Butler v Ocular Sciences Australia Pty Ltd [2003] QIRC 238 (2004) 175 QGIG 37

9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 37 Released: 12 December 2003 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISISON Industrial Relations Act 1999 – s. 74 – application for reinstatement Sandra Gail Butler AND Ocular Sciences Australia Pty Ltd (No. B866 of 2003) COMMISSIONER BROWN 17 December 2003 DECISION By way of an application lodged on 23 May 2003, Sandra Gail Butler (the applicant) sought reinstatement to her former position with Ocular Sciences Australia Pty Ltd (the respondent). The business of the respondent was operated and administered from a Head Office in Melbourne, Victoria. The applicant was the sole Queensland employee and filled the position of Sales Manager. The applicant contested the reasons advanced by the respondent for the termination which were contained in the witness statement of Dr Graeme White, General Manager of the respondent, as being: 1. Given the significant reduction in products supplied and the volume of sales to Precision Eyewear and to ProVision, the respondent no longer needed an employee of the applicant’s expertise and experience to conduct its operations in Queensland; and 2. Given the significant drop in sales, the respondent could not afford to retain someone with the applicant’s significant remuneration package. The applicant was first employed in June 1996 by Aspect Vision Care (Aust) Pty Ltd, a business acquired by the respondent on 16 July 1999. The applicant’s transferred employment with the respondent was confirmed by letter dated 30 September 1999. Also confirmed were the terms of employment which included inter alia “a salary of $80,000 per annum (inclusive of Superannuation Guarantee contributions)”. -- 1 of 5 -- 38 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 January, 2004 The applicant was advised on 6 May 2003 by Dr White of the decision to make her position redundant. That decision was confirmed by a letter dated 6 May 2003 handed to the applicant by Dr White. The applicant provided evidence in support of her application stating that she was shocked to have been made redundant and claimed to have contributed positively to the growth and improved performance of the business of the respondent. The applicant disbelieved the sales performance analyses provided by Dr White. The applicant claimed that there was no prior indication of her impending redundancy nor was there any consultation. She stated that Dr White neither discussed with her nor offered her any alternative position. The applicant claimed that Dr White told her that the respondent no longer required an employee possessing the skills of the applicant and that the role had changed to a $50,000 per year job. The applicant stated that this position also was not offered to her but filled by a Vanessa Lawrence. The applicant presented material (SG3 of Ex 1) that indicated that Lawrence held the title of “Queensland Territory Manager”. Dr White gave evidence that he was General Manager of the respondent and had over 24 years experience in the healthcare and pharmaceutical industries with much of that time being spent in managerial roles. Dr White gave evidence as to the nature of the business which was substantially the marketing and distribution of contact lenses and lens solutions to retailers, primarily optometrists and stores dispensing spectacles and lenses. Dr White stated that he had estimated in late 2002 that the purchase by OPSM of a major client of the respondent, Precision Eyewear, would have serious ramifications for the respondent in terms of sales revenue. Dr White claimed to have kept the applicant abreast of developments affecting or likely to affect Queensland sales but confirmed the evidence of the applicant that there was no prior consultation with the applicant regarding the decision to terminate her. Dr White stated that he had discussed the perceived problems in Queensland with the National Manager and in April 2003 had also discussed the subject of making the applicant’s position redundant. Dr White’s evidence was that he met with the applicant over lunch on 6 May 2003 and following lunch adjourned to a private meeting room where he told the applicant of the decision to restructure and make her redundant. He stated that he handed her a letter to that effect which also set out the amounts owing to the applicant as statutory entitlements together with further amounts offered as compensation for the redundancy. The applicant claimed that Dr White handed her the letter of termination immediately upon entering the room and further that at no stage during the ensuing discussion did Dr White mention that the restructure in Queensland involved the appointment of a part-time agent nor was she given the opportunity to indicate an interest in the agency role. Both parties agreed that the issues to be determined were: 1. Whether or not the termination of the applicant constituted a bone fide redundancy; and 2. Should 1. be answered in the affirmative, whether or not the process followed by the respondent in terminating the applicant was harsh or unjust or unreasonable in the circumstances. Regarding the first issue, the applicant submitted that the reasons given by the respondent for the need to restructure were not genuine but concocted by the respondent with a view to justifying the unfair removal of the applicant. Mr Thomson, counsel for the applicant, suggest that it was open to the Commission to conclude that there were other issues that may have motivated the respondent in its desire to part company with the applicant. Mr Thomson suggested that one such reason could be that the length of service of the applicant meant that the applicant would have been entitled to pro- rata long service leave had she been employed for a further 7 weeks. Another possibility advanced by Mr Thomson (and the applicant in evidence) was that Dr White had systematically removed long standing employees of the respondent since his appointment as General Manager and that the applicant’s termination was another example of Dr White eliminating the “old hands”. These scenarios, Mr Thomson claimed, were open to the Commission to consider as possible reasons because the stated reasons for the redundancy, economic downturn in the enterprise and predicted economic problems in the future in Queensland, were untrue. Despite differences in the version of events relating to the meeting between Dr White and the applicant on 6 May 2003, it was common ground that the reasons advanced by Dr White for the restructure was the drop off in sales in Queensland for January, February, March and April of 2003 and the predicted continuing sales difficulties arising from the takeover of one major client by another. Mr Thomson also stated that the similarities between the duties performed by the applicant and the duties now performed by the agent appointed by the respondent Ms Vanessa Lawrence were further reason to doubt the respondent’s claim that the termination was a genuine redundancy. Regarding the evidence relating to the financial and sales performance of the respondent, the Commission is of the view that an Employer is under no obligation to demonstrate the existence of financial difficulty or impending financial difficulty to justify a decision to restructure even where that restructure involves redundancy. However, where the Commission is asked to determine the bone fides of a redundancy, it is appropriate to consider the reasons given by the respondent and in this case the economic/sales performance of the company was advanced as the sole reason. The performance of the applicant was never in question. From the evidence it was established that in late 2002 news of an impending takeover of Precision Eyewear by OPSM arrived at the respondent. Precision Eyewear had an agreement with the respondent for the supply of products and pricing was a part of that agreement. -- 2 of 5 -- 9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 39 Y:\GAZETTES\INDUSTRIAL\JANUARY\04-01-09\GAZ_JAN09.DOCGaz_Jan09.DOC OPSM was also a significant client of the respondent and one that purchased product from the respondent at a lower price than that paid by Precision Eyewear. Dr White foresaw a desire by Precision Eyewear to restructure their arrangements with the respondent. I accept the evidence of Dr White that this news caused concern to the respondent. As it turned out, this concern was not without justification as Precision Eyewear by letter to the respondent dated 4 February 2003 terminated the supply agreement. By letter dated 19 February 2003 Dr White responded to Precision Eyewear pointing out the contractual obligation on Precision Eyewear to provide 12 months’ notice of termination of the agreement. Precision Eyewear responded on 31 March 2003 acknowledging their obligation and giving notice to the respondent that the supply agreement for “Freshcare Products” would conclude on 1 March 2004 (GW 2,3 &4 of Ex4). The evidence of Dr White and supporting material with respect to sales performance and turnover showed particularly low monthly sales for the months of February to April 2003 and a recovery, albeit not a recovery to former levels for the months May through to September 2003 (Ex4 and GW 5,6 and 7). Exhibits 9 and 10, according to Dr White, were used to compile the information submitted by Dr White in exhibit 4. Dr White accepted that the downturn for the months of May through to September 2003 was not as severe as expected or predicted, however, he did not resile from his estimate that impact from the takeover by OPSM would be severe. Considering the evidence and material, I accept that the circumstances existing in the months leading to and including April 2003 would be sufficient to prompt a prudent employer to review their operational requirements. I further accept that Dr White would have, on 6 May 2003, believed to be true, the reasons advanced to the applicant for her redundancy. Dr White denied having considered the question of the long service leave of the applicant in his review. In the absence of reliable evidence I am not persuaded to accept the invitation of the applicant to find that the impending financial impact of pro rata long service leave or a desire to remove long standing employees impacted on the decision making process of the respondent. I accept that the respondent engaged a part-time agent following the termination of the applicant. The agent was remunerated by the respondent upon the presentation of invoices. No PAYG tax was deducted from payments. The agent was personally responsible for meeting expenses such as motor vehicle and telephone costs. She carried her own insurance covering her for accident and injury at work. None of these arrangements bear any similarity to the employment arrangements of the applicant. Indeed, it was agreed that the agent was not an employee of the respondent. Some of the activities of the agent were similar to that previously undertaken by the applicant. Visiting clients and promoting the products of the respondent were obvious similarities. However, the agent was not required to service or visit OPSM stores (a significant part of the applicant’s duties) nor was the agent required to perform training of client’s employees, a duty performed by the applicant from time to time, although not a major component of the applicant’s responsibilities. I have concluded that the agent’s position is not simply the applicant’s position under another name. I accept that the reasons advanced by the respondent to justify the applicant’s redundancy were not contrived to disguise another motive for the termination and thus I accept that the redundancy was bona fide. Having accepted that the termination genuinely arose through redundancy, the Commission must now examine the second issue, namely, whether or not the process adopted by the respondent in terminating the applicant was fair. Dr White agreed that there was no discussion or consultation with the applicant about her redundancy prior to her termination. There was some conflict in the versions of events presented by the parties with respect to the post lunch meeting on 6 May 2003 between Dr White and the applicant. The differences are: 1. The applicant claimed that the respondent commenced the meeting by handing the applicant the letter terminating her services and that a discussion regarding the termination ensued. The respondent claimed some discussion preceded the presentation of the letter. 2. The respondent claimed to have explained to the applicant the proposal to utilise the services of an agent and further claimed that this constituted an opportunity for the applicant to enquire about or express an interest in the agent’s position which Dr White says she did not. The applicant stated that no such explanation was forthcoming and as a consequence no opportunity was afforded her to discuss the agent’s position. Regarding 1, I am of the view that little hinges on the timing of the presentation of the letter to the applicant. What does, however, have weight in my mind was that the letter was prepared, signed and ready for presentation and presented without affording the applicant an opportunity to discuss possible options with Dr White. Options which may have lessened the impact of the decision on the applicant. On the evidence, if the opportunity to discuss the alternative of the agent’s position did arise, then it arose after the presentation of the letter. The applicant’s claim that the agency job was not explained or mentioned was supported by the fact that contemporaneously prepared hand written notes of the meeting prepared by Dr White within 45 minutes of the meeting made no reference to such a conversation. Against the claim is the applicant’s evidence that she was shocked at learning of her termination so much so that accurate recollections of the events in the meeting were difficult. The claim was that the applicant was not afforded an opportunity to discuss alternative employment and in my view, on either version of events, the claim was substantiated. Even if the latent recollections of Dr White are accurate, the announcement of the decision to utilise an agent does not constitute a discussion about alternatives nor does it constitute, in the view of the Commission, an invitation to discuss alternatives. I find that there was no consultation with the applicant prior to or subsequent to her termination. -- 3 of 5 -- 40 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 January, 2004 Dr White conceded that the decision to change the Queensland structure was made in April 2003. It was then that the applicant should have been appraised of the position and given the opportunity to canvass alternatives to her redundancy or at least discuss ways to minimise the impact. The applicant had almost 7 years’ experience in her position and would, in all probability, have contributed constructively to such a debate. The opportunity to explore ways of lessening the impact of redundancy was denied her and at the very least she was denied time to adjust personally to her impending job loss. I find this to be unfair and pursuant to s. 73(1)(a) harsh. Remedy In s. 78 Remedies – reinstatement, ss. (2) states: (2) The commission may order the employer to reinstate the employee to the employee’s former position on conditions at least as favourable as the conditions on which the employee was employed immediately before dismissal.”. The applicant sought reinstatement. This was opposed by the respondent. Evidence from both Dr White and the applicant indicated that in the minds of both, trust levels had diminished to the point of being absent. The applicant argued that the minimal level of direct contact between the two would allow for a functioning work environment. The respondent, for their part, believed that a significant level of contact between Dr White and the applicant would occur if reinstatement or re-employment in another capacity were to occur. The respondent submitted that there could be no satisfactory working arrangement given the absence of trust and the admission by the applicant that she did not like Dr White. In any event, having already concluded that the respondent had not acted improperly in deciding that the applicant’s position was redundant, the position the applicant previously held does not currently exist and should an order for reinstatement re-establish the position it may well be that the position is again made redundant in quick order. For these reasons I consider reinstatement to be impracticable. Section 78(3) states: “(3) If the commission considers reinstatement would be impracticable, the commission may order the employer to re-employ the employee in another position that the employer has available and that the commission considers suitable.”. The respondent submitted that no other position was available in which to employ the applicant and in the absence of evidence or submissions to the contrary, I accept that position. I further accept the submissions of the respondent that the Commission lacks the power to order the respondent to enter into a business arrangement with the applicant in similar terms to those contained in the contract between the respondent and Lawrence. Thus, I consider re-employment to be impracticable. Section 79 Remedies – compensation states: “(1) If, and only if, the commission considers reinstatement or re-employment would be impracticable, the commission may order the employer to pay the employee an amount of compensation decided by the commission. (2) The Commission must not award an amount of compensation that is more than– (a) if the employee was employed under an industrial instrument – the wages the employer would have been liable to pay the employee for the 6 months immediately after the dismissal, paid at the rate the employee received immediately before the dismissal; or (b) if the employee was not employed under an industrial instrument – the lesser of the wages under paragraph (a) and an amount equal to half the amount prescribed under s. 72(1)(e)(iii).”. (3) The commission must take into account any amount paid to the employee by the employer on dismissal. (4) This section does not limit the commission’s power to make an interim or interlocutory order.”. Hall P. in Angus Stewart v Creekgold Pty Ltd t/a Zipf’s IGA Supermarket, Cooroy (No C52 of 2003) stated: “The object of compensation is to restore the employee, as far as practicable, to the financial position in which he would have been but for the wrongful dismissal.– Atkin v Hymix Industries (1999) 160 QGIG 165 at 167 per Williams P. The starting point is to identify that which the person to be compensated has lost.”. The applicant was the only employee employed in Queensland. The respondent employed less than 15 employees nationally in any event thereby exempting the respondent from, inter alia, the requirement to pay severance pay pursuant to Clause C – Redundancy of the Statement of Policy of the Queensland Industrial Relations Commission relating to Termination of Employment, Introduction of Changes, Redundancy. Pursuant to the Industrial Relations Act 1999 (the Act) and the employment contract between the respondent and the applicant (Ex 4, GW 10), the respondent had an obligation to pay all monies owed by way of wages earned, untaken annual leave credits, and payment of wages in lieu of notice. The employment agreement provided for the giving of or payment in lieu of 4 weeks’ notice of termination. The Act provides that the applicant is entitled to an extra 1 week’s notice or payment in lieu having regard to her length of service and age. The respondent’s offer to the applicant contained in the letter of 6 May 2003 was in two parts. The first part of the offer exceeded the statutory obligations of the respondent by 12 weeks pay (2 weeks per completed year of service). The applicant was further offered outplacement assistance of up to $1,500 in the first part. -- 4 of 5 -- 9 January, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 41 The second part of the offer included: 1. continued use of the motor vehicle; 2. an extra week’s pay per completed year of service; and 3. an extra 2 week’s severance payment in consideration of the applicant’s being aged over 45 years. The offer was contingent upon the signing of a deed of release which covered the return of the respondent’s property, the maintenance of confidentiality regarding the settlement and commercially senitive information and not bring the respondent’s name into disrepute. The deed further required acceptance that the offer was in full and final settlement of all matters pertaining to the termination. The applicant chose not to sign the deed and consequently has not received the amounts listed in the second part of the offer although she did continue in possession of the vehicle for some time. She was paid the monies listed in the first part of the offer (except for the outplacement assistance). The requirement that the applicant refrain from denigrating the respondent seemed to the Commission to be a reasonable requirement as was the requirement that the applicant maintain confidentiality about the settlement and other commercially confidential knowledge, the requirement that the vehicle be returned in good condition was also reasonable. The applicant was terminated on 6 May 2003, the same day the issue of redundancy was first raised with her. Had the respondent consulted with the applicant, as it should have, and had she been given time to examine the situation and respond, it may have been that a reasonable period for such dialogue would have been 4 weeks. Having considered the evidence regarding the sales estimates and figures available in May 2003 and the evidence regarding the absence of suitable alternative positions within the structure of the respondent, it is entirely possible that no solution other than redundancy would have emerged during the consultation period. The applicant was paid the amounts set out in the first part of the offer which, apart from pro rata annual leave and wages owing) totalled 16 weeks’ pay (4 weeks in lieu of notice and 12 weeks severance pay). Considering the material, evidence and submissions, I find that the applicant in being denied the opportunity to consult lost the opportunity to work for a further 4 weeks. The applicant alone chose not to sign the deed and therefore did not access the second part of the offer which contained inter alia an offer of a further 2 weeks’ wages in consideration of the applicant’s age, one week of which was an entitlement pursuant to s. 84 of the Act. This should have been paid. Pursuant to s.79(3) I have considered the amounts paid upon termination and have taken them into account when deciding the quantum of compensation. I believe that the respondent, acting fairly, would have offered the terms contained in the letter of 6 May 2003 at the conclusion of the consultation period. Further, I accept the applicant tried to mitigate her loss (See Ex 3). Considering the evidence, submissions and material before me, I have decided to award compensation equivalent to 4 weeks’ pay for the lost earning opportunity and a further week for the loss incurred by the applicant from the shortfall in the payment in lieu of notice. I order that Ocular Sciences Pty Ltd pay the amount of $7,470.00, taxed according to law, to Sandra Gail Butler within 22 days of the date of release of this decision. D. K. BROWN, Commissioner. Hearing Details: 2003 1 and 2 December Appearances: Mr G. Thomson (instructed by Hollingworth & Spencer) for the applicant. Mr R. Cameron (instructed by Abbott Stillman & Wilson) for Ocular Sciences Pty Ltd. -- 5 of 5 --