Raymond Ernest Grout and Gunnedah Shire Council

C A T C H W O R D S

INDUSTRIAL LAW - termination of contract of employment by written notice - whether notice reasonable - whether employer can accept notice that is not reasonable - whether repudiation of contract by employee - Industrial Relations Court - jurisdiction in relation to termination - whether adequate alternative remedy under Industrial Relations Act 1991 (NSW) - accrued jurisdiction of Court if adequate alternative remedy available

Industrial Relations Act 1988 (Cth), ss170EA, 170EB
Industrial Relations Act 1991 (NSW), ch3 Pt8

Birrell v Australian National Airlines Commission (1984) 15
FCR 447
Walton v Wollondilly Abattoirs Co-op Ltd (1993) 50 IR 81
Association of Professional Engineers, Scientists and Managers
Australia and anor v Skilled Engineering Pty Ltd (1994) 122
ALR 471
Hill v C.A. Parsons Ltd (1972) Ch 305
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 453
Finch v Sayers (1976) 2 NSWLR 540
Smythe & Co. v Bailey & Co. (1940) 3 AllER 60
Simmons Ltd v Hay (1964) NSWLR 416
Siagian v Sankel Pty Ltd (1994) 122 ALR 333
Grieve v West Maitland Council (1943) 44 SR (NSW) 142
Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976)
46 FLR 444
Short v F.W. Hercus Pty Ltd (1993) 46 IR 128
Wylie v Carbide International Pty Ltd, unreported, 13 July
1994, Industrial Relations Court, Keely J
Smith v Director General of School Education (1993) 31 NSWLR
349
Australian Municipal, Administrative, Clerical and Services
Union v Gold Coast Community Options Association Incorporated,
26 August 1994, unreported, Industrial Relations Court, Spender J
Gregory v Phillip Morris Ltd (1988) 80 ALR 455
Burgundy Royale Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212
Kennedy v Australasian Coal and Shale Employees Federation
(1983) 50 ALR 735

No. NI 397 of 1994

RAYMOND ERNEST GROUT v GUNNEDAH SHIRE COUNCIL

MOORE J

SYDNEY

30 SEPTEMBER 1994

IN THE INDUSTRIAL RELATIONS      )
  )
COURT OF AUSTRALIA               )       No. NI 397 of 1994
  )
NEW SOUTH WALES DISTRICT REGISTRY )

BETWEEN: RAYMOND ERNEST GROUT

Applicant

AND: GUNNEDAH SHIRE COUNCIL

Respondent

JUDGE: Moore J

PLACE: Sydney

DATE: 30 September 1994

REASONS FOR JUDGMENT

On 16 June 1994 an application was filed under s170EA of the Industrial Relations Act 1988 ("the Act") seeking a remedy on the basis that the employment of Mr Raymond Grout had been terminated in May 1994 by his employer, the Gunnedah Shire Council. The application also invoked the accrued jurisdiction of the Industrial Relations Court of Australia ("the Court") seeking declarations and orders concerning the contract of employment of the applicant with the respondent.

The matter first came before the Court on 16 June 1994 when the Chief Justice granted leave to file the application returnable on 22 June 1994. On 22 June Beazley J made directions to enable the preliminary determination of jurisdictional issues and whether there was an adequate alternative remedy: see s170EB of the Act. Whilst her Honour had ordered that these issues be heard as a preliminary matter, it was apparent at the hearing I conducted for that purpose on 3 August 1994, that issues of fact would have to be resolved for the purposes of determining them. An agreement had been reached between the parties that there would be no cross examination of the deponents to affidavits. Thus findings of fact might be made that would need to be decided on a fuller basis at the hearing of the matter were it to proceed to that stage. In the result the parties agreed that the hearing of the jurisdictional issues should be adjourned and dates were set for the final hearing. I directed at that time that the matter be referred to the Australian Industrial Relations Commission for conciliation. That occurred but was unsuccessful.

The general factual background - uncontested facts

The following narrative contains either facts about which there was no dispute or findings that should be made when there may have been some slight, though not significant, divergence in the evidence.

In September 1987 the applicant commenced employment with the respondent as manager of the Gunnedah Shire Abattoir which is owned by the respondent. There was no written contract of employment and the terms on which he was employed were agreed to orally. They were that he would receive a salary of $65,000 per annum, a house provided by the respondent at a fixed rental, certain other emoluments and superannuation contributions to be paid into what is now the State Authorities Superannuation Board. It was also agreed that all other terms and conditions of employment such as sick leave, salary increases and the like were to be consistent with other senior local government employees.

Between September 1987 and May 1994 the applicant oversaw the modernisation of the abattoir. It was clear that in early 1994 there was considerably dissatisfaction amongst sections of the local community about the process. In early February 1994 a rally took place in Gunnedah attended by a large number of people at which calls were made for the resignation of the applicant, the Mayor, Mr John Lyle and the Chairman of the Abattoir Committee of the respondent, Mr Neil Kemmis. It was clear from the evidence as a whole that those associated with the management of the abattoir including the applicant, Mr Lyle and Mr Kemmis were each under considerable pressure in early 1994 in relation to the abattoir's management.

On 5 May 1994 the applicant felt sufficiently stressed to see his local general practitioner, Dr Harris. Dr Harris prescribed anti-depressant tablets for the applicant. The events critical to this matter occurred later in May. On the evening of 17 May the applicant slept very little. At 6.00am on 18 May the applicant phoned Dr Harris and requested an appointment which was arranged and took place at 8.00am that morning. During that consultation the applicant presented as depressed and broke down uncontrollably and wept. Notes taken by Dr Harris, that are difficult to read, appear to record:

"Not coping. Not sleeping. Stress xx from work. Depressed. ..... Requesting cert for immediate cessation from work."

It is clear from these notes that the applicant discussed with Dr Harris his employment at the abattoir. That is also apparent from a note written by Dr Harris for the applicant at that consultation. The note assumes some significance in these proceedings and is in the following terms:

"Mr Ray Grout has been suffering from severe work related stress, which is now causing severe depression, and which is also causing his general health to deteriorate.

As the Manager of 'the Gunnedah Council Abattoir', he is reluctant to apply for Work Cover benefits, or to go on any sick leave entitlement.

I therefore recommend that he take early retirement from his work to be effective immediately, as he can no longer cope with the stresses of work.

He has been advised to seek specialist assessment which is being arranged."

It was signed by Dr Harris but not addressed to anyone. As a result of this consultation Dr Harris wrote on 18 May a letter of referral to Dr John Ellard who is a psychiatrist practicing in Sydney. In it he records:

"When seen at 0800 hours he was obviously distressed, was tearful and just not coping.

He requested that he be given a certificate stating 'that he was suffering from work related stress which was causing his general health to deteriorate, and that as the manager of the Abattoir he was reluctant to apply for Work Cover benefit or to go on any sick leave entitlements. He wanted recommendation for him to take early retirement from his work to be effective immediately.'

Because of his depression I increased his Tolvin to (drug dosage) mgm and advised him to seek specialist assessment, not only because of his depression and the effect on his health, but because of the ramifications that his abrupt withdrawal from his position will cause not only on his life but on the running and possible survival of the Abattoir and consequently the lives of the people that work there.

This referral is an indefinite referral to assess, advise and treat this man who is in a most unenviable situation."

At the conclusion of this consultation, the applicant returned home briefly and then went to the abattoir. The applicant talked with Mr Thomas who is the Financial Controller at the abattoir. They discussed the form of a letter to be sent to the respondent and also discussed the superannuation entitlements that might be available to the applicant were he to leave his employment on medical grounds. Mr Thomas gave the applicant two forms relating to superannuation. One was a confidential medical report to be completed by a doctor. The other was a form to be used when notifying the superannuation fund of an employee who left his or her employment because of illness or incapacity. It was signed by Mr Thomas.

Later that morning the applicant gave to his secretary, Mrs King, a letter in a draft form which she typed. The letter was in the following terms:

"Mr Neil Kemmis
Chairman
Gunnedah Council Abattoir Committee
GUNNEDAH NSW 2380

Dear Neil

Please find attached Doctor's certificate which is self explanatory. I have a specialist's appointment in Sydney on Friday, 20 inst.

It is with regret that I find it necessary to advise you that I am taking the Doctor's advice to take effect on 5pm Monday 23 inst.

Yours sincerely

(Grout's signature)

R E Grout
Glen Eagle
Gunnedah"

This letter and the attached doctor's certificate were sent by facsimile to Mr Kemmis at about 11.30am and was read by Mr Kemmis at approximately 12.30pm when he arrived home. The certificate was the note written by Dr Harris and given to the applicant at the consultation earlier that morning. At about this time the applicant rang his wife and asked her to get a quotation from a firm of removalists to pack and move their belongings from the house they were then occupying. During the afternoon the applicant asked Mrs King to make arrangements for him to travel to Sydney on Friday and to return that day.

The applicant remained at work and at approximately 3.30pm was visited by Mr Lyle and Mr Kemmis. That visit resulted from a meeting that Mr Kemmis and Mr Lyle had together with Mr Clegg, the Deputy Mayor, and Mr Dutton, who is the General Manager of the respondent. Upon receipt of the facsimile Mr Kemmis had gone to the Council offices where he met with this group and informed them of the letter which he gave to Mr Lyle. During the meeting Mr Lyle proposed that he and Mr Kemmis visit the applicant and Mr Clegg and Mr Dutton remain to commence a regular Council meeting scheduled for that day.

During the meeting between the applicant, Mr Lyle and Mr Kemmis at the abattoir, the applicant broke down and cried. The applicant now has no specific recollection of what occurred at that meeting and the account of Mr Lyle and Mr Kemmis was that after the applicant regained his composure there was discussion about the letter. In that conversation the applicant confirmed that he wished to resign from his employment. At the conclusion of this visit Mr Lyle and Mr Kemmis left the abattoir and briefly visited Mrs Grout at her home. There was an issue as to what was said and occurred at that time. Mr Lyle and Mr Kemmis returned to the Council offices and participated in the Council meeting which was then under way.

That meeting went on into the evening though there was a break for dinner. Shortly before the conclusion of the meeting the members of Council heard a report from Mr Lyle about the letter from the applicant and the visit to him that afternoon. He read the letter and the attached medical certificate to the meeting though copies of it were not then distributed nor had they been earlier. The manner in which the meeting dealt with this matter is recorded in the minutes:

"It was RECOMMENDED that the abattoir manager's resignation due to ill health be accepted.

It was further RECOMMENDED that Council require the abattoir manager to sign a confidentiality agreement on his termination."

On the following day, Thursday, 19 May, the applicant attended work at the abattoir and went about performing his duties as manager. During the course of the day Mr Dutton sent the applicant, through Mr Thomas, a draft press release which had been formulated by Mr Lyle. In it there was a reference to the applicant having "resigned". When the applicant was shown the draft press release by Mr Thomas he indicated to Mr Thomas that he said the word "resigned" was not correct. Rather he wished it to be changed to say "retired due to ill health". This was communicated to Mr Dutton but that change was not made. In the afternoon of Thursday, 19 May, the applicant and Mr Dutton met in the applicant's office. Mr Thomas attended part of the meeting. The applicant discussed the method by which a successor might be found and the salary that might be required to attract a suitable replacement. That day Mrs King picked up the airline tickets for the trip to Sydney the applicant has asked her to book. The applicant also instructed her to pack up his personal effects in his office which was done the following day.

On Friday, 20 May the applicant travelled to Sydney and saw Dr Ellard who was the specialist psychiatrist to whom he had been referred by Dr Harris. He was then admitted for an indefinite period to Northside Clinic which is a psychiatric hospital. During the afternoon the applicant rang Mrs King and asked her to cancel the return trip from Sydney.

The next event of significance occurred on Monday, 23 May 1994. At 5.22pm a letter was received by the respondent by facsimile. It was in the following terms:

"Dear Sir,

Mr Ray Grout

We act for Mr Grout.

We understand that Mr Grout forwarded a letter to you on or about 19 May 1994 indicating that he had taken medical advice to the effect that he should retire from his duties as manager of the Gunnedah Shire Council Abattoir. Mr Grout hereby withdraws his letter of 19 May 1994.

Mr Grout will remain on sick leave for at least the remainder of this week. If you require Mr Grout to provide a medical certificate please advise by return facsimile and we provide a certificate as soon as possible.

Yours faithfully

CORRS CHAMBERS WESTGARTH

(Signature)

Paul McCann
Partner"

That letter was considered by Mr Dutton and discussed with Mr Lyle who, in turn, discussed it with some, if not all, councillors who were attending a meeting of the Estimates Committee of the respondent on Monday evening. As a result of those discussions a letter was sent the following day to the applicant's solicitors which said:

"Reference is made to your facsimile transmission at 5.22pm on Monday, 23 May, 1994 in regard to Mr Grout's letter of resignation dated 18 May, 1994 with medical certificate and your advice that Mr Grout wishes to withdraw his letter of 18 May 1994.

I have to advise that at its Ordinary Meeting of the 18th May 1994 Council formally accepted Mr Grout's resignation dated 18th May, 1994, effective from 5.00pm Monday, 23rd May, 1994.

Mr Grout's employment has been terminated by his own resignation effective from 5.00pm Monday, 23 May, 1994. Your advice that Mr Grout wishes to withdraw such resignation is not accepted.

Yours faithfully

(Signature)

D N Dutton
General Manager"

On Monday, 23 May, Mr Dutton agreed with a Mr Marshall that he should temporarily fill the position of Manager of the abattoir for a period of up to six months. Mr Marshall took up the position on Monday, 30 May.

Contested facts

There was only one factual issue about which there was any substantial contest. It concerned discussions between Mrs Grout and Mr Lyle and Mr Kemmis on the afternoon of Wednesday 18 May.

Mr Lyle's account of the meeting with Mrs Grout was first that he said to Mrs Grout words to the effect that "Ray has told us he is resigning" and second that Mrs Grout was then packing. He was cross-examined about both matters. Mrs Grout denied those words were said or that she was packing. She was cross-examined on both matters. Mr Kemmis does not recall the contentious words being said but in his affidavit does say that Mrs Grout was "packing their belongings into cardboard boxes". He was not cross-examined about this.

I am not satisfied Mrs Grout was packing on the afternoon of Wednesday, 18 May. She denies she was and I found her evidence credible. Mr Lyle's evidence, when tested in cross-examination did not provide a satisfactory foundation for concluding she was. He could recall no details of what she was doing to support the more general assertion that she was packing. Mr Kemmis' evidence was not tested. Read literally, it is that Mrs Grout was packing when they arrived. However, Mr Lyle's account of their arrival was that when they arrived they knocked on the front door and were invited in by Mrs Grout with whom they had a conversation at the entrance of the house. At best Mr Kemmis would have seen boxes that he believed had been packed by Mrs Grout. I am not satisfied that this evidence, in light of Mrs Grout's denial, establishes she had commenced packing on Wednesday, 18 May.

I should add, however, whether she had been packing or not is not, in my opinion of any real significance. It is clear that Mr Grout had, after the dispatch of the letter of 18 May, taken steps consistent with him leaving his employment. He had asked his wife to get a quotation to move, he had asked his secretary to pack up his office, he had discussions with Mr Dutton about the means of securing a replacement. Whether Mrs Grout was packing on Thursday, 19 May and whether I should infer she was doing so at her husband's request, adds little to the picture that emerged from the evidence as a whole. The applicant, having written the letter of 18 May, took a number of steps in the following days consistent with him giving effect to it. As to whether Mr Lyle said to Mrs Grout that "Ray has told us he is resigning", I am not satisfied he did.

The issues

During the course of the hearing the parties reached agreement that I should determine a number of legal issues and reserve for further consideration what orders should be made as a result of my determination of them. The issues were:

Whether the Court has jurisdiction to deal with the application made under s170EA under Part VIA Div3 of the Act.

If so, whether there is an adequate alternative remedy available within the meaning of s170EB of the Act.

Whether the applicant's contract of employment was validly terminated at law.

If so whether the termination is liable to be set aside in equity.

Whether the applicants contract of employment is still on foot.

Whether the Court has jurisdiction to determine issues 3, 4 or 5.

Whether there has been a termination of the applicant's employment contrary to the requirements of subdivision B of Div3 of the Act.

While the issues were identified in this order, it is first necessary to consider the effect of the events on and after 18 May on the contract of employment of the applicant. The determination of that issue enables an informed consideration of whether there was a termination of the employment as that expression appears in s170EA and related sections and other issues that flow from that.

Did the letter of 18 May 1994 constitute reasonable notice by the applicant which terminated his employment

Both parties to an employment contract may terminate the contract unilaterally by giving notice though the period of notice must be reasonable if the period has not been expressly agreed. The contract terminates at the expiry of the notice and the notice, once given, may not be withdrawn by the party who gave it other then with the consent of the other party: see Birrell v Australian National Airlines Commission (1984) 15 FCR 447 at 457 per Gray J.

If the notice is not reasonable it is ineffective to terminate the contract. In the present case the applicant submits that the notice he gave of just over three working days was not reasonable. The respondent submits it was and whether it was is to be considered having regard to the attitude of the respondent to it including the period chosen. In any event, the respondent submits it was accepted.

The submissions of the parties on this issue proceeded on the basis that the letter of 18 May could be treated as a simple written notice from an employee that the employee intended to cease working at the time identified in the notice. As will be apparent shortly, this characterisation of the letter belies, in my opinion, its true intent and how it should have been understood in the circumstances. However I will consider, for the moment, this issue as if it was such a notice.

What is reasonable notice must be determined having regard to surrounding circumstances. Factors that might be relevant are listed by Macken, McCarry and Sappideen in The Law of Employment (1990), 3rd Edition at 156 though the learned authors rightly caution against undue reliance on what is thought to be reasonable in other circumstances:

"We have said that the duration of the hiring (for example, weekly) and industry practice (albeit not a custom) will be two. Both of these factors pertain to the job. Other relevant job-related factors include:

(a)the "high grade" of the appointment; (Hill v C.A. Parsons Ltd [1971] 3 WLR 995 at 1002)

(b)the importance of the position; (Adams v Union Cinemas [1939] 3 All ER 136; Dyer v Peverill (1979) 2 NTR 1 at 5)

(c)the size of the salary; (Mulholland v Bexwell Estates Co. (1950) 66 TLR 764; Orman v Saville Sportswear Ltd [1960] 1 WLR 1055)

(d)the nature of the employment; (Fisher v Dick & Co [1938] 4 All ER 467, 471; see Orman v Saville Sportswear Ltd [1960] 1 WLR 1055; Dyer v Peverill (1979) 2 NTR 1 at 5)

Factors which pertain to the employee and which are relevant in assessing the reasonableness of notice include:

(a)the length of service of the employee; (Hill v C.A. Parsons Ltd [1971] 3 WLR 995 at 999)

(b)the professional standing of the employee; (Hill supra)

(c)the employee's age; (Thorpe v S.A. Football League (1974) 10 SASR 17 at 36

(d)the employee's qualifications and experience; (Thorpe supra; Dyer supra)

(e)her or his degree of job mobility; (Dyer supra)

(f)what the employee gave up to come to present employer (for example, a secure long standing job); (Dyer supra)

(g)the employee's prospective pension or other rights (Hill supra; Mulholland supra; McClelland v Northern Ireland Health Board [1957] 1 WLR 594; Dyer supra.

Such a list is not much more helpful than the conventional aphorism that each case in this area will depend on its own facts."

The respondent submits that one of the surrounding circumstances that indicates the period of notice given by the applicant was reasonable was the illness of the applicant. However the difficulty with this submission is that it merges, in effect, two strands of the common law concerning the rights of an employer and an employee to terminate, or treat as terminated, the contract of employment. The traditional approach to the effect of the illness of an employee is that when an employee is so ill that the employee cannot work at least in the longer term, the contract may be frustrated, thus terminating it: see Simmonds Ltd v Hay (1964) 81 WN Pt 1 (NSW) 358. An alternative approach to the position of an ill employee adopted by Wooten J in Finch v Sayers (1976) 2 NSWLR 540 (in which his Honour discusses many of the relevant authorities) avoids reliance on the doctrine of frustration. It is that if an ill employee is still unable to work after any period of sick leave to which the employee is entitled under the contract either expressly or impliedly, the employer may, though need not, then terminate the contract and dismiss the employee.

Termination by notice is a contractual right that enables the parties to terminate the contract unilaterally but not immediately. The principal purpose of the requirement that the period be reasonable is to allow the recipient of the notice sufficient time after the notice is given either to seek other employment or employ another employee: see Birrell, supra at 458, and often this has meant the more senior the position the longer the period of notice. The state of health of an employee giving notice has no bearing on the time an employer might be expected to need to find a replacement employee after notice was given. If the period of notice to be given by an employee who is ill but not so ill as to frustrate the contract, can be shorter than the period that would have been required if the employee was not ill, then the time available to the employer to secure a replacement would be less than the time that would otherwise be reasonable.

I am not aware of any authority that suggests that a relevant consideration in determining whether notice given by an employee is reasonable, is the state of health of the employee. To do so would merge two discrete grounds the common law recognises for the termination of a contract of employment and would do so in a way that does not meet the principal purpose of the requirement that the notice be reasonable and thus might operate unfairly on the party receiving it. This is not to suggest, however, that an employer or an employee cannot exercise the right to terminate the contract by giving reasonable notice while the employee is sick: see Marshall v Harland and Wolff Ltd (1972) 1 WLR 899 at 904. The illness of the applicant is, in my opinion, not relevant in determining whether the notice he gave was reasonable.

In Walton v Wollondilly Abattoirs Co-op Ltd (1993) 50 IR 81 an issue arose in proceedings in the District Court of New South Wales as to what was a reasonable period of notice to terminate the employment of the manager of an abattoir. His position appears to have been at least similar to that of the applicant. Bell J determined that nine months notice was reasonable. Walton, supra provides some indication as to what might be a reasonable period of notice. The applicant held a senior position managing a significant commercial undertaking. He had held the position for over six years and was in receipt of a salary of over $70,000 per annum. The management of the abattoir was difficult and demanding and was particularly so in early 1994 when there was community dissatisfaction as to how it was being managed. It is, in my opinion, inconceivable that three days notice would generally be reasonable notice for a person in the position of the applicant.

Even if three days notice would not ordinarily be seen as reasonable notice, the respondent submits that whether notice given by an employee is reasonable may be determined by considering the employer's response to it. A related submission is that the employer may accept notice that is less than reasonable notice. As to the first limb of this submission, I find it difficult to accept how the attitude or response of the employer is a relevant consideration when determining whether the notice is reasonable. I was referred to no authority to support that proposition. I accept that the requirement that reasonable notice be given by an employee is intended to benefit the employer. However it does not follow that when assessing whether the period of notice is reasonable, one can pay regard to the response of the employer to it. Termination by notice is a singular feature of the common law of employment. Once given it brings the contract to an end by the effluxion of time unless it is withdrawn by agreement: see Birrell, supra and Association of Professional Engineers, Scientists and Managers Australia and anor v Skilled Engineering Pty Ltd (1994) 122 ALR 471 at 484.

A contract of employment may be terminated by either party giving reasonable notice because there is implied into the contract a term to that effect if it is not an express term. The term that is implied enables the exercise of a contractual right. I do not accept, and it is illogical, that it is appropriate to ascertain what are the contents of that term by reference to the conduct of one party to the contract following the exercise of the right the term has given the other party.

The respondent's submission that an employer can accept notice that is not reasonable is based on the following observations of Denning LJ in Hill v C.A. Parsons Ltd (1972) Ch 305 at 313:

"Then comes the important question: what is the effect of an invalid notice to terminate? Suppose the master gives the servant only one month's notice when he is entitled to six? What is the consequence in law? It seems to me that if a master serves on his servant a notice to terminate his service, and that notice is too short because it is not in accordance with the contract, then it is not in law effective to terminate the contract - unless, of course, the servant accepts it. It is no more effective than an invalid notice to quit. Just as a notice to quit which is too short does not terminate a tenancy, so a notice which is too short does not terminate a contract of employment."

The Court of Appeal was considering the effect of notice given by an employer which was not reasonable and had not been accepted by the employee. Denning LJ's observations about the effect of acceptance by the employee of notice which is too short were not essential to the determination of the appeal and, in any event, it may have been a reference not to the legal effect of the notice simpliciter but rather termination of the contract of employment by agreement.

In Birrell, supra, Gray J said at 457:

"The giving of notice of termination of a contract, in accordance with the terms of that contract, is a unilateral right. Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice."

Inadequate notice was described by Dixon J in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 453 at 469 as "abortive". In my opinion, I should follow the approach of Gray J. It is a recent decision of a judge of the Federal Court exercising the jurisdiction now exercised by this Court and Birrell, supra has been followed by Gray J sitting as a judge of this Court, see Skilled Engineering, supra, at 484. However it may be accepted that a contract of employment can be terminated by agreement and that the giving of notice that is not reasonable may, in appropriate circumstances, be treated as an offer to terminate capable of acceptance. Alternatively it may constitute a repudiation of the contract which can be accepted which is an issue raised in the proceedings and which I deal with shortly. However these approaches require consideration of what the offeror should be viewed, in the circumstances, as having intended or whether there was, in the circumstances, a repudiation of the contract.

In my opinion the period of notice given by the applicant was not reasonable and the effect of the letter of 18 May was not to terminate the contract of employment at 5.00pm on Monday, 23 May 1994.

The contract of employment - repudiation and termination

The respondent submits that by sending the letter of 18 May and behaving as he did thereafter, the applicant repudiated his contract of employment. Further, the respondent accepted the repudiation and decided to terminate the contract by the decision it made at the meeting on the evening of 18 May, and that acceptance was communicated to the applicant before he withdrew his letter of 18 May on 23 May. The applicant submits the conduct did not amount to repudiation, or if it did and was accepted by the respondent who decided to terminate the contract, that was not communicated to the applicant.

It is first necessary to determine whether the conduct of the applicant amounted to a repudiation of his contract of employment. Had the applicant actually left his employment without notice or with insufficient notice it would ordinarily have constituted a repudiation of the contract: see Thomas Marshall (Exports) Ltd v Guinle (1979) Ch227; Evening Standard Co Ltd v Henderson (1987) ICR 588. However his conduct, apart from writing the letter and making certain arrangements consistent with giving effect to it, involved the continued discharge of his contractual obligations. The applicant worked, though perhaps somewhat ineffectively, on Wednesday, 18 May and again worked on Thursday, 19 May. He absented himself from work on Friday, 20 May to see a doctor though he had given the respondent notice of his intention to do so. His failure to return to work on Friday, 19 May or, at the latest, Monday 23 May was as a result of his hospitalisation of which the respondent was made aware by the applicant. The act of the applicant of absenting himself from work to consult a doctor and not returning because of hospitalisation was, in my opinion, consistent with an implied term that the applicant could take reasonable leave because of illness and did not constitute a repudiation of the contract: see Sayers, supra at 547-548.

Even assuming the intention of the applicant, when writing the letter of 18 May, was not to perform his duties as an employee after 5.00pm on Monday, 23 he did not give effect to it. This is because shortly after the time nominated in the letter, the applicant made this clear when his solicitors withdrew the letter. It should then have been apparent to the respondent that the applicant would continue to perform his duties as an employee, subject to his capacity to do so having regard to his illness.

The only conduct of the applicant that might be said to be a repudiation of the contract was the actual writing of the letter of 18 May and taking steps consistent with giving effect to it. The letter itself does not state unambiguously what the applicant's intentions were. He informed the respondent that he is "taking the Doctor's advice to take effect on 5pm, Monday 23rd". The doctor's advice in the annexed letter was that the applicant "take early retirement from his work to be effective immediately". It is plain from the context in which these extracts appear that these steps were being recommended and taken because of the applicant's illness. The likely meaning of these letters, viewed in isolation, was that the applicant was indicating to the respondent that he desired to retire early on the grounds of ill health and would do so on Monday, 23 May. On Wednesday 18 and Thursday 19 May the applicant took steps consistent with an intention to cease work on Monday, 23 May.

However his conduct in writing the letter and making arrangements to leave is consistent with a belief that the applicant then had that he was incapacitated and might be able to retire early and, in all probability, would be able to do so on the basis that he was incapacitated for the purposes of his superannuation. The applicant said in evidence that he now has no recollection of why he wrote in the terms he did. I accept this evidence. In an affidavit sworn 16 June 1994 accompanying the application the applicant's explanation for his conduct was:

"Following Dr. Ellard's advice I consulted with my solicitors, Corrs Chambers, Westgarth for the first time on 23 May 1994. In my meeting with the solicitors I instructed them to withdraw any suggestion I may have made on 18 May 1994 of taking early retirement.

I realised shortly after 18 May 1994 that I desired to return to my position and only hastily forwarded the letter of 18 May 1994 as a result of the stress I was suffering at the time."

In a second affidavit sworn 22 July 1994 he said:

"Prior to seeing the doctor on 18 May 1994 I had no intention of leaving my job. I was looking forward to completing the needed changes at the abattoir through to 1995 and taking up a new fixed term contract with the respondent under the Local Government Act for five years. My recollection of my acts on 18 and 19 May 1994 are not good. On seeing Dr. Harris and reading his letter, I thought I could not cope and had to leave the abattoir to get help.

My letter of 18 May 1994 is totally out of character for me. My normal letters are very precise and detailed with complete reasons set out in them. It is also totally out of character for me to show my emotions as I did on 18 May 1994. By and large I am a very unemotional person.

I am 56 years of age, being born on 10 January 1938. At my age I believe it will be virtually impossible for me to find alternative employment in the meat industry at my current level."

and in an affidavit sworn 8 August 1994:

"My recollection of what I did the rest of the day (18 May) is not good. The overwhelming thought in my mind at the time was the direction of my doctor to see a psychiatrist. At that point in time I had absolutely no faith in psychiatrists and did not believe they had any role other than with respect to persons who were insane. I was shocked and terrified at the thought that I was being directed to see a psychiatrist and did not know how I could cope with such a direction or tell anyone else about it. I was at the time a totally unemotional person and given the way I broke down in front of Dr Harris I was entering thoughts of whether in fact I was mentally unstable. I realised I had to face the fact that I was to see a psychiatrist in Sydney and that this had been arranged for Friday by Dr Harris and that I would have to tell the Council Abattoir Committee about this at such a crucial time for the abattoir.

It was this thought in my mind that I prepared the letter which is annexed hereto and marked 'A' (the letter of 18 May). I did not know what was going to happen to me following my visit to the psychiatrist on Friday. At that stage I had one overwhelming focus - that Dr Harris was telling me that I had to see such a psychiatrist as soon as possible. That was all I was intending to convey by my letter of 18 May 1994. I was not intending to resign, but it was unclear whether I could even return to my job. This would have to await the doctor's advice. Looking at the letter now I do not know why I wrote 'to take effect at 5.00pm Monday, 23rd inst.'."

In his cross-examination at the trial he said:

"I take it, Mr Grout, that you are not in a position to tell us today why it was you gave the council your letter of 18 May? --- No, I don't know why I gave that to them and looking back in hindsight I can't work out why I gave it to them.

You can shed no light on why --- ? --- The only thing that I can account for in hindsight is the fact that I had to see a psychiatrist absolutely threw me, I thought they were shrinks for kooks as far as I was concerned and that scared hell out of me; that's the only thing I can try and justify what I've done."

Other evidence, which I accept, indicates that the applicant had used the word resignation in conversations with Mr Thomas and Messrs Lyle and Kemmis. However that evidence has to be considered with the evidence about the applicant's apparent concern about superannuation manifest in his discussion with Mr Thomas on 18 May and the disagreement over the wording of the press release the following day.

The applicant had a conversation with Mr Thomas on the morning of Wednesday 18 May to which I have already referred in a summary way. The applicant has no recollection of it. Mr Thomas's account was in two affidavits and it was touched upon in cross-examination. This evidence was not put in issue by the applicant and I accept it.

In the first affidavit sworn 15 July 1994 Mr Thomas's evidence of a conversation with the applicant was:

"Mr Grout: 'Dr Harris has recommended that I see a specialist in Sydney and is going to make an appointment for me. Do you think that will be sufficient for Superannuation on medical grounds?'

Me:'I think so but the Superannuation Board will want you to see their own panel.'

Mr Grout:'I have had enough and I am going to resign. Will you help me write a letter of resignation?'"

In the second affidavit sworn 19 August 1994 the evidence was:

"...During the conversation I had with Mr Grout in his office on 18 May 1994 when we were discussing his superannuation entitlements, Mr Grout telephoned the State Superannuation Investment and Management Corporation in Sydney and in my presence spoke to someone there for approximately 5 or 10 minutes during which he said words to the effect of:

'Can you tell me about the rules governing early retirement? What about the rules for leaving employment on medical grounds?'."

and later:

"During the conversation on 18 May 1994 Mr Grout asked me a number of questions regarding superannuation. While I cannot recall all of the questions I do recall that he said to me words to the effect of:

'How do you qualify for early retirement?'

I said:

'I'm not sure. I'd have to ask the Superannuation Board.'

In respect of the two SASS10 forms (a blank example of which is annexed hereto and marked 'B') that I gave to Mr Grout, I explained to him that it is normal practice for an employee who proposes to retire on medical grounds to complete those forms. Following my comment that the Superannuation Board would probably want him to be examined by their own panel and my explanation of the forms, Mr Grout said to me words to the effect of:

'You'd better give me a form to take.'"

The applicant was given a form signed by Mr Thomas. It was an application for superannuation benefits for employees who leave their employment because of illness or injury and are under the early retiring age. Mr Thomas filled out parts of the section of the application to be filled out by the employer and signed the form. While the entire section to be completed by the employer had not been filled out, the signature of Mr Thomas was in a section where the employer was certifying certain particulars to be correct. One of those particulars printed on the form was that "the above member is physically or mentally incapable of carrying out their normal duties". Though Mr Thomas indicated in evidence that he was not certifying anything by signing, he used that form because he believed it was the correct one to use in the circumstances and the signed form was given to the applicant. It is apparent from these forms that they relate to an employee who is permanently unable either to do the work they formerly did, that is, partially incapacitated, or be employed in any remunerative occupation the employee might be expected to engage in, that is, totally incapacitated.

The conclusions I have reached from the evidence are that on 18 May the applicant was confronted with his doctor's assessment of his illness and the need for him to undergo psychiatric treatment. He was then severely depressed and appears to have been overcome by the suggestion that his depression would require psychiatric treatment.

Notwithstanding the qualifications that Mr Thomas placed in his conversation with the applicant on the applicant's entitlement to superannuation on the grounds of incapacity, it is likely that the applicant then believed he was incapacitated and believed that it was probable, thought not certain, that he could retire for medical reasons and enjoy any additional superannuation benefits that flowed from ceasing employment in those circumstances. This belief was based on the medical advice he had received, his conversation with Mr Thomas and the contents of the signed form he was given. It was in that context that the applicant wrote the letter of 18 May. That the applicant held this belief is reinforced by his desire to ensure that the press release he commented on during Thursday, 19 May, spoke of "retired due to ill health".

The applicant came to this belief before he sent the letter to Mr Kemmis. What the applicant was proposing either was or should have been apparent to Mr Thomas who was a comparatively senior employee of the respondent. Mr Dutton gave evidence to the effect that he was concerned at the time to ensure that the applicant received superannuation benefits flowing from being permanently incapacitated. Mr Dutton and probably the others acting on behalf of the respondent would have understood that it was likely that the applicant was also concerned to secure superannuation benefits based on incapacity.

The letter to Mr Kemmis should be viewed, in these circumstances, as indicating what would happen conditionally. That is, the applicant was indicating that he would leave his employment because he believed he was incapacitated and that he would do so if he could gain the benefits under the superannuation scheme arising from being incapacitated. He then believed he most likely could. It did not, however, constitute a repudiation of the contract. It was not an unqualified refusal to work after 5.00pm, Monday 23 May 1994. As Lord Wright said in Smythe & Co. v Bailey & Co. (1940) 3 AllER 60 @ 71:

"The case for a repudiation by the appellants is, I think, quite unsubstantial. It must not be forgotten that repudiation of a contract is a serious matter, not to be lightly found or inferred. I cannot do better than quote the words of Lord Selbourne in Mersey & Iron Co. v. Naylor, Benzon & Co. (9), at p.438, where he says that you must look at the:

'... actual circumstances of the case in order to see whether the one party to the contract is relieved from its future performance by the conduct of the other; you must examine what that conduct is, so as to see whether it amounts to a renunciation, to an absolute refusal to perform the contract, such as would amount to a rescission if he had the power to rescind, and whether the other may accept is as a reason for not performing his part...'"

Those observations are particularly apt when the party alleged to have repudiated the contract was in a state of severe depression that caused him to behave atypically. While I do not conclude that the applicant behaved entirely irrationally or his actions were not intended, his emotional state is relevant, in my opinion, in ascertaining what he intended and how his conduct should have been viewed in the circumstances by those representing the respondent. Some allowance has to be made for the fact that the applicant appears to have been acting, to some extent, in a state of despair and was not in a state of emotional equilibrium however composed he might have appeared at any particular time.

The letter of 18 May did not constitute an "absolute refusal to perform the contract" to adopt the language of Lord Selbourne. The applicant's assumption that he was incapacitated may have proved to be wrong as might his belief that he most likely would enjoy any superannuation benefits flowing from leaving his employment for reasons of incapacity. As events unfolded, the attitude adopted by the respondent on Tuesday, 24 May meant that a point was not reached where it was obvious what position the applicant might adopt if these assumptions were wrong. Though in giving his solicitors instructions to withdraw his letter of 18 May, the applicant appears to have at least commenced to review his earlier belief that he was incapacitated if not abandon it. This is consistent with the view I have formed that the letter of 18 May was, in truth, conditional. I am not satisfied that the applicant's letter of 18 May and his conduct thereafter consistent with giving effect to it, amounted to a repudiation of his contract of employment.

The letter of the respondent of 24 May may have been a repudiation of the contract though it may have been no more than the respondent acting on an incorrect understanding of its contractual rights not amounting to repudiation: see Green v Sommerville (1979) 141 CLR 594 at 611 per Mason J. If it did amount to a repudiation it has not been accepted by the applicant. On either approach to the effect of the letter of 24 May, the contract of employment has not been terminated.

Jurisdiction to deal with the application under s170EA

An application under s170EA must relate to a termination of employment. The applicant submits it does, the respondent that it does not. What then is the meaning of the expression "termination" in s170EA and elsewhere in Div3 of PtVIA? It may be accepted that the Division concerns termination of employment at the initiative of the employer. So much is apparent from the combined operation of s170CB and Article 3 of the Convention Concerning Termination of Employment which is found in Sch10 of the Act: see Siagian v Sankel Pty Ltd (1994) 122 ALR 333 and Skilled Engineering supra. The more difficult question is what is the scope of the expression "at the initiative of the employer" in the context of this application.

I have already dealt with the effect of the events in May 1994 on the contract of employment. The contract was not terminated by the notice nor was it otherwise terminated. Two questions then arise. Was it "termination" as that expression appears in s170EA and if so, was it at the initiative of the employer.

The resolution of the first question involves a consideration of Siagian and Skilled Engineering supra. In Siagian Wilcox CJ concluded at 351:

"Bearing all these matters in mind, and given that the courts have sometimes recognised the possibility of a difference between a termination of employment and a termination of the contract of employment, it seems preferable to treat the words "termination of ... employment" in Division 3 of Part VIA of the Industrial Relations Act as including any act that brings to an end the employer-employee relationship, whether or not the act, or any acceptance of it, also brings to an end the contract of employment."

In Skilled Engineering supra, Gray J approached the matter somewhat differently concluding at 482:

"Both the requirement that expressions in division 3 of Pt. VIA be given the same meanings as in the Convention and the form of the provisions of division 3 therefore suggest that "termination" refers to what is done by an employer attempting to bring about the end of the employment. The legislative intention is to permit applications under s170EA of the IR Act if an employer has done some act terminating or purporting to terminate the employment, irrespective of whether the act is effective to bring about the termination without some further act on the part of the employee. The "termination" referred to in s.170EA and in s.170EE is the act of the employer. If the act of the employer is effective to terminate the contract of employment, remedies appropriate to that situation can be granted. If the contract remains on foot, the Court still has the power under s.170EE(1) to "make such orders as it thinks appropriate in order to put the employee in the same position (as nearly as can be done) as if the employment had not been terminated."

On the approach of Wilcox CJ it is necessary to ask did the employer terminate the employment relationship and on the approach of Gray J it is necessary to ask whether the employer has done some act terminating or purporting to terminate the employment. On either approach the answer is, in my opinion, the same in this matter and it is unnecessary for me to express a preference between the two approaches.

Division 3 is intended to provide employees with a statutory remedy in the event of termination. It constitutes, in this respect, beneficial legislation that should be construed liberally much in the same way as worker's compensation legislation has been construed: see Wilson v Wilson's Tile Works Pty Ltd (1960) 104 CLR 328 at 335; Dodd v Executive Air Services Pty Ltd (1975) VR 668 and Walker v Wilson (1991) 172 CLR 195 at 199 and 204.

I have already said that Div3 concerns termination at the initiative of the employer. The respondent submits that "initiate" means "to begin, commence, enter upon; to introduce, set going, or initiate": see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression "termination" in the Act, read in conjunction with Article 3 of the Convention which speaks of "termination ... at the initiative of the employer", a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Division 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately lead to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.

In the present case the respondent did two things that fundamentally affected the employment of the applicant to either terminate it in adopting the approach of Wilcox CJ, or purportedly to terminate it in adopting the approach of Gray J.

First the respondent accepted the letter of 18 May at its meeting on that day notwithstanding the knowledge of the individual councillors about the circumstances of the applicant apparent from the doctor's letter and the report of Mr Lyle. Secondly the respondent refused to accept or act upon the letter of 23 May from the applicant's solicitors seeking to withdraw the letter of 18 May and it appointed a person to carry out the duties of the applicant. I am presently considering the character of these acts, not in a contractual context, but in the context of s170EA and related provisions. It must be accepted that the first event in the chain of events leading to the termination or purported termination was the dispatch of the letter of 18 May by the applicant. But that by itself had no effect on the employment and by early in the evening of Monday, 23 May it was clear that the applicant would not do what he earlier said he would do, namely cease his employment at 5.00pm that day. His letter of 18 May, viewed in that context, did not terminate the employment. Rather it was the acceptance of it by the respondent coupled with the later insistence that it be honoured and the filling of the applicant's position that resulted in the termination or purported termination of the employment. In my opinion it was these acts that can properly be characterised as a termination at the initiative of the employer. The application is thus an application that can be brought under s.170EA of the Act.

The application was filed more than 14 days after the letter from the respondent of 23 May. It is probable that it is necessary to extend the time for the filing of the application: see s170EA(3). An extension of time is not opposed by the respondent and I extend the time for filing the application to 16 June 1994.

Adequate alternative remedy

Section 170EB of the Act provides:

"The Court must decline to consider or determine an application under section 170EA if satisfied that there is available to the employee by or on whose behalf the application was made an adequate alternative remedy, in respect of the termination, under existing machinery that satisfies the requirements of the Termination of Employment Convention."

It is necessary to consider whether there is available to the applicant an adequate alternative remedy under Pt8 of ch3 of the Industrial Relations Act 1991 (NSW) ("the NSW Act"). The respondent submits there is, the applicant that there is not. Part 8 invests the Industrial Relations Commission of New South Wales ("the NSW Commission") with jurisdiction to deal with the dismissal or threatened dismissal of certain employees. The basis upon which that jurisdiction arises is found in s245 which relevantly requires that the employee is one "for whom any conditions of employment are fixed by an award or agreement": see s245(1)(a).

The respondent submits that the applicant's employment was regulated by the Local Government (State) Award ("the principal award"). The applicant disputes this. The principal award was made by Justice Glynn on 11 December 1991: 272 IG 696. However it appears from an exhibit containing the principal award that another award, the Local Government Rates of Pay (State) Award ("the pay award") was made on 17 March 1994 which prescribed rates of pay which, since 1991, had been prescribed by the principal award. The area, incidence and duration clause of the principal award, cl17, was in the following terms:

"17. Area, Incidence and Duration

This award shall apply to all employees in Local Government except those employees employed in electricity undertakings and those employees covered by the Municipal and Shire Council Nurses (State) Award and the Municipal and Shire Councils, &c. (Electricians) Award.

This award shall operate from the beginning of the first pay period to commence on or after 8 June 1992 and shall remain in force for a period of 12 months."

That clause was amended in 1992 to exclude from the principal award's operation, employees of Councils of the Cities of Sydney, South Sydney and Newcastle and to modify the exclusion as it concerned electricity undertakings to read "except... all persons who are employed wholly or principally in or in connection with electricity undertakings of county councils and Tenterfield Shire Council, and the County of Yancowinna". The area incidence and duration clause of the pay award incorporates the area incidence and duration clause of the principal award though, for reasons not apparent from the exhibit, it is referred to as cl21 of the principal award.

The applicant submits the awards have no application, as they concern only "employees in Local Government" which does not comprehend employees working at abattoirs. The respondent submits that the nature of a Council's operation, and thus what is meant by "Local Government", has to be considered having regard to s8 of the Local Government Act 1993 (NSW) which, it is submitted, permits councils to engage in a range of commercial activities.

The operation of abattoirs by local councils it not a recent phenomenon and the power to do so was considered in Grieve v West Maitland Council (1943) 44 SR (NSW) 142: see also Re Maitland Abattoir Pty Ltd (1984) AR 370 at 370.6 per Cahill J and Patterson v Burns (1970) 1 NSWLR 212. The power of a council to conduct an abattoir existed as early as 1902 under the Cattle Slaughtering and Diseased Animals Act 1902 (NSW): see Grieve, supra at 144, and was included in the Local Government Act 1919 when first enacted: see Grieve supra at 145. However, employees of local councils working in abattoirs have not, for the purposes of industrial arbitration, necessarily been accorded the conditions enjoyed by other local government employees: see Re Butchers (Newcastle Abattoir) Award 1977 AR 604; at least abattoir employees who are manual or process workers.

The evidence as to whether the principal award or the pay award fixed any conditions of employment of the applicant is, at best, incomplete. The General Manager of the respondent said in an affidavit that the applicant's employment was governed by the principal award. The applicant's evidence of events surrounding his initial employment was that he was told "all other terms and conditions of my employment was to be consistent with other local government employees with regard to sick leave and salary increases and the like". This appears to involve an acceptance that he was or would be treated as a senior local government employee.

However, there is no reference to any discussion to the effect that his employment would then be regulated by an award, nor was that put to him in cross examination. Indeed, the applicant says in an affidavit of 22 July 1994:

"Prior to these proceedings it has never been suggested to me by anyone from the Respondent that my employment is governed by the Local Government (State) Award."

He was not cross examined on this.

At the time of his dismissal the applicant's rate of pay was $1,481.85 per week which is not a rate prescribed by the pay award and is a rate that falls between two classifications, namely Executive Band, Level 3 and Executive Band, Level 4. That the applicant was not paid a rate prescribed by the pay award, might suggest that this award has no application to his employment. If that were so, then neither would the principal award apply given that both awards have a common scope clause. However the apparent discrepancy between the award provisions and the rate of pay of the applicant is of no real significance for two reasons. The first is that the rates of pay are prescribed in the pay award as "entry level rates of pay only" with the exception of one classification for which the rate is an "actual rate(s) of pay": see cl5 of the pay award. The second is that the payment and receipt of the salary is conduct of the parties after the award was made and the conduct of parties under an award is not generally treated as relevant when construing it: see Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444 at 445 and Short v F.W. Hercus Pty Ltd (1993) 46 IR 128 at 133-134 per Burchett J, see also Subsequent conduct as an aid to interpretation of a contract - "the refuge of the desperate" (1993) 67 ALJ 864.

The events of May 1994 occurred at a time when the respondent was seeking to directly appoint the applicant under cl39(2) of Sch7 of the Local Government Act 1993 (NSW) which would have had the result, by operation of s340 of that Act, of denying, in practical effect, the NSW Commission jurisdiction to deal with the remuneration and conditions of employment of the applicant or rendering ineffective any award that then applied to it: see s340(4). There is some evidence which suggests that Mr Grout's position, when he was appointed, was of this character (see the first page of annexure A of the affidavit of Mr Dutton of 21 June 1994).

Employment in managing an abattoir is not transparently comprehended by the expression "all employees in Local Government" as employment at an abattoir might more readily be considered as employment in the meat industry rather than local government. However some indication of the width of this expression in cl17 is apparent from the exclusion found in that clause excluding employees employed in electricity undertakings from the operation of the award. The exclusion appears to have been necessary because that aspect of a Council's activities and the employees working in it would otherwise have been comprehended by the expression "all employees in Local Government".

The body of the principal award is, in the main, in general and non-specific language which casts little light on its scope. The only clauses of the principal award which provide any indication of the areas of a Council's operation to which it intended to apply are cl7 and cl11. Clause 7, disability allowance, identifies the activities which attract the allowance. It refers to the more traditional areas of local government activity such as community services, gardening, garbage, sanitary and sullage and ordinance control. Similar references to traditional areas of local government activity are found in cl11(iii). However, cl7 also refers, in a proviso limiting its operation, to "salesyard manager" which suggests that the principal award might apply to employees managing salesyards used for selling livestock though cl7 does not. As to the level of employment to which the principal award relates, it contains skill descriptions in cl5 concerning the Executive Band which describe, albeit in the most general terms, the type of senior managerial work undertaken by the applicant.

I have concluded, on balance, that the principal award and the pay award did apply to the applicant's employment in May 1994. The award is expressed to apply to "all employees in Local Government" with certain exceptions the identification of which tend to indicate the intended width of that expression. The applicant's employer was a local council carrying out a commercial activity of a type permitted by the Local Government Act 1993 (NSW). While the operative parts of the principal award provide little indication of its scope, cl7 suggests its application is not narrow, particularly given the reference to "salesyard manager". The principal award is clearly framed so as to apply to senior employees though its application to the applicant may well only be accidental in the sense that the process put in train by the respondent to remove him from its application was well advanced but had not concluded. The applicant is, in my opinion, an employee "for whom any conditions of employment are fixed by an award" as that expression appears in s245(1)(a) of the NSW Act.

The applicant submits that the provisions of Pt8 of Ch3 of the NSW Act do not provide an adequate alternative remedy even if available to the applicant. The applicant first refers to the time limits in the NSW Act that have now expired. Section 246 of the NSW Act requires that an application be lodged within 21 days of the termination of the employment. Section 246(3) enables the NSW Commission to accept a late application if it considers there is sufficient reason to do so. In the scheme regulating applications to this Court, s170EA(3) requires that an application be made within 14 days after the employee receives written notice of the termination though the Court has power to extend that time: see s170EA(3)(b). When considering whether there exists an adequate alternative remedy it is necessary, in my opinion, to determine whether there is an adequate alternative remedy available at the time the Court comes to consider the matter and I proceed on that basis: see Wylie v Carbide International Pty Ltd, unreported, 13 July 1994, Industrial Relations Court, Keely J at 4. This is consistent with the language of the section which speaks of satisfaction that the adequate alternative remedy "is available", that is, at the time the Court is called upon to consider the matter. It is also consistent with the purpose of the section which is to deny an applicant the opportunity of pursuing an application under the Act if an application to the same effect can be pursued under, ordinarily, other legislative schemes which would generally, though not exclusively, arise under state industrial laws. Thus, it must be capable of being pursued at the time the Court denies, by operation of s170EB, the applicant the opportunity of further pursuing the application under s170EA.

In relation to a termination that might be dealt with under Pt8 of the NSW Act, the Court could well be considering the question of adequate alternative remedy after the time limit in s246 of the NSW Act had expired. At that time, the consideration of an application under the NSW Act would be conditional upon the NSW Commission accepting it under s246(3). That depends upon the NSW Commission considering there is sufficient reason to do so: see Griffith Ex-Services Club Ltd v Federated Liquor and Allied Industries Employees Union (NSW Branch) 1994 AILR 110 and see also s246(4). An applicant would not, at that time, have an unqualified statutory right to have his or her termination dealt with by an impartial tribunal.

However the absence of such an unqualified statutory right does not, in my opinion, result in there being no adequate alternative remedy at the time the Court was considering this issue. Section 170EB requires that the adequacy of the alternative remedy and the machinery under which it arises be tested against the requirements of the Convention found in Sch10. Article 8 of that Convention provides:

A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator.

Where termination has been authorised by a competent authority the application of paragraph 1 of this Article may be varied according to national law and practice.

A worker may be deemed to have waived his right to appeal against the termination of his employment if he has not exercised that right within a reasonable period of time after termination."

While not expressed in these terms, cl3 of Article 8 would permit time limits to be imposed upon the exercise of the "right to appeal" as long as the time limit constituted a "reasonable period". In my opinion the time limit imposed by s246(2) constitutes a "reasonable period" particularly having regard to the discretion of the NSW Commission under s246(3) to accept an application lodged out of time. The scheme in Pt8 of the NSW Act can be an adequate alternative remedy even though it imposes time limits. Its character does not alter, in my opinion, because the time limit has expired and an application would only be considered by the NSW Commission under s246(3).

I should add a qualification to this conclusion though it is not presently relevant to this application. Situations may arise where employees who have a remedy under the NSW Act, nonetheless elect, perhaps without any understanding of s170EB and its effect, to bring applications under s170EA and prosecute their applications to the point where the Court must give effect to the mandatory provisions of s170EB. When that happens employees in this position may seek to lodge applications under the NSW Act. If, in those circumstances, the NSW Commission declines to exercise the power under s246(3), then it may be that Pt8 of the NSW Act, having regard to the provisions in ss246(2) and (3) as they operate in practice, would not constitute an adequate alternative remedy and further applications might be brought under s170EA or the earlier applications revived. This matter, however, is not one I need consider further in these proceedings at this point.

The applicant also identifies a number of other features of the scheme in the NSW Act that are said to show it does not provide an adequate alternative remedy.

The first feature is the reference to "dismissal" in the NSW Act. The applicant submits I cannot be satisfied that the expression "dismissal" is co-extensive with the expression "termination". The respondent submits there is no material difference. Neither refers to any decision concerning the meaning of "dismissal" in the NSW Act to support the submission made: but see Smith v Director General of School Education (1993) 31 NSWLR 349. Even if there is some difference in the meaning of the two words more generally, I presently see no reason to treat the jurisdiction of the NSW Commission as not extending to the purported termination or dismissal of the applicant. The word "dismissal" will not be construed narrowly: see Smith supra at 365-366. A similar difference in language arises in Queensland where the Industrial Relations Act 1990 (Qld) invests the Queensland Industrial Relations Commission with jurisdiction to deal with "dismissal(s)". That difference was not treated as material by Spender J in Australian Municipal, Administrative, Clerical and Services Union v Gold Coast Community Options Association Incorporated, 26 August 1994, unreported, Industrial Relations Court, when His Honour decided that the Queensland legislation provided an adequate alternative remedy.

The second feature is that the NSW Act contains no equivalent of s170EDA which identifies a number of circumstances where the employer bears the burden of establishing that the termination was not of a proscribed type by establishing the reasons for it though that burden is not unqualified: see s170EDA(1)(b). Article 9(2) of the Convention provides:

In order for the worker not to have to bear alone the burden of proving that the termination was not justified, the methods of implementation referred to in Article 1 of this Convention shall provide for one or the other of the following possibilities:

(a)the burden of proving the existence of a valid reason for the termination as defined in Article 4 of this Convention shall rest on the employer;

(b)the bodies referred to in Article 8 of this Convention shall be empowered to reach a conclusion on the reason for the termination having regard to the evidence provided by the parties and according to procedures provided for by national law and practice."

While Article 9(2) allows for provisions such as s170EDA: see Article 9(2)(a), as an alternative it contemplates, in Article 9(2)(b) a process of eliciting evidence and determination by the impartial tribunal according to proceedings provided for by national law and practice which includes state law: see Gold Coast Community Options supra. The applicant did not point to any feature of the procedures under the NSW Act that indicate the requirements of Article 9(2)(b) were not satisfied and, in my opinion, they are.

The third feature is that the NSW Act does not satisfy the requirements of other articles of the Convention, namely Articles 4, 5, 6 and 7. Article 4 provides:

"The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service."

Article 5 identifies a range of matters that do not constitute valid reasons for termination but are plainly not relevant in these proceedings. The same cannot be said of Article 6 which provides:

Temporary absence from work because of illness or injury shall not constitute a valid reason for termination.

The definition of what constitutes temporary absence from work, the extent to which medical certification shall be required and possible limitations to the application of paragraph 1 of this Article shall be determined in accordance with the methods of implementation referred to in Article 1 of this Convention."

This provision is reflected in s170DF(1)(a) of the Act. The respondent submits that the requirements of Articles 4 and 6 of the Convention do not concern a remedy, are not relied upon by the applicant and are, in any event, met by the provisions of s249 of the NSW Act.

The Convention contemplates that terminations which occur in specified circumstances relating to the reasons for termination can, if established, give rise to a remedy because they are unjustified. A statutory scheme that does not operate, in substance, in the same way does not, in my opinion, satisfy s170EB. The expression "adequate alternative remedy" clearly raises for consideration the nature of the remedy that the employee can obtain under other legislative schemes which allow for "appeals against .... termination" to use the language of the Convention. However the remedy cannot be viewed in isolation and can only be considered having regard to the rights that give rise to it. If the remedy available under the NSW Act accords with the requirements of the Convention but the circumstances in which it arises are more limited or less beneficial than the Convention contemplates then the remedy, in that context, is not an adequate alternative one.

There is no provision in the NSW Act that precludes an employer from terminating the employment of an employee as a result of a temporary absence from work because of illness or entitles an employee to a remedy if termination occurs in those circumstances. The NSW Act does require the insertion into awards of minimum sick leave entitlements: see s96, but the entitlement only arises if an application is made. Even if the relevant award contains such a provision, there is no provision dealing with the dismissal of an employee who has taken such leave which is to be contrasted with ss235 to 244 which deal with the reinstatement of an injured employee.

I accept that s249 of the NSW Act is cast in terms sufficiently wide to enable the grant of a remedy if dismissal occurred when an employee was temporarily absent because of illness. However the Convention provides, in positive terms, that this reason for termination is not a valid one and clearly implies that a termination for that reason will, and not may, give rise to a remedy. It must be accepted that its operation in this way is subject to an examination by the impartial tribunal of the circumstances of the termination to determine what, in fact, was the reason for it: see Article 6(2). In addition the Convention contemplates that the tribunal may determine what constitutes temporary absence from work, the extent to which a medical certificate is required and limits on the otherwise general application of Article 6(1): see Article 6(2). But the NSW Act does not recognise even a prima facie right of an employee to a remedy if dismissal occurs because of a temporary absence from work because of illness. Without such a prima facie right the NSW Act does not provide, in my opinion, an adequate alternative remedy.

If, in these proceedings, the applicant's termination can be said to have been as a result of his temporary absence from work because of illness then the scheme in the NSW Act as it would operate in relation to the applicant's dismissal does not satisfy s170EB. I have already concluded that the termination arose from the action of the respondent in sending the letter on Tuesday, 24 May refusing to accept the withdrawal by the applicant of his letter of 18 May. This occurred when the applicant was absent from work because of illness. However the evidence does not support a finding that it was this absence that was the reason for the termination. Rather it was the mistaken belief of the respondent that it could adhere to what it considered was the effect of the letter of 18 May that was the reason for the termination. Accordingly, as the termination of the applicant was not for the reason of his temporary absence from work because of illness, the inadequacy of the remedy under the NSW Act has no bearing on these proceedings.

The fourth feature concerns the remedies under the NSW Act. Section 250 empowers the NSW Commission to order reinstatement: s250(1)(a), re-employment: s250(2)(a) and compensation: s250(3). If reinstatement or re-employment is ordered then amounts for remuneration lost between the dismissal and the time of the order may also be ordered: s250(1)(b) and s250(2)(b). However if neither reinstatement nor re-employment is practicable, the employer can be ordered to pay the former employee compensation not exceeding the amount of the remuneration of the employees during the period of six months immediately before the dismissal: s250(3). It is this limit of six months pay that founds the submission of the applicant. I have already referred to Walton, supra, in which a manager of an abattoir was awarded damages equal to nine months salary.

Article 10 of the Convention provides that the independent tribunal "be empowered to order payment of adequate compensation" if, in substance, reinstatement is not effected. The submission of the applicant is to the effect that having regard to the statutory limit on compensation of six months in the NSW Act and the damages awarded in Walton supra, the compensation that might be awarded under that Act is not adequate compensation and thus Article 10 is not satisfied. Viewed in the abstract this submission has substance.

However the yardstick in s170EB that the adequate alternative remedy under existing machinery satisfies the requirements of the Convention must be viewed in the legislative context in which it appears. Section 170EE of the Act now provides that a person in the position of the applicant may only be awarded a maximum amount of compensation of $30,000: see s170EE(4)(b), which is less than six months of the applicant's salary, at least on the rate of pay at the time of the termination or purported termination.

The consideration under s170EB of the remedy available under the NSW Act is as an alternative one. That necessarily involves consideration not only of the Convention but also the remedies available under the Act itself. It would be a curious result if parliament intended that there would be no bar to an employee prosecuting a claim under Div3 of the Act because the remedy under the NSW Act was not adequate, but with the result that the remedy under Div3, in so far as compensation was concerned, was even less adequate. It is a result that, in my opinion, is not intended. Even if the compensation remedy under the NSW Act available to the applicant does not constitute adequate compensation as that expression appears in Article 10 of the Convention, it does provide, for the purposes of s170EB, an adequate alternative remedy.

I should at this stage note that the applicant's salary exceeded the applicable amount referred to in s170CD which, in general terms, precludes applications by employees earning more than $60,000 per annum. However the application was filed before 30 June 1994 when that section commenced: see Industrial Relations Amendment Act (No 2) 1994, and accordingly can be pursued having regard to the definition of "termination of employment" in s170CD(4).

The last feature of the scheme arising under the NSW Act which the applicant submits establishes that it does not provide an adequate alternative remedy, is that the NSW Commission has no jurisdiction equivalent to the accrued jurisdiction of this Court. It thus has no jurisdiction to make binding declarations of right or to set aside unconscionable transactions. However this submission is, in my opinion, misconceived. Section 170EB forms part of a statutory scheme which establishes a statutory remedy for an employee whose employment has been terminated. As I earlier indicated, s170EB invites comparisons between that statutory scheme and remedies under "existing machinery" which is suggestive of other statutory schemes. The yardstick by which the other schemes are generally to be assessed is the Convention. The fact that this Court might exercise jurisdiction deriving not from that statutory scheme, but from elsewhere is irrelevant to the comparison and assessment required to be made by s170EB.

I am satisfied that the applicant has an adequate alternative remedy.

The jurisdiction to determine the matters arising in the Courts accrued jurisdiction

The issue is whether the Court has jurisdiction to deal with the common law claims even if I were to conclude that there had been no termination so as to found, in a jurisdictional sense, an application under s170EA or I was required by s170EB not to consider the application further because an adequate alternative remedy exists.

The Industrial Relations Court of Australia has been constituted in the same terms as the Federal Court of Australia: see Canceri v Taylor, unreported, 11 August 1994, Industrial Relations Court, Moore J. It can be accepted that decisions dealing with the nature of the accrued jurisdiction of the Federal Court apply equally to the Industrial Relations Court save for any involving consideration of the operation of cross-vesting legislation.

The application made under s170EA by the applicant concerned a termination. Apart from the effect of s170EB, it is an application the Court would be obliged to determine in accordance with its jurisdiction arising under Div3 of PtVIA of the Act: see Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393 at 399 per Deane J. Section 170EB limits, in certain circumstances, the nature of the jurisdiction that might be exercised in relation to an application under s170EA. Plainly the Court has jurisdiction to commence to deal with the application but if, in doing so, it is satisfied that the employee to whom the application relates has an adequate alternative remedy, the Court is precluded from further exercising the jurisdiction arising under Div3. Section 170EB requires the Court to "decline to consider or determine the application".

The application in these proceedings was made to resolve a controversy between the applicant and the respondent and raises for determination their respective rights both under Division 3 of the Act and at common law. The controversy concerned a substratum of facts common to the statutory application and the common law claims. The jurisdiction of the Court may, in those circumstances, be treated as the same as that of the Federal Court which was described by Wilcox and Ryan JJ in Gregory v Phillip Morris Ltd (1988) 80 ALR 455 at 480:

"It is now well settled that the conferment upon this court of jurisdiction to determine a particular matter empowers the court to consider all claims arising out of that matter. For this purpose the word "matter" has the meaning it bears in ss 75-78 of the Constitution: a single justiciable controversy. The jurisdiction of the court is not confined to claims arising under federal law, but extends to claims under State law. The critical question always is whether the claim arises out of the same "matter" as that which attracts the jurisdiction of the court. Thus, one example of the same matter giving rise to a non-federal claim and a federal claim occurs where both arise out of a common substratum of facts: see Fencott v Muller (1983) 152 CLR 570 at 607-9; 46 ALR 41."

While Gregory, supra deals generally with the Federal Court's accrued jurisdiction, the respondent raises the question of the Court's jurisdiction to deal with the common law claims when it cannot deal with the statutory claims. Reference was made to Burgundy Royale Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 where proceedings were brought under the Trade Practices Act 1974 (Cth) against, amongst others, the Northern Territory and the Northern Territory Development Corporation. Damages were sought both under that Act and at common law as well as declaratory relief. A Full Court of the Federal Court decided that Act had no application to either of these respondents. The Court had then to consider whether the jurisdiction to deal with the common law action survived that conclusion. The Court said at 219:

"The Court's jurisdiction is to determine each of the claims which together constitute a federal "matter". That jurisdiction cannot be limited, as the argument of the second and third respondents would suggest, to the determination of only those claims, federal or attached, which are successfully maintained. On the contrary, the jurisdiction is to entertain, and determine, all claims constituting a "matter", whatever their ultimate fate. Any other approach would involve the extremely inconvenient result that the existence or absence of jurisdiction to deal with a particular claim would depend upon the substantive result of the claim: cf Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 per Dixon J at 391.

As we followed the argument, the second and third respondents accepted that there were facts common to the claims brought against them under the Act and at common law. It must follow that the Court had jurisdiction to entertain the federal matter thus arising. What is now said on behalf of claims was attracted in the first instance, that is, upon the filing of the initiating process, this jurisdiction is lost once it has been decided, as it now has, that the Act does not bind these respondents.

It is true that in answering questions 1 and 2 in the negative, we have determined preliminary points of law in the claims under the Act brought against the second and third respondents; and that, in consequence, there will be no further trial of those issues. But it does not follow that the Court ever lacked jurisdiction to deal with such claims. Nor does it follow that the Court now loses its jurisdiction to deal with the attached common law claims: see Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 469, 472, 477; Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) ATPR 40-795; 75 ALR 271, and Dorotea Pty Ltd v Vancleve Pty Ltd (1987) ATPR 40-807; 75 ALR 629. In principle, the position is no different than it would have been if the claims under the Act had proceeded to trial and had been dismissed on the merits. In that situation, it could not seriously be suggested that the dismissal of the claims under the Act had the effect of depriving the Court of jurisdiction to deal with any attached non-federal claim.

The position may have been different if the claims under the Act had been 'colourable' in the sense that they were made for the improper purpose of 'fabricating' jurisdiction: see P H Lane, Lane's Commentary on the Australian Constitution (1986), pp 367-368 and the cases there cited. There is no room for such suggestion here. The applicants' case that the second and third respondents were bound by the Act cannot be said to be unarguable; and we think it was pursued bona fide: cf R v Cook; Ex parte Twigg (1980) 147 CLR 15 per Gibbs J at 26."

See also Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 16 FCR 410 at 435 per Gummow J.

I can discern nothing in the reasons for judgment of the Court to support the respondent's submission that the Court reached the conclusion it did because the proceedings under the Trade Practices Act 1974 concerning other respondents remained on foot and were unaffected by the conclusion concerning the second and third respondents: see Kennedy v Australasian Coal and Shale Employees Federation (1983) 50 ALR 735 at 742-743.

In this matter, there were clearly issues of substance as to whether there had been a termination and whether there was an adequate alternative remedy. It cannot be said that the statutory application was not made bona fide or is colourable. The Court had and continues to have jurisdiction to deal with the claims brought by the applicant concerning his rights at common law notwithstanding that the prohibition in s170EB presently operates to preclude further consideration of the statutory claim.

In summary I conclude:

The letter of 18 May 1994 did not constitute reasonable notice and the sending of the letter did not bring to an end the contract of employment between the applicant and the respondent.

The applicant, by his conduct, did not repudiate the contract of employment.

(iii) The contract of employment between the applicant and the respondent is still on foot.

There was a termination of the employment of the applicant within the meaning of s170EA of the Act.

There is available to the applicant an adequate alternative remedy within the meaning of s170EB of the Act and I decline to determine the application made under s170EA.

The Court has jurisdiction to continue to deal with the claims made in its accrued jurisdiction.

It is unnecessary, and in some respects undesirable, to deal with the remaining issues that were agreed but which I have not dealt with in this judgment.

I will adjourn the matter for 14 days and list the matter for further hearing to enable the parties to make submissions as to what orders should be made to give effect to this judgment.

I certify that this and the preceding fifty-eight (58) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.

Associate:

Date:30 September 1994

Counsel for the Applicant: J. Ireland QC &
R. Dubler

Solicitor for the Applicant: Corrs Chambers
Westgarth

Counsel for the Respondent: R. Goot

Solicitor for the Respondent: Sly & Weigall

Date of hearing: 24, 25 August and
5 September 1994

Date of judgment: 30 September 1994

[1994] IRCA 41

30 Sep 1994