Jerry Smith v Training Services Pty Ltd T/A Line Management Institute of Training

[2016] FWC 7438

[2016] FWC 7438

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jerry Smith
v
Training Services Pty Ltd T/A Line Management Institute of Training
(U2016/8761)

COMMISSIONER MCKENNA SYDNEY, 14 OCTOBER 2016

Application for relief from unfair dismissal.

[1] On 9 August 2016, Jerry Smith (“the applicant”) made an application, pursuant to s.394 of the Fair Work Act 2009 (“the Act”), in which he sought an unfair dismissal remedy concerning his termination of employment by Training Services Pty Ltd T/A Line Management Institute of Training (“the respondent”), effective 20 July 2016. The applicant had been employed by the respondent as one of its trainers pursuant to a contract of employment since about 9 March 2014. Prior to the signing of the March 2014 contract of employment, the applicant had worked for the respondent since 31 July 2009 as a “freelance contractor” and, from 3 June 2011, as a contractor under a fixed-term contract.

[2] Shortly stated, the termination came about in connection with what the respondent described in the letter of termination which read, in part:

“As previously discussed last year and again in April of this year, our organisation has been undergoing many changes with the consideration of adjustments to the working conditions of Trainer and Assessors. We have discussed future business plans such as trainer allocations, the need for course development and face to face delivery. In these phone meetings you had advised me that contract assessing is what you prefer.

Since this time you have continued to perform your conduct [sic] a high level in the organisation which is to be admired. Due to the business need such as the implementation of CRICOS, face to face delivery, and course development needs we are writing to advise that your current employment contract with Line Management Institute of Training will come to an end on 20th July 2016.

We however, wish to offer you a new offer of Contract Trainer Assessor enclosed with a commencement date of the 21st July 2016.

Your current agreement will be required to work out a notice period of 2 weeks, concluding on 20th July 2016. Upon termination of your current employment agreement you will be entitled to receive the following payments:

● Outstanding wages;
● Any unused, accrued annual leave;
● Superannuation up until the last day of your existing contract. …”

(bold in original)

[3] The applicant indicated in the Form F2-Unfair Dismissal application that he was seeking the following outcomes by lodging the application:

“1 - I am seeking redundancy entitlements as I do not believe that because the company has restructured that it should result in my termination as one of the longest serving employees remaining at LMIT.

2 - I am seeking full payment of my superannuation beginning August 2015 until as such time this matter is resolved, including 1.25% interest I have missed out on as a result of non-payments.

3 - I am also seeking wages up till such times as this matter is resolved. I do not believe that after being asked to be a full time employee from a contractor to resort back to a contractor when it suits them as being fair and reasonable.”

(It may be noted that the applicant has later indicated in his oral and written submissions he understands an application for an unfair dismissal remedy is not an appropriate way to seek relief with respect to the alleged underpayments.)

[4] For its part, the respondent in its Form F3-Employer Response to Unfair Dismissal Application indicated it had 12 employees at the time the applicant was dismissed. The Form F3 further indicated as the reason for the dismissal (in response to Q3.1) as follows:

“The applicant was not dismissed. The position was made redundant for operational reasons and has not been filled.”

[5] Moreover, the Form F3 also provided the following response (to Q3.2) to the applicant’s contentions:

“The position was made redundant and we meet the criteria for a small business.

We accept we should have paid a total of four weeks notice as per the contract [the applicant] refers to. We have had a change of management and did not have a copy of that version [of the contract] so took the required notice from the Fair Work website. We are willing to accept that there is a contract requiring four weeks and pay the extra two weeks on top of the two weeks plus the holiday pay which we have already paid.”

[6] I recite these matters (as contained in the Forms F2 and F3) only by way of setting out some of the circumstances surrounding the termination of employment - because it is what occurred subsequently in connection with settlement-related matters which is apposite to this decision and my conclusion concerning the disposition of the application.

Procedural background

[7] As is typically the case with applications made pursuant to s.394 of the Act, the matter was listed for conciliation, by telephone, before a Fair Work Commission conciliator. As to the outcome of the conciliation on 9 September 2016, the conciliator wrote to the parties in (relevantly) the following terms:

“Thank you for your participation in the conciliation in the above matter. I confirm that you reached a settlement agreement and I attach terms of settlement as agreed.

As discussed, a three day cooling off period now applies. I will hold the file for three business days to allow you (the parties) time to consider the agreement reached at conciliation. Unless I hear from either of the parties by Wednesday 14 September 2016 the matter is resolved in the terms attached and the file will be closed.

If one of the parties does not want to proceed with the settlement and advises me during the cooling off period, I will refer the matter for arbitration before a Member of the Fair Work Commission (the Commission).  For information on that process, please follow this link.

As this is an agreement reached between the parties, you must send your signed terms to the other party.  Do not send a copy to the Commission as we do not keep any record of your agreement. You should however keep a signed copy of the agreement for your records. Any resignation or statement of service (if applicable) should be sent directly to the relevant party, not to the Commission.

The Applicant will need to file a Form F50 “Notice of Discontinuance” (see with the Commission, with a copy sent to the Respondent.  The Commission will refund the application fee, if applicable, within four to six weeks of receipt of the Form F50. …” (bold in original)

[8] The terms of settlement, which I do not reproduce, relevantly addressed settlement under headings, including the parties’ agreement to “fully and finally settle the matter” on bases principally set out under sub-headings including “Payment”, “Release”, “Confidentiality” and “Non Disparagement”.

[9] Early on the morning of Thursday 15 September, the day after the specified cooling-off period had expired, the applicant sent email correspondence to the conciliator which read:

“I have consulted with my advisor.

I do not wish to proceed with the terms set forth in the agreement on 9 September 2016.

Please refer this matter for arbitration before a member of the Fair Work Commission.
I am aware and expect that a formal hearing will not occur for at least 2 months (i.e. mid November at the earliest).

I am seeking the sum of [X] weeks’ salary [dollar amount].”

[10] The conciliator wrote to the parties on 16 September 2016 advising that “the Applicant has indicated that he will not proceed with the settlement agreement” and further advised she had “referred the matter for arbitration before a Member of the Fair Work Commission”. The conciliator prepared a report (being a report which is used to assist the Commission’s Unfair Dismissals Case Management Team (“UDT”)) in connection with matters including the identification of the parties’ future processing preferences and jurisdictional issues. The report indicated that the outcome was “Settlement collapsed”, and otherwise indicated jurisdictional issues had been raised with respect to the Small Business Fair Dismissal Code and genuine redundancy.

[11] On 28 September 2016, the UDT issued a Notice of Listing for a three-day “Jurisdiction (Genuine Redundancy; Small Business Fair Dismissal Code) and Arbitration Conference/Hearing” in the Brisbane Arbitration Roster, and the directions thereto.

[12] The file record indicates a communication was received from the (NSW-based) applicant about where the proceeding should be listed. Shortly stated, the UDT cancelled the listings in Brisbane with advice that the matter will be relisted at a time and date to be advised. The (Queensland-based) respondent also made representations about where the matter should be heard. The file was then allocated to me.

[13] I listed the matter for pre-hearing directions and/or conference, by telephone, on Friday 7 October 2016 (in advance of the Jurisdiction (Genuine Redundancy; Small Business Fair Dismissal Code) and Arbitration Conference/Hearing I had otherwise listed for 7 November 2016 by videolink between Sydney and Brisbane together with revised directions thereto, in substitution for the UDT’s original directions and by-then cancelled hearing dates concerning the same).

[14] At the pre-hearing directions and/or conference on 7 October 2016, and among other matters discussed during that proceeding, I canvassed with the parties, as I consider I was bound to (more particularly as neither party was represented by a lawyer or paid agent), whether there already was a binding agreement between them and the potential import of that matter. On the basis of what was before me in the file papers, and having heard the parties’ submissions that day, I indicated to the parties that I would give the matter further consideration.

[15] Upon further consideration, I subsequently instructed my Associate to write to the parties with advice that the matter would be listed for directions and/or hearing by telephone on 14 October 2016 in relation to why the application should not be dismissed on my own motion on the basis of the existence of a binding agreement between the parties, so as to allow the parties the opportunity to be heard on this discrete matter - in circumstances where the extant directions otherwise required the commencement of the filing and service of materials concerning the parties’ substantive materials from 19 October 2016. As part of the correspondence, the parties were provided a copy of the decision by Richards SDP in Heyden v Maa Amble Group Pty Ltd ATF Maa Ambe Unit Trust T/A Red Rooster[2014] FWC 7854, being a case which may have been of assistance to the parties given it discusses relevant authorities concerning binding settlement agreements. The parties were also referred more generally to cases in the Commission’s Unfair Dismissal Benchbook.

[16] Prior to the listing scheduled for 14 October 2016, and in advance of any directions that may have been made that day should the parties have wished to have the opportunity concerning the filing and service of any materials concerning the question of a binding agreement instead of proceeding directly into any hearing that day, the applicant made a detailed written submission on 12 October 2016. Despite its detailed nature, the applicant’s submission did not relevantly address whether there was a binding agreement. In large part, the applicant’s submission addressed whether there had been sham contracting arrangements, or the like, in relation to the period of time from 2009 to 2014 - that is, in the years before, it is common ground, the parties had entered into a contract of employment. Among other matters, the applicant’s submission addressed matters including those:

(a) which were irrelevant to the question of whether there was a binding agreement;

(b) which were irrelevant or at least largely irrelevant to the substantive issues that otherwise may have arisen for determination in relation to this particular application for an unfair dismissal remedy; and

(c) which were, more generally, jurisdictionally-irrelevant to those matters properly arising for determination in relation to any unfair dismissal application.

[17] The applicant concluded by submitting he had initially sought reasonable remuneration for lost wages from the time of dismissal until the time “this situation was resolved”, “[y]et after attempting to negotiate and compromise to no avail I am looking for maximum compensation for the distress this situation has put me and my family in.”

[18] In summary, in the proceeding that subsequently unfolded on 14 October 2016, the submissions advanced by the parties effectively were: (a) that the applicant was content to rely on the matters outlined in the written submission that he had made prior to the listing; and (b) the respondent had nothing to add. The respondent’s representative confirmed, however, that the respondent was ready, willing and able to perform its part of the terms of settlement, and would do so in terms of prompt payment pursuant to the settlement agreement.

Consideration

[19] In the decision of McKinnon v Eventide Homes (Stawell) Inc[2013] FWC 5273, which was upheld on appeal to a Full Bench (McKinnon v Eventide Home (Stawell) Inc[2013] FWCFB 8123), Bissett C dismissed an application under s.394 of the Act where the applicant had agreed to terms to settle the application during the course of a conciliation conference, but subsequently elected not to sign the agreement.

[20] In that decision, the Commissioner provided the following analysis in determining whether a binding agreement had been reached between the parties:

“[45] In Masters v Cameronthe High Court held that when parties reach agreement on terms of a contractual nature and agree that the negotiations will be dealt with by a formal contract, that the case may belong to any of three categories:


(1) the parties have agreed on all terms and intend to be immediately bound to perform those terms “but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect”; or

(2) the parties have agreed on all terms and intend no departure from or addition to that which there agreed terms express or implied, “but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document”; or

(3) the parties do not intend “to make a concluded bargain at all, unless and until they execute a formal contract.”

[46] In the first two categories the High Court held that there was a binding contract.

[47] The principles in Masters v Cameron provides clear guidance as to the status of any agreement reached in conciliation and are applicable in determining this matter. Ms McKinnon suggests the decision can be ignored. To ignore established legal authority is not appropriate and would lead to uncertainty in decision making by the Commission. There are well established public policy reasons relating to sound administration and consistency in decision making that determine the applicability of the reasoning in Masters v Cameron and in other relevant decisions of the Courts and this Commission to this matter.

[48] The question of whether or not there was a binding agreement reached between the parties is a matter of fact. Even though the Applicant did not sign the agreement arising from conciliation this does not mean that a binding agreement was not reached. The question to be determined is if any agreement of the types described in Masters v Cameron was reached between the parties in conciliation. If the agreement reached is of the first or second category it would, following Masters v Cameron, be a binding agreement.” (footnotes omitted)

[21] In the present case it seems clear that an agreement of the type described in the first category in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 was reached between the parties. Such an agreement is a binding agreement. There was no suggestion by the parties, either on the papers or during proceedings, that agreement was not reached at the conciliation chaired by the Fair Work Commission conciliator; nor was there any suggestion that the parties did not intend to be bound by those terms, absent the exercise of the opportunity respectively available to each of them within the cooling-off period.

[22] The agreement reached between the parties on Friday 9 September 2016 provides as it does. There is no suggestion of duress or anything else of that nature arising in relation to the settlement. There is no suggestion that the written terms of settlement do not accurately reflect the agreement that was reached between the parties on 9 September 2016.

[23] Neither the applicant nor the respondent availed of the opportunities available to them concerning the settlement agreement during the cooling-off period that applied to that agreement, as set out in the conciliator’s correspondence of 9 September 2016. Rather, it was only after the cooling-off period had expired that the applicant belatedly informed the conciliator that he did not wish to proceed with the terms of the agreement of 9 September 2016 and sought that the matter be referred for arbitration. The advice concerning the applicant’s purported withdrawal from the settlement was, simply stated, too late. The applicant’s advice was conveyed in email correspondence sent at 5.16am on Thursday 15 September 2016; the cooling-off period had by then lapsed. It does not matter if a cooling-off period had passed by five hours or, for example, five days or five weeks because the relevant cooling-off period has passed by its cut-off time or cut-off date regardless. Here, the applicant advised after the conclusion of the cooling-off period that he did not wish to proceed with the settlement because he, by then, decided he wanted (or, more accurately, advised the conciliator he was seeking) double the financial component specified in the settlement agreement.

[24] It was not, after the conclusion of the cooling-off period on 14 September 2016, properly available to either party to purport to withdraw from the settlement agreement. Absent a withdrawal from the settlement within the cooling-off period, the settlement agreement applied with equal force and effect to both parties.

[25] Equally with the conclusions I have reached concerning the applicant, it would not have been properly available to the respondent, after the expiry of the cooling-off period, to indicate that it did not wish to proceed with the agreement recorded in the settlement terms or, hypothetically, to indicate that it had reconsidered its position and was now prepared to pay only half the financial component of the settlement agreement. The respondent is bound to effect its part of the agreement by attending to its obligations under those terms (albeit in circumstances where the terms have not been signed and, as a corollary to findings that there is a binding agreement, do not necessarily need to be signed for the agreement to have effect as a binding settlement agreement in any event). The respondent has confirmed it will promptly do so, by making the relevant payment specified in the settlement agreement.

Conclusion

[26] I am satisfied, in circumstances where there is a binding agreement between the parties, I should exercise my power under s.587(1)(c) of the Act to dismiss the applicant’s application. As such, an order dismissing the application will separately issue.

[27] In consequence, I also vacate the directions made in connection with the Jurisdiction (Genuine Redundancy; Small Business Fair Dismissal Code) and Arbitration Conference/Hearing that had been listed for 7 November 2016, and also cancel the hearing by videolink scheduled for that day. A notice concerning the cancellation of that listing will also separately issue.

[28] For completeness, I note the advice in the conciliator’s correspondence of 9 September 2016 as to the need to file a Notice of Discontinuance (in connection, I understand, with any potential refund of the application fee under reg. 3.07(8) of the Fair Work Commission Regulations 2009) is now otiose given the dismissal of the application.

[29] The proceedings before the Commission are concluded.

COMMISSIONER

Appearances:

J. Smith, in person.

M. MacDonald, director of the respondent.

Hearing details:

2016.

14 October;

Sydney (by telephone)

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