Graves v The Commonwealth of Australia

[1996] IRCA 225

DECISION NO:  225/96

CATCHWORDS

INDUSTRIAL LAW - redundancy - voluntary retirement - dispute as to period of service used in calculation of severance pay - "continuous service".

Industrial Relations Act 1988, s178
Long Service Leave (Commonwealth Employees) Act 1976 ss 11(2)(a), 11(5)(a), 11(2)(f)
Conciliation and Arbitration Act 1904, s70A
Public Service Act 1922, ss76, 76W(4), 76X

Bell v Grillen Motors Pty Ltd (1989) 24 FCR 77
FW Hercus Pty Ltd v Sutton (1994) 51 IR 475
Seamans Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FCR 444
City of Wanneroo v Holmes (1989) 30 IR 362
Short v FW Hercus Pty Ltd (1993) 40 FCR 511
FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd (1993) 2 VR 343
Byrne v Australian Airlines Ltd (1995) 131 ALR 422
Director-General of Education v Suttling (1987) 162 CLR 427

No. NI 1255  of 1995

JOHN RONALD GRAVES v THE COMMONWEALTH OF AUSTRALIA

MOORE J

SYDNEY

6 February 1996

IN THE INDUSTRIAL RELATIONS      )
  )
COURT OF AUSTRALIA               )      No. NI 1255 of 1995
  )
NEW SOUTH WALES DISTRICT REGISTRY )

BETWEEN:              JOHN RONALD GRAVES

Applicant

AND:       THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE:    Moore J

PLACE:    Sydney

DATE:        6 February 1996

ORDER OF THE COURT

THE COURT ORDERS THAT:

1. The application is dismissed.

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

IN THE INDUSTRIAL RELATIONS      )
  )
COURT OF AUSTRALIA               )      No. NI 1255 of 1995
  )
NEW SOUTH WALES DISTRICT REGISTRY )

BETWEEN:              JOHN RONALD GRAVES

Applicant

AND:       THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE:    Moore J

PLACE:    Sydney

DATE:        6 February 1996

REASONS FOR JUDGMENT

This is an application by John Graves ("the applicant") under s178 of the Industrial Relations Act 1988 (Cth) ("the Act"). The applicant contends that the Commonwealth breached a provision of the Australian Public Service Redeployment and Retirement (Redundancy) Award 1987 ("the Award") by failing to pay him the appropriate amount when he was retrenched. A claim is also brought in the Court's accrued jurisdiction alleging breach of contract.

The facts giving rise to the claim are agreed.  The applicant commenced service with the Australian Navy on 7 July 1963, resigned on 10 December 1983 and was voluntarily discharged.  He was then paid an amount reflecting 6.125 months of accrued long service leave.  From 10 December 1983 the applicant has been receiving a pension resulting from his service with the Australian Navy which will continue to be paid for life.  On 12 December 1983 the applicant commenced employment as a senior security officer with the Museum of Applied Arts and Sciences at the Powerhouse Museum which comes under the control of the Premiers Department in the New South Wales Public Service.  On 8 November 1985 this employment terminated.

On 11 November 1985 the applicant commenced employment as a protective services officer grade 1 with the Australian Protective Service.  The Australian Protective Service comes under the control of the Commonwealth Department of Administrative Services.  On 15 April 1994 the applicant's position with the Australian Protective Service was made redundant and the applicant accepted voluntary retirement. The applicant was then paid an amount of $14,043.76 by way of severance pay.  This was based upon a period of service from 11 November 1985 to 15 April 1994, a period of eight years and three months.  The applicant's entitlement to long service leave payments when his employment terminated was based upon a period of service from 7 July 1963 to 15 April 1994, a period of thirty years and eight months.

On 15 April 1994 the respondent was, in respect of its employment of the applicant, bound to conform to the provisions of the Award.  At the time the applicant's employment terminated on 15 April 1994 his annual salary was $44,401.00 or $853.87 per week.

It can be seen that the calculation of the applicant's severance pay was by reference to a period of service that was not the same period of service used to calculate his entitlement to payment in lieu of long service leave. The former was shorter than the latter. The applicant contends his severance payment should also have been calculated by reference to the longer period. The source of the applicant's entitlement to a long service leave payment was the Long Service Leave (Commonwealth Employees) Act 1976 ("the Long Leave Act").

The source of the applicant's entitlement to severance pay was clause 7 of the Award which relevantly provides:

"(f)An officer retired in accordance with this clause shall be entitled to be paid a sum equal to 2 weeks' salary for each completed year of continuous service, plus a pro rata payment for completed months of continuous service since the last completed year of continuous service, calculated in accordance with this clause.

Provided that:

(i)the minimum sum payable under this subclause shall be 4 weeks' salary and the maximum shall be 48 weeks' salary;

(ii)the sum payable to an officer under this subclause shall not exceed the sum of salary that would be payable were the officer to continue in his or her employment until the maximum retiring age applicable to the class of officers to which he or she belongs.

(g)For the purpose of calculating any payment in lieu of notice or part payment thereof the salary an officer would have received had he or she been on recreation leave during the notice period, or the unexpired portion of the notice period as appropriate, shall be used.

(h)For the purpose of calculating any payment under subclause (f):

(i)where an officer has been acting in a higher position for a continuous period of at least twelve months immediately preceding the date on which he or she receives notice of retirement under section 76W of the Act, the salary level shall be the officer's salary in such higher position at that date;

(ii)where an officer has, during 50% or more of pay periods in the twelve months immediately preceding the date on which he or she receives notice of retirement, been paid a loading for shiftwork, the weekly average amount of shift loading received during that twelve month period shall be counted as part of "week's salary";

(iii)the inclusion of other allowances, being allowances in the nature of salary, shall be with the approval of the Board."

The expression "continuous service", which is highlighted in the preceding extract, is not defined in the Award. That is to be contrasted with the provisions of the Long Leave Act which identify, in detail, the nature of the employment which is to be treated as service for the purposes of that Act and thus service for the purpose of determining an employee's entitlement to long leave or payment in lieu. Section 11(2)(a) of the Long Leave Act requires prior service with a state to be treated as part of the period of service. Section 11(5)(a) requires employment as a member of the Defence Force to be treated as relevant service which, by operation of s11(2)(f), is also to be treated as part of the period of service.

The applicant submits that what is treated as service for the purposes of the Long Leave Act should also be treated as service for the purposes of the Award. The expression "continuous service", properly construed, means service of the same character as that identified in the Long Leave Act.

The starting point in construing the expression "continuous service" in clause 7 is its ordinary meaning in context. The Award is said to bind "all Ministers of the Crown for the Commonwealth and the Public Service Board": see clause 3(a). At the time the Award was made special provisions were to be found in Division 1A of the Conciliation and Arbitration Act 1904 ("the 1904 Act") concerning the making of awards applying, inter alia, to persons employed under the Public Service Act 1922 (Cth). The "employing authority" for the purposes of Division 1A was, in relation to employees employed under the Public Service Act 1922, the relevant Minister or the Public Service Board: see s70A of the 1904 Act.

The Award is also said to bind nominated unions in respect of persons employed as officers or employees as defined in clause 5: see clause 3(b). Clause 5 defines officers, subject to qualifications which are not presently relevant, as an officer employed under the Public Service Act 1922 or an employee employed under that Act as a continuing employee employed for more than one year.

It is plain from these provisions and the Award as a whole that it concerns the employment of Commonwealth employees, whether officers or employees as defined, employed under the provisions of the Public Service Act 1922 and the circumstances in which, and the terms on which, they can be redeployed or retired as a result of redundancy. Indeed clause 17 of the Award directs that the Award be read in conjunction with the Public Service Act 1922. In that context the most obvious meaning of the expression "continuous service" in clause 7(f) is service as an officer or employee under the provisions of the Public Service Act 1922. That is, service as an employee, in the broader sense, in the employment to which the Award generally relates: as to the meaning of "continuous service" in private sector employment see Bell v Gillen Motors Pty Ltd (1989) 24 FCR 77 and FW Hercus Pty Ltd v Sutton (1994) 51 IR 475.

The applicant submits that the true meaning of "continuous service" is not so narrow and comprehends service of the type to which the Long Leave Act applies. However there is, in my opinion, no warrant for treating the expression "continuous service" in the Award or having what is, as found in the Long Leave Act, a plainly extended meaning.

The rationale advanced by the applicant for this approach is that both the Award and the Long Leave Act confer benefits on Commonwealth employees and there is no reason to suppose some distinction would be drawn between the types of service upon which the benefits were calculated. However the identification of service in the Long Leave Act, which is stated to be for the purposes of the Act, is, as I said earlier, plainly an extended one. No attempt was made in the Award, which was made after the enactment of the Long Leave Act, to identify service in an extended sense, as the basis upon which severance pay would be calculated following retrenchment from employment under the Public Service Act 1922.

One matter relied upon by the applicant in support of his construction of the Award, and for another purpose which is discussed shortly, is the provisions of administrative instructions issued pursuant to s76X of the Public Service Act 1922 which provides:

"76X (1)   The Board may cause to be published in the Gazette written administrative instructions, not inconsistent with this Act, in relation to the exercise of powers conferred on Secretaries by this Division.

(2)   The Board may, by notice in writing, give to a Secretary directions in relation to the exercise of powers conferred on Secretaries by this Division.

(3)A Secretary exercising, or proposing to exercise, a power conferred by this Division:

(a)shall comply with any administrative instructions expressed to be binding on Secretaries and with any directions given to the Secretary under subsection (2) that are expressed to be binding; and

(b)shall have regard to any other administrative instructions, and to any other directions given to the Secretary under subsection (2)."

Administrative instructions were issued and gazetted in a Commonwealth of Australia Gazette published on 20 July 1987, which was seven days after the date the Award was made, viz, 13 July 1987. The instructions are plainly intended to identify the manner in which officers, as defined in the Award: see also s76S of the Public Service Act 1922, might be redeployed or retired under Division 8C of that Act and includes instructions concerning the manner in which the Award should be implemented. The powers of Departmental Secretaries to retire an officer is subject to any relevant industrial award: see s76W(4). In relation to severance pay the instructions provide:

"2.20Officers who are voluntarily retrenched are entitled to a severance pay of two weeks' salary for each complete year of Commonwealth service, plus a pro rata payment for complete months of service since the last completed year of service (cl. 7(f)).

2.21The minimum amount of severance pay is four weeks' salary and the maximum amount 48 weeks' salary.  However an officer cannot receive more in a severance payment than the salary the officer would have received had he or she worked to the applicable maximum retiring age.

2.22"Salary" for severance pay purposes can include higher duties allowances and shift penalty payments, subject to eligibility requirements as set out in sub-clause 7(h) of the award.  The inclusion of other allowances in the nature of salary is at the Board's discretion.

2.23"Commonwealth service" for this purpose includes service with any Commonwealth agency, or service with the Defence forces, which is recognised for long service leave purposes.  However for the definition of continuous service to be satisfied, there must have been no break between the various periods of employment.  Also, any period of service which ceased in any of the following ways is not to be counted: retrenchment; retirement on grounds of invalidity; inefficiency or loss of qualifications; forfeiture of office; dismissal as a result of disciplinary action; termination of probationary appointment for reasons of unsatisfactory service; and voluntary retirement at or above the minimum retiring age applicable to the officer.

2.24Absences during a period of eligible service which do not count as service for long service leave purposes also do not count for severance pay purposes."

It can be seen that the instructions contemplate that an entitlement to severance pay is based upon what is described as "Commonwealth service" which is defined as including "service with any Commonwealth agency or service with the Defence Forces, which is recognised for long service leave purposes".

This definition indicates that service with the Defence Forces is relevant service and links the character of the service upon which severance pay is calculated with the service upon which entitlements to long service leave or payments are calculated.

However in construing the Award the nature of this material must be carefully considered.  It reflects the meaning given by the Public Service Commissioner, or those officers of the Board who drafted the instructions, to the expression "continuous service" in clause 7(f) of the Award.  However considerable caution has to be exercised in relation to material such as this.  Indeed recent authority indicates it is impermissible, in construing an award, to look at the conduct of parties to it when applying it: see Seamans Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444 City of Wanneroo v Holmes (1989) 30 IR 362 at 378, Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 517 per Burchett J see also FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd (1993) 2 VR 343 and case note (1993) 67 ALJ 864 but see also 68 ALF 457. Thus, on one view, the administrative instructions simply reflect the view of one party to the Award, expressed after it was made, of its meaning and consistent with the authorities just referred to, cannot be considered when construing it. However even taking a more benevolent view of the use that might be made of the instructions, they are of limited assistance in construing the Award. The instructions make no mention of service with a state as "Commonwealth service". Is this because it is not, in the view of the authors of the instructions, service for the purposes of the calculation of severance payment? If so the adoption of the provisions of the Long Leave Act is selective. If such service was viewed as service for the purposes of the calculation of severance payments the failure to refer to it is a significant omission. Moreover the use of the expression "Commonwealth Service" is an odd one if the relevant service includes service with a state. In my opinion the instructions reflect a misunderstanding of the intended effect of the Award. As earlier discussed, the service to which the Award relates is service under the Public Service Act 1922.

The instructions were also relied upon by the applicant as the source of an entitlement to severance pay, based on the longer period of service, independently of the Award. However the instructions were issued, pursuant to s76X of the Public Service Act 1922, to identify the manner in which powers conferred on Departmental Secretaries by Division 8C might be exercised. In so far as the instructions deal with severance payment they are, on their face, intended to do no more than instruct the Departmental Secretary as to the manner in which such payments are to be calculated. Even assuming that administrative instructions could ever confer a right or benefit on a person on whom the instructions might operate, the instructions in question are plainly not intended to confer a right or benefit of their own operation. The source of the right or benefit remains the Award. That is plain from the parenthetical reference to "cl. 7(f)" at the conclusion of para 2.20. That paragraph, like others in the instructions, identifies the provision in the Award conferring the right or benefit or otherwise deals with the redeployment or retirement of employees: see clauses 1.3, 1.10, 1.11, 1.14, 2.1, 2.16, 2.18, 2.19, 3.9, 3.12, 3.14, 3.36. Accordingly the right to severance payment, and the manner in which it is to be calculated, is on the terms identified in the Award and only on those terms. While the instructions also refer to benefits to retrenched officers under the Superannuation Act 1976 and the Long Leave Act, I do not see why those references lead to the conclusion, as contended for by the applicant, that an entitlement to severence pay arises from the instruction rather than simply the Award.

The conclusions expressed in the preceding paragraph are sufficient to dispose of the claim in contract based on the administrative instructions.  The applicant contended that a term of his contract of employment was that he would be paid severance payment in accordance with clause 2.20 of the instructions which were embodied in a Personnel Management Manual applying to his employment.  It is unnecessary to address questions such as the circumstances in which a term might be implied into a contract of employment: see Byrne v Australian Airlines Ltd (1995) 131 ALR 422 and the status of a crown employee at common law and the extent of the Crown's right to terminate at will: see Director-General of Education v Suttling (1987) 162 CLR 427. It is clear, in my opinion, that whatever contractual rights the applicant has, they are no different to those conferred by the Award as the manual reflects the administrative instructions which, as just discussed, are not intended to add to the Award.

I dismiss the application under s178 and the claim in contract.

I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.

Associate:  ........ ........ ......
Dated:    ..../..../....

APPEARANCES

Counsel for the Applicant:          Mr R Reitano

Solicitor for the Applicant:              Geoffrey Edwards & Co

Solicitor for the Respondent:             Mr D Godwin of the Australian Government Solicitor

Dates of Hearing:  23 June 1995

Written Submissions Complete:             9 August 1995

Date of Judgment:  6 February 1996