Holt, S.L. v Musketts Timber Sales P/L

[1994] FCA 137

STANLEY LEA HOLT v MUSKETTS TIMBER SALES PTY LTD
No. TI8 of 1993
FED No. 137/94
Number of pages - 11
Industrial

COURT

IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
NORTHROP J

CATCHWORDS

Industrial - Termination of employment without notice - whether Award applies - s178 Industrial Relations Act 1988 - common law right to reasonable notice of termination - application of Industrial Relations Act 1984 (Tas) ss46, 47

HEARING

HOBART, 1 March 1994
#DATE 1:3:1994

Counsel for the Applicant: Mr B.R. McTaggart

Solicitors for the Applicant: Jennings Elliott

Counsel and Solicitor for
the Respondent: Mr E. Sikk

ORDER

THE COURT ORDERS THAT:

1. There be judgment for the Applicant against the Respondent in the sum of $718.20.

2. The cross-claim be dismissed.

Note: Settlement and entry of orders is dealt with in Order 30 of The Federal Court Rules

JUDGE1

NORTHROP J I have formed a firm view on what should be done in this case. No useful purpose would be achieved in my reserving judgment. I propose to give, now, in a fairly summary way, the reasons for the conclusions I have come to.

1. By application dated 19 October 1993 the applicant, Mr Holt, sought relief in this Court based on a number of causes of action. Essentially, the claim was based upon s178 of the Industrial Relations Act 1988 (Cth) seeking the imposition of a penalty for a breach of an award, namely the Timber Industry Consolidated Award 1990 ("the Award"). In addition, there were other claims based upon the law as it then stood and as expounded in the case of Gregory v Phillip Morris Ltd (1988) 80 ALR 455, those claims being based on the concept that the terms of the award, in appropriate cases, could be treated as terms of the contract of employment with the result that a person bound by that contract could be sued for damages for breaches of a term of the award. In addition, there were claims based upon redundancy payments.

2. The amended statement of claim and defence make it clear that the claim was based upon the fact that the award applied in the sense that the respondent was bound by it with respect to all its employees who were covered by the Award. The issue raised was whether Mr Holt was entitled to the benefit of the Award. There was also a cross-claim made, which I will come to later, in relation to what occurred at the time the employment of Mr Holt was terminated.

3. When the matter came on for hearing on a motion shortly before the hearing of the proceeding was due to begin, attention was drawn to the recent decision of a Full Court of this Court, Byrne v Australian Airlines Limited, the judgment in which was given on 7 February 1994, which had the effect of overruling Gregory v Phillip Morris Ltd in a material respect, namely, as to the importation of terms of an award into an employment agreement. As a result, at the hearing the applicant, realizing the implications, did not seek to lead evidence on the breach of contract points but did not waive them. He maintained his position that Byrne was wrongly decided so as to keep open an appeal, if in due course it was decided to challenge Byrne. It also became apparent that the claim based upon the unfair dismissal or redundancy points could not continue because of the lack of number of persons employed by the respondent. In the result, the claim was presented on whether the applicant had the benefit of the Award, the respondent arguing that the Award did not apply.

4. In addition, the respondent alleged a new contract of employment had been entered into by the applicant with the respondent and that the applicant had abandoned his employment under that contract. The respondent claimed damages for breach of contract and claimed the right to notice of termination by the applicant which notice had not been given.

5. On the first day of the hearing, the issues having become clarified, at the suggestion of the Court, the applicant was granted leave to amend the application and the statement of claim, claiming damages for breach of the contract of employment, being the amount lost as the result of the respondent not giving sufficient notice of termination. The way it was put in the amended statement of claim was that the respondent had to give the applicant reasonable notice of six months for the termination of the employment. It did not do this and, therefore, the applicant claimed the loss of salary for that period of six months. The respondent put in an amended defence denying that and also saying that it relied upon the provisions of sections 46 and 47 of the Industrial Relations Act 1984 (Tas). I will come back to those provisions later. The first issue to be determined is whether the respondent is bound by the award with respect to the applicant.

6. The evidence in this case was given by way of affidavit and the essential evidence is that contained in the affidavits of Mr Holt, the applicant, and Mr Owen Muskett, one of the directors of the respondent company. On the crucial issue, there is not much dispute. I should indicate that Mr Holt was cross-examined, he being the only witness who was cross-examined. I should indicate that I accept Mr Holt as a witness of truth. I accept the evidence he gave in his affidavit which was supported by his evidence in cross-examination. He is 63 years of age and had worked at the mill in North Glen Road in Huonville since 1976. Initially he worked for the MMB Timber Company. The mill was taken over by J.W. Porter Pty Limited in July 1981 and he worked for that company until the present respondent, Musketts Timber Sales Pty Limited, acquired the mill on 1 July 1992. Initially he was employed as a foreman at the mill. He became manager whilst J.W. Porter ran the mill. He continued as manager when Musketts Timber Sales took over. His duties were that of site manager and general supervisor. The details of what he did are set out in paragraph 3 of his affidavit of 16 February 1993, the one commencing "I am 63 years of age". I do not need to go through those in detail except to say that they cover a very wide range of activities but all incidental to his position of site manager and general supervisor of all operations at the site. More details of what he did are set out in his other affidavit of 16 February 1993.

7. Mr Holt then gives evidence that on Thursday, 29 July 1993, the directors of Musketts Timber Sales Pty Limited, George and Owen Muskett, came to his office at the mill and Mr George Muskett told him that the company had been losing money and Mr Holt asked George Muskett whether he was going to be replaced. Mr George Muskett said that that is up to Mr Holt. There was discussion about a possible other job of a lesser stature, basically a salesman and timber racker. In substance, Mr Holt said he would need to consider that matter including the need to obtain a vehicle. It is to be noted that there was no discussion at all as to what was to be paid to Mr Muskett for this other job. He was receiving salary which amounted to over $700 one week and a bit less than $700 the other week for his position as site manager and all the responsibilities entailed therewith, but there was no discussion at all as to what was to be received in relation to the new proposed job. Mr Holt told Mr Muskett that he would think about this new offer. Mr Holt asked when he, Mr Muskett, wanted him to finish up his old job and it was arranged that Mr Holt would cease his employment when the office girl came back to the office from holidays.

8. On Monday 2 August the office girl was at work. She worked at the direction of Mr Holt. He told her to work out what was to be paid to him. He would finish work at the end of Tuesday 3 August. Mr George Muskett apparently also was aware of that fact. At the end of Tuesday 3 August, he was due to receive payment for the week that was then due. The payment included some other additional payments for previous work done. The utility which he normally drove and was supplied by the employer was left by Mr Holt at the works. He was driven home by Mr Owen Muskett. There was no discussion about the alternative employment. Mr Hold did not attend for work after 3 August.

9. On 5 August Mr Holt attended the mill to collect his pay, details of which are set out as an exhibit to the affidavit. He received a gross amount less tax for the period ending 3 August including arrears. He asked about his long service leave and eventually it was agreed that he would come back later to receive that and this was done on 13 August, when he returned to collect his long service leave and payment for leave as well. The details of this are set out in an exhibit to the affidavit and there is another exhibit headed "Employment Separation Certificate" signed by Mr Owen Muskett, indicating that he had received his payment for annual leave and long service leave. The total amount was something over $8404.15 less tax, which resulted in a net amount of $5765.25 being paid. It was quite clear that his employment had been terminated as from 3 August 1993 as appears from the Employment Separation Certificate and as given in evidence by Mr Holt. At no time did Mr Holt do any work under any other contract of employment although he did purchase a utility which he says he purchased with his own moneys which he then reimbursed from the moneys he received on 13 August.

10. Mr Owen Muskett swore an affidavit on 10 December 1993. The substance of his evidence on this is set out in paragraph 5 as follows:
    

"On Thursday 29 July, my father and I spoke to the Applicant at the mill at some time in the morning. My father said we could not continue to employ him as manager because the business was not making enough money. My father asked him if he was prepared to go out on the road and sell timber and rack timber for the rest of the time. My father said he would have to supply his own vehicle. The Applicant replied that he could not afford to buy his own vehicle. He asked me whether he could get his long service leave money to buy a vehicle. I said yes. My father said we would pay the expenses of running the motor vehicle. My father said he could be an asset to the business on the road as he knew most of the builders.

The Applicant said that he was prepared to take on the job but that he would need a few days to organise the purchase of the vehicle. He asked when his duties as manager were to finish. I said when Lisa came back to work from Melbourne. Lisa Newbon was the office clerk and she subsequently returned to work on Tuesday 3 August."

1. Actually Lisa was there on the Monday. There is no evidence to suggest that any rate of pay was agreed upon for this new job. There was a suggestion by Mr Owen Muskett that he assumed that the same rate of pay would be paid to Mr Holt on this lesser job as he was receiving as manager. I reject that completely. It seems incomprehensible to me that an employer who cannot afford to keep on a manager is still prepared to pay the same rate of wage to a person doing a lesser job while the manager's job must still be done by somebody else. On the whole of the evidence, I accept the evidence of Mr Holt that there was no new agreement whatsoever. At the very most Mr Holt said he would consider the proposition. He never accepted any proposition. There were never any terms of any such proposition. The evidence does not support the finding of a new agreement. In those circumstances, the cross-claim by the respondent must fail.

2. The first question of law is whether the Timber Industry Consolidated Award 1990 applies to the employer with respect to Mr Holt. This depends, essentially, upon the incidence clause of that award, namely Clause 3 which is as follows:
   

"This award shall come into operation on and from the beginning of the first pay period commencing on or after 15 March 1990 and shall continue in force for a period of twelve months and shall be binding upon:

(a) the Australian Timber Workers Union, its officers and its members respectively; and

(b) the respondent associations and members thereof and the employers mentioned in the schedule hereto (and this is the important part) in respect of all their employees, whether members of the union or not, engaged in any of the occupations enumerated in this award."

1. There are many occupations enumerated in the award, by way of classifications. Many of the classifications are classifications of work which Mr Holt in fact did from time to time at the mill site but he was never engaged specifically for any of those classifications. He was engaged as site manager and general supervisor of the mill. There is no doubt about that. I also accept that when he did do the other type of work it was to help out from time to time. The work so done was only part of the incidental nature of his job as site manager. He had not been engaged to perform the duties specified in any of the classifications enumerated in the Award itself.

2. I do not propose to go through in detail referring to the classifications and what in fact Mr Holt did. These were enumerated in detail in the submissions. There is no doubt that much of the work he did from time to time was of a type coming within the classifications specified in the Award. It is also clear that the wages he received were far in excess of the highest award rate set out in the Award. It cannot be said that he was engaged in any of the occupations or classifications enumerated in this award.

3. The words "engaged" and "employed" are difficult words to interpret. A reference to the dictionary meaning of those words illustrates the problems involved. This is apparent from a consideration of the meanings given in both the Macquarie Dictionary and in the Oxford English Dictionary. A large number of different meanings are set out in the Oxford Dictionary. Under the word "employ" the most appropriate one is "the state or fact of being employed; esp that of serving an employer for wages". "Engaged" also has many different meanings as a reference to the dictionaries illustrates. It is difficult to work out just what meaning it should have in the Award. The most appropriate is that in the Oxford Dictionary: "to hire, secure the services of (a servant, workman, agent, etc) ... to enter into an agreement for service". That is the word "engage". Employment is the state or fact of being employed.

4. The Macquarie Oxford Dictionary expresses the same concepts:
   

"Employ" - to use the services of (a person); have or have in employment service;

"Engage" - to secure for aid, employment, use etc; hire; to engage a workman, to engage a room".

1. Generally speaking the word "engage" is used in the sense of entering into an agreement, in this case, of employment. The agreement is not disputed. It was an agreement to be an employee as site manager and general supervisor of the mill. It was not an engagement to do any of the particular work coming within any of the classifications set out in the award. Therefore, prima facie it would appear that the Award does not bind the respondent with respect to the applicant.

2. In the course of submissions, reference was made to a number of authorities on this question, probably the most important of which is Horne v Trenchermen Pty Ltd (1964) 6 FLR 176, a decision of the Commonwealth Industrial Court comprising Dunphy, Joske and Eggleston JJ. That case is to be distinguished from the present in that there a person had been engaged by the respondent to act as the manager and nominee of an hotel. He was required to live in the hotel and work very long hours. In addition, he had served as a barman each day while the bar was open. Upon his dismissal, questions arose as to whether his employment was lawfully or unlawfully terminated. An action was commenced in the Court of Petty Sessions for a breach of the award. The magistrate dismissed the application on the ground that the award did not apply to him. There was an appeal to the Commonwealth Industrial Court. In that award, and I should indicate that the incidence clause apparently is not set out in the reasons for judgment, there is a clause headed "The Industry" which reads:
   

"This award relates to the industry of persons employed in any capacity, whether permanent or casual in hotels, wine saloons and wine bars in or in connection with the selling of drinks, preparing and serving food and drinks, cleaning and attending to the premises and all other services associated therewith being a branch of the industry in or in connection with which the Australian Hotels Association and the Federated Liquor and Allied Industries Employees Union of Australia as organizations of employers and employees respectively are formed and registered together with all wine saloons and wine bars within the area of the award."

1. Clause 10 of the award contained a definition of bar attendant as follows: "'Bar attendant' shall mean any person usually employed for more than two hours in any one day or night in supplying or dispensing or mixing of liquor in any portion of the licensed premises including sale of liquor from the bottle department".

2. Note the word "employed" appearing in the phrases "any person usually employed for more than two hours in any one day or night in the bar". The use of that word "employed" is to be contrasted with the word "engaged" in the incidence clause of the Award in the present case.

3. The Commonwealth Industrial Court held that the manager was employed as a bar attendant within the definition and that, therefore, the employer was bound by the provisions of that award. This is made clear at p180 where the Court, talking about the definition of bar attendant, said:
   

"This definition is singular in at least two respects - to qualify a person must be "usually" employed and for "more than two hours in any one day or night". If, for instance, a person usually employed as a manager took an occasional, as distinct from a regular or usual, turn in the bar for periods of more than two hours he might not be a "bar attendant". It is possible that he might, by the terms of his engagement, be a "casual employee" as defined in cl10 and entitled to claim payment under cl8. However, we are not required to answer these questions and do not attempt to do so."

1. Because of the different provisions in that award and the use of the word "employed" not "engaged", I find no assistance in that authority.

2. Reference was made also to the fact that this is not a case where Mr Holt is claiming wages due under the award but is claiming the benefit of the award because of the provisions of Clause 21 which deals with the termination of employment. Clause 21(c) provides, in substance, that the provisions set out thereafter that relate to termination shall apply. Under those provisions, an employer had to give a period of five weeks notice or payment in lieu of notice to terminate the employment of an employee who had served for as long as Mr Holt had. In the present case the employer, the respondent, had given no notice of termination. Hence, it was agreed that Clause 21 had been breached by the employer. In my opinion, however, the Award does not apply to the employer with respect to Mr Holt since he had not been engaged in any of the classifications enumerated in the Award nor was he performing any of the activities within those classifications. In other words, there had been no entering into a contract of employment to perform the occupations or activities enunciated in the classifications enumerated in the Award. For the same reason, the question of mixed functions in Clause 34 can have no application, but it is interesting to note that in Clause 34 the words "engaged" and "employed" are both used. I do not need to determine, in this case, what meaning is to be given to each of those words in that Clause.

1. Accordingly, in my opinion, the applicant has failed to establish a claim based upon s178 of the Act for a penalty to be imposed on the respondent. It follows that the applicant has failed in his claim for payment of five weeks pay in lieu of notice.

2. One then comes to the alternative claim based upon the general law. A contract of employment of this type can be terminated. There can be no doubt that the contract was for an indefinite period. The common law position is that normally an employer or an employee can terminate a contract of employment of that kind by giving reasonable notice. What is reasonable notice depends upon the nature of the work being done as well as many other factors. This is discussed in some detail in the text books and reference may be made to what is contained in the Law of Employment by Macken, McCarry and Sappideen, 3rd edition, which is referred to at page 8 of the reasons of judgment of Wright J in Hutt v Cascade Brewery Company Limited, unreported, judgment in which was given on 29 November 1991.

3. The common law position in Tasmania is affected by the provisions of the Industrial Relations Act 1984 (Tas), which have been in operation in Tasmania since about the middle of the last century. I was informed by counsel that these provisions are novel to Tasmania and Queensland. The relevant sections are sections 46 and 47. Those sections are within Part 3 of the Act. That Part is headed "Awards". Division 1 relates to power to make awards and related matters. Division 2, which contains these two sections only, is headed "Provisions in respect of industries or employment not otherwise subject to award". Since 15 December 1992, s46 has provided:
   

"46 This Division applies to the employment of a person whose terms and conditions of employment are not -

(a) prescribed by or under any Act or Act of the Commonwealth; or

(b) regulated by an order, award, determination or agreement having effect under any Act or Act of the Commonwealth."

1. In view of the conclusion already reached by this Court, this section makes the provisions of this Division applicable since the employment of Mr Holt was not regulated by any award made under a Commonwealth Act. There is no evidence to suggest the conditions of employment are prescribed under any State Act or any award made under a State Act.

2. In these circumstances, the other section in Division 2 of Part 3 of the Industrial Relations Act applies. That section, s47, since 1986, has been as follows:
   

"47(1) Unless otherwise expressly agreed by the employer and employee, the wages payable in respect of employment to which this Division applies, shall be deemed to be due and payable weekly."

1. In the present case the wages were payable weekly and were paid weekly. There is no problem as far as subsection 47(1) is concerned. In 1986 subsections (1A) and (1B) were inserted. They relate to penalties being imposed on an employer who does not comply with subsection 47(1). They have no relevance to the present case. Subsections 47(2) and (3) are as follows:
   

"(2) Subject to subsection (3) a term or period of service of employment to which this Division applies that is of indefinite duration is terminable by either party by -

(a) a week's notice, if the wages are payable weekly;

(b) a fortnight's notice, if the wages are payable fortnightly; or

(c) a month's notice in any other case."

(3) Subsection (2) does not apply in relation to the termination of a term or period of service of employment of an employee on account of his serious and wilful misconduct."

1. There is no suggestion in this case that Mr Holt had been guilty of serious and wilful misconduct and that his termination of employment results therefrom. What is of importance is that, on its face and in law, subsection 47(2) confers a right on an employer, and for that matter an employee, to terminate a contract of employment by giving one week's notice if wages are payable weekly. That is the effect of paragraph 47(2)(a) on the facts of this case where the employee was paid on a weekly basis. It does nothing more than that, namely, to give a right to terminate an employment on the giving of one week's notice.

2. In the present case, it is quite clear that the employer, the respondent, did not exercise that right. It did not give a week's notice to terminate the employment of Mr Holt. Therefore, apart from other considerations which I will mention in a moment, as far as the termination is concerned, the employer cannot rely upon s47 of the Industrial Relations Act.

3. I have enumerated the facts giving rise to the termination earlier. It is argued on behalf of the employer that what occurred here was an agreement between the parties to terminate. In my opinion, this matter must be considered in the light of what a Full Court of this Court said in Turner v Australasian Coal and Shale Employees' Federation and Elcom Collieries Pty Ltd (1984) 6 FCR 177, a Court comprising Keely and Gray JJ and myself. The question of termination of employment was discussed in some length at pages 188 to 193. It is apparent from a reading of that passage that even though an employer gives notice of termination, and that notice is unlawful, the employee has a right to either accept the notice or reject it. The giving of notice under those circumstances, in reality, constitutes a repudiation of the agreement of employment which cannot be done unilaterally. In some cases it is important for the employee not to accept such an unlawful notice as illustrated in that passage. In other cases the employee may accept it but that does not deprive him of his right to sue for loss of wages because of the unlawful nature of the termination. This is made quite clear from a passage which appears at page 192 in that report, and I quote:
   

"In some cases, little point has been seen in allowing the contract to continue on foot after its repudiation by one party. Where the consideration for the payment of wages is the performance of work, and the employee is unwilling to perform or the employer refuses to permit the performance of work, no claim for wages can be brought. The view has been taken, therefore, that only a claim for damages is possible, the damages only being equivalent to wages which would have been paid or forfeited in lieu of the notice required for termination. In these days, however, there may be many reasons other than the seeking of remuneration why either party may wish to keep a contract of employment alive."

1. I need not go any further. On the facts found by me, this is a case where the employer did not purport to give any notice of termination of employment at all. It is argued that there was an agreement to work out the rest of that week and that, therefore, this was equivalent to the giving of notice or in any event was part notice fulfilled partly by working. Those arguments are rejected. The right given by s47 of the State Act is clear. It was not exercised. Mr Holt accepted the termination, unlawful though it was, and left work within a week. He was quite entitled to do so, but the important point is that this was not a lawful termination in accordance with the State Act. It certainly was not in accordance with the common law.

2. One would have expected an employer who had engaged a person like Mr Holt in this responsible position to have been more generous in payment of a reasonable amount of compensation for termination of employment. I express that view. At the same time I express the view that I must apply the law. I turn then to consider what is the entitlement for Mr Holt arising from the unlawful termination of his employment.

3. In the circumstances and having regard to s47 of the State Act, the employer could have terminated the employment by the giving of one week's notice. That was not done. It follows that the only view, in law, which can be drawn is that reasonable notice should have been given of one week. In the absence of such notice, Mr Holt is entitled to one week's salary in lieu of notice. The amount agreed upon for this purpose is $718.20.

4. Accordingly it is ordered that there be judgment for the applicant against the respondent in the sum of $718.20.