Tibaldi Smallgoods (Australasia) Pty Ltd v Rinaldi
[2008] VSC 112
•11 April 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 8204 of 2007
| TIBALDI SMALLGOODS (AUSTRALASIA) PTY LTD | Appellant |
| v | |
| MAURICE RINALDI | Respondent |
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JUDGE: | COGHLAN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 February 2008 | |
DATE OF JUDGMENT: | 11 April 2008 | |
CASE MAY BE CITED AS: | Tibaldi Smallgoods v Rinaldi | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 112 | |
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Appeal pursuant to s. 109 of the Magistrates’ Court Act 1989 – Appellant bound by an Enterprise Bargaining Agreement (“EBA”) in respect of some employees but not the Respondent – Respondent sought severance pay in accordance with the terms of the EBA – Respondent’s employment contract silent on the question of redundancy entitlements – Magistrate held it was an implied term of the Respondent’s employment contract that he was entitled to severance pay in accordance with the EBA – It was not open for the Magistrate to conclude that as a result of crystallised custom or custom and usage, such a term could be implied into the Respondent’s contract of employment.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr C. O’Grady | Mason Sier Turnbull |
| For the Respondent | Mr M. Klemens | Saines & Partners |
HIS HONOUR:
This is an appeal from a decision of the Magistrates’ Court of Victoria sitting at Melbourne dated 15 August 2007 pursuant to s.109 of the Magistrates’ Court Act 1989 (Vic).
The questions of law raised for consideration of this court by Amended Notice of Appeal dated 5 October 2007 is:
Did the Magistrates’ Court err in deciding that the fact that at the time the Respondent was employed, the Appellant was bound by the Tibaldi Small Goods (Australasia) Pty Ltd Enterprise Agreement 2002 (“the Certified Agreement”) in respect of other employees but not the Respondent, was a sufficient basis for implying into the contract of employment of the Respondent, a term that he was entitled to be paid severance pay in accordance with the Certified Agreement?
The Grounds of Appeal are also set out in Amended Notice of Appeal of 5 October 2007. They are:
1.Magistrate Hawkins held that as a result of crystallized custom or custom and usage, the Respondent’s employment contract contained a term that the Respondent was entitled to receive, in the event of redundancy, the amount of severance pay he would have received, had he been covered by the Certified Agreement (“the Redundancy Term”).
2.The finding described in paragraph 1 involved an error of law in that:
(a)There was no evidence before Magistrate Hawkins capable of supporting a finding that as a result of crystallized custom or custom and usage, the Respondent’s employment contract contained a term in the form of the Redundancy Term;
(b)A term in the form of the Redundancy Term was contrary to the express term of the employment contract that it constituted the entire agreement of the parties;
(c)The finding described in paragraph 1 was based on the fact that the Appellant was a party to a certified agreement titled the Tibaldi Small Goods (Australasia) Pty Ltd Enterprise Agreement 2002 (the Certified Agreement). The fact that the Appellant was a party to the Certified Agreement was not capable of supporting a finding that, as a result of crystallized custom or custom and usage, the Respondent’s contract of employment contained a term in the form of the Redundancy Term as:
(i)the Certified Agreement did not apply to the Respondent;
(ii)there was no evidence that the Respondent was aware of or relied upon the Certified Agreement when the contract of employment was made;
(iii)the Certified Agreement derived its force from the Workplace Relations Act 1996. Reliance upon the terms of the Certified Agreement does not require those terms to be given contractual force as they have statutory force. They are not terms that the parties to the contract of employment can reasonably be presumed to have imported into the contract.
(d)The finding described in paragraph 1 was based on a finding that the Appellant had conceded that the Respondent had an entitlement to redundancy pay. The Appellant made no such concession.
There are a number of matters of common ground.
The respondent had been employed by the appellant in various positions from about January 1992 until his position was declared redundant in December 2005. He was then made redundant.
At that time the respondent was the Production Manager. He was offered that position in October 2003. The offer was made by letter dated 29 October 2003. (See Exhibit SS3 to the Affidavit of Sara Summerbell dated 11 September 2007.) The letter offered the appointment to the position of Production Manager. General duties and responsibilities were set out in Section A of the Attachment to the letter. Remuneration arrangements were set out in Section B of the Attachment. The effect of the agreement was expressed as follows:
This Agreement constitutes the entire agreement between us (the parties).
The next paragraph of the letter is headed:
“Applicable law and other general conditions”
and below the heading states:
Your contract of employment arising from acceptance of this offer will be governed by the law of the State of Victoria.
The Attachment to this letter forms part of the terms and conditions of this offer of a contract of employment with us.
The letter sought acceptance within 14 days, otherwise the offer would lapse. At the end of the letter the following appears:
I acknowledge having received and read the letter and the Attachment and I accept the offer on the terms set out in these documents.
The respondent’s signature then appeared with the date 14.11.03.
“Section B” of the Attachment was set out as follows:
B1 Salary package
Base Salary $45,029
Superannuation $4,053
Motor vehicle fully maintained $16,565
Total Package $65,647
B2 Leave entitlements
Your leave entitlement and obligations will remain as is current.
B.3 Telephone
A mobile telephone is provided with business calls paid by the company.
For present purposes it should be noted that the agreement is silent on the question of redundancy and the question of any entitlements due under a redundancy.
On 19 December 2005, the respondent was told he was being made redundant. On that day he attended a meeting with Mark Wood and Ross Pollock, who were part of senior management. At the meeting he was told that he had certain entitlements for Redundancy, Annual Leave, Long Service Leave and Pay in Lieu. The respondent was asked to sign a form which set out the amounts totalling $30,783.69 ($26,642.99 after tax) and in which he acknowledged that his position had been made redundant.
The respondent refused to sign the form because he was not satisfied that amounts he was being offered were accurate or appropriate. He was being offered 12 weeks Redundancy when he though he was entitled to more.
On 20 December 2005, the respondent wrote to the appellant (Mark Wood and Ross Pollock) setting out what he regarded as his entitlements. He disputed the calculations relevant to his base rate of pay and to the calculation of the payment for annual leave.
The matter of importance to this appeal is the following part of the letter:
(b)The hours offered for redundancy fall under the existed [sic] Enterprise Bargaining Agreement between Tibaldi Small Goods and the unionised employees. Although not part of the EBA my advice is that any other staff of the company are to be offered equal or more than the EBA. The redundancy in that EBA is 2 weeks per year of service capped at 52 weeks. Based on these calculations I am entitled to 13.89 years @ 2 weeks per year equals 27.78 weeks of redundancy.
The difference between the offer and the respondent’s claim was $26,051.62.
Mark Wood replied on behalf of the appellant by letter dated 28 December 2005. Paragraph 3 was relevant to this appeal:
3.As you acknowledge you were not employed under the EBA nor were you a member of the Union whilst employed at Tibaldi.
The respondent issued proceedings in the Magistrates’ Court to recover the amount he had set out in his letter of 20 December 2005. He was generally successful and judgment was entered in his favour. The respondent was order to pay $28,205.37 plus interest of $2,412.05 and costs of $8,358.00.
The payment for redundancy was $22,716.07. That was payment for two weeks for each year of service, namely, 27.78 weeks.
It is that part of the order below which is the subject of the appeal. It is accepted that the contract of employment of the respondent contained no term relating to the payment of redundancy. It followed that there was nothing in the contract which assisted in calculation of the amount.
The respondent gave evidence. He was questioned about the letter of 20 December 2005. His counsel took him through the letter and the following exchange took place:
Counsel:And you also set out some 27.78 weeks of redundancy payment.
Respondent: Yes, that was based on two weeks per year.
Counsel:Two weeks per year of service.
Respondent: That’s correct.
Counsel:What was the basis upon which you believed you were entitled to that component?
Respondent: The conversation with Mr Mihashi and also the EBA of the employees which I knew I wasn’t bound by but …
Counsel:Now who is Mr Mihashi?
Respondent: Mihashi, Mr Mihashi was the Japanese director, or the company director on behalf of Japanese. He wasn’t actually paid by Tibaldi but he ran Tibaldi for the Japanese and he was probably four years, three to four years managing director before I left or before the company stopped.
Counsel:And you knew him whilst you were working there?
Respondent: Yes sir, yes.
Counsel:And I think you said you had discussions with him after you were …
Respondent: Yes, that’s correct.
Counsel:Is that right?
Respondent: Yes
Counsel:And as a consequence of those discussions, you put together the document?
Respondent: That’s correct.
(The transcript of the proceedings is Exhibit SS2 to the Affidavit of Sara Summerbell of 11 September 2007 – transcript (“T”) of Magistrates’ Court hearing pp.14-18.)
The respondent was not cross-examined about those matters.
Mr Gordon McRobert and Mr Mario Mori, former employees of the company, gave evidence. Mr McRobert said that he had been paid 16 weeks redundancy for 7.77 years of service. Mr Mori was employed for over eight years and was paid 16 weeks redundancy.
Mr Mark Wood was called on behalf of the appellant. He gave evidence that he was the manager of information systems for Ridders Fresh Pty Ltd and Tibaldi Smallgoods (Australasia) Pty Ltd. He said he was an employee of Ridders Fresh Pty Ltd when that company took over the appellant company on 1 November 2005. Prior to that, the appellant company had been owned by Fuji Nihon Pty Ltd. He told the Court he knew Mr Mihashi, who had been CEO and general manager of the appellant company up until 31 October 2005. Mr Wood said that Mr Mihashi played, “no role whatsoever” after that (Transcript T26.) Mr Wood had been seconded to the appellant company. Mr Wood was shown the document which was produced to the respondent at the meeting of 19 December 2005. Mr Wood said he had prepared the document and made the calculations. He was asked:
Counsel:Now, how did you arrive at the figure of 12 weeks for redundancy?
Mr Wood:I sought, well firstly I reviewed Maurice Rinaldi’s personal file and read his employment agreement and also I took advice from the lawyers to Tibaldi upon what his entitlement was, being made redundant. And then I applied those, those that advice to his particulars and calculated his entitlement including the tax component and net payment to Maurice.
(The next two questions and answers have been omitted.)
Counsel:What was your calculation, or how did you calculate redundancy for non EBA workers?
Mr Wood:I used a schedule which had been supplied to me by the lawyers for Tibaldi and schedule detailed an amount of redundancy for term of weeks corresponding to a period of service and is Maurice’s case, given he had exceeded 10 years’ employment with Tibaldi the entitlement he was, to apply, was the, ah, 12 weeks of redundancy and at the rate of pay times 40 hours per week and also add to that his long service accrual.
Later:
Counsel:Take Mr Mori’s first, he was there for 8.68 years according to this.
Mr Wood:Yes.
Counsel:And he was paid 16 weeks.
Mr Wood:That’s right.
Counsel:Do you recall how you arrived at those two figures, sorry, at the 16 week figure?
Mr Wood:Yes, I do. If you had served 8 years it was a simple calculation of multiplying 8 years times 2 weeks per year of service for redundancy payment.
Counsel:OK. So why was Rinaldi different, or less? He only got 12 weeks if you recall.
Mr Wood:That’s because Maurice Rinaldi had served greater than 10 years and after 10 years the schedule reduced the payment from a matter of 16 weeks to 12 weeks.
Counsel:Very well. Can I ask you to look at the other ETP schedule there, which is for Mr McRobert. You will see he got paid 16 weeks and worked 7.77 years.
Mr Wood:That’s right.
Counsel:OK. Can you explain how you arrived at 16 weeks for Mr McRobert?
Mr Wood:Yes and on this occasion, the amount of years was less than 8, however, I conferred with my supervisor and it was it was resolved to round that up to 8 weeks and therefore he got, sorry, 8 years, and therefore he got paid 8 times 2 which is 16 and given his service was less than 10 years, he attracted no long service leave payout.
It was common ground that neither Mr Mori nor Mr McRobert received any long service leave payout. The respondent had been offered a little over $10,000 ($7,000 after tax) which of course was no more than his entitlement.
Mr Wood gave further evidence that there was an enterprise bargaining agreement in place on the site at that time. He said that pursuant to that agreement, an employee was entitled to 2 weeks redundancy for each year of service up to 52 weeks.
Counsel:So that those employees covered by that agreement specifically would, if they were there the same period of time that Mr Rinaldi was there, would have received 27 odd weeks of redundancy pay.
Mr Wood:Um, Maurice was there 13.9 years.
Counsel:Yep.
Mr Wood:I’m not sure of the exact formula but, because nobody under that agreement was made redundant.
At a later stage in his evidence, Mr Wood said that he knew Mr Mihashi. He said that he had never been told by Mr Mihashi, “to pay 2 weeks per year of service by way of redundancy payment to Mr Rinaldi.”
Counsel on behalf of the appellant submitted that there was no express or implied term in the contract of the respondent which entitled him to redundancy on the basis of what was provided in the EBA. It was clear that he was not directly covered by the EBA. He submitted that no agreement had been made by Mr Mihashi. Although there had been some evidence on that point, it was clearly insufficient to support the existence of an agreement which could affect the outcome of the case. That aspect of the case was not persisted with.
It was submitted on behalf of the appellant that the critical date to view the contract was 23 October 2003. It might more accurately have been 14 November 2003, when the respondent agreed to the terms. Nothing in the case turns on the difference. (In any event the letter of offer was dated 29 October 2003.)
It was next submitted that there was nothing in custom and usage from which a condition could be implied. In particular, there was nothing in the evidence from which it could be concluded that the matter was of such notoriety that a condition relating to redundancy should be inferred and that it should be inferred in the term of the EBA.[1]
[1]Counsel referred to Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (“Con-Stan”) (1985-86) 160 CLR 226. A copy of the case was provided to Her Worship.
Counsel argued that a term could only be implied if it was so notorious that even persons in the particular trade would have the term implied in any contractual agreement.
Counsel further argued that the respondent had no entitlement to redundancy. He was not covered by an award or by the EBA. It was submitted that he was in a class of employee entitled to reasonable notice and not to redundancy.[2]
[2]Counsel referred to Ryan v Textile Clothing and Footwear Union of Australia and Another [1996] 2 VR 235, 260-261. Copies of the relevant pages were provided to Her Worship.
Counsel submitted that the payments made to Mr Mori and Mr McRobert were at best equivocal from the point of view of the respondent and Mr Wood had given evidence as to how he calculated the payments for them.[3]
[3]Counsel also relied on FAI Traders Insurance Co v Savoy Plaza Pty Ltd [1993] 2 VR 343 to support the proposition that subsequent conduct could not be used as a basis for interpretation of the contract.
In closing, counsel also relied upon Byrne and Frew v Australian Airlines Ltd[4], and he handed up extracts of that report. Counsel relied on it for what was said about the nature of “crystallized custom”.
[4](1995) 185 CLR 410, 428.
Counsel for the respondent submitted that, “the basis upon which a reasonable and fair redundancy, it’s a fair go all round principle, a reasonable and fair redundancy to be paid is all that the plaintiff seeks in this case Ma’am.” (T38.)
He based that submission on the proposition that the defendant had accepted that there was an entitlement to a redundancy payment. That proposition was proved by the offer of payment to the respondent. He submitted that there were express and implied terms in the contract of the respondent. The express term was for the EBA and, “two employees who were paid out, were paid out, their payments were not inconsistent with that EBA” (T38.)
He further submitted that the term is to be implied to give business efficiency to the employment arrangement. He sought to draw comfort from the proposition that the redundancy payments to Mr Mori and Mr McRobert were greater than payments to the respondent even though they had served less years than him.
Counsel concluded by submitting that the appellant’s intention at the time of the making of the contract must have been to pay redundancy in accordance with the EBA and it ought, therefore, be an express term of the agreement or an implied term to give business efficacy to the agreement. That was in the sense that it be a reasonable payment. The reasonable payment being exhibited by what was paid to Mr Mori and Mr McRobert.
In reply, counsel for the appellant submitted that the term suggested could not be implied on the basis of business efficacy.
Her Honour gave oral reasons for her decision. After dealing with the questions relating to rate of pay and long service leave she continued:
Turning to the question of the redundancy payment. Both parties conceded there was a redundancy entitlement. What is that entitlement is the question rather than whether one ought to be implied. Whilst the employment letter purports to constitute the entire agreement between the parties, this is clearly not the basis upon which the parties contracted. For instance, full detail concerning the provision of the motor vehicle was left out entirely from the contract, it was filed without that. It was also silent as to what entitlement and obligations would flow at the time of the termination of employment. In Byrne and Frew terms, to give reasonable and effective operation to the contract, such terms need to be implied. To imply a term giving rise to an entitlement to redundancy, reference may only be had to matters at the time of the making of the contract. It cannot be determined by reference to what was paid to Mr McRoberts and Mr Mori at the time their employment was terminated or at the time your employment was terminated. I think that was the same day, if I’m correct.
So the relevant time is in 2003 when you were issued with that letter of appointment to the production manager position. At that time, am I correct in assuming that the enterprise bargaining agreement which set out redundancy entitlements was in existence in 2003 for shop floor workers?
Counsel for the Respondent: Yes.
Her Honour: All right, well based on that assumption and given the acceptance by the defendant that some sort of entitlement to redundancy did exist for the defendant, I find that the terms of the enterprise bargaining redundancy entitlement would have been well known to the parties and would have had the notorious qualities referred to, which give rise to the concept of the crystallised custom described by the Court in Byrne and Frew that’s contrasted with the certain facts of that case.
I have no evidence of the origins of the redundancy scale referred to in, by the witness for the defendant which was used to calculate the eventual entitlement paid to Mr Rinaldi other than it came from the lawyers. I need not have any regard to the payments made to the other two employees to reach this conclusion, although I note, post that determination, that they do corroborate this interpretation. Whilst Mr Rinaldi had no EBA entitlements per se to redundancy payment because he wasn’t in the class of employees that was covered by that agreement, the parties understood you have to have an entitlement. Accordingly, I find that the term was implied into your contract of employment to pay severance payments in accordance with the scale set out in the enterprise bargaining agreement. That is, 2 weeks per year of service capped at 52 weeks. I find that the defendant has breached the contract of employment by failing to pay Mr Rinaldi his full entitlement to severance pay, which is 13.89 years by two weeks or 27.78 weeks less the 12 weeks pay. So that leaves an outstanding entitlement to 15.78 weeks of redundancy pay to be calculated at the increased package rate of $62,827.00 per annum which is the package rate exclusive of the super component.
In that part of her judgment Her Honour made four major findings:
1. That the parties accepted that the respondent had an entitlement to redundancy pay,
2. That there was nothing in the agreement between the appellant and respondent which directly covered the amount to be paid on redundancy,
3. That at the time the respondent entered into his contract there was otherwise in place in the workplace an EBA which did contain redundancy provisions.
4. The EBA referred to in paragraph 3 had such notorious qualities so as to have become “crystallized custom” and a term should be implied in the respondent’s agreement of employment entitling him to redundancy payments in accordance with the EBA.
The question raised on appeal attacks the findings in points 3 and 4 (although the finding in point 1 is not accepted by the appellant).
I have set out much, if not all, the relevant evidence in the case.
The first matter to be considered is whether or not the appellant actually conceded that the respondent was entitled to a redundancy payment. The evidence was that the appellant offered a redundancy payment. Mr Wood spoke of calculating a redundancy entitlement but the entitlement to which he referred was an entitlement based on the schedule which he had received from the solicitors. It is not clear to me that he was conceding “entitlement” in any other form. The tenor of Mr Wood’s evidence was that the EBA had nothing to do with the respondent. Counsel for the appellant certainly made it clear in his submissions that no entitlement to payment for redundancy was conceded.
Even if the finding that both sides accepted an entitlement to redundancy payments is correct, the next steps in the reasoning have to be considered.
Mr Wood made it clear that he had a basis for his calculation and that was the schedule received from the solicitors. He explained the calculations he had made in relation to all three employees. He did so according to the schedule. Mr Mori was paid 16 weeks redundancy after 8.76 years of service. If he had been paid under the EBA he would have been entitled to 17.52 weeks. he was paid to a ceiling of 16 weeks, that is, in accordance with Mr Wood’s schedule.[5]
[5]There was no evidence as to the source of Mr Wood’s schedule other than it came from the solicitors. On the appeal I was provided with a copy of the decision of the Full Bench of Australian Industrial Relations Commission of 26 March 2004. In that decision, a change was made to the general safety net provisions for redundancy payments. It was in accordance with Mr Wood’s schedule. It was not in evidence before Her Honour. It does, however, demonstrate that there was a known basis which could have laid foundation for Mr Wood’s calculations. It might also go to the question of whether or not any payments were reasonable.
It follows that there is little, if anything, about the treatment of Mr Mori or Mr McRobert which supports the respondent’s submission. It cannot be said that their treatment, “corroborated the interpretation” made by her Honour (T43).
It is safe to conclude that at the time the respondent entered into his agreement in October/November 2003 that the EBA was in place for the workplace although the evidence did not make that particularly clear.
The question became, what was in the mind of the parties at the time of the making of agreement? There is no evidence that the matter of redundancy was discussed or, for that matter, contemplated at the time the respondent entered into his agreement. That is why it is dangerous to conclude that because the appellant was prepared to make a payment or to find an “entitlement” at the time redundancy occurred that there was always such a term contemplated in the original agreement.
If the parties had discussed such matters, on what basis could a term be implied in the agreement? As a matter of the law of contract, the law in Australia is clearly set out in “Con-Stan” (supra). In that case, the High Court decided in a judgment of the Court (Gibbs CJ, Mason J, Wilson J, Brennan J and Dawson J), that custom or usage will justify the implication of a term in a contract but whether it does so is a question of fact. It follows that there must be evidence that, “the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can readily be presumed to have imported that term into the contract”[6].
[6]At p.236
The applicability of those principles to industrial agreements was dealt with by the High Court in Byrne and Frew (supra). That case turned on whether or not the terms of an award would become implied conditions in an employment contract. The circumstances in which that might occur were looked at by various members of the Court. In general, the Court concluded that terms of awards would not be imported into contracts of employment. Those terms would be enforceable in their own right.
The High Court in Byrne v Frew did accept that it was possible for a term or terms to be implied in a contract of employment. In particular, the Court accepted that as a result of custom matters might be implied in a contract of employment.
It had been suggested by the appellants in Byrne and Frew (supra) that as a result of “crystallised custom” the term of the award had been imported into a contract of employment. The Court rejected that argument. Brennan CJ, Dawson and Toohey JJ said:[7]
[7]At p.423.
The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact and there must be evidence of its acceptance such that it is “reasonable to assume that the parties contracted on the basis of the custom, and that it is therefore reasonable to import such a term into the contract”. Just as there can be no implied or presumed intention of the parties in this case to include a provision of an award as a term of their contracts of employment, there can be no assumption that they contracted upon the basis of the inclusion of an award provision. There would be no need for them to do so because the award operates of its own force. Whatever may be the situation with the terms of collective bargains, which at least involve a measure of agreement albeit not with individual employees, there can in our view be no basis for treating a provision of an award as a “crystallised custom” and implying a term to its effect into a contract of employment.
McHugh and Gummow JJ said:[8]
Custom
We consider first the foundation for an implied term in custom. The phrase "crystallised custom" appears to have its origin in the writings of Professor Sir Otto Kahn-Freund[9]. The term "crystallised" adds nothing to the principles which determine when the existence of a custom or usage will justify the implication of a term into a contract. The phrase "custom or usage" includes terms implied by established mercantile usage or professional practice.
The matter was considered in the joint judgment of five members of this Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd[10] The question is always whether the general notoriety of the custom makes it reasonable to assume that the parties contracted with reference to the custom so that it is therefore reasonable to import such a term into the contract. Where there is such an established usage, "the courts are spelling out what both parties know and would, if asked, unhesitatingly agree to be part of the bargain"[11]. Because the importation of the term rests on the presumed intention of the parties, it must yield to the actual intention embodied in express terms of the contract, whether the contract be written or oral.
Further, whilst it is not essential that the custom be universally accepted, it must be so well known and acquiesced in that persons making a contract in that situation reasonably can be presumed to have imported it into their contract. It is here that there arises an immediate difficulty for the appellants in this case.
The difficulty is that, apart from the inferences that may be drawn from the existence of the Award and the apparent common ground that the Award bound the respondent and the employment of the appellants was subject to the Award, there is lacking evidence of a custom whereby, as between persons in the position of the respondent and the appellants, the provisions of cl 11(a) of the Award were carried into their contracts of employment. Still less is there evidence that such a custom was, at any relevant time, so well known and acquiesced in that all parties of the relevant description can reasonably be presumed thereafter to contract on the footing that cl 11(a) became a term, and to modify existing contracts so as to include it.
No doubt the existence of the award structure provided for in the 1904 Act and the 1988 Act may be treated as common knowledge, at all relevant times, of the parties to this litigation. But it would be another matter to assume on the evidence in this case that the terms of awards which dealt with termination of employment were to be given contractual force. The submission as to "crystallised custom" fails at the threshold.
[8]At p.440.
[9]In his essay "Legal Framework", Flanders and Clegg (eds), The System of Industrial Relations in Great Britain (1954), p 58. See also Hepple and Fredman, Labour Law and Industrial Relations in Great Britain, (1986), §151-152.
[10](1986) 160 CLR 226 at 236-238.
[11]Liverpool City Council v Irwin [1977] AC 239 at 253.
The question of an implied term has been dealt with in other cases. There is nothing in either BP Refinery (Western Ports) Pty Ltd v Shire of Hastings[12] or in Con-Stan (supra) which would alter the position set out in the two passages above or throw any further light upon the proposition of implying terms in contracts of employment by custom.
[12](1978) 52 ALJR 20.
In this case, the evidence before her Honour was that for some workers employed at Tibaldi Smallgoods there was, in force, an enterprise bargaining agreement. The respondent was not party to that agreement. The respondent’s terms and conditions were covered by a written agreement he had with his employer.
In my view it was not open for her Honour to have concluded that the term of the enterprise agreement applicable to the “shop floor worker” could be imported into the employment contract by custom or usage. The evidence went no further than establishing that during the time of employment of the respondent, there was in force an enterprise agreement which applied to other workers. That factual circumstance is entirely insufficient to establish custom or usage in the workplace and certainly not sufficient to imply the term in the respondent’s contract.
The other matter on which her Honour acted was that the assumption that the appellant had accepted an entitlement to redundancy. I am not satisfied that that finding was open on the evidence. It is quite likely that the legal position of the appellant was that he was not entitled as a matter of law to anything other than reasonable notice.[13]
[13](See Byrne v Australian Airlines Ltd (supra) Brennan CJ and Dawson and Toohey JJ at 429).
It does not follow as a matter of logic that the fact that an employer agrees to pay an amount for redundancy should be treated as agreement by the employer that he had a legal obligation to do so.
In answer to the question raised by the ground of appeal, the Magistrate did err in deciding that the fact that at the time the respondent was employed, the appellant was bound by the Certified Agreement in respect of other employees but not the respondent, was a sufficient basis for implying into the contact of employment of the respondent, a term that he was entitled to be paid severance pay in accordance with the Certified Agreement.
Accordingly, the appeal will be allowed, with costs. Subject to any submissions the parties may make, I propose to make the orders outlined in the Notice of Appeal.
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