Gapes v Commercial Bank of Australia Ltd

[1980] FCA 26

Re: ROBERT LESLIE GAPES
And: THE COMMERCIAL BANK OF AUSTRALIA LIMITED (1980) 41 FLR 27
No. V11 of 1979
Industrial Law - Conciliation and Arbitration

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIAN DISTRICT REGISTRY
INDUSTRIAL DIVISION
Smithers(1), Evatt(1) and Deane(2) JJ.

CATCHWORDS

Industrial Law - obligation to pay salary under award - refusal of performance of part of duties of employment - continuation of the contract of employment notwithstanding such refusal - relationship of award to contract of employment - penalty. Conciliation and Arbitration Act 1904, s.119.

Conciliation and Arbitration - Award - Provision as to salary - Failure by employee to perform obligations under contract of employment - Entitlement of employee to salary under award - Breach of award - Penalty - Conciliation and Arbitration Act 1904 (Cth.), s. 119.

HEADNOTE

The appellant was employed by the respondent under a written contract of employment which provided that he should "diligently perform all duties and tasks which may devolve upon him or which any authorised officer may entrust to him or request him to perform". The appellant's employment was governed by the Bank Officials (Federal)(1963) Award ("the award") which by cl.6 prima facie entitled him to be paid a specified annual salary. Clause 12(c) of the award entitled the respondent to make a deduction in respect of every hour or part thereof that an employee "has been absent from duty without the consent of the bank during the period in respect of which the salary is paid". The respondent failed to pay the appellant three days' salary when on those days as part of an industrial campaign as a union member he declined to perform certain of his ordinary duties of a significant nature. The trial judge dismissed a summons by the appellant against the respondent for the imposition of a penalty under s. 119 (1) of the Conciliation and Arbitration Act 1904 in respect of an alleged breach of the award and seeking other relief.

On appeal,

Held: (1) The respondent had not been entitled to make the deduction from the appellant's salary because: per Smithers and Evatt JJ. - (a) the award created an unconditional obligation to pay the relevant salary which persisted while the relevant status of employment continued. The actions of the appellant did not touch the respondent's obligations under the award to make the relevant payments and would only give rise to a remedy in damages for breach of contract. Australian National Airlines Commission v. Robinson, (1977) VR 87, distinguished. (b) Once a relevant contract of employment existed, the award governed the amount of salary, the times of payment and the circumstances under which it had to be paid.

Per Deane J. - (c) The express terms of the award that the appellant was entitled to be paid a salary could not be qualified by an implication that he was only so entitled while he remained ready, willing and able to carry out in full the contract of employment. Such an implication would be inconsistent with the terms of the award.

(2) Clause 12 (c) of the award was not applicable because: per Smithers and Evatt JJ. - (a) It applies to circumstances where the absence of the employee is essentially his own voluntary act and accordingly would not have applied even if the respondent had excluded the appellant from carrying out the performance of his duties that he undertook.

Per Deane J. - (b) The appellant was performing the duties which he performed with the consent of the respondent and thus was not "absent from duty"

(3) Appeal allowed.

HEARING

Melbourne, 1979, December 4-5; 1980, March 13. #DATE 13:3:1980

APPEAL.

The facts appear from the judgment of Deane J.

H. T. Nathan and S. Morris, for the appellant.

J. Sher Q. C. and C. N. Jessup, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Lachlan Riches.

Solicitors for the respondent: Moule, Hamilton & Derham.

T. J. GINNANE

ORDER

1. THE COURT ORDERS:

That the appeal be allowed.

2. THE COURT FINDS:

That the respondent committed a breach of the terms of the Bank Officials (Federal)(1963) Award (as varied) by making a deduction in respect of 31 October and the 1st and 3rd days of November 1978 from the salary payable under the award in respect of a period including those days.

3. THE COURT ORDERS:

(a) that the respondent pay the sum of $142.37 to the appellant;

(b) that the respondent pay a penalty of $25; and

(c) that the penalty be paid into the Consolidated Revenue Fund.

JUDGE1

We have had the advantage of reading the reasons for judgment in this matter of our brother Deane J. We agree with his conclusion that on the facts of this case, which are set out in his reasons, nothing had occurred which entitled the respondent to make a deduction from the salary of the appellant in respect of the three days during which he refused to perform certain of his duties of his employment category. Accordingly the appeal must be allowed.

We agree also with the reasons which led Deane J. to interpret the award in the way he did. We desire however to make the following observations because we are unable to satisfy ourselves that had the respondent rejected part performance of the duties of the appellant and excluded him from carrying out such part performance clause 12(c) of the award would have been applicable. This is because we feel that clause 12(c) is directed to circumstances where the absence of the employee is essentially his own voluntary act.

The learned trial Judge took the view that because during the relevant period the employee was not ready and willing to perform certain significant items of his duties the obligation under the award to pay the salary therein provided for was modified to the extent that the employer was relieved from payment of a portion of the fortnightly instalment of annual salary payable under the award, the portion being calculated in respect of the days during which the employee was not ready and willing to perform all his duties.

The obligation under the award to pay a salary depends upon its terms express or implied. If the terms of the award provide unconditionally for the payment of a yearly salary in stated proportions at stated times during the continuance of the relevant relationship of employer and employee, it is not to the point that at common law, obligations to pay salary under a similar class of contract to which no award was relevant, might have been regarded by the law as conditional on a particular degree of work performance. Where there is an award applicable to a contract of employment it is necessary to ascertain what the award does provide expressly or impliedly about payment of remuneration.

When one looks at this award one finds save in clause 12(c) thereof no hint that non-performance of part of the duties of a particular category of employment will justify a reduction in salary. On the proper construction of the award the obligations created therein with respect to payment of salary do not depend upon actual performance of particular duties. Accordingly there being a state of employment to which this award is applicable the obligation to pay salary as and when provided therein is not conditional on work performance. The obligation persists while the relevant state of employment exists. In this case the state of employment in the relevant category was in existence at all relevant times because while the employee was performing duties appropriate to his classification, although not all of such duties, and the employer was accepting such performance, it could not be said that the relevant state of employment did not exist. The employee was not dismissed and he had not resigned.

Once there is a contract of employment of such a nature that the terms of an award are applicable to it, then, so far as the award speaks the terms of the award must be obeyed. Normally, as in this case, the terms of employment specifying for example, whether hourly, weekly or otherwise, and the payments to be made are prescribed in the award. The award may specify whether the employee's remuneration shall be earned hourly, weekly or otherwise and whether that remuneration is payable periodically as part of a salary in a particular classification of employment. In cases of the latter kind the obligation to pay salary as and when it is expressed to be payable could be made conditional on performance of all the duties of an employee in the relevant classification of employment or it may be created subject to no such condition. In this case it is impossible to find any factor by reference to which the obligation to pay salary, being expressed absolutely, may be construed as subject to an implication that the obligation to pay is conditional on the duties of the employment being performed to some lesser or greater degree.

This does not mean that breach of the promise of the employee to perform his duties is not a breach of contract with appropriate legal consequences. It only means that the breach does not touch the obligation under the award to make the specified payments of salary. The remedy will be in damages to be measured according to the loss suffered by the employer as a result of the breach. That may be minor or major according to circumstances. Where some or most duties of an employment are performed and others are not it would be an unusual case where the measure of damages suffered by the employer equalled an amount calculated, for instance, on the basis of the proportion to the total period of employment of the number of the days during which the employee's default continued. Deduction of a sum so calculated would normally be inappropriate in the case of an employment on annual salary payable periodically even where no award was involved.

In the judgment appealed from particular reference is made to the observations of the Chief Justice Sir John Latham in Amalgamated Colleries of W.A. Ltd. -v- True (1938) 59 C.L.R. 417 at pp. 423-424 in the following terms, namely: -
"When any person is employed to do work to which an award applies, the parties are bound by a contract. Their legal relations are in part determined by the contract between them and in part by the award. The award governs their relations as to all matters with which it deals. . . . . . .

But an award never deals with all the matters which affect the relations of any particular employer and any particular employee. The creation of the relation of employer and employee depends upon an agreement between them and not upon any award. Thus the existence of the obligations under an award in relation to a particular employer and employee always depends on the existence of a contract between them. So, also, there are terms of their relationship which do not depend upon any award. For example, the employee must always obey the lawful orders of his employer, but awards do not commonly include a term to that effect. In my opinion however, it is unnecessary in this case to work out in detail the basis of the relations created by employment under an award. For the purposes of this case it is sufficient to refer to what was said in a unanimous judgment of this court in Mallinson -v- Scottish Australian Investment Co. Ltd. (1920) 28 C.L.R. 66 at p.73: 'Apart from the Act' (The Commonwealth Conciliation and Arbitration Act) 'the right to receive wages sprang from the existence of the relationship of master and servant and the performance of services therein, and notwithstanding the Act it is still the existence of this relationship and the performance of services therein which confers on the employee the right to remuneration - all that the Act has done in this respect is to substitute another method of determining the amount of remuneration.'"

But we do not think these observations of the Chief Justice throw doubt on our views expressed in these reasons. The problem in each case is to identify the topic with which the award deals and to ascertain what it says on that topic. It is the provision made by the award on that topic which governs. It is clear that one topic with which this award deals and therefore governs embraces the amount of salary, the times of payment of the components thereof, and the nature of the obligation to pay such components as and when specified in the award, namely whether that obligation is conditional or unconditional. Every obligation in the award is conditional on the existence of at least, a contract of employment. But once that condition is fulfilled the award operates and governs the obligations of the parties to the extent that it deals therewith.

In this case the award was operative throughout the period relevant to the issues in these proceedings because there was in existence throughout that period a state of employment arising out of a contract of employment. The critical issue between the parties was therefore whether, according to the terms of the award properly construed, there was created an unconditional obligation to pay on the date specified for payment, the fortnightly component of salary falling due under the award in respect of the fortnight during part of which the employee was in default in respect of performance of part of his duties. In our opinion the award properly construed did create an unconditional obligation to pay the fortnightly component on the date provided in the award for payment thereof.

Whether when an employee refuses to perform a significant part of his duties and the employer rejects performance of the remaining part of the duties and excludes the employee from rendering such part performance, the state of employment upon which the relevant obligations under the award depend, has come to an end or is suspended is a question that does not arise here. Such a situation is in substance that which existed in Australian National Airlines Commission -v- Robinson (1977) V.R. 87. The decision in that case played a significant part in the judgment of the learned Judge. But in this case the employer did not reject part performance. Accordingly the state of employment upon which the obligations of the award depended continued at all times.

We agree in the order proposed by our brother Deane J.

JUDGE2

This is an appeal from a decision of Northrop J. dismissing proceedings brought by the appellant, Robert Leslie Gapes, against the respondent, The Commercial Bank of Australia Limited ("the Bank"), pursuant to s.119 of the Conciliation & Arbitration Act 1904 ("the Act") for the imposition of a penalty in respect of an alleged breach or non-observance by the Bank of the Bank Officials' (Federal) (1963) Award ("the Award"). The alleged breach or non-observance of the Award was the failure of the Bank to pay to the appellant that part of his salary which related to 31 October, 1978, 1 November, 1978 and 3 November, 1978. The appellant also seeks, pursuant to s.119(3) of the Act, an order that the Bank pay to him the amount of the alleged under-payment of his salary.

The appellant was, at relevant times, in his fifth year of adult service with the Bank. He was acting as accountant at the Bank's Bairnsdale (Vic.) Branch. His employment was governed by the terms of the Award which was binding on both the Bank and himself. On 31 October, 1978, 1 November, 1978 and 3 November, 1978 he refused to perform certain of the ordinary duties of the position of accountant in which he was acting. This refusal was in conformity with an industrial campaign which was being waged by the Australian Bank Employees' Union of which he was a member. The duties which he declined to perform were found by Northrop J. to be "significant in the sense of not being trivial or of no substance". Otherwise, apart from a period of half an hour at the commencement of work on 31 October, 1978, he performed the ordinary duties of accountant at the Bairnsdale Branch on each of those three days. The Bank has refused to pay to the appellant so much of his salary as is referable to the three days in question.

Under Clause 6 of the Award, the appellant, as an officer of the Bank in his fifth year of adult service, was entitled to be paid a "salary per annum" of $9453. The appellant was also entitled to a special above award allowance of $175 per year. At relevant times he was entitled to be paid at the higher salary rate applicable to the position of accountant in which he was acting. For present purposes however, the important consideration is that the Award provided that the appellant was to be remunerated on the basis of an annual salary. It is not suggested by either party that the particular rate applicable at the relevant time will have any effect on the outcome of the appeal apart from the quantification of any amount which the Bank might be ordered to pay to the appellant in the event that the appeal succeeds. It is common ground between the parties that, in that event, the amount which the Bank should be ordered to pay to the appellant is $142.37.

Prima facie, the Award entitled the appellant, while he remained in the employ of the Bank, to be paid the annual salary appropriate to the capacity in which he was acting. The only express provision in the Award which could arguably be suggested, in the circumstances of the present matter, to absolve the Bank from the obligation to pay the appellant in respect of the relevant three days is to be found in Clause 12(c) which entitles an employer Bank to make a deduction in accordance with a formula in respect of every hour or part of an hour that an employee "has been absent from duty without the consent of the Bank during the period in respect of which the salary is paid". Senior counsel for the Bank initially conceded that the provisions of that clause were inapplicable to the circumstances of the relevant three days. Subsequently however, that concession was, at least partially, withdrawn. I propose to deal with the appeal on the basis that the Bank relies, inter alia, upon the provisions of Clause 12(c) to justify its refusal to pay to the appellant his salary for the three days in question.

The contract of employment between the appellant and the Bank was in written form. It provided, in terms, that the appellant should "diligently perform all duties and tasks which may devolve upon him or which any authorized officer may entrust to him or request him to perform". The terms of the Award operated upon that contract in the sense that the Award governed the terms of employment which the contract, and not the Award, created. To the extent that there might be express or implied inconsistency between the terms of the Award and the terms of the contract of employment, the terms of the Award prevailed. Otherwise, both appellant and Bank were bound by the terms of the contract between them. There was nothing in the Award inconsistent with the abovementioned provision of the contract of employment. In refusing to perform part of the ordinary duties which had devolved upon him, the appellant was in breach of the terms of that provision of that contract.

If, when the appellant refused to perform a significant part of his duties, the Bank had simply directed him to refrain altogether from working in his job, I would have been of the view that the appellant was not entitled to be paid his salary during any period in which he was absent from his duties in accordance with that direction or in which he performed some of his duties in defiance of the Bank's continuing direction to abstain from working altogether. An employer is entitled to decline the services of an employee who refuses to perform significant parts of the job which he is employed to do, at least for so long as that refusal of the employee persists. The appellant would, in my view, have been "absent from duty" for the purposes of Clause 12(c) of the Award during any period in which he refused to carry out a significant part of his duties and was, as a result, either excluded altogether from the performance of his duties or working in defiance of an instruction from the Bank to abstain from working in his job altogether.

In the present case, the Bank initially refused the appellant's services altogether by instructing him to leave the Bank's premises. When, however, the appellant declined to leave the premises, the evidence indicates that the Manager of the Bairnsdale Branch had a telephone conversation with "head office" and that the Bank did not, thereafter, persist in its refusal to permit the appellant to work at all. The appellant was "informed that he may thereafter resume duties" but that, in terms of a Bank circular which he had seen, he would not be paid for the work which he did. His keys were returned to him and he was, subsequently, provided with the current combination for the safe. In the light of the failure of the Bank either to call the Manager of the Bairnsdale Branch or to explain the failure to call him, it seems to me that the proper inferences to be drawn from all the evidence is that, in respect of the relevant period of three days, the Bank waived the direction that the appellant cease work altogether and that the appellant was performing the duties which he in fact performed for the Bank, with the consent of the Bank. In these circumstances, the appellant was not "absent from duty without the consent of the Bank," within Clause 12(c). In so far as the three days in question are concerned, the only applicable express provision of the Award was that a person in the position of the appellant is entitled to be paid an annual salary of the appropriate amount.

In the view I take, the critical factors in the present case are that the appellant, being an employee of the Bank, actually worked in his job for the three days in question and that he so worked with the knowledge and consent of the Bank. The essential question is whether, in those circumstances, the express provision of the Award that the appellant is entitled to be paid a salary at a specified rate are to be qualified by an implication that he is only so entitled while he remains ready, willing and able to carry out in full the contract of employment between himself and his employer. In my view, the terms of the Award cannot properly be read as subject to any such implication.

It is, of course, true the an Award will ordinarily operate within the general context of the law of master and servant. It is also true that many of the matters governing the relationship between a particular employer and a particular employee will commonly be left by an Award to be dealt with by the particular contract of service between them. Where, however, an Award contains a specific provision for payment of an employee at an annual rate and spells out in some detail the circumstances in which deductions from that annual salary can properly be made, it will not ordinarily be permissible for employer and employee to emasculate the express terms of the Award entitling the employee to payment by engrafting upon it provisions such as that the employee will only be entitled to such payment while he complies with contractual conditions that he work honestly or diligently or, as suggested in the present case, while he is ready and willing to perform all the duties of his employment. Such additional contractual provisions may not be inconsistent with the provisions of the Award establishing entitlement to payment if the effect of any breach of them is left to lie in contract. Such inconsistency will, however, exist if the effect of the purportedly added contractual obligation is to absolve the employer from his liability to pay to the employee, in respect of a period in which, with his employer's informed consent, he is actually working for his employer, the salary which the Award stipulates the employee shall be paid.

It should be noted that it is at least arguable that the Award does not exhaustively specify all of the circumstances in which an employer Bank can be relieved from the liability to pay a proportionate part of his salary to an employee without inconsistenty with the pivotal provisions of the Award to be paid the salary which the Award specifies. The most obvious example is the case where, in special circumstances, an employer Bank agrees that an employee should be given leave of absence without pay. It is possible that other examples can be given. Within the confines of such cases, it may well be that there is no inconsistency in an employer bank and an employee reaching particular agreement either in the overall contract of employment between them or on an ad hoc basis. There is however, no room under the Award for an employer Bank and an employee to reach agreement between them that even though the employee is performing duties for the employer Bank of a type covered by the Award, he will not be entitled to be paid the salary for which the Award makes provision in the event that there are other duties which the employee is refusing to perform or by reference to a general attitude of the employee as not being ready, willing and able to perform his duties or not performing his duties diligently or honestly. The most that the employer Bank and an employee can do by arrangement between them in respect of those matters is to create a contractual obligation for which damages for breach of contract may be recovered in the event of breach.

In the result, I consider that the Bank's refusal to pay the appellant his salary in respect of the relevant three days was in breach of the provisions of the Award by which the Bank and the appellant were both bound and rendered the Bank liable to a penalty pursuant to the provisions of s.119(3) of the Act.

It was agreed by the parties that in the event of the Court being of the view that the Bank was liable to a penalty, the appropriate penalty would be a nominal one. In the circumstances, I consider that the Bank should be ordered to pay a penalty of $25.00 to consolidated revenue and to pay to the appellant the amount of $142.37 representing his salary for the three days in question.