Ashby v Lifetime Furniture Pty Ltd [1994] QIRC 683 (1995) 148 QGIG 46

46 QUEENSL AN D GO VER NMENT INDUSTRI AL GAZ ETTE [6Jan uary, 1995 ########/!###/!########################################## QUEENSLAND IND USTRIAL RELATIONS CO MMISSION industrial Relations Act I 990 s. 297 - applicat ion for compensat ion Philip Robert Ashby AND Lifetime Furniture Ply Ltd (No 867 I of 1994) COMMISSIONER BOUGOURE 14 December 1994 Tennination of employment - Dismissal - Application for compensation - Employers financial si tu ation - Serious downturn in business - Applicants conduct. capacity or perfonnance not an issue - Proposed orders for work postponed - Valid re ason for dismissa l - Reason not harsh. unjust or unreasonable - Application refused. REPORT ON DECISION (as edited) In giving his decision from the Dench at the Toowoomba Court House on 8 December 1994, Commissioner Bougoure stated:- 'Th is is an ap plication by Mr Phil ip Robcn Ashby fo r relief in relat ion to his dismissal from his fonncr position of Master Craftsm an in the area of fine conservation work witl1 Lifetime Fu mi t ure Ply Ltd. Mr Ashby commenced employment with the employer on 18 October 1993 and was dismissed on 14 June 1994. The letter of termination is a two page documen t which explains certain matters 10 the applican t. including the employcr·s financial situa ti on and inability to fin d enough work for the applican t in the area of restorat ion and conservation which it was sai d was the applicam·s area of special talent. The Lone of the letter is unusually conciliatory for a dismissal. A crucial part of the letter reads as follows: - 'Under the current circumstances we do not ha ve any more work for you a0er the frisco table and we are therefore unable to continue your employment. There is no ques t ion as to you r level of ex pertise in fine conservation and we are sure the re are areas in wh ich yo u could contribute greatly to this husiness. However. we are left with a situat ion where we jus t cannot afford to keep you o n. We ha ve spent many hours agonising over th is decision and assure you it has no t been ma de without considering every possible alternati ve . I wou ld like to think you could leave here on a friend Iv bas is and i r there was any time in the fu ture where we could a!Tord to employ your skills tha1 avenue would remain open. In the mean time we would be very pleased to re fe r any suitable conservation work directly to you.·. Mr and Mrs Boucher, the two directors of the employer company. appeared before me and both gave evidence. Both made it quite clear Lhat Mr Ashby's conduct and capacity or perfomiancc were not in issue and th at his dismissa l was due to the serious downturn in business experienced by th e employers. Mr Ashhy seems to concede th at there was. at the time of dismissal, a lack of work in the employer's business. However. his complaint seems clearly to be that he made a move from Adelaide to Toowoomba specifically to work for the employer on the understanding t ha t his position with the employer would be secure and lon g tcnn. Mr Ashby states that his understand ing was based on what he was to ld by Mr Boucher prior 10 accepting the position. He states that he would not have moved to Toowoomba for a short tem1 , insecure job. Mr and Mrs Boucher maintain that when Mr Ashby was employed the company's pros pects \Vere good. with substantial future work anticipated. However, the company's circumstances changed significantly during the tenn of Mr Ashby's employment. II is appropriate to briefly mention ccnain figures outlined in evidence to highlight the changing circumstances of the company. Fo r the year ending 30 June 1994 the company had gross sa le s of $457.822.31 c.ompa re d with $607,641.50 fo r the year ending 30 June I993. In respect of the same periods th e ne t profit fell from $88.032.84 to $36,421 .81 . The combined salaries paid to Mr and Mrs Boucher for the year ending 30 June 1993 was $48,462 but thi s was reduced to $26.538 for the year ending 30 June 1994. Over these two years trade creditors increased su bstant iall y. At close of busine ss on 14 June 1994. the day of dismissal. th e company ·s overdraft was $ I66.915.52 and apparently it had another commitment of $155.000. Evidence before me also indicates that nn 18 October 1993. the day of commencement of the applicant ·s employment, the value of work in progress was $35,586 wi th fo rward orders va lued at $411 ,700. It was said that the laller figu re equated lo IO to 11 months work. However, by 14 June 1994. the clay of dism issal, work on pr ogress was valued at only $1,100 and there was no forward orders. The decline in the company's fortunes can be directly rela ted to two clients who postponed their orders. The forward orders of $411.700 aforementioned. included $151,800 for cl ient Mastcnon and $203.640 for client Drager. The company was progress ive ly doing work for both clients and it was anticipated that as soon as other work was completed, commencement on future work wo ul d he authorised. However, both of these clients postponed their orders and add itional work of that magn itude could not be obtained. It so happens that the Masterton work was recent ly commenced and it is ant ic ipated that the Drager work will be commenced shortly. I am satislied that. on tl1e evidence befo re me. Mr Boucher was entitled 10 be reasonably confiden t of the future of the company at the time he made employment arrangements with the applicant. The c.ompany had been in operation for 11 yea rs . It had expanded during that time and it had ju st experienced a good ye.ar and had a jus1i fi ed expectat ion of substantial forward orders. 135 71__ 1.DOC 6 January, 1995] QUEENSL AN D GOVERN MENT INDUS TRI AL G AZETTE 47 It should be mentioned that it was the ap plicant who telephoned Mr Boucher on 25 J une I 993 inqu iring about employment. The applicant was brought to Toowoomba from 5 to 8 August 1993 to inspect th e employer's operations and it was at this time that he was offered em ployme nt and accepted. It seems that by th e time the appl icant· s employment actually commenced, the company 's prospects were less hopeful. The applicant maintains that Mr Bouc her misrepresented the company' s level of prosperity to him. The ap plican t maintains he was assured of secure, long 1enn employment ot he rwise he wou ld not have left Adelaide. It should also be men tioned that the app licant' s work prospects in Adelaide were also poor at the time. He had been registered as unemployed for approximately 11,ree months. Because he was unemployed the Department of Emp loyment, Education and Training contri but ed $5,271 towards 1he transter of the applicant and his fami ly to Toowoomba. The applicant states in evidence that this figure cove red the cost of the move. I am satisfied that at the time Mr Bouchi::r spoke to th e applicant about employment, Mr Boucher was entilled 10 be reasonably conlident of the company's future. Trading operations at. 30 June 1993 had shown a substantial profit and substantial forward orders were j ustifiably anticipated. I am satisfied that Mr Boucher jus ti fiably be lieved that Mr Ashby·s employment wou ld be secure for the foreseeable future. No doubt, Mr Boucher expressed confidence in the fu ture. However. in my view, in the circumstances of this case. misrepresen tation was no t in volved. Mr Ashby concedes h is employment was not for any fixed tenn. Most employment contracts are subject to a variety of contingencies. As Mrs Boucher indicated. if her husband died she wou ld have to ,e ll the b us iness or close it down. A business of th is nature is also directly or indirectly subject to external economic factors such as recess ion, drought, competition and lack of orders. Mrs Boucher says clients postponed or cancelled orders alleged ly because of d rou ght or the recessio n. She says that in tim es of prosperity and hig h profits clients tend to order the expensive furniture made by th e company. whereas orders are cancel led or postpo ned when clients are financially less well off. In this case. it is a fact that two large orders were, in fact. postponed. In thaL sit ua tion with dwindling work the di rectors, in the course of properly managing the business. were entitled to take measu res to reduce expenses, such as wages. If there was limited work to he uone, t he staff obviously had to be reduced. In January 1994 the staff was asked to take some unpaid le ave due lO lac k of work and one employee was dismi ssed prior to the applicant's dismissa l. I am satisfied that the employer's decision to tcnninate th e a pp lican t wa, not hasty. I accept that significant consideration was given to the decision and that it was a reluctant decision by t he employe r. I am satisfied th at by 14 June 1994. the employer' s financial position was such that th e tenninat io n or further staff was clearly ju stified. The employer gave due consideration to wh ich employee sho ul d be tcnn inatcd. and in selecting the applicant for lennina tion I am satisfied that the employer acted fairly and reasonab ly so far as the applicant was concerned and in the best interests of the future of'the business. The employer' s linancial position became so d es perate about June 1994 that va rious me asures had to be taken to allow the business to continue operations. which it is still doing, with reduced staff. These measures in cluded se lli ng a ve hi cle ~o pay wages, obtaining a private loan, a restructuri ng of debt with another bank. and action to sell the workshop and lease it back. The restructuring of debt means that the company now has a substantial indebtedness as outlined in evidence. A buyer has been obtained for the workshop but because it is situated on leasehold land, there is apparently going to be some substantial delay due to what was referred to as a Mabo issue. In my view, it cannot be denied that the company's financia l posi tion now and on 14 June 1994 j ustified it in reducing staff. Section 291(1) of the /ndus1rial Relations AC! 1990 provides that: - 'An employer must not dismiss an employee unless there is a valid reason related to the employee·s conduct. capaci ty or perfonnance or based on the operational requircmentS for the emp loyers undertaking, es ta blishmen t or service.'. Furthennore, s.291 (2) provides that:- . A reason is not valid, if having regard 10 the employee's conduct, capacity or perfonnance, and the operational requirements aforementioned, the dismissal is harsh, unjust or unreasonab le.'. As at 14 June 1994, the onus of proof of these issues rested upon the employer company. In this case the em ployee 's conduct, capacity or performance is not questioned. In this case it is the operational requirements of the employer's undertaking which is the basis for dismissal. The employer has satisfied me beyond any doubt that in this case there was, in fact, a valid reason for dismissal based on the operational requirements of the undertaking. The valid reason is simply that there had been a substantial downtum in business. The employer no longer had work for the applicant and the employer faced serious financial difficu lties. Under those circumstances, I am satisfied that the dismissal was clearly not harsh. unjust or unreasonable. I am satisfied that the employer was reluctan t to dismiss the applicant and di d so in a caring manner. The employer discussed the matter with the applicant, provided a good reference and effectively len open future employment. Appropriate notice was given and bearing in mind the financial posi tion of the employe r, add it io nal payment could not be expected. In my view, the employer's conduct in relati.on to the dismissal does not deserve any criticism at all. I do find it somewhat surprising that this application was lodged. and more particularly that it was pursued to a hearing by th e app licant. whose evidence indicates he was seeking tot al compensation of $25,000 but not rei nstatemen t. In my view, the application had no chance of success. Since the applica nt has fai led his claim for legal expenses incmTed prior tu the hearing, does not require consideration. It would have fai led in any event because of the provisions of t he Ac t. For t he reasons aforementioned, the appl ication is refused and th e Commission orders accordingly.". Dated this fourteenth day ofDceemher 1994 . By the Commission, (L.S.] R.H. BLUMSOM. Assistan t In dustrial Registrar. 13571 _1. DOC -- 1 of 1 --