Dixon v National Mortgage Company Group Pty Ltd [2006] QIRC 2 (2006) 181 QGIG 83

[Extract from Queensland Government Industrial Gazette, dated 20 January, 2006, Vol. 181, No. 3, pages 83-85] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 - s. 74 - application for reinstatement Robin Dixon AND National Mortgage Company Group Pty Ltd (B/2005/1066) VICE PRESIDENT LINNANE 6 January 2006 Unfair dismissal application - Applicant's position made redundant - Applicant demoted and offered alternative position - Applicant did not accept new position - Severance pay not paid at time of termination - Dismissal deemed to be unfair - Applicant to be re-employed - Equivalent of 12 weeks' salary to be paid - Industrial Relations Act 1999 s. 74. DECISION [1] This is an application by Robin Dixon (Applicant) seeking reinstatement to her former position as Litigation & Risk Management Manager with National Mortgage Company Group Pty Ltd ACN 099413162 (Respondent). [2] The Respondent's employment records show that the Applicant commenced employment with the Respondent on 15 February 2004 as its Credit Control Manager and remained in that position until 1 August 2004. She received a salary of $50,000.00 per annum. On 2 August 2004 she was promoted to the position of Customer Service Manager on a salary of $70,000.00 per annum. On 16 September 2004 her position was changed to that of Litigation & Risk Management Manager and remained in that position on $70,000.00 per annum until her dismissal on 8 June 2005 when she received a "Notice of Redundancy" signed by Lischelle Franzway, the Respondent's Group Systems Administrator. That "Notice of Redundancy" relevantly provides as follows: "We acknowledge that after 3 separate conversations with you regarding the diminution of responsibilities within your role, and the move towards a role of latter stage arrears only for you, that you have declined our offer of continued employment. As no other positions are available related to your current skill set, we advise that your position within our Company is redundant, effective immediately. You will be paid an amount equivalent to 2 weeks pay in lieu of notice, and your accrued annual leave entitlements to date. This will be paid in an overnight transfer this evening. We regret that this situation has come to such a hostile one, and that such misconduct this afternoon has occurred by your behaviour [sic]. We had hoped that through our consultation made [sic], we could have come to a more amicable agreement.". [3] The problem is that the Applicant received only two weeks' pay in lieu of notice. No severance pay or other compensation was paid to the Applicant on termination. The Respondent did however some two days prior to the commencement of this hearing deposit into the Applicant's bank account an amount equivalent to four weeks' severance pay. That is in excess of five months following after termination. [4] It seems that in or about early May 2005 the Respondent's Managing Director, Steven Dover, together with other members of the management team, made a decision to contract out its major litigation work. This meant that a substantial part of the Applicant's duties would be referred to legal firms. One can readily understand why the Respondent took such a decision. It is of course a management prerogative to make such a decision. [5] Mr Dover says that, upon making the decision to contract the legal work out to legal firms, it was also decided that the Applicant would be offered her "original role" of Arrears Manager on the original salary of $50,000.00 per annum. The difficulty is that the Applicant's original role was never "Arrears Manager" but rather Credit Control Manager which included arrears management as a rather small component of that role. Mr Dover also relied upon research undertaken by Amber Cook, the Respondent's Human Resources Manager, that indicated that a salary of $50,000.00 per annum was "at the high end of the salary range for a similar position". The evidence revealed that the research undertaken by Ms Cook was somewhat flawed in that she relied upon salaries in an incorrect industry group. [6] Shortly after the decision was made to make the Applicant's position redundant, Ms Franzway and Ms Cook met with the Applicant and advised her that she was to be demoted and her salary was to be reduced by $20,000.00 per annum. The Applicant did not agree to this offer. In early June 2005 Mr Dover then met with the Applicant and explained the decision to her. The Applicant enjoyed the litigation and risk management aspect of her position and did not want to lose this aspect of the position. She also did not wish to have a salary reduction. Mr Dover agreed to consider the position further, however he did not change his view. [7] As Mr Dover was away from Brisbane on the following days he asked Ms Franzway and Darryl Blake, a management consultant engaged by the Respondent for a six month contract, to confirm with the Applicant that the decision was to -- 1 of 4 -- 2 stand. Mr Dover was informed by both Ms Franzway and Mr Blake that the Applicant had become abusive during the meeting with them. [8] In his statement (Exhibit 18) Mr Dover made a number of unsubstantiated serious allegations about the Applicant's conduct following dismissal. He seemed to be under the impression that because the Applicant was offered an "important, flexible well paid role at NMC for which she was already contracted" that the Applicant should have been very grateful to him and his management team. The fact is that she was no longer contracted to the position of Credit Control Manager, was never contracted to perform the role of "Arrears Manager" and her salary had been well in excess of the salary that she was now being offered. [9] Mr Blake's evidence was of little assistance to me. He had commenced in the management consultancy role only in mid April 2005. He was involved in the decision to contract out the litigation work. In his written statement (Exhibit 20) Mr Blake made the most unusual statement that in May 2005 the Applicant "was on a contract with us for $50k base plus entitlements for a primary role of arrears management. She was however being paid for 'higher duties' having been given additional responsibility for looking after various legal type matters for the group". Given that he was either under a complete misapprehension of the true legal position of the Applicant's employment or he was deliberately trying to paint an incorrect picture of that employment, his evidence is, in my view, tainted. Mr Blake was at the meeting on 8 June 2005. His evidence was that the Applicant was only offered the "late arrears role under the original format". The Applicant's duties under the original contract included being responsible for all arrears, not just late arrears. At some latter stage another person had been employed to look after arrears less than 30 days. Further, Mr Blake said that the Applicant was advised that she could perform the role either three or four days a week if she wanted to continue to work part-time. [10] At the time the Applicant had been working a four day week with the agreement of management. [11] Mr Blake made comments in his written statement such as "in my over 10 years experience in general management and human resource consultancy, I have never experienced such an extreme case of vexatious claims being used in an attempt to strike out at an employer". The fact is that Mr Blake was involved in making the Applicant's position redundant and yet he did not advise, at any time, that some form of severance pay might be appropriate. Rather than suggesting that the Applicant's claim was vexatious one would think that 10 years' experience in human resource consultancy would suggest that it would be unfair to terminate an employee in such circumstances without some form of severance pay. [12] Ms Cook's evidence is also coloured. She also was part of the management team that made the Applicant's position redundant. At no time did she advise management that it would be appropriate for the Applicant to receive some form of severance pay. Ms Cook states in her statement (Exhibit 21) that she is responsible for "all aspects of people management including performance management, recruitment and selection, training and development, and rewards/remuneration", that she had "7 years of people management experience" and yet she concludes that "this is the first case of this kind, whereby despite strong care and flexibility in working arrangement ... her unreasonable nature has left us in the position of no other option than redundancy". That is of course redundancy without severance pay. [13] Ms Cook did however give evidence that the Applicant was a "valued employee and an important part of our team". Ms Cook agreed with Mr Blake that the only work offered to the Applicant was "latter stage arrears". Ms Cook's evidence was that she couldn't understand the attitude of the Applicant when all they wanted was "to work through this and negotiate a remuneration scale to adequately reflect" the Applicant's new responsibilities. The fact is that the Applicant had been told that the $50,000.00 remuneration package was the "bottom line". [14] In her statement Ms Cook accused the Applicant of undertaking "illegal ASIC searches" without any knowledge whatsoever of what an ASIC search involved. Once again there was no basis for such an allegation. [15] The evidence generally is that the Applicant was exceptionally good at the arrears work. She was thus offered this "latter stage arrears". The only people who knew what that "latter stage arrears" involved was the Applicant and the employee currently performing the "latter stage arrears", i.e. Ms Serena Mulder. Ms Mulder is currently performing all arrears work and her evidence is that the "arrears over 30 days" (i.e. the latter stage arrears) would take up "a very small part" of her working hours. Her evidence was that her work in the under 30 day arrears took up probably 90% of her work time. [16] It was the Applicant's evidence that she did not consider the offer of "latter stage arrears" on $50,000.00 per annum to be a full-time position. This is because she understood that the position would only involve her in working some two days per week at the most and that this would result in her earning only $20,000.00 per annum if she accepted the position. One could then understand her apprehension given the evidence of Ms Mulder. -- 2 of 4 -- 3 [17] Mr Dover's evidence however, is that he envisaged that it would be a full-time position and that the Respondent needed two people with arrears experience so that when one was absent the other could do the whole arrears role. I accept Mr Dover's evidence in this regard. There is no evidence before me to suggest that this was conveyed to the Applicant in any of the discussions had with her prior to termination. The evidence is that the "latter stage arrears" position is currently vacant and that Ms Mulder is performing the role until a suitable person is found for the position. [18] The decision to send the litigation and risk management aspects of the Applicant's position to legal firms meant that the position which the Applicant occupied was made redundant. In all the circumstances, the failure to make some form of severance pay to the Applicant made the termination unfair. The severance payment was made, not at the time of dismissal, and not at the s. 75 Conference nor at any time shortly thereafter. Rather the payment was made two days prior to the commencement of this hearing and on the advice of lawyers for the Respondent. [19] A further issue is the loan application made by the Applicant and her husband in or about March 2005. The loan was for $950,000.00. Prior to seeking approval for the loan the Applicant sought assurances from Mr Dover that her position and salary were secure. The Applicant says that she received such assurances. The loan was organised through the Respondent and was approved on the Applicant's then current salary. With the termination of the Applicant's employment she and her husband were unable to afford the repayments on that loan. They had to draw on their superannuation fund to cover overdue payments and avoid repossession of the home by the funder of the monies through the Respondent. Whilst the Applicant and her husband were applying for superannuation contributions to meet payments on the loan a default notice was issued. The Respondent was aware that the default notice was issued. The fact that the default notice was issued has caused the Applicant difficulties with her credit rating. The Respondent appears to rely upon the Applicant's conduct in respect of default position as conduct which I should consider to be inappropriate. I do not make any adverse finding in respect of this conduct. I think it was understandable in all the circumstances. Remedy [20] Having concluded that the position of Litigation & Risk Management Manager was redundant, reinstatement is impracticable. [21] The issue is then whether re-employment is available. The position of "latter stage arrears" is currently vacant. Mr Dover has indicated that he wants two persons experienced in arrears in employment. The evidence is that the Applicant was very competent in arrears management. The only concern is her conduct once notified that her position was to become redundant. The evidence before me is of a general nature with witnesses saying the Applicant was abusive at meetings after she had been terminated. No specifics of that abusive behaviour was given other than she was loud and telling management that they would have to sack her, that she was not accepting the demotion, that they would have to get the police to remove her if she was not paid her entitlements. [22] The evidence of Mr Dover is that the Applicant had previously resigned following a personality conflict with another employee whereby she was accused of being abusive. Mr Dover was not in Australia when the Applicant resigned on this occasion. On his return to Australia Mr Dover met with the Applicant and negotiated her return to work with the Respondent. [23] The Applicant did not accept the "latter stage arrears" offer because she understood that the "latter stage arrears" was not a full-time position. This view was supported by the evidence of Ms Mulder. Mr Dover has, during his evidence, assured the Commission that the position of "latter stage arrears" is a full-time position. The Applicant has not obtained employment since the termination. She is currently 49 years of age. [24] In all the circumstances I order the re-employment of the Applicant in the full-time position of "latter stage arrears" on a salary of $50,000.00 per annum as and from 16 January 2006. The Applicant has been paid two weeks' pay in lieu of notice and a further four weeks' severance pay (Exhibit 4). I am not prepared to order that the Applicant receive her remuneration for the six month period following dismissal. Whilst I can understand the Applicant was distressed in being advised that her position had become redundant, particularly given that she had committed to a $950,000.00 loan some two months prior, and that her income would be reduced to $50,000.00 per annum the manner in which she dealt with these meetings meant that she rejected an offer without clarifying the full extent of the offer. In those circumstances the Applicant contributed to the predicament she now finds herself in. [25] In the circumstances she will have lost a total of 31 weeks' salary from date of dismissal to date of re-employment. She has received payment in respect of 6 of those weeks. That leaves the Applicant with a loss of 25 weeks' salary. Accounting for the Applicant's contribution I order that the Respondent pay to the Applicant the equivalent of 12 weeks' salary at the rate of $70,000.00 per annum. Such payment is to be made within 21 days of the date of release of this decision. -- 3 of 4 -- 4 [26] Further, I order that the Applicant's continuity of employment be maintained as though she had been employed during the period 8 June 2005 to 16 January 2006. Order accordingly. D.M. LINNANE, Vice President. Hearing Details: 2005 19 October 14, 15 November Appearances: Ms. R. Dixon the Applicant representing herself. Mr. S. Dover on behalf of NMC Group Pty Ltd. Released: 6 January 2006 Government Printer, Queensland The State of Queensland 2006. -- 4 of 4 --