Chinnappan v Queensland University of Technology

[1995] IRCA 327

CATCHWORDS

INDUSTRIAL LAW - Termination of employment - Claim of unlawful termination - Redundancy - Implied Limitation of Powers - Senior Officer Holder, Definition of - Jurisdiction Applies to State Employees terminated on basis of operational requirements.

Industrial Relations Act 1988, S170DE, S170ED, S170EDA, S170EA.

CONSTITUTIONAL LAW - Implied limitations in legislative power of Commonwealth - Division 3 Part VIA Industrial Relations Act 1988 does not impair capacity of a State to function as a government.

CASES:

The Australian Education Union [1995] 128 ALR 609
Beshara v Budget Couriers Equity Management Employee Relations Commission of Victoria (unreported) 22 July 1993
Hunt v STA Technical Engineering Pty Ltd (t/a Boyd Steel), (IRCA, Ryan JR, (unreported) 23 September 1994)
Gregory v Philip Morris [1988] 80 ALR 455
Papadopoulos v The Colonial Mutual Life Assurance Society Ltd (IRCA, Ryan JR, (unreported) 16 August 1994)

Bunnetts v Henderson Federal Springs [1989] 4VIR 364

BANNISTER v DEPARTMENT OF THE TREASURY

No. VI-1504/95

Before:          Ryan JR

Place:            Melbourne

Date:              14 July 1995

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY  Matter No VI-1504/95

B E T W E E N:                  PETER BANNISTER
  Applicant

AND:               DEPARTMENT OF THE TREASURY

Respondent

RYAN JR

MINUTES OF ORDER

14 JULY 1995

THE COURT ORDERS THAT:

The application be dismissed.

NOTE:  Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY  Matter No VI-1504/95

B E T W E E N:         PETER BANNISTER
  Applicant

AND:               DEPARTMENT OF THE TREASURY
  Respondent

COURT:       RYAN JR

PLACE:        MELBOURNE

DATE:           14 JULY 1995

EX TEMPORE JUDGMENT (Revised from Transcript)

TERMINATION ON GROUNDS OF REDUNDANCY

I propose to rule on whether the termination of the applicant occurred on grounds of the operational requirements of the employer and on the grounds of redundancy, and I will do that at this stage.  And in doing it, I will not go into the details and background of the application for remedy for unlawful termination of employment.  That is not to say at some later stage the details may not be gone into in a written determination of the Court.

On 1 June 1995 a notice of motion from the respondent returnable on 23 June was filed in the Court but on that date, that is on 1 June, a Duty Judge, Gray J, determined that the motion was inappropriate and that the issue should be canvassed at trial. 

ISSUE OF IMPLIED LIMITATION OF POWERS

The issue to which the Judge referred was the motion that the applicant's application be dismissed. This motion was founded on the following propositions

1. the employment of the applicant was terminated on the ground of redundancy,

1. Division 3 part VIA of the Industrial Relations Act 1988 has no application in relation to the applicant's termination of employment

1. the Court lacks jurisdiction to deal with the applicant's application for remedy

1. the lack of jurisdiction is based on the implied constitutional limitation against laws of general application of the Commonwealth which operate to destroy or curtail the continued existence of the States or their capacity to function.

PRE TRIAL ORDERS

On 8 June the Court made a number of orders designed to allow the trial to proceed on 13 July. Among other things, reasonable time had to elapse for the giving of notice to the Attorneys General of the Commonwealth and the States of a cause pending in this Court arising under the constitution and involving the interpretation of the constitution. I refer there to the requirements of section 78B of the Judiciary Act 1903.

The matter proceeded yesterday with the respondent, through his counsel, Mr Parry, agreeing to call evidence and make submissions designed to demonstrate that the applicant was terminated on the grounds of his redundancy, and thus establish in the respondent's submission a lack of jurisdiction in this Court based on the doctrine of implied limitation of Commonwealth legislative power.

PROCEDURE AT TRIAL

Both parties agreed that, while certain respondent witnesses were brought to Court, the applicant could begin his case by giving evidence as to why he alleges the termination of his employment was unlawful.  After the applicant gave evidence, Mr Parry, counsel for the respondent, cross-examined but confined his cross-examination to matters relevant to the respondent's claim of termination on the grounds of redundancy.  Mr Parry then called evidence but again primarily confined evidence-in-chief to issues relevant to the claim of termination on the grounds of redundancy.

TERMINATION BASED ON OPERATIONAL REQUIREMENTS

I have concluded that the termination of the applicant was indeed for valid reasons based on the operational requirements of the employer, the Crown in the Right of State of Victoria, and that the termination was on the grounds of redundancy and probably redundancy in the sense in which that word is used in the State Employees case 128 ALR 609. I will not at this stage provide citations to the authorities on which I rely, but I will say that these authorities are cited in Papadopoulos v The Colonial Mutual Life Assurance Society Ltd (IRCA, Ryan JR, (unreported) 16 August 1994) and include consideration of the extended definition of redundancy as outlined by Deputy President Lawrence in Bunnetts v Henderson Federal Springs [1989] 4VIR 364 at 376.

At this stage, I will simply say that the operational requirements of the State government led to a total restructure of the Departments of both Finance and Treasury, following change of government in October 1992.

JURISDICTIONAL ISSUE

I will turn next to the jurisdictional issue, and to the applicability of the doctrine of implied limitation of Commonwealth legislative power, and I expect to be able to rule on that issue at 2.15 pm today.  And if I rule that the doctrine does not apply so as to prevent the Court having jurisdiction, I would anticipate and hope that this matter could continue immediately and be resolved today.

DOCTRINE OF IMPLIED LIMITATION OF POWER

The respondent's position is succinctly put in the last three paragraphs of counsel's outline of submission and is as follows:

Division 3 of part VIA of the Industrial Relations Act gives powers to the Court to deal with applications in respect of termination of employment. These powers the respondent submits should be read consistently with the Australian constitution. There is an implied limitation on the exercise of Commonwealth legislative powers which prohibits discrimination against placing special burdens or disabilities on States and prohibits laws of general application which operate to destroy or curtail the continued existence of the States or their capactiy to function as governments.

STATE EMPLOYEES CASE

This implied limitation has recently been considered by the High Court in The Australian Education Union [1995] 128 ALR 609 hereafter referred to as the State Employees case. As noted in that case at 630, the majority stated as follows:

It seems to us that critical to that capacity, (i.e. the capacity to function as a government), is the government's rights to determine the number and identify of persons whom it wishes to employ, the term of employment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State’s rights in these respects would, in our view, constitute an infringement of the applied limitation.

Counsel for the respondent had also referred to other passages at 630, 631, 632 and 637.  In any event, the Court has read all of the case and read it thoroughly. 

The respondent submits that the High Court concluded that the Australian Industrial Relations Commission could not make an award in respect of redundancy of public servants,  nor could the Commission make an award binding the States in relation to the terms and conditions of employment of senior office holders.  Ultimately the Court overturned awards which restricted the State's right as an employer to terminate the employment of employees on the ground of redundancy.

The respondent submits that the State Employees case decision makes clear that a Commonwealth law cannot restrict a State in selecting persons for termination on the grounds of redundancy and terminating such persons on those grounds.  Further, the more senior the employee, the more control the State has over the regulation of the terms and conditions of the employee's employment as well as the terms on which the employment may be terminated. 

Given that it is clear that the position formerly held by the applicant was redundant, (and the Court has already held that), then the respondent submits the Court does not have power to make orders restricting the powers of the State of Victoria to terminate the employment of the applicant, or indeed power to make any orders at all.  The Court notes that the respondent's general argument of interference with State power to dismiss seems to be based on a passage in the majority judgment at 630. 

CONCILIATION AND ARBITRATION POWER

Before going to it, the Court notes that the case deals specifically with the applicability of the doctrine of implied limitation in respect of the Commonwealth legislative power under section 51 (xxxv) of the Constitution, namely the “industrial relations power” the conciliation and arbitration power. The Court also notes that Division 3 part VIA of the Industrial Relations Act 1988 is not based on that Commonwealth legislative power.

DOCTRINE APPLYING TO ALL COMMONWEALTH POWER

However, the Court accepts that the doctrine of implied limitation applies to all Commonwealth legislative power and that the State Employees case is binding authority on the Industrial Relations Court of Australia to the extent that it sets out circumstances in which the doctrine of implied limitation applies.  The Court also notes that the case seems to limit the limitation itself to protection of the existence of the States and their capacity to function as a government.  As I understand the case, it holds that:

(a)the applied limitation does not protect the States from Commonwealth legislation that would impair State capacity to exercise government functions;

(b)a limitation in those terms would travel beyond the requirements of section 106 of the Constitution and would protect the exercise of powers on the part of States to an extent inconsistent with the subordination of those powers to the powers of the Commonwealth through the operation of section 109 of the Constitution;

(c)the implied limitation does not protect the States in relation to their employment of persons engaged in the administrative services of the States.

That being said, the case seems to hold as the respondent asserts, that the implied limitation consists of two elements:

(a)a prohibition against discrimination which involves placing on the States special burdens or disabilities; and

(b)a prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments.

THE FINDING IN THE STATE EMPLOYEES CASE

Turning now to the State Employees case at 630, their Honours in the majority judgment said that they regarded the following rights as critical to the capacity of a State to function as a government:

1.The right to determine the number and identity of the persons whom it wishes to employ;

2.The right to determine the term of appointment of such persons, and

3.The right to determine the number and identity of persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds.

An impairment of these rights would in the majority's view, constitute an infringement of the implied limitation.  On this basis, the majority held that certain interim awards regulating voluntary departure packages could not be supported;  and that was so held at 631.  That was what the Court held, no more and no less. 

IMPLIED LIMITATION NOT INFRINGED

As far as I am concerned it is not clear precisely what the majority intended by the word "identity" when referring to restrictions on the State’s ability to determine the identity of the persons whose employment it wishes to terminate.  It may be that the majority is referring to skills and attributes, rather than personal identity of employees. A State’s ability to function requires that it be able to decide what kind of skills and experience it has in its workforce not the actual personal identities of its employees per se.  I have concluded that the requirements imposed by Division 3 constitute restrictions on a State government's ability to hire and fire employees.  However, they are not impairments of a State government's ability to make and implement decisions about its work force which are necessary for it to function as a government.  Division 3 Part VIA Industrial Relations Act 1988 does not impair a State’s ability to dismiss employees with or without notice; rather, it requires that employees be treated fairly by the dismissal process.

In other words, the rights accorded to a State government by the majority in the State Employees case, do not constitute an absolute right to hire and fire employees at will, since such right is not essential to the capacity of a State to operate as a government.  Division 3, in my view, therefore, does not infringe the implied limitation as set out in the State Employees case.

INABILITY TO RESTRICT OR BIND STATES IN RESPECT OF SENIOR OFFICE HOLDERS

On the other hand, if the State Employees case is adequate, binding and clear authority in respect of the exercise of the Commonwealth power on which Division 3 part VIA is based, and for my part I emphasise clear authority, the majority at 631 states that the operation of the implied limitation would also preclude the Australian Industrial Relations Commission (and no doubt this Court) from making an award or (in the case of this Court), an order, binding the States, (in this case the State of Victoria), in relation to the terms and conditions of employment and engagement of persons such as ministers, ministerial assistants and advisers, heads of department and senior office holders.

I think it can be inferred from the majority's earlier references, that this is a reference not only to terms and conditions of “employment” and “engagement”, but also “termination of employment” and “disengagement”.

However, I do not accept that it follows that the High Court reference to “senior officer holders” applies in Victoria to what was the lowest level of the Senior Executive Service level 1.  I appreciate that “senior officer” is defined in what I call a “Finnigans's Wake” or circular fashion in section 3 of the Public Service Act 1974 (Victoria) and is more clearly defined to include all SES officers in, I think, section 28(B) of the Act.

SES, LEVEL 1, VICTORIAN PUBLIC SERVICE NOT “SENIOR OFFICE”

Be that as it may, I am not satisfied that the references to “senior officer holders” (at 631, line 31) or even more so “high level statutory officers”; (630, line 46) encompassed the lowest level of an office at the time entitled “Senior Executive Service” and at the time accorded a salary in the order of $57,431 and in the case of the applicant, a gratuity of $3,659. 

That being so, I am not satisfied that this Court lacks jurisdiction to determine Mr Bannister's application under section 170EA of the Industrial Relations Act 1988, and I propose that the parties make submissions on whether a termination of employment, which the court has already found, based on valid reasons being the employers operational requirements, is none the less harsh, unjust or unreasonable under section 170DE(2). As I flagged before lunch, I propose that with any luck we will proceed with that and, in fact, determine it this afternoon.

In respect of that, it is up to the parties.  I must say I would have thought that submissions would be as much as is required rather than the calling of additional evidence but, of course, it is up to the parties in respect of that.

RESTRUCTURE

The applicant worked in the Victorian Public Service for 30 years.  In 1992, he held a senior position in the lowest level of the Senior Executive Service in the Effectiveness Review Unit of State Treasury.  On 5 May 1994, the Secretary of the Department of the Treasury wrote to the applicant in the following terms:

Dear Peter,

As you know, following the election of the Coalition Government in October 1992, the Treasury's Effectiveness Review Unit was disbanded and, as such, the position of Program Analyst, Class SES1 became surplus to this Department's requirements. In this context and following the organisation review by Anderson Consulting and the implementation of a new executive structure, I have abolished the SES positions in accordance with section 7(2) of the Public Sector Management Act 1992, including your last position of Program Analyst SES1 in the former ERU.

As you were unsuccessful in obtaining an appointment to an Executive Officer position in the new structure and as a surplus officer I am referring you to the Workforce Management Unit which will examine opportunities for placement elsewhere in the public sector. 

The Secretary of the Department then invited the applicant to complete certain personal and redeployment details and advised that Ms Lyn Southward would contact the applicant and discuss the employment process and explore with the applicant, options. It is the evidence of both the applicant and Ms Southward that they had had discussions and, indeed, lengthy discussions prior to the receipt of this letter on or about 5 May 1994.

TERMINATION

On 30 January 1995, the Secretary of the Department wrote again to the applicant in the following terms:

Dear Peter,

I am writing to advise you that the Workforce Management Unit has indicated that there are no suitable vacancies within the Victorian Public Service to which you may be redeployed, nor are there likely to be any such vacancies in the foreseeable future.

On the basis that it is not possible to effect your redeployment under section 78(2) of the Public Sector Management Act 1992, I have taken the decision to terminate your employment. Your termination will be effective from close of business on Monday, 30 January 1995.

As a consequence of your termination, you will receive the following payment under the targeted separation package:  Two weeks pay for each year of continuous full-time service up to a maximum of 20-weeks pay;  four weeks pay in lieu of  notice;  payments for outstanding recreation and long-service leave.

A certificate of retrenchment has been forwarded to the State Superannuation Board and you will be entitled to full retrenchment benefits.

The letter concludes by giving a contact point for queries and thanking the applicant for his services to the Department over the years and wishing him well in the future.

CLAIM OF UNLAWFUL TERMINATION

On 9 February 1995, the applicant lodged an application for remedy in a claim of unlawful termination of employment pursuant to section 170EA of the Industrial Relations Act 1988. The respondent's solicitors entered an appearance on 17 February and the matter was referred to the Australian Industrial Relations Commission for conciliation on 20 February.

PRELIMINARY ISSUES

On 7 April, the Commission certified under section 170DE(2) that it had been unable to settle the matter by conciliation. At a directions hearing on 9 May, the respondent's solicitor advised an intention to file a notice of motion challenging the jurisdiction of the Court to deal with this particular application. That issue was dealt with earlier today. Also earlier today I found that the termination was, for reasons, based on the employer's operational requirements and was a termination on the grounds of redundancy.

APPLICANT’S WORK HISTORY

The applicant, Peter John Bannister, became an officer in the Victorian Public Service on 24 July 1963.  After holding various positions in the Public Service, on 25 June 1992, he was promoted to the position of Program Analyst in the Effectiveness Review Unit at Senior Executive Service Level 1, that is SES1.  In October 1992, the Effectiveness Review Unit was disbanded and the position of program analyst class SES1 became surplus to the Department's requirements with the consequence that the applicant became an unattached officer in accordance in accordance with the practice and procedures of the Victorian Public Service.

MANAGEMENT REVIEW, SPILL OF POSITIONS, REAPPLICATIONS AND JOB SEARCH

In April 1993, the Secretary of the Department announced that a management review of the Department was to take place. The management review took place between approximately May 1993 and January 1994. As a result of the review, a new executive officer structure was adopted. This had the consequence that all SES positions in the Department were, in effect, abolished pursuant to section 7(2) of the Public Sector Management Act 1992 and interested persons were required to apply for positions in the new structure. On 16 May, the applicant, having been identified as redundant in accordance with the policies and procedures of the Victorian Public Service, was referred to the Workforce Management Unit in order that opportunities for placing the applicant elsewhere in the Victorian Public Sector could be explored.

APPLICANT DECLINES APPOINTMENT

On 21 June 1994, the applicant was seconded to temporary duties as an Administrative Officer, Level AM8 in the Department of Finance. The secondment, after being extended, concluded on 27 January 1995.

The applicant, it must be noted, declined regular invitations to accept appointment to this position.  He stated in evidence that he loved the work but felt inadequately qualified for it.  During the period from May 1994 to December 1994, the applicant unsuccessfully applied for several permanent executive officer positions in the new structure.  I record again that he was also offered on several occasions and on a permanent basis the position to which he had been seconded in the Department of Finance.

He declined this position which, although a non-executive position, in other words, not classified within the new EO structure or, for that matter, within the old SES structure, would have translated into the new non-executive structure at what would have been probably VPS level 5 with the salary range potentially 51,500 to 72,500.

The applicant would have transferred at his existing remuneration level and, it seems to the Court, would have had an opportunity (in the longer term) to earn considerably more remuneration than he had been receiving in his redundant position of Program Analyst level SES1. The Court states that, although accepting that the overall package associated with non-executive officer positions in the new structure did not, of course, provide such additional benefits as a motor vehicle and quite possibly not the kind of benefits associated with secretarial assistance that are provided in the executive structure.

RETRENCHMENT

On 30 January 1995, after approximately 8 months in which attempts were made to redeploy the applicant, he was retrenched and given a standard Victorian Targeted Separation package.  I do not intend in this extempore decision to go into details.  I may issue a more detailed decision with more detailed reasons for the decision I am about to make.

TERMINATION NOT HARSH, UNJUST OR UNREASONABLE

The applicant was indisputably very competent.  He was conscientious.  That, too, is undisputed.  He feels a personal sense of loss.  He considers that his reputation has probably been damaged, but the Court has to say that even if his reputation has perhaps been unfairly damaged, that does not of itself constitute harsh, unjust or unreasonable termination.

The one issue remaining for determination is whether a determination for the otherwise valid reason or reasons of operational requirements is invalid and unlawful, because in some way it is harsh, unjust or unreasonable.

Sub-Section 170EDA(i) reads:

If an application under section 170EA alleges that a termination of employment of an employee contravened subsection 170DE(1) the termination is taken to have contravened subsection 170DE(1) unless the employer proves that apart from subsection 170DE(2) there was a valid reason or valid reasons of a kind referred to in subsection 170DE(1).

The Court has already found earlier today that there was such a valid reason.

Sub-Section 170DEA(i)(b) continues:

If the employer so proves the termination is nevertheless taken to have contravened sub-section 170DE(1) if the applicant proves that because sub-section 170DE(2) the reason or reasons proved by the employer were not valid.

And Sub-Section 170DE(2) is as follows:

A reason is not valid if, having regard to the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid.

There are a plethora of cases on redundancy and on what might in certain circumstances constitute harsh, unjust or unreasonable termination via redundancy.  It is not enough that the redundancy be genuine as here.

Cases such as the Victorian case of  Beshara v Budget Couriers Equity Management Employee Relations Commission of Victoria (unreported) 22 July 1993, the case in this Court of Hunt v STA Technical Engineering Pty Ltd (t/a Boyd Steel), (IRCA, Ryan JR, 23 September 1994),  Gregory v Philip Morris [1988] 80 ALR 455 specifically at 473 and a case in this Court of Papadopoulos v The Colonial Mutual Life Assurance Society Ltd (IRCA, Ryan JR, (unreported) 16 August 1994), all of these cases and others set out what may in particular circumstances make a termination on the grounds of redundancy harsh, unjust or unreasonable.  Each case, of course, depends on its own circumstances.

Here there was consultation.  There was an application, a thorough application of selection criteria, both selection criteria for those selected redundant and an application of selection criteria in relation to consideration for a number of other positions.  There was an exploration of alternatives.  There were extensive enquiries, albeit that Miss Southward stated - and it proved that the applicant here was accurate - that there was little chance of an applicant at SES level achieving a redeployment once referred to the Workforce Management Unit.

In my view the applicant was clearly accorded procedural fairness. The termination was for valid grounds.  The application must be and is dismissed.

The Court says no more, except that it wishes the applicant well in his present employment.

I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.

Associate  :          

Date  :          24 July 1995

Appearances:

The Applicant appeared in person

Counsel for the Respondent        :          Mr Frank Parry

Solicitor for the Respondent         :          Clayton UTZ

Date of Hearing  :          13 and 14 July 1995

Judgment  :          14 July 1995