Minister for Health v Ferry

[1996] IRCA 117

DECISION NO:  117/96

INDUSTRIAL LAW - UNLAWFUL TERMINATION OF EMPLOYMENT - JURISDICTION - Employee had been employed at a hospital under a series of fixed-term contracts under which he was entitled to redeployment on redundancy - After expiry of last fixed term contract employee continued working for an indefinite period until the hospital closed - Whether employment was terminated at the initiative of the employer - Effect of award entitlement - Availability of remedy of reinstatement.

Industrial Relations Act 1988, ss.170CC, 170EE.

MINISTER FOR HEALTH v JOHN FERRY

NO.  WI.2177 of 1995

CORAM:    WILCOX CJ, NORTH and MADGWICK JJ
PLACE:    SYDNEY (HEARD IN PERTH)
DATE:     4 APRIL 1996

IN THE INDUSTRIAL RELATIONS COURT  )
OF AUSTRALIA  )  No. WI.2177 of 1995
WESTERN AUSTRALIA DISTRICT REGISTRY)

ON APPEAL FROM A SINGLE JUDGE
      OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA

BETWEEN:  MINISTER FOR HEALTH

Appellant

AND:JOHN FERRY

Respondent

CORAM:    WILCOX CJ, NORTH AND MADGWICK JJ
PLACE:    SYDNEY (HEARD IN PERTH)
DATE:     4 APRIL 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT  )
OF AUSTRALIA  )  No. WI.2177 of 1995
WESTERN AUSTRALIA DISTRICT REGISTRY)

ON APPEAL FROM A SINGLE JUDGE
      OF THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA

BETWEEN:  MINISTER FOR HEALTH

Appellant

AND:JOHN FERRY

Respondent

CORAM:    WILCOX CJ, NORTH AND MADGWICK JJ
PLACE:    SYDNEY (HEARD IN PERTH)
DATE:     4 APRIL 1996

REASONS FOR JUDGMENT

THE COURT: This is an appeal against a decision of a Judge of the Court (Marshall J) in an unlawful termination of employment case. His Honour was asked to review a decision of a Judicial Registrar dismissing a claim for reinstatement and/or compensation that was made by John Ferry against the Western Australian Minister for Health. The Judicial Registrar had held that Mr Ferry's employment was not terminated at the initiative of the employer but by agreement between the parties; consequently, the claim did not fall within the Court's jurisdiction under Division 3 Part VIA of the Industrial Relations Act 1988.

The facts

Mr Ferry was employed by the Minister as an orderly/ward assistant at Heathcote Hospital in Applecross, a suburb of Perth.  Heathcote was one of several hospitals conducted by the Minister in the Perth metropolitan area. 

Mr Ferry's employment spanned the period 8 January 1993 to 18 November 1994 but it was not continuous over this period.  In January and February 1993 he was employed under a series of short term contracts relating to specific periods of time, from 48 hours to two weeks.  Each of the short term contracts (and their successors until 30 June 1994) took the form of a one page printed document signed by Mr Ferry and his immediate supervisor Elaine Kean.  The form included the following paragraph:

"The employee understands and accepts that upon expiry of this contract or any further temporary contract entered into by the parties, the employee has no guarantee of appointment to a permanent position within the hospital."

The evidence does not disclose why short term contracts were used.

Mr Ferry did not work at the hospital after the end of February until 2 July when he was re-employed under a short term contract that, with its successors, ran until 7 October 1993.  Once again there was a gap in employment until 8 December when he was re-employed on a contract that expired on 25 February 1994.  After a further gap, Mr Ferry was re-employed on a contract dated 31 March that was said to cover the period 28 March to 19 May 1994.  On 17 May he signed a further agreement for the period 20 May - 30 June.  On 1 July, when he was at work, Mr Ferry was asked to sign a further agreement, for the period until 24 August.  After consultation with his union, he refused to do so.  Nonetheless, he continued to work and was paid normal wages.  This situation continued after 24 August.

On 9 September 1994, Mr Ferry received a letter from Peter Easom, Manager of the hospital, offering him a "fixed term appointment ... for the period 28 August 1994 to 8 November 1994".  The letter stated that the contract "is in accordance with the terms of the Hospital Workers (Govt) Award" and was subject to ongoing performance reviews.  Mr Ferry returned this letter with a notation "I accept this offer of employment on the basis that it will not prejudice my claims for permanent employment under the redeployment general order.  J Ferry".  The Judicial Registrar said this "was clearly a reference to, and was accepted by the respondent as a reference to, order number 1059 of 1993 Western Australian Government Employers Redeployment Retraining and Redundancy General Order", a copy of which was admitted into evidence.  That Order was made by the Western Australian Industrial Relations Commission in 1988 and amended in November 1993.  It contained provisions for the redeployment and retraining of redundant employees.

Mr Ferry's employment did not terminate on 8 November, the date stated in Mr Easom's letter.  The evidence is sparse as to what happened that day.  In his affidavit Mr Ferry simply said:

"When 8 November came I continued to work until the 18 November when the hospital closed without any further contracts.  I wanted to continue to work but the hospital said they did not need me."

The only reference in Mr Ferry's oral evidence to the position on and after 8 November was in these exchanges in cross-examination:

"So 8 November came and you understood that was the end of the fixed-term appointment that was represented by Mr Easom's letter.  Is that right?---Say that again?

When 8 November came - - -?---Yes.

- - - you understood, did you, that that was the end of the fixed term appointment that Mr Easom's letter represented or put into formalities?---Must have, yes.

And after 8 November you continued to do some work; that is correct?---Until - yes, until it closed, yes.

And you understood that you were going to be working until the hospital actually closed?---Yes."

Mr Easom was the only witness for the Minister.  He did not deal specifically with the position on and after 8 November but, in his affidavit, he gave this general evidence:

"From the time I commenced as Manager at the Hospital until the closure of the Hospital I spoke several times with the Applicant regarding his employment.  I assured him, on those occasions, of the continuation of his employment until the closure of the Hospital.  I also made it clear to the Applicant that he had no ongoing employment following the closure of the Hospital.  Whilst the Applicant stated that he understood both of those facts, he reaffirmed his dispute with the Hospital regarding the matter."

Mr Easom was not cross-examined. 

It is common ground that, on 8 November, Mr Ferry was told that he could continue to work at the hospital until it closed.  On 18 November, the Minister closed the hospital and Mr Ferry's employment ceased.

Shortly before Mr Ferry's employment was terminated, on 3 November 1994, Senior Deputy President Riordan made an award in the Australian Industrial Relations Commission entitled "Western Australian Government/Australian Liquor, Hospitality and Miscellaneous Workers Union (ALHMWU) Redeployment, Retraining and Redundancy (Interim) Award, 1994" ("the RRR Award").  That award applied to Mr Ferry's employment.  Its terms were relevantly identical to those of the Western Australian Redeployment Retraining and Redundancy Order referred to by Mr Ferry in his endorsement to the letter of 9 September.  The award provided that an employee "shall not be made redundant by the employer other than in accordance with clause 7" of the award.  The word "redundancy" was defined as "a situation when a job performed by an employee ceases to exist or becomes surplus to requirements".

Clause 7 sets out a scheme for identification of suitable alternative employment for employees made redundant.

The Judicial Registrar's decision

In relation to the last period of employment, the Judicial Registrar commented:

"The last contract of employment was a contract for a specified term in that it was a contract to work from 8 November until the closure of the hospital.  The precise date on which the hospital was to close was not specified but it was known that the closure was imminent.  The applicant knew that this was a very short term contract.  He knew and confirmed on oath that he knew that his final term of employment from 8 November would only be to the closure of the hospital.

While this was an oral contract to work until the occurrence of a specified event, the closure of the hospital, it was not a contract for a specified period of time excluded by section 170CC and regulation 30B(1)(a), because the ending of the contract was determined by a specific event and the date of that event was not specified.  This final contract may have been excluded from the requirements for termination of employment and from the jurisdiction of this court, under regulation 30B(1)(b), in that the applicant may have been an employee engaged under a contract of employment for a specified task, the specified task being to work as an orderly for a short period until the closure of the hospital.

However, counsel for the respondent never asserted that the final short term contract was excluded under regulation 30B(1)(b), and with an oral contract and a lack of evidence, that it was for a specified task, I would not and do not find that the contract was excluded under regulation 30B(1)(b)."

However, the Judicial Registrar went on to say that "this was not a termination of employment at the initiative of the employer".  He explained:

"If termination of employment is brought about by a particular event and the parties willingly enter a contract of employment which provides for the contract to be terminated on the occurrence of that event, and both parties acknowledge that this was intended and understood, that is not a termination at the initiative of the employer, it is a termination by agreement between consenting parties to the agreement."

The decision of Marshall J

When the matter came before Marshall J for review, neither party sought to adduce additional evidence.  Both parties were content to argue the matter on the basis of the evidence tendered to the Judicial Registrar, the main issue being the correctness of the Judicial Registrar's opinion that Mr Ferry's employment had not been terminated at the initiative of his employer.  Marshall J analysed that issue in this way:

"In my opinion, the correct analysis is that the applicant was employed continuously by the respondent from 28 March 1994 until 18 November 1994.  It is common ground that at the time he was employed by the respondent his employment was subject to the Hospital Workers (Government) Award 1966 ("the State award"), being an award of the Western Australian Industrial Relations Commission.  The State award required two weeks notice of a termination of employment.  Even assuming that the applicant had a single, stand alone, contract of employment on 8 November until the close of the hospital, the State award provision as to notice was incapable of being applied if the employment did not extend to 22 November 1994 ...  In these circumstances, it is obvious that the applicant's employment was terminated by the respondent and did not occur by the effluxion of time and that such termination contravened the State award provision as to notice."

His Honour said that Mr Ferry was "dismissed without notice" and that, "(a)lthough he had an expectation that he would no longer be employed at the hospital when it closed, he wished to be considered for redeployment", as was his right under the RRR award.

After concluding that Mr Ferry's employment was terminated at the initiative of the employer, so the Court had jurisdiction, Marshall J went on to consider whether the Minister had a valid reason for terminating the employment.  In relation to that issue, he said:

"The respondent, on the assumption that jurisdiction existed, contended that the employment was terminated for a valid reason.  The valid reason was said to be the closure of the hospital.  I do not accept that submission.  The respondent operated at the time of the termination, and still operates other hospitals.  The RRR award applied across the public sector and not only to hospitals conducted by the respondent.  It applies equally, at least to those conducted by boards of management within the public sector.  To terminate an employee in breach of the employer's obligations under State and Federal awards is not to terminate an employee's employment for a valid reason."

Marshall J held that the Minister had failed to discharge his onus under s.170EDA to show that the termination was for a valid reason.  He said there was a true redundancy and the RRR award applied, "the decision to terminate the applicant cannot be justified on the basis of the particular operational requirements of the respondent at Heathcote Hospital in Applecross."  Dealing with remedy, Marshall J said that no cogent submissions had been put to him as to the impracticality of reinstatement.  He noted that the Minister "is a large employer who employs many ward assistants/orderlies in various hospitals in metropolitan Perth and country Western Australia". Accordingly, he ordered pursuant to s.170EE(1)(a)(ii) of the Act:

"that the applicant be appointed to another position with the respondent on terms and conditions no less favourable than those on which the employee was employed immediately before the termination.  These conditions would include the State and RRR awards being applicable to such employment."

The arguments on appeal

The Minister appealed against Marshall J's decision.  His counsel put a number of submissions.  First, they contended that the State award, the Hospital Workers (Government) Award, was irrelevant and that Marshall J erred in holding that its effect was to extend Mr Ferry's employment until 22 November.  They said that his Honour's conclusion failed to take account of the unchallenged evidence of Mr Easom "that it was made clear to the respondent that the final contract of employment was for a term ending on the actual date of closure of Heathcote Hospital and that, following the closure date, there would be no further employment available to the respondent."  They said in their written submissions:

"8.Whilst the occurrence of Heathcote Hospital ceasing to operate and provide medical services can be seen as an occurrence connected with the very existence of the employer, that closure was an occurrence foreseen by both parties to the employment relationship and accepted as being an occurrence which would result in the employment coming to an end.

9.There is no reason to distinguish between a contract of employment ending by effluxion of time on a specified date on the one hand, and on a pre-determined occurrence (accepted by both parties to arise in the foreseeable future), on the other hand.  In each case, the circumstances are known to both parties.  The eventual occurrence of the determining event (even where it involves part of the employer's operations ceasing to exist) is no more at the initiative of the employer than of the employee."

Counsel elaborated this submission orally by saying that the proper finding on the evidence was that there was an agreement between the parties for the employment to terminate when the hospital was closed and, accordingly, this was the event that brought Mr Ferry's employment to an end.  It did not matter that it was the Minister who determined whether or not to close the hospital and, if so, when.  The reason for this, they said, was that, on 8 November when the agreement was made in respect of the last period, both parties knew that closure was imminent.

Counsel for the Minister also contended that Marshall J should not have ordered reinstatement.  They accepted that, in considering the practicability of reinstatement, his Honour was entitled to have regard to all the Minister's hospital operations and not just Heathcote Hospital and that there was no evidence that it was impracticable to employ Mr Ferry in another hospital.  But they said that the effect of a reinstatement order was to place Mr Ferry in a more favourable position than he had enjoyed at Heathcote Hospital, where he had been employed under a series of short-term contracts.  Reinstatement on the same basis was impracticable; consequently, that remedy should not have been awarded.

Counsel for Mr Ferry put the awards at the forefront of his submissions.  He said that, throughout the whole of his employment, Mr Ferry was entitled to the benefits conferred on government employees by the Western Australian Redeployment, Retraining and Redundancy Order.  He was aware of this, at least by mid-1994, and was therefore unwilling to sign the short term contract presented to him on 2 July 1994 or to accept the letter of 9 September 1994 except on the basis of a reservation of his rights under the Order.  Counsel said there was no evidence of an agreement on 8 November for an extension until the closure of the hospital, and certainly no evidence that Mr Ferry accepted that his employment would come to an end, without redeployment rights, on the closure of the hospital.  Finally, he said that, even if it was agreed that Mr Ferry's employment would cease on the closure of the hospital, this was an event entirely controlled by the Minister; so the termination was at his initiative.  Counsel for Mr Ferry also defended the reinstatement order.

Conclusions:  termination

It is common ground that Mr Ferry was not an employee under a contract for a specified period of time or for a specific task, so as to be excluded from the operation of Subdivisions B, C, D and E of Division 3 of Part VIA of the Act by regulation 30B(1). Consequently, those Subdivisions applied and he was entitled to a remedy if the termination of his employment was at the initiative of the Minister and was without a valid reason.
          As already indicated, counsel for the Minister say that the termination did not occur because of any initiative of their client but pursuant to an agreement between the parties, it being agreed that the employment would come to an end when Heathcote Hospital closed.  There are at least two difficulties about this approach.  First, the evidence does not establish an agreement to the effect contended for by counsel.  Second, any agreement could not override the terms of the RRR award.

As to the first matter, we have already set out such evidence as there is regarding the arrangements between the parties.  We accept that, after his commencement of employment at Heathcote Hospital on 4 July, Mr Easom made clear to Mr Ferry (probably more than once) his view that Mr Ferry had no continuing employment right after the hospital closed.  But it seems equally clear that Mr Ferry declined to accept this view.  Because of union advice, he refused to sign the short term contract presented to him in respect of the period 1 July to 24 August 1994.  When, in the letter of 9 September, he was  offered employment from 28 August to 8 November 1994, he accepted only on the basis that it would not prejudice his claim for permanent employment under the redeployment general order. 

It is not necessary to determine whether Mr Ferry's endorsement to the letter had contractual significance, by constituting a counter offer that was accepted on behalf of the Minister by Mr Easom allowing him to continue to work.  Even if it merely constituted a reservation of rights, as counsel for the Minister suggest, it points strongly against a conclusion that the parties agreed that Mr Ferry's employment would come to an end, without any right of redeployment elsewhere, on 8 November.  And nothing occurred on 8 November to change that situation.  So far as the evidence indicates, nothing was said on that day about the duration or terms of his continuing employment.  As had happened before, he was simply allowed to work on, notwithstanding the expiry of his fixed-term contract.

As we see the situation, notwithstanding the earlier fixed-term contracts, on termination day Mr Ferry was in the ordinary situation of being employed for an indeterminate period subject to termination on 14 days notice, or payment in lieu thereof, as required by the Hospital Workers (Government) Award, but subject also to his rights under the RRR Award and the Industrial Relations Act.

Even if there was an agreement for termination of the employment at the time of closure of the hospital, without any right of redeployment, this would not exclude the operation of the RRR award. By force of statute, and notwithstanding any agreement to the contrary, a valid award of the Australian Industrial Relations Commission is binding on the parties: see s.149 of the Industrial Relations Act.  The RRR award applies to all employees of the Western Australian Government other than those listed in Schedule A of the Award.  Schedule A excludes employees retired on grounds of ill health, employees whose employment is terminated as a consequence of poor performance or misconduct, casual employees and -

"an employee where an agreement has been reached between the employee, employer and relevant union that the employee is only engaged for a defined period under a fixed term contract at the conclusion of which their employment shall cease; ... "

As will be apparent, there are two reasons why Mr Ferry was not in the last stated category;  his union was not a party to any understanding that was reached on 8 November and the continuing employment was not for a defined period under a fixed-term contract.  It follows that the RRR award applied to Mr Ferry and he would have been entitled to continuing employment pursuant to its terms even if he had agreed otherwise.

As we say, we think this is no different from an ordinary case of an employee who was entitled to indefinite continuing employment being terminated by the employer because his particular job had become redundant. We agree with Marshall J that, particularly having regard to the RRR award, proof of the closure of the particular hospital at which Mr Ferry was employed was not enough to establish a valid reason for Mr Ferry's termination. The termination contravened s.170DE(1) of the Industrial Relations Act.

Reinstatement

The primary remedy for unlawful termination of employment provided by the Act is reinstatement.  This is
apparent from s.170EE(2) of the Act, which confers power to make a general compensation order. That subsection commences by stating the condition on which the power to order compensation is dependent:

"If the Court thinks, in respect of a contravention of a provision of this Division ... constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order. ..."

The meaning in this context of the word "impracticable" has been discussed in previous cases:  see particularly Liddell v Lembke (1994) 1 IRCR 466 at 486-487 and 494-495. Having regard to the facts that Mr Ferry's dismissal did not arise out of any personal deficiency or misconduct and that the Minister conducted several other hospitals, there was no reason for Marshall J to conclude that it was impracticable to order his reinstatement. It was true that he would need to be reinstated at a hospital other than Heathcote; but redeployment like that was envisaged by the RRR award.

As we have indicated, counsel's main argument was that reinstatement would place Mr Ferry in a more favourable position than that enjoyed by him whilst working under short-term contracts at Heathcote Hospital. Having regard to the terms of s.170EE(2), we do not think there is room for arguments of disproportionality; reinstatement in the particular case is either practicable or not. In any case, we do not agree that reinstatement would place Mr Ferry in a more favourable position than before. Immediately before Mr Ferry's employment was terminated, he was employed under a contract of employment, of indefinite duration, that entitled him to the benefit of the RRR award. Subject to the presently irrelevant qualifications contained in that award, he was entitled, in effect, to permanent employment by the Western Australian government. A reinstatement order does no more than vindicate that right.

It was not argued that the amendments made to s.170EE of the Industrial Relations Act by the Industrial Relations and other Legislation Amendment Act 1995 applied to this case: see cl.14 of Schedule 2 of that Act. If they do apply, and the Court's power to order reinstatement depends upon our being of the opinion that reinstatement is "appropriate in all the circumstances of the case", this does not affect our opinion that the reinstatement order ought to be upheld.  Because of the factors mentioned above, reinstatement is appropriate in all the circumstances of this case.

We agree with the orders made by Marshall J.  The appeal must be dismissed.

I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment of the Court.

Associate:

Dated:4 April 1996

APPEARANCES

Counsel for the Applicant:     R E Cock and R L Hooker

Solicitor for the Applicant:        Crown Solicitor (WA)

Counsel for the Respondent:         J Nolan

Solicitor for the Respondent:       Steve Masselos & Co

Dates of hearing:                   27 February 1996