AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.45 appeal against decision PR902030
issued by Commissioner Cribb on 6 March 2001
C. Woodman
(C2001/1639)
s.170CE application for relief re termination of employment
Cameron Woodman
and
The Hoyts Corporation Pty Ltd
(U1999/32903)
JUSTICE GIUDICE, PRESIDENT |
|
SENIOR DEPUTY PRESIDENT WATSON |
|
COMMISSIONER GRAINGER |
MELBOURNE, 11 JULY 2001 |
Appeal - application for relief in relation to termination of employment - appeal principles - exercise of discretion - existence of error - alleged breach of employee duties - error found - significance of lying in all the circumstances - termination unjust - termination disproportionate penalty - reinstatement ordered - whether orders appropriate under s.170CH(4) - reference to Commissioner to Commissioner Grainger.
DECISION
[1] This is an appeal, for which leave is required, by Cameron Woodman (the appellant) against a decision given by Commissioner Cribb on 6 March 2001 dismissing the appellant's claim for a remedy in relation to the termination of his employment by The Hoyts Corporation Pty Ltd (Hoyts) on 22 July 1999.
The Facts
[2] The appellant commenced employment with Hoyts as a casual cinema worker on 12 June 1998. On 22 July 1999, being then 19 years of age, the appellant was rostered on duty at the Highpoint Cinema Complex to work in a simulation ride called Cinemotion.
[3] On that day a Mr Luke Wentworth (Wentworth), an off-duty casual employee of the respondent at the same complex and employed at the same level as the appellant, came to the cinema and, without requisite authorisation, took a friend or friends into the cinema to see a movie. He approached the cinema Candy Bar from the public side of the counter and removed two choc top ice creams from the end freezer positioned in the counter. The total retail value of the ice creams was $5.40.
[4] At the relevant time the appellant was temporarily in the Candy Bar during a break from his work. He was lawfully obtaining a free drink. He did not have a till code which would have enabled him to operate the register in the Candy Bar. He was standing on the service side of the Candy Bar behind the freezer from which Wentworth removed the ice creams. The appellant and Wentworth exchanged several words over the counter as Wentworth removed the ice creams. Although the appellant testified before the Commissioner that he had told Wentworth to put the ice creams back, Wentworth testified that he did not hear the appellant do so. There was no evidence that the appellant had mentioned this matter to anyone prior to the hearing and the Commissioner rejected the appellant's evidence and found that he had not told Wentworth to put the ice creams back.
[5] While this was occurring the Candy Bar supervisor, Ms Magazu (Magazu), was present in the Candy Bar and was standing at most five metres from the end freezer. She was engaged in a conversation with Mr Elvery (Elvery), Hoyts duty manager at the Highpoint cinema complex.
[6] The appellant apparently made no effort to stop Wentworth from removing the ice creams. The appellant could observe that Elvery could see Wentworth removing the ice creams. He did not take any action to attract the attention of either Elvery or Magazu. Elvery immediately questioned the appellant about Wentworth's actions. The appellant told Elvery that the ice creams had been paid for.
[7] Approximately one hour later the appellant was taken to the office of a Ms Goldstein, one of Hoyts supervisors, where he met with and was questioned by Goldstein, Elvery and a Mr Karaoulis, the cinema supervisor for Hoyts at the Highpoint Shopping Centre at that time. Although at first he maintained that the ice creams had been paid for the appellant eventually admitted that he had not told Elvery the truth. He said that Wentworth had taken the ice creams without paying for them and that he, the appellant, had lied because he did not want to be responsible for Wentworth losing his job. The circumstances in which the appellant made the admission was a matter in issue before the Commissioner. The appellant testified that he abandoned the fabrication after being informed that Wentworth's employment had been terminated. Hoyts' witnesses testified that at the time the appellant confessed he did not know of the termination of Wentworth's employment. The Commissioner made no finding on that issue.
[8] During the interview the appellant's employment was terminated without notice for serious misconduct on the grounds that:
(a) he had allowed another off-duty employee to take company product from the Candy Bar without paying; and
(b) he had lied about the incident when questioned by management.
[9] At the relevant time employees, including the appellant, were employed subject to the provisions of the Hoyts Employee Handbook. Hoyts relied both before the Commissioner and during the appeal on two provisions in particular. The first provision appears in the section of the handbook dealing with stock control. It reads:
"No stock is to be given away under any circumstances. The release of stock without payment is an offence and perpetrators shall be dealt with accordingly."
The second provision is found in the employee Code of Conduct and it reads, where relevant:
"At all times I will.... act honestly and with the utmost integrity......"
[10] Other than what is contained in the first of these provisions there is no evidence of the penalties or consequences to be suffered by an employee breaching the rules. Counsel for Hoyts submitted on the appeal that the duty to "act honestly and with the utmost integrity" encompassed a duty owed by all Hoyts employees to report to a supervisor any breaches by other Hoyts employees of the Hoyts rules of which they became aware. Counsel also submitted that the employee's common law duty of fidelity and good faith encompasses a duty "to take reasonable steps to protect an employer's property from theft, to report theft when it occurs in front of the employee, and to answer questions honestly when direct questions are put to the employee as to the actions of another employee".
[11] The Commissioner decided that the termination of the appellant's employment was not harsh, unjust or unreasonable and dismissed his application. She found in particular that the appellant's actions constituted serious misconduct justifying summary dismissal and that in the circumstances there was a valid reason for the termination. The relevant findings of fact made by the Commissioner, and on which she principally relied, were that the appellant had allowed Wentworth to take the ice creams without payment, in the sense that he did not stop him doing so, and had subsequently lied about it.
The Grounds of Appeal
[12] The grounds of appeal allege the following errors in the Commissioner's decision:
(1) it was wrong to find that the appellant had allowed Wentworth to take the ice creams without payment;
(2) the Commissioner erred in law in finding that there was an obligation on the appellant to prevent or report Wentworth's misconduct;
(3) it was wrong in law to conclude that the appellant's failure to stop Wentworth taking the ice creams without payment constituted serious misconduct and a valid reason for the termination of the appellant's employment;
(4) the Commissioner erred in not making a finding as to the appellant's motivation for eventually telling the truth about the incident; and
(5) it was wrong in law to conclude that in the circumstances the appellant's lie constituted serious misconduct and a valid reason for the termination of his employment.
Appellate Principles
[13] This appeal, subject to the grant of leave, is brought pursuant to s.45 of the Workplace Relations Act 1996 (the Act). Section 45(7) sets out the powers that may be exercised by the Full Bench on the hearing of an appeal pursuant to s.45. Those powers include powers to quash or vary the order or decision under appeal. The powers are exercisable only if there is
error on the part of the primary decision-maker (Coal and Allied Operations Pty Ltd v
Australian Industrial Relations Commission (2000) 74 ALJR 1348 per Gleeson CJ, Gaudron & Hayne JJ at para [17] and per Kirby J at para [75]). In relation to appeals against orders made under Subdivision B of Division 3 of Part VIA of the Act, the requirement for error as a precondition to the exercise of the powers to quash or vary the decision under appeal is reinforced by the terms of s.170JF(2). That section reads:
"(2) For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to an order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."
[14] The appeal is against a decision dismissing an application for relief in relation to termination of employment brought pursuant to s.170CE(1)(a). That section reads:
"(1) Subject to subsection (5), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment:
(a) on the ground that the termination was harsh, unjust or unreasonable;
.................."
[15] In considering applications made pursuant to s.170CE(1)(a) the Commission is required to ensure that "a fair go all round" is accorded to both the employer and the employee concerned (s.170CA(1)). The Commission is also required to have regard to a number of matters specified in s.170CG(3). That section reads:
"(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."
[16] It is clear from these provisions that the decision-making process in an application pursuant to s.170CE(1)(a) is one in which no one consideration and no combination of considerations is necessarily determinative of the result. It is appropriate therefore to describe a decision that a termination of employment is or is not harsh, unjust or unreasonable as a discretionary decision (Coal & Allied per Gleeson CJ, Gaudron and Hayne JJ at para [19]). The errors that might be made in exercising such a discretion were described in House v The King (1936) 55 CLR 499 in the following terms:
"If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so." [at 505]
This passage was cited with approval by the majority in Coal & Allied (at para [21]).
[17] Bearing these principles in mind we turn now to the appeal in this case. We shall deal firstly and briefly with the question of leave and then consider each of the grounds of the appeal as far as it is necessary to do so.
Leave to Appeal
[18] An appeal may only brought with the leave of the Full Bench (s.45(1)(b)). The relevant facts are of narrow compass and the contested issues are few. We did not require the appellant's counsel to address the question of leave as a preliminary issue and both counsel dealt with the question of leave and the merits of the appeal together. In the circumstances it is convenient and appropriate that we consider the question of leave in conjunction with the merits.
The First Ground of Appeal
[19] It is alleged in the first ground that the Commissioner erred in finding that the appellant had allowed Wentworth to take the ice creams without payment. This ground is misconceived. It does not accurately describe the relevant finding. The finding was in these terms:
"[160] I have considered very carefully all of the evidence put before me and am satisfied that the applicant "allowed" as in "did not stop" Mr Wentworth from taking the ice creams without paying." [Print PR902030]
When the finding the Commissioner actually made is considered it is clear that the finding is correct. There is no need to consider the first ground further.
The Second Ground of Appeal
[20] It is alleged in this ground that the Commissioner erred in law in finding that there was an obligation on the appellant to prevent or report Wentworth's misconduct. The relevant passage from the decision reads:
"[152] Having considered all of the evidence, I do not accept the respondent's proposition that, in standing behind the candy bar, the applicant thereby accepted responsibility for any transactions that occurred whilst he was there. It should be remembered that the applicant was not rostered on that day to work in the candy bar and that it was agreed that Ms Magazu was the supervisor and that she was standing at one end of the candy bar at the time of the incident.
[153] It is also my view that it was not reasonable for the company to have assumed that, simply because the applicant was behind the counter at the time Mr Wentworth came into the candy bar, that he was therefore serving Mr Wentworth.
[154]However, I do accept that the applicant, as an employee of Hoyts, has a responsibility to tell another employee not to take company goods without paying for them.
...................
[160] I have considered very carefully all of the evidence put before me and am satisfied that the applicant `allowed' as in `did not stop' Mr Wentworth from taking the ice creams without paying."
[21] We think that the Commissioner made a finding, as the appellant's counsel submits, that the appellant was under a duty to prevent or report Wentworth's misconduct. With respect we are unable to agree with that finding. The relevant circumstances tending against the existence of such a duty include those identified by the Commissioner in the passage we have just set out. They are that the appellant was not on duty in the Candy Bar and had no direct responsibility for stock or cash, that the supervisor, Magazu, was standing at the other end of the Candy Bar at the relevant time (talking with Elvery) and that the appellant was not serving Wentworth in any relevant sense. To these we would add that the appellant had no access to the till and he was employed at the same classification level as Wentworth. Furthermore the appellant's evidence was that he could see that Elvery was observing the incident. This does not appear to have been contested and is consistent with the evidence that Elvery did in fact observe the incident. Looking at the matter objectively, the appellant was entitled to take the view that he was not in any sense responsible for the stock and that it was up to Magazu and Elvery who were present and observing to deal with Wentworth. Magazu, unlike the appellant, was on duty in the Candy Bar and Elvery had management responsibility for the area.
[22] On the hearing of the appeal counsel for Hoyts relied upon the extracts from the Employee Handbook which we have set out earlier. The first provision deals specifically with stock. It forbids the giving away of stock and the release of stock without payment. The appellant cannot be guilty of either of those things because he was not at the time responsible for the stock. The second provision requires employees to act honestly and with the utmost integrity. In our view, and speaking generally, those words impose a duty upon employees to do something about the situation where it is clear that stock is being taken without payment. But when the circumstances which we have identified, in particular the presence of Magazu and Elvery, are properly considered we do not think the appellant failed to discharge that duty by not taking some action to stop Wentworth leaving with the ice creams.
[23] We also reject Hoyts' contention that the appellant breached the duty of fidelity, whether that duty was an implied term of his contract of employment or arose independently. No doubt an employee may be obliged by the duty of fidelity to attempt to stop or to report wrongdoing by other employees. But it is not necessary to explore the boundaries of that duty in the circumstances of this case. We are confident there was no breach of that duty, so far as the first ground for dismissal is concerned. We refer again to our reasons for concluding that the appellant did not breach the obligation in the employee handbook to act honestly.
[24] Did the Commissioner's finding that the appellant was under a duty to take some action to stop Wentworth constitute an important part of her decision? It will be recalled that the conduct relied upon by Hoyts involved two elements: the appellant's failure to intervene to stop Wentworth from taking the ice creams and his indicating falsely that the ice creams had been paid for when in fact they had not. After referring to both of these events in a part of her decision headed "Was there a valid reason?" the Commissioner said:
"[163] Having taken into account all of the evidence, I am satisfied that the actions of the applicant on 22 July 1999 amounted to serious misconduct and that there was a valid reason for his termination."
It follows that the finding that the appellant was under a duty to stop Wentworth influenced the Commissioner's conclusion that there was a valid reason for the appellant's termination for the purposes of s.170CG(3) in a significant way.
[25] A further indication of the significance of the finding in the decision overall appears in the following passage from the concluding paragraphs:
"[170] I accept the applicant's submission, that in one sense, he was in the wrong place at the wrong time. However, the applicant had the option of making it the right place at the right time by, firstly, having told Mr Wentworth not to take the ice creams and secondly, to have told Mr Elvery the truth from the beginning and not to have maintained the lie until some later point during the meeting with Mr Elvery and Mr Karaoulis."
[26] We are satisfied that the Commissioner's reliance on the appellant's obligation to stop Wentworth's conduct was misplaced and that this constituted a significant error in the decision-making process. In the circumstances the appropriate course is to decide the matter for ourselves, if we are able to do so on the material available.
[27] Since we are to decide the matter ourselves, it will not be necessary to deal with the remaining grounds of appeal. We point out, however, that to the extent that the Commissioner's finding of serious misconduct is based upon the appellant's failure to stop Wentworth taking the ice creams without payment, that finding is unsafe.
The Merits
[28] We have set out the essential facts earlier. There was a great deal of evidence before the Commissioner about the events of 22 July most of which is summarized in her decision. On the appeal, however, very little of the evidence was referred to and both counsel were content to rely for the most part on the essential facts. The conduct relied upon by Hoyts to justify the termination consisted of the appellant's failure to take action to stop the ice creams being removed and the appellant's subsequent lie, persisted in, on the evidence, for about an hour and a half, that payment had been made. It also relied upon the appellant's obligations pursuant to the Employee Handbook not to release stock without payment and to act honestly, and upon an alleged breach of the common law duty of fidelity. Reliance was also placed on the circumstances of the employment, which the Commissioner accepted, as shown by the following passage from the decision:
"[171] In making this finding, I have been persuaded by the evidence of Mr MacLagan regarding the various particular characteristics of the cinema business, including the trust that the company has to place on its casual/young workforce and which is relied upon daily, so that employees do not succumb to the pressures from friends and others to give them free access to the cinemas and other company property"
[29] It is clear from our finding in relation to the second ground of appeal that we do not think that the appellant was under an obligation to take action to stop Wentworth from taking the ice creams. We reiterate the main reasons for that conclusion. The appellant played no active role in giving Wentworth the ice creams or consenting to his removal of them from the freezer of the Candy Bar and was simply a passive observer of this incident. Furthermore the appellant was not on duty in the Candy Bar at the time of the incident, had no access to the till to take payment for the ice creams, and was aware that two responsible supervisors were standing within five metres and could observe what was occurring.
[30] Having dealt with the first ground of dismissal we are left only with the second. In applications of this kind where the conduct which led to the applicant's dismissal included a lie the significance to be attached to the lie depends upon all of the circumstances: Allied Express Transport Pty Ltd v Anderson (1998) 81 IR 410 at 413. In some cases the fact that the applicant has lied might support the conclusion that the termination was not harsh, unjust or unreasonable: McIndoe v BHP Coal Pty Ltd [Print PR901846, 2 March 2001]. In other cases despite the applicant having lied it might be held that there was no valid reason for the termination: Allied Express Transport Pty Ltd v Anderson. Whilst the facts of particular cases might be instructive in a general sense, it is inappropriate to attempt to compare the facts of one case too closely with the facts of another. It is the totality of the relevant facts in each case which must be considered in the context both of the particular employment relationship and the employer's undertaking.
[31] The incident which sparked the appellant's lie was one which we have found was no fault of the appellant's. Within a very short time, probably seconds, of the incident Elvery was questioning the appellant. It is clear the lie was not premeditated. There is nothing in the evidence to suggest that the lie was self-serving. We therefore accept that the lie was told to protect the other employee. The appellant knew, on the facts as found, that the other employee had been guilty of misconduct. The lie was therefore an attempt to conceal the theft of company property. The gravity of the theft is also relevant - $ 5.40 is fairly low in the scale of theft. The lie was not persisted in for very long - apparently about 90 minutes. There is no finding of fact concerning the reason why the lie was retracted and we therefore make no assumption in that respect.
[32] The broader context includes the somewhat unsatisfactory manner in which the appellant was interviewed by Hoyts' management. The Commissioner's findings were not challenged on appeal. They include the following:
"[169] It is clear that the processes followed by the company and the assumptions that were made by them resulted in a procedurally, less than perfect, termination. These imperfections included the lack of an independent witness for the applicant, no notification to the applicant of the reason for the meeting and the manner in which Mr Elvery and Mr Karaoulis conducted the interview with the applicant. However, in balancing all of the factors contained in section 170CG(3), the procedural imperfections are not so serious as to render the termination harsh, unjust or unreasonable."
[33] We must also take into account the effect of his dismissal on the appellant, including the potentially devastating impact upon the career of a young man not yet 20 years of age. On the other hand there is to be considered the employer's legitimate concern to maintain high standards of personal conduct among staff. Hoyts employs large numbers of young people who are routinely entrusted with care of money and property. The integrity of staff is no doubt an important protection against theft. Hoyts is entitled to regard any dishonesty as a potential threat to security.
[34] We have concluded that the appellant's lie, being dishonest, was a breach of his obligations pursuant to the Employee Handbook and a breach of his common law duty of fidelity. We have concluded also that there was a valid reason for the termination of the appellant's employment for the purposes of s.170CG(3)(a). That reason related to his conduct in representing that the ice creams had been paid for. We find that the employee was notified of the reason (s.170CG(3)(b)) and given an opportunity to respond (s.170CG(3)(c)). Nevertheless we think that the termination of his employment was harsh. The appellant himself was a participant in the theft only in an indirect way in that his statement that the ice creams had been paid for amounted to an attempt to cover up the theft. But the lie was not premeditated nor was it intended to benefit the appellant. It was not persisted in for long and it was given in connection with the pilfering of goods of fairly low value. We are unable to say what led to the appellant's subsequent admission that he had lied about payment. Although Hoyts challenged his assertion that he had decided to tell the truth when he knew that Wentworth's employment had been terminated, no alternative reason for the change of heart was advanced. We do not think that the resolution of this issue has any real bearing on the outcome of the case. While we do not underestimate the importance of maintaining high standards of honesty amongst staff working in this industry, we think the appellant's conduct warranted a warning and no more. Dismissal for dishonesty had the potential to entirely alter his employment prospects for the rest of his life. In the circumstances that penalty was unwarranted. We have no doubt that this is a case of the kind referred to in Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410 in which the termination was disproportionate to the gravity of the misconduct in respect of which the employer acted (per McHugh and Gummow JJ at 465).
[35] We grant leave to appeal, uphold the appeal and quash the Commissioner's decision.
[36] We are satisfied that reinstatement is the appropriate remedy pursuant to s.170CH(2). It was not suggested that an order for reinstatement would affect the viability of Hoyts' undertaking. We understand that the appellant's earnings would have been substantial had he not been dismissed. The evidence at the time of the hearing before Commissioner Cribb revealed that the appellant tried hard to obtain alternative employment in the cinema industry. We see nothing in that evidence which would support a remedy other than reinstatement. It was suggested, however, that the appellant's conduct had destroyed the basis of the employment relationship and that reinstatement was inappropriate. Whilst we do not accept that submission we think it would be inappropriate for the appellant to be reinstated at the Highpoint Cinema Complex.
[37] We shall order, pursuant to s.170CH(3), that Hoyts reinstate the appellant by appointing him to a position at a cinema complex other than the Highpoint Cinema Complex on terms no less favourable than those on which he was employed immediately before the termination of his employment.
[38] Section 170CH(4) provides that if the Commission makes an order for reinstatement the Commission may also make an order to maintain the continuity of the dismissed employee's employment and an order to cause the employer to pay the employee an amount in respect of lost remuneration. We shall direct Commissioner Grainger to hear and determine any claims by the appellant pursuant to that section.
BY THE COMMISSION:
PRESIDENT
Appearances:
C. Dowling of counsel for C. Woodman.
D. McLaughlin of counsel for The Hoyts Corporation Pty Ltd
Hearing details:
2001
Melbourne.
May, 30.
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