Cliffe v Hoechst Australia Limited

[1996] IRCA 514

DECISION NO:514/96

CATCHWORDS

INDUSTRIAL LAW - application for imposition of a penalty - alleged breach of award clause prohibiting harsh, unjust or unreasonable termination of employment - whether award clause expressly incorporated into the contract of employment - whether applicant entitled to damages for breach of contract - employee handbook - whether reference in handbook to award termination conditions was express incorporation

Industrial Relations Act 1988 s 178

Metal Industry Award 1984 - Part I  cl 6(d)(vi)

Byrne v Australian Airlines Ltd (1995) 131 ALR 422
Gregory v Philip Morris Ltd (1988) 80 ALR 455
Moama Bowling Club Limited v Armstrong (1995) 64 IR 238
Termination, Change and Redundancy Case(1984) 8 IR 34
Termination, Change and Redundancy Case(1984) 9 IR 115

No. VI 1036 of 1994

CHRISTOPHER JOHN CLIFFE v HOECHST AUSTRALIA LIMITED

JUDGE:    Marshall J
PLACE:    Melbourne
DATE:     21 October 1996

IN THE INDUSTRIAL RELATIONS  )
COURT OF AUSTRALIA          )
VICTORIA DISTRICT REGISTRY   )   
  No. VI 1036 of 1994

BETWEEN:     CHRISTOPHER JOHN CLIFFE

Applicant

AND:      HOECHST AUSTRALIA LIMITED
  Respondent

JUDGE:    Marshall J
PLACE:    Melbourne
DATE:     21 October 1996

ORDER

THE COURT ORDERS THAT:

1.The Court answers the question ordered by North J to be tried separately in the following way:

The terms of clause 6(d)(vi) of the Metal Industry Award 1984 - Part I did not form part of the contract of employment between the applicant and the respondent.

2.The application otherwise be placed in the list of cases awaiting trial.  It  is noted that the parties will advise the Registry in no later than twenty-one days concerning the estimated hearing time required for the balance of the matter.

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

IN THE INDUSTRIAL RELATIONS  )
COURT OF AUSTRALIA          )
VICTORIA DISTRICT REGISTRY   )   
  No. VI 1036 of 1994

BETWEEN:     CHRISTOPHER JOHN CLIFFE

Applicant

AND:      HOECHST AUSTRALIA LIMITED

Respondent

JUDGE:    Marshall J
PLACE:    Melbourne
DATE:     21 October 1996

EX-TEMPORE REASONS FOR JUDGMENT

BACKGROUND
This matter is an application under s178 Industrial Relations Act 1988 (“the Act”) in which the applicant, Mr Cliffe, seeks the imposition of a penalty upon the respondent, Hoechst Australia Limited (“Hoechst”) for breach of clause 6(d)(vi) of the Metal Industry Award 1984 - Part I (“the award”).

Clause 6(d)(vi) of the award provides as follows:

“Unfair dismissals

(vi)Termination of employment by an employer shall not be harsh, unjust or unreasonable.

For the purposes of this clause, termination of employment shall include terminations with or without notice.

Without limiting the above, except where a distinction, exclusion or preference is based on the inherent requirements of a particular position, termination on the ground of race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction and social origin shall constitute a harsh, unjust or unreasonable termination of employment.”

The abovementioned provision was inserted into the award on 1 February 1985 after the Termination, Change and Redundancy Test Cases (1984) 8 IR 34 and (1984) 9 IR 115 in the Australian Conciliation and Arbitration Commission.

Mr Cliffe was employed by Hoechst on 29 May 1990 as a “mechanical tradesperson special class”.  On 18 January 1993, Hoechst terminated Mr Cliffe’s employment with it, in circumstances in which Mr Cliffe alleged that cl 6(d)(vi) of the award was breached by Hoechst.

Mr Cliffe’s application was filed on 16 November 1993.  Apart from seeking the imposition of a penalty upon Hoechst for breach of the award, Mr Cliffe  also sought damages for breach of contract.  In the “points of claim” filed on 4 January 1994, Mr Cliffe alleged that cl 6(d)(vi) of the award was an implied term of his contract of employment.  His case in that respect was of the same nature as that ultimately contended for by Mr Gregory in Gregory v Philip Morris Ltd (1988) 80 ALR 455 (“Gregory”).

The Court file in this matter lay dormant until after the decision of the High Court in Byrne v Australian Airlines Ltd (1995) 131 ALR 422 (“Byrne”).  The result in that case foreclosed Mr Cliffe’s ability to make good his claim that the relevant provision of the award was an implied term of his contract of employment.  Claims based on Gregory were no longer open as a result of Byrne.

On 18 March 1996, North J ordered that pursuant to Order 29 of the Rules of Court, the following question be tried separately before further trial of the proceedings, namely:

“...whether the terms of Clause 6(d)(vi) of the Metal Industry Award 1984 form part of the contract of employment between the applicant and the respondent.”

The trial of that separate question occurred earlier today.  Mr Timothy Ginnane, of counsel, appeared for Hoechst and Mr John Wallace, of counsel, appeared for Mr Cliffe.

Mr Wallace contended that cl 6(d)(vi) of the award was expressly incorporated into Mr Cliffe’s contract of employment.  The main source of that contention was the fact that Mr Cliffe was given a handbook at the commencement of his employment which contained the following terms:-

“TERMINATION

Staff employment contracts, part of our offer of employment letter, provide for a probationary period.

During the usual three months probationary period, termination of employment may be given by either employee or employer by submitting, in writing, as provided in the employment contract, one or two weeks’ notice of intention.

After the probationary period, termination of service may be made by either party, giving one month’s, or one half-month’s notice of intention, again as provided in your contract.  Termination conditions are provided in Awards and Determinations.  Notice of one week is usually the minimum period acceptable.  If in doubt contact the Personnel Office.

The Company, however, reserves the right to dismiss an employee without such notice for acts of misconduct or wilful damage.

In the event of failure to give the required notice, a payment or forfeiture of wages/salary, whichever the case may be, may occur.

Terminating employees will receive final salary payments, etc. from the Personnel Office, Industrial Relations Office, or Branch Manager’s Office only, after return of Company properties, motor cars, tools, keys, books calculators, etc.

A Certificate of Service will be provided to each terminating employee.”

Mr Wallace submitted that the single sentence “Termination conditions are provided in Awards and Determinations” should be construed to mean that the terms and conditions applying in awards from time to time about termination conditions were expressly incorporated into Mr Cliffe’s contract of employment.

I do not accept that submission.  I accept Mr Ginnane’s submission that, in the proper context, the reference to the sentence referred to above was one concerning the notice which is required to be given on either side to terminate a contract of employment.

There is nothing in the handbook in the section headed “Termination” which in any way deals with the topic addressed by cl 6(d)(vi) of the award.  This is not surprising given that the handbook is dated September 1978, some 6.5 years before cl 6(d)(vi) came into existence.

Mr Wallace submitted that the reference to “awards” in the relevant section of the handbook should be construed in an ambulatory fashion.  I do not accept that submission either.  In the current context, for a term to be expressly incorporated into a contract of employment it must be demonstrated by reference to some direct words that an extraneous document is to be incorporated into the document which otherwise sets out terms and conditions of employment.  An example of such direct words are those which were included in the employment contract discussed by the Industrial Court of New South Wales in Moama Bowling Club Limited v Armstrong (1995) 64 IR 238 at 239 - 240. Clause 7.1 of that contract provided that:

“7.1This Agreement shall be deemed to incorporate the whole of the provisions of the Award as the Award stands at the date of this Agreement together with all future variations of the Award and the provisions of any Award made in substitution thereof and the provisions of this Agreement shall be read and interpreted so as to be subject to the provisions of the Award or any Award made in substitution therefor.”

Mr Wallace referred to several authorities where Courts had found that staff handbooks had been incorporated into contracts of employment.  None of those authorities were in the context of a federal award also applying to an employment situation “with statutory force”.  See Byrne at 427 per Brennan CJ, Dawson and Toohey JJ. Each result turned on the facts of the individual cases.

I am prepared to accept that Mr Cliffe was advised by Hoechst personnel staff on engagement that the award applied to his employment.  This would have been an unexceptional statement, but it is not to be equated to an express incorporation of the award into Mr Cliffe’s contract of employment.  It was no more, in the circumstances of this case, than a recognition by Hoechst that it was bound by law to apply the award to Mr Cliffe.

I do not find it necessary to resolve the conflict in the evidence between Mr Cliffe and Ms Grimshaw (a personnel employee of Hoechst at the time of Mr Cliffe’s engagement), as to whether Ms Grimshaw told Mr Cliffe that the handbook was “very much out of date”.  The date it bears, i.e., September 1978, speaks volumes on that issue.  I am prepared to assume for the current purposes that Mr Cliffe was not told that the handbook was “very much out of date”.  I am also prepared to assume that he was told to “read it very carefully”.  The Court was not provided with a copy of the award, other than the relevant clause.  The Court does not know if there were matters in the handbook which would require careful reading because they were not addressed by the award.  No adverse inference should be drawn against Hoechst on that subject matter.

Mr Cliffe was provided with “a welcome letter” from Hoechst, dated 24 May 1990.  On commencing employment on 29 May 1990, Mr Cliffe signed a “starting ticket” in which he acknowledged that he would abide by the terms and conditions of employment stated on his “application form”.  His “application form” recorded an acknowledgment to “obey all Safety Laws and Company Regulations”.  None of this material is of assistance to Mr Cliffe’s claim that cl 6(d)(vi) of the award was expressly incorporated into his contract of employment.

In the circumstances the appropriate order for the Court to make is as follows:

1.The Court answers the question ordered by North J to be tried separately in the following way:

The terms of clause 6(d)(vi) of the Metal Industry Award 1984 - Part I did not form part of the contract of employment between the applicant and the respondent.

2.The application otherwise be placed in the list of cases awaiting trial.  It  is noted that the parties will advise the Registry in no later than twenty-one days concerning the estimated hearing time required for the balance of the matter.

I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment herein of his Honour Justice Marshall.

Associate:  

Date:  

Counsel for the Applicant:            J P Wallace
Solicitor for the Applicant:           Ryan Carlisle Thomas
  as Agents for Taylor &   Scott

Counsel for the Respondent:           T. Ginnane
Solicitor for the Respondent:          Freehill Hollingdale & Page

Date of hearing:  21 October 1996
Date of judgment:  21 October 1996