Litchfield v Chief Executive, Department of Manufacturing, Innovation, Trade, Resources and Energy
[2014] SASCFC 51
•2 June 2014
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
LITCHFIELD v CHIEF EXECUTIVE, DEPARTMENT OF MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
[2014] SASCFC 51
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Bampton)
2 June 2014
EMPLOYMENT LAW - EFFECT OF INDUSTRIAL AWARDS, AGREEMENTS OR LEGISLATION ON EMPLOYMENT CONTRACT - PARTICULAR CASES
PUBLIC SERVICE - CLASSIFICATION, PROMOTION OR TRANSFER - OTHER STATES OR TERRITORIES
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - RULES OF CONSTRUCTION - GENERALLY
EMPLOYMENT LAW - CONTRACT OF SERVICE - TERMS OF CONTRACT - CONSTRUCTION OF PARTICULAR TERMS
Appeal from the Full Court of the Industrial Relations Court.
The appellant, David Litchfield, was employed under a contract which was governed by the Public Sector Management Act 1995 (SA) as Executive Director, International Market Development. On 23 December 2010 the appellant received a letter advising him that his position was to be abolished from 31 December 2010 and assigning him to a different executive position within the public sector with a lower classification.
The appellant was awarded payment in lieu of notice and a termination benefit pursuant to the employment contract by a magistrate of the Industrial Relations Court through a claim under s 14 of the Fair Work Act 1994 (SA). The Full Court of the Industrial Relations Court overturned that decision. It found that the appellant’s employment had not been terminated according to the contract but that he was assigned to different duties pursuant to the Public Sector Act 2009 (SA).
The appellant contends that the abolishment of his previous position and assignment to the new position, Director, Industry Liaison and Regional Development, did not constitute a change of duties but was a transfer to a new position. According to the appellant, the transfer was a repudiation of the employment contract entitling him to payment in lieu of notice and a termination benefit pursuant to its terms.
Held per Stanley J (Kourakis CJ and Bampton J agreeing, dismissing the appeal):
1. The assignment of the appellant to a new position within the public sector was not a valid exercise of s 47 of the Public Sector Act 2009 (SA) which applies to the variation of an employee’s duties within the same position at ([64] - [71]).
2. The assignment of the appellant to the new position with the same substantive remuneration level was authorised pursuant to s 9(3) of the Public Sector Act 2009 (SA) and did not constitute repudiation of the employment contract (at [74] - [79]; [88] - [93]).
3. The appellant was not given written notice of the termination of his employment and did not receive payment in lieu of notice. In the absence of such written notice or payment in lieu of notice, the entitlement to the payment prescribed by clause 11 of the employment contract was not enlivened (at [94] – [104]).
4. The assignment of the appellant to a new position pursuant to s 9 of the Public Sector Act 2009 (SA) did not terminate the appellant’s employment and the appellant was, therefore, not entitled to termination payments irrespective of the effect of the assignment on his contract (per Kourakis CJ at [9]).
Fair Work Act 1994 (SA) s 14; Public Sector Act 2009 (SA) s 3, s 4, s 9, s 20, s 39, s 75, s 77-79, s 42-45, s 47, s 49, s 50, s 53-55, clause 3 of Part 2 Schedule 3; Public Sector Regulations 2010 (SA) s 4, s 5, s 14; Public Sector Management Act 1995 (SA) s 33-37, s 44, s 50, referred to.
Morante v South Australian Superannuation Board (1998) 82 IR 318; Jarratt v Commissioner of Police (NSW) (2005) 224 CLR 44; Australian Education Union v Department of Education and Children's Services (2012) ALJR 217, applied.
Litchfield v Chief Executive, Department of the Premier and Cabinet & Anor [2012] SAIRC 33, discussed.
Director General of Education v Suttling (1987) 162 CLR 427; Morante v South Australian Superannuation Board (1998) 84 IR 205; Koompahtoo Local Aboriginal Land Council & Anor v Sandpipe Pty Ltd & Anor (2007) 233 CLR 115; Loughridge v Lavery [1969] VR 912 at 923 - 924, considered.
LITCHFIELD v CHIEF EXECUTIVE, DEPARTMENT OF MANUFACTURING, INNOVATION, TRADE, RESOURCES AND ENERGY
[2014] SASCFC 51Full Court: Kourakis CJ, Stanley and Bampton JJ
KOURAKIS CJ: I would dismiss the appeal for the reasons given by Stanley J.
I wish to make an additional observation on the appellant’s contention that executive employees are excluded from the scope of s 9 of the Public Sector Act 2009 (SA) (the Public Sector Act).
Plainly enough the term “employee” will ordinarily include an executive employee and, accordingly, on its terms s 9 of the Public Sector Act is capable of applying to executive employees. However, the apparently wide terms of one provision of a statute may sometimes be read down by reason of a negative implication drawn from another provision or provisions.
The appellant’s contention must rest on a negative implication arising out of Division 2 of Part 7 of the Public Sector Act and s 44 of that Act in particular. Section 42 provides that the employment of a person as an executive employee of a public sector agency is to be subject to a contract made between the employee and the agency. Employment is a common law relationship which is, in modern times, commonly regulated by the terms of an oral or written contract, an award or other statutory instrument. The effect of s 42 is to require the employment to be regulated by a contract which contains the terms prescribed by s 42(2) of the Public Sector Act and which may exclude or modify a provision of the Public Sector Act itself. Section 43 provides for the resignation of an executive employee. Section 44 provides for the termination of an executive’s employment in the following terms:
44—Termination of executive's employment by notice
(1)A public sector agency may, by notice in writing, terminate the employment of an executive employee of the agency without specifying any grounds.
(2)Subject to the contract relating to the employee's employment, if the employee's employment is terminated by the agency by notice under subsection (1), the employee is entitled to a termination payment of an amount equal to 4 months remuneration (at the rate determined for the purposes of this subsection under the employee's contract) for each uncompleted year of the employee's employment (with a pro rata adjustment in relation to part of a year) up to a maximum of 16 months remuneration.
(3)The period of notice under subsection (1) must be at least 4 months except where the employee is compensated by payment of an amount equal to the remuneration that would have been payable during the balance of the period of 4 months (at the rate determined for the purposes of this subsection under the employee's contract).
(4)The power conferred by this section is in addition to the power to terminate an executive employee's employment under section 54.
The appellant’s employment as an executive employee is governed by a contract which pre-existed the enactment of the Public Sector Act and the termination of his employment by the agency is therefore governed by clause (3)(f)C of the Third Schedule to the Public Sector Act. That Placitum provides:
C—Termination of executive's employment by notice
(1)A public sector agency may, by notice in writing, terminate the employment of an executive employee of the agency without specifying any grounds.
(2)Subject to the contract relating to the employee's employment, if the employee's employment is terminated by the agency by notice under subclause (1), the employee is entitled to a termination payment of an amount equal to 3 months remuneration (at the rate determined for the purpose under the employee's contract) for each uncompleted year of the employee's employment (with a pro rata adjustment in relation to part of a year) up to a maximum of 12 months remuneration.
(3)The period of notice under subclause (1) must be at least 3 months except where the employee is compensated by payment of an amount equal to the remuneration that would have been payable during the balance of the period of 3 months (at the rate determined for the purpose under the employee's contract).
(4)If the employee's employment is terminated by notice under subclause (1) and the employee was, immediately before the commencement of this clause, entitled under section 36(3)(a) of the Public Sector Management Act 1995 to some other appointment in the Public Service in the event of termination of the employee's employment by notice under section 36(2) of the Public Sector Management Act 1995—
(a)subclauses (2) and (3) do not apply; and
(b) section 36(3) and (5) of the Public Sector Management Act 1995 apply as if those provisions continued in force.
(5)The power conferred by this clause is in addition to the power to terminate an executive employee's employment under section 54 of this Act.
Placitum C and s 44 of the Public Sector Act confer statutory rights to termination benefits on an executive employee. Section 9 of the Public Sector Act confers a power on a public sector agency to assign an employee to another position. It is a basic principle of statutory construction that the provisions of a statute should be construed as whole and given a coherent operation. In particular s 9 of the Public Sector Act ought not be construed in a way which would allow a public sector agency to unilaterally deny an executive employee the termination benefits to which he or she would otherwise be entitled pursuant to the Act’s other provisions. If s 44 and Placitum C of the Public Sector Act had provided that on the termination or repudiation of an executive employee’s contract by a public sector agency, the executive employee became entitled to termination payments, it would, at least, be arguable that s 9 of the Public Sector Act should not be construed in a way which allowed a Public Sector agency to deny an executive employee his or her statutory benefits by the unilateral exercise of assigning him or her to a different position instead of giving notice of the termination of the contract in accordance with s 44 or Placitum C. That construction could be achieved reading down the word “employee” to exclude executive employees entitled to the termination benefits conferred by s 44 of the Public Sector Act or Placitum C of the Third Schedule. If the word “employee” was read down in that way, the provisions of s 9, and in particular s 9(6), of the Public Sector Act, would not be a good defence to an employee’s claim for termination benefits.
Be that as it may, it is clear that s 44 and Placitum C of the Third Schedule to the Public Sector Act do not confer a right to a payment on termination of the executive employee’s contract. Instead, those provisions confer a right to the benefits therein prescribed only if the public sector agency terminates the employment of an executive employee.
Read together, the purpose of the provisions is to confer a right to termination benefits only in those cases in which there is no alternative position at the same remuneration level to which to assign the executive employee. Flexibility in the management of the Public Sector employees is thereby achieved and some financial protection afforded to employees for whom a position cannot be found.
On assigning an executive employee to another position pursuant to s 9 of the Public Sector Act, the relationship of employer and employee is maintained. Accordingly, no entitlement to termination benefits arises. There is therefore no statutory tension or incoherence in the application of s 9 of the Public Sector Act to executive employees.
STANLEY J:
Introduction
This is an appeal from the Full Court of the Industrial Relations Court of South Australia (“the IRC”). The IRC allowed the respondent’s appeal from the judgment of an industrial magistrate awarding the appellant’s claim for payment in lieu of notice and a termination benefit pursuant to clause 11 of his employment contract. The appellant’s claim was made pursuant to s 14 of the Fair Work Act 1994 (SA) (“Fair Work Act”).
The appellant claimed he had been made redundant from his employment as Executive Director, International Market Development, with the respondent department on or about 31 December 2010. The appellant claimed he did not receive notice in writing of his termination or payment in lieu of notice, or the termination payment prescribed by clause 11.1 of his employment contract.[1]
[1] Amended Particulars of Claim para. 6.
The Full Court of the IRC allowed the appeal on the basis that the appellant’s employment had not been terminated within the meaning of clause 11. It held that the respondent had assigned the appellant to different duties pursuant to the power conferred on it by s 47 of the Public Sector Act 2009 (SA) (“Public Sector Act”).
The appeal to this Court raises difficult issues of construction of the Public Sector Act.
The facts
In May 2009 the appellant was appointed to an executive position in an administrative unit pursuant to the Public Sector Management Act 1995 (SA) (“PSM Act”). In accordance with s 34(1) of the PSM Act, the parties executed a contract by which the appellant was employed as the Executive Director, International Market Development, with the administrative unit which at that time was named the Department of Trade and Economic Development. The title of the unit changed to the Department of Manufacturing, Innovation, Trade, Resources and Energy in October 2011. The term of the contract was three years. The appellant’s classification level was SAES 2.
The contract provided that the appellant was to undertake the duties set out in Item 5 of Schedule 1 of the contract in accordance with the Executive Performance, the SAES Executive Competency Framework and all relevant legislative requirements.
Those duties were set out in a position description which described the primary purpose of the position, key challenges, key result areas and key relationships. The contract provided a total remuneration package value of $210,000 per annum. That comprised of salary and allowances of $192,661 and an employer superannuation contribution of $17,339.
The contract did not provide any right of return to the Department at the expiry of the term of the contract if the respondent chose not to reappoint the appellant to the position.
Clause 11 of the contract provided for termination as follows:
11.1The Chief Executive may terminate the employment of the Executive by giving notice in writing, or by payment in lieu of notice, to the Executive in accordance with the Act. The Chief Executive may elect whether or not to give reasons for the decision.
11.1.1 If the employment of the Executive is terminated by the Chief Executive under this clause the Executive will be entitled to a termination payment of four (4) months “adjusted remuneration” for each uncompleted year of the term of appointment (with a pro rata adjustment in relation to part of a year) subject to a maximum payment of sixteen (16) months adjusted remuneration.
11.2 The Executive shall not be entitled to any termination payment if either the appointment of the Executive to the position is terminated to enable the Executive to be appointed to another position in the service of the State Service or if the employment of the Executive is terminated by the Governor under section 51 (mental or physical incapacity), section 52 (unsatisfactory performance), section 58 (misconduct) or section 60 (criminal conviction) of the Act.
11.3This Agreement does not remove or restrict the right or power of the Governor to dismiss the Executive under Part 8 or Part 9 of the Act.
The appellant’s appointment was regulated by the provisions of the PSM Act relating to executive employees including Part 7, Division 1.
As a result of budget decisions, the appellant’s position was abolished with effect from 31 December 2010. In late December 2010 the appellant was informed of this decision by the Chief Executive of the Department, Mr Lance Worrall, who suggested that the appellant could temporarily fill the position of Director, Industry Liaison and Regional Development in the period from 1 January 2011 to the end of February 2011. The appellant indicated that he was prepared to consider that as a possibility depending on whether any other opportunities arose. At about the same time Mr Worrall also suggested to the appellant that he could take up a position in strategic projects. The appellant considered this suggestion over night.
The next day the appellant told Mr Worrall that he was prepared to undertake strategic project work under certain conditions. He gave Mr Worrall a document in the following terms:
· Offer to be that I continue with strategic project work until at least Xmas 2011.
· Job to be Executive Director, Strategic Projects
· A Redeployee to be identified to provide support and be Strategic Projects Officer until they find a permanent role
· If I identify an external role during the year which offers ongoing career prospects, then my SAES contract will be terminated when I provide advice and I will be eligible for termination payments in accordance with my contract.
· The Projects may include, but not be limited to:
ØAviation Route Development
ØChina Strategy
ØIndia Strategy
ØReview/Restructure of the ICNSA
· Not necessarily be part of Corpex, but regular scheduled meetings with CE or DCE to be kept abreast of developments/issues in the agency and to discuss future work plan.
The appellant gave evidence, which the magistrate apparently accepted, that Mr Worrall made no response to the conditions proposed.
On 23 December 2010 the appellant was presented with a letter from Mr Worrall which purported to assign him temporarily to the executive position of Director, Industry Liaison and Regional Development pursuant to s 47 of the Public Sector Act. This was a position at the Director level with a classification of SAES 1. This contrasted with his position as Executive Director, International Market Development, which was an executive director position with a classification of SAES 2. Executive Director is a superior position to Director in the public service hierarchy. SAES 2 is a higher classification than SAES 1.
As at 23 December 2010 the appellant’s total salary and allowances were $202,413.76. His total remuneration package was valued at $220,631. As the Executive Director, International Market Development, the appellant was responsible for 50 departmental staff based in Adelaide and 30 staff who worked in overseas offices. He was responsible for a budget of around $80 million. By contrast, the position to which he was assigned commencing on 1 January 2011 had a staff of about 15. In that position he was not responsible for a budget.
The learned magistrate found that following the appellant’s assignment to his new position, he continued to be paid at the same classification level stipulated in his contract.[2]
[2] [2012] SAIRC 33 at [33] and [58].
By letter dated 14 February 2011 Mr Worrall purported to assign temporarily the appellant to the position of Executive, Strategic Projects pursuant to s 47 of the Public Sector Act. This position was classified at the SAES 2 level.
In about April 2011 the appellant applied for and won the externally advertised position of Director, Major Projects, with the Department of Planning and Local Government. He commenced this position in early June 2011. He was terminated from this Executive Director position effective 23 December 2011 when the position became redundant.
Although before us, Mr Heywood-Smith QC, counsel for the appellant, submitted that the letter from Mr Worrall to the appellant of 23 December 2010 constituted notice, it was common ground at trial and on appeal to the Full Court of the IRC that the appellant was not given written notice of the termination of his employment.
Magistrate’s reasons
The learned magistrate found that the abolition of the appellant’s position as Executive Director, International Market Development, amounted to the repudiation of the contract by the respondent. The assignment to the temporary position of Director, Industry Liaison and Regional Development, did not maintain his contract position. With one exception, the degree of responsibility, the staff reporting to him, budgets and level of appointment, were not maintained by this assignment. The one exception was his level of remuneration.
The magistrate found the circumstances under which the appellant undertook the temporary assignments did not amount to an election to keep the contract on foot. Accordingly, he found the appellant was entitled to payment of the termination benefit set out in clause 11 of the contract. In addition he found the appellant entitled to receive payment in lieu of notice pursuant to the transitional provisions contained in clause 3(3)(f) of Part 2 of Schedule 3 of the Public Sector Act.
The Full IRC’s reasons
The Full Court of the IRC allowed the appeal from the magistrate’s decision on the basis that the assignment of the appellant to the position of Director, Industry Liaison and Regional Development, was authorised by s 47 of the Public Sector Act. He was being assigned new duties in this position. Accordingly his employment had not been terminated within the meaning of clause 11 of the contract. On that basis the appellant’s claim was dismissed.
Submissions of the parties
The appellant contends that the employment relationship was contractual. It was a contract for appointment to a specific position, namely, Executive Director, International Market Development. The abolition of that position and the “assignment” to the position of Director, Industry Liaison and Regional Development, was not authorised by s 47. Section 47 is concerned with a change of duties not a transfer to a new position. A transfer to a new position could only be authorised pursuant to s 9(3). Section 9(3) did not apply as the transfer did not occur with the appellant’s agreement, and was not conditioned on the maintenance of his substantive remuneration level. Accordingly, what occurred was a unilateral variation of the terms of the contract without the consent of the employee. This amounted to a repudiation of the contract. The performance by the appellant of further duties in the particular circumstances did not constitute an election by him to treat the contract as being on foot. It followed that his employment had been terminated, entitling him to the benefit of clause 11 of the contract.
The respondent contends that the appellant’s employment was governed by statute and the respective rights and obligations of the parties had to be obtained by reference to the provisions of the Public Sector Act. To the extent that the relationship was contractual, the contract had to be consistent with the terms of the Public Sector Act. In that context s 47 applied to the appellant’s employment and empowered Mr Worrall to assign him to different duties. This is precisely what occurred when his position as the Executive Director, International Market Development, was abolished. For the same reasons adopted in Morante v South Australian Superannuation Board,[3] reassignment to the duties of the position of Director, Industry Liaison and Regional Development did not constitute repudiatory conduct that amounted to constructive dismissal enlivening the entitlements prescribed by clause 11 of the appellant’s contract.
[3] (1998) 82 IR 318 upheld on appeal (1998) 84 IR 205.
In the alternative, the respondent contends that if Mr Worrall was not empowered to reassign the appellant to the duties of the position of Director, Industry Liaison and Regional Development, he was empowered to transfer him to that position pursuant to s 9(3). At all times the appellant was paid the remuneration set out in Schedule 2 of his contract.
In the further alternative, the respondent contends that if there was scope for the operation of the doctrine of repudiation in the statutory context of the Public Sector Act the conduct of Mr Worrall was not repudiatory. It was not conduct which objectively indicated an intention no longer to be bound by the terms of the contract. He continued to be employed in a senior position in the public sector at the same rate of pay. Even if Mr Worrall’s conduct was repudiatory, the conduct of the appellant, in continuing to perform work, constituted an election to keep the contract on foot. Finally, even if there was no election by the appellant, he is precluded from the entitlement prescribed by clause 11 of the contract by reason of the operation of clause 11.2 which excludes the entitlement where the employment is terminated to enable the appellant to be appointed to another position in the public sector.
The relevant legislation
It is helpful at this juncture to set out the relevant statutory provisions:
The PSM Act
Part 7, division 1 of the PSM Act provided:
Division 1—Executive positions
33—Appointment of executives
(1) The Chief Executive of an administrative unit may appoint persons as executives of the unit.
(2) Subject to a determination of the Commissioner under Part 5, an appointment to an executive position may only be made as a consequence of selection processes conducted on the basis of merit in accordance with the regulations.
34—Conditions of executive's employment
(1) The conditions of employment in an executive position are to be subject to a contract made between the executive and the Chief Executive.
(2) The contract must specify––
(a) that the executive is employed for a term not exceeding five years specified in the contract and is eligible for reappointment to the position; and
(b) that the executive is to meet performance standards as set from time to time by the Chief Executive; and
(c) that the executive is entitled to remuneration and other benefits specified in the contract; and
(d) the sums representing the values of the benefits (other than remuneration); and
(e) the total remuneration package value of the position under the contract; and
(f) that the executive may resign from the Public Service by not less than three months notice in writing to the Chief Executive (unless notice of a shorter period is accepted by the Chief Executive).
(3) The decision whether to reappoint to the position at the end of a term of employment must be made and notified to the executive not less than three months before the end of the term.
(4) If the contract so provides, the executive will be entitled to some other specified appointment in the Public Service (without any requirement for selection processes to be conducted) in the event that he or she is not reappointed to the position at the end of a term of employment or in other circumstances specified in the contract.
(5) If––
(a) the executive is not reappointed to the position at the end of a term of employment; and
(b) the contract does not provide that he or she is entitled to some other specified appointment in that event; and
(c) immediately before the executive was first appointed to any executive position under this Act, he or she was employed in the Public Service (but not under a contract for a fixed term with no entitlement to employment in another position at the end of the fixed term); and
(d) the contract does not exclude the operation of this subsection,
the executive is entitled to be appointed (without any requirement for selection processes to be conducted) to a position in the Public Service with a remuneration level the same as, or at least equivalent to, that of the position he or she occupied immediately before the commencement of his or her first term of employment in the position to which he or she is not being reappointed.
(6) If an employee is appointed as required by subsection (5) to a position that is an executive position, the conditions of his or her employment will not be required to be subject to a contract under this section (except in the event that he or she is appointed to another executive position).
(7) This section does not apply to an employee who is an executive as a result of assignment from a position other than an executive position.
35—Contract overrides other provisions
(1) The contract relating to an executive’s employment may make any other provision considered appropriate, including provision excluding or modifying a provision of this Act (other than this Division).
(2) The contract will prevail, to the extent of any inconsistency, over the provisions of this Act (other than Part 2 and this Division).
36—Termination of executive's employment by notice
(1) This section applies only to an executive whose conditions of employment are subject to a contract under this Division.
(2) The Chief Executive of the administrative unit in which an executive is employed may, with the approval of the Commissioner, terminate the executive’s employment by not less than three months notice in writing to the executive.
(3) If an executive’s employment is terminated by the Chief Executive by notice under this section, the following provisions apply:
(a) if––
(i) the contract relating to the executive’s employment does not provide that he or she is entitled to some other specified appointment in the event of such termination; and
(ii) immediately before the executive was first appointed to any executive position under this Act, he or she was employed in the Public Service (but not under a contract for a fixed term containing provision for termination of his or her employment by notice in writing of a specified period); and
(iii) the contract does not exclude the operation of this paragraph,
the executive is entitled to be appointed (without any requirement for selection processes to be conducted) to a position in the Public Service with a remuneration level the same as, or at least equivalent to, that of the position he or she occupied immediately before the commencement of his or her first term of employment in the position occupied at the time of termination;
(b) in any other case––the executive is, subject to any provision in the contract, entitled to a termination payment of an amount equal to three months remuneration (as determined for the purposes of this subsection under the contract) for each uncompleted year of the term of employment (with a pro rata adjustment in relation to part of a year) up to a maximum of 12 months remuneration (as so determined).
(4) If an employee is appointed as required by subsection (3)(a) to a position that is an executive position, the conditions of his or her employment will not be required to be subject to a contract under this Division (except in the event that he or she is appointed to another executive position).
(5) Nothing in this section prevents termination of an executive’s employment by a shorter period of notice than three months provided that a payment is made to the executive in lieu of notice of an amount equal to the salary and allowances (if any) that the executive would have been entitled to receive during the balance of the period of three months less, in the case of an executive appointed to another position under subsection (3)(a), the salary and allowances (if any) payable in respect of employment in that position during the balance of the period of three months.
(6) The provisions of Part 8 relating to termination of an employee’s employment apply to an executive in addition to this section but subject to any provision in the contract relating to the executive’s employment.
37—Executive's general responsibilities
An executive is responsible to the Chief Executive of the administrative unit in which he or she is employed for––
(a) the efficient and effective management of the resources under his or her control; and
(b) the attainment of the performance standards set from time to time under the contract relating to his or her employment; and
(c) ensuring the observance within the areas under his or her control of the aims and standards contained in Part 2; and
(d) contributing to the attainment of the Government’s overall objectives consistently with legislative requirements.
Section 44 of the PSM Act provided:
44 –– Assignment
(1) Subject to this section, the Chief Executive of an administrative unit may assign an employee from one position in the unit to another position in the unit.
(2) Subject to this section, an employee may be assigned from a position in one administrative unit to a position in another administrative unit by the Commissioner in consultation with the Chief Executives of the units.
(3) Promotion of an employee to a higher remuneration level through assignment under this section––
(a) may be made only subject to conditions determined by the Commissioner; and
(b) may continue only for up to 12 months or such longer period not exceeding three years as the Commissioner may allow in a particular case.
(4) An employee may not be assigned from a position to another position with a lower remuneration level except––
(a) with the employee’s consent; or
(b) in order to return an employee to his or her former remuneration level as required for compliance with subsection (3).
(5) If an employee whose employment is subject to a contract is assigned to another position, the provisions of the contract continue to apply in relation to the employee’s employment in the new position subject to any necessary modifications or further agreement between the employee and the Chief Executive.
Section 50 of the PSM Act provided:
50 –– Excess Employees
(1) If the Chief Executive of an administrative unit is satisfied.
(a) that––
(i) the services of an employee have become underutilised; or
(ii) an employee is no longer required to perform, or cannot perform, the duties of his or her position,
because of––
(iii) changes in technology or work methods or in the organisation or nature or extent of operations of the administrative unit; or
(iv) loss of a qualification that is necessary for the performance or proper performance of the duties; and
(b) that it is not practicable to assign the employee under Division 1 to another position in the administrative unit,
the Chief Executive must refer the matter to the Commissioner.
(2) If a matter is referred to the Commissioner under subsection (1) and the Commissioner is satisfied––
(a) as to the matters referred to in subsection (1)(a); and
(b) that all reasonable endeavours have been made to assign the employee under Division 1 to another position in the Public Service (whether in the same or another administrative unit) but that it is not practicable to do so in the circumstances of the case; and
(c) that reasonable consultations have taken place with the appropriate recognised organisation,
the Commissioner may––
(d) transfer the employee to another position in the Public Service with a lower remuneration level; or
(e) recommend to the Governor that the employee’s employment in the Public Service be terminated.
(3) The Governor may, on the recommendation of the Commissioner under this section, terminate an employee’s employment in the Public Service.
(4) If an employee is transferred under this section to a position with a lower remuneration level, the employee is entitled to supplementation of the employee’s remuneration in accordance with the relevant provisions of an award or enterprise or industrial agreement or, if there is no award or enterprise or industrial agreement covering the matter, in accordance with a scheme prescribed by the regulations.
Transitional provisions
On 1 February 2010 the Public Sector Act commenced operation. The transitional provisions of the Public Sector Act set out in Schedule 3 applied to the employment of the appellant. Clause 3(1) of the transitional provisions provides that a person employed in an administrative unit of the public service under the PSM Act immediately before the commencement of the Public Sector Act continues to be employed in the same administrative unit with the same duties subject to the Public Sector Act. Clause 3(3) of the transitional provisions applies to executives. Clause 3(3)(e) applies to the appellant. It provides that after the commencement of the Public Sector Act he continued to be employed on the same contractual terms as had existed prior to the commencement of the Public Sector Act but subject to that Act, and Part 7, Division 2 of the Public Sector Act did not apply to him for the balance of the term of his contract. Part 7, Division 2 of the Public Sector Act, consisting of sections 42, 43 and 44, provides for the conditions of employment, resignation and termination of employment by notice, of executives. The subject matter of those topics is prescribed by clause 3(3)(f) of Schedule 3. Clause 3(3)(f)A provides for the conditions of employment of executives. It is in the following terms:
A—Conditions of executive's employment
(1)The employment of a person as an executive employee of a public sector agency is to be subject to a contract made between the employee and the agency.
(2)The contract must specify—
(a) that the employee is employed for a term not exceeding 5 years specified in the contract; and
(b) that the employee is to meet performance objectives as set from time to time by the agency.
(3)Subject to the regulations, the contract may make any other provision considered appropriate, including provision excluding or modifying a provision of this Act.
(4)The decision whether to engage the employee for a further term must be made and notified to the employee not less than 3 months before the end of the employee's current term of employment.
Relevantly for the purpose of this appeal, however, the provisions in clause 3(3)(f) relating to the termination of executive employment, which would otherwise have applied to the appellant’s employment from 1 February 2010, were made subject to the contract relating to the executive employee’s employment. Accordingly, the rights, duties and obligations of the parties in relation to the termination of the appellant’s employment fell to be determined by reference to the terms of clause 3(3)(f)C, subject to the provisions of his contract relating to termination.
Clause 3(3)(f)C provides:
C –– Termination of executive’s employment by notice
(1)A public sector agency may, by notice in writing, terminate the employment of an executive employee of the agency without specifying any grounds.
(2)Subject to the contract relating to the employee's employment, if the employee's employment is terminated by the agency by notice under subclause (1), the employee is entitled to a termination payment of an amount equal to 3 months remuneration (at the rate determined for the purpose under the employee's contract) for each uncompleted year of the employee's employment (with a pro rata adjustment in relation to part of a year) up to a maximum of 12 months remuneration.
(3)The period of notice under subclause (1) must be at least 3 months except where the employee is compensated by payment of an amount equal to the remuneration that would have been payable during the balance of the period of 3 months (at the rate determined for the purpose under the employee's contract).
(4)If the employee's employment is terminated by notice under subclause (1) and the employee was, immediately before the commencement of this clause, entitled under section 36(3)(a) of the Public Sector Management Act 1995 to some other appointment in the Public Service in the event of termination of the employee's employment by notice under section 36(2) of the Public Sector Management Act 1995—
(a) subclauses (2) and (3) do not apply; and
(b) section 36(3) and (5) of the Public Sector Management Act 1995 apply as if those provisions continued in force.
(5)The power conferred by this clause is in addition to the power to terminate an executive employee's employment under section 54 of this Act.
Public Sector Act
Section 47 provides:
47 –– Assignment of duties
A public sector agency may from time to time determine the duties of a person as an employee of the agency and the place or places at which the duties are to be performed.
Section 9 provides:
9 –– Flexible arrangements for transfer within public sector
(1)The Premier may, in order to reorganise public sector operations, by notice in the Gazette—
(a) transfer employees within the public sector; and
(b) make transitional or ancillary provisions that may be necessary or expedient in the circumstances.
(2)A notice under subsection (1) has effect according to its terms and despite any other Act.
(3)A public sector agency may transfer an employee of the agency to other employment within the public sector, on conditions that maintain the substantive remuneration level of the employee or are agreed to by the employee.
(4)A public sector agency is not to transfer employees under this section except with the agreement of any other public sector agency directly affected by the transfer.
(5)The regulations may prescribe rules relating to the movement of employees within the public sector, including movement initiated by employees.
(6)A transfer of an employee under this section does not constitute a breach of the person's contract of employment or termination of the person's employment, or affect the continuity of the person's employment for any purpose.
Section 42 provides:
42 –– Conditions of executive’s employment
(1)The employment of a person as an executive employee of a public sector agency is to be subject to a contract made between the employee and the agency.
(2)The contract must specify—
(a) that the employee is employed for a term not exceeding 5 years specified in the contract; and
(b) that the employee is to meet performance objectives as set from time to time by the agency.
(3)Subject to the regulations, the contract may make any other provision considered appropriate, including provision excluding or modifying a provision of this Act.
(4)The decision whether to engage the employee for a further term must be made and notified to the employee not less than the prescribed period before the end of the employee's current term of employment.
(5)In this section—
prescribed period means—
(a) if the contract is for a term of 5 years—6 months;
(b) if the contract is for a term less than 5 years—the period determined by applying to the period of 6 months the proportion that the number of months in the term of the contract bears to 60 months.
Section 44 provides:
44 –– Termination of executive’s employment by notice
(1) A public sector agency may, by notice in writing, terminate the employment of an executive employee of the agency without specifying any grounds.
(2) Subject to the contract relating to the employee's employment, if the employee's employment is terminated by the agency by notice under subsection (1), the employee is entitled to a termination payment of an amount equal to 4 months remuneration (at the rate determined for the purposes of this subsection under the employee's contract) for each uncompleted year of the employee's employment (with a pro rata adjustment in relation to part of a year) up to a maximum of 16 months remuneration.
(3) The period of notice under subsection (1) must be at least 4 months except where the employee is compensated by payment of an amount equal to the remuneration that would have been payable during the balance of the period of 4 months (at the rate determined for the purposes of this subsection under the employee's contract).
(4) The power conferred by this section is in addition to the power to terminate an executive employee's employment under section 54.
Section 49 provides:
49 –– Remuneration
(1) An employee of a public sector agency is entitled to remuneration in accordance with the employee's remuneration level.
(2) A deduction may be made from an employee's remuneration for any charge payable by the employee under a determination of the Commissioner under Part 4 in respect of accommodation, services, goods or any other benefit provided to the employee in connection with his or her employment.
(3) The remuneration level of an employee of a public sector agency may be reclassified by the agency on the initiative of the agency or on application to the agency by the employee.
(4) The regulations may not exclude the right of an employee to apply under Part 7 Division 4 to the Public Sector Grievance Review Commission for review of a decision on an application by the employee under subsection (3).
Section 53 provides:
53 –– Reduction in remuneration level
(1)A public sector agency may reduce the remuneration level of an employee of the agency without the employee's consent on any of the following grounds:
(a) the employee is excess to the requirements of the agency at the higher remuneration level;
(b) the employee's physical or mental incapacity to perform duties satisfactorily at the higher remuneration level;
(c) the employee's unsatisfactory performance of duties at the higher remuneration level;
(d) the employee's misconduct;
(e) the employee's lack of an essential qualification for performing duties at the higher remuneration level.
(2)A public sector agency may not reduce an employee's remuneration level under subsection (1)(a) or (b) unless the agency has made reasonable endeavours to find, but has failed to find, other suitable duties in the agency, or other public sector employment (to which this Part applies), to which the employee might be assigned or transferred on conditions that maintain the employee's substantive remuneration level.
(3)If an employee's remuneration level is reduced under subsection (1)(a), the employee is entitled to supplementation of the employee's remuneration in accordance with the relevant provisions of an award or enterprise agreement or, if there is no award or enterprise agreement covering the matter, in accordance with a scheme prescribed by the regulations.
(4)The power to reduce an employee's remuneration level under this section includes (without limitation) power—
(a) to reduce an employee's remuneration level to a remuneration level from a classification structure, or different classification structure, fixed by a determination of the Commissioner under Part 4; and
(b) to reduce an employee's remuneration level to a remuneration level for a class of employees not subject to a determination of the Commissioner under Part 4; and
(c) to reduce an employee's remuneration level as a preliminary step to assigning or transferring the employee to other duties in the agency or other public sector employment (whether or not employment to which this Part applies).
Section 54 provides:
54 –– Termination
(1)A public sector agency may terminate the employment of an employee of the agency on any of the following grounds:
(a) the employee is excess to the requirements of the agency;
(b) the employee's physical or mental incapacity to perform his or her duties satisfactorily;
(c) the employee's unsatisfactory performance of his or her duties;
(d) the employee's misconduct;
(e) the employee's lack of an essential qualification for performing his or her duties.
(2)The employment of an employee may not be terminated under subsection (1)(a) or (b) unless the public sector agency has made reasonable endeavours to find, but has failed to find, other suitable duties in the agency, or other public sector employment (to which this Part applies), to which the employee might be assigned or transferred on conditions that maintain the employee's substantive remuneration level.
(3)A public sector agency may not terminate the employment of an employee under subsection (1) on any ground unless the agency—
(a) has informed the Commissioner of the grounds on which it is proposed to terminate the employment of the employee and the processes leading up to the proposal to terminate; and
(b) has considered any advice given by the Commissioner within 14 days about the adequacy of the processes.
Section 55 provides:
55 –– Disciplinary action
(1)A public sector agency may—
(a) reprimand an employee of the agency; or
(b) suspend an employee of the agency from duty without remuneration or accrual of leave rights for a specified period,
on the ground of the employee's misconduct.
Note—
Disciplinary action may also take the form of—
(a)reduction of the remuneration level of an employee under section 53; or
(b)termination of an employee's employment under section 54.
A public sector agency may, in conjunction with taking disciplinary action—
(a)assign an employee to different duties or to a different place under section 47; or
(b)transfer an employee to other employment under section 9.
(2)Nothing prevents a public sector agency from taking more than 1 form of disciplinary action against an employee for misconduct.
Consideration
The questions this appeal raise are whether what occurred by the purported assignment of the appellant to the position of Director, Industry Liaison and Regional Development, was within the power conferred on Mr Worrall pursuant to s 47. If not, what is the consequence at law? Did it effect the termination of the appellant’s employment entitling him to the payment agreed in clause 11 of his contract?
It is convenient first to address the nature of the relationship between the parties. The appellant contends that his relationship with the respondent was contractual. The respondent does not contend that the Public Sector Act is a code exhaustively and exclusively governing the relationship between the parties. Rather it contends that the contract was always subject to the relevant Act, whether the PSM Act or the Public Sector Act.
As at 23 December 2010 when Mr Worrall purported to reassign the appellant to the position of Director, Industry Liaison and Regional Development pursuant to s 47 of the Public Sector Act, the appellant’s employment was governed by the applicable provisions of the Public Sector Act and the terms of his contract.
In Director General of Education v Suttling[4] Brennan J[5] considered whether the nature of the relationship between a public servant and the Crown is contractual or statutory. Without deciding the question, his Honour concluded that if the relationship is contractual, the contract must be consistent with any statutory provision which affects the relationship as it is not possible to engage a public servant on terms inconsistent with any statute governing his or her appointment. As his Honour said:[6]
To the extent that the statute governs the relationship, it is idle to inquire whether there is a contract which embodies its provisions. The statute itself controls the terms of service.
[Citation omitted].
[4] (1987) 162 CLR 427 at 437.
[5] Mason ACJ and Deane J concurring.
[6] (1987) 162 CLR 427 at 437 – 438.
In this case to descend into an analysis of the general principles that inform the law governing the relationship of public sector employees and the Crown is unnecessary. The Public Sector Act provides the framework and context of the appellant’s employment.[7] The Act itself requires a contract between an executive and the agency. Both the Act and the contract are the source of the rights, duties and obligations of the parties. The confluence between the Act and the contract identifies the terms of the appellant’s employment as partly statutory and partly contractual.[8] Accordingly, there is no profit in addressing the question of whether the Act constitutes a code. If it does not constitute a code then there is room for the parties to determine their respective rights, duties and obligations by contract in the interstices of the statutory regime governing executive employment. To the extent it does constitute a code, the Public Sector Act expressly provides for the existence and operation of an employment contract between executive employees and a public sector agency.[9] The statutory scheme, requiring an employment contract, stipulates particular matters which are to be the subject of that contract. That leaves further scope for other matters to be made subject to contract as considered appropriate, including a provision excluding or modifying a provision of the Act.[10] As it is the Act itself which permits the employment contract to exclude or modify provisions of the Act, I consider that, to the extent this occurs, the contract would do so expressly rather than by implication.
[7] Jarratt v Commissioner of Police (NSW) [2005] HCA 50 at [10], (2005) 224 CLR 44 at 51- 52.
[8] Jarratt v Commissioner of Police (NSW) [2005] HCA 50 at [45], (2005) 224 CLR 44 at 59.
[9] Section 42 and clause 3(3)(f)A.
[10] The power to include in a contract a provision modifying or excluding a provision of the Act is subject to regulations. Regulation 14 of the Public Sector Regulations prohibits a contract from excluding or modifying sections 9 or 42.
It follows that Parliament has enacted a statutory scheme for public sector employment, one of the objectives of which is the promotion of a high-performing public sector that is responsive to government priorities.[11] Part of that scheme is provision for the employment of executive employees whose employment is subject to a contract made between the executive and the agency.
[11] See the object in s 4(a).
This appeal gives rise to a question of construction. The Full Court of the Industrial Relations Court found that the respondent had assigned the appellant to different duties pursuant to s 47. Whether what occurred in December 2010, which the appellant characterises as the termination of his contract or an act of repudiation by the respondent which the appellant accepted, and which the respondent characterises as a reassignment of duties pursuant to s 47, turns on the proper construction of the Public Sector Act. The process of construction begins with a consideration of the ordinary and grammatical meaning of the words of the statute having regard to context and legislative purpose.[12]
[12] Australia Education Union v Department of Education and Children’s Services [2012] HCA 3 at [26], (2012) ALJR 217 at 224.
The operation of s 47 falls to be considered on a reading of the Act as a whole. Section 47 must be construed in the context of the operation of s 9. There is an interrelationship between s 47 and s 9. Section 9(3) confers a power to transfer an employee to other employment within the public sector on condition that the substantive remuneration level of the employee is maintained or with the employee’s agreement. On the other hand, s 47 provides that a public sector agency may, from time to time, determine the duties of a person as an employee of the agency and the place at which those duties are to be performed.
In my view the provisions of s 9(3) and s 47 are complementary. Their object is to confer upon a public sector agency powers to ensure that the public sector operates flexibly and efficiently in the management of its human resources. The powers conferred by the two sections are different notwithstanding that each serves the same object. Section 47 empowers an agency to determine different duties for a person as an employee of the agency or to direct an employee to undertake duties at a different place. Section 9(3) permits the transfer of an employee to other employment within the public sector on certain conditions. The respective powers conferred by s 47 and s 9 observe the distinction between the allocation of duties within an existing position and the transfer to a new position with new duties. The text of s 47 reflects this distinction. The power conferred to determine the duties of a person is qualified by the words: “as an employee of the agency”. These are words of limitation. The power conferred is confined to directing the person to perform duties consistent with the person’s employment with that agency. Given the interrelationship between s 47 and s 9, the limits of s 47 are defined by s 9. The difference between the respective powers turns on the concept of employment. Section 47 operates within existing employment, but if the employer wishes to assign duties that extend beyond the employee’s existing employment, then the agency is actually effecting a transfer of the employee to other employment and the agency must comply with the requirements of s 9(3).
The complementary nature of the provisions of s 47 and s 9 are reinforced by the terms of s 53(2), s 54(2) and the note to s 55(1). These provisions juxtapose the powers conferred by these sections, indicating their complementary character.
This position is to be compared with the position under the PSM Act, which was in operation at the time the appellant commenced employment. Section 44 of the PSM Act conferred power on the Chief Executive of an administrative unit to assign an employee from one position in the unit to another position in the unit. Section 44 also conferred power on the Commissioner for Public Employment, in consultation with the relevant Chief Executives, to assign an employee from one position in an administrative unit to a position in another administrative unit.
In Morante v South Australian Superannuation Board[13] Lander J concluded that, pursuant to s 44, the employer had the right to reassign employees within the public service. His Honour concluded that if those statutory powers did not exist, staff who became excess to requirements would remain in areas where there was no work for them to perform. He rejected a submission that the reassignment of an employee to a new position constituted a constructive dismissal of the employee. He did so on the basis that if that was so, s 44 would not have any work to do.[14]
[13] (1998) 82 IR 318.
[14] (1998) 82 IR 318 at 344 - 345.
Lander J’s conclusion and reasons were upheld on appeal to this Court.[15]
[15] (1998) 84 IR 205.
Morante is authority for the proposition that the PSM Act conferred power on the employer to assign public sector employees to new positions either within the same administrative unit in which they were employed, or to new positions in other administrative units. This was a compulsory power that could be exercised unilaterally subject to the observance of certain prescribed conditions. Importantly, for the disposition of this appeal, the exercise of that statutory power did not constitute the constructive dismissal of the employee.
The exercise of the statutory power conferred by s 44 was not repudiatory conduct, in the sense of conduct by one party to the contract evincing an intention no longer to be bound by one of the contract’s essential terms. In Koompahtoo Local Aboriginal Land Council & Anor v Sandpine Pty Ltd & Anor,[16] in a joint judgment, Gleeson CJ, Gummow, Heydon and Crennan JJ discussed the legal principles applicable to termination for a repudiatory breach of contract. They said:[17]
The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.… Second, it may refer to any breach of contract which justifies termination by the other party.
[Citations omitted].
[16] [2007] HCA 61, (2007) 233 CLR 115.
[17] [2007] HCA 61 at [44], (2007) 233 CLR 115 at 135 - 136.
Mr Heywood-Smith sought to distinguish Morante on the basis that Morante was not an executive and his employment was not subject to a contract. While both propositions are factually correct, I do not consider that they provide a valid basis to distinguish the approach taken to construction of the PSM Act in Morante from the construction of the Public Sector Act. Some of the provisions of the Public Sector Act only apply to executives e.g. s 42, s 43 and s 44, some provisions do not apply to executives e.g. s 45, and some provisions apply generally to executive and non-executive employees e.g. s 47 and s 9. As the Court is concerned with the third category of provisions, the status of Mr Morante as a non-executive employee is irrelevant. Further, the reasoning of Lander J in Morante focused on the terms of s 44 of the PSM Act. Section 44(5) prescribed what was to occur where an employee whose employment was subject to a contract was assigned to another position. Clearly, the powers conferred by s 44 were unaffected by the existence of a contract.
Dr Bleby SC, counsel for the respondent, contended for a broad construction of the power conferred by s 47 of the Public Sector Act. He submitted that the Public Sector Act did not continue the statutory concept of a “position” found in the PSM Act. Accordingly, the abolition of one position and the assignment of an employee to a new position within an agency previously contemplated in the former s 44(1), could now only be viewed in the context of s 47. In my view, this contention is untenable in the light of the provisions of s 20(1)(b), s 39(1)(b), s 75(1)(b), s 77, s 78 and s 79(1)(b) of the Public Sector Act, all of which expressly recognise the existence of a position under the Act occupied by an employee. So much is most clearly established by s 77 which provides that a “public sector agency may, but is not required to, designate specified duties in the employment of the agency as a position with a specified title”.
Where an agency has designated specified duties as a position with a specified title, a substantial change in the nature of those duties, especially if accompanied by a change in title, to my mind evidences not an exercise of the power conferred by s 47 but rather an exercise of the power conferred by s 9(3). This will always be a question of fact and degree.
It will be a question of fact and degree as to whether the assignment of new duties to an employee is fundamentally inconsistent with the person’s existing employment so as to take the exercise of power by the agency outside of the terms of s 47 and to constitute the transfer of that person from one employment to other employment within the public sector.
Applying this approach to the facts of this matter, I am of the view that the purported assignment by Mr Worrall of the appellant to the executive position of Director, Industry Liaison and Regional Development, was not a valid exercise of the power conferred pursuant to s 47. The purported assignment did not constitute the determination or redetermination of the duties of the appellant as an employee of the agency as contemplated by s 47. Mr Worrall was not amending the appellant’s duties by adding to or subtracting from his existing duties as set out in the position description annexed to his contract. Rather it was a transfer of the appellant to a new position with a different specified title, with different duties, a reduced classification and level of appointment, a substantially reduced budget and staff and a changed line of reporting. It was a transfer to other employment within the public sector. Indeed the very language of the letter from Mr Worrall to the appellant of 23 December 2010 is expressed not in the language of “determination”, or for that matter of “transfer”, but in the language of “assignment”. That expression is redolent of the power conferred pursuant to the former s 44, to assign an employee to another position, not the language of the Public Sector Act. In my view, what occurred took the appellant outside his existing employment in his position as Executive Director, International Market Development, and transferred him to a new position of Director, Industry Liaison and Regional Development.
In my view, the Full Court of the IRC erred in concluding otherwise.
That conclusion does not necessarily result in the finding that the purported reassignment of the appellant to the position of Director, Industry Liaison and Regional Development, constituted repudiatory conduct or effected the termination of his employment.
As the High Court observed in Australian Education Union v Department of Education and Children’s Services[18] in the joint judgment of French CJ, Hayne, Kiefel and Bell JJ:
A mistake by an administrative decision-maker as to the source of his or her power to make a decision does not necessarily invalidate the decision if it is able to be supported by another source of power. Whether it can be supported by the other source of power will depend upon whether that power is subject to requirements which the decision-maker has failed to meet because of his or her belief as to the source of the power or for some other reason. As Heydon J said in Eastman v Director of Public Prosecutions (ACT):
If the maker of an administrative decision purports to act under one head of power which does not exist, but there is another head of power available and all conditions antecedent to its valid exercise have been satisfied, the decision is valid despite purported reliance on the unavailable head of power.
[Footnote omitted].
[18] [2012] HCA 3 at [34], (2012) 86 ALJR 217 at 225 – 226.
Notwithstanding that Mr Worrall purported to assign the appellant new duties pursuant to s 47, his mistake in the characterisation of the power relied upon by him does not invalidate the administrative act if it was empowered by s 9(3).
The power of a public sector agency to transfer an employee to other employment within the public sector is conditioned on either maintaining the substantive remuneration level of the employee or the agreement of the employee to the transfer.
In the circumstances which existed on 23 December 2010, I do not consider that the appellant agreed to his transfer to the position of Director, Industry Liaison and Regional Development. At its highest, he merely acquiesced in what occurred in the face of being advised that his substantive position was being abolished. The concept of agreement enshrined in s 9(3) does not include circumstances where an employee has no choice but to accept a proffered transfer, as in this case where his existing position has ceased to exist, at the unilateral decision of the employer. Indeed I did not understand the respondent to contend that, if it was necessary to have recourse to s 9(3), the appellant had agreed to his transfer to this other employment.
The real issue between the parties was whether the transfer occurred on conditions that maintained the substantive remuneration level of the appellant.
The evidence at trial, accepted by the magistrate, was that following the appellant’s assignment to the position of Director, Industry Liaison and Regional Development, he continued to be paid at the same classification level as stipulated in his contract.[19]
[19] [2012] SAIRC 33 at [33] and [58].
The appellant submits that his substantive remuneration level was not maintained, as his assignment to his new position resulted in the reduction of his classification from SAES 2 to SAES 1. The respondent submits that the change in his classification did not affect his substantive remuneration level which was maintained. So much was evident from the fact that his remuneration did not change.
This issue raises the question of the meaning of “substantive remuneration level” in s 9(3).
“Substantive remuneration level” of an employee of a public sector agency is defined in s 3(1) as follows:
[T]he remuneration level determined by the public sector agency in accordance with the regulations to be the employee's substantive remuneration level;
“Remuneration level” is defined in s 3(1) as follows:
[T]he remuneration level fixed by a public sector agency for an employee of the agency from a classification structure in accordance with the appropriate determination of the Commissioner under Part 4 or, if there is no applicable determination, has the meaning assigned by the regulations;
“Remuneration” is defined in s 3(1) as follows:
[S]alary, allowances or other monetary benefits payable to an employee;
The definition of “substantive remuneration level” in s 3(1) refers to a remuneration level determined by an agency in accordance with the regulations to be the employee’s substantive remuneration level. Regulation 4 of the Public Sector Regulations 2010 (SA) provides:
An employee’s substantive remuneration level is –
(a) [not relevant];
(b) [not relevant];
(c) in any other case–– the remuneration level currently applicable to the employee.
Regulation 5 of the Public Sector Regulations 2010 (SA) provides:
If there is no determination of the Commissioner under the Act that is applicable to an employee, the remuneration level of the employee is to be determined according to any applicable award or agreement under an industrial relations law.
Ordinarily the meaning of a statutory provision is not to be found in subordinate legislation but in this case the definition in the Act refers to the regulations. Recourse to the regulations, however, is of limited assistance as it is apparent that the regulations highlight the circularity of the definitions in s 3. There was no evidence before the court of any relevant determination of the Commissioner under the Act applicable to the appellant or of any applicable award or agreement under an industrial relations law.
Some assistance in ascertaining the meaning of this expression in the context of s 9(3) can be derived from other provisions of the Act. Section 49(1) provides that an employee is entitled to remuneration in accordance with the employee’s remuneration level. Section 49(3) provides for the reclassification of an employee’s remuneration level. Section 50(1) provides that an agency may direct an employee to perform specified duties in addition to those on which the employee’s remuneration level is based. Section 53(1) permits an agency to reduce the remuneration level of an employee on specified grounds and under specified conditions. Section 55(1)(b) permits an agency to suspend an employee from duty without remuneration for misconduct.
It is apparent that the legislature intended to denote a difference in meaning between the expressions “remuneration”, “remuneration level” and “substantive remuneration level”. Nonetheless, these are related concepts. It is not altogether clear the difference between “substantive remuneration level” and “remuneration level”. However, I am satisfied that for the purposes of s 9(3) “substantive remuneration level” is not the same as “remuneration”. While I consider the purpose of imposing conditions on a transfer to other employment in the public sector is the protection of the employee concerned, the legislature chose not to condition the transfer, inter alia, on the maintenance of the employee’s remuneration. Instead, it chose to afford the employee the desired protection by reference to the employee’s “substantive remuneration level”. I consider the policy underpinning the selection of that criterion by way of protection was a recognition that over time an employee’s remuneration will increase even while the employee’s substantive remuneration level remains unchanged.
In my view, however, “substantive remuneration level” is not the same as an employee’s classification level. I say that notwithstanding the terms of s 49(3) which provides for the reclassification of an employee’s remuneration level. I understand the reference in s 49(3) to the reclassification of an employee’s remuneration level to connote a different and distinct concept from an employee’s classification.
At trial, the appellant agreed that following the abolition of his position and his reassignment to the position of Director, Industry Liaison and Regional Development, until he commenced employment as Director, Major Projects, with the Department of Planning and Local Government in early June 2011[20], he had continuous paid employment at level SAES 2.[21] The learned magistrate found that his level of remuneration prescribed in his contract was maintained following Mr Worrall’s reassignment of the appellant to his new position.[22] That finding was not challenged on appeal to the Full Court of the IRC. In my view, it is not open to the appellant to challenge it now. Indeed, the appellant’s notice of appeal to this Court, while invoking s 9 and the definition of “substantive remuneration level” did not challenge that finding. Accordingly, I reject the submission that the appellant’s substantive remuneration level was not maintained upon his transfer to the position of Director, Industry Liaison and Regional Development.
[20] In fact it appears from the statement of agreed facts tendered before the learned magistrate that the appellant continued to be paid at his substantive remuneration level for a further month after he commenced his position with DPLG.
[21] [2012] SAIRC 33 at [33], Transcript AB 171 lines 31-32.
[22] [2012] SAIRC 33 at [58].
It follows that, in my view, the appellant’s transfer to that position was authorised pursuant to s 9(3). In those circumstances, there was no conduct constituting repudiation of his contract, nor was his contract terminated.
For the reasons this Court found persuasive in Morante, the valid exercise of the statutory power conferred by s 9(3) cannot constitute repudiatory conduct in the sense that the conduct of Mr Worrall, in purporting to reassign the appellant to the position of Director, Industry Liaison and Regional Development, evinced an intention no longer to be bound by one of the essential terms of the contract of employment made pursuant to s 42. That is an objective test.[23] Equally, the valid exercise of the statutory power conferred by s 9(3) cannot constitute termination of the appellant’s employment within the meaning of clause 11 of the contract. Clause 11 is concerned with termination of the employment of the executive in accordance with the Act. Under the Public Sector Act the source of the rights, duties and obligations of an executive employee are both statutory and contractual. As I have noted, s 42(3) permits the parties to make a contract which excludes or modifies a provision of the Act, however, that power does not include the power to exclude or modify s 9. Accordingly, the valid exercise of the power in s 9 to transfer an employee to other employment in the public sector cannot constitute termination of the contract. The contract implicitly contemplates its implementation in accordance with its statutory framework.
[23] Loughridge v Lavery [1969] VR 912 at 923 - 924.
As the appellant’s employment was not terminated by his transfer to the position of Director, Industry Liaison and Regional Development he was not entitled to the payment prescribed by clause 11 of his contract. Neither was he entitled to payment in lieu of notice.
That conclusion is sufficient to dispose of the appeal. I add, however, that if I am in error in this view, I would nonetheless conclude that the appellant was not entitled to the termination payment agreed in clause 11.1 of his contract.
The entitlement to the payment agreed in clause 11.1 of the contract is conditioned on the employment of the appellant being terminated by Mr Worrall under clause 11[24] (emphasis added). Clause 11.1 provides:
The Chief Executive may terminate the employment of the Executive by giving notice in writing, or by payment in lieu of notice, to the Executive in accordance with the Act…
[24] See clause 11.1.1.
The entitlement to the payment prescribed by clause 11 is not enlivened merely by the termination of the executive’s employment. Rather, it is enlivened by the termination of the executive’s employment by the giving of notice in writing or by payment in lieu of notice in accordance with the Act. At the time the contract was made, the Act was the PSM Act. In my view, the contract generally, and clause 11 specifically, was agreed against the background of the PSM Act. That background included the provision of the former s 44 and the compulsory power conferred therein to unilaterally assign an executive to another position within the public service. Clause 11, in stipulating that the entitlement to payment depended upon the giving of notice or payment in lieu in accordance with the Act,[25] provides that the only termination giving rise to an obligation to make the specified payment is a termination in accordance with the Act. Section 36 of the PSM Act provided for the termination of an executive’s employment, by notice in writing pursuant to s 36(2), or by payment in lieu of notice pursuant to s 36(5).[26]
[25] Section 36(2) of the PSM Act provided:
“The Chief Executive of the administrative unit in which an executive is employed may, with the approval of the Commissioner, terminate the executive’s employment by not less than three months notice in writing to the executive.”
[26] I note that the cognate provision in the Public Sector Act, namely, s 44, provides for termination of an executive’s employment by notice in writing or payment in lieu of notice.
This construction is reinforced by a consideration of the terms of clause 11.2, which provides, inter alia¸ that the executive shall not be entitled to any termination payment if the appointment of the executive is terminated to enable the executive to be appointed to another position in the public service. Plainly, the objective intention of the parties in agreeing clause 11 was that the entitlement to the prescribed payment only arises where the termination of the employee’s contract results in the employee leaving the public service.
In this case, it was common ground that there was no payment in lieu of notice. As I have noted, until the matter reached us, it was common ground that the appellant was not given written notice of the termination of his employment. This is hardly surprising considering the employer’s position that the appellant’s employment had not been terminated. In my view, the letter from Mr Worrall to the appellant of 23 December 2010 cannot be construed as the giving of notice in writing of termination within the meaning of clause 11. Any suggestion now by the appellant to the contrary is plainly inconsistent with the appellant’s pleading of his claim in paragraph 6 of the amended particulars of claim[27] and, more particularly, his claim for four months’ pay in lieu of notice.
[27] The applicant did not receive notice in writing informing him that his employment as Executive Director had been terminated, or payment in lieu of notice, contrary to Clause 11.1 of the Contract. The applicant is therefore entitled to four months' pay in lieu of notice, being $73,543.66 including superannuation, based on his total remuneration package, pursaunt to section 44 of the Public Sector Act 2009 (SA).
In the absence of such written notice or payment in lieu of notice, the entitlement to the payment prescribed by clause 11 was not enlivened.
The apparent harshness of this conclusion is belied by the right of an employee to sue for damages for breach of contract. That the transfer of the appellant pursuant to s 9(3) did not constitute either repudiatory conduct or the termination of his employment, does not exclude the potential for repudiatory conduct on the part of a public sector agency, entitling an employee to treat the contract as at an end. In my view, there is scope for the operation of the doctrine of repudiation in the statutory context of the Public Sector Act, but not in the circumstances of a valid exercise of the transfer power in s 9(3). For example, had the employer purported to transfer the appellant to other employment without the appellant’s agreement and without maintaining his substantive remuneration level, other than pursuant to s 53 or s 55, that, in my view, would constitute repudiatory conduct by the employer. True repudiatory conduct by the employer, irrespective of whether the executive elected to treat the contract as continuing or not, would entitle the executive to claim damages for breach, the measure of which would be an amount reflecting the sum the executive would have earned had the contract been performed, perhaps subject to any amount earned by way of mitigation.[28]
[28] Jarratt v Commissioner of Police (NSW) [2005] HCA 50 per McHugh, Gummow and Hayne JJ at [58] – [60], per Callinan J at [146], (2005) 224 CLR 44 at 63 and 90 - 91.
Of course, the appellant’s claim was not for damages for breach of contract but for a sum due to a former employee from a former employer under a contract of employment pursuant to s 14(a)(i) of the Fair Work Act.
Given my conclusions it is unnecessary to address the respondent’s alternative argument based on election, however, I should address the respondent’s submission that the appellant was not entitled to the payment agreed pursuant to clause 11 of the contract by reason of the operation of clause 11.2.
I do not accept this submission.
As I have noted, clause 11.2 precludes the entitlement to the prescribed payment, inter alia, if the appointment of the executive is terminated to enable the executive to be appointed to another position in the public sector. Clause 11.2 is intended to prevent an executive who is promoted or accepts a different position in the public sector from claiming the termination payment. It is not directed to the circumstances that existed in this case. The position of the appellant was not terminated to enable him to be appointed to another position in the public sector. On the contrary, for the purposes of this argument, the appointment to the new position and the termination were co-terminous. The appointment and the termination were effected by the same instrument, namely, Mr Worrall’s letter of 23 December 2010. In these circumstances clause 11.2 did not apply.
Conclusion
I would dismiss the appeal
BAMPTON J: I agree that the appeal should be dismissed for the reasons expressed by Stanley J.
Key Legal Topics
Areas of Law
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Employment Law
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Statutory Interpretation
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Administrative Law
Legal Concepts
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Appeal
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Statutory Construction
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Contract Formation
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Remedies
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Procedural Fairness
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