Gibbs v Mayor, Councillors and Citizens of City of Altona

[1992] FCA 553

Re: STEPHEN GIBBS
And: THE MAYOR, COUNCILLORS AND CITIZENS OF THE CITY OF ALTONA
No. V I86 of 1991
FED No. 553
Industrial Law
(1992) 37 FCR 216

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J.(1)

CATCHWORDS

Industrial Law - award - breach - termination of employment - failure to hold discussions with Union - failure to provide written information to Union - whether breaches of a single term or separate terms - penalty - whether to be paid to applicant or to organisation.

Words and Phrases - "term of an award".

Industrial Relations Act 1988 ss. 178, 356.

Electrical Trades Union of Australia v. Sims Products Ltd. trading as Besco Batteries (Federal Court of Australia, Gray J. 3rd February 1988, unreported).

Lynch v. Buckley Sawmills Pty. Ltd. (1984) 3 FCR 503.

Vehicle Builders' Employees' Federation of Australia v. General

Motors-Holden's Pty. Ltd. (1977) 32 FLR 100.

Seymour v. Stawell Timber Industries Pty. Ltd. (1985) 9 FCR 241.

HEARING

MELBOURNE

#DATE 4:8:1992

Counsel for the applicant: R. Hinkley

Solicitors for the applicant: Ryan Carlisle Thomas

Counsel for the respondent: F. Parry

Solicitors for the respondent: Maddock Lonie and Chisholm.

ORDER

THE COURT ORDERS THAT:

1. The respondent pay a penalty of $700.00 for breach of clause 23(a)(i) of the Victorian Local Authorities Interim Award 1991 in failing to hold discussions with the Australian Municipal, Transport, Energy, Water, Ports, Community and Information Services Union on 11th September 1991 about its proposed termination of the employment of Jason Clarke.

2. The respondent pay a penalty of $50.00 for breach of clause 23(a)(iii) of the Victorian Local Authorities Interim Award 1991 in failing to provide in writing to the Australian Municipal, Transport, Energy, Water, Ports, Community and Information Services Union on 11th September 1991 all relevant information about the proposed termination of the employment of Jason Clarke.

3. Each penalty be paid to the Australian Municipal, Transport, Energy, Water, Ports, Community and Information Services Union.

4. By consent the applicant have leave to withdraw the allegations in paras. 1(a) and (c) and 2 of the application.
Note: Settlement and entry of orders is dealt with by O.36 of the Federal Court Rules.

JUDGE1

By application filed on 11th December 1991, the applicant sought the imposition on the respondent of penalties for breaches of terms of an award, pursuant to s.178 of the Industrial Relations Act 1988 ("the Act"). The applicant is the national secretary of the Australian Municipal, Transport, Energy, Water, Ports, Community and Information Services Union ("the Union"), an organisation registered pursuant to the Act, and is authorised under its rules to sue on its behalf.

1. The breaches of award alleged arose out of the dismissal from the respondent's employment of one Jason Clarke on 11th September 1991. In the application, it was alleged that, on or about 10th September 1991, the respondent, having made a definite decision that it no longer wished the job Mr Clarke had been doing to be done by anyone, did in breach of clause 23(a) of the relevant award fail:
   

(a) to hold discussions with Mr Clarke about his proposed termination;

(b) to hold discussions with the Union about the proposed termination;

(c) to provide in writing to Mr Clarke all relevant information about his proposed termination; and

(d) to provide in writing to the Union all relevant information about the proposed termination

prior to terminating Mr Clarke's employment. There was also an allegation of a breach of clause 23(e) of the award in failing to notify the Commonwealth Employment Service of the termination of Mr Clarke as soon as possible thereafter.

1. The award concerned is the Victorian Local Authorities Interim Award 1991 ("the Award"). By clause 4, the Award is binding on the Union, its officers and members and on the respondents named in the schedule of respondents in respect of employees, whether members of appropriate organisations or not. The schedule of respondents lists the Mayor, Councillors and Citizens of the City of Altona, which is the respondent to this proceeding, as a respondent to the Award. The respondent is a body corporate, pursuant to the provisions of the Local Government Act 1989 (Vic).

2. Clause 23(a) of the Award provides as follows:
   

"23 - REDUNDANCY

Discussions Before Terminations

(a) (i) Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the employer shall hold discussions with the employees directly affected and with the relevant union/s.

(ii) The discussions shall take place as soon as is practicable after the employer has made a definite decision which will invoke the provision of paragraph (i) hereof and shall cover, "inter alia", any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.

(iii) For the purposes of the discussion the employer shall, as soon as practicable, provide in writing to the employees concerned and the relevant Union all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information the disclosure of which would be inimical to the employer's interests."

1. When the matter was called on for trial, counsel for the applicant informed the Court that, as a result of negotiations, the respondent would be admitting the breaches alleged in paragraphs (b) and (d) to which I have referred, and the applicant would be withdrawing the allegations in paragraphs (a) and (c) above, and the allegation of breach of clause 23(e). The matter therefore proceeded largely on the addresses of counsel. Counsel for the applicant tendered three documentary exhibits, being the Award and two letters. Counsel for the respondent made certain admissions, and advanced certain facts in mitigation of penalty. What follows as to the facts is derived from those exhibits and from the addresses of counsel.

2. Mr Clarke was first employed by the respondent on 16th July 1984. His position was Municipal Recreation Officer. The Award bound the respondent in respect of the employment of Mr Clarke.

3. The respondent employs some 350 full and part time employees. It has good relations with the Union, and with other organisations of employees to which its employees belong. It has never previously had a proceeding brought against it for breach of award. It relies on government funding to pay the salaries of a number of its employees. One of those specifically funded was Mr Clarke's position. He was the only person employed by the respondent in the position of Municipal Recreation Officer.

4. On 10th September 1991, the council of the respondent met. It received information that government funding in respect of Mr Clarke's position would terminate on 31st December 1991. The council determined that it would cease to conduct a vacation care programme, the conduct of which had been a large part of the duties of Mr Clarke. It also resolved not to conduct a festival called the Operation Recreation Festival, the organisation of which was also part of the duties of Mr Clarke. It therefore decided that Mr Clarke's position was redundant. This was a definite decision that the respondent no longer wished the job Mr Clarke had been doing done by anyone, within the meaning of clause 23(a)(i) of the Award. The council considered whether it had another position open for Mr Clarke, and formed the opinion that it did not. It also considered whether to keep Mr Clarke in its employ until the end of the calendar year, but decided not to, on the basis that he would have better prospects in September and October of obtaining another job in local government.

5. On the morning of the following day, Mr John Shaw, the Chief Executive Officer/Town Clerk of the respondent consulted with the Municipal Association of Victoria, an association of employers of which the respondent is a member. The respondent had not had to deal with another redundancy during the preceding twenty years, and Mr Shaw required advice as to how a redundancy should be dealt with. He was given general advice, covering the need to advise the Union and to have discussions with it, but not specific advice as to the provisions of clause 23(a) of the Award.

6. On 11th September, Mr Shaw engaged an "outplacement consultant" to advise Mr Clarke on obtaining alternative employment.

7. At 4.00 p.m. on 11th September, Mr Shaw saw Mr Clarke and advised him that his position was redundant. He handed him a letter, the relevant parts of which are as follows:
   

"Position of Municipal Recreation Officer It is with much regret that I advise you that the Council, at its meeting last night, resolved that the position of Municipal Recreation Officer become redundant forthwith. Prior to reaching this decision, the Council resolved not to conduct a vacation care program during the 1991/92 financial year and to invite the Operation Recreation Committee to conduct the 1992 festival. The Council decided that the tasks previously performed by the Municipal Recreation Officer in regard to the organisation of the Operation Recreation Festival be no longer performed by the Council. The reasons for the Council's decision are that a substantial proportion of the duties of the position of Municipal Recreation Officer related to the conduct of vacation care programs and the organisation of the Operation Recreation Festival, coupled with the fact that the Victorian Government has advised the Council that the government funding of Municipal Recreation Officer positions will terminate effective from December 31, 1991. I have also been instructed to advise you that the Council has considered redeployment, taking into account your qualifications, known skills and experience, together with positions requiring to be filled within the Council, and has formed the opinion that it is not possible to offer you another position.

The Council requires you to conclude your service with the Council as from the close of business tonight and to take with you all of your personal belongings. The Community Services Director, Mr Alan Gruner, will assist you to gather up your belongings and, as I understand that you have recently lost your Licence to Drive a Motor Vehicle for three months, Mr Gruner will provide you with a Cabcharge voucher and will book a taxi for you to travel home tonight. ...

I will be advising the Australian Services Union of this decision forthwith and will also advise the Local Authorities Superannuation Board of the redundancy. ...

In an effort to assist you through what will no doubt be a most difficult period, and to give you every opportunity to find another satisfying position, the Council has agreed to engage the professional Outplacement Support Services of Mr Ron Ritter of KPMG Peat Marwick Management Consultants. Mr Ritter will be introduced to you later today and he will outline the very valuable support services that he is able to offer you over a period of up to twelve weeks as from today.

If, after today, you have any matters which you need to clarify please feel free to contact the Community Services Director, Mr Alan Gruner, on 316 1274, or Mr Allan Baker on 316 1224.

The Council believes that the redundancy package it has made to you is quite generous and trusts that you will be prepared to take full advantage of the professional services of KPMG Peat Marwick in assisting you to find other suitable employment.

The Council thanks you for the work you have performed at the City of Altona during the past seven years and wishes you well for the future."

The passages which I have omitted from this letter dealt with moneys due to Mr Clarke on his dismissal and in respect of superannuation.

1. Some discussions took place between Mr Shaw and Mr Clarke as to whether there were options other than dismissal available. Mr Shaw advised that the council considered there were none. Mr Shaw introduced the outplacement consultant, who engaged in discussions with Mr Clarke until approximately 5.00 p.m. Mr Clarke then made some telephone calls and left at about 6.15 p.m. At about 4.30 p.m., Mr Shaw advised a meeting of staff of the redundancy and the reasons. He also had some discussions with one of the two shop stewards of the Union employed by the respondent, the other of those shop stewards being Mr Clarke himself.

2. Also on 11th September, Mr Shaw gave an instruction to his secretary to send by facsimile to the Union a copy of the letter which he had handed to Mr Clarke, and a letter addressed to the Victorian branch secretary of the Union, in the following terms:
   

"Redundancy - Municipal Recreation Officer I wish to advise you that, at a meeting of the Council held last night, the Council resolved that the position of Municipal Recreation Officer become redundant forthwith. Attached is a copy of the letter I have this day handed to the Municipal Recreation Officer, Mr Jason Clarke. Please note that Mr Clarke is the only officer affected by the decision to make the position redundant and he is to conclude his service with the Council as from the close of business tonight.

I am prepared to discuss the matter with a representative of the Australian Services Union at a mutually convenient time."

It was common ground that this facsimile transmission was received in the Victorian branch office of the Union at approximately 5.00 p.m. on that day. As a result, no discussions occurred between any representative of the Union and any representative of the respondent on that day, although Mr Shaw had hoped that some telephone discussion would be possible. Discussions did take place on 12th and 13th September. It was acknowledged that there had not been the necessary prior discussion. In the discussions, the concentration was on a settlement package. The result was a more generous financial package for Mr Clarke than the Award obliged the respondent to make available, and a detailed and generous reference.

1. In these circumstances, as it has admitted, the respondent was in breach of clause 23(a) by failing to have discussions with the Union between the time of making a definite decision that the respondent no longer wished the job which Mr Clarke had been doing done by anyone and the time of the termination of Mr Clarke's employment. It was also in breach of clause 23(a), as it admitted, in failing to provide in writing to the Union all relevant information about the proposed termination of Mr Clarke.

2. Counsel for the applicant argued that the breaches were serious and should attract the maximum penalty provided for in s.178 of the Act, of $1,000.00. He referred to the imposition of maximum penalties for breaches of provisions similar to those found in clause 23(a) of the Award in Electrical Trades Union of Australia v. Sims Products Ltd. trading as Besco Batteries (Federal Court of Australia, Gray J., 3rd February 1988, unreported). He contended that the breaches were exacerbated, not mitigated, by the fact that discussions had been held with the Union after the dismissal. He pointed to the evident purpose of the clause, which is to enable the expertise of the Union to be brought to bear, in the interests of an employee whose job is about to be abolished, to avoid the dismissal of that employee by the particular employer.

3. Counsel for the respondent urged that the breaches had arisen because the respondent was not aware of the precise detail of clause 23(a); it did intend to comply with the Award, but did not inform itself fully as to its obligations. He argued that there should be no penalty, or merely a nominal penalty. In mitigation of penalty, he relied on the complexity of the clause, the possible difficulty of determining precisely when the termination of employment took effect, the fact that Mr Shaw had sought advice, the consciousness of the respondent of its general obligations, the lack of detriment to Mr Clarke and the fact that the respondent had admitted breaches, thereby avoiding the need for a prolonged hearing. With respect to the absence of detriment suffered by Mr Clarke, it was conceded that discussions prior to his dismissal may or may not have led to some other result.

4. In my view, it is not appropriate to impose the maximum penalty, nor to treat the matter as one appropriate for no penalty, or for a nominal penalty only. The obligations imposed by clause 23(a) are serious. As I said in Electrical Trades Union of Australia v. Sims Products Ltd. trading as Besco Batteries, at pp 8-9:
   

"It is necessary for all parties to awards to be aware that the obligations in them are part of the law of the land and must be obeyed. The particular obligations in this case have important consequences for the employees concerned and breaches of them were likely to have far reaching effects."

On that occasion, I also referred to what Keely J. said in Lynch v. Buckley Sawmills Pty. Ltd. (1984) 3 FCR 503, at p 508:

"In this connection it is important that the respondent - and other employers bound by the award or by other awards under the Act - understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligations to comply with particular provisions of an award or the award generally should only be taken after careful consideration. They must not be left under the impression that in times of financial difficulty they can breach an award made under the Act either with impunity or in the belief that no substantial penalty will be imposed in respect of a breach found by a court to have been committed."

It is possible that, had the requisite discussions taken place, with the Union in possession of the required information, some way might have been found of avoiding the termination of Mr Clarke's employment. It is not enough to say that the council of the respondent was unable to see any way in which Mr Clarke might have been retained in another position. It is possible that the Union might have been able to suggest a way in which this could have been done. The respondent should have taken the trouble to ascertain precisely what its award obligations were.

1. On the other hand, the respondent must receive credit for its previous good record, for the fact that it did consider whether alternative employment with the respondent was available for Mr Clarke, for the actions it took to mitigate the consequences of dismissal for Mr Clarke, for the fact that it was prepared after the event to increase the financial compensation to Mr Clarke beyond that which the Award obliged, and for the fact that it has admitted its breaches.

2. One question which troubled me, and which caused me to reserve my judgment, concerned the operation of s.178(2) of the Act, which provides:
   

"Subject to subsection (3), where:

(a) 2 or more breaches of a term of an award or order are committed by the same organisation or person; and

(b) the breaches arose out of a course of conduct by the organisation or person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term."

Subsection (3) is not relevant for the purposes of this proceeding. The issue in the present case, which was raised during argument, is whether the two admitted breaches can be said to be breaches of a single term.

1. It is possible to identify in clause 23(a) a number of separate obligations. Para. (i) contains two obligations, namely to hold discussions with the employees directly affected by the decision and to hold discussions with the relevant union or unions. Para. (ii) imposes obligations as to the time and content of the discussions. It is possible that each of the three classes of subject matter which the discussions are required to cover could be construed as a separate obligation. Para. (iii) imposes obligations to provide written information to the employees concerned and to the relevant union. Again, each of the categories of information could be said to impose a separate obligation. Thus, if written information were provided to the appropriate persons or unions at the appropriate time, but that written information did not include anything about, for example, the period over which terminations were likely to be carried out, there would be a breach of an obligation imposed by the Award. On the other hand, if no written information were provided, it would seem more appropriate to treat that as a breach of the obligation to provide written information, rather than as several breaches of several separate obligations to provide written information in several categories. It is this sort of difficulty, arising from the cumulative nature of some of the obligations imposed in clause 23(a), which gives rise to a problem of construction of the word "term" in s.178 of the Act.

2. It is possible to regard clause 23(a) as a term of the Award, imposing a number of different obligations. It is possible to regard each of paras. (i), (ii) and (iii) of clause 23(a) as a "term", each of which imposes several obligations. It is possible to regard each of the separate obligations within these paragraphs as a separate term.

3. There appears to be no authority on the subject. In Electrical Trades Union of Australia v. Sims Products Ltd. trading as Besco Batteries at pp 7-8, I relied on a concession of counsel and treated a clause very similar in its terms to clause 23(a) of the Award as a single term, and therefore treated several breaches of its different obligations, which arose out of a course of conduct, as constituting a single breach. I reserved my opinion on whether such a clause contains more than one term.

4. There appears to be no authority which can be called in aid to resolve the question. Counsel for the applicant was not able to refer to any. Counsel for the respondent elected to make no submission as to whether clause 23(a) contains separate terms. My own researches and those of my associate have not turned up any authority.

5. The object of s.178(2) appears to be that a party bound by an award and pursuing a course of conduct involving repeated acts or omissions, which would ordinarily be regarded as giving rise to a series of separate breaches, should not be punished separately for each of those breaches. If such a party has pursued a course of conduct which gives rise to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another. This reasoning leads to the conclusion that each separate obligation found in an award is to be regarded as a "term", for the purposes of s.178 of the Act. The ascertainment of what is a term should depend not on matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out. For these reasons, I incline to the view that each separate obligation imposed by an award is to be regarded as a "term", for the purposes of s.178 of the Act. If the different terms impose cumulative obligations or obligations that substantially overlap, it is possible to take into account the substance of the matter by imposing no penalty, or a nominal penalty, in respect of breaches of some terms, but a substantial penalty in respect of others.

6. In the present case, the admitted breaches involved failing to hold discussions with the Union, and failing to provide in writing to the Union information which would have been useful in those discussions. Those were breaches of separate terms of the Award, so cannot be treated as a single breach for the purposes of penalty. Nonetheless, the major obligation was to hold discussions prior to the termination. In the circumstances, the appropriate penalty for breach of that term is $700.00. The failure to provide written information, preparatory to the discussions, was in a sense a breach consequent upon the respondent's failure to have the discussions. In the circumstances, it would be appropriate to impose a lesser penalty of $50.00 in respect of that breach.

7. A question also arose as to what order should be made as to the recipient of the penalties. Section 356 of the Act empowers the Court to order payment into the Consolidated Revenue Fund or to a particular organisation or person. The usual order, when the proceeding is not brought by an inspector appointed under the Act, is for payment to the person or organisation applying for the penalty. The reasons for this are canvassed in Vehicle Builders' Employees' Federation of Australia v. General Motors-Holden's Pty. Ltd. (1977) 32 FLR 100, at pp 111-114 and Seymour v. Stawell Timber Industries Pty. Ltd. (1985) 9 FCR 241, at pp 245-246 in the judgment of Northrop J. In the present case, the applicant has brought the proceeding on behalf of the Union, to enforce the Award for the benefit of the Union and its members. Had the applicant brought the proceeding in his personal capacity, and at his own expense, it would have been appropriate to order that the penalties be paid to him. It is unlikely that the applicant has become responsible personally for the costs of the proceeding and more likely that those costs will be met by the Union. In the circumstances, it is appropriate that the Union should be the recipient of the penalties.