters in the laboratory and by mid- 2002 his management responsibilities had been extended to include responsibility for all staff employed at the Cairns laboratory, including administrative matters. Mr Bates continued to have the responsibilities until his employment was terminated. By this application, Mr Bates seeks an order: "2 (a) That the contract of employment entered into between myself and Sullivan and Nicolaides Pty Limited be declared to be a contract which was harsh, unconscionable and unfair; (b) That the said contract be amended to include the following terms: (i) That in the event of the employee's performance or behaviour giving the employer cause for concern, such matters are to be brought to the attention of the employee without delay who shall be given an opportunity to explain his performance or behaviour; (ii) In the event that the employee's performance or behaviour is considered to be not of an acceptable standard, then the employee will be subject to:  Formal counselling followed by, if necessary  A first written warning, thereafter  A final written warning  Followed by termination, where appropriate; (c) That should the employer consider that it has grounds for terminating the employment, it should provide the employee with a brief summary of the grounds for termination, giving the employee an opportunity to respond; (d) In the event that the employer proceeds to terminate the employment, that the employee be given not less than six months notice or payment in lieu of notice; (e) Following the termination of employment, the employer agrees that it will not itself and neither will it permit its employees, officers or agents to make any statement disparaging or derogatory of the employee, thereby limiting or reducing the employee's prospects of finding alternative employment within the local community.". Ms Marita Barnes, Executive Manager - Operations, SNP outlined in evidence that since 1999, there is in place a Human Resource Manual which is accessible to all employees. In reference to this Manual, Ms Barnes by affidavit indicated: -- 1 of 3 -- 2 " . . . 10. The Introduction to the Manual states: 'This Manual contains statements of human resource policies and procedures as a guide to all SNP Managers. It provides clear guidelines for decisions and enables the policies to be administered in a consistent and impartial manner. 11. Section 12.2 of this Manual is entitled 'Dismissal'. There is no period of notice required under this section. 12. Section 18 of this Manual 'Performance Management' sets down procedures to be followed in disciplining staff for unsatisfactory performance. 13. Section 25 'Redundancy' sets down a schedule of compensation to be paid in a redundancy situation. 14. SNP exercised its right as an employer to terminate Mr Bates' contract of employment with effect from 28th January 2005. . . .". Ms Barnes outlined that at the time of the termination the respondent was not in a position to fully comply with the Performance Management Protocol as set out in the Human Resource Manual. In recognition of this acknowledged non- compliance, SNP paid to Mr Bates on termination an ex gratia payment (taxed as a redundancy package) equivalent to: 1. 5 weeks' salary in lieu of notice; and 2. 2 weeks' salary for every year of service in the business (which is equivalent to the quantum of severance payments which are payable for award free staff such as Mr Bates); and 3. $15,023 in long service leave (which represents a pro rata payment for less than 10 years of service). As a long serving employee Mr Bates was a dedicated and loyal officer who enjoyed a good working relationship with the original owners. With the new ownership, changes occurred which resulted in a deterioration of the employee/employer relationship. Efforts were made by Mr Bates to overcome the problems being experienced with the new management style and for a period performance management was undertaken in 2003. From approximately August 2003 to January 2005 no formal issues were raised with him and he received two salary increases. During this period of employment he received positive performance review with the follow-up assessment in mid-2003. It noted as follows "The laboratory's efforts to address the issues raised at the previous assessment are commended". Mr Bates outlined that at the time of his dismissal it was obvious that the respondent was not interested in discussing performance matters with him and in relation to the correspondence received he was not given an opportunity to respond. Furthermore, he alleged that he was not given any opportunity to respond on certain allegations even though he was of a firm belief they related to the operation of the Practice and not his professional capacity. In elaborating in his affidavit, Mr Bates stated the termination was so sudden that he was not permitted to complete a meeting he had commenced. The Commission regarded him as a very honest and reliable witness who was unfortunate to have experienced a change in management structure and procedure. This combined with personality issues, which it appears management had no interest in addressing, resulted in the termination. The acceptance by the respondent that there was non-compliance with the Human Resource Manual as well as the evidence presented at the hearing confirmed the allegations were not investigated. There was a very real likelihood that if investigations were undertaken they would have resulted in problems in other areas of the Cairns operations being revealed, rather than inadequacies on the part of Mr Bates. The difficulty presented at the hearing was that Mr Bates was seeking by the application an order in relation to his contract. In evidence, Mr Bates in response to questioning does not seek any relief contained in paragraphs 2(a), (b) or (c) of the application, and in regard to paragraph (d) he agreed that his employment had been terminated and he had been paid not less than six months' pay in lieu of notice. In TDG Logistics v Reilly (No 2) (2002) 169 QGIG 133 Mr Herbert, on behalf of the respondent, made submissions in relation to the fact that parties are bound by the application and the pleadings that they bring to the Commission. The Commission is not entitled to award any relief other than the relief set out and claimed in the application and that the only way that any party can depart is if they seek and are granted leave to amend their application. In response to the criticisms that the pleadings haven't specifically requested compensation, Mr Dwyer, on behalf of the applicant, suggested that there is no such requirement. He agreed that the Commission is not entitled to make findings that fall outside a pleaded case or evidence but the Industrial Relations Act 1999 (the Act) triggers the entitlement to a payment should the Commission find that the contract was unfair. He referred to s. 276 (5) of the Act which states: -- 2 of 3 -- 3 "The Commission may make an order it considers appropriate about payment of an amount for a contract amended or declared void.". It was Mr Dwyer's submission that where a contract has been found to be unfair and either amended or declared void there is nothing to prevent the Commission from instigating a payment. The Commission agrees that Mr Bates had an expectation of continuing employment and had procedural fairness been extended the process would have lengthened the period of employment. It is not appropriate on this occasion for the Commission to express views on how long the employment relationship would have continued. However, Mr Bates accepted in evidence that he had received payments as he outlined in responding to questions from Mr Herbert. On consideration of all the evidence, submissions and affidavits, the Commission is not prepared to declare the contract harsh, unconscionable and unfair. The application is refused. Order accordingly. K.L. EDWARDS, Commissioner. Appearances: Hearing Details: 2005 1 December Released: 8 December 2006 Mr J. Dwyer instructed by Gadens Lawyers on behalf of the applicant. Mr A. Herbert directly instructed by Mr G. Muir of Employer Services on behalf of the respondent. Government Printer, Queensland The State of Queensland 2006. -- 3 of 3 --