Dr Peter Wirth v Calvary Health Care Act Limited (Public Division) - [2013] FWC 3564

[2013] FWC 3564

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Dr Peter Wirth
v
Calvary Health Care ACT Limited (Public Division)
(U2012/12024)

COMMISSIONER DEEGAN

CANBERRA, 4 JUNE 2013

Application for unfair dismissal remedy - Fixed term contract - effect of employment continuing after expiration of term - offer and acceptance - termination at initiative of employer - dismissal was harsh and unfair - compensation order subject to provision of information.

[1] This decision arises from an application made under s.394 of the Fair Work Act 2009 (the Act) by Dr Peter Wirth (the applicant) in relation to the termination of his employment with Calvary Health Care ACT Limited (Public Division) (the respondent).

[2] On 4 September 2012, the respondent lodged a Form F4 raising a jurisdictional objection to the application on the grounds that the applicant was not ‘dismissed’ within the meaning of s.386(1) of the Act and that the applicant was not protected from unfair dismissal as he had not worked the required minimum employment period. However, the latter ground for objection was subsequently withdrawn by the respondent.

[3] The matter was the subject of an unsuccessful conciliation conference which took place on 22 August 2012. Directions were issued and the matter was listed for hearing, which took place on 30 and 31 January 2013.

Background

[4] The applicant was employed by the respondent as a full-time Senior Specialist in Emergency Medicine under a fixed-term temporary contract for the period 1 July 2011 to 30 June 2012.

[5] On 22 September 2011, the applicant attended an interview for a permanent role as a Senior Specialist with the respondent. The applicant was informed later that day by Dr Garry Wilkes, Director of Emergency Medicine and chairperson of the interview panel, that the applicant had been successful at the interview.

[6] Negotiations regarding the terms of the employment contract for the permanent role took place from September 2011 and the applicant, together with other candidates who had been successful in the interview for similar positions, was provided with a written contract for the permanent position in January 2012. However, the contract was withdrawn as its terms were rejected by the candidates.

[7] Further negotiations took place from January 2012, with particular reference to the financial terms and the travel allowance, and a revised and final contract was provided to the applicant on 26 June 2012.

[8] On 30 June 2012, the applicant’s temporary contract expired but the respondent continued to roster the applicant for shifts and the applicant continued to turn up and perform his work as Senior Specialist in Emergency Medicine.

[9] On 18 July the applicant obtained an assessment of the remuneration outlined in the permanent contract from his accountant. The applicant formed a view on the basis of the assessment that he would be financially worse off under the permanent contract than he had been under the terms of his temporary contract.

[10] Later that day, the applicant sent an email 1 to Dr Garry Wilkes and Dr Allan Pelkowitz, Director of Medical Services, seeking an opportunity to discuss his accountant’s assessment. The email stated:

The following is an assessment by my accountant of the remuneration aspect of the new contract, and the net decrease in its value.

I am keen to discuss this with you both, as my heavy financial commitments to my ex-wife and children will make the change to commuting reimbursement very difficult.

[11] On 20 July 2012, Dr Pelkowitz, Mr David Prior (Human Resources Manager of the respondent) and Mr Ray Dennis (Chief Executive Officer of the respondent) met to discuss the applicant’s employment in light of the email. As a consequence of these discussions, a decision was made to withdraw the applicant’s offer of employment.

[12] On 23 July 2012, the applicant was sent a letter 2 by Mr Ray Dennis withdrawing the offer of permanent employment.

The Applicant’s Case

[13] The applicant filed a witness statement 3, with a number of attachments and was cross-examined. It was his evidence that after his interview for a permanent Senior Specialist position with the respondent on 22 September 2011, Dr Wilkes had told him

You were successful in your application for the ongoing Senior Specialist position.

The paperwork is just a formality and you should consider yourself to be employed on a permanent basis. 4

[14] According to the applicant’s evidence, the respondent had then treated him as a permanent employee and this was indicated to him in several ways:

the respondent gave him permission to officially represent it at a meeting in Tonga in December 2011, whereas on a trip to Fiji for a meeting in August 2011 he had been instructed not to identify himself as the respondent’s representative.

on a second trip to Tonga in February 2012 he again understood that he was attending as the respondent’s representative.

on both visits to Tonga, the respondent provided him with his own ‘Calvary’ business cards and he was not aware of these being provided to temporary doctors.

he became involved in several ongoing projects that would have extended beyond the expiry date of his temporary contract; a proposal to establish a dedicated men’s health clinic at Calvary and the sourcing of funds for a research project. He was also endorsed by Dr Wilkes to attend a meeting with the Head of the Nursing School at the University of Canberra relating to the work undertaken in Tonga.

[15] The applicant recalled that he had, on a number of occasions, enquired about the paperwork for the permanent role. Dr Wilkes had assured him that it was just a ‘formality’. He had received a contract in January 2012 but had disregarded it when advised by Mr David Prior, Human Resources Manager, that there was an error in it. As a revised contract had not been provided within a short timeframe, he enquired with both Dr Wilkes and Mr Prior on several occasions and was again assured that the paperwork was just a ‘formality’.

[16] On 26 June 2012, the applicant was given a revised contract for the permanent position consisting of a cover letter from Dr Pelkowitz, an offer of employment setting out the terms of the employment and a Special Employment Arrangement stated to operate from 1 July 2012.

[17] According to the applicant, on the same day that he had obtained the assessment from his accountant he had spoken to Mr Prior in the hospital cafeteria. He recalled that Mr Prior stated that it was not intended that he be worse off under the contract that was offered and that the respondent could not unilaterally alter his terms of employment. Mr Prior then recommended that the applicant raise the matter with Dr Pelkowitz and Dr Wilkes, which the applicant did by email later that day.

[18] On 23 July 2012, the applicant stated that he was telephoned by Dr Pelkowitz who indicated that the offer of permanent employment was withdrawn. Later that day, the applicant received an email 5 from Mr Prior to the same effect. He was then informed by Dr Wilkes by phone that he had been dismissed because he had not accepted the offer by the specified cut-off date and that it was not for any disciplinary or clinical reason, there was no complaint about him and his record was ‘clean’. According to the applicant, he informed Dr Wilkes that there was no cut-off date specified in the contract.

[19] Under cross-examination, the applicant indicated that he had not considered nor had it been communicated to him that the ‘relatively generous reimbursement arrangement for travel and accommodation’ 6 related to his temporary status. When questioned about his conversation with Dr Wilkes on 22 September 2011, the applicant maintained his position that Dr Wilkes had said words to the effect that he should consider himself a permanent employee.

[20] The applicant was cross-examined about the examples he had provided which he claimed was indicative of his status as a permanent employee. It was put to the applicant that the decision as to whether he should represent the respondent at Fiji or Tonga related to the liability ramifications for the respondent. When asked if he thought that a temporary employee could not legitimately represent the respondent at those functions, the applicant stated that he ‘can’t speak to that in a technical sense’ 7 and stated that it was one of several indications that he was now permanent. It was further put to the applicant that Dr Wilkes had regularly issued Calvary business cards to temporary employees but the applicant denied knowing about it and reiterated his position that it was one of several indications that led him to believe he was permanent. In relation to the dinner where discussions took place around sourcing funds for a research project involving an MRI machine, it was put that he was involved because of his attributes as a fundraiser and a person with a good network. The applicant stated that it was not communicated to him in that way and that it led him to believe that it was part of an ongoing role. When asked if anyone had said that he was present at that dinner because he was a permanent employee, the applicant replied no but noted that it was a project that was going to take some time as the MRI machine would not be commissioned for several months. The applicant stated that this suggested to him a ‘future, a predictable future, of employment beyond 30 June’8.

[21] When asked about the reason for his vigorous and regular pursuit for the provision of the permanent contract if he had already believed he was permanent, the applicant explained that his ex-wife had wished to formalise their financial relations through the Family Court and it was thus important, in the process of negotiating how much he could afford and would be legally committed to pay, that he had something in writing. The applicant agreed that the projections for income included his ability to claim travel and accommodation expenses of around $40,000. He also claimed that given the effluxion of time following the receipt of the first permanent contract in January, he had wanted to ensure that what was finally offered would not vary considerably from what he had received under his temporary contract. The applicant claimed that he had asked Dr Wilkes, Dr Pelkowitz and Mr Prior about whether there was going to be a variance 9 and he was reassured by the doctors that it would remain the same. When asked if Mr Prior had said anything that would suggest he was permanent, the applicant stated that he did not give any reasons to suggest that he was not permanent.

[22] It was put to the applicant that if the permanent contract were to govern his employment, he would have found it ‘an impossible situation to deal with because of the financial shortfall’ 10. The applicant claimed that he would have signed the contract as it stood had someone given him that opportunity and that he had never rejected the contract. He noted that he sought a discussion with Dr Wilkes and Dr Pelkowitz, through the email of July 18, because he wanted to discuss the contract, not to reject it. When it was put that the financial arrangement under the permanent contract provided on 26 June was as far as the respondent could go in terms of increasing the remuneration, the applicant accepted that proposition but reiterated that he had never rejected the offer.

[23] Under further questioning, the applicant contended that he had had a discussion regarding the acceptance cut-off date with Dr Wilkes on 23 July and that he was the first person to inform him of the reason for the withdrawal of the offer.

[24] During re-examination, the applicant clarified that Dr Wilkes was a permanent employee of the respondent at the time he had received the email 11 dated 29 May 2011 sent from Dr Wilkes.

The Respondent’s Case

[25] Evidence for the respondent was adduced from four witnesses who each filed statements and were cross-examined during the hearing:

Mr Ray Dennis, Chief Executive Officer at Calvary

Mr David Prior, Human Resources Manager at Calvary

Dr Garry Wilkes, Director of Emergency Medicine at Calvary

Dr Allan Pelkowitz, Director of Medical Services at Calvary

Mr Dennis’ evidence

[26] Mr Ray Dennis, filed a witness statement 12 and was cross-examined. His evidence went to the decision to withdraw the offer of permanent employment. Mr Dennis contended that it is contrary to the respondent’s recruitment practice for any employee to be appointed to a new role without a further signed contract.

[27] According to Mr Dennis he was made aware of the applicant’s situation after Dr Pelkowitz informed him of it on 20 July 2012. It was his understanding that the applicant was given a permanent contract in late June 2012, that he had continued to work in his existing capacity past the expiry date of his temporary contract because it was “expected” that he would sign the permanent contract within a few weeks and that an email had been sent by the applicant on 18 July indicating that the remuneration arrangements under the contract were not suitable. Mr Dennis formed the view that there was no capacity to increase the remuneration proposed as it was the maximum that Dr Pelkowitz and Dr Wilkes had regarded as appropriate. According to Mr Dennis, he then agreed with Dr Pelkowitz’s recommendation to withdraw the offer as the applicant had indicated that the remuneration was not acceptable.

[28] Under cross-examination, Mr Dennis confirmed that he was ultimately the person who made the decision to withdraw the offer as he had accepted the advice provided by Dr Pelkowitz and Mr David Prior that based on the applicant’s circumstances, withdrawing the offer would be the most appropriate course of action to take. He explained that the applicant’s “circumstances” was that the applicant was not satisfied with the package as his accountant had advised him that he would be disadvantaged and based on that, the applicant wanted to discuss the matter further. Mr Dennis agreed that he had not communicated to the applicant at any time that the permanent contract needed to be signed by a particular date though he stated that on the basis of the 18 July email, the applicant had ‘in our view’ 13 declined that offer.

[29] In response to further questioning about the language used in the email, Mr Dennis agreed that “discuss” meant “discuss” and not “reject”. Despite not having seen the email at the time, he confirmed that he understood and was aware that the applicant wished to “discuss” the remuneration arrangements though he had already decided to withdraw the offer. He stated that the ‘line of discussion had been exhausted’ from the view of Dr Pelkowitz and Mr David Prior.

[30] It was finally put to Mr Dennis that the applicant would have continued to work if the offer had not been withdrawn. Mr Dennis did not entirely agree, stating that the applicant’s situation needed to be rectified ‘one way or another’ 14.

Mr Prior’s evidence

[31] Mr David Prior filed a statement 15 indicating that he had worked as Human Resources Manager at Calvary since June 2011 and was responsible for issues during the recruitment process and preparation of employment contracts. He stated that he had never said anything to suggest to the applicant that he was a permanent employee. Mr Prior stated that the applicant continued to ‘press’ him for a written employment offer from September 2011 and that on each occasion, he sought to reassure him that it would soon be prepared. He claimed that between February and May 2012, he referred the applicant back to Dr Pelkowitz when asked about the employment offer.

[32] According to Mr Prior, he was forwarded the email of 18 July by Dr Pelkowitz and based on that email, he thought the applicant would not accept the offer, given that he would be financially worse off. Mr Prior met with Mr Dennis and Dr Pelkowitz two days after to discuss the applicant’s employment in light of the email. During the meeting he expressed his view that the respondent could withdraw the offer as the applicant had not accepted it, and that subsequent to that occurring there would be no basis for the applicant’s employment to continue. The meeting was resolved with an agreement that Dr Pelkowitz would formally recommend to Mr Dennis that the offer to the applicant be withdrawn.

[33] It was also Mr Prior’s evidence that employment status was not a factor in the decision of whether the applicant would represent the respondent at an overseas conference as he recalled being asked to look into it from a public liability and professional indemnity perspective. He also stated that it was the applicant’s ability to get in contact with people who could provide ‘seed funding’ that generated his invitation to the dinner concerning a research project.

[34] During cross-examination, Mr Prior confirmed that the covering letter had not stipulated a time period for acceptance and that the offer did not have an expiry date. Mr Prior conceded that medical practitioners were able to commence work before signing their offer, as was the case with the applicant.

[35] In contrast to the applicant’s contention, the witness maintained his position that he had not said anything to the applicant about the paperwork being merely a formality. He also denied that he had said that an employer cannot unilaterally alter the terms and conditions of the applicant’s employment. Mr Prior agreed though that he did say, during his conversation with the applicant on 18 July, that it was not intended for him to be made worse off by the offer of permanent employment. In response to further questioning, the witness confirmed that he had not mentioned this conversation with the applicant in his meeting with Dr Pelkowitz and Mr Dennis.

[36] The witness was also cross-examined about the view he had expressed in the meeting on 20 July that the applicant had not accepted the offer. It was put to him that the applicant had accepted by performance as he worked post 30 June. He stated that it would have been on the same terms as the applicant’s temporary contract but conceded that the temporary contract did not provide for what should happen past its expiry. He agreed that the only thing that had changed leading to the withdrawal of offer was that the applicant had made an inquiry about his terms and conditions of employment. When asked whether he had advised the applicant that he needed to get the contract signed, he stated that he said to the applicant that he needed to communicate whether he was accepting or rejecting it and subsequently referred him to Dr Pelkowitz.

Dr Wilkes’ evidence

[37] Dr Garry Wilkes, Director of Emergency Medicine at Calvary, filed a statement of evidence 16 and was cross-examined. His evidence covered the process of interviewing and selecting candidates for the permanent role of Senior Specialist and also his involvement in that process, as chairperson of the interview panel, and his consultations with Dr Pelkowitz regarding remuneration arrangements under the employment contract subsequently issued to the successful candidates, including the applicant.

[38] According to Dr Wilkes, on 22 September, shortly after the conclusion of the interviews, he spoke in person or by phone to each of the successful candidates and said words to the following effect:

Congratulations. You were successful in the interview and the panel has recommended your appointment. The Board of Calvary will now make a formal decision to offer you the job and after that you will be given the contract to sign. You can negotiate the details with Dr Pelkowitz.

[39] After receiving the applicant’s email of 18 July, it was his evidence that he believed the applicant had considered the remuneration under the permanent contract to be ‘unacceptable’. He then had a discussion with Dr Pelkowitz on 20 July 2012 in which he stated that he was not in favour of any further increase to the applicant’s remuneration and that Dr Pelkowitz had agreed. Later that day, Dr Pelkowitz informed him that the offer to the applicant would be withdrawn, that the applicant had not accepted the offer and ‘there is no way that we are going to offer more money’ 17. Dr Wilkes then advised that he agreed with this course.

[40] It was also his evidence that he authorised the issuance of business cards for temporary employees on a regular basis particularly to those who were undertaking external liaison work for the respondent.

[41] Dr Wilkes gave oral evidence concerning the remuneration package offered by the respondent. It was his evidence that he became involved in discussions with Dr Pelkowitz in order to gain some consistency in the remuneration offered to employees. He stated that there was a relocation allowance (a sum of close to $50,000 in the collective agreement) which he had requested that he be allowed to use for travel instead of for the purpose of relocating as he had family in Perth and was still deciding on whether to relocate. This had been acceptable to the respondent at that time and when the applicant started work as a temporary employee, he was also on that arrangement. Dr Wilkes stated that during the discussion with Dr Pelkowitz, it was decided that for ongoing employees, the relocation allowance should only be used for the purpose of actually relocating and thus, no travel allowance would be paid.

[42] During cross-examination, the witness confirmed that he was a permanent employee at the time of accessing the relocation allowance. He conceded that after he had exhausted the relocation allowance towards his travel expenses, a decision was made with Dr Pelkowitz that going forth, it should only be used for purposes of relocating. He explained that the decision was to keep the travel and relocation allowances separate. Instead of the previous arrangement, the incentive provided would be an additional $30000 in salary with a 17 or 18% loading for allowances totalling approximately $50000 additional in salary which could be spent at the employee’s discretion. It was put to the witness that he was not a financial adviser and had not taken any financial advice in relation to the proposed arrangements. He agreed but stated that as head of the department, he was in a position to provide that advice which was subsequently confirmed within budget by the Chief Financial Officer. When asked, Dr Wilkes stated that he did mention there was going to be ongoing changes with remuneration but conceded that he did not inform the applicant that it would be reduced under the permanent contract.

[43] When cross-examined about the conversation he had with the applicant on 22 September. Dr Wilkes denied saying to the applicant that he was now permanent and that the written contract would merely follow as a formality. He claimed that he had never said that to anyone after an interview and that the formalities were essential. The witness was taken to two identical emails 18 he had sent to Dr Salter and Dr Bell which stated the following:

As expected you sailed through interview getting good scores on all questions from all. The only formality left now is to nominate the referees to Alicia as per the letter earlier this week. Once they are completed, the permanent contract will be issued.

Will be nice to have the formalities out of the way so we can get stuck back in to the task at hand.

[44] When it was again put to the witness that the words he claimed to have said to the applicant were not true, that the applicant had correctly depicted the conversation, he denied this and reiterated his position.

[45] Dr Wilkes was asked about the email of 18 July. He agreed that the applicant did not reject the offer but wanted to have a discussion and also that if the applicant was unhappy with the offer he could negotiate with Dr Pelkowitz. He also stated that he did not know whether the applicant had rejected the offer but noted that the email stated that the applicant did not believe the remuneration was sufficient. When asked, he stated that he did not clarify whether the applicant had rejected the offer and that he had not responded to the email advising him to negotiate with Dr Pelkowitz because the applicant would have been aware that it was Dr Pelkowitz with whom he should negotiate.

[46] During cross-examination, the witness also agreed that a conversation with the applicant took place by phone in which he had stated to the applicant that Dr Pelkowitz’s reason for his dismissal was because he had not accepted the offer by the specified cut-off date. He recalled that the applicant had stated that he could not see a cut off date but he did not check the applicant’s contract to confirm that because he did not have the contract.

Dr Pelkowitz’s Evidence

[47] Dr Allan Pelkowitz is the Director of Medical Services at Calvary. He filed a statement 19 and was cross-examined at the hearing. His evidence went to the process of recruiting doctors, the components of an employment contract and the changes to the use of the relocation allowance for travel expenses.

[48] It was his evidence that in September 2011, he had a discussion with Dr Wilkes regarding their preference forthe employment of permanent staff due to the costs involved with travel expenses for temporary employees. In or about January 2012, a written offer of permanent employment was provided to four successful candidates for permanent employment, including the applicant. The offer had been rejected by all. It was his understanding that the main reason for the rejection was that the reimbursement for travel would no longer be available under the permanent contract. Further negotiations with Dr Wilkes took place and the contract was revised so that there was an increase in salary to offset the loss of reimbursement. The final contract was given to the applicant in late June 2012.

[49] Dr Pelkowitz indicated that he was aware the applicant was provided with the contract in late June 2012 and that he had not signed it for 3 weeks. He had expected the applicant to sign the offer so he was not concerned that his temporary contract had expired. Upon receiving the email of 18 July, it was his interpretation that the applicant would only accept the offer if the terms were changed to provide better remuneration. As the remuneration proposed represented the maximum that the respondent could make, in consultation with Mr Prior, the decision was made to withdraw the offer.

[50] Under cross-examination, the witness agreed that the applicant’s temporary contract had expired on 30 June 2012. He also agreed that he had stated in his evidence that temporary and permanent employment must be in writing. When asked about the written agreement which covered the applicant after his temporary contract expired, the witness claimed there was an arrangement of continuity of work, the temporary contract had rolled over. In response to further questioning, the witness conceded that there was no term in the temporary contract that provided for the rollover.

[51] The witness agreed that the purpose of a covering letter provided with the contract was to set out important information. He conceded that the covering letter 20 did not contain advice concerning the need to sign the contract, which he had considered important, and that there was no specified date for acceptance. It was put to the witness that the covering letter stated the following ‘Before your first day, we ask that you complete the attached acceptance of appointment’. It was further put that the applicant had started work on 1 July. The witness agreed that the applicant attended for work on 1 July but that it was not under the terms of the permanent contract. He confirmed that he had not advised the applicant to not come into work until he had signed the offer.

[52] During cross-examination, the witness agreed that Mr Prior had not informed him, in their meeting on 20 July 2012, that two days earlier he had had a conversation with the applicant about the contract. He also claimed that the view expressed in his statement, that the applicant had not accepted the terms and that it was necessary to ‘regularise the position’, was the agreed view of Mr Prior, Mr Dennis and himself and that in the end it was his decision to provide that advice to Mr Dennis.

[53] When asked if the decision to withdraw the offer was a consequence of the email of July 18, Dr Pelkowitz agreed that that was the case. He claimed that the applicant wished to renegotiate the offer, which would put him in an inequitable position with other doctors. While he wished to maintain a uniformity of outcome in relation to remuneration for the doctors appointed on a permanent basis, he agreed that the respondent retained discretion in the changes to travel allowance and that on a case-by-case basis, further negotiations could take place. He explained that he did not inform the applicant that that was the maximum they could afford to offer because negotiations had been taking place for several months and doctors were aware that the position was final, there was no room for renegotiation. It was put to the witness that there were no negotiations that took place with the applicant. The witness agreed but stated that he negotiated with Dr Wilkes who was negotiating on a position that would be acceptable to the doctors taking into account the fact that the relocation allowance would no longer apply. When asked, he claimed that the applicant would have known that the final position had been reached because it would have been clear after nine months of negotiations.

Submissions for the Applicant

[54] It was put for the applicant that it was clear on the evidence that there was a termination at the initiative of the employer. The temporary contract ended on 30 June 2012. No provision of that contract provided for the terms and conditions of the temporary contract to continue until a further contract is entered into. It was argued that, in the absence of such a provision, once the temporary contract came to an end and the employee continued to turn up for work and was paid, the position was that a contract of employment of indefinite duration took effect.

[55] Additionally, in this case, the applicant had been interviewed for, and been told he was successful in gaining, a permanent position. From that time the applicant believed that he was permanent. It was put that Dr Wilkes had ostensible, if not actual, authority to offer the applicant the permanent position. It was the applicant’s primary position that from 22 September 2011 he was engaged on an indefinite permanent basis but in the alternative, that situation was in place from 1 July 2012.

[56] According to the applicant’s representative there was no doubt that the applicant’s termination was at the initiative of the employer. All the relevant representatives of the respondent were aware that the applicant’s temporary contract had ended and that the applicant had continued to be rostered for work and to be paid. It was also their evidence that the reason that the offer of permanent employment was withdrawn was the email sent by the applicant on 18 July 2012.

[57] It was contended that the email did not in any way reject the offer of employment but merely asked to discuss the offer, which was perceived by the applicant as a unilateral variation of the terms and conditions of his employment

[58] It was argued for the applicant that there was no requirement that the permanent contract of employment be signed, and that the applicant was either on an indefinite contract on the same terms as his temporary contract once that contract expired, or must be taken to have accepted the terms of the contract offered on 26 June 2012 by continuing to work after 30 June.

[59] The decision in Davis v RMIT University Student Union (Davis) 21 was distinguished on the ground that unlike this case that matter concerned a situation that “...was not a mere continuation of the employment beyond a fixed term such as might have led to an inference that the employment will become indefinite.”22 The applicant in this matter had been made an offer of permanent employment whereas in Davis the only offer was of further temporary employment.

[60] Finally it was noted that the respondent had not claimed that there were any concerns so far as the applicant’s performance was concerned, and it appeared that the only ground for termination was the purported withdrawal of the contract. In the circumstances it was put that the termination must be harsh, unjust and unreasonable and claims made by the respondent in the written submissions that the contract was withdrawn for financial reasons were not supported by the evidence. Dr Pelkowitz’s evidence had been that the contract was withdrawn in a desire to maintain a uniformity of outcome in relation to remuneration for the doctors appointed on a permanent basis. It was put that in the absence of any suggestion of loss of confidence or concerns about the applicant’s clinical skills there was no reason why reinstatement was not appropriate.

Submissions for the Respondent

[61] The respondent did not dispute that at the relevant time the applicant was a person protected from unfair dismissal, the respondent was not a small business employer and there was no issue of genuine redundancy.

[62] In the submission of the respondent there were three issues requiring determination:

whether the applicant was dismissed within the meaning in s.386 of the Act;

if so, whether that dismissal was harsh, unjust or unreasonable within the contemplation of s.385(b) of the Act; and

if the answer to the second question is "Yes" - what remedy ought properly to be granted to the applicant.

[63] As concerns the question of whether there was a dismissal at the initiative of the employer the respondent contended that this requires both an examination of the actions of the employer that are said to have brought about the termination, but also the ascertainment of the terms of the employment contract to which the employer and the employee were parties at the relevant time. The latter was necessary as it is possible for a person's employment to terminate due to the operation of a term of the contractual relationship, and that termination does not then take place on the initiative of the employer. It was submitted that this was the finding in Davis ultimately affirmed on appeal.

[64] It was noted for the respondent that the parties agreed that the applicant had worked from 1 July 2012 until 23 July 2012 and that the work must have occurred pursuant to a contract. It was common ground that the contract for that period was not written given that the temporary contract signed in June 2011 had expired, according to its terms, on 30 June 2012 and the applicant had not accepted the terms of the written contract provided to him on 26 June 2012.

[65] The respondent contended that the terms of the unwritten contract for the work performed in July 2012 must be inferred from the imputed intention of the parties 23.

[66] It was the respondent’s position that there could be no finding that an informal contract for permanent employment was created in September 2011 when the applicant was informed by Dr Wilkes that he had been successful in his interview for a permanent position given;

the applicant was not told he should regard himself as a permanent employee;

the evidence of the need for the preparation and signature of a written contract;

the evidence contradicting the applicant’s claims of the circumstances suggesting he was treated as a permanent employee after September 2011;

the evidence of the different conditions and remuneration applicable to temporary and permanent contracts such that it was unlikely that the respondent would offer a permanent contract on the same terms as a temporary contract;

the evidence of the drawn out negotiations over the terms of contract for permanent employment which would have been rendered unnecessary had an informal contract for permanent employment been concluded;

the evidence that the applicant had continued to request the provision of a written contract;

[67] It was also the respondent’s position that the fact that the applicant continued to work after the expiration of the temporary contract did not automatically bring into existence a permanent contract on the same terms and conditions that had been attached to the temporary contract. It was put on the basis of the relevant authority 24 that whether an implied or tacit agreement to continue dealing on the same terms (save for termination on notice) should be inferred, is an evidentiary or factual question requiring an examination of the overall conduct of the parties.

[68] According to the respondent such an inference was not safe as the applicant had been given a draft written contract for permanent employment on 26 June, following a process where at least one attempt at reaching an agreement on remuneration had not been acceptable to the doctors. The applicant’s evidence that he was not involved in the negotiations was noted, as was the evidence of Dr Wilkes that he had been attempting to broker a deal between the specialist doctors and the respondent in relation to remuneration and travel reimbursement which was consistent and equitable. Against that background the applicant had been given a draft contract on 26 June which contained terms different from those applying to his temporary employment.

[69] In circumstances where the evidence supported neither scenario suggested by the applicant it was the respondent’s submission that what was clearly intended by the parties was that, having provided the applicant with a final draft contract on 26 June, it was intended that the applicant would continue to work under an unwritten contract with the financial benefits that applied under the fixed term contract so as to permit the negotiations for permanent employment to be concluded. It was the respondent’s contention that it was a term of that contract that once the offer, which was then open and under consideration, was rejected or withdrawn then the basis for that employment ceases, and the employment then terminates through the operation of the contract in a manner akin to the contract that was dealt with in the Davis case. It could not be the position that what had occurred was just a “holding over” as the applicant had been provided with the draft contract in relation to the offer of permanent employment. It was put that the circumstances of this case were the same as those in the Davis case in respect of which SDP Kaufman stated:

Those cases are of little assistance in the circumstances of this matter because the employment did not just continue after the expiration of the term, it only continued whilst negotiations as to its continuation were taking place and ended when no agreement was reached. 25

[70] It was the respondent’s submission that it followed that there was no dismissal at the initiative of the employer. Further, it was put that the matters concerning the fairness of the process surrounding the withdrawal of the offer of permanent employment had no relevance to the question of whether or not there was a termination at the initiative of the employer. If it is accepted that such a contract existed as at 23 July then it must follow that termination of that contract occurring in the circumstances in which it did was not harsh, unjust or unreasonable, assuming that a finding of some relevant dismissal is found.

[71] On the basis of the decision of VP Watson in Maswan v Escada Textilvertrieb 26 it was argued that it is available to the Commission to consider whether or not there was a valid reason for a termination in circumstances other than matters which go to the conduct or capacity of the employee, and that it is open to the respondent to argue that the termination of the applicant’s contract was not unfair in the statutory sense. It was put that the consequences of maintaining the applicant in his employment with the conditions attaching to his temporary contract would have been burdensome to the respondent.

[72] It was ultimately the respondent’s position that the applicant had enjoyed a period of temporary employment and then continued working while negotiations took place that ultimately proved to be unfruitful. In these circumstances the outcome could not be found to be harsh, unjust or unreasonable. If in fact the termination were found to be unfair it was apparent that reinstatement would not be an appropriate remedy since the applicant could not be reinstated into the position that he was in at the time of his termination as that contract existed only for the purpose of allowing the negotiations on the permanent offer to proceed.

Applicant in response

[73] The applicant’s representative disputed that the applicant had been in negotiations concerning the permanent contract. It was contended that the evidence showed that the negotiations had been between Dr Wilkes and Dr Pelkowitz. On that basis it was put that there was nothing in the evidence that supported a finding that a contract existed after 30 June 2012 for the purposes of allowing negotiations to occur over the terms of a permanent contract.

[74] It was the applicant’s position that there was either a contract of indefinite duration, the terms and conditions of which were the terms and conditions of the temporary contract or there was an offer of employment made to the applicant on 26 June 2012, and that by turning up for work after the temporary contract expired the applicant accepted the offer made on 26 June. It was the applicant’s submission that the Commission should accept the latter proposition.

Respondent in reply

[75] It was submitted by the respondent that the claim that the applicant had accepted the contract of 26 June 2012 by attending for work after the temporary contract had expired was not one put in the original submissions of the applicant or supported by the evidence of the applicant himself, who had indicated that he was not satisfied with the financial terms of the 26 June contract.

CONSIDERATION

Was there a termination at the initiative of the employer?

[76] It was argued for the respondent that there was no termination at the initiative of the employer as the applicant was employed on a fixed term contract which had expired on 30 June 2012. A new contract (on the same terms as the original fixed term contract) had then operated to allow the parties to attempt to complete a contract of permanent employment. That contract had ended when the offer of permanent employment was withdrawn on 23 July 2012. In support of this position the respondent relied on the decisions in the Davis case at first instance 27 and on appeal28.

[77] In the decision at first instance, SDP Kaufman found that there was no termination at the initiative of the employer as follows:

[32] Section 386 deals with the meaning of “dismissal”. Having found that Ms Davis was not engaged under a contract of employment for a specified time, the saving in s 386(2) does not apply. I do not accept the submission of Mr J Pesutto, who appeared for RUSU, that for the period from 8 August 2010 Ms Davis had been employed for a specified task until the issue of her employment status had been resolved, nor that a period of employment had been specified so that it could be said that she had been employed under a contract of employment for specified period of time. The time of this particular period had clearly not been specified, albeit that it may be inferred, as Mr Pesutto submitted, that the period would end either when an agreement had been reached or when agreement was unable to be reached.

[33] This then leads to a consideration of whether Ms Davis’ employment had been terminated on the employer’s initiative so as to enliven the jurisdiction of Fair Work Australia. Because there were no express terms governing the employment relationship that commenced with the expiration of the 8 June to 8 August fixed term contract, it is necessary to find those terms by inference. I have already described what I found to be the terms of the contract; it, and Ms Davis’ employment would terminate if she did not accept RUSU’s offer.

[34] When, on 31 August 2010, Ms Davis rejected RUSU’s offer that rejection brought her employment to an end in accordance with the terms of the contract. In my view, Ms Davis’ employment ended by operation of the implied terms of the contractual relationship that was in force from 8 August 2010. RUSU’s letter of 2 September merely acknowledged what had occurred.

[35] It follows that there was no termination on the employer’s initiative. 29

[78] On appeal the Full Bench confirmed the finding at first instance:

[16] It was also contended by the Appellant that the Senior Deputy President erred in finding that she had accepted the fixed term contract offered by the Respondent from 8 June to 8 August. It was said that this conclusion was not supported by the evidence which included that the Appellant had advised her supervisor that she did not intend to accept further temporary employment. We have examined the evidence before the Senior Deputy President as to the circumstances relating to the Appellant’s employment from 8 June to 8 August. We consider that the Senior Deputy President’s conclusion that the Appellant had accepted the fixed term contract was open on the evidence before him and was the correct finding. There was ample evidence to support a finding that the Appellant had accepted the contract by conduct (see D’Ortenzio v Telstra Corporation (No.2) (1998) 82 IR 52). In this regard we also note the evidence concerning the request made by the Appellant on 7 July 2010 for her employment to be changed from temporary to permanent. 30

[79] In the Davis case the employee was offered a further fixed term contract and continued to work despite indicating that she did not wish to enter into another fixed term arrangement. The employment ended when the employee refused to accept the new fixed term contract in the time period allowed by the employer. In those circumstances it was found that by continuing to work she had agreed to the terms of the contract offered by the employer to cover the period while she considered the offer of further fixed term employment. There was no termination at the initiative of the employer as that interim contract was brought to an end by Ms Davis’s refusal to accept the new fixed term arrangement and not by any action of the employer.

[80] In this matter I am satisfied that at the time the applicant’s employment was terminated he was covered by a contract of employment that came into existence at the expiration of his fixed term contract.

[81] I do not accept the proposition that the applicant became a permanent employee of the respondent in September 2011. In my view, the applicant could not reasonably have considered that he had become a permanent employee of the respondent merely because he had been successful at the interview. I accept the evidence of Dr Wilkes that it was his practice to congratulate the successful applicants and advise them that they would be made permanent once the necessary paperwork was completed.

[82] The evidence concerning the protracted negotiations over the terms of the permanent contract was such that I cannot accept that the applicant believed that he had been offered, and had accepted, a permanent contract on the same terms as his temporary contract. While I accept the evidence that the applicant did not take a prominent role in the negotiations surrounding the conditions attaching to the permanent positions, I do not accept that he was unaware that these negotiations were taking place. The evidence is clear that he continued to request the provision of a written contract during 2012. He admitted to receiving a copy of the first draft of the contract that was issued in early 2012 and then withdrawn and it did not come as a surprise to him when he was given the final contract in June 2012. The evidence supports a finding that the applicant remained covered by his fixed term contract until 30 June 2012.

[83] Similarly I do not accept the applicant’s submission that by continuing to work after 1 July 2012 the applicant indicated his acceptance of the permanent contract that had been offered on 26 June 2012. He did not notify the respondent of any such acceptance and instead, indicated that he wished to have further discussions about the remuneration that had been offered to him.

[84] The contract for permanent employment was offered to the applicant on 26 June and the attached covering letter stated ‘On, or before, your first day, we will ask that you also complete the attached Acceptance of Appointment’ 31. I understand that advice to mean that he would be unable to commence work under the terms of that contract until it was signed. The situation that applied was the same as that in the Davis case. A new (unwritten) contract was created to allow a reasonable period for the applicant to consider and accept or reject the offer made by the respondent. The terms of the contract were the same as applied under the temporary contract but the term was not defined.

[85] The circumstances of this case, while similar, are not identical to the circumstances of the Davis case and differs in one vital respect. In both cases the employee had been covered by a fixed term contract which had expired. In Davis, however, the applicant refused the offer of further employment, thus bringing the interim contract to an end. In this case the applicant queried the remuneration attaching to the offer and requested further discussions. The respondent then withdrew the offer of permanent employment and terminated the interim contract. In such a circumstance, I find that the termination of the applicant’s employment was at the initiative of the employer. There was no time limit put on the applicant’s acceptance of the offer made on 26 June. Had there been, and the applicant had failed to indicate his acceptance by that time, the contract would not have been terminated by the action of the employer. In circumstances where the applicant did not refuse the offer and the offer was withdrawn by the employer then there is a dismissal within the meaning of s. 386(1)(a) of the Act.

Was the dismissal unfair?

[86] Having found that there is a dismissal within the meaning of s.386 of the Act and given that there is no suggestion that the applicant was not a person protected from unfair dismissal at the time of the termination, I must consider whether the dismissal was unfair.

[87] In determining this matter I have had regard to the factors set out in s.387 of the Act.

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)

[88] The respondent’s case is that it did not dismiss the applicant for any reason relating to his capacity or conduct but merely made a decision to withdraw an offer of permanent employment. Once the offer of permanent employment was withdrawn the contract that had been brought into existence in order to allow the consideration of that offer necessarily terminated.

(b) whether the person was notified of that reason

[89] The applicant was notified that the offer of employment was withdrawn and that his employment would cease. He was not given any reason for the decision to withdraw the offer.

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[90] This criterion has no application in this matter

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[91] This criterion has no application to this matter.

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[92] This criterion has no application to this matter.

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

[93] The respondent is a large hospital and, as such, it is not likely that its size would impact on the procedures followed in effecting the dismissal.

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal

[94] The respondent has dedicated human resource management expertise and it is clear that this expertise was accessed for the purposes of effecting the dismissal. The evidence is clear that the Human Resources Manager, Mr Prior, was consulted at the time the decision was taken to withdraw the offer and terminate the applicant’s employment.

(h) any other matters that FWA considers relevant.

[95] Given the peculiar circumstances attaching to this matter it is the other matters that are particularly important. In determining whether the dismissal was unfair I have taken into account:

The applicant was employed by the respondent for a period of 12 months on a fixed term contract;

In September 2011, only 3 months after commencing his fixed term contract, the applicant was successful in his application for a permanent position with the respondent;

Through no fault on the part of the applicant it took a full 9 months for a contract setting out the terms and conditions of the offer of permanent employment to be made;

The offer of permanent employment did not set out any date by which acceptance or otherwise was to be advised;

No advice was given to the applicant that the offer would be withdrawn if not accepted within any particular period;

The offer was withdrawn merely because the applicant had requested to discuss further the remuneration under the contract;

The applicant was never advised that the offer was made on a take it or leave it basis;

The respondent did not give the applicant any opportunity to accept the offer as an alternative to withdrawing it; and

Importantly, the offer was withdrawn less than four weeks after having been made in circumstances where a full 9 months had been taken to formulate the offer.

[96] Taking into account the above matters, I have reached the conclusion that the withdrawal of the offer of permanent employment without allowing the applicant an opportunity to make a decision whether or not to accept the offer as presented was harsh. As that action brought about the termination of the applicant’s employment I find that the dismissal was, therefore, unfair.

Remedy

[97] The relevant sections of the Act are as follows:

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

Note: subsection 392(5) indexed to $61,650 from 1 July 2012

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

[98] The requirements of ss.390(1) and (2) are satisfied.

[99] I have noted that the applicant seeks reinstatement. In determining whether an order for reinstatement is appropriate I must also take into account the provisions of s.391 which require an order for reinstatement to either reappoint a person to the position in which the person was employed immediately before the dismissal or to another position on terms and conditions no less favourable.

[100] Given the nature of the contract under which the applicant was employed immediately before the dismissal I have reached the view that reinstatement is neither practical nor appropriate. I cannot reinstate the applicant to a permanent position as he did not hold one. The applicant’s temporary contract ceased on 30 June 2012. There is no utility in appointing the applicant to a position which no longer exists, that is, the contract created for the purpose of allowing the applicant to consider whether he would accept the offer of permanent employment. Once that offer was withdrawn that contract ceased. There is no position that can be considered equivalent to that occupied by the applicant at the time of the dismissal. The applicant did not have a permanent position with the respondent at that time.

[101] In accordance with s.390(3), as reinstatement is inappropriate, I am able to make an order for compensation and I consider that it is appropriate to make such an order.

[102] So far as the provisions of s.392(2) of the Act are concerned, I take into account the following:

No submission was made concerning the effect any order of compensation might have on the respondent but it is unlikely to impact to any great extent on an employer the size and nature of the respondent;

The applicant was employed for less than 13 months by the respondent;

Had the applicant’s employment not been terminated it is likely that he would have continued to be remunerated under the terms set by the fixed term contract for any period of employment ending with his acceptance or refusal of the offer of permanent employment;

The applicant gained other employment following the termination: that employment was not permanent, was at a lower rate of remuneration and not in a convenient location;

Information has been provided concerning the applicant’s earnings through other employment from the time of the dismissal until 19 October 2012. No information has been provided in relation to his earnings since that date.

[103] In the absence of the information required to be taken into account pursuant to s.392(e)-(f) of the Act, I am unable to finally determine the amount of compensation that should be awarded.

[104] I direct that the applicant provide, within 7 days of the date of this decision, the information set out in s.392(e)-(f) of the Act. Upon receipt of that information I will make an order for compensation if appropriate.

COMMISSIONER

Appearances:

Mr M. Spry, of Counsel, for the Applicant.

Mr D. Cross, solicitor, for the Respondent.

Hearing details:

2013.

Canberra:

January 30, 31.

1 Exhibit S1, Attachment G.

2 Exhibit S1, Attachment H.

3 Exhibit S1.

4 Exhibit S1 at Paragraph 15.

5 Above n 2.

6 Transcript PN 70.

7 Transcript PN 124.

8 Transcript PN 139.

9 Transcript PN 149.

10 Transcript PN 253.

11 Exhibit S2.

12 Exhibit C1.

13 Transcript PN 395.

14 Transcript PN 408.

15 Exhibit C2.

16 Exhibit C3.

17 Exhibit C3 at Paragraph 50.

18 Exhibit S3.

19 Exhibit C4.

20 Exhibit S1, Attachment A.

21 [2010] FWA 9968.

22 Davis v RMIT University Student Union[2010] FWA 9968 [24].

23 Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410.

24 Brambles Ltd v Wail [2002] VSCA 150.

25 Above n 22, [27].

26 [2011] FWA 4239.

27 Davis v RMIT University Student Union[2010] FWA 9968.

28 Davis v RMIT University Student Union[2011] FWAFB 1992.

29 Above n 27, [32]-[35].

30 Above n 28, [16].

31 Above n 20.

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