Johns v Gunns Limited
[1995] IRCA 210
•18 May 1995
CATCHWORDS
INDUSTRIAL LAW - Unlawful termination - Part VIA of the Industrial Relations Act 1988 discussed - whether the employment was terminated for reasons including temporary absence from work because of injury - onus of proving reason for termination discussed - nature of obligation on employer to afford procedural fairness to an employee who is in danger of being terminated discussed - whether reinstatement of the employee was impracticable - whether the Court has a discretion to make an order requiring the employer to pay the employee the remuneration lost because of the termination - meaning of "remuneration lost by the employee because of the termination"
Industrial Relations Act 1988 ss170CA, 170DB, 170DC, 170DE, 170DF, 170EDA
Byrne v Australian Airlines Ltd (1993) 120 ALR 274
Heidt v Chrysler Australia Ltd (1976) 26 FLR 257
Minister of State for Immigration and Ethnic Affairs v Teoh (1995) 128 ALR 353
Bowling v General Motors Holden's Pty Ltd (1980) 50 FLR 79
WORDS AND PHRASES Remuneration lost
JASON SCOTT JOHNS V GUNNS LIMITED
No TI 148R of 1994
NORTHROP J
HOBART
18 MAY 1995
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
No TI 148R of 1994
TASMANIA DISTRICT REGISTRY
B E T W E E N :
JASON SCOTT JOHNS
Applicant
A N D :
GUNNS LIMITED
Respondent
COURT: NORTHROP J
PLACE: HOBART
DATE: 18 MAY 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The Order of the Court constituted by a Judicial Registrar made on 16 December 1994 be set aside and in lieu thereof the following orders be made.
The respondent reappoint Jason Scott Johns to the position in which he was employed immediately before his termination on 2 August 1994 so as to maintain the continuity of his employment.
The employment of Jason Scott Johns be deemed to have been continued for all purposes from 2 August 1994 to the date the final order is made in this matter.
The matter be adjourned to the sittings commencing in Hobart on 19 June 1995 at a time to be determined by the District Registrar to enable the parties to calculate in accordance with the principles set out in the reasons for judgment the amount of the remuneration lost by the applicant because of the termination.
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 TI 148R of 1994
TASMANIA DISTRICT REGISTRY
B E T W E E N :
JASON SCOTT JOHNS
Applicant
A N D :
GUNNS LIMITED
Respondent
COURT: NORTHROP J
PLACE: HOBART
DATE: 18 MAY 1995
REASONS FOR JUDGMENT
Part VIA of the Industrial Relations Act 1988 ("the Act") was inserted into that Act by the Industrial Relations Reform Act 1993 and came into operation on 30 March 1994. Amendments were made to Part VIA by the Industrial Relations Amendment Act (No 2) 1994 which came into operation on 30 June 1994. Those amendments had some retrospective effect and Part VIA as amended applies to the facts of this application.
Part VIA has changed dramatically the relationship that exists between an employer and employees of that employer. The right (if that is now the correct word) of an employer to dismiss, or to use the expression which is now common, to terminate the employment of an employee, has been restricted by statutory provisions. In broad terms the right is limited to cases where the employer is able to satisfy the Court of valid reasons for terminating the employment connected with the employee's capacity or conduct or based on the operational requirements of the employer. Even if one of these reasons is established, the employer may be unable to terminate the employment of the employee. These statutory provisions, with minor exceptions, override the terms of any contract of employment existing between an employer and an employee. The statutory provisions are different in nature from the terms of an award made under the Act and binding upon an employer and the employees of that employer. Many awards contain a clause the same as or similar to clause 11(a) of the Transport Workers' (Airlines) Award 1988 which is set out in Byrne v Australian Airlines Ltd (1993) 120 ALR 274 at 294:
"Termination of employment by an employer shall not be harsh, unjust or unreasonable. For the purposes of this clause, termination of employment shall include termination with or without notice."
Many authorities of the Federal Court of Australia have considered the proper construction and application of clauses of this kind and have developed the concepts that the clause imposes requirements that the employer afford procedural fairness to an employee who is liable to be terminated as well as substantive duties and rights on employers and employees. Part VIA of the Act applies notwithstanding what provisions an award contains.
Members of the public, including employers and employees, must understand and remember that the Parliament of Australia enacted Part VIA of the Act. Under the Act, the Industrial Relations Court of Australia is required to construe and apply the provisions of Part VIA according to normal judicial principles and procedures. In most cases arising under the provisions of Part VIA, one party will consider the result unfair and inequitable. The Court should not be blamed for this. The Court is performing its function according to law. This is such a case.
The Court has seen and heard the witnesses called to give evidence in this case including the employee concerned and the acting manager of the plant of the employer who decided, on behalf of the employer, to terminate the employment of the employee. In addition, two other witnesses were called by the employer to give evidence. The Court formed a very high opinion of each of the witnesses, and in particular their integrity, honesty, and ability to do their work well and to perform their obligations and duties to the best of their abilities. Nevertheless one party will consider the result to be unfair.
On 2 August 1994 Gunns Ltd ("the respondent") terminated the employment of its employee Jason Scott Johns ("Mr Johns"). By application dated 16 August 1994, Mr Johns made an application to the Court under subsection 170EA(1) of the Act for a remedy in respect of his termination of employment. The substantive remedies sought were for an order requiring the respondent to reinstate him in his employment and an order that the respondent pay him compensation. On 16 December 1994 the Court, constituted by a Judicial Registrar, by a decision, ordered that the application be dismissed. By motion, notice of which is dated 23 January 1995, Mr Johns sought a review of that decision pursuant to section 377 of the Act. The review is by way of a rehearing of the application. On the first directions hearing of the motion, the Court, at the request of the parties, ordered that the review be based on evidence to be given at the hearing of the review as if the review was the hearing of the application. The evidence led at the hearing of the review was more extensive than the evidence led before the Judicial Registrar.
Before turning to the facts of this matter, it will be helpful to refer to some of the provisions contained in Part VIA of the Act. Subsection 170CA of the Act provides that the object of Division 3, which comprises sections 170CA to 170EH, is to give effect to, among other things, to the Termination of Employment Recommendation, 1982, which the General Conference of the Industrial Labour Organisation adopted on 22 June 1982. This recommendation is also known as Recommendation No 166, a copy of the text of which is set out in Schedule 11 of the Act. Counsel for Mr Johns claims clauses 7, 8 and 10 of Recommendation No 166 have application to the facts of this case.
Section 170DB provides that an employee must not terminate an employee's employment unless a specified period of notice is given or payment in lieu of notice is given or, by paragraph 170DB(1)(b):
"the employee is guilty of serious misconduct, that is, misconduct of a kind such that it would be unreasonable to require the employer to continue the employment during the notice period."
In the present case, the respondent did not rely upon paragraph 170DB(1)(b) which, subject to sections 170DC and 170DE(2), enables an employer to terminate an employee for serious misconduct without notice as required by paragraph 170DB(1)(a). In terminating Mr John's employment the employer paid him compensation in lieu of notice in conformity with the provisions of section 170DB.
The limitation on the right of an employer to terminate the employment of an employee does not arise from section 170DB. The limitation arises, essentially, from section 170DE which provides:
"170DE (1) An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service.
(2) A reason is not valid if, having regard to the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid."
Section 170DF imposes further limits upon the right of an employer to terminate the employment of an employee. Under that section an employer is prohibited from terminating the employment of an employee for one or more specified reasons or for a reason which includes one of those specific reasons. For the purposes of this case, paragraph 170DF(1)(a) is relevant. That paragraph provides:
"170DF (1) An employer must not terminate an employee's employment for any one or more of the following reasons, or for reasons including any one or more of the following reasons:
(a)temporary absence from work because of illness or injury;
(b)... "
Section 170DC imposes an obligation on an employer to afford what is often described as procedural fairness to an employee whose employment is in danger of being terminated for specified reasons. That section is set out:
"170DC An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless:
(a)the employee has been given the opportunity to defend himself or herself against the allegations made; or
(b)the employer could not reasonably be expected to give the employee that opportunity."
In the present case, paragraph 170DC(b) has no application but paragraph 170DC(a) provides the foundation for a major contention put on behalf of Mr Johns.
Reference has been made already to section 170EA which permits an employee to apply to the Court for a remedy in respect of termination of employment. Section 170EDA contains provisions relating to the onus of proof to be applied in respect of such applications. The section in its present form was inserted into Part VIA with effect from 30 June 1994. Some difficulties arise with respect to the meaning to be given to the word "application" appearing in that section. This will be referred to later in these reasons. At the hearing it was obvious that Mr Johns alleged his termination of employment was in contravention of subsection 170DE(1) and in particular paragraph 170DF(1)(a). Subsections 170EDA(1) and (2) are set out:
"170EDA (1) If an application under section 170EA alleges that a termination of employment of an employee contravened subsection 170DE(1):
(a)the termination is taken to have contravened subsection 170DE(1) unless the employer proves that, apart from subsection 170DE(1), there was a valid reason, or valid reasons, of a kind referred to in subsection 170DE(1); and
(b)if the employer so proves, the termination is nevertheless taken to have contravened subsection 170DE(1) if the applicant proves that, because of subsection 170DE(2), the reason or reasons proved by the employer were not valid.
(2) If an application under section 170EA alleges that a termination of employment of an employee contravened subsection 170DF(1) on the ground that the termination:
(a)was for a particular reason or reasons referred to in that subsection that were stated in the application; or
(b)was for reasons stated in the application that included a particular reasons or reasons referred to in that subsection;
the termination is taken to have contravened subsection 170DF(1) unless the employer proves that:
(c)the employment was not terminated for the particular reason or reasons or for reasons that included the particular reason or reasons; or
(d)the particular reason was a reason, or the particular reasons were reasons, to which subsection 170DF(2) or (3) applied."
Subsections 170DF(2) and (3) are not relevant to the facts of this case. These provisions have the effect of imposing the limitation on the right of an employer to terminate the employment of an employee as set out at the beginning of these reasons.
Finally, for the purposes of this introduction, some observations of a general nature are made. Normally in proceedings of the type similar to those described in subsection 170EA(1), the applicant has the general onus of proving the claim the subject of the application. It is true that in the conduct of the hearing of the application the shifting or evidentiary onus may fall upon the respondent to the application but the overall onus of proof remains on the applicant. In many respects, the provisions contained in subsections 170EDA(1) and (2) are similar to an averment provision in a statute with the result that if the averment is made, or in cases where subsections 170EDA (1) and (2) apply, the termination of employment is not in dispute and the appropriate allegation is made in the "application under section 170EA", the applicant has proved an entitlement to a remedy unless the respondent produces evidence to satisfy the Court to the contrary. The proper construction and application of these two provisions could affect the procedures at the hearing of an application under subsection 170EA(1) with the result that the respondent should present a defence before the applicant is required to give evidence in support of the claim contained in the application. However, it should be noted that section 170EDA does not apply to sections 170DC nor to subsection 170DE(2). The normal evidentiary provisions apply where an employee alleges that the employer did not afford procedural fairness in the procedures leading to the termination of the employment or the employee seeks to rely upon subsection 170DE(2). These questions arise only after the employer has established valid reasons for the termination and has disproved the existence of a prohibited reason. Reference will be made later in these reasons to the question of whether the requirement of procedural fairness is to be implied from the provisions of subsection 170DE(2). If it is, the benefits to an employee flowing from subsection 170EDA(1) may apply.
At the hearing of the review, evidence was given by Mr Johns, Mr Wright who is now the sales manager for the respondent but who on 2 August 1994 was the acting general manager of the respondent at its operations in Smithton in the north-west of Tasmania, and had the power to decide whether Mr Johns' employment should be terminated, Mr Whelan, the manager of the lamination plant at Smithton and Mr Upton the leading hand in the beam plant area of that plant. As I said earlier, I find each of these witnesses honest, giving evidence to the best of their recollection. Mr Johns was cross-examined at length on many matters some going to his credibility. He had left school at the age of 16 years before he had completed his tenth year of school. He is now aged 24 years. He is not very articulate and presented as somewhat nervous. Nevertheless I accept his evidence on most matters. In truth most of the essential facts are not in dispute and, as counsel for Mr Johns contended, this case does not turn on any question of credibility. It was because of these findings that I introduced the reasons for judgment in the way that I did. The findings made are based upon the whole of the evidence before the Court but no reference is made to facts which, in my opinion, are irrelevant to the issues before the Court.
The respondent carries on a number of different types of business at different places in Tasmania and the mainland. Its main business is in the timber industry. It carries on an extensive business at Smithton. It employs a very large number of persons, some 150 in number, at its business in Smithton. It is possibly the second largest single employer in the area. Most of its employees at Smithton are engaged in its sawmilling and related activities. At Smithton it conducts what is described as the lamination plant. The main products manufactured in the lamination plant are laminated timber beams. Some 12 people are employed in the plant. Normally, the plant operates two shifts, the morning shift from 7.00 am to 3.30 pm and the afternoon shift from 3.30 pm to midnight. Sometimes a third shift is worked from 10.30 pm to 7.00 am. Normally some six people are engaged on the plant floor during the morning shift and some three persons engaged in the beam plant area on the evening shift. One of the pieces of machinery used in the laminating plant area is called a finger jointing machine. The operator of this machine is described as a finger joint profiler although that phrase is often used to describe the machine itself. At the time of the termination of his employment on 2 August 1994, Mr Johns was engaged as a finger joint profiler.
Mr Johns commenced employment with the respondent in 1989 on a casual basis and became a weekly employee in 1991. He was employed as a machinist on wood working machines initially on a moulding machine and then on the finger jointing profiler. This machine is used to cut V shapes at the end of a piece of timber, called a stick, to enable two sticks to be joined together by the interlocking fingers and the gluing of the ends of those sticks. The cuts are made by a series of blades which rotate at high speed on an arm which is lowered to the end of the stick automatically when a stick is placed on the machine. A guard is fitted to the machine to prevent entry to moving parts of the machine when in operation. A switch is fitted to the guard which stops the machine operating when the guard is lifted.
Apart from Mr Whelan, the manager of the lamination plant, Mr Johns was the most experienced operator of the finger jointing profiler. For this reason he normally worked the afternoon shift when none of the supervisors were present except for a short time at the beginning of the shift. A document had been prepared by Mr Whelan relating to the finger jointing machine containing many instructions relating to safety in the use of the machine and to problem-solving and the maintenance of the machine. Mr Johns had played a significant part in the preparation of the problem solving aspect of the document. The document stated the objective of the operator to include "To ensure all equipment is maintained to the highest standard, thus ensuring the efficient and safe operation of all equipment." The document described the qualifications for the operation as follows: "This position requires a high level of skill, either as a trained wood machinist or a person with considerable experience with woodworking machinery."
This machine forms a core part of the successful operation of the lamination plant. There was no suggestion that Mr Johns did not satisfy the qualifications. He appears to have been a good operator.
The document specifies in paragraph 6.02.02 safety provisions to be followed. It is not necessary to refer to these in detail but it is necessary to refer to a number of matters relevant to the termination of employment of Mr Johns on 2 August 1994. During the afternoon shift on 18 May 1995, Mr Johns did a very silly and unsafe thing. He had performed this activity on a number of occasions. Moving chains operating part of the machinery of the finger joint profiler were becoming loose. Mr Johns attempted to correct this defect by hitting the moving chains with a hammer. He did not lift the guard. He said the safety switch on the guard was not working. I don't accept that evidence. In any event, if the machine was stopped it would take some time to restart it. This is why Mr Johns did not stop the machine. He lent over the guard and was hitting the chains with the hammer. Unknown to him, another employee who was not operating the machine, placed a stick on the machine. Automatically the cutting blades descended and struck the hammer. Luckily no one was injured but the machine was damaged. On the following day a verbal warning was given to Mr Johns by Mr Whelan. A formal warning in writing was given the next day. A union representative was involved in the warning. The official warning was as follows:
"This is an official warning to Jason Johns for his unsafe work practices which he continues to use and which, on the afternoon shift of Wednesday, 18th May 1994, caused major production loss and destroyed some 11 finger joint cutters, valued at $1,500.00.
Jason was extremely lucky not to have caused himself massive injury. He has been trained to operate this machine in accordance with Work Procedure 6 : 02 which states that any unsafe acts will result in instant dismissal."
On its correct construction there had been no breach of particular terms of the document but there is no doubt that Mr Johns had engaged in an unsafe work practice. There is nothing to suggest that since then Mr Johns has engaged in that unsafe work practice or any other unsafe work practice.
It appears that Mr Johns has a propensity to injury resulting in time off work. While at work he has suffered a number of injuries, the major ones being to his back. In all cases he has received workers' compensation payments with respect to the injuries and time off work. None of these facts are in dispute. A summary of those injuries is given. On 11 March 1993 he suffered an injury to his back while washing a bucket but was cleared for work the same day. On 18 March 1993, he suffered an eye injury from sawdust and an eye wash with a disinfectant. On 26 January 1994 he suffered a back strain while lifting timber from a trolley to the docking bench. He was off work for three and a half days. On 20 April 1994 he suffered a further back strain while undoing bolts on a cutter heard of the finger joint machine and was off work for three days. On 3 June 1994 he suffered a back strain while shovelling sawdust from the top of a blower bin. He was placed on selected work being in relation to the moulding machine but had some time off work. He returned to full duties on 14 June. On 21 June he suffered a further back strain when lifting the safety cage on the finger joint machine. He received manipulation and returned to work on 22 June. At this time his doctor advised him to undertake exercises to strengthen his back muscles. One of the exercises was with the use of a broom handle held behind his back. Mr Johns did this exercise. On 28 June he received a certificate stating he was unfit for work from 27 June to 30 June. He undertook physiotherapy treatment to his back. He was advised to swim regularly. Mr Johns did not know how to swim. He took desultory steps to learn but did not in fact enter any swimming pool. He commenced to do exercises on a rowing machine and obtained a certificate from his doctor to do that. Later he bought his own rowing machine for exercise purposes.
On 1 July Mr Johns returned to work. On 17 July he suffered a further back strain. He returned to the moulding machine and was doing light work between 18 July and 22 July when he was declared fit for his usual duties. He was due to return to work on the finger joint machine on Sunday 24 July commencing at 3.30 pm. I will return to this date later. At present it is sufficient to say that he did return to work on that day when he injured his shoulder while pulling plastic off a blower bin. He did not injure his back. He was off work until 1 August 1995. On 2 August he was working the day shift which started at 7.00 am. That was the day the respondent terminated his employment.
On 24 July an event occurred which gives the appearance of a disputed question of fact. In my opinion, after hearing all the evidence, the dispute arose from a misunderstanding arising from a lack of appreciation of how words were used and the way they were used. Mr Johns was watching an Australian Football League match on television. Time got away from him. He was waiting to see the half time scores of another match in which the team he followed was playing. About 3.30 pm he suddenly realised he should have been at work. He proceeded to leave for work and should have reached work about 15 minutes late. He did not wait to see the score from the other game. As he was departing, the phone rang. He answered it. The call was from Mr Upton, who wanted to know if he, Mr Johns, was coming to work. Mr Johns said he was, that he had been watching the football match but would be at work in about five minutes. Mr Upton gave evidence that when he rang Mr Johns, Mr Johns said he was on his way after half time of the football match and that he, Mr Upton, said that was not good enough. Shortly after, Mr Upton recorded in his work diary the following entry:
"Rang Jason Johns at 3:40 pm to check if he would be working today. His reply was yes. I asked him why he wasn't here as he knew he had to start at 3.30 pm. He said that he would be about 5 minutes as he was watching the football and he was waiting for half time. I told him that it wasn't good enough and hung up."
Mr Johns reported for work about 15 or 20 minutes late. Shortly thereafter Mr Upton left work. Later that day Mr Johns injured his shoulder.
On Monday 25 July Mr Upton reported the incident to Mr Wright. Later he added the following to his diary note of 24 July:
"Reported the incident to Ian Wright on Monday 25th July Jason also knocked off at 10:15 after injuring his shoulder."
On this issue, I accept the evidence of Mr Johns. Mr Upton's version is based on a misunderstanding of how Mr Johns expressed himself. In particular, I accept that Mr Johns did not make a deliberate decision to be late for work.
On 2 August, Mr Johns was working on the day shift. He had reported for work at 7.00 am. Sometime that day Mr Wright decided that he might have to terminate Mr Johns' employment. He instructed employees of the respondent to prepare a statement of what should be paid to Mr Johns if he was terminated and to prepare a cheque for the amount of the payment to be made to Mr Johns. Mr Johns received a message to attend a meeting at the office of Mr Wright. Mr Johns says the meeting was for 12 noon. Mr Wright says the meeting was for 2.00 pm. The actual time is not important since both times were during the day shift, not the afternoon shift. Mr Johns did not know the purpose for which the meeting was called. Mr Wright and a Mr Cumming, the production manager, were at the meeting when Mr Johns arrived. Later, Mr Whelan attended. Mr Wright did not tell Mr Johns the purpose of the meeting. Mr Wright mentioned a number of matters to Mr Johns being the safety practice incident, the history of his injuries and absences from work, the failure of Mr Johns to do the recommended exercises, particularly the swimming, the failure to attend for work on time on 24 July and that his reason for being late for work "watching the football" was unsatisfactory. He then asked Mr Johns if he had any reason for the problems he, Mr Wright, had outlined.
In evidence Mr Johns said he was shocked at what Mr Wright had said. He told Mr Wright "Well I can't say anything". At that stage he did not know he was in danger of being terminated. Mr Wright then told Mr Johns that his employment was terminated and handed him the pay slip advice and pay cheque.
It should be noted that Mr Johns had no history of being late for work. From time to time employees of the respondent had attended late for work but no employee had been given a warning based upon late attendance or had been terminated for late attendance.
Subsection 170EA(1) of the Act provides:
"170EA (1) A person ("the employee") may apply to the Court for a remedy in respect of his or her employment."
On 17 August 1994, Mr Johns made an application to the Court pursuant to subsection 170EA(1). At that time the Court Rules required the application to be supported by an affidavit which included a statement of the alleged reason for termination and the respondent was required to file an affidavit stating the reasons for termination. In his affidavit, which was not properly sworn until later but which is not challenged, Mr Johns stated the alleged reason for his termination as follows:
"I was advised on 2 August, 1994, that I was a liability for the company, due to a back injury, and I was to pack my bags and leave."
In answer, the respondent in it affidavit sworn by Mr Wright, stated the reasons for termination as follows:
"The reasons for the Respondent's decision to terminate the employee's employment were:
(a)that his failure to undertake medically recommended rehabilitation and conservative treatment exercises was unsatisfactory;
(b)that his history of continued injury at work arising after his failure to undertake medically recommended rehabilitation and treatment exercises reinforced the fact that his failure to undertake those exercises was unsatisfactory;
(c)that his admission that he failed to attend for swimming exercises despite continuous medical recommendation and despite having taken time off from his employment with the Respondent on the pretence of attending such exercises was unsatisfactory;
(d)that his unsafe work practice on the 18th May, 1994 (for which he was formally warned in writing) was unsatisfactory;
(e)that his failure to attend his work with the Respondent on time on the 24th July, 1994 was unsatisfactory;
(f)that his reason for failing to attend his work with the Respondent on time on the 24th July, 1994 ("watching the football") was unsatisfactory;"
In final submissions, counsel for the respondent conceded there was no evidence to support the reasons expressed in paragraph (c), but that the respondent claimed that paragraphs (a), (b), (d), (e) and (f), cumulatively constituted a valid reason or valid reasons within the meaning of subsection 170DE(1) for the termination of the employment of Mr Johns.
Before setting out further facts relevant to this review, it is helpful to make some additional comments. These are made in the context of this review where no claim for termination for misconduct under paragraph 170DB(1)(b) is made and the provisions of section 170DD have no application.
At common law, subject to the terms of the contract of employment between an employer and an employee and to any statutory provisions or the terms of any award binding upon an employer, the employer had the right to terminate an employee's employment at any time. A reference to the law reports shows that over the years many questions arose as to what period of notice of termination of employment should be given and for damages for breach of contract. More recently, awards began to include terms to the effect of clause 11(a) of the Transport Workers' (Airlines) Award 1988 which is set out earlier in these reasons.
The Act recognises and accepts the right of an employer to terminate the employment of an employee. Under section 170CC, the regulations may exclude specified employees from the operation of parts of Division 3. In this regard reference may be made to Regulation 30BC.
The essential feature of Division 3 of Part VIA of the Act is to impose restrictions on the right of an employer to terminate the employment of an employee. This restriction is imposed by subsection 170DE(1) namely to where there is a valid reason or valid reasons connected with the employee's capacity or conduct or based on the operational requirements of the employer. Even if there is a valid reason, subsection 170DE(2) imposes a further restriction on the right of the employer to terminate the employment of an employee. The Act does not define what constitutes a valid reason or valid reasons for the purposes of subsection 170DE(1). Subsection 170DF(1), however, does impose a prohibition on an employer terminating an employee for specified reasons or for reasons including one of the specified reasons. The relevant reason here is that contained in paragraph 170DE(1)(a). On the facts of the present case, there is no doubt that the absences from work of Mr Johns arising from his injuries arising in the source of his employment are temporary absences from work because of injury, see Regulation 30D and in particular Regulation 30D(2).
The phraseology used in the operative parts of sections 170DC, 170DE and 170DEF is unusual. The words "an employer must not ... " normally impose a duty on an employer not to do the prohibited act with the result that a breach constitutes a criminal offence. This is not the case here; see section 170EG. The phraseology continues with the word "unless". The use of this word suggests that the words following the "unless" impose an obligation or duty on the employer in the nature of a condition precedent to be complied with by the employer before the employer terminates the employment of an employee. The obligation or duty is not a true condition precedent since non-compliance does not make the termination illegal, unlawful or non-effective. The non-compliance is described in the Act as a contravention of a provision of Division 3 of Part VIA of the Act; see section 170EE which will be considered later in these reasons. This section is based on the assumption that the termination of the employment is effective and that remedies may be granted for the contravention found on the basis that the termination is effective.
The reasons of an employer for terminating the employment of an employee are solely within the knowledge of the employer. The employer may state a reason but that reason need not be the actual reason nor need it be the only reason. Parliament has, from time to time, devised procedures to transfer to an employer the onus of proving the reason for termination of employment. Thus section 5 of the Conciliation and Arbitration Act 1904 made it a criminal offence for an employer to dismiss an employee by reason of specified circumstances. Subsection 5(4) provided that in proceedings for an offence, if all the relevant facts and circumstances, other than the reason "set out in the charge as being the reason ... of the ... (dismissal) ... are proved, it lies upon the person charged to prove that ... (the dismissal) ... was not activated by that reason ... ".
In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257, those provisions and earlier authorities relating to them were discussed at length and in particular at 266-271. I set out a passage appearing at 268 which has equal application to cases where paragraph 170DF(1)(a) of the Act applies:
"The provisions of s.5(4) of the Act cast an onus of disproving facts, namely, that the reason for the defendant's action was not actuated by the reason alleged in the charge. It has been held that a defendant need not prove the reason why he dismissed an employee: Atkins v Kirkstall-Repco Pty Ltd (1957) 3 FLR 439. The mere proof of a reason for dismissal, other than the reason alleged in the charge, does not necessarily negate the reason alleged in the charge. A mere denial of the reason alleged in the charge may not be sufficient to satisfy the onus cast upon the defendant. All the facts and circumstances leading up to the dismissal must be considered, including any reason expressed at the time of the dismissal, as well as any denial of the reason alleged in the charge."
In the same lengthy passage, at 267 reference is made to averment provisions and what was said by Dixon J in R v Hush; Ex parte Devanny (1932) 48 CLR 487. These views could have equal force in the application of subsection 170DE(1) and subsection 170DF(1) if the Act.
The section now corresponding to section 5 of the Conciliation and Arbitration Act is section 334 of the Act. The wording is somewhat different but, for relevant purposes, the effect is the same, see Lawrence v Hobart Coaches Pty Ltd, a decision of the Industrial Relations Court given 28 June 1994, unreported.
Section 170EDA was inserted into the Act and came into operation on 30 June 1994. Subsections 170EDA (1) and (2) commence "If an application under section 170EA alleges ... ". The section was enacted when the Court Rules contained provisions that an application, being the formal document initiating a claim or application for a remedy under section 170EA(1), had either itself or in the accompanying affidavit, to allege the employer's stated reason for termination. Since then, from 14 October 1994, under the Court Rules, no allegation of reason for termination is required to be given. Order 75 describes an application under subsection 170EA(1) as a "claim" and Form 132 adopts that terminology. As a result, if a claim for a remedy comes before the Court there is no application containing an allegation of reason for termination.
Section 170EDA applies with respect to terminations where the employee alleges there are no valid reasons for the termination under subsection 170DE(1) as well as to reasons, not necessarily the only reason, prohibited under subsection 170DF(1). In my opinion, the opening words of subsection 170EDA(1) are to be construed as meaning that if, upon all of the evidence, the termination is proved, then the employee is entitled to a remedy unless the employer establishes a valid reason or reasons under subsection 170DE(1). If established, subsection 170DE(2) has to be applied. If this construction is not accepted, the absence of appropriate forms in the Court Rules could defeat the intention of the Parliament.
For similar reasons, the opening words of subsection 170EDA(2) are to be given the same meaning. However, a very important result follows. Under subsection 170EDA(2), where that subsection is to be applied, the termination is taken to have contravened subsection 170DF(1) unless the employer proves:
"(c)the employment was not terminated for the particular reason or reasons or for reasons that included the particular reason or reasons; or"
It is because of this provision that the passage quoted from Heidt is of such importance. On the facts of this case, on the assumption that subsection 170EDA(2) applies, it would not be sufficient for the respondent to establish the reasons for dismissal as set out in the affidavit of the respondent and that they constituted valid reasons for termination under subsection 170DE(1). The respondent has to establish a negative namely that the reasons for dismissal did not include the reason that Mr Johns was temporarily absent from work because of injury. A mere denial may not be sufficient. All the facts and circumstances of the case have to be considered.
In the present case, having regard to the alleged reason for termination contained in the applicant's affidavit, I am satisfied that subsection 170EDA(2) applies. Further, during the course of the case presented on behalf of Mr Johns, it was obvious that Mr Johns was alleging that one of the reasons the respondent terminated him was that he, Mr Johns, had temporary absences from work because of injury. This, by itself, in my opinion, is sufficient to satisfy the requirements of subsection 170EDA(2). These provisions should be considered with respect to a possible amendment to the Court Rules.
In my opinion, the respondent has not satisfied the onus of proof cast upon it by subsection 170EDA(2). The onus is to be satisfied on the civil basis of balance of probabilities. Normally it would be expected that an employer would give a direct denial to a question of whether a reason for termination was for the reason of temporary absence from work because of injury; compare the express denial in Lawrence. This was not done in this case, but I do not rely on the absence of an express denial of this reason.
The facts and circumstances of the termination have been set out. In the course of cross-examination Mr Wright gave the following evidence:
"Question:So, if we go back to my question, did you ask him for any reasons why you should not act to terminate him ? --- Not that I can recall, no. By the same token he was able to respond once I had advised him that he was - - -
Yes.Thank you, Mr Wright. Mr Wright, I would be right in saying, would I not, that you were pretty upset by the absences of Mr Johns, in particular his final year of employment ? --- It was a concern, yes.
Yes.And would I be correct in saying that those times on which Mr Johns had been absent have been covered by a medical certificate ? --- I can't be sure that all times he was absent were covered by medical certificates, no.
Right.And I want to put to you that your concern over Mr Johns absences from work formed part of the reason why you dismissed him ? --- I'd have to agree with that, yes.
Yes.Thank you. Nothing further."
On the whole of the evidence, and in particular the evidence just set out, I am not satisfied, on the balance of probabilities, that the temporary absences from work of Mr Johns was not included as a reason of the respondent in terminating the employment of Mr Johns. Accordingly, on this basis, Mr Johns is entitled to a remedy.
Having come to this conclusion, it is undesirable to express an opinion on the question of whether there has been a contravention of the respondent of section 170DC and whether the respondent has established a valid reason or valid reasons under subsection 170DE(1). It must be remembered that section 170DC and subsection 170DE(2) have application only if the employer establishes a valid reason or valid reasons for termination under subsection 170DE(1). However, I do desire to make some observations about section 170DC.
In construing and applying section 170DC of the Act, it must be remembered that the section is to be applied in practical situations of employer and employee. In these circumstances it may not be appropriate to import into that section all the learning developed by the Courts when considering procedural fairness to be applied by a person exercising a power conferred by statute. The section applies where the employer proposes to exercise a personal right or power not conferred by statute. Section 170DC imposes an obligation on the employer to do something before he exercises that right or power. Whether the employer has observed that obligation or not depends upon the whole of the material before the Court, but a decision must be made having regard to the practical circumstances of the relationship of employer and employee.
Further, a question arises whether the express provisions of section 170DC leave room for the implication of the need to observe procedural fairness by reason of the provisions of subsection 170DE(2). The implication arises from the judgments in Byrne but there, no section equivalent to section 170DC had any application.
Reference has been made already to section 170CA(1) of the Act. The object is achieved by the express provisions of the Act contained in Division 3. The fact that Recommendation No 166 is set out in Schedule 11 of the Act, does not give legislative effect to the terms of the Recommendation. Those terms do not become part of the domestic law of Australia except to the extent they have been enacted as part of the substantive domestic law. In this regard there is much of interest in the reasons for judgment of the High Court in Minister of State for Immigration and Ethnic Affairs v Teoh (1995) 128 ALR 353. Nevertheless the terms of Recommendation 166 may give guidance to what can constitute reasonable opportunity for an employee to defend himself or herself against allegations made by the employer. On general principles, in order for an employer to give an employee the opportunity to defend allegations made where the employee is in danger of having his or her employment terminated, the employer should state that the employee is in danger of having the employment terminated. This was not done in this case.
Particular reference is made to paragraphs 7 to 13 of Recommendation 166. These clauses should not be applied as if they formed part of the domestic law. Nevertheless they may be relevant to consider whether, on the facts of any particular case, the employer has complied with the requirements of section 170DC. On the facts of this case, a union representative played a part in the investigation and warning relating to the breach of safety practices by Mr Johns on 18 May 1994. In these circumstances, in order to comply with section 170DC, the employer may well have given the opportunity to Mr Johns to have the benefit of the assistance of a union representative as part of the opportunity to defend himself against the allegations made; compare clause 9 of Recommendation 166. If this course had been followed, the respondent may not have acted as precipitously as it did with the consequential serious financial consequences. As I have said, Mr Johns is not very articulate. He needed the assistance of someone to help to put his case to the employer.
Section 170EE specifies the remedies the Court has power to award in respect of a contravention of a provision of Division 3 of Part VIA in relation to the termination of employment of an employee. The section, in its present form, was inserted into the Act with effect from 30 June 1994. Remedies under the repealed provisions should not be granted after that date. The primary remedy is that prescribed in subsection 170EE(1), namely reinstatement with consequential orders. The primary order to be made is as follows:
"(a)an order requiring the employer to reinstate the employee by:
(i)reappointing the employee to the position in which the employee was employed immediately before the termination; or
(ii)appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and
(b)if the Court makes an order under paragraph (a):
(i)any order that it thinks necessary to maintain the continuity of the employee's employment; and
(ii)an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination."
Subsections 170EE(2), (3) and (4) apply where reinstatement is impracticable and have no application where an order is made under subsection 170EE(1).
In the present case, Mr Johns is seeking an order that the respondent reinstate him to the position in which he was employed immediately before 2 August 1994. The employer contends that this is impracticable.
The main grounds advanced on behalf of the employer is the length of time since Mr Johns was terminated, the fact that his position has been given to another person and one of the reasons for the termination namely being late for work because of watching television. The last ground, it was said by Mr Wright, could cause difficulties at the workplace with respect to other employees which, when taken into account with the delay, makes reinstatement impracticable.
Mr Whelan and Mr Upton each gave evidence to support the conclusion that reinstatement was practicable. Each said they would treat Mr Johns in the same way as before the termination. They said other employees might tease Mr Johns for a short time but that, within days, the workplace would be performing normally.
Here effluxion of time between the date of termination of employment and the date an order for reinstatement can be made does not, of itself, make reinstatement impracticable. This is illustrated by Bowling v General Motors-Holden's Pty Ltd (1980) 50 FLR 79, a case involving section 5 of the Conciliation and Arbitration Act. There, the employment of Mr Bowling was terminated on 10 August 1978. Eventually a Full Court of the Federal Court ordered reinstatement within 7 days after 19 November 1980, more than 2 years after the termination. There, the employer employed a very large number of employees. Much of what was said by the Court at 94-99, with necessary adaptations, has equal application to the facts of this case. The lapse of time does not make reinstatement impracticable.
The fact that the position held by Mr Johns has been filled by another person gives rise to greater concern. This is so particularly where so few people are employed in the beam plant area. There is no evidence to suggest that the new employee cannot be directed to perform different duties or otherwise be absorbed into the workforce. More importantly the mere fact that a position vacated as a result of the termination of an employee has been filled by the engagement of a new employee cannot make the reinstatement impracticable. A contrary conclusion would make the primary remedy ineffective. An employer could refill the position immediately thereby depriving the terminated employee of the remedy of reinstatement. There is no doubt that in cases of this kind an employer faces a difficulty, particularly where a small number of persons are employed. A solution may be for the employer to arrange for a replacement to be employed under a contract in conforming with section 170CC of the Act and Regulation 30BC. Otherwise, the employer may face an application under section 170EA by the employee who is to be terminated to permit the first employee to be reinstated.
In the present case, Mr Johns commenced his application within the prescribed time after his termination. It appears that at all times he has sought reinstatement. In my opinion, the fact that his position has been filled by another person does not make reinstatement impracticable.
In all the circumstances of this case, the contentions put on behalf of the respondent whether individually or cumulatively do not make reinstatement impracticable. In the result orders will be made in conformity with paragraphs 170EE(1)(a)(i) and (ii) and (b)(i) and (ii).
Difficulties arise in determining the remuneration lost by Mr Johns because of the termination. This arises from the provisions of subsection 170EE(1) of the Act. Where the Court makes an order under paragraph 170EE(1)(a) the Court may make the orders set out in paragraphs 170EE(1)(b)(i) and (ii). An order made under paragraph 170EE(1)(b)(i) has the affect of maintaining the continuity of Mr Johns' employment for all purposes but it is obvious he has not received his remuneration for the whole of the period to the date the orders are made. Under paragraph 170EE(1)(b)(ii) the Court may make an order requiring the employer to pay to Mr Johns the remuneration lost because of the termination.
A first consideration is whether the word "may" is, in its context in subsection 170EE(1) to be construed as mandatory or as conferring a discretion. A similar problem has been considered by a Full Court of the Federal Court of Australia in Bowling. Subsection 5(5) of the Conciliation and Arbitration Act provided:
"(5) Where an employer has been convicted of an offence against this section the court by which the employer was convicted may order that the employee be reimbursed any wages lost by him and may also direct that the employee be reinstated to his old position or in a similar position."
The wording of that subsection has many similarities to the wording of paragraphs 170EE(1)(a)(i) and (b)(ii) of the Act. In Bowling, the employer was convicted of an offence against section 5 of the Conciliation and Arbitration Act. The question arose whether subsection 5(5) was mandatory in the sense that, upon conviction, the Court must order reinstatement and reimbursement for any wages lost. The Court, at 88-95, considered this matter and concluded that the word "may" was not to be construed as must. The reasons relied on in that passage have much to commend them and with necessary adaptations have equal force to the present legislation. Further this conclusion is supported by reference to subsection 33(2A)of the Acts Interpretation Act 1901 which was in operation when section 170EE was inserted into the Act. That subsection provides:
"(2A) Where an Act assented to after the commencement of this subsection provides that a person, court or body may do a particular act or thing, and the word "may" is used, the act or thing may be done at the discretion of the person, court or body."
The policy of the present legislation is to give protection and relief to employees who have been terminated for no valid reason. Where reinstatement is practical, as here, the employee should be reimbursed any wages lost. In Bowling, the Full Court ordered that Mr Bowling "be reinstated in his old position, or in a similar position, within seven days after publication of these reasons". The application for the reinstatement of any wages lost by Mr Bowling had been deferred by the trial Judge see 80-81, and that question did not come before the Full Court.
In the present case, prima facie Mr Johns should be entitled to receive the wages he would have received on the basis that his employment had continued unbroken from 2 August 1994 to the date of reinstatement. This raises immediate difficulties. The normal meaning of the word remuneration is the amount paid for services rendered. In the context of this case it means wages. Thus Mr Johns is entitled to the wages lost because of the termination. From here, difficulties arise because since 2 August 1994 Mr Johns has received social security payments as well as wages for doing other work. It seems only fair that the amounts so received should be deducted from the sum of the wages ordered to be paid under paragraph 170EE(1)(b)(ii). Likewise, the amount paid in lieu of notice and for accrued holiday pay should be deducted. Counsel for the parties agree that it is most unlikely that Mr Johns will be required to repay the social security payments. The only substantive issue is whether the wages ordered to be paid should be based on the gross wages paid or on the net wages after deduction of tax.
Counsel for the respondent has equated any amount ordered to be paid under paragraph 270EE(1)(b)(ii) to an "eligible termination payment" within the meaning of section 27A of the Income Tax Assessment Act 1936. He contended that the opinion of Gray J in Wheeler v Philip Morris Ltd (1990) 97 ALR 282 at 312-313 was apposite. That case involved an amount of damages to be awarded and the amount equated to lost wages was liable to tax in the hands of the recipient. This is a different type of case. Both counsel contended that the amount to be ordered to be paid should be based on the gross wage lost by Mr Johns.
In my opinion, this is not the correct approach. The amount ordered to be paid is the remuneration lost in circumstances where the employment is deemed to have been continued as if there had been no termination. On this basis of deeming continuity of employment, the appropriate approach is to determine what wages, excluding any overtime, Mr Johns would have received between 2 August 1994 and the date of reinstatement. At the time of his termination, his gross weekly pay was $414.21 plus $56.28 allowance on the basis of a deemed rostered day off. This amounts to a gross wage of $470.49 per week. There is no evidence to show whether any increases in wages have been made since 2 August 1995. On this basis, it is a mathematical exercise to determine the total of the wages lost making, if necessary, allowances for any increase in wages. No allowance should be made for annual leave loading.
From this some deductions must be made. Mr Johns has received two weeks pay in lieu of notice plus accrued holiday pay and loading amounting to $940.98 and $730.78 respectively. Tax has been deducted from those amounts.
The employer should deduct from the gross wages that would have been paid, the PAYE deductions normally made and these should be paid to the Commissioner of Taxation. From the balance, the employer should deduct and retain the following amounts:
(a)The net amounts already paid being the sum of $940.98 and $730.78 namely $1671.76;
(b)$1200.00 received by Mr Johns for work done while terminated; and
(c)$4750.00 plus any further amounts received by way of social service payments.
From the balance, the employer should deduct union dues normally deducted and paid to Mr John's union.
The balance is the appropriate remuneration to be paid to Mr Johns.
As is apparent, the Court is unable to make these calculations. Orders are to be made giving effect to these reasons. The matter will then be adjourned to enable the parties to see if any amount can be agreed upon. If agreement is reached, a further consent order can be made pursuant to Order 35 rule 10. If no agreement can be reached, the parties are directed to file submissions setting out the calculations by which the disputed amounts are reached and the Court will then determine the amount to be paid.
In conclusion, nothing said in these reasons relating to the calculations made under subsection 170EE(1) has application to calculations of compensation under subsection 170EE(2) or to calculations of damages with subsection 170EE(5). Compensation under subsection 170EE(2) probably constitutes an "eligible termination payment" under the Income Tax Assessment Act. In all probability the compensation should be calculated on gross remuneration leaving tax to be paid by the employee. No view is expressed in relation to subsection 170EE(5). Legislation clarifying the application of section 170EE should be considered.
Orders accordingly.
I certify that this and the preceding thirty four (34) pages are a true copy of the reasons for judgment of the Honourable Justice R.M. Northrop.
Associate:
Date:
ATTACHMENT
Counsel for the Applicant: Ms L. Mackey
Solicitor for the Applicant: Jennings Elliott
Counsel for the Respondent: Mr P.W. Tree
Solicitor for the Respondent: Shields Heritage
Date of Hearing: 21 April 1995
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