CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT CONVENTION - CASUAL EMPLOYMENT - INTERPRETATION - meaning of “casual employee engaged for a short period”
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Claim of UNLAWFUL TERMINATION - VALID REASON - HARSH, UNJUST OR UNREASONABLE - PROCEDURAL FAIRNESS - COMPENSATION - whether COMPENSATION payable for distress, disappointment, anxiety, humiliation, injured feelings not amounting to psychiatric illness
INDUSTRIAL LAW - EMPLOYMENT CONTRACT - whether IMPLIED TERM - duty of mutual trust and confidence - BREACH OF CONTRACT - whether DAMAGES payable for breach of duty of mutual trust and confidence - Whether damages for DISTRESS payable
Industrial Relations Act 1988 (Cth): ss 3, 170ca, 170cb, 170ce, 170de, 170ea, 170ee, 415, 470, 471
Industrial Relations Regulations: Reg 30b
Termination of Employment Convention: Article 2
Workers Compensation Act 1987, ss 66, 67, 151a, 151g
Addis v Gramophone Co Limited [1909] AC 488
Aitken v The Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (Unreported, Lee J, 7 August 1995, WI94/328)
Baltic Shipping Co v Dillon (1993) 176 CLR 344
BP Refinery (Westernport) Prt Limited v Shire of Hastings (1977) 16 ALR 363
Byrne & Frew v Australian Airlines (1995) 131 ALR 422
Courtaulds Northern Textiles Limited v Andrew [1979] IRLR 84
Duncan v Kingfleet Holdings Pty Limited t/as Lyster Removals & Storage (Unreported, Patch JR, 1 August 1995, WI95/1215)
Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67
Mohazab v Dick Smith Electronics Pty Limited (Unreported, Lee, Moore, Marshall JJ, 28 November 1995, NI95/2571)
Mount Isa Mines v Pusey (1970) 125 CLR 383
Swan v Williams Demolition Pty Limited (1987) 9 NSWLR 172
Western Excavating (ECC) Limited v Sharp [1978] ICR 221
Whelan v Waitaki Meats Limited [1991] 2 NZLR 74
Woods v W M Car Services (Peterborough) Limited (Court of Appeal) [1982] ICR 693
Woods v W M Car Services (Peterborough) Limited [1981] ICR 666
Mara BURAZIN v The BLACKTOWN CITY GUARDIAN
NI 3718 of 1995
CORAM: MADGWICK J
PLACE:SYDNEY
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
NEW SOUTH WALES
DISTRICT REGISTRY
No. NI 1993 of 1995
BETWEEN MARA BURAZIN
Applicant
AND BLACKTOWN CITY
GUARDIAN PTY LTD
Respondent
CORAM: MADGWICK J
PLACE:
DATE:
MINUTES OF ORDER
1. The matter will be adjourned to 29 January 1996 for mention to consider its further disposition.
2. I direct that copies of these remarks be forthwith forwarded to the Attorney-General and to the Minister for Industrial Relations.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
NEW SOUTH WALES
DISTRICT REGISTRY
No. NI 1993 of 1995
BETWEEN Mara BURAZIN
Applicant
AND BLACKTOWN CITY
GUARDIAN PTY LTD
Respondent
CORAM: MADGWICK J
PLACE: SYDNEY
DATE: 16 NOVEMBER 1995
REASONS FOR JUDGMENT
HIS HONOUR:
Nature of proceedings
This is an application under s 170ea of the Industrial Relations Act for compensation for alleged unlawful termination of employment. The applicant also seeks damages for alleged breach of contract.
Issues for decision
The substantial issues are:
1. Was the applicant excluded from the operation of the “Termination of Employment” provisions of the Act by s 170cc and Regs 30b(1)(d) and (3), as a “casual employee engaged for a short period”?
2. Assuming that she was not so excluded,
(a) Was there an unlawful termination of the applicant’s services”? and
(b) If so, what sum should be assessed by way of compensation? In particular,
(c) Is any sum payable to her under the provisions of the Act on account of alleged distress and injury to her feelings?
3. Was there any breach of her contract of service which would avail her if:
(a) she is so excluded from the operation of the Act? or
(b) compensation is not payable under the Act for such distress and injury?
Conclusions reached
There are legal questions in this case of great moment for this court and for all concerned with the proper working out of the meaning and implications of the Act. There is ample room for legitimate divisions of opinion on these questions. It is important that they be settled soon. That urgency is increased because under very recent amendments to the Act, informal arbitration upon matters involving such questions, by persons who may or may not be legally qualified, is contemplated. In
short, this is a case well fitted for referral of the legal questions identified above and summarised below for the opinion of a Full Court under s 415.
However, it is patent that the present applicant is not in good financial circumstances. I would not cause her further expense by so referring questions, and I shall not refer them, unless means can be found for the matter to be fully and properly argued before the Full Bench at no cost to her.
I strongly recommend to the relevant Minister or Ministers that arrangements be made to pay for Ms. Burazin to be represented on such a referral by senior counsel. It may also be a case for Ministerial intervention under s 471. I note that any interested “peak council” representative of employers or employees could also make application under s 470 to intervene. In order that this matter may progress, I will simply adjourn it for a few weeks so that the result of my recommendation may be known. If proper arrangements cannot be put in hand to the general effect I envisage, I will then fix an early date any further submissions before me and decide it myself. I do not regard that as the preferable course.
Life on a local newspaper
The applicant was employed by the respondent as a sales representative to sell advertising in its family-run, suburban newspaper, the Blacktown City Guardian (the Guardian). She worked there from 31 October 1994 until 12 April 1995 that is, about five and a half months. Her employment was terminated on 13 April by a letter signed by the respondent’s General Manager, Ms Daisy Constantine and its Sales Manager, Mr Paul Dodd.
Originally she was engaged on wages and commission to work, and did work, three days per week - Monday, Thursday and Friday. The paper’s deadline for copy to the printer was Tuesday each week. Her days of work were changed early in 1995 to Monday, Tuesday and Wednesday. The change was made at her request to enable her to make ends meet by working at a second part-time job.
She was an able salesperson, a personable member of the staff and, generally, an attractive person.
There was considerable discussion, indeed, among relevant employees of the respondent of possibly bringing her then fiancee’s and her own intentions to marry to fruition by way of staging her then intended wedding as part of a “Bridal Expo”. This is a kind of fair for the vast wedding industry, marketed by the Guardian and another Constantine family venture, the well-known Parklea Markets. These discussions gave rise to a claim by Ms Burazin for loss of anticipated, considerable, economic benefit by way of the provision to her of complimentary goods and services in connection with that possible wedding. It is enough to reject that claim to say that Ms Burazin remains single, that she is no longer engaged, and that the evidence falls a long way short of establishing that the termination of the employment played any substantial causative role in the termination of the engagement.
At all events, matters proceeded quite satisfactorily between the parties until about mid-March 1995.
At that time the applicant complained that she had not been paid her commission due for February. On 22 March, Mr Dodd told her that the company could not afford it. He offered to pay her $40 per week extra to make up for the non-payment of the commission. The applicant did not accept this and made several unsuccessful attempts to see the General Manager, Ms Daisy Constantine.
Ms Daisy Constantine alleges that in March 1995 she became aware of a need to cut costs radically, and hence decided to “freeze”, by which she meant “not pay”, the sales representatives their “bonus”, by which she meant their commissions, for 8 weeks. Ms Burazin was not present when this plan was allegedly presented to the other sales representatives without, allegedly, any demur by them.
On Tuesday 11th April some advertising copy given by Ms Burazin to the paper’s “art” employee went missing. Suspicion arose in Mr Dodd’s mind that Ms Burazin was responsible for the loss and was sabotaging the paper. There was some initial justification for this suspicion, but in the end the missing copy turned up, and by 12 April, Mr Dodd was no longer blaming her for its loss.
On both 11th and 12th April, Ms Burazin was in and out of Mr Dodd’s office on a number of occasions.
On Wednesday 12th April at about 3pm Ms Daisy Constantine asked Ms Burazin to see her and Mr Dodd in the latter’s office. The applicant had had informal legal advice that she should see her superiors only one at a time: “one on one” as she put it when she relayed this advice and her intention of acting on it to Ms Constantine. Ms Constantine agreed to this course of action and invited Ms Burazin to see Mr Dodd in his office on his own.
As Ms Burazin was on her way in, she encountered Ms Nicky Constantine. The latter took administrative decisions in the absence of her elder sister Daisy and Mr Dodd, but otherwise worked as a secretary. In the presence of other employees, Ms Constantine sneered at her, saying words to the effect “One on one! What a joke.” Ms Burazin replied to the effect “That’s right Nicky, but you’re too young and immature to understand that”. Ms Constantine rejoined “I’d rather not be your age.” Ms Burazin rushed over to Ms Constantine’s desk, stood over her, pointed at her and said “Don’t push me, don’t push me”. She then entered Mr Dodd’s office where she spoke to him. Ms Daisy Constantine meanwhile called the police.
Inside Mr Dodd’s office, he gave Ms Burazin a letter dated 12 April in the following terms:
“Due to the current economic climate of Suburban Newspapers today, unfortunately one being the Guardian Newspaper, cost cutting measures have to be implemented for company profitability.
Cut backs in this case must affect an areas within the publication.
At present your 24 hours (3 days a week) working time will have to be cut by a day.
Hence a 16 hr week is to commence from the date of 27th April, 1995.
A week settling in period has been taken into consideration to suit you.
During your employment of the last 6 months the Guardian compromised to fit into your 2nd job schedule, and meet with your 2nd job’s working needs.
We believe though it didn’t meet with that of the publication as the Tuesday was a copy day hence less canvassing.
The original arrangement of 3 days a week, Thursday, Friday and Monday will stand but without the 8hrs on Monday.
Keep in mind also selling of individual advertisements requires a signature on the booking slips which you haven’t kept up to date with.
This also applies to all staff who have been guilty of the same thing.”
He told her that there would be no commission and no pay rise. She pointed out that she had already been paid the $40 extra on one occasion. Mr Dodd told her that that pay rise would cease. She left his office.
The police arrived soon after and Ms Burazin was removed from the premises by them.
Both Ms Burazin and Ms Nicky Constantine are forceful characters. Ms Burazin was then aged 30 and Ms Constantine was 19 or 20. Ms Burazin is tall and of imposing presence. Although young, Ms Constantine was, from what I saw of her, much better able to handle herself under pressure and more assertive than most people her age. It is likely that Ms Nicky Constantine was quite taken aback and that there was a degree of upset for a short period. However, the respondent’s witnesses on this matter exaggerated the affair quite considerably, in my view. The incident was about as alarming as a classroom quarrel.
The next day the respondent had a letter dated 13 April delivered to Ms Burazin’s home. It was in the following terms:
“After careful consideration, both Daisy Constantine and myself Paul Dodd have no choice but to terminate your employment with the Guardian effective immediately upon receipt of this letter. Due to poor and unsatisfactory attitude to work and surrounding staff members.
We feel management have been more than reasonable with many of your requests.
REASONS FOR TERMINATION
Tuesday 11/4/95 “Update and Renovate Feature”
At approximately 3.30pm, 9 advertisements of your advertising were lost.
Your assistance in recontacting these clients was unsatisfactory. At no time at all did you show concern for the lost advertisements that were your responsibility.
Coincidentally your clientele booking sheets which would have eased the matter of finding the clients for the feature could not be located. To help with the advertising feature 4 other representatives were fortunately at hand to assist in your effort to obtain new hard copy.
Wednesday 12/4/95
* Staff members concerned with your attitude re: your complaints towards the Blacktown City Guardian management staff.
* Negative attitude and disruptions towards other staff members.
* At approximately 3.00pm Daisy Constantine (General Manager) requested your presence in Paul Dodd’s office you declined openly on the reasoning that you were only allowed to see either of us purely on a one on one basis. (Apparently on advice from your Solicitor)
* You then proceeded out of the sales room and provoked a staff member this then turned into a aggressive outburst with you standing over the top of the person in question and pointing your finger in her face and yelling in turn which frightened other staff members.
* The letter dated the 12th April, 1995 in which was given to yourself is now disregarded.
This letter was totally ignored by yourself, you clearly indicated to myself (Paul Dodd) that you had no intentions of adhering to management requests which were listed in the letter.
And you Said, “I will work the days I want to work and no other”.
* Your attitude towards both Daisy and myself was disrespectful and aggressive. The aggression you displayed was totally unprofessional and uncalled for in a working environment, to the point of actually bringing in two Police Constables to control and escort you from the premises.
These reasons above, outline your dismissal.
I have set aside a time of 10.00am no earlier and no later on Tuesday morning re: appointment to discuss this matter with Daisy and myself. You may bring your solicitor to this meeting.
Attached is your pay for the week.”
The “short-term casual” issue
Ms. Daisy Constantine said that before Ms Burazin’s engagement, the respondent was looking for someone to work “8 hours a day, three days a week”: Exhib 2, para 6. In a letter furnished to Ms Burazin for use in a projected loan application by her, the respondent described her in February 1995 as being “employed as a permanent/casual Sales Representative”, who “works three (3) days per week and [whose] net income is $263”. The reference to $263 was to her weekly wages not including commissions. As late as in the very formal letter to Ms Burazin of 12 April her “current job status” was described as “Permanent Part-time”.
Upon Ms Burazin’s engagement, there was no discussion as to whether she would be paid sick leave or holiday pay. The paper closed for a fortnight over the 1994-5 Christmas holiday period. Ms Burazin was not paid any holiday pay for that period.
She was paid by reference to an hourly rate of pay; indeed an hourly rate which was increased by 20% from another hourly rate; the ultimate source of that base rate and mark-up was inadequately explored. I assume it was simply the market. However, records of the actual hours Ms Burazin worked were not produced and, I infer from that and the “time sheets” which were produced but which recorded no detail of hours, not kept. She was paid at weekly intervals.
There were other sales representatives who worked full-time and were paid holiday and sick pay. I am not satisfied, if it matters, that there was any uniform or even general practice of calling these people “permanent” in contradistinction to Ms Burazin.
In the letter to Ms Burazin of 12 April, the meaning of the words
“... a 16 hr week is to commence from ... 27th April, 1995. A week settling in period has been taken into consideration to suit you.”
is not clear. However, by that time the authors of the letter were already considerably annoyed with Ms Burazin and would not, in my opinion, have accorded her any notice unless they thought that she had some entitlement to it. They seem to have thought that she was entitled to at least one week’s notice of the changes they were proposing.
The parties conducted the case on the basis that Ms Burazin’s employment was award-free, despite my stated disbelief in the likelihood of that according with reality. I was not satisfied in this regard that exhaustive inquiry had been made. Further, no effort was made to put before me information from which one might infer that there is some pattern of different remuneration for permanent part-time as distinct from truly casual employment that would assist towards a conclusion here. That raises the following questions:
(1) whether any award provisions would be relevant in comprehending the true nature of the arrangements and in construing the legislation - the doubt arises because essentially the task seems to be to interpret an international treaty: see below; and
(2) if so, whether the court is free to supplement the researches of the parties after the hearing has concluded, as in a search to elucidate, say, whether some statutory provision were applicable, if counsel’s efforts had failed to resolve the question;
(3) whether it is permissible scope for me to take judicial notice, as a member of a specialist court, of my understanding of industrial practices. I have in mind, as I said in argument, my own belief that it has often happened that award provision has originally been made for higher pay for casual, in its true sense of irregular, than for permanent work and that this was done both by way of compensation for various disabilities of such work and for the general non-availability of holiday pay, sick pay and so on, and also as a deterrent, at least for some employers, against reliance on other than a permanent work force. However, with time the “casual” award terms thus prescribed have become by agreement the basis for what is truly permanent, though often part-time, work (part-time work, regular or irregular, itself often being discouraged and/or specially compensated in awards). Such, indeed, is the origin in my understanding of the well-enough understood Australianism “permanent casual” used in this case by the respondent’s managers.
Without reflection on counsel in this case, unlawful termination cases are frequently conducted by people (including some with real expertise in such cases) - lawyers and others - who do not have a high degree of experience in wider aspects of industrial law that often impinge on such cases. So those questions have some importance generally for this court. It will appear from what follows that they may have particular importance in this case.
The legislative approach to “short-term casuals”
The I.L.O.’s Termination of Employment Convention 1982 (“the Convention”) provides in Article 2 that:
“2. A Member may exclude the following categories of employed persons from all or some of the provisions of this Convention:
...
(c) workers engaged on a casual basis for a short period.”
Under s 170ca(1) of the Act of course the object of the “Termination of Employment” Division is to give effect, or give further effect to the Convention.
s 170cb is in the following terms:
“An expression has the same meaning in this Division as in [the Convention]”
s 170cc provides that:
“The regulations may exclude specified employees from the operation of specified provisions of this Division. An exclusion has effect only if :
(a) it is permitted by paragraph 2 ... of Article 2 of [the Convention] ...”
Regulation 30b provides:
“(1) ... for the purposes of section 170cc of the Act,, the following employees are excluded from [all relevant provisions of the relevant Division] of the Act:
...
(d) a casual employee engaged for a short period within the meaning of subregulation (3)
...
(3) For the purposes of paragraph (1)(d), a casual employee is taken to be engaged for a short period unless:
(a) the employee is engaged by a particular employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 6 months; and
(b) the employee has, or but for a decision by the employer to terminate the employee’s employment, would have had, a reasonable expectation of continuing employment by the employer.”
It seems to me arguable that the Regulation may be the result of a confusion of concepts. The employees whom the Convention contemplates as available for exclusion are “workers engaged on a casual basis for a short period”, understood liberally in accordance with the ordinary meaning of those words, having in mind the object and purpose of the Convention, but bearing in mind the desirability of international uniformity since an international treaty is being interpreted: Mohazab v Dick Smith Electronics Pty Ltd (Unreported, Industrial Relations Court of Australia, Full Court, 28 November 1995) at 8-10. But the Regulation excludes employees who do not properly fall within that class and who are only sometimes referred to as “casual” at all on account of the rather singular aspects of Australian industrial history, as I understand it, which I have set out above.
In effect, the argument might run, the effect of Reg 30b(3) is that a casual employee is excluded from the Act unless he/she:
(1) is not at all like many, and perhaps most, casual employees (as a matter of ordinary language, one tends not to think of a casual employee as one who is “engaged on a basis”, which is both “systematic and regular”, as para. (a) requires);
(2) is so engaged for a sequence of periods of employment over at least a 6 months period; and
(3) would at the end of that 6 months have a reasonable expectation of a kind of employment, namely continuing employment with the one employer, which is not one of the usual indicia that workers are “engaged on a casual basis” (c.f. the Convention), as that phrase would, in ordinary usage, be understood.
Further, the circumstances of some of those who would be excluded by the Regulation are such, the argument might continue, as to indicate that the Convention did not authorise their exclusion at all, for example,
(a) a casual labourer given work by an employer for an average of four days per week for 5 months and who had been told he could expect about the same amount of work for another six months to come;
(b) a fruit-picker available generally for casual work but year after year engaged and given, say, about three months’ work in the season by a particular orchardist in a particular district, who then, two weeks into the season in a particular year, summarily dismisses her because of a mistaken belief that she has been dishonest, and
(c) a casual hospitality industry employee who in fact works for one employer for a sequence of periods of employment over a period of a year and whose unfair dismissal might impact upon his/her employability generally in the industry, but the circumstances are such that it cannot be said that there was a basis of engagement that was both systematic and regular and/or that there was a reasonable expectation of continuing employment with that particular employer.
The argument might thus conclude that paras 1(d) and 3 of Reg 30b are at least to some extent beyond power. Questions might then arise about how much of those paragraphs might survive.
Obviously, these are questions of some general importance.
A valid reason for termination?
It will be observed that, in the letter of 13 April effecting the termination of Ms Burazin’s services, the employer was asserting reasons therefor “connected with the employee’s capacity or conduct” within the meaning of s 170de(1) of the Act. The question then arises whether these reasons were “valid”, that is whether they are sound or well-founded (see Macquarie Dictionary (2nd ed)).
To take the complaints set out in the letter, item by item:
· There was nothing apart from the events of 12th April that could have given rise to any reasonable concern with Ms Burazin’s “attitude to work and surrounding staff members”, let alone anything that might have motivated a reasonable employer to dismiss her.
· The complaint about her alleged lack of assistance in coping with the temporary loss of the advertising copy which she had solicited had no foundation and was merely colourable;
· Staff members’ alleged concerns amounted in reality, as did their evidence in my view, to no more than their making it plain that, as to the contretemps with Ms Nicky Constantine, and especially after the police were called in, they knew which side their bread was buttered on.
· Ms. Burazin was no more disruptive to staff members than many another sorely provoked person might have been. She had been handed the bitter cup of refusal to pay agreed commissions, loss of one day’s work per week, and a rearrangement of working days with which it would be virtually impracticable to comply. A young person, not at the time exercising a management role, had ridiculed her before others. Employees, no less than the employer’s family, are entitled to understanding of their human reactions to untoward events.
· As to her openly declining to see Ms Daisy Constantine and Mr Dodd together, they accepted on 12th April that which, on 13th April, they said justified the termination of her employment.
· Any fair-minded employer would have recognised that both Ms Burazin and Ms Nicky Constantine had behaved in an untoward fashion. Any mature employer would, if desirous of reproving Ms Burazin, have also upbraided Ms Nicky Constantine for needlessly intervening in an already tense situation. Indeed, any sensible employer who was not hell-bent on getting rid of an employee assertive of her rights would have helped the pair make a tolerable peace: they had been on good terms previously.
The actions of the employer, by its agent Ms Daisy Constantine, both in calling the police, but even more in suffering them actually to remove a perfectly respectable employee, were unnecessary, humiliating and hurtful. There never was an imminent threat to Ms Nicky Constantine but only a peremptory demand for her silence, phrased as a warning. Ms Burazin overstepped the mark, but Ms Constantine had provoked it. Ms Burazin uttered her outburst when she was obviously offended and embarrassed, and in an emotionally charged atmosphere. Immediately upon that utterance, Ms Burazin removed herself from Ms Nicky Constantine’s presence by entering Mr Dodd’s office. Steps might then reasonably have been taken by Ms Daisy Constantine to lower the temperature.
· Ms. Burazin’s immediately expressed dissatisfaction with the proposed changes to her work schedule hardly meant that in reality she was refusing the intended re-arrangements, and if protest availed nought, she might well have wished, with a day or two to think the matter over, to accept what was on offer. A fair-minded manager would have realised this.
· Ms. Burazin’s attitude to Ms Daisy Constantine and/or to Mr Dodd, apart from the matter of her preference, on legal advice, to see them “one on one”, did not justify serious complaint. Ms Daisy Constantine had accepted Ms Burazin’s preference at the time. That one matter, alone or with the other matters complained of, could hardly be said to amount to a sound basis for dismissing an employee.
It will be apparent that, in general, I much prefer the evidence of the applicant to that of the respondent’s witnesses. Where it can be seen that I have not adopted the account given by the applicant, it is because the inferences from the objective circumstances seem to me to compel acceptance of another view. The applicant did her best to tell the truth. The respondent’s witnesses, for various reasons obvious from the record of the evidence and what I have already said, were unreliable for partiality, unless speaking against interest or where they are supported by compelling inferences from the objective facts.
In short, the respondent employer has failed in my opinion to prove, without any need for reliance by the applicant on considerations of harshness, etc. under s 170de(2), that there was, within the meaning of the Act, any valid reason for the termination of Ms Burazin’s employment. It would thus have been in breach of s 170de.
Harshness, etc.
If that view be mistaken, then I have no doubt that the termination of the employment was harsh, unjust or unreasonable within the meaning of s 170de(2). The events of a mere two days were complained of. The impugned conduct and/or capacities were exhibited in a context of major and very inconvenient change sought to be imposed unilaterally by the employer. To dismiss Ms Burazin even for all of what was complained of was, in my opinion, quite excessive, applying the standards of a modern, reasonable Australian employer.
In part, these standards can be gauged against a general background of experience in this court of the degrees of reactions by other employers who have been provoked more seriously than occurred here. It seems worth making this point expressly so that litigants may understand that in this court judicial officers quickly build up, and the court has built up, background experience of such matters.
Failure to give a hearing
Her dismissal was the more excessive because of what would be the breach of s.170dc. Ms Burazin was given no opportunity to defend herself before her employment was terminated. There was no reason why the employer could not have done this. That is also, of course, an independently unlawful aspect of the termination of Ms Burazin’s services.
Damages for distress?
Ms Burazin was naturally extremely distressed by the way she was treated on 12th April, and by her ultimate, actual dismissal on the 13th. The respondent by its agents behaved arrogantly and contemptuously towards her. She was suddenly at least $263 per week net worse off when, like most employees, she had, and would reasonably have been expected to have, financial commitments.
She was shocked, humiliated to the quick, financially worried, disoriented and depressed, as anyone might have been. There was no adequate evidence before me, however, that she had a mental and/or emotional reaction severe enough to be classified as a psychiatric illness. She had, no doubt, for a time, to endure stress. By which I mean, as does the Macquarie Dictionary, disturbing psychological influences that produced in her a severe state of tension. The same dictionary points out that the word “stress” had its origin simply from the gradual disappearance of the unstressed vowel in the word “distress”, which it defines as “great pain, anxiety or sorrow; acute suffering; affliction; trouble”. It would be equally accurate to say that Ms Burazin suffered “distress” for a period. As a measure of her condition, had she been in a position where her ordinary kind of work was still available to her, she would have been able to limp through it adequately enough: her pain on account of the termination of her employment, and the events bound up with it, was of course nothing like the more severe of the degrees of distress which life commonly offers people, such as on the death of someone beloved. Nevertheless, as things actually were, she was probably in no fit state of self-possession, for a few weeks, confidently and properly to present herself on the open market as an aspirant for the skilled and competitive work which was her field.
The question is whether the law provides for her to have compensation for her distress, whether by way of a statutory notion of it - see s 170ee(2) (it was rightly agreed that reinstatement would be impracticable), or on her action in the accrued jurisdiction for breach of contract. This question is of the greatest importance for all concerned with the operation of the Act: in virtually every case of an unfair dismissal distress is occasioned to the ex-employee.
“Compensation”?
Moore J has held that a psychiatric illness caused or aggravated by an employer’s breach of contract attracts compensation: Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67. Lee J has held that distress and disappointment are likewise compensible: Aitken v CMETS&WU (Unreported, Industrial Relations Court of Australia, Lee J, 7 August 1995).
On the other hand, Patch, JR in Duncan v Kingfleet Holdings Limited t/as Lyster Removals & Storage (Unreported, Industrial Relations Court of Australia, Patch JR, 1 August 1995) set out some of the powerful arguments that would support a contrary view, notably that the primary remedy under the Act is reinstatement: s 170ee(1) and that, where that remedy is obtained, there will nevertheless usually be some distress which simply goes uncompensated.
There are other policy implications of choosing to take a broad view of the notion of compensation posited by the Act that perhaps bear closer examination than appears so far to have been made. I offer the following examples:
1. Employees’ safety and workers compensation rights
An employer’s common law duty to take all reasonable steps to prevent harm to an employee extends to preventing harm in the form of “bare” psychiatric illness, i.e. where not accompanied by physical injury: Mount Isa Mines Ltd. v Pusey (1970) 125 CLR 383, but perhaps not to preventing harm in the form of bare distress falling short of such an illness: (at 393), and see the discussions and the cases cited in Fleming, Law of Torts (8th ed. 1992) at 159-60, and Balkin & Davis, The Law of Torts (1987) at 249-50. Nobody suggests the position is any different under the statutory duties as to safety imposed on employers.
If “non-illness” distress is not compensible under a duty to see to an employee’s safety, why should it be different under duties which appear to have as their primary consideration not the personal security of employees but their economic and social welfare?
If, on the other hand, mere distress is compensible under the common law or specific statutory safety duties of employers, different considerations arise. Even where compulsory insurance can spread the burden, for example, in workers compensation systems, under the influences of an improved Commonwealth social security safety net, fierce competition between the states to attract employers, and inflation of premiums (allegedly due in no small part to an actual burgeoning of “stress” claims), it has in the last decade or so been generally felt necessary in this country to limit the compensation. In NSW, for example, an injured worker gets no non-fault compensation for “pain and suffering” unless he/she has also suffered a fairly substantial physical injury falling within enumerated kinds in a table of disabilities: Workers Compensation Act 1987 (NSW), ss 66 and 67. The pain and suffering compensation is proportionate to a maximum of less than $70,000. Further, an injured worker must choose between seeking the common law remedy of damages or compensation under the said Act: s 151a. No common law damages are payable for any non-economic loss unless they are assessed at over $38,000 (s 151g(4)), proportionately to an imposed cap of $217,000 (s 151g(4)). In practice, therefore, it would only be in cases of a severe psychiatric condition and/or a relatively serious physical injury that any mental distress would actually be compensated, and the compensation would then be at an artificially low rate. New South Wales is by no means the least generous of the jurisdictions.
One may be entitled to ask: if both illness and non-illness distress occasioned to employees in breach of the specific duties of employers to keep safe their employees, are mostly not, and are only ever barely and partially, compensible, why should it be assumed that the Commonwealth Parliament intended something more generous under the rubric of compensation for unlawful termination of employment?
Further, to take the NSW example, was the national Parliament intending the extinction of State workers compensation rights pursuant to s 151a of the said State Act? Or did the Parliament intend that an unlawfully terminated employee keep both damages/compensation for illness or non-illness distress under the Commonwealth Industrial Relations Act and also workers compensation rights, although a distressed and unlawfully maltreated employee who keeps a job, or voluntarily turns it in, must choose and, whatever the choice, in either case usually get nothing, or next to nothing?
2. An Act about the economic sphere?
As this case and many others in this court show, the lot of many non-unionised workers in this country, even white-collar workers, even in workplaces a long way from dark Satanic mills, was one of great inequality, vis-a-vis their employers: liable to sudden and disproportionate precipitation into the relative poverty of unemployment at the prerogative of an arrogant management offended by a single incident, with a dearth of practicably enforceable rights. The enactment of provisions such as those found in the Termination of Employment Division of the Industrial Relations Act was therefore sorely needed and curiously overdue in a nation that esteems itself, justly in some other respects, as the home of the “fair go”.
That said, to construe the Act as intending, along with compensation for loss of pecuniary rights, to afford comfort for injury, however grave, merely to the sentiments, when explicit provision is elsewhere made for such injury, is to assume a sphere of concern for its provisions for which, apart from the use of the term “compensation”, there may be little warrant.
The principal object of the Industrial Relations Act, as set out in s 3 is:
“to provide a framework for the prevention and settlement of industrial disputes which promote the economic prosperity and welfare of the people of Australia by:
...
(b) providing the means for:
...
(ii) ensuring that labour standards meet Australia’s international obligations;...”[emphasis added]
Thus, it may be argued, the Act is about the economic sphere. It is, relevantly, concerned with labour standards to which Australia is committed. No doubt the rights of labour are simply a species of human rights. But there is nothing in the Act or the international treaties to which the said Division gives effect, which indicates unequivocally that the Division is concerned with safety issues or the security of one’s feelings. On the contrary, everything points to a concern with income security and rehabilitation from injury to pecuniary interests.
Again, the Act looks to the nation’s economic prosperity. Needed as the termination of employment provisions were, and necessary to such prosperity as proper labour standards are (employees and their dependants being the greater part of the nation), in Parliament’s evident view, their introduction was bound to cause some disruption and some expense to a good many employers. A considerable change in their standards was to be wrought. But beyond the steps strictly necessary to achieve those changes, it is unlikely that Parliament intended to go. As McHugh J conceded in Baltic Shipping Co. v Dillon (1993) 176 CLR 344 at 396, “[a]llowing damages [for breach of contract] for distress or disappointment would increase the cost of entering into contracts”. That is as true or truer of contracts of service as of any other kind of contract. In an era of chronic and severe unemployment, and unprotected exposure to the chill winds of international trade, it is surely arguable that unnecessary disincentives for employers to enter into stable employment contracts (the very kinds caught by the Act and Regulations), and unnecessary increases in potential labour costs as to existing employments, were hardly intended to be imposed, and ought not be imposed by judicial decision, on a good many of the nation’s productive enterprises. There was when the Act was passed, and still is, no scheme of compulsory, or even generally available, insurance to spread the cost (which may be substantial for a particular employer) of non-compliance with the Act.
What is the countervailing benefit to be offset against that cost (see Baltic Shipping at 396-7)? Is it really necessary, to force a change in attitude by those employers in need of it, to mulct them in damages on account of hurt to terminated employees’ feelings? Will it not suffice to force them to compensate for the financial harm done by their unlawful conduct in the course of their economic endeavours? Very substantial benefits have surely been conferred on employees, without travelling into the realm of the sentiments, at no little cost to affected employers, who may be large or small. Do the demands of distributive justice require perfection, or merely practicality?
3. A “statutory tort”? If so, what follows?
In Aitken, Lee J (at 20) referred to ss 170ea and 170ee as having the “characteristics of a statutory tort”. Be it so, is that the answer to the problem, or merely another statement of it?
The remedies for many torts, including some statutory ones, dealing with the plaintiff’s economic relations, in circumstances where the emotions are apt also to be engaged, give no solace for sentimental harm. The high water mark is probably the Lord Campbell’s Act action. As Professor Fleming puts it:
“In no other respect more than this do damages fall short of compensating for the total loss: here, for the value of life ... Damages in the nature of solatium for grief or bereavement (unless amounting to psychiatric illness [caused by “nervous shock”: Swan v Williams (Demolition) (1987) 9 NSWLR 172, 191-5] ) ... are rigorously excluded.” (Fleming at 669).
But, in general, tort law is still very chary of compensating emotional distress unless very severe(Swan loc. cit.), even in cases of assault (see Fleming at 31-4). Where the criterion of liability is that some economic relation has been interfered with, i.e. in cases of trespass to land or chattels, conversion, deceit, contractual interference, trade or business interference, conspiracy, passing off, etc., despite the obvious tendency of such civil wrongs often to cause anguish, as well as pecuniary harm, there is in general no question of compensation for the sentimental harm. The position is different of course in relation to defamation, but the gist of that action is not damage to one’s property or physical person, but precisely injury to the sentiments: harm to reputation wounds the soul, but not the body or, necessarily, the pocket.
Damages for breach of contract?
Whether damages for non-illness distress may be awarded for breach of contract may be relevant both in its own right and as an analogy or guide to the approach to be taken to compensation under the Act, as Lee J perceived in Aitken (at 20).
However, first, one must recall that the cause of action is in contract, and identify any breach. The plaintiff has not sued here for the defamation seemingly implicit in her employer’s manager having needlessly and high-handedly called the police; nor for breach of the duty, contractual as well as tortious (see the discussion by Greig and Davis in The Law of Contract (1987) Law Book Co Ltd, at 545), to take reasonable care for her safety, as by not humiliating her in circumstances where it was foreseeable that an employee might be extremely distressed, or even precipitated into frank psychiatric illness.
Was there a relevant implied term in the contract?
What has been pleaded in this case is breach of the following allegedly implied contractual duties:
“(i) that the Respondent would not terminate the Applicant’s employment without due cause for doing so;
(ii) that the Respondent would not without reasonable cause, conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee;
(iii) that the Respondent would act towards the Applicant in good faith;
(iv) that the Respondent would exercise its powers in relation to the Applicant fairly;
(v) that the Respondent would exercise its powers in relation to the Applicant reasonably;
(vi) that the Respondent would not exercise its powers to the detriment of the Applicant on the basis of misleading, incorrect or prejudicial information.”
There is ample English authority for the implication of the second of these. The precise formulation was first accepted in Courtaulds Northern Textiles v Andrew [1979] IRLR 84. The cases are collected and succinctly summarised thus in Halsbury (4th ed, Vol 16 at 46):
“44. Implied term of trust and respect. In a contract of employment there is an implied term that the employer will not, without reasonable and proper cause, conduct himself in a manner calculated as likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.
The kinds of behaviour which may breach the term of trust and respect are entirely variable, and in each case a question of fact for the tribunal, and include:
(1) abusive and false accusations;
(2) intolerable behaviour and bad language;
(3) unwarranted docking of pay;
(4) failure to give the employee necessary support;
(5) unmerited reprimanding in humiliating circumstances;
(6) persistent attempts to vary conditions of employment;
(7) seducing the employee;
(8) failure to follow established procedures;
(9) failure to take seriously a complaint of sexual harassment.
The implied term has also been applied in the area of occupational pension schemes.
The implied term of trust and respect in the contract of employment has been held to have overriding effect, that is to say that, even where the employer has express power to act in a particular way under the terms of the contract, he must exercise that power in the light of his overall duty of trust and respect, with the result that, if he does not do so, the employee may be contractually entitled to leave and claim constructive dismissal, in spite of the employer’s claim that he was merely exercising his contractual rights.”
According to Halsbury, the locus classicus in England is thought to be the judgment of Browne-Wilkinson, P, at intermediate appeal level in Woods v. W.M.Car Services (Peterborough) Ltd [1981] ICR 666 at 670-2:
“To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract:...[it is necessary] to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it ... The conduct of the parties has to be looked at as a whole and its cumulative impact assessed ... Any breach of that implied term is a fundamental breach amounting to a repudiation since it necessarily goes to the root of the contract ...”
In England there seems to have been some tendency to take the precise formulation of the implied term in Courtaulds and use it almost as if it were a statutory enjoiner, which might cover quite various cases. It may be preferable to essay, for particular cases, a plainer and more pointed formulation, as did Lord Denning in the Court of Appeal in Woods [1982] ICR 693 at 698:
“It is the duty of the employer to be good and considerate to his servants. Sometimes it is formulated as an implied term not to do anything likely to destroy the relationship of confidence between them: see Courtaulds Northern Textiles Ltd. v. Andrew [1979] I.R.L.R. 84. But I prefer to look at it in this way: the employer must be good and considerate to his servants. Just as a servant must be good and faithful, so an employer must be good and considerate. Just as in the old days an employee could be guilty of misconduct justifying his dismissal, so in modern times an employer can be guilty of misconduct justifying the employee in leaving at once without notice. In each case it depends on whether the misconduct amounted to a repudiatory breach as defined in Western Excavating (E.C.C.) Ltd. v. Sharp [1978] ICR 221.”
One need not, perhaps, go so far as Lawton LJ, in Western Excavating (E.C.C.) Ltd. v Sharp [1978] ICR 221, who said that (at 229):
“[l]ay members of industrial tribunals ... do not spend all their time in court and when out of court they may use, and certainly will hear, short words and terse phrases which describe clearly the kind of employer of whom an employee is entitled without notice to rid himself”,
to agree with him that, in this area, “the principles of law applicable to the termination by an employee of a contract of employment because of his employer’s conduct are difficult to put concisely in the language judges use in court” and that “what is required ... is a large measure of common sense” (at 229).
It would be enough in this case to accept that there is no sufficient difference between English and Australian conditions to require a different policy approach by Australian courts, and that therefore that duty, or something like it, is implied into the contract of employment, in the sense of being imposed by the courts upon the contract.
In England, there were special problems with a particular statutory notion of constructive dismissal which, no doubt, hastened the formulation of that implied contractual duty. But it is clear that the Court of Appeal in Woods did not depend on those provisions for its approach, and Browne-Wilkinson P referred to “the inherent desirability of requiring both employer and employee to behave in the way required by such a term” (at 671). With the passage of the Industrial Relations Act and State legislation on the same subject, there may, in any event, now be no relevant difference in the statutory environment between England and Australia.
We have of course recently been reminded in Australia that for such a term to be so implied there must be a necessity for it in the sense that, unless such a term be implied,
“the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined ... This notion of “necessity” has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law.” (see Byrne v Australian Airlines per McHugh and Gummow JJ (1995) 131 ALR 422 at 450).
It would seem clear enough that the test of necessity is satisfied. Employees surely cannot reasonably or justly be required to put up with any degree of contemptuous or disrespectful treatment that their employer may care to mete out as the price of keeping their jobs. It seems simply not consonant with conceptions of proper conduct nearly universally held in this country that employers be contractually free to treat their employees without reasonable respect for their human dignity. Every employer would rightly demand such respect from their employees, and there is no reason, in Australia no less than in England, not to require mutuality.
Indeed this may very probably be no more than an adaptation to the employment sphere, with its necessarily personal relationships, of the:
“...general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his [or her] part to enable the other party to have the benefit of the contract”: Butt v McDonald (1896)7 QLJ 68 at 70-1.
See generally the cases cited and the discussion in Cheshire and Fifoot’s Law of Contract (6th Aust. ed, 1990) at 208.
As a useful final check, in my view, the conditions for the different kind of implication of a term into particular contracts where they are silent on some point, required by BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363 at 365, can be said, so far as they can be applied here, to be satisfied. Apart from what I would regard as the patent necessity for such a term for what in the context is the “business efficacy” of the contract, the term is reasonable and equitable; it is so obvious that it “goes without saying”; it is capable of clear expression, and there are no other standard express or implied terms of employment contracts which it contradicts.
Although there would be no necessity to decide it, it may be doubted whether any of the rest of the implied terms pleaded, even that suggesting in bald terms a duty of good faith, absent a fiduciary relationship, would pass the requisite tests. The same may be said, with respect, would the suggested formulation in Whelan v Waitaki Meats Ltd [1991] 2 NZLR 74 and referred to in Aitken (at 21):
“ an implied termthat an employer would not so breach the contract to cause vexation, mental distress, disappointment or frustration to an employee where such an adverse consequence for the employee may be said to have been within the reasonable contemplation of the employer and the employee.”
Few breaches of an employment contract would not be attended by such vexation, etc. Such a term would appear to go well beyond what is necessary.
To the extent that a term such as I have suggested ought to be implied, there is no doubt in my mind that it has been broken by the employer here.
The nature of the damages remedy for breach of the implied contractual duty of respect
I leave aside questions of financial loss: that can certainly be accounted for by way of compensation under the Act, and it is unnecessary to go into it here.
Let me restate the effect here of the implied term: the employer by its managers must not, without reasonable cause, subject its employees to indignities such that in all the circumstances they could not reasonably be expected to continue in the employment.
Even as to what I have called “illness distress”, that is, where actual psychiatric illness has ensued, there is a question whether for breach of this term, damages for other than financial loss are allowable. In the first place, the term is implied in part because mutuality is one of the important factors which make it just to do so: it is the obligation, as a matter of common sense, of the employee, to put it shortly, not unreasonably to show intolerable disrespect to the employer: Lord Denning’s homespun in Woods brings this out. Is a boorish employee to be liable in damages for the paranoia or depression to which he may have driven his employer, when there is no rule that an employee has a general duty to compensate his employer for failure to take reasonable care for the latter’s safety? If not, since ex hypothesi the duty of an employer as to the employee’s safety will have been breached, why might the damages remedy in this instance go beyond compensation for pecuniary loss? The position is a fortiori if Swan is right and non-illness distress is not compensible under the employer’s duty as to his/her employees’ safety.
In the second place, the term is implied to do justice as between the parties by preventing the employer from behaving in a way which prevents the employee having the benefit of the contract. Is it not the corollary that the harm which the term seeks to guard against is the loss of what the employer had promised under the contract, i.e. financial benefits? The term seems not primarily to be directed at the protection of the employee’s feelings. Employees do not guarantee their employees peace of mind.
Perhaps the truly unacceptable thing about the way Addis v. Gramophone Co. Ltd. [1909] AC 488 has been applied is in relation to its treatment of economic loss in wrongful dismissal cases (by limiting such loss to the emoluments that might have been earned during a period of due notice) rather than its refusal to allow aggravated damages for breach of contract, or any damages for personal distress. As to its disutility and outdatedness in the former regard, especially as to its failure to compensate for
(i) the difficulty of finding alternative employment, including diminished employability on account of having had one’s employment terminated; and
(ii) the loss of the opportunity of continued employment
there is much to be said for the criticisms of Addis made extra-curially by Gray J in “Damages for Wrongful Dismissal; Is the Gramaphone Record Worn Out” in McCallum, McCarry & Ronfeldt, Employment Security (1994, Federation Press, p41). The time may be ripe for Australian courts to assert that such limitations should no longer be countenanced. Among other things, full and proper compensation for economic loss is likely in practice considerably to assuage distressed feelings.
In Australasia, only in New Zealand does Addis seem not to have been followed. The key case was Whelan. It was something of a hard case. An employee of nearly 30 years’ standing was paid off with scant notice and a relative pittance. Apparently, no great attention was paid to a full working out of the heads of economic loss which I have just referred to (see Whelan at 90), but compensation for such economic loss seems nevertheless to have accounted for the great bulk of what the plaintiff was awarded: ibid.
There ought be no embarrassment for the courts about facing other policy issues. I have referred to some above under the heading “Compensation?”. I mention, in addition, the ease of asserting, and the difficulty of judging the true causation, extent and degree of, bare distress. There is little doubt about the reality of this. There is also the apparent, unhealthy tendency of the availability of remedies for “stress” to encourage some temporarily upset people to see themselves passively as victims afflicted with what is often no more than the contemporary equivalent of the vapours.
Questions intended for referral for opinion of a Full Court
1. Did Division 3 of Part VIa of the Industrial Relations Act 1988 (Cth) apply to the applicant?
2. If so, since I have found that, upon that assumption, her employment was unlawfully terminated, is compensation payable to her under the Act for the distress she has undergone?
3. Was there any breach of a term of her contract, as alleged, which would entitle her to damages for such distress?
4. The subsidiary questions are:
(a) would the provisions of any award be relevant to the determination of question 1?
(b) if the parties have not referred the court to any such award, is the court free to make its own inquiries as to the applicability of any such award and to act upon the result of its inquiries?
(c) is it permissible for a judge to take judicial notice of his/her own understanding of industrial practices?
(d) to what extent are subregulations (1)(d) and (3) of Regulation 30b authorised by the Act?
(e) is there an implied term in employment contracts, apart from the duty of employers to take reasonable care for their employees’ safety, which would entitle the applicant to damages for her distress?
(e) if compensation is payable under the Act, or if there is a contractual right to damages for such distress, will such compensation extinguish any actual or inchoate workers compensation rights the applicant may have arising out of the manner of the termination of her services?
(f) if so, in either case does that provide a basis for the court not to award such compensation or to decline the jurisdiction to award damages?
Orders
1. The matter will be adjourned to 29 January 1996 for mention to consider its further disposition.
2. I direct that copies of these remarks be forthwith forwarded to the Attorney-General and to the Minister for Industrial Relations.
I certify that this and the preceding 29 pages are a true copy of the Reasons for Judgment of His Honour Justice Madgwick.
Associate:
Dated:
APPEARANCES:
Counsel for the Applicant: Mr M Christie
Solicitor for the Applicant: Champion & Partners
Counsel for the Respondent: Mr P Cook
Solicitor for the Respondent: B David & Associates
Dates of hearing: 3 November 1995
