Dec 643/00 M Print S6824

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996
s.45 appeal against decision Print S2256
issued by Senior Deputy President Acton on 10 January, 2000

P. Annetta
(C No. 30444 of 2000)

s.170CE application for relief in respect of termination of employment

P. Annetta

and

Ansett Australia Ltd
(C No. 30754 of 1999)

JUSTICE GIUDICE, PRESIDENT
SENIOR DEPUTY PRESIDENT WILLIAMS
COMMISSIONER CRIBB	MELBOURNE, 7 JUNE, 2000

Termination of employment - valid reason - s.170CG(3)(a) - misconduct - s.170CG(3)(d) - unsatisfactory performance.

DECISION

[1] This is an appeal by Pasquale Annetta (the appellant) from a decision of Senior Deputy President Acton on 10 January, 2000 in which she dismissed the appellant's application for a remedy in relation to the termination of his employment [Print S2256]. At the conclusion of the hearing on 3 May, 2000 we announced that we had decided not to grant leave to appeal and that we would publish our reasons in due course. These are the reasons.

[2] The appellant was employed by Ansett Australia Ltd (Ansett) from 1986 until his summary dismissal for misconduct on 25 February, 1999. At the time of his dismissal he worked in Ansett's engine maintenance division at Tullamarine in Victoria.

[3] For the purposes of the appeal the relevant events can be dealt with in a summary fashion and for the most part on the appellant's own version. On 17 February, 1999 the appellant was asked by his leading hand, Mr Nemeth, to stop the job he was doing and to do another job. The appellant refused to do so because he considered the job was a strenuous task which would require two people, the person working on the job did not know how to do it and the appellant knew he would be expected to teach him and to do most of the work on his own. His response when asked to assist was "He can do it himself." The leading hand then told the appellant to fix a mistake made by another worker on a gearbox. The appellant said he should not have to fix other people's mistakes but said nothing else when asked if he was refusing to do the job. He did not do that job either.

[4] An investigation followed. When interviewed on 25 February, 1999 the appellant offered his view that he did not think it was appropriate that he had to fix other people's mistakes. While admitting that the events occurred he denied that they constituted a refusal of duty and expressed no remorse. Later that day Ansett terminated the appellant's employment "on the basis of 3 refusals of duty, brandishing a knife and unacceptable behaviour as outlined in the final warning on your personal file."

[5] The reference to "brandishing a knife" was to an altercation between the appellant and another employee during which the appellant had a home-made knife in his hand. There was a conflict of evidence as to whether the appellant wielded the knife in a threatening manner or simply had it in his hand for the purpose of peeling his fruit. The final warning on the appellant's file had a different origin. It resulted from a fight in which another employee was injured. The appellant challenged the warning, both at the time it was given and during the hearing, claiming that he had been acting in self defence or retaliating.

[6] Mr Langmead, who appeared for the appellant on the appeal, took us to various evidentiary issues in an attempt to show that the appellant's conduct was not unreasonable in the circumstances and did not constitute misconduct of a kind justifying summary termination. The appellant had been with Ansett for 13 years and the supervisor, Mr Nemeth, for 16 years. At various times the appellant himself had been the acting leading hand. In those circumstances the exchanges on 17 February, 1999 were far less serious because they were in truth exchanges between peers. It was also submitted that the relationship between the two employees had to be taken into account. In particular our attention was drawn to notes in Mr Nemeth's diary which may have supported a conclusion that Mr Nemeth wanted to get rid of the appellant and on the day in question had set him up for dismissal by asking him to perform duties he would not normally do. Mr Langmead also relied on uncontested evidence that the appellant had been harassed at work by other employees over the two years preceding his dismissal. For example in July, 1998 he returned from annual leave to find his padlocks glued shut. In December, 1998 one of the wing mirrors on his car was broken off. Most of the employees in his work area refused to speak to him.

[7] It is convenient to analyse the case on appeal by reference to three issues, namely: the nature of the test which should be applied in deciding whether there is a valid reason for termination pursuant to s.170CG(3)(a) in cases where serious misconduct is alleged, the need to consider all of the relevant evidence when applying the paragraphs of s.170CG(3) and whether in the circumstances s.170CG(3)(d) was relevant and should have been considered by the Senior Deputy President.

[8] Before dealing with each of the issues it is necessary to set out the terms of s.170CG(3).

"(3) In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and
(b) whether the employee was notified of that reason; and
(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and
(d) if the termination related to unsatisfactory performance by the employee-whether the employee had been warned about that unsatisfactory performance before the termination; and
(e) any other matters that the Commission considers relevant."

We shall deal first with the operation of s.170CG(3)(a) in cases of dismissal for serious misconduct.

[9] It was submitted on behalf of the appellant that in cases of summary dismissal there can be no valid reason for the termination within the terms of s.170CG(3)(a) unless the employee is guilty of conduct justifying summary dismissal at common law. In this respect it was further submitted that the common law requirement goes beyond wilful disobedience in that the conduct must amount to a refusal to be bound by the terms of the contract: Adami v Maison de Luxe Limited (1924) 35 CLR 143. Mr Langmead submitted that the appellant's conduct on 17 February, 1998 could not be so regarded because there was no instruction given to the appellant, only a request, and the appellant provided an adequate explanation for not doing the work he was asked to do.

[10] We think there are a number of answers to this submission. It is generally accepted that the term "valid reason" should be construed to mean "sound, defensible or well-founded": Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373. Although that case concerned legislation which has now been repealed it is still regarded as authoritative. To limit the meaning of the term "valid reason" by importing a test amounting to repudiation of the contract at common law is unwarranted and impermissible. Secondly 170CG(3)(a) focuses on the reason for termination. The appellant's construction would result in an arbitrary application of the section in some circumstances. Take a case where an employee is guilty of conduct which does not amount to misconduct justifying summary termination. If the employer terminates the employment on notice there would be a valid reason for doing so. If the employer terminates the employment summarily there would not be a valid reason for doing so. The validity of the reason cannot be made to depend on whether or not the termination was on notice. Thirdly, however, we are not convinced that if the common law test were applied it would make any difference in this case. The Senior Deputy President found that the appellant had refused to do the duties he was requested to do and that the explanation he gave for the refusals was unreasonable. We think these findings were clearly open to her. The appellant did not say during the enquiry into his conduct that he was not given a direction. Furthermore he continued to maintain his right to refuse to do work which was not his and to refuse to rectify work which somebody else had performed unsatisfactorily. The appellant took this position in an interview more than a week after the day of the refusals. This amounts to the unilateral inclusion of a new term in the employment contract and by necessity amounts to a refusal to observe the fundamental requirement of any contract of service - to be ready, willing and available to carry out the lawful directions of the employer. In the circumstances we reject the submission that the Senior Deputy President should have found that there was no valid reason for the termination of the appellant's employment.

[11] Next it was submitted that all of the relevant circumstances must be taken into account in applying the various paragraphs of s.170CG(3) and that the Senior Deputy President failed to do so. The submission focused on other relevant evidence which it was said reduced the seriousness of the appellant's actions. It was also said that the Senior Deputy President should have given more weight to such evidence and had she done so would have concluded either that there was no valid reason for the termination or that if there was the termination was nevertheless harsh, unjust or unreasonable because the penalty was disproportionate to the offence.

[12] The evidence relied upon by Mr Langmead included matters already mentioned such as the length of the appellant's service, the challenge made to the fairness of the final warning, the challenge made to the seriousness of the knife incident, the nature of the relationship between the appellant and Mr Nemeth, including the allegation that Mr Nemeth had set out to trap the appellant into providing grounds for termination, and the harassment of the appellant by other employees. Whilst all of these matters might be weighed in the balance in the appellant's favour the appellant must persuade us that it was not open to the Senior Deputy President to conclude that the termination was harsh, unjust or unreasonable. He has failed to do so. Despite Mr Langmead's submissions to the contrary, we have concluded that the Senior Deputy President's approach to weighing the relevant evidence was free of error.

[13] The final ground advanced on behalf of the appellant is that the Senior Deputy President erred in not having regard to s.170CG(3)(d) (Section 170CG(3) is set out earlier in the decision). The relevant part of her decision is as follows:

"[24] I am not satisfied s.170CG(3)(d) is relevant to this matter, given I have found there was a valid reason for Mr Annetta's termination related to his conduct as opposed to unsatisfactory performance by him: Fischer v Telstra Corporation Limited, 1 March 1999, [Print R2558]."

[14] Mr Langmead submitted that the appellant's actions on 17 February, 1998 should be characterised as unsatisfactory performance. Ansett terminated his employment without warning him about that unsatisfactory performance and that was a matter the Senior Deputy President was bound to take into account pursuant to s.170CG(3)(d). Her failure to do so was an appealable error.

[15] In a number of cases a Full Bench of the Commission has decided that the paragraphs of s.170CG(3) must be considered in determining a claim for relief in respect of termination of employment only in so far as they have application or are relevant to the circumstances of the case: Chubb Security Australia Pty Ltd v John Thomas, Print S2679, 2 February 2000 per McIntyre VP, Marsh SDP and Larkin C; King v Freshmore (Vic) Pty Ltd, Print S4213, 17 March 2000 per Ross VP, Williams SDP and Hingley C; Tenix Defence Systems Pty Ltd v Fearnley, Print S6238, 22 May 2000 per Ross VP, Polites SDP and Smith C. The approach to be taken to the duty cast on the Commission by s.170CG(3) is summarized in the following passage from the judgement of Moore J in Edwards v Giudice and Others (2000) 169 ALR 89:

"It is clear from both the language and structure of s 170CG(3) and the statutory context in which the subsection appears that the section requires the Commission to consider each of the matters referred to in paras (a) to (e), though the matter referred to in para (d) does not arise in all circumstances. Not only must the matters be considered but the use of the words "have regard to" signify that each must be treated as a matter of significance in the decision making process: see Minister for Immigration and Ethnic Affairs v Baker (1997) 45 ALD 136, Friends of Hinchinbrook Society Inc v Minister for Environment (No. 3)(1997) 77 FCR 153 and Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121." 169 ALR at 92

[16] It is clear that s.170CG(3)(d) will not always be relevant but that in cases where it is it must be treated as a matter of significance in the decision-making process. Is s.170CG(3)(d) relevant in this case? We think not. In approaching the costruction of the term "unsatisfactory performance" it may be significant that in describing a valid reason s.170CG(3)(a) distinguishes between capacity and conduct. Although neither term appears in s.170CG(3)(d) we think that performance is more likely to relate to capacity than to conduct. The preliminary question posed by paragraph (d) itself is whether the appellant's employment was terminated for unsatisfactory performance. While in a limited sense it was, because the misconduct was constituted by a refusal to perform work, we do not think that the conduct is unsatisfactory performance within the meaning of the paragraph. The paragraph is intended to refer to the level at which the employee renders performance including factors such as diligence, quality, care taken and so on. While there might be some overlap between the concept of unsatisfactory performance and the concept of misconduct, for example in relation to neglect of duty or poor timekeeping, misconduct of the kind which occurred in this case is in a different category. On one reading of the relevant paragraph the Senior Deputy President may have implied that conduct can never be categorised as unsatisfactory performance. Whether she did so is immaterial in this case. We are satisfied that the appellant's employment was not terminated for unsatisfactory performance within the meaning of that term in s.170CG(3)(d). We reject the third ground of appeal also.

[17] For these reasons we decline to grant leave to appeal.

BY THE COMMISSION:

PRESIDENT

Appearances:

D. Langmead of counsel for Pasquale Annetta

N. Green QC and C. O'Grady for Ansett Australia Ltd

Hearing details:

2000
Melbourne.
May, 3.

Printed by authority of the Commonwealth Government Printer

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