Cerin v ACI Operations Pty Ltd & Ors
[2015] FCCA 1654
•22 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CERIN v ACI OPERATIONS PTY LTD & ORS | [2015] FCCA 1654 |
| Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 – s.44 Contravention by First Respondent of a National Employment Standard, namely the requirement for notice of termination or payment in lieu pursuant to s.117 of the Act – whether Second Respondent was involved in First Respondent’s contravention within the meaning of s.550 of the Act – declarations made – consequential orders to be considered. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 117, 545, 546, 547 and 550 Federal Circuit Court Rules 2001 (Cth), r.13.10 |
| Cerin v ACI Operations Pty Ltd and Workcover Corporation of SA [2013] SAWCT 23 Sheridan Australia Pty Ltd v McCall [2006] SAIRC 66 Finch v Sayers [1976] 2 NSWLR 540 Marshall v Harland & Wolff Ltd and Another [1972] 1 W.L.R. 899 Lawless v WorkCover (Qantas) [2013] SAWCT 40 Labour Law, Breen Creighton & Andrew Stewart. The Federal Press 5th Edition Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Carter et al 2007: ch 34 Cutter v Powell (1795) 6 TR 320; 101 ER 573 Stubbs v Holywell Railway Co (1867) LR 2 Exch 311 Simmons Ltd v Hay [1964-5] NSWR 416 Giancaspro v Eurest (Australia) Pty Ltd [2004] SAIRC 63 FC Shepherd & Co Ltd v Jerrom [1986] ICR 802 Walsh v Police Association (2000) 140 IR 58 Hamersley Iron Pty Ltd v Federated Engine Drivers and Firemens Union (1983) 4 IR 230 Hilton Hotels of Australia Ltd v Pasovska (2003) 122 IR 428 Smith v Moore Paragon Australia Ltd (2004) 130 IR |
| Applicant: | ANTHONY CERIN |
| First Respondent: | ACI OPERATIONS PTY LTD (ABN 94 004 230 326) |
| Second Respondent: | NICOLA POWELL |
| Third Respondent: | MARIO MINNITI |
| File Number: | ADG 343 of 2012 |
| Judgment of: | Judge Simpson |
| Hearing date: | 16 May 2014 |
| Date of Last Submission: | 12 June 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 22 June 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Ats |
| Solicitors for the Applicant: | Lieschke & Weatherill |
| Counsel for the First, Second & Third Respondents: | Mr R Manuel |
| Solicitors for the First, Second & Third Respondents: | Zeitz Workplace Lawyers |
THE COURT DECLARES THAT:
The First Respondent, ACI Operations Pty Ltd contravened s.44 of the Fair Work Act 2009 (Cth) (“the Act”) by failing to provide the Applicant, Anthony Cerin, with 5 weeks’ notice of termination or pay in lieu thereof as was required by s.117 of the Act when it notified the Applicant on 12 October 2012 that his employment with the First Respondent was terminated effective from 12 November 2012.
The Second Respondent, Nicola Powell, was, pursuant to s.550 of the Act, involved in the contravention referred to in paragraph 1 hereof.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 343 of 2012
| ANTHONY CERIN |
Applicant
And
| ACI OPERATIONS PTY LTD (ABN 94 004 230 326) |
First Respondent
| NICOLA POWELL |
Second Respondent
| MARIO MINNITI |
Third Respondent
REASONS FOR JUDGMENT
Introduction
With the Court’s consent, the parties have agreed that this matter should initially proceed in relation to liability only, and that penalty and any other consequential orders should be addressed after the liability issues have been determined.
In these reasons, a statement of fact is a finding of fact arrived at on the balance of probabilities after a consideration of all of the evidence and submissions put on behalf of the parties.
These proceedings are concerned with the circumstances of the First Respondent’s dismissal of the Applicant on or about 12 November 2012.
Orders sought
I have before me an Amended Application in which the Applicant seeks the following orders:
“1.A declaration that the first Respondent contravened section 44 of the Fair Work Act 2009 by failing to provide the Applicant with 5 weeks actual notice of termination or pay in lieu thereof as required by section 117 of the Fair Work Act 2009.
2.A declaration that the second Respondent was involved in the first Respondent’s contravention of section 44 of the Fair Work Act 2009 as set out in Order 1 above pursuant to section 550 of the Fair Work Act 2009.
3.An Order pursuant to section 545 of the Fair Work Act 2009 that the first Respondent pay the Applicant pursuant to section 117 of the Fair Work Act 2009 in an amount agreed between the Applicant and the first Respondent, or failing agreement, in an amount determined by the Court.
4.An Order pursuant to section 547 of the Fair Work Act 2009 that the first Respondent pay interest on the sum payable pursuant to Order 3 in an amount agreed between the Applicant and the first Respondent, or failing agreement, in an amount determined by the Court.
5.An Order for the imposition of a penalty on each of the Respondents pursuant to subsection 546(1) of the Fair Work Act 2009 in relation to the contravention set out in Order 1 above.
6.An Order pursuant to subsection 546(3) of the Fair Work Act 2009 requiring the Respondents to pay any penalties to the Applicant.
7.Such further or other Orders as this honourable Court deems fit.”
The Respondents seek orders that the application be dismissed as disclosing no cause of action. They say that the action should be dismissed pursuant to r.13.10 of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”), as being frivolous and vexatious in that the Applicant has suffered no less as a consequence of the alleged breach.
Evidence relied upon
The Applicant relied on the following affidavits:
·Affidavit of the Applicant, sworn on 18 February 2014 and filed on 21 February 2014;
·Affidavit of Joseph Kane, affirmed and filed on 21 February 2014. Mr Kane is branch organiser with the Australian Worker’s Union of South Australia;
·A Linkedin profile of Nicola Powell dated 16 May 2014; and
·Affidavit of Nicola Powell sworn and filed on 23 September 2014.
The Respondents relied upon the following document:
·Affidavit of Nicola Powell sworn and filed on 20 March 2014.
The Applicant and Ms Powell were both subjected to cross-examination. Mr Kane’s affidavit was received without a request that he be made available for cross-examination.
Assessment of the witnesses
Both the Applicant and Ms Powell gave their evidence well. In their answers they were both helpful to the Court. They were each direct and to the point with evidence. I find that they were both truthful witnesses.
Relevant provisions of the legislation (Fair Work Act 2009 (Cth))
s.44 Contravening the National Employment Standards
(1)An employer must not contravene a provision of the National Employment Standards.
(2)However, an order cannot be made under Division 2 of Part 4‑1 in relation to a contravention (or alleged contravention) of subsection 65(5) or 76(4).
s.117 Requirement for notice of termination or payment in lieu
(1)An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).
(2)The employer must not terminate the employee’s employment unless:
(a)the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b)the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
(3)Work out the minimum period of notice as follows:
(a)first, work out the period using the following table:
Period Employee’s period of continuous service with the employer at the end of the day the notice is given Period 1 Not more than 1 year 1 week 2 More than 1 year but not more than 3 years 2 weeks 3 More than 3 years but not more than 5 years 3 weeks 4 More than 5 years 4 weeks (b)then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.
s.545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a)an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
(c)an order for reinstatement of a person.
s.546 Pecuniary penalty orders
(1)The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
(2)The pecuniary penalty must not be more than:
(a)if the person is an individual—the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or
(b)if the person is a body corporate—5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
Payment of penalty
(3)The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a)the Commonwealth; or
(b)a particular organisation; or
(c)a particular person.
Recovery of penalty
(4)The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.
No limitation on orders
(5)To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.
s.547 Interest up to judgment
(1) This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument.
(2) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.
(3) Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made.
s.550 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Relevant provisions of the legislation (Workers Rehabilitation and Compensation Act 1986 (SA)):
s.58B—Employer's duty to provide work or pay wages
(1)If a worker who has been incapacitated for work in consequence of a compensable injury is able to return to work (whether on a full-time or part-time basis and whether or not to his or her previous employment), the employer from whose employment the injury arose must provide suitable employment for the worker (the employment being employment for which the worker is fit and, subject to that qualification, so far as reasonably practicable the same as, or equivalent to, the employment in which the worker was employed immediately before the incapacity).
Maximum penalty: $25 000.
(2)Subsection (1) does not apply if—
(a)it is not reasonably practicable to provide employment in accordance with that subsection (and the onus of establishing that lies in any legal proceedings on the employer); or
(b)the worker left the employment of that employer before the commencement of the incapacity for work; or
(c)the worker terminated the employment after the commencement of the incapacity for work; or
(e)the employer currently employs less than 10 employees, and the period that has elapsed since the worker became incapacitated for work is more than 1 year.
(3)If a worker who has been incapacitated for work in consequence of a compensable injury undertakes alternative or modified duties under employment or an arrangement that falls outside the worker's contract of service for the employment from which the injury arose, the employer must pay an appropriate wage or salary in respect of those duties unless otherwise determined by the Corporation.
s.58C—Notice of termination of employment to be given in certain cases
(1)If a worker has suffered a compensable injury, the employer from whose employment the injury arose must not terminate the worker's employment without first giving the Corporation and the worker at least 28 days notice of the proposed termination.
Maximum penalty: $15 000.
(2)However, notice of termination is not required under this section if—
(a)the employment is properly terminated on the ground of serious and wilful misconduct; or
(b)the worker is neither receiving compensation, nor participating in a rehabilitation program, for the injury; or
(c)the worker's rights to compensation for the injury have been exhausted or the time for making a claim for compensation has expired.
Background
From 6 March 1996 until, at the latest, 12 November 2012, the Applicant was employed by the First Respondent, ACI Operations Pty Ltd, trading as O-I Glass (“ACI”). ACI is an Australian branch of an international business that makes glass bottles. At the time it had a workforce of approximately 22,500 people at 77 plants in 21 countries around the world. Relevantly it had a plant on Port Road at West Croydon in South Australia. The Applicant worked at the West Croydon plant.
On 20 April 2009, the Applicant sustained a work injury to his right shoulder resulting in him having bilateral shoulder disabilities. Those disabilities were accepted as compensable disabilities arising out of his employment with ACI for the purpose of the Worker’s Rehabilitation and Compensation Act 1986 (SA) (“the WRC Act”).
On 10 August 2009, the Applicant lodged a claim for workers compensation. The claim was accepted by the compensating authority, Employers Mutual Limited (“EML”) on behalf of WorkCoverSA. On medical advice, the Applicant was placed on modified duties. At this early stage, ACI was able to find suitable modified duties to keep the Applicant occupied with work.
Between August 2009 and July 2012, the Applicant continued to work on modified duties. He was continuously provided with rehabilitation services and numerous ‘Return to Work Plans’ were created.
The last ‘Return to Work Plan’ before being informed that his employment was to be terminated, was the plan signed by the Applicant on 17 August 2012. He had not been performing tasks with a forklift, as was mentioned in ACI’s letter of 3 June 2011, (see below) but had been doing work on quality control.
In mid-2011, the Applicant was informed by Ms Powell of changes to his role at ACI. Those changes were documented in a letter addressed to the Applicant and dated 3 June 2011 (“the June 2011 contract”). The letter was in the following terms:
“Dear Anthony
I am confirming our offer of full-time employment with ACI Operations Pty Ltd (trading as O-I) at the Adelaide Plant.
You will be employed under the conditions of the O-I Adelaide Certified Agreement (Glassworkers) 2009 (“the EBA”) and the underpinning industrial award. This letter sets out some of your conditions of employment.
COMMENCEMENT DATE
Your new employment arrangements will commence on Monday 20 June 2011.
ROLE
Your role will be working on Shift in the Cold End which encompasses tasks such as, but not limited to, Verifying, Building 9, Audit and Forklift. Your responsibilities will be in accordance with the Broadbanding Agreement in the EBA.
TRAINING
You agree to participate in ongoing training and skill development.
WAGES
Upon commencement your applicable pay rate will be $33.29 per hour (G5 classification). You will be paid fortnightly into your nominated financial institution account.
Shift penalties will apply in accordance with the EBA.
You will be paid fortnightly into your nominated financial institution account.
HOURS OF WORK
Your ordinary hours of work will average 35 hours per week.
It is a condition of this offer of employment that you undertake shift work in accordance with our established shift rosters, including afternoon shift, night shift and work on Saturdays, Sundays and public holidays.
In accordance with the Award you are required to work a reasonable amount of overtime.
SUPERANNUATION
O-I will contribute superannuation in order to meet the requirements of the EBA and/or the superannuation guarantee legislation. Superannuation is payable in addition to the wage specified in this contract.
You are eligible for immediate entry to the company-nominated fund, AustralianSuper. The enclosed Member Guide outlines the features and benefits of the fund in more detail.
LEAVE
Leave is granted in accordance with the EBA.
Annual leave will accrue at the rate of five weeks per annum when working on shift work or four weeks per annum when working on day work. Leave loading of 17.5% applies.
Personal (sick and carer’s) leave will accrue on the basis of ten days per year.
Long service leave will accrue in accordance with O-I policy, which is currently 13 weeks for every ten years of service.
POLICIES AND PROCEDURES
You are required to comply with the policies and procedures detailed in O-I’s policy manuals. These include Occupational Health and Safety and Equal Employment Opportunity.
Protection clothing and equipment, including hearing and eye protection, must be worn and all safety requirements must be observed at all times.
If you have any questions about your new employment arrangements, please do not hesitate to contact me on (08) 8300 7705.
Yours sincerely
O-I Adelaide Plant
Nicola Powell
Employee Development Manager”
The Applicant did not sign the acceptance at the end of the document, nor did he return his copy to Ms Powell. He nevertheless says that he orally agreed to the June 2011 contract. The parties proceeded pursuant to the terms of the June 2011 contract.
In November/December 2011, the Applicant undertook intensive rehabilitation, at which time he worked limited hours. After completion of the intensive rehabilitation, he worked full hours.
In early 2012, ACI decided that, for commercial reasons, it would downsize its plant at West Croydon by closing one line. As a result, employees were asked to indicate whether they would like to take a voluntary retrenchment package. The Applicant submitted an application for retrenchment but, after a thorough assessment process by ACI, was informed by ACI that he was unsuccessful. This was confirmed to him by letter dated 31 May 2012.
In August 2012, ACI again sought expressions of interest for voluntary redundancy as a result of the closure of another section of its West Croydon plant. The Applicant did not seek a package on this occasion.
On 19 July 2012, the Applicant was advised by email from WorkCoverSA that they intended to make a decision that would clear ACI’s obligations pursuant to s.58B of the WRC Act. The email said:
“Dear Tony
I have read your claims file, particularly the medical reports of your treating doctor.
As you know it is not reasonable for you to continue doing the verifier role for one line. The Verifier working on 51 only is able to do all the duties of the role and as such does not require assistance to do the role.
The Cold End Job change role has been considered and your treating GP, Dr Nguyen, has advised that this job is not suitable for you. He did so in a letter to EML on 15 March 2012. I am sure you have a copy, I have attached a copy in any case.
I cannot find any suitable employment for which you are fit. Please be advised that I intend to make a decision to clear O-I of their s58B obligation. Should you object to this decision please provide reasons and evidence of such.
Kind regards,
Phillip Marshall
Compliance Officer, Scheme ComplianceWorkCoverSA, 400 King William St, Adelaide, SA 5000”
It will be remembered that s.58B of the WRC Act (see above) does not apply if, “it is not reasonably practicable to provide employment in accordance with that subsection”[1].
[1] WRC Act s.58(2)(a).
By letter from Ms Powell dated 12 October 2012[2], the Applicant was advised that his employment with ACI would be terminated with effect from 12 November 2012. The letter stated:
[2] ACI’s Employee Development Manager.
“12 October 2012
Dear Anthony
O-I Adelaide has received direction from Employers Mutual Limited in relation to your Worker’s Compensation Claims 07349483/09 and /10.
Accordingly this letter is to inform you that due to the requirements of Section 58B of the Worker’s Rehabilitation and Compensation Act (SA) and O-I Adelaide being unable to provide suitable employment due to your injury/capacity, your employment with O-I Adelaide (ACI Operations Pty Ltd) will be terminated on 12 November 2012.
We advise that as of the date of this letter, you are not required to attend for work. You will continue to be paid during this time.
All entitlements owing to you on termination will be advised and paid into your nominated bank account by Tuesday 13 November 2012.
Regards
Nicola Powell
Employee Development ManagerAdelaide Plant”
By letter dated 17 October 2012, from Mr Peter Russell of the Australian Workers’ Union on behalf of the Applicant, it was stated that the Union refuted EML’s determination that ACI could not provide suitable work for the Applicant.
By letter dated 26 November 2012, EML advised ACI that it had received a Notice of Dispute filed with the Workers Compensation Tribunal (“the Tribunal”) on behalf of the Applicant disputing the decision of EML to detach him pursuant to s.58B of the WRC Act.[3]
[3] ACI and EML objected to the jurisdiction of the Tribunal to hear the disputes and make orders which they alleged would have the effect of requiring the re-employment of the Applicant (see Cerin v ACI Operations Pty Ltd and Workcover Corporation of SA [2013] SAWCT 23).
On 21 December 2012, the Applicant filed his Application in this Court.
The Applicant says that ACI terminated his employment on 12 November 2012 without giving him the required notice of termination, or pay in lieu thereof, as required by s.117 of the Fair Work Act 2009 (Cth) (“the Act”).
Submissions and findings
The Respondents submit that the Applicant’s contract of employment with ACI came to an end by reason of the doctrine of frustration, and that the frustrating event was the Applicant’s inability to render his services in accordance with the contract. They submit that, as a result, they were relieved of the requirements of s.117 of the FW Act to give the Applicant 5 weeks’ notice, or pay in lieu.
The Respondents’ case is that during the period that the Applicant was receiving worker’s compensation, ACI was obliged pursuant to s.58B(1) of the WRC Act to continue to employ him. However, as soon as Workcover’s agent, EML, determined that it was not reasonably practicable for ACI to provide work for the Applicant, such that, pursuant to s.58(2)(a) of the WRC Act, ACI no longer had obligations pursuant to s.58B, the employment contract came to an end. The Respondents say that it came to an end on the basis of a frustrating event, namely, the Applicant’s inability to carry out the work that ACI requested him to perform.
The Respondents argue that the only reason that an employment relationship had continued after the Applicant was placed on worker’s compensation, was because of ACI’s obligations under the WRC Act. The Respondents say that there was no employment contract that obliged ACI to find suitable work for the Applicant. The Respondents also say that ACI’s acceptance of the termination of the employment contract by frustration did not require that ACI give notice of acceptance to the Applicant. They say that, “Notice would be pointless as the Applicant was incapable of providing consideration by way of service in respect of his contract of employment”.
Both the Applicant and ACI agree that there was an employment contract between him and ACI. The Applicant does not agree with ACI that it was terminated by reason of frustration.
The Applicant submits that the original contract of employment, which was put in place before the Applicant’s injuries, was replaced by a new contract following the Applicant’s incapacity and that it was this contract that was current at the time of termination.
It is not controversial that in mid-2011, there were discussions between the Applicant and Ms Powell on behalf of ACI which led to the parties agreeing to the new employment contract, namely, the June 2011 contract.
The Applicant refers to the case of Sheridan Australia Pty Ltd v McCall[4] (“Sheridan’s case”), a Full Court decision of the Industrial Relations Court of SA, on the topic of frustration of employment contracts. In particular, the Applicant refers to the following passage:
“In the case of Ms McCall, there was a longstanding employment relationship governed by the terms of an industrial award, the Sheridan Agreement, the minimum standards applicable under the Industrial and Employee Relations Act 1994 (as it then was), and other legislation including the Compensation Act[5]. These circumstances, in my view, do not permit “any available scope for the operation of the doctrine of frustration”. Rather, once Sheridan was free to terminate the employment of Ms McCall without being in breach of its obligations under the Compensation Act, Ms McCall’s continuing partial incapacity excused her from attending work, given that suitable employment was no longer available, and Sheridan was excused from the obligation to pay wages, and also was able to exercise the right to terminate the employment.
Indeed, Sheridan then chose to exercise that right for the reason that there were “no suitable duties”. This action is quite inconsistent with the notion of a contract ending due to it being frustrated. As noted in the extract from Finch v Sayers[6] …, frustration will end a contractual relationship by operation of law, independent of the volition or intention of the parties.”
[4] [2006] SAIRC 66 at [44] - [45].
[5] The Workers Rehabilitation and Compensation Act 1986 SA.
[6] [1976] 2 NSWLR 540.
It is helpful to look more closely at the last sentence of the above quote from Sheridan’s case. Wooten J in Finch v Sayers was there referring to a passage from the decision of Marshall v Harland & Wolff Ltd and Another[7] in which the Court stated:
“The ending of the relationship of employer and employee by operation of law is, by definition, independent of the volition or intention of the parties. A tribunal is, however, entitled to treat the conduct of the parties as evidence to be considered in forming a judgment as to whether the changed circumstances were so fundamental as to strike at the root of their relationship.”
Before making a finding that an employment contract has been terminated as a result of a frustrating event, it is therefore necessary to look closely at all the circumstances, including the conduct of the parties.
[7] [1972] 1 W.L.R. 899 at 904.
In my view, an application of the above extract from Sheridan’s case to the present case would suggest that frustration of the contract of employment did not occur as the circumstances and conduct of the parties allowed no scope for the operation of the doctrine of frustration.
The Applicant submits that the Respondents’ termination of employment because there were no suitable duties,[8] is inconsistent with the suggestion of the contract ending due to frustration.
[8] It is to be noted that the Applicant submits that it believes that suitable employment was available to the Applicant and that the Applicant commenced separate proceedings in a State Court to obtain relief in relation to this claim.
The Applicant further submits that the June 2011 contract had contemplated that the Applicant would be unable to perform unrestricted duties, and that the Applicant was being employed by ACI on that basis. ACI declined to accept the Applicant’s employment in accordance with the contract and instead elected to terminate the contract. In doing so, ACI failed to comply with s.117 of the Act in that it provided only 4 weeks’ notice of termination rather than the 5 weeks’ notice (or pay in lieu thereof) that in the circumstances s.117 requires.
The case of Lawless v WorkCover (Qantas),[9] is factually similar to the present case. The Court found that s.58B(1) of the WRC Act:
“… does not provide for the making of any “decision” by a compensating authority, but rather imposes a duty of the employer to provide suitable employment, and specifies a monetary penalty for any breach. The decision implicitly approved the proposal of Qantas that it no longer be obliged to provide suitable employment to the worker on the ground that it was no longer practicable to do so, and that it be at liberty to terminate his employment for that reason in accordance with s.58B(3) of the Act. The decision clearly gave Qantas comfort in the sense that in proceeding accordingly it would not be exposed to any action instigated by the compensating authority involving a prosecution and penalty for a breach of s.58B(1), or the imposition of a supplementary payment of premium under s.72C of the Act.”
[9] [2013] SAWCT 40 at [71] and [72].
The Applicant further submits that the First Respondent was not obliged by anything in or done pursuant to the WRC Act to terminate the Applicant’s employment. Rather, ACI was given an intimation that if it did terminate the Applicant’s employment, WorkCover would not penalise it for doing so. They further submit that s.58B of the WRC Act does not vest any right enforceable by the Applicant:
“… a review of the action of Qantas in terms of any compliance with s.58B(1) of the Act can occur only in the context of a prosecution seeking the imposition of a penalty for a breach of that provision, a review under s.72M of the imposition of a supplementary premium payment, or an investigation under s.99D by the Ombudsman.”
They submit that:
“Nothing in or pursuant to the Workers Rehabilitation and Compensation Act obliged or required the termination of the Applicant’s employment, or lends support to the Respondent’s contention that the employment contract was frustrated.”
I find that the June 2011 contract was not terminated on the basis of frustration. The only termination was the termination that resulted from Mr Biggins, on behalf of ACI, handing the Applicant the 12 October 2012 letter. The termination occurred on 12 November 2012 at which time there was still a contract of employment in place.
My finding that there was still a contract of employment in place at the time of ACI’s termination on 12 November 2012, has been assisted by the fact that the parties had entered a new contract of employment on 3 June 2011. That new contract recognised that the Applicant had limitations to his working capacity. The Applicant and ACI had been happy to recognise that contract as valid for the whole of the period from 3 June 2011 until 12 November 2012 (ie some 16 months).
Cases such as Sheridan v McCall and Marshall v Harland lend support to the conclusion that termination by reason of frustration should not be lightly found.
In Labour Law[10], the learned authors had this to say on the topic:
“In certain circumstances a contract of employment is brought to an end by operation of law, without the need for any action by either party. Under the doctrine of frustration, a contract will automatically terminate where circumstances change after the formation of the contract to such an extent that performance becomes impossible, or one party is effectively deprived of the benefit of the other’s performance.[11] This will be the case, for instance, on the death of the employee or employer (if the latter is a natural person).[12] …
On the face of it, there seems to be no reason why a contract of employment might not be frustrated in other circumstances: for instance, where attendance at work for a significant period is precluded by the employee suffering a long-term illness or injury,[13] or being imprisoned.[14] However, in many instances the possibility of frustration is raised by an employer solely for the purpose of denying that a dismissal has taken place, despite all appearances to the contrary.[15] The motivation is usually to deny the employee access to statutory benefits which hinge on the manner and/or date of termination. For this reason, it was suggested in Finch v Sayers[16] that a contract for a short fixed term or which is readily terminable by the giving of notice should not generally be treated as capable of being frustrated in this manner.[17]”
[10] Breen Creighton & Andrew Stewart. The Federal Press 5th Edition.
[11] Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, As to the consequences of frustration, see Carter et al 2007: ch 34.
[12] Cutter v Powell (1795) 6 TR 320; 101 ER 573; Stubbs v Holywell Railway Co (1867) LR 2 Exch 311.
[13] See eg. Simmons Ltd v Hay [1964-5] NSWR 416; Giancaspro v Eurest (Australia) Pty Ltd [2004] SAIRC 63.
[14] See eg FC Shepherd & Co Ltd v Jerrom [1986] ICR 802.
[15] See eg Walsh v Police Association (2000) 140 IR 58.
[16] [1976] 2 NSWLR 540.
[17] See also Hamersley Iron Pty Ltd v Federated Engine Drivers and Firemens Union (1983) 4 IR 230; Hilton Hotels of Australia Ltd v Pasovska (2003) 122 IR 428; Smith v Moore Paragon Australia Ltd (2004) 130 IR.
It is not necessary for the Court in this case to make findings about the motivation of ACI, but the very fact that ACI had Ms Powell deliver the letter of 12 October 2012 advising the Applicant that his employment would be terminated on 12 November 2012, leads me to believe that ACI believed that there was a contract of employment in place. If it had already been terminated by the doctrine of frustration, there would be no need for a letter advising of termination some time in the future.
Conclusions
I find that ACI contravened s.44 of the Act by failing to give the Applicant the required 5 weeks’ notice of his termination, or pay in lieu thereof, as was required by s.117 of the Act. Instead ACI gave the Applicant only 4 weeks and 3 days’ notice. I also find that Ms Powell was, within the meaning of s.550 of the FW Act, involved in the contravention.
Having made the above findings, it is now necessary to address penalty and consequential orders.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 22 June 2015
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