Milagros Isturiz-Moron v Northside Community Service Limited

[2016] FWC 4649

[2016] FWC 4649

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.526—Stand down

Milagros Isturiz-Moron
v
Northside Community Service Limited
(C2015/8161)

DEPUTY PRESIDENT KOVACIC SYDNEY, 13 JULY 2016

Application to deal with a dispute involving stand down – jurisdictional objections dismissed – orders sought not made.

[1] On 14 December 2015 United Voice (UV) made an application on behalf of Ms Milagros Isturiz-Moron (the Applicant) under s.526 of the Fair Work Act 2009 (the Act) requesting that the Fair Work Commission (the Commission) deal with a dispute involving stand down. Ms Isturiz-Moron had been stood down on full pay on 30 April 2015 but on 14 July 2015 was suspended without pay by Northside Community Service Limited (Northside – the Respondent).

[2] The application was the subject of conferences in January and February 2016 which failed to resolve the dispute, with Directions issued by the Commission on 10 February 2016. On 14 February 2016 Ms Isturiz-Moron advised the Commission that she was no longer represented by UV and that in future she would be represented by Mr Kenneth Moore.

[3] The application was heard on 30 May 2016. At the hearing Mr Moore appeared on behalf of Ms Isturiz-Moron, while Mr Jon Lovell appeared with permission for Northside. Mr Simon Rosenberg, Northside’s Chief Executive Officer, provided a witness statement 1 on behalf of the Respondent. Mr Rosenberg was not required for cross examination.

[4] For the reasons set out below, I have dismissed Northside’s jurisdictional objections. Further, I have found that there was no basis under either s.524(1) of the Act or under the contract of employment for Northside to suspend Ms Isturiz-Moron without pay, though there may be a basis for such a suspension relying on the implied term of “no work no pay” at least for the duration of the suspension of Ms Isturiz-Moron’s Working With Vulnerable People (WWVP) registration. I have also declined to make the orders sought by Ms Isturiz-Moron.

Background

[5] Ms Isturiz-Moron commenced employment with Northside on 3 February 2011 as a Childcare Assistant.

[6] On 27 April 2015 allegations of serious misconduct were made against Ms Isturiz-Moron. Those allegations involved claims that Ms Isturiz-Moron had engaged in rough handling of children. Ms Isturiz-Moron was stood down on full pay on 30 April 2015 while the allegations were investigated.

[7] On 14 July 2015 Northside was advised by the ACT Office of Regulatory Services that Ms Isturiz-Moron’s WWVP registration had been suspended. By way of background, under the Working With Vulnerable People (Background Checking) Act 2011 (ACT) (the WWVP Act) childcare services are a regulated activity [Schedule 1, Clause 1.3]. Further, the WWVP Act requires a person to be registered to engage in a regulated activity [s.12(1)] and states that a person whose registration is suspended does not have registration allowing the person to work in a regulated activity [s.59(5)].

[8] On 15 July 2015, Northside wrote to Ms Isturiz-Moron advising that she had been suspended without pay. The letter stated, inter alia, that:

“… Northside has in the meantime received a ‘Notice of Suspension’ by the Delegate of the Commissioner for Fair Trading, Access Canberra advising that your registration under the Working With Vulnerable People (Background Checking) Act 2011 (the Act) has been suspended in accordance with section 59 of the Act effective 14 July 2015.

On this basis, having regard to the suspension of your Working with Vulnerable People (WWVP) permit, it is clear that Northside is not able to engage you in any regulated activity or service whilst your registration is suspended, and therefore has initiated a notice of suspension ‘without pay’ from 14 July 2015.

The decision to suspend you without pay will be reviewed when the matters currently under investigation are resolved and findings are available to Northside. At that point, Northside will consider on merit whether there is lawful basis for continuing employment or some other action, as appropriate.

This decision is made in accordance with section 524 (1) of the Fair Work Act 2009 which provides for an employer to stand-down an employee in such circumstances, particularly where the employer cannot reasonably be held responsible.” (Emphasis as per original, underlining added)

[9] On 16 November 2015 the ACT Office of Regulatory Services advised Northside that Ms Isturiz-Moron had been granted conditional WWVP registration, with one of the conditions listed on her registration being that Ms Isturiz-Moron must be under direct supervision at all times while engaging in a regulated activity. The ACT Office of Regulatory Services wrote to Ms Isturiz-Moron on 8 January 2016 clarifying the practical effect of the above condition, stating that it meant “that an employer is responsible for ensuring that when engaging in a regulated activity or service, you are within “line of sight” of another employee at all times …”.

[10] As noted above, on 14 December 2015 an application under s.526 of the Act was made on behalf of Ms Isturiz-Moron by UV. In her application, Ms Isturiz-Moron sought a number of orders, including that she be compensated for lost wages.

[11] Northside responded to Ms Isturiz-Moron’s application on 4 January 2016 and contended that as it did not stand Ms Isturiz-Moron down under s.524(1) of the Act but pursuant to an express contractual power to do so, the application could not be dealt with under s.526 of the Act and should therefore be dismissed.

[12] In subsequent developments, Ms Isturiz-Moron’s employment was terminated by Northside with effect from 14 April 2016, though the termination is not an issue in the context of these proceedings.

The Statutory Framework

[13] The relevant sections of the Act are ss.524 and 526 which provide as follows:

“524 Employer may stand down employees in certain circumstances

(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:

(a) industrial action (other than industrial action organised or engaged in by the employer);
(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

(2) However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:

(a) an enterprise agreement, or a contract of employment, applies to the employer and the employee; and
(b) the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.

Note 1: If an employer may not stand down an employee under subsection (1), the employer may be able to stand down the employee in accordance with the enterprise agreement or the contract of employment.

Note 2: An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).

(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.

526 FWC may deal with a dispute about the operation of this Part

(1) The FWC may deal with a dispute about the operation of this Part.

(2) The FWC may deal with the dispute by arbitration.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(3) The FWC may deal with the dispute only on application by any of the following:

(a) an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1));
(b) an employee in relation to whom the following requirements are satisfied:

(i) the employee has made a request to take leave to avoid being stood down under subsection 524(1) (or purportedly under subsection 524(1));
(ii) the employee’s employer has authorised the leave;

(c) an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (a) or (b);
(d) an inspector.

(4) In dealing with the dispute, the FWC must take into account fairness between the parties concerned.”

The Respondent’s case

[14] Northside submitted that it had a contractual power to suspend Ms Isturiz-Moron from her employment, adding that her contract of employment authorised it to suspend her with full pay where Northside considered that to be in its best interests. Northside further submitted that in circumstances where it was suspected that Ms Isturiz-Moron had engaged in misconduct and did not have a WWVP registration that it was in its best interests that Ms Isturiz-Moron be suspended from her employment.

[15] Northside also contended that Mr Rosenberg mistakenly advised Ms Isturiz-Moron in his letter of 15 July 2015 that her suspension was in accordance with s.524(1) of the Act and that this incorrect advice did not affect its contractual power to suspend Ms Isturiz-Moron. Northside also acknowledged that s.524(1) of the Act could not have authorised the direction to Ms Isturiz-Moron not to attend the workplace.

[16] As to the orders sought by Ms Isturiz-Moron, Northside submitted that:

• an order for the payment of wages would involve the enforcement of past rights and therefore was outside the jurisdiction of the Commission;



• following both the suspension of her WWVP registration and the subsequent granting of her conditional WWVP registration, Ms Isturiz-Moron was not able to perform the inherent requirements of her position and was therefore not ready, willing and able to perform her duties;



• consistent with the “no work no pay” term generally implied into employment contracts: Automatic Fire Sprinklers v Watson 2 (Watson), in circumstances where Ms Isturiz-Moron had not rendered service and was not ready, willing and able to render that service she had no entitlement to wages; and



• the making of an order that Ms Isturiz-Moron be provided with work was inappropriate in circumstances where she had been suspended from her employment and was unable to perform the inherent requirements of her position.

[17] At the hearing Northside raised a further jurisdictional objection given that it had terminated Ms Isturiz-Moron’s employment with effect from 14 April 2016. Specifically, Northside contended that s.526(3)(a) of the Act required an ongoing employment relationship to be on foot for the Commission to have the ability to deal with the matter. As to Ms Isturiz-Moron’s contention that she should have returned to work on 21 October 2015 when she was granted a conditional WWVP registration (though Northside was not advised of the decision until 16 November 2015), Northside submitted that the condition that Ms Isturiz-Moron must be under direct supervision at all times was an onerous condition which it could not accommodate. Finally, referring to clause 14 of Ms Isturiz-Moron’s contract of employment, Northside acknowledged that it provided a right to suspend with pay, submitting that it exercised that power in the first instance when Ms Isturiz-Moron was suspended with pay but that it suspended Ms Isturiz-Moron without pay when she was unable to meet the inherent requirements of her job as a result of the suspension of her WWVP registration.

[18] Mr Rosenberg deposed in his witness statement that Ms Isturiz-Moron’s contract of employment:

• was signed by Ms Isturiz-Moron on 17 February 2011;



• provides at clause 14 for her suspension from employment when Northside considers that it is in the best interests of Northside for that to occur; and



• does not refer to a requirement to hold WWVP registration as that requirement stems from legislation which did not come into effect until 8 November 2012, i.e. after the contract had been signed.

[19] As previously noted, Mr Rosenberg’s evidence was not challenged.

The Applicant’s case

[20] Ms Isturiz-Moron submitted that the Commission had jurisdiction to deal with the matter under s.526 of the Act because Northside purportedly relied on s.524(1) of the Act to stand her down. Ms Isturiz-Moron further submitted that as there was no basis under s.524(1) to stand her down, the decision to do so was unlawful and that as such her employment status prior to 14 July 2015, which was “stood down on paid leave”, should apply from that date until the Commission determined her application. Ms Isturiz-Moron also contended that Northside had no contractual power to stand her down without pay. As to remedy, Ms Isturiz-Moron submitted that the Commission should order Northside to pay her ordinary fortnightly earnings from 14 July 2015 until her application was determined and return Ms Isturiz-Moron to her job in accordance with the conditions attached to her WWVP registration. Beyond this, Ms Isturiz-Moron submitted that Northside’s contention that it was an inherent requirement of her position to work unsupervised was not credible as it was not specified in either her contract of employment or her position description and that she was ready, willing and able to resume her duties as a Childcare Assistant with Northside.

[21] At the hearing, Ms Isturiz-Moron submitted among other things that:

• there was no provision in her contract of employment which provided a basis for her to be suspended without pay;



• clause 14 of her contract of employment only allowed for suspension on full pay;



• direct supervision was a normal operational requirement in a regulated environment such as the provision of childcare services;



• she did not accept that a junior childcare worker would be able to work unsupervised;



• she had been ready, willing and able to return to work on 21 October 2015 when her conditional WWVP registration was granted; and



• it would be illogical for conditional WWVP registration to be granted if it meant that the person could not return to work.

Consideration of the issues

[22] There are four key issues which the Commission needs to determine. They are:

(i) whether the Commission has jurisdiction to deal with the application in circumstances where Ms Isturiz-Moron is no longer employed by Northside;
(ii) whether Ms Isturiz-Moron was stood down under s.524(1) of the Act thereby enlivening the Commission’s jurisdiction to deal with an application under s.526 of the Act;
(iii) whether Ms Isturiz-Moron was lawfully stood down and/or suspended; and
(iv) whether it is appropriate to make the orders sought by Ms Isturiz-Moron.

[23] I will deal with each of those issues separately.

(i) Can the Commission deal with the application in circumstances where Ms Isturiz-Moron is no longer employed by Northside?

[24] This issue was considered by Commissioner Johns in Timothy Schell & Ors v Ensign Australia Pty Ltd 3 (Ensign). Specifically Commissioner Johns observed that:

“[22] When considered in context and having regard to the purpose of investing the Commission with a dispute settling power, the better interpretation is that, at the time the application is made to the Commission, there must be an existing employment relationship between the applicant employee and the respondent employer. In the present context the power to stand down is a creature of statute. It relieves the employer of the obligation to pay an employee who is otherwise ready, willing and able to work for the employer. At common law the employee would be entitled to be paid, however s.524(3) of the FW Act relieves the employer of that common law obligation. The consequences for an employee, deprived of his or her wage by operation of the statute, are potentially significant. It is for this reason that the Parliament provided for a mechanism through which an employee adversely affected by a stand down could make application to address those adverse consequences.

[23] Such an interpretation is assisted by focusing on the phrase “who has been, or is going to be, stood down”. That is to say, at the time the application is made to the Commission, the employee must be experiencing the consequences of the stand down or be about to experience the consequences of the stand down. They must be employed by the respondent employer when the application to the Commission is made. The whole purpose of the legislative scheme is to provide affected employees with a remedy that can be promptly actioned by them.”

[25] As can be seen from above, s.526 of the Act empowers the Commission to deal with a dispute concerning the operation of Part 3-5 of the Act only where on application is made by, inter alia, an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1)) or an employee organisation that is entitled to represent the industrial interests of such an employee. There is nothing in the language of s.526 which connotes an intention to limit the Commission’s powers under Part 3-5 to circumstances where an employee continues to be employed by the respondent employer.

[26] Against that background, Northside’s contention that the Commission does not have the jurisdiction to deal with the application because Ms Isturiz-Moron is no longer employed by it is unsustainable. Accordingly, the jurisdictional objection is dismissed.

(ii) Was Ms Isturiz-Moron stood down under s.524(1) of the Act?

[27] While I note Northside’s submissions that the reference to s.524(1) in Mr Rosenberg’s letter of 15 July 2015 was an error, the letter is unambiguous in its reliance on s.524(1). I further note that the letter makes no reference whatsoever to Ms Isturiz-Moron’s contract of employment.

[28] As to Northside’s submission that the Commission does not have jurisdiction to deal with the dispute under s.526 of the Act as Ms Isturiz-Moron was not stood down under s.524(1) of the Act, I note that s.526(3)(a) provides that the Commission may only deal with a dispute on application by “an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1))” (underlining added) while s.526(3)(c) refers to “an employee referred to in paragraph (a)”.

[29] On any reading of the letter of 15 July 2015 it is clear that Northside purported to suspend Ms Isturiz-Moron without pay under s.524(1) of the Act, even if it did so erroneously. In doing so, Northside enlivened the Commission’s jurisdiction to deal with an application made in accordance with s.526 of the Act. Accordingly, Northside’s jurisdictional objection that Ms Isturiz-Moron’s application cannot be dealt with under s.526 of the Act is dismissed.

(iii) Was Ms Isturiz-Moron lawfully stood down and/or suspended?

[30] As previously mentioned, Northside acknowledged in its submissions that s.524(1) of the Act could not have authorised the direction to Ms Isturiz-Moron not to attend the workplace.

[31] Northside further submitted that it had a contractual power to suspend Ms Isturiz-Moron. Clause 14 of Ms Isturuz’s contract of employment provides as follows:

“14. Suspension

The Organisation may suspend you on full pay for any period if the organisation considers that it would be in the best interests of the organisation to do so.” 4 (Underlining added)

[32] It is clear from the clause that it does not provide for suspension without pay.

[33] However, a further consideration in this case is whether Ms Isturiz-Moron was able to perform her duties during the period in which her WWVP was suspended and subsequently when she was granted a conditional WWVP registration. As to the period during which Ms Isturiz-Moron’s WWVP registration was suspended, by virtue of s.59(5) of the WWVP Act Ms Isturiz-Moron was precluded from working in a regulated activity. Further, under the WWVP Act both Ms Isturiz-Moron and Northside could have been prosecuted had she worked for Northside in the provision of childcare services without her WWVP registration. This supports a finding that while Ms Isturiz-Moron was ready and willing to work she was not able to do so in the provision of childcare services for the duration of her WWVP suspension. As stated by Justice Dixon in Watson:

“A contract for the establishment of the relation of master and servant falls into the same general category of agreements to pay in respect of consideration when and so often as it is executed, and is, therefore, commonly understood as involving no liability for wages or salary unless earned by service, even though the failure to serve is a consequence of the master’s wrongful act.” 5

[34] The position is less clear in respect of the period for which Ms Isturiz-Moron held conditional WWVP registration, though Northside submits that it was unable to comply with the condition requiring that Ms Isturiz-Moron be “within “line of sight” of another employee at all times”. In this regard I note that Ms Isturiz-Moron’s position description states that the “Employee will work under direct supervision in a team environment …” 6 For the reasons outlined below when considering the orders sought by Ms Isturiz-Moron, it is not necessary to come to a definitive view on this issue.

[35] In summary, there was no basis under either s.524(1) of the Act or under the contract of employment for Northside to suspend Ms Isturiz-Moron without pay. However, Northside may have been justified in suspending Ms Isturiz-Moron without pay consistent with the implied term set out in Watson, at least for the period that Ms Isturiz-Moron’s WWVP registration was suspended if not beyond as well.

(iv) Is it appropriate to make the orders sought by Ms Isturiz-Moron?

[36] In Ensign Commissioner Johns observed:

“[2] … Each of the original applications sought an order that the applicants be paid an amount referable to the period from when they were stood down to when their employment was terminated. In essence the original orders sought had all the hallmarks of a claim for back payments in respect of the identified period. On the face of the original applications it seemed, more likely than not, that the applicants, by way of remedy, wanted the Commission to enforce a past right. That is to say they wanted the Commission to exercise judicial power rather than arbitral power. That would have been beyond the jurisdiction of the Commission.”

[37] Ms Isturiz-Moron sought an order that Northside pay her ordinary fortnightly earnings from 14 July 2015 until her application was determined. Drawing on the language in Ensign, Ms Isturiz-Moron wants the Commission to enforce a past right which is beyond the jurisdiction of the Commission for the reasons outlined in Ensign.

[38] Ms Isturiz-Moron also sought an order that Northside return her to her job in accordance with the conditions attached to her WWVP registration. I accept Northside’s submission that it could not accommodate the condition requiring that Ms Isturiz-Moron be “within “line of sight” of another employee at all times”. For that reason, I decline to issue the order sought.

[39] Given that Ms Isturiz-Moron has been dismissed, it is of course open to her make an unfair dismissal application. Clearly, if Ms Isturiz-Moron has not yet made such an application she will need to establish that there are exceptional circumstances warranting the Commission granting her a further period to make such an application given that any such application would be made outside the 21 day statutory timeframe specified in s.394(2) of the Act.

[40] For the reasons outlined above, I decline to make the orders sought by Ms Isturiz-Moron.

Conclusion

[41] For all the above reasons, I dismiss Northside’s jurisdictional objections. Further, I find that there was no basis under either s.524(1) of the Act or under the contract of employment for Northside to suspend Ms Isturiz-Moron without pay, though there may be a basis for such a suspension relying on the implied term of “no work no pay” for at least for the duration of the suspension of Ms Isturiz-Moron’s WWVP registration. I also decline to make the orders sought by Ms Isturiz-Moron.

Appearances:

K. Moore for the Applicant.

J. Lovell for the Respondent.

Hearing details:

2016.

Canberra and Hobart:

May 30.

 1   Exhibit 1

 2 (1946) 72 CLR 435

 3   [2015] FWC 8825

 4   Exhibit 1 at Attachment A

 5 (1946) 72 CLR 435 at 465

 6   Attachment to Applicant’s Response to the Respondent’s Submission dated 1 March 2016

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