Alembaki, M. v Telstra Corporation Ltd
[1993] FCA 751
•19 OCTOBER 1993
MARY ALEMBAKI v. TELSTRA CORPORATION LIMITED
No. NI6 of 1993
FED No. 751
Number of pages - 14
Industrial Law
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
INDUSTRIAL DIVISION
WILCOX J
CATCHWORDS
Industrial Law - Prosecution for breach of award - Award adopted procedures agreed between respondent and relevant unions regarding disciplinary proceedings - Employee suspended without pay - Decision by Disciplinary Appeal Board to transfer employee to other duties - Question whether or not the employee is entitled to be paid salary foregone during period of suspension - Question turns on wording of provisions of agreed procedures concerning removal of suspension and payment of lost salary - Declaration of entitlement made.
Industrial Relations Act 1988, ss.178 and 179.
HEARING
SYDNEY, 6 September 1993
#DATE 19:10:1993
Counsel for the Applicant: S Rothman
Solicitors for the Applicant: Theodore Solomon and Partners
Counsel for the Respondent: J P Curtis
Solicitors for the Respondent: Sparke Helmore Withycombe
ORDER
The Court Declares That:
1. The applicant, Mary Alembaki, is entitled pursuant to cl.10 of Section 3 of the Procedures referred to in cl.10(2) of the Telecom General Conditions of Employment Award 1989 to be paid the salary not paid to her during the period of her suspension from employment between 3 December 1987 and 22 August 1991.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
WILCOX J This case was initiated by an Application filed pursuant to s.178 of the Industrial Relations Act 1988 whereby the applicant, Mary Alembaki, sought the imposition of a penalty on Australian Telecommunications Corporation, an entity now known as Telstra Corporation Limited. The respondent was previously known as the Australian Telecommunications Commission. As nothing turns on the respondent's various names, I will refer to it simply as "Telecom". Ms Alembaki also sought an order under s.179 of the Act for the payment of salary allegedly due to her. She claims that Telecom breached s.10(2) of the Telecom General Conditions of Employment Award 1989 to which it is the sole respondent.
Clause 10 of the Award deals with employee misconduct and discipline. Sub-clause (1) defines misconduct in this way:
"(1) Behaviour by an employee shall be regarded as constituting misconduct if the employee:
(a) Wilfully disobeys or wilfully disregards a direction given them as an employee and given by a person having authority to give the direction;
(b) is inefficient or incompetent by reason of causes within their own control;
(c) is negligent or careless in the discharge of their duties;
(d) is guilty of improper conduct as an employee;
(e) is guilty of improper conduct otherwise than as an employee, being conduct that adversely affects the performance of their duties, is prejudicial to the interests of the corporation or damaging to the business of the corporation;
(f) contravenes or fails to comply with the terms and conditions upon which they are employed; or
(g) has, whether before or after becoming an employee, wilfully supplied to the corporation, to an employee or to some other person acting on behalf of the corporation, incorrect or misleading information in connection with their employment with the corporation."
"(T)he corporation" is, of course, Telecom.
Sub-clause (2) incorporates into the Award the provisions of another document ("the Agreed Procedures"). The sub-clause reads:
"(2) Where the corporation initiates disciplinary action against an employee in connection with alleged misconduct, the matter shall be handled in accordance with procedures agreed between the parties which are set out in the exhibit 'Procedures agreed between the Australian Telecommunications Corporation and the staff organisations respondent to the Telecom General Conditions of Employment Award 1989' and which was tendered in the proceedings which lead to the making of this award. An employee upon whom the corporation has imposed disciplinary action shall have the right to appeal to a disciplinary appeal board against such disciplinary action in accordance with the above procedures agreed between the parties."
Sub-clause (3) deals with the constitution of Disciplinary Appeal Boards. Boards are to consist of a chairperson selected in accordance with procedures agreed between Telecom and the staff organisation having the largest number of Telecom employees, an employee nominated by Telecom and a person nominated by the relevant staff organisation.
This case turns on the proper interpretation of Section 1 of the Agreed Procedures. It is not easy to understand.
The Agreed Procedures comprise five Sections. Section 1 is headed "Disciplinary Process". It envisages four possible stages. Stage 1 arises where a supervisor has reason to believe that the behaviour of an employee may constitute misconduct. The supervisor may require the employee to provide a written explanation of the alleged misconduct. If, after having considered the explanation, the supervisor is of the opinion that misconduct has occurred, he/she may counsel the employee or submit a report on the matter (including the explanation) to a "delegated employee" - presumably an employee selected by Telecom for this purpose.
Stage 2 deals with the powers of the delegated employee. If, having considered the supervisor's report, the delegated employee believes that misconduct may have occurred, he/she may counsel the employee, have the supervisor counsel the employee or charge the employee in writing with misconduct. In the last-mentioned case, the charge is considered by an Inquiry Officer.
The Stage 3 provisions specify the powers of an Inquiry Officer who is satisfied that the misconduct charge is justified. The officer may counsel the employee, arrange for the supervisor to counsel the employee, admonish the employee, direct a maximum $500 salary deduction, reduce the employee's salary for up to 12 months, or make a recommendation to Telecom for the employee's transfer to other duties or dismissal. Telecom may take any of the courses open to the Inquiry Officer or give effect to the Inquiry Officer's recommendation.
Stage 4 covers the position pending appeal. If the employee appeals, no disciplinary action (other than counselling) may be taken pending disposal of the appeal.
Section 2 of the Agreed Procedures sets out the position where an employee is convicted of a criminal offence. Telecom may counsel, transfer or dismiss the employee, where this is justified in its interests, having regard to the nature and circumstances of the offence and the nature of the employee's duties.
Section 3 deals with suspension (cll.(1) to (6)) and removal and variation of suspension (cll.(7) to (11)). This Section is critical to this case. I set it out in full:
"(1) An employee may be suspended from duty or transferred temporarily to other duties having the same classification as their existing duties if:-
(a) the employee is charged with having committed a criminal offence; or
(b) the Corporation is of the opinion that the behaviour of the employee constitutes misconduct, and the continued performance by the employee of his/her existing duties would be prejudicial to the effective operations of the Corporation, the interests of the public or the interests of the employee and his/her fellow employees.
(2) An employee suspended from duty on the basis of being charged with having committed a criminal offence shall be suspended without pay.
(3) An employee who is suspended from duty on the basis of alleged misconduct shall be suspended with pay until such time as a decision is made as to whether the employee is to be charged with misconduct.
(4) Where an employee is suspended from duty at a time when he/she is absent on leave of absence, the employee shall continue to receive their salary to which they are entitled in respect of that period of leave of absence.
(5) The suspension of an employee from duty does not prevent the granting to the employee of leave of absence with salary.
(6) An employee who is suspended from the duty is entitled to engage in paid employment during any period of suspension without salary.
(7) The Corporation may, at any time, remove the suspension of an employee or direct that salary be paid during the suspension on the grounds of hardship.
(8) If the suspension of an employee continues for more than 30 days, the Corporation shall consider whether the suspension should be removed or whether salary should be paid to the employee during the suspension.
(9) Notwithstanding sub-section 3(7) and 3(8), the Corporation shall remove the suspension of an employee or transfer an employee back to his/her original duties, as the case may be, where:-
(a) a direction or decision by an Inquiry Officer or the Corporation under Section 1, a decision by the Corporation under sub-section 2(1) or a decision by a Disciplinary Appeal Board under Section 4 takes effect;
(b) an employee who is charged with a criminal offence is subsequently found not guilty of the charge or the charge is not proceeded with;
(c) an employee is charged with misconduct and the charge is subsequently not established or is withdrawn; or
(d) an (sic) delegated employee decides that the employee should not be charged with misconduct.
(10) An employee whose suspension has been removed by the Corporation shall be paid any salary that was not paid during the suspension period and shall be credited with any leave that was taken during the suspension period.
(11) Except where an employee is dismissed from the Corporation, the period during which the employee is suspended from duty counts as service for all purposes."
Section 4 relates to appeals. It prescribes the circumstances under which an employee may appeal to a Disciplinary Appeal Board, the appeal procedures and the Board's constitution and powers. It is not necessary to refer to this Section in detail. But, because of one argument put by Mr J P Curtis, counsel for Telecom, I must mention cl.(8) of the Section:
"(8) Where an employee appeals under sub-section 4(1) against a direction or decision on the ground that the action to be taken in accordance with that direction or decision is excessively severe, evidence may be given on the hearing of the appeal:-
(a) if the employee was suspended without salary prior to the giving of that direction or the making of that decision - of any loss of earnings arising from the suspension;
(b) if the employee is to be transferred to another position - of the expenses that will be incurred by the employee in connection with that transfer; and
(c) of matters relating to the previous employment history and general character of the appellant."
Section 5 grants employees the right to apply for review of adverse findings by an Inquiry Officer or Disciplinary Appeal Board on the ground that new evidence is now available that might have resulted in non-establishment of the charge or less severe disciplinary action.
Ms Alembaki commenced her Telecom career in 1982 when she obtained employment as a manual assistance operator grade 1. At that time the employing body, the Australian Telecommunications Commission, was constituted under the Telecommunications Act 1975. That Act contained provisions (ss. 57-64) dealing with disciplinary action against employees. The later Agreed Procedures bear a superficial resemblance to those provisions; but there are several important departures from the earlier text, one of which gives rise to the present problem. In view of one submission of Mr Curtis, I will return to the terms of the 1975 Act.
The Australian Telecommunications Commission became the Australian Telecommunications Corporation in 1988: see s.6 of the Telecommunications Amendment Act 1988. After the enactment of the Telecommunications Act 1989, the 1975 Act was repealed: see s.90 of the Telecommunications and Postal Services (Transitional Provisions and Consequential Amendments) Act 1989.
In the meantime, on 3 December 1987, Ms Alembaki had been charged under s.58 of the 1975 Act with failing to fulfil her duty as an officer of Telecom. The charge alleged that she engaged in improper conduct as an officer in that she improperly and without authority misused telecommunications facilities and deprived the Commission of the proper charge payable in respect of the facility. She was suspended without pay.
Criminal proceedings were instituted against Ms Alembaki in connection with the matter. On 6 July 1989, she was committed for trial in the District Court of New South Wales on six charges of defrauding the Commonwealth. But the Director of Public Prosecutions declined to proceed further with the charges.
On 14 November 1989 an Inquiry Officer found the misconduct charge proved and recommended that Ms Alembaki be dismissed. She appealed against this decision to a Disciplinary Appeals Tribunal. The appeal was held on 21 and 22 August 1991. At the end of the hearing, the Disciplinary Appeals Tribunal unanimously found the offence proved but, by majority, substituted for the dismissal recommendation a direction that Ms Alembaki be transferred to a different position at a lower salary. Pursuant to this direction, Ms Alembaki was reinstated. However, she was not paid salary in relation to her period of suspension, from 3 December 1987 to 22 August 1991.
Ms Alembaki argues that the failure of Telecom to pay salary in respect of the suspension period constitutes a breach of the Agreed Procedures and, therefore, of cl.10(2) of the Award. She is not much concerned with the question whether a penalty is imposed on Telecom; her main object is to obtain an order that will result in payment of the lost salary. Ms Alembaki's counsel, Mr S Rothman, says that his client would be content with a declaration that she is entitled to be paid salary during the relevant period, leaving the parties to calculate the appropriate amount.
Both counsel agree that Ms Alembaki's claim turns on Section 3 of the Agreed Procedures, quoted above. Mr Rothman accepts that his client was validly suspended from duty, pursuant to cl.(1) of the Section, and that, the suspension arising because of criminal charges made that day, the suspension was properly without pay: see cl.(2). He notes that there is no evidence that Telecom considered whether the suspension should be removed, or salary paid during the period of suspension, notwithstanding that the suspension continued much longer than 30 days: see cl.(8) of Section 3. But he does not base any argument on this omission. Mr Rothman's argument is that Section 3 imposes upon Telecom an obligation to remove the suspension of an employee in any case where, amongst other events, a direction of a Disciplinary Appeal Board takes effect (see cl.(9)(a)) and that, thereupon, Telecom must pay the employee any salary not paid during the suspension period: see cl.(10). He says that this is what occurred in the present case. In failing to pay Ms Alembaki the salary applicable to the suspension period, Telecom breached cl.(10).
Mr Curtis concedes that, read literally, cll.(9) and (10) have the effect suggested by Mr Rothman. But he says that the clauses cannot be read literally. He puts several arguments. First, he refers to the equivalent provisions of the 1975 Act. Section 58(1) of the 1975 Act set out the circumstances under which officers were taken to have failed to fulfil their duty. Section 58(2) dealt with action by a supervisor. The remainder of the section related to subsequent actions, including inquiries and Commission decisions. Section 59 provided for suspension of officers and s.60 for the removal or variation of suspensions. Section 60(1) covered the position pending determination of charges and subss.(2) to (7) the removal of suspensions after determination and the making of consequential salary adjustments:
"(2) Where an officer has, by reason of the officer having been charged with an offence referred to in paragraph 59(1)(a), been suspended from duty or transferred temporarily to another position and, upon the hearing of the charge -
(a) the officer does not plead guilty, and is not found guilty in respect of the offence of which he is charged or of another offence of a kind referred to in that paragraph; or
(b) the charge is not proceeded with, the Commission shall, if it has not previously done so, remove the suspension or transfer the officer back to the position which he previously held, as the case may be.
(3) Where an officer has been suspended from duty or transferred temporarily to another position in circumstances referred to in paragraph 59(1)(b) and -
(a) if the officer is charged with misconduct - the officer holding an inquiry into the misconduct or a Disciplinary Appeal Board finds that the charge has not been established or the charge is withdrawn; or
(b) in any other case - an officer authorized for the purposes of subsection 58(3) decides that the officer should not be charged with misconduct, the Commission shall, if it has not previously done so, remove the suspension or transfer the officer back to the position previously held by him, as the case may be.
(4) Where -
(a) an officer has been suspended from duty under section 59;
(b) the amount of salary that would otherwise have been paid to the officer in respect of the period or a part of the period of the suspension was not paid to him; and
(c) the Commission removes the suspension, the officer shall, subject to sub-section (5), be paid that amount of salary.
(5) Where the Commission is satisfied that an officer to whom sub-section (4) applies has engaged in paid employment or work during the period or a part of the period of his suspension, the amount payable to him under that sub-section shall be reduced by the amount equal to the total of the amount of the earnings that the Commission is satisfied were received or are receivable by him in respect of that employment or work.
(6) Where the suspension of an officer who had, after the suspension commenced, sought and been granted leave of absence for a part of the period of suspension, is removed under this section, the officer is entitled to a credit of a period of leave of absence equal to that part of the period of suspension.
(7) Except where an officer is dismissed from the Service, the period during which the officer is suspended from duty counts as service for all purposes."
It will be noted, first, that the Commission's obligation to pay suspension salary by reason of the final determination of the charges was limited, first, to cases where the criminal charge or allegation of misconduct failed or was not pursued and, secondly, that the calculated payment was to take into account other earnings during the period of suspension. Mr Curtis argues that the terms of the old s.60 assist interpretation of Section 3 of the Agreed Procedures; that cl.(10) should be read as applying only to cases like those mentioned in the old s.60(2) and (3).
Secondly, Mr Curtis points out that the employee may not have been available for work during the period of suspension. The employee may have been in prison awaiting trial, a possibility recognised by cl.(4) of Section 2 dealing with continuity of service. The employee may have taken other employment during the period of suspension, a right conceded by cl.(6) of Section 3. He submits that it would be unreasonable to read cll.(9) and (10) of Section 3 in such a way as to impose on Telecom an obligation to pay salary to an employee in respect of a period during which the employee was not available for work.
Thirdly, counsel points to cl.(8) of Section 4 which entitles an employee to give evidence, in mitigation of penalty, of a loss of earnings during suspension. It would be absurd, he says, to allow that evidence to be given if a re-instated employee was entitled to payment of the lost earnings.
Finally, Mr Curtis observes that the second command of cl.(9), that Telecom "transfer an employee back to his/her original duties" cannot be applied literally. He points out that the decision of Telecom or the Disciplinary Appeal Board - the action that triggers the obligation to transfer the employee back to his/her original duties - may be to transfer the employee to other duties.
Mr Curtis says that the key to understanding the clause is the ejusdem generis rule; paras.(b), (c) and (d) all refer to cases where the matter terminates in the employee's favour; para.(a) should be interpreted in the same way, confining its operation to cases where there is a decision favourable to the employee. He says that this would make sense in terms of policy; it cannot be supposed that the parties intended that suspension-salary would be paid where Telecom or the Board decided that the employee should be disciplined.
Initially, Mr Curtis submitted that para.(a) referred only to cases where the employee was completely exonerated. I put to him that this interpretation would make the paragraph otiose; exoneration would be covered by one of the other three paragraphs. Mr Curtis then submitted that para.(a) should be treated as covering cases of lesser penalties, such as counselling, admonition and deduction of salary, in which cases it might be thought unduly harsh to impose the additional burden of loss of salary. He suggested that the paragraph should be construed as if it contained the additional words "being a direction or decision other than for transfer or dismissal".
In reply, Mr Rothman argued that the terms of para.(8) of Section 4 were not as significant as might first appear. Even on a literal interpretation of cll.(9) and (10) of Section 3, there would be cases where suspension-salary was not eventually paid; for example, where an employee was suspended because of a criminal charge that was found proven.
Clause (9)(a) of Section 3 is difficult to construe. The drafters' intention is obscure. Nor is it easy to see why they decided against reproducing (with or without amendments) the understandable language contained in s.60 of the 1975 Act. Presumably, they made that decision because they wished to achieve a different result. It would be wrong to follow Mr Curtis' invitation to treat cl.(9) as intended to achieve the 1975 Act position. Paragraphs (b), (c) and (d) deal with the situations covered by s.60(2) and (3); para.(a) must have been intended to provide a right to removal of suspension (and payment of unpaid salary under sub-cl.(10)) in some other cases. The problem is: what other cases?
Read literally, para.(a) applies to each of the following situations:
(i) a direction by an Inquiry Officer. This may be a direction that a sum not exceeding $500 be deducted from the employee's salary or that the employee's salary be reduced to a lower salary: see cl.(8)(d) and (e) of Section 1;
(ii) a decision by an Inquiry Officer. This may be a decision to counsel the employee, have the employee counselled by his/her supervisor or admonish the employee: see cl.(8)(a), (b) and (c) of Section 1;
(iii) a decision by Telecom to counsel or admonish the employee - see cl.(9)(a) and (b) of Section 1 - or to give effect to the Inquiry Officer's recommendation of transfer or dismissal: see cl.(9)(c) and (d) of Section 1;
(iv) a direction by Telecom to deduct not more than $500 from the employee's salary or to reduce the employer to a lower salary: see cl.(9)(e) of Section 1;
(v) a decision by Telecom, following the entry of a criminal conviction or a finding that the employee committed the offence, to counsel, transfer or dismiss the employee: see cl.(1) of Section 2; and
(iv) a decision by a Disciplinary Appeal Board to vary a previous direction or decision so as to make any of the above decisions or directions. (I omit decisions of the Board confirming previous directions or decisions because cl.(9)(a) could be construed as applying directly to the original direction or decision.)
Read down in the manner suggested by Mr Curtis, para. (a) would apply to the situations set out in (i), (ii) and (iv) above and to some (but not all) of the decisions described in (iii), (v) and (vi). Counsel's suggestion implicitly accepts that para.(a) covers cases, not within s.60 of the 1975 Act, in which the allegation of misconduct or criminal charge is found justified.
The difficulty about Mr Curtis' suggestion is that there is no warrant for confining the operation of para.(a) to the "lesser penalty" cases to which he refers. There may be a basis for excluding cases of dismissal. I say this because a dismissal decision may only be made by Telecom itself, either of its own motion or on the recommendation of an Inquiry Officer (see cl.(9)(c) and (d) of Section 1), or pursuant to its duty to give effect to a decision of a Disciplinary Appeal Board (see cl.(3) of Section 4). It would be incongruous if Telecom's decision to dismiss an employee obliged it to remove the employee's suspension or transfer the employee back to his/her original duties; thereby enabling the employee to resume those duties and receive the salary attached to them. I have already indicated my agreement with Mr Curtis that it cannot have been intended that a decision to transfer an employee to particular duties would trigger an obligation to transfer the employee back to his/her original duties. However, there is no similar incongruity in a case where an employee has been suspended and the decision is that he/she shall be transferred to other duties. For such a decision to be implemented, the suspension has to be removed.
A transfer to other duties is a relatively severe penalty, appropriately reserved for cases of serious misconduct. Some people might think it unduly generous for the Agreed Procedures to provide for payment, in such cases, of the salary foregone during the period of suspension. But cl.(9)(a) of Section 3 provides no textual warrant for excluding such a payment. Resort to general notions of fairness or undue generosity creates difficulties. Unlike the provisions of the 1975 Act, and incongruously to my mind, the Agreed Procedures do not permit the deduction of the value of income derived by the employee from another employer during the suspension period. Secondly, it is improbable that those who drafted the Agreed Procedures envisaged a period of suspension without pay as great as the period (almost 3 years and 9 months) that occurred in this case. They apparently contemplated that, after 30 days, a suspension would ordinarily be revoked or salary paid.
Confronted with the almost impenetrable wording of para.(a), it seems to me that the only safe course is to construe the paragraph literally, subject only to such reading down as is necessary to avoid absurdity. So construed, the paragraph extends to a case where the ultimate decision is to transfer the employee. If the drafters did not intend to cover such cases, they should amend the paragraph.
Having regard to the difficulty in interpreting the Agreed Procedures, I agree that this case does not require the imposition of a penalty. It is clear that Telecom acted on the genuine belief that cl.(9)(a) of Section 3 does not cover this case. I propose to make a declaration along the lines suggested by counsel, leaving the parties to calculate and arrange payment of the appropriate sum of money.
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