Transport Workers' Union of Australia v K&S Freighters Pty Ltd
[2010] FCA 1225
FEDERAL COURT OF AUSTRALIA
Transport Workers’ Union of Australia v K&S Freighters Pty Ltd
[2010] FCA 1225
Citation: Transport Workers’ Union of Australia v K&S Freighters Pty Ltd [2010] FCA 1225 Parties: TRANSPORT WORKERS' UNION OF AUSTRALIA and JAMES SIDNEY LEE v K&S FREIGHTERS PTY LTD (ACN 007 544 390) File number: NSD 1260 of 2009 Judge: COWDROY J Date of judgment: 12 November 2010 Catchwords: INDUSTRIAL LAW – Contracts – Termination – Summary dismissal of driver employee for refusing to authorise weekly deductions from pay – Driver alleged by employer to be negligent in causing an accident and deductions were designed for the purpose of repaying the repair costs of the damaged vehicle – New employer policy requiring reimbursement from employee for damage to company vehicle at the rate of $100 per week where damage was considered by the employer to result from negligence by employee – Driver employed under unwritten contract – Whether employer had contractual entitlement to require employee to authorise deductions from his pay to pay for negligently caused damage – Whether employer had contractual entitlement to dismiss employee should he refuse to authorise deductions – Construction of unwritten employment contract – Incorporation of workplace policies into the employment contract – Incorporation of certified agreement into employment contract – Whether employer was in breach by summarily dismissing employee for refusing to authorise deductions – Held – Contract of employment did not authorise Employer to require employees to authorise deductions from their pay to pay for negligently caused damage to company vehicles or face summary termination – Employer in breach of employment contract through the summary termination of employee.
DAMAGES – Employer was in breach of employment contract through the summary termination of employee – Employee claimed loss from date of termination until retirement – Employee mitigating loss through other employment – Employer claimed right to terminate without cause with reasonable notice – Employer claimed that liability for damages was limited to a period of reasonable notice – Whether ‘least burdensome performance’ principle applied to limit employer liability – Held – Employer would have exercised its entitlement to terminate with reasonable notice had it known that it did not possess right to summarily terminate – Liability limited to a term of reasonable notice.
INDUSTRIAL LAW – Section 792 of Workplace Relations Act 1996 – Dismissal of employee for the reason that the employee is entitled to the benefit of an industrial instrument – Whether employer breached of s 792 – Whether employee was dismissed by reason of his entitlement to rate of pay as contained in certified agreement – Whether entitlement was dominant or sole reason for termination – Held – Employee dismissed to change culture of workplace – Entitlement to rate of pay was not the sole or dominant reason for dismissal.
INDUSTRIAL LAW – Declaration pursuant to Reg 7.2.20 of the Workplace Relations Regulations2006 – Application to Court for declaration that certified agreement did not permit or authorise company to require employees to authorise deductions from their pay to pay for the repair of vehicles damaged through alleged negligence – Whether agreement purported to regulate such matters – Held – The agreement did not seek to regulate the subject matter addressed by the proposed declaration – Application for declaration refused.
Legislation: IndustrialRelations Act 1999 (Qld) s 391
Workplace Relations Act 1996 (Cth) ss 16, 792, 792(4), 793, 809, 824
Workplace Relations Regulations 2006 (Cth) Reg 7.2.20Cases cited: TheAmalgamated Engineering Union v The Metal Trades Employers Association (1944) 52 CAR 23
Ansett Australia Limited (subject to Deed of Company Arrangement) v Australian Licensed Aircraft Engineers’ Association [2003] FCAFC 209
Australasian Meat Industry Employees’ Union v Belandra Pty Ltd (2003) 126 IR 165
Barclay v The Board of Bendigo Regional Institute of
Technical and Further Education (2010) 193 IR 251
Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20
Byrne v Australian Airlines (1995) 185 CLR 410
John Fredrick Causer v Austral Bronze Crane Copper Pty Ltd (1970) 25 Industrial Information Bulletin 1715
City of Wanneroo v Holmes (1989) 30 IR 362
The Clerks (Shipping) Award; Ex parte Lloyd Timber Mills Ltd (1954) 78 CAR 201
TheCommonwealth v Amann Aviation Pty. Limited (1991) 174 CLR 64
Construction, Forestry, Mining & Energy Union v Mount Thorley Operations Pty Ltd (1997) 79 FCR 96
Crofter Hand Woven Harris Tweed Company Ltd and Others v Veitch and Another (1942) AC 435
Dyer v Peverill (1979) 2 NTR 1
The Employment Advocate v National Union of Workers and Another (2000) 100 FCR 454
General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605
Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120
Greater Dandenong Council v Australian Municipal, Administrative, Clerical and Services Union and Another (2001) 112 FCR 232
Gunton v Richmond-Upon-Thames London Borough Council [1981] 1 Ch 448
Kucks v CSR Limited (1996) 66 IR 182
Maritime Union of Australia and Others v Geraldton Port Authority and Others (1999) 93 FCR 34
Master Builders’ Association of Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation (1981) 54 FLR 358
McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375
Media Entertainment and Arts Alliance v John Fairfax Group Pty Ltd (1993) 49 IR 374
Rankin v Marine Power International Pty Ltd (2001) 107 IR 117
Robinson v Harman [1843-60] All ER Rep 383
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Thorby and Others v Goldberg and Others (1964) 112 CLR 597
Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165Date of hearing: 7, 8, 9 and 10 June 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 217 Counsel for the Applicants: Mr A. Hatcher Solicitor for the Applicants Maurice Blackburn Lawyers Counsel for the Respondent: Mr C. O’Grady Solicitor for the Respondent CCI Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1260 of 2009
BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA
First ApplicantJAMES SIDNEY LEE
Second ApplicantAND: K&S FREIGHTERS PTY LTD (ACN 007 544 390)
Respondent
JUDGE:
COWDROY J
DATE OF ORDER:
12 NOVEMBER 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The Respondent pay damages to the Second Applicant relating to his wrongful termination in the amount of $3,564.53 including interest.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1260 of 2009
BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA
First ApplicantJAMES SIDNEY LEE
Second ApplicantAND: K&S FREIGHTERS PTY LTD (ACN 007 544 390)
Respondent
JUDGE:
COWDROY J
DATE:
12 NOVEMBER 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
By Application and Statement of Claim filed 6 November 2009, the applicants apply to the Court for compensation and pecuniary penalties against the respondent. Such claim arises from the respondent’s decision to terminate the employment of the second applicant. The applicants also apply for declarations regarding the validity of such termination and damages.
THE CLAIM
In their application, the applicants relevantly seek the following:
1.An order imposing a pecuniary penalty upon the Respondent pursuant to s 807(1)(a) of the Workplace Relations Act 1996 (Cth) (‘the WR Act’) as in force immediately before 1 July 2009.
2.An order that the respondent pay such penalty to the first applicant.
3.An order requiring the respondent to pay to the second applicant compensation pursuant to s 807(1)(b) of the WR Act.
4.An order pursuant to Regulation 7.2.20 of the Workplace Relations Regulations 2006 as in force immediately before 1 July 2009 and/or s 21 of the Federal Court of Australia Act 1976 (Cth) declaring that K&S Freighters Pty Ltd Transport Employees (Queensland) Agreement 2005-2011 did not, on its proper interpretation, authorise or permit K&S to:
(a)require any employee to whom the said agreement applied to authorise deductions from weekly wages in order to pay for the costs of alleged negligent damage to any K&S vehicle; or
(b)dismiss any employee for any refusal to authorise any such deductions.
5.Damages at common law with respect to the wrongful dismissal of the second applicant by the respondent.
6.Interest.
7.Costs.
The applicants rely on the affidavit of James Sidney Lee sworn 5 March 2010 and the affidavit in reply of James Sidney Lee sworn 25 May 2010.
The respondent filed its defence on 24 December 2009. In it the respondent claims that it was entitled to summarily terminate Mr Lee’s employment and did so. The respondent relies on the affidavits of Legh Winser apparently sworn 28 April 2010, Steve Fanning sworn 28 April 2010 and Mark Ticehurst sworn 5 May 2010.
Background
The second applicant, Mr James Sidney Lee (‘Mr Lee’) is a truck driver, having been so engaged for approximately 35 years, and is a member of the Transport Workers’ Union of Australia (‘the TWU’), who is the first applicant in these proceedings.
The respondent, K&S Freighters Pty Ltd (‘K&S’), is a company operating a road freight transport business across several states of Australia. Among other contracts, K&S hold a contract with Coca-Cola for the delivery of Coca-Cola products in Queensland.
In mid to late August 2008 Mr Lee commenced employment with K&S as a truck driver working in Brisbane.
On the afternoon of 11 February 2009, Mr Lee was required in the course of his duties with K&S to make a delivery of Coca-Cola products to a Woolworths distribution centre at Larapinta in Brisbane.
The loading dock at the distribution centre in Larapinta was what is known in the industry as a ‘finger-dock’, the design of which surrounds the truck on three sides at the same height as the trailer deck when the truck is reversed into it for the purpose of loading and unloading. Such dock was approximately two feet wider than the truck itself, allowing for approximately one foot of space on either side of the vehicle when using the dock.
In the course of making the delivery and in manoeuvring the truck into the dock, the vehicle struck a low bollard located at the entrance to the loading dock (‘the accident’). Such accident caused the steps on the cab of the truck and the fuel tank to be damaged. Mr Lee immediately called Mr Gavin Gurr, his shift supervisor, and reported the accident. He was told to complete an incident report when he returned to the depot, which he duly did.
On 16 February 2009, Mark Ticehurst (‘Mr Ticehurst’), a K&S employee employed as the Operations Manager at the Coca-Cola depot at Richlands, informed Mr Lee that K&S had found him to be negligent with respect to the damage to the truck which had occurred on 11 February 2009.
Mr Ticehurst then provided Mr Lee with a document headed ‘RE Negligent Damage to Company Property’ (‘the deduction authorisation form’) which stated that the accident of 11 February 2009 had resulted in damage amounting to $4,016.70 to K&S property and that it had been determined after investigation that Mr Lee had been negligent in performing his duties. The document stated that K&S proposed to recover the cost of the repair of the vehicle from Mr Lee by an agreed payment plan of a minimum $100 per week, and purported to create an arrangement whereby $100 per week would be deducted from Mr Lee’s wages until the purported debt of $4,016.70 was fully satisfied. The document stated: ‘Failure to repay this cost may result in the termination of your employment’.
Mr Ticehurst demanded Mr Lee sign the deduction authorisation form. Mr Lee declined to do so.
The following day, namely 17 February 2009, Mr Lee’s employment with K&S was summarily terminated.
Mr Lee claims that he has suffered loss and damage as a result of his summary dismissal by K&S including a period of unemployment.
THE EVIDENCE
(a) The Employment of Mr Lee
The first payment from K&S to Mr Lee for his employment was received by him on 3 September 2008 for the period of 25 August 2008 to 2 September 2008. There exists no single written agreement under which Mr Lee undertook his employment with K&S. Accordingly, it is necessary to have regard to the various documents that the parties have submitted to have effect in constructing Mr Lee’s contract of employment with K&S.
(a)(i) The Queensland Agreement
At all material times the provisions of K&S Freighters Pty Ltd Transport Employees’ (Queensland) Agreement 2005 (‘the Queensland Agreement’) were in force. During the duration of his employment Mr Lee was paid weekly wage rates and overtime rates in accordance with Appendix 1 of the Queensland Agreement. It is agreed by the parties that the purported $100.00 weekly reduction to Mr Lee’s wage would have resulted in Mr Lee being paid a wage below that mandated by the Queensland Agreement.
Clause 9.5 of the Queensland Agreement is entitled ‘Employee Issues’. It relevantly contains the following:
9.5 Employee Issues
The following procedure shall be observed to address shortcomings in an employee’s work performance, including punctuality and attendance:
(a)Depending on the seriousness of the situation, the situation will be discussed between the supervisor and the employee. Depending on the seriousness of the issue, if the matter is resolved then, it will rest there.
(b)If the matter or the employee’s performance is serious enough to warrant counselling, a warning or more serious action, then the union delegate or such person as the employee concerned may nominate, then that person may participate as witness. The outcome of such proceeding will be recorded and a copy provided to the employee.
(c)All incidents or accidents potentially involving disciplinary action will be thoroughly investigated and during such investigation an employee may be stood down. If as a result of the investigation, the allegation is not substantiated, the employee will be reinstated without loss of ordinary pay.
….
Clause 9.6 of the Queensland Agreement is entitled ‘Termination of Employment’ and provides the following:
As per the Workplace Relations Act 1996 and any subsequent legislation that replaces the current provisions.
There is no provision in the Queensland Agreement which requires employees to pay for damage to vehicles or otherwise be dismissed.
(a)(ii) The Company Handbook
At the commencement of his employment, Mr Lee undertook an initial induction and training period and was provided with a 41 page document entitled ‘K&S Freighters Pty Ltd Employee Handbook’ (‘the Handbook’) containing the policies, rules and regulations of employment at K&S. Mr Lee stated that he was given a copy of the Handbook to put in his truck.
Contained in the introduction to the Handbook is the following:
1.1 Welcome to K&S Freighters
We are pleased to welcome you to K&S Freighters. We wish you a long, enjoyable and successful career with our Company.
K&S Freighters is committed to providing quality customer service and achieving our service objective, which is to deliver all freight on time, in full and damage free. Our customers are our number one priority.
K&S Freighters aim is to achieve total quality performance and are highly committed to adopting the principles of Total Quality Management (TQM) in all aspects of our business.
The Employee Handbook is provided to all employees as an information resource when commencing employment and a reference guide during the course of your employment. This handbook outlines major Company policies, procedures and information and also highlights the importance of Occupational Health and Safety and our strong commitment that the “Everybody Safe Everyday” message is communicated throughout the business.
In the future we will continue to adopt new Company policies and review current Company policies to reflect business and legal obligations. All Company policies can be accessed via the Company intranet system (KasNet) or be obtained by your Manager.
For further clarification on the contents of this handbook or to provide feedback, please contact your Manager or Human Resources Manager.
Section 2 of the Handbook is entitled ‘Conditions of Employment’. Clause 2.1 provides:
2.1 Contracts of Employment
Contracts of employment are offered to individuals based on their role and job type. These contracts can include individual contracts, collective or individual agreements or award based arrangements.
Terms of engagement may be on a monthly, weekly, hourly, fulltime, part-time or casual/temporary basis as outlined within your employment offer. Full details related to your conditions of employment are contained within your specific employment agreement or contract.
Clause 2.23 relates to discipline. It provides:
2.23 Performance Management – Disciplinary Procedures
All employees are expected to comply with Company policies and procedures, in respect to behaviour, safety, legal activities and general conduct.
Any person who fails to maintain these standards will be subject to disciplinary action including verbal, written warning and/or termination of employment.
It is the intent of this process to clearly identify the issues that are unsatisfactory and provide clear expectations of the required improvements to achieve these standards.
Any person who engages in serous wilful misconduct will face termination of employment.
Clause 2.24 contains information in respect of termination and provides:
2.24 Termination of Employment
Notice of termination of service by either the Company or the employee must be in accordance with either the appropriate letter of appointment, award or general community standard.
The Company may dismiss an employee without notice in the cases of serious misconduct including unacceptable behaviour.
Clause 4 of the Handbook is entitled ‘Company Policy and Procedures’, the introduction to which states:
The following policies and procedures are a condition of employment for all employees and adherence to them is expected. These policies may vary from time to time and you will be informed of any changes by your Manager. Failure to comply with these policies may result in disciplinary action including termination of employment.
Thereafter numerous subject matters are itemised. Clause 4.20 is entitled Vehicle Policy and relevantly provides as follows:
4.20 Vehicle Policy
As a condition of employment, all employees are expected to adhere to the details of the Vehicle Policy. In general the policy outlines our commitment to road safety and professional behaviour. Specifically:-
Ÿ...
ŸAccidents or damage must be immediately reported. Negligent damage will be costed to the employee.
Ÿ…
Clause 5 is entitled ‘Company Facilities and Amenities’. Clause 6 is entitled ‘Company Quality Systems and Accreditations’, and Clause 7 is entitled ‘Occupational Health, Safety & Environment’.
On the last page of the Handbook the following appears:
Thank you for reading the K&S Freighters Employee Handbook. You are now ready to complete the Employee Handbook Induction Training!
This text is followed by a schedule whereby employees are asked to confirm having understood each section contained in the Handbook by circling in handwriting the word ‘YES’ adjacent to each of the Handbook sections. The text then continues:
I acknowledge receipt of one copy of the “K&S Freighters Pty Ltd. – Employee Handbook”.
I understand that I am required to read the rules and follow the instructions contained within the Employee Handbook.
If there is any rule or instruction I do not fully understand, I undertake to ask my Supervisor or Manager the full meaning or interpretation.
K&S produced to the Court a copy of the final page of the Handbook which bears a signature ‘James Lee’ and a description of the employee as ‘Driver’. It is dated 25 August 2008. Mr Lee testified that he does not recall signing such document and claimed that the form of signature on the page produced is not the form in which he would normally sign his name.
(b) The Accident
Mr Lee testified that he was aware that bollards were located at the front finger dock into which he was required to reverse his semi-trailer. Mr Lee stated that at the time he was making his delivery it was difficult to see into the loading dock because of the position of the afternoon sun. Mr Lee said that he could not reverse into the dock without using his mirrors and that whilst using the mirrors he could not see the bollards. He explained that the bollards were much lower than the cabin of the truck, and were located in a ‘blind spot’. Nevertheless Mr Lee acknowledged that he knew of their presence and agreed that he could have climbed out of the truck to determine their location. Mr Lee said that in reversing into the finger-dock he could see that the truck was not aligned with the dock, and that in attempting to align it he drove forward causing the truck to strike the bollard.
(c) The K&S Driver Negligence Policy
(c)(i) Policy prior to 11 February 2009
Legh Winser (‘Mr Winser’), Managing Director of K&S, testified that prior to 11 February 2009, K&S possessed an unwritten policy that dictated that an employee found to be negligent in causing an accident would be asked to authorise weekly deductions from their wages to repay K&S for the costs of the repair of the damage (‘the old driver negligence policy’). Mr Winser testified that the enforcement of such policy depended on the circumstances of accident, the particular driver involved and their ability to pay.
Mr Winser acknowledged that such policy was not recorded in writing and that employees would only know of its details from discussion with other drivers. Mr Winser claimed that K&S was entitled to put in place and enforce such policy under the employment contract under which it engaged its drivers. The content of this contract, and accordingly K&S’s legal entitlement to enforce such policy, will be discussed in detail later in these reasons.
Mr Ticehurst, the Operations Manager, testified that although he knew of such policy prior to February 2009, he understood it to be never enforced, and that he knew of no policy whereby an employee would be terminated for refusing to authorise deductions from their pay in order to contribute to the repair costs of a negligently damaged vehicle.
(c)(ii) Policy after 11 February 2009
Mr Winser said that K&S had been concerned with the damage being sustained to its vehicles and desired to bring such damage to its drivers’ attention. Accordingly, at the time of Mr Lee’s accident, Mr Winser decided to enforce strictly the K&S policy that drivers found to be negligent in causing damage to company vehicles would be required to make payments contributing to the cost of repair of the vehicle. For convenience, such policy is hereafter referred to as ‘the new driver negligence policy’.
Mr Winser testified that an employee who had damaged a vehicle in circumstances which the company deemed to be negligent would be required to sign a document purporting to authorise the deduction of a minimum of $100.00 per week from that employee’s pay until the costs associated with the repair of the damage had been fully paid. For the purposes of such a deduction being made, Ms Kaye Evans, Human Resources Manager, had drawn up a pro-forma document (‘the deduction authorisation form’) that relevantly contained the following:
RE: Negligent Damage to Company Property
I write to confirm details of our discussion today in relation to your employment with K&S Freighters, based at (site).
On (date) you were involved in an incident (brief description), that resulted in ($amount) damage to Company property.
At the conclusion of the investigation it has been determined you were negligent whilst performing your driving duties.
As a result of this negligence the Company seeks to recover the cost of the repair to the vehicle from you, with an agreed payment plan of a minimum $100 per week (please complete the table below).
Failure to repay this cost may result in the termination of your employment.
Mr Winser acknowledged that, pursuant to the new policy, if the employee concerned failed to agree to the deductions, instant dismissal would follow. Mr Winser also acknowledged that he was aware that K&S was required to pay minimum rates of pay as provided by the Queensland Agreement and that failure to do so would constitute a breach of such agreement. Nevertheless he maintained that if the employee agreed to the deduction, there was no breach of the Queensland Agreement. Mr Winser stated that K&S had received legal advice in forming this view. Mr Winser provided examples of other deductions which he believed could be made from an employee’s salary with the employee’s consent such as Union dues and contributions to charity.
Mr Winser testified that the new driver negligence policy was not implemented for the sole purpose of reimbursing the respondent for the cost of repairs to damaged vehicles, but rather to ‘change the culture’ of K&S. Mr Winser gave evidence that the ‘bash and crash’ attitude of K&S drivers had not only resulted in high costs to K&S but was also a safety concern. Mr Winser testified that by ‘hurting the hip-pocket’ of negligent drivers, K&S might effect a change in driver behaviour.
To give effect to the decision to strictly enforce the new policy, Mr Winser had sent an email (‘the negligence policy directive’) to various K&S managers on 11 February 2009 at 3:53 pm stating the following:
Every accident in Aust and NZ was caused by driver negligence 100%
Tell every driver he is paying [weekly deduction min $100] or he leaves employment immediately, you have been warned now its policy “YOUR NEGLIGENCE YOU PAY”
YOU WILL REPORT TO ME INDIVIDUALLY that you have it executed by close of business Thursday 12 Feb
By coincidence, within an hour of the email being sent, Mr Lee was involved in the accident that would become the catalyst for the events leading to this litigation. There is no evidence to suggest that Mr Lee was aware of such email prior to the accident.
Mr Winser testified that K&S’s current policy was generally understood within the organisation to cap a negligent driver’s total liability under the policy at $2,000 and that the weekly repayment amount could range between $50 to $200 per week. Mr Winser testified that the $2,000 cap on repayments had been introduced a ‘couple of months after’ 11 February 2009 but no notification had been made to employees and Mr Winser acknowledged such limit to the policy was not recorded in writing.
(d) The Aftermath of the Accident
Referring to the action taken by K&S in the days following the accident, Mr Ticehurst said on 12 February 2009 that he had a discussion with Mr Lee concerning the accident and described the meeting as a ‘brief counselling session’ in which Mr Lee was advised to take more time and be more careful in the future. The occurrence of such meeting is denied by Mr Lee but in view of the later findings of the Court, this evidentiary discrepancy is of no consequence.
At 3:09 pm on 12 February 2009, Mr Ticehurst received an email from a Mr Bob Miller, a K&S Queensland Manager, which forwarded an email sent at 3:05 pm from Ms Kaye Evans to various K&S management staff. Ms Evans’ email relevantly contained the following:
All please note the following effective immediately:
All accidents should be reported to your General Manager (and insurance department) via email within 24 hours from occurrence.
At this point the General Manager will discuss the accident and make a decision on the outcome of any action – including disciplinary or cost recovery. No letters should be issued without approval of your GM. All letters will then be issued by HR.
Attached is a Company Policy that should be issued to all new employees as part of their engagement paperwork.
Please re-issue to all employees – requesting a signature/date that they have received – take a copy of this and forward to HR.
Attached to such email was the Vehicle Policy.
During his oral testimony Mr Ticehurst claimed that in the days following the forwarding of such email, he caused the Vehicle Policy to be re-issued to approximately 30 drivers. Mr Ticehurst claimed that he personally gave a copy of the policy to Mr Lee on the afternoon of 12 February 2009 whereupon Mr Lee signed the Vehicle Policy.
Such assertion was not contained in any evidence before the Court including the evidence contained in Mr Ticehurst’s own affidavit. However, after such testimony Counsel for K&S produced a copy of the Vehicle Policy dated of 12 February 2009 and signed by ‘Jim Lee’. When re-examined upon this new evidence, Mr Lee denied signing and dating the document that had been produced. Again, in view of the Court’s ultimate findings, this evidentiary discrepancy is of no consequence.
On 13 February 2009 at 11:32 am Mr Ticehurst sent an email to Mr Steve Fanning, Executive General Manager of K&S (‘Mr Fanning’) and Ms Jeanine Sims, Insurance Officer at K&S head office in Mount Gambier. Such email contained the following:
Steve/Jeanine,
Please find the attached regarding one of our permanent drivers, Jim Lee, who has hit one of the bollards that protect the docks at Woolworths. At this stage he has been spoken too [sic] regarding the incident. Could you please advise any further course of action.
Jeanine,
Accident report to follow.
Mr Fanning testified that upon receiving the email he made inquiries of Mr Don Gailer, the K&S Queensland State Manager (‘Mr Gailer’), concerning the incident. Having done so, and having read the Report of Motor Vehicle Accident prepared by Mr Lee, Mr Fanning decided that Mr Lee had been negligent. He acknowledged that he arrived at such conclusion without having visited the site nor having spoken to Mr Lee. He then sent an email at 12:27 pm on 13 February 2009 to Mr Ticehurst stating that Mr Lee should pay for the damage in the following terms:
Mark,
He should pay for the replacem,ent. [sic]
At some time following receipt of Mr Fanning’s reply, Mr Ticehurst said he spoke to Mr Lee and told him that the company required him to pay for the damage to the vehicle. On 16 February 2009 Mr Ticehurst had a meeting with Mr Lee and provided him with the deduction authorisation form seeking authority to deduct $100 per week from his pay for the damage to the truck, together with quotes for the repairs. Mr Ticehurst informed Mr Lee that K&S had found him to be negligent and that if he failed to sign such authority he would be dismissed. Mr Lee declined to sign the letter and Mr Ticehurst suggested that he give careful consideration to it and that they would meet on the following day.
On 17 February 2009 Mr Lee spoke to Mr Ticehurst and informed him that he would not be paying for the damage. Mr Ticehurst then spoke briefly to Mr Gailer to confirm his understanding of the new driver negligence policy. Mr Ticehurst then informed Mr Lee that his employment would be terminated because of a refusal to comply with a direction from Mr Fanning that he pay for the damage caused to the vehicle. Mr Ticehurst said that the decision to terminate Mr Lee’s employment followed from Mr Fanning’s decision.
CONSIDERATION: THE EMPLOYMENT CONTRACT
Formation of the Contract
The parties could not agree upon the date when the contract of employment between Mr Lee and K&S had been formed.
The applicants submitted that in early August Mr Lee had attended an interview with a representative of K&S and had discussed conditions of the job and rates of casual pay. Later that day Mr Lee had accepted the offer of employment by telephone. Accordingly, the applicants submitted that the contract was formed prior to 18 August 2008, the date that Mr Lee commenced his induction period at K&S. Such interpretation has the consequence that the terms of the various workplace documents such as the Handbook and Vehicle Policy are precluded from incorporation into the contract of employment. The Court notes that the casual driver rates of pay apparently discussed by Mr Lee and K&S at the interview would presumably not apply to a permanent driver such as Mr Lee.
K&S submit however that on the proper construction of the employment contract, Mr Lee’s employment commenced on 25 August 2008. K&S support this submission by reference to the fact that Mr Lee commenced paid employment on such date (see above at [16]). On this construction, the incorporation of the Handbook and the Vehicle Policy is at least possible given the fact that the Handbook had by that stage been distributed to Mr Lee.
The Court finds that it is unlikely that any agreement reached between the parties prior to 18 August 2008 could be said to constitute an entire employment contract, particularly in circumstances where an induction period was undertaken and introductory material was to be provided. The proper characterisation of the contractual negotiations and relationship between the parties must include the circumstances of Mr Lee’s induction and the Court must assess whether the material distributed to Mr Lee during his induction period was of a contractual nature.
On the evidence before the Court, the Court prefers the respondent’s construction and finds that the contract of employment commenced on 25 August 2008. This finding results from the fact that Mr Lee commenced paid employment on this date and because the alternative finding would require the recognition of a contractual employment relationship between Mr Lee and K&S with almost no relevant contractual terms.
Terms of the Employment Contract
The next issue is to determine the relevant contractual terms under which Mr Lee was employed in circumstances where there was no written contract. As detailed above, various sources including the Queensland Agreement, the Handbook, the Vehicle Policy and various unwritten driver negligence policies have been submitted to have contractual force in respect of Mr Lee’s employment. Their precise effect will be considered below.
Status of the Handbook
The contractual status of the Handbook is a determinative factor in assessing whether K&S possessed a contractual entitlement to terminate Mr Lee for refusing to sign the deduction authorisation form.
The parties disagreed upon the contractual status of the Handbook. The applicants submitted that the Handbook did not form part of the contract of employment but submitted that even if its terms had been incorporated into the employment contract, K&S would not have been entitled to terminate Mr Lee. K&S submitted that certain clauses of the Handbook had been incorporated into the employment contract, specifically and relevantly clauses 1.1, 2.23, 2.24, 4 and 4.20.
In assessing the contractual status of the Handbook, the Court is required not only to characterise the language used in the text of the Handbook but also to examine the wider circumstances of the contractual arrangement.
In Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165 at 179 the High Court of Australia said at [40]:
It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. [Footnotes omitted]
The test is accordingly an objective one. The Court is also mindful of the particular conditions and context in which industrial law operates. In this respect the Court notes the observations of Madgwick J in respect of the interpretation of an industrial award in Kucks v CSR Limited (1996) 66 IR 182 at 184 where his Honour stated:
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
The Court considers that such an approach should apply in the construction of Mr Lee’s employment contract.
In Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120 Jessup J at [287] considered whether the terms contained in various documents provided to an employee at the time of his engagement could be said to have contractual significance. His Honour, referring to a particular document (‘WWU’) submitted to have contractual effect, said at [292]:
At one extreme WWU was the means by which the appellant apparently set out many – if not all – of what his Honour regarded (correctly in my respectful view) as quite commonplace conditions of employment in the nature of entitlements, such as leave of various kinds. At the other extreme, WWU contained many sections which were manifestly informational only, as well as others which urged upon employees the adoption of a way of thinking, and a general pattern of behaviour, that conformed to the appellant’s culture. The appropriate course, in my view, is to consider each of the particular obligations which, according to his Honour, were imposed upon the appellant by WWU, and to ask whether his Honour fell into error in those respects. There is little to be gained, I consider, by further wrestling with the question whether WWU should be regarded either as wholly contractual or as wholly non-contractual.
The reasons of the Full Court in Nikolich contain a number of references to various terms used in the evaluation of written statements as being contractual or otherwise. Terms such as ‘aspirational’, ‘descriptive’, ‘advisory’, ‘informational’ and ‘promissory’ are useful in assessing the contractual nature of the written statements contained within any supplementary material supplied to an employee, however the contractual status of such terms should be determined not only by characterisation of the words used but also by having regard to the circumstances of the relationship between the parties.
As to the correct approach when assessing whether to incorporate statements from various sources into a contract of employment, Jessup J observed at [287]:
… I would have no difficulty following the approach which was taken in Riverwood [Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193]. That approach was to consider all the facts and circumstances surrounding the making of the contract in question, including the content of the documents which were controversial, for the purpose of considering whether the term contended for by the respondent had been established as a matter of inference.
The Court will now proceed to consider the various relevant statements contained in the Handbook and make findings in respect of their contractual status.
Introduction to the Handbook
The introductory words contained in the opening section of the Handbook entitled ‘Introduction to K&S Freighters’ are atypical of a contract. Such section provides that the Handbook is an ‘information resource’ and a ‘reference guide’ and states that the Handbook ‘outlines major Company policies, procedures and information’.
Clause 2 of the Handbook
Significantly, cl 2 of the Handbook entitled ‘Conditions of Employment’ begins with the following introduction:
Listed below is a summary of the main terms and conditions that relate to your employment with K&S Freighters.
The use of the word ‘summary’ suggests that the section is not designed to reflect the actual terms of the employment contract but rather reflect a summary of such terms. The content of the clause itself reflects such construction, as most of the subclauses contain references to other documents such as letters of appointment or alternatively direct the employee to obtain further information from their manager.
Such conclusion is reinforced by the provisions of cl 2.1 thereof entitled ‘Contracts of Employment’ (see above at [23]). This clause envisages that a written agreement would form the basis of any employment relationship.
Clause 2.23 regarding Discipline (see above at [24]) is particularly relevant to the Court’s task of construction of the contract. Unlike the previous subclauses of cl 2, the language contained in cl 2.23 could be said to be of a contractual nature particularly in respect of its final sentence which states: ‘Any person who engages in serious wilful misconduct will face termination of employment’.
The component of cl 2.23 on which K&S might rely relevantly provides the following:
All employees are expected to comply with Company policies and procedures, in respect to behaviour, safety legal activities and general conduct.
Any person who fails to maintain these standards will be subject to disciplinary action including verbal, written warning and/or termination of employment.
It is arguable that such clause might incorporate the terms of various company policies, relevantly the Vehicle Policy, into the terms of the employment contract.
Finding: Clause 2
Given the Handbook’s description as a summary, the generality of cl 2.23 and the use of aspirational language such as ‘expected’, the Court finds, applying the considerations as contained in the authorities set out above, that cl 2 of the Handbook does not constitute a term of Mr Lee’s contract of employment with K&S.
Clause 4 of the Handbook
Clause 4 of the Handbook (see above at [26]-[27]) is drafted in terms that could be said to have contractual force. The introductory paragraph to cl 4 states that the policies and procedures described in that section were ‘a condition of employment for all employees and adherence to them is expected’. Such terminology indicates that the clause is clearly intended to be more than a mere guide or information source. The use of the words ‘condition of employment’ suggests that the clause would have been interpreted by a reasonable person to have contractual force. Accordingly, the Court considers that cl 4 does form part of the contract of employment between Mr Lee and K&S.
Status of Clause 4.20
Given that the Court has found cl 4 of the Handbook to be of contractual force, the question remains as to the effect of subclause 20 of such clause entitled ‘Vehicle Policy’. K&S submit that the terms of such subclause should be given contractual effect, most relevantly, the statement that ‘As a condition of employment, all employees are expected to adhere to the details of the Vehicle Policy’ and the statement that ‘Accidents or damage must be immediately reported. Negligent damage will be costed to the employee’.
There is no doubt, given the Court’s earlier finding that cl 4 of the Handbook forms part of the employment contract, that the former statement must be given contractual effect. The statement that employees are bound by the Vehicle Policy is contained in the introduction to cl 4.20 and expressed in clear and unambiguous terms. The use of the phrase ‘condition of employment’ suggests that such clause was intended to operate with contractual force, and such conclusion leads to the result that the Vehicle Policy itself is incorporated into the contract. The effect of the contractual nature of the Vehicle Policy will be discussed later in these reasons.
The remaining question for the Court in regard to cl 4.20 is the status of the statement: ‘Accidents or damage must be immediately reported. Negligent damage will be costed to the employee’.
The Court is of the opinion that such statement should not be given contractual effect. It has formed this view on a number of bases.
Firstly, such finding is based on the context in which such statement arises. The statement in question exists in cl 4.20 as an entry in a list. The relevant format of such list is as follows:
In general the [Vehicle] policy outlines our commitment to road safety and professional behaviour. Specifically:-
….
§Accidents or damage must be immediately reported. Negligent damage will be costed to the employee.
…
The text of the introduction to the list and existence of the Vehicle Policy as a separate document suggests to the Court that the list contained in cl 4.20 was designed merely to summarise the requirements of the Vehicle Policy and was not intended to comprise the terms and conditions of the Vehicle Policy. The phrase ‘costed to the employee’ is demonstrative of this approach, since such a phrase lacks the requisite detail and certainty required to constitute a contractual clause. It is clearly insufficient to give rise to a contractual term, such that a breach thereof could lead to summary dismissal, as K&S claims.
As a comparison it is useful to note Black CJ’s observation during his Honour’s assessment of a purportedly contractual statement in Nikolich. At [30] his Honour said the following:
The difficulty is that the statement in issue is not explicitly contractual in its language and could be seen as merely aspirational. It appears in a document of mixed content and purposes and, although these include contractual purposes, at least the primary repository of the employment contract is unambiguously elsewhere. The context is, however, decisive.
Such statement is apt in assessing the listed statements in cl 4.20. The context of the statements suggests that the actual terms of the employment contract regarding vehicles are to be found in the Vehicle Policy itself and not in the Handbook.
On inspection of the Vehicle Policy (discussed in more detail hereunder), it is apparent that the terms contained therein are in some cases materially different to the summarised terms in cl 4.20. The most obvious example of such discrepancy is demonstrated by the comparison of the respective statements included in each document in respect of the repayment of costs of repair to damaged vehicles. The Vehicle Policy provides that an employee ‘may be required to meet part or all of the cost of repairing any damage caused to a Company vehicle’. It does not state, as the summary states in cl 4.20, that ‘Negligent damage will be costed to the employee’.
In such circumstances the Court is fortified in its conclusion that the listed Vehicle Policy statements in cl 4.20 are not terms of the employment contract. In circumstances where a policy is inconsistent with its apparent summary, the Court finds that the parties are only bound by the terms of the policy itself.
Effect of Mr Lee’s signature on the Handbook
The significance of an employee’s signature on a policy document was discussed by Jessup J in Nikolich at [327]. There his Honour observed:
The next matter which I consider significant is the fact that the respondent signed off on the appellant’s health and safety statement. …These matters were not mentioned in his Honour’s reasons, but I consider that they support his conclusion that the health and safety provisions of WWU were contractual. It is significant that the respondent was asked to state that he had read and understood the health and safety statement, and to acknowledge, in effect, that it outlined his obligations as a team member in the employ of the appellant. Where one party draws a document, provides it to the second party for his signature and includes a statement manifestly laying the groundwork for the second party later to be held to his knowledge and understanding of the document, there would rarely be any doubt but that the first party was intending the document to have contractual operation, if otherwise the context were appropriate. Because of that specific sign-off procedure, I prefer to identify the question which arose as whether the health and safety statement contained in the sign-off chapter to WWU was contractually binding on the appellant, rather than whether the more general provisions of the text of WWU were so binding. As it happens, there is little difference between the two and, I consider, no difference of any materiality in the present circumstances.
This approach must be tempered in the present circumstances given the obvious reality that not all of the statements contained within the Handbook, for reasons already discussed, are of a contractual nature. Such fact was admitted by K&S in their submissions. The contractual nature of the various statements contained within the Handbook remain to be assessed on the basis of text of those statements. In the Court’s opinion, the presence of a signature page at the conclusion of the Handbook is not determinative of the entirety of that document’s contractual status.
It was not clearly established at the hearing as to whether Mr Lee had in fact signed the signature page of the Handbook acknowledging his understanding of its contents. Mr Lee testified that he did not recall signing the document and that the form of signature on the page produced by K&S is not the form in which he usually signs his name.
The Court sees no necessity to make a finding in respect of this evidentiary discrepancy. The evidence before the Court clearly points to the fact that Mr Lee was not only provided with a copy of the Handbook but that he was also told that ‘this is what the Company expects’. By such event Mr Lee can be taken to have had notice of the nature of the Handbook including the fact that it contained conditions of his employment. The apparent presence of his signature on the final page of the Handbook is not determinative of his acceptance of the terms contained therein. The Court considers that regardless of any apparent signature, Mr Lee should be understood to have accepted as terms of his employment any statements within the Handbook that could be deemed to be of a contractual nature.
Status of the Vehicle Policy
The Court concludes that contractual terms contained within the Handbook require the incorporation of the terms contained in Vehicle Policy into the contract of employment.
The Court has arrived at such finding despite the fact that the parties have agreed that Mr Lee had not, prior to the accident on 11 February 2009, read or been provided with the Vehicle Policy in its own terms. This finding also removes the necessity for the Court to make any ruling regarding the alleged meeting of Mr Ticehurst and Mr Lee on 12 February 2009 in which Mr Lee, according to Mr Ticehurst, signed a copy of the Vehicle Policy. The existence of such meeting was disputed by Mr Lee and was not referred to in Mr Ticehurst’s affidavit. The fact that it occurred after the accident of 11 February 2009 renders it otiose in any event given that such signature could not retrospectively bind Mr Lee in respect of damage for which K&S seek to hold him liable.
The Vehicle Policy sets out matters under headings including ‘General Behaviour’; ‘Licensed Drivers’; ‘Legal Obligations – Road Laws’; ‘Fit to Drive’; ‘Passengers’; ‘Log Book Recording’ and ‘Fuel Cards’.
Under a section entitled ‘General Care and Responsibility’ the following appears:
General Care and Responsibility
It is the responsibility of all drivers of Company vehicles to return them in the same condition as they were prior to driving them, subject to fair wear and tear, otherwise they may be liable for any costs associated with restoring them to such condition. The vehicle should be kept in a neat and tidy condition and notify the maintenance department or the dealership service department of any mechanical requirements.
A further section entitled ‘Accidents/Incidents’ immediately follows and provides:
Accidents/Incidents
All accidents or damage observed to the vehicle must be reported immediately to their manager and the Insurance Department within 24 hours of the accident on the Accident Report Form. An employee may be required to meet part or all of the cost of repairing any damage caused to a Company vehicle, where the employee or a driver authorised by the employee was negligent.
As a result of the findings above such sections are to be given contractual force.
Status of the Queensland Agreement
The precise status of the Queensland Agreement as an overarching instrument to govern the contractual relationship between the parties was not clearly defined by the parties at the hearing. It was however agreed by the parties that the Queensland Agreement did not constitute part of the employment contract of Mr Lee.
In Byrne v Australian Airlines (1995) 185 CLR 410 their Honours Brennan CJ, Dawson and Toohey JJ observed at 420 that:
A right to the payment of award rates is imported by statute into the employment relationship which is contractual in origin and express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract, but award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right. As Latham CJ points out in his judgment in Amalgamated Collieries of WA Ltd v True, the legal relations between the parties are in that situation determined in part by the contract and in part by the award. And as the judgment of the Privy Council in that case suggests, a provision in an award may also be made a term of the contract by agreement between the parties, but that is only to emphasise the distinction between an obligation imported by statute and one arising by agreement. [Footnotes omitted]
Their Honours concluded at 421:
In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations. [Footnotes omitted]
As the above authority suggests, entitlements under the terms of a certified agreement can be enforced as rights without such terms necessarily being imported into the employment contract itself. In this case, Mr Lee possessed a right to the award rate as stated in the Queensland Agreement without the entitlement to that rate necessarily becoming a term of his contract.
This is not however to say that the terms of a certified agreement cannot be incorporated expressly into the contract of employment. Their Honours McHugh and Gummow JJ in Byrne said at 443-444:
There is no reason why an employee might not be engaged upon terms and conditions including some or all of the terms of an award under the legislation. True v Amalgamated Collieries of WA Ltd was such a case. The worker sued for wages to which he was entitled in the same amount both under the State award and under the express terms of his contract. There was no issue as to whether the terms of the award had become an implied term of the contract. [Footnotes omitted]
The applicants submit that the Queensland Agreement forms no part of the employment contract. The applicants further submit however that should the Handbook, specifically cl 2.1 (see above at [23]), be incorporated as a term of the contract, the Queensland Agreement would therefore itself become incorporated into the contract. In this event the applicants submit that the Queensland Agreement’s termination regime would accordingly be incorporated into Mr Lee’s contract and further that K&S would be in breach of such regime.
The text of cl 2.1 relevantly states:
Contracts of employment are offered to individuals based on their role and job type. These contracts can include individual contracts, collective or individual agreements or award based arrangements.
Having had regard to the text of cl 2.1 the Court observes that it is unnecessary to decide whether such clause has contractual force given that even if such clause could be said to have contractual effect, it would not serve to incorporate the Queensland Agreement into the contract.
The use of the words ‘can include’ indicate that even if the above clause was to be deemed contractual, its effect is not such as to necessarily incorporate the terms of the Queensland Agreement into the contract. There is no evidence to suggest that terms of the Agreement were actually intended to form part of Mr Lee’s contract. Accordingly the Court does not accept the applicants’ submission on this point.
Summary
In summary, the Court has found that cl 4 of the Handbook is sufficient to incorporate the Vehicle Policy into the employment contract of Mr Lee. Further, the Court has found that cl 2 of the Handbook and the Summary of the Vehicle Policy contained in cl 4.20 of the Handbook do not constitute contractual terms of Mr Lee’s employment. Having made the above findings regarding the employment contract between the parties, the Court now proceeds to determine whether K&S have breached Mr Lee’s contract in summarily dismissing him.
BREACH OF CONTRACT
The Court has found that Mr Lee’s employment contract is properly understood to include the terms of the Vehicle Policy. It provides that an employee ‘may be required to meet part or all of the cost of repairing any damage caused to a Company vehicle, where the employee or a driver authorised by the employee was negligent’. It does not state, as does cl 4.20 of the Handbook, that ‘Negligent damage will be costed to the employee’.
K&S submitted that although cl 4.20 did not outline the ‘mechanism’ of the repayment, such clause put an employee on notice that there was a possibility that employees may be required to pay for any vehicle damage caused by their negligence. K&S submit that the reasonable person referred to by the High Court of Australia in Toll at [40] (see above at [61]) would have understood the clause to mean as much.
K&S submitted that the negligence policy directive sent by Mr Winser on 11 February 2009 constituted a direction to Managers of the way in which K&S would thereafter exercise its ‘unfettered discretion’ to render negligent drivers liable for the repairs of damaged vehicles. Such submission relies on an acceptance that the various terms incorporated from the Handbook and the Vehicle Policy establish an unfettered discretion to recoup money from employees found to be negligent in damaging their vehicles.
The Court has found at [86] that cl 4.20 of the Handbook has no contractual force in respect of the employment of Mr Lee. K&S’s purported ‘unfettered discretion’ to recoup vehicle repair costs from drivers found to be negligent must then, if it exists, arise by force of the Vehicle Policy itself.
The Court emphasises that such conclusion is predicated upon the facts surrounding Mr Lee’s employment. The fact that Mr Lee had been engaged as an employee for less than six months and as such had no recourse to an unfair dismissal claim is critical in this finding. Had Mr Lee been engaged for a longer period, thereby increasing the period of notice due and exposing K&S to an unfair dismissal claim, alternative remedies may have been available.
Determining Reasonable Notice
Given the above finding, the Court must, in the absence of any specific contractual term, determine the period of reasonable notice by which damages are to be determined.
In Rankin, Gillard J of the Victorian Supreme Court considered the calculation of reasonable notice. At [219]-[220] his Honour stated the following:
The issue as to what length of notice is reasonable is a question of fact, to be determined after consideration of all relevant circumstances. There have been many decisions dealing with the issue but each case must be considered in relation to the particular circumstances. The cases do not lay down any rule of law. At best, they furnish a guide. But the tribunal of fact must be cautious of applying decisions which were made in different times, when attitudes to industrial relations were different.
In determining what is a reasonable period in respect to an employee, it must be steadily borne in mind what the primary purpose of giving a period of notice is. It is to enable the employee to obtain new employment of a similar nature. Some types of employment are readily available, whilst others are not. Those who are at the top or near the top of their chosen fields, invariably have very few opportunities to obtain similar employment and hence, the period of notice is usually many months to in excess of a year.
His Honour continued at [222]-[223]:
Factors that have been taken into account vary, according to the circumstances, but the nature of the employment, the degree of responsibility and the required dedication to the job usually result in a longer period of notice being reasonable.
In Macken, McCarry and Sappideen, Law of Employment (4th ed), the learned authors, at p 166, have listed relevant factors which have been taken into account in the cases, in determining what was a reasonable period of notice. The authors have listed the cases which support their list of relevant factors. The factors include the high grade of the appointment, the importance of the position and the size of the salary. Further, it is clear that the nature of the employment is a relevant factor. In addition, factors which pertain to the particular employee which are relevant are the length of service, his professional standing and his age, his qualifications and experience, and the expected period of time it would take for him to find alternative employment.
A number of the above factors are of particular relevance to Mr Lee’s circumstances. The nature of his employment, his relatively short service at K&S (less than six months) and his success in attaining driving work for other companies after his dismissal are persuasive factors in holding that a reasonable period of notice would be a matter of weeks rather than months. Mr Lee’s age is a factor for extending such notice while the fact that Mr Lee’s subsequent employment has been less lucrative than his K&S employment and also relatively sporadic is also another complicating issue. The Court observes that K&S submitted that a reasonable term of notice would be one to two months.
Assessing the above factors and in light of the concession made by K&S, the Court finds that a reasonable period of notice in the case of Mr Lee is eight weeks. Such a period would have resulted in a payment of approximately $15,159.68. On the evidence before the Court, Mr Lee mitigated his loss through work for seven of those eight weeks through employment at ‘Hampton Haulage’. Mr Lee was paid approximately $11,595.15 for those services. As such his loss of remuneration is approximately $3,564.53.
DECLARATION PURSUANT TO REG 7.2.20 OF WORKPLACE RELATIONS REGULATIONS
The applicants further seek an order in the following terms:
An order pursuant to regulation 7.2.20 of the WR Regulations and/or section 21 of the Federal Court of Australia Act 1976 (Cth) declaring that the K&S Freighters Pty Ltd Transport Employees (Queensland) Agreement 2005-2011 did not, on its proper interpretation, authorise or permit K&S to:
(a)require any employee to whom the said agreement applied to authorise deductions from weekly wages in order to pay for the cost of alleged negligent damage to any K&S vehicle; or
(b)dismiss an employee for any refusal to authorise any such requested deductions.
Regulation 7.2.20 of the Workplace Relations Regulations 2006 (Cth) relevantly provides the following:
Interpretation of transitional instruments
(1)The Court or the Federal Magistrates Court may give an interpretation of a transitional instrument on application by:
…
(c)an employee whose employment is subject to the transitional instrument.
(2)The decision of the Court or the Federal Magistrates Court is final and conclusive and is binding on:
(a)the organisations and persons bound by the transitional instrument; and
(b)the employees whose employment is subject to the transitional instrument;
who have been given an opportunity of being heard by the Court or the Federal Magistrates Court.
(3)In this regulation:
transitional instrument means any of the following:
(a)a pre-reform certified agreement within the meaning given by clause 1 of Schedule 7 to the Act;
…
The Queensland Agreement is an example of a pre-reform certified agreement in that it was certified before the commencement of Schedule 1 to the Work Choices Amendment Act. Accordingly the Court has the power, on application by a company or a subjected employee, to make an interpretation of the Queensland Agreement that will be binding on K&S and its employees employed under such agreement. Additionally, the Court has power under s 21 of the Federal Court of Australia Act 1976 (Cth) to make declarations of right.
K&S oppose the making of such an order. K&S submit that the making of such an order is discretionary: see Construction, Forestry, Mining & Energy Union v Mount Thorley Operations Pty Ltd (1997) 79 FCR 96 at 113. K&S further submit that it is not for this Court under the guise of interpretation to undertake a factual investigation, make findings of fact and then determine whether those facts give rise to a particular construction: Mount Thorley Operations Pty at 106. See also TheAmalgamated Engineering Union v The Metal Trades Employers Association (1944) 52 CAR 23 at 24; The Clerks (Shipping) Award; Ex parte Lloyd Timber Mills Ltd (1954) 78 CAR 201; and Media Entertainment and Arts Alliance v John Fairfax Group Pty Ltd (1993) 49 IR 374.
K&S submit that in formulating the Queensland Agreement the parties did not turn their minds to the issues addressed by the declarations sought.
K&S submit that the parties’ intention to leave the issue of termination unaddressed in the Queensland Agreement is apparent on the face of cl 9.6 which specifically defers the issue of termination to the terms of the WR Act. K&S submit that the Court’s task is not to imply a term into the Queensland Agreement but rather to interpret it and determine whether any declaration of that interpretation is appropriate. Accordingly K&S submit that the Court cannot interpret the Queensland Agreement in respect of a matter not considered by the parties.
K&S also submit that the proposed declaration would be invalid as it seeks to capture any circumstances in which an employee is dismissed for a refusal to authorise deductions for negligent damage. K&S submit that in certain circumstances, authorised deductions from the wage of a worker found to be negligent may be eminently appropriate and the proposed declaration would prevent such procedures from being undertaken. K&S further submit that the consideration of the Court should be directed to the Queensland Agreement itself and further to the general effect of the proposed declaration as opposed to the specific circumstances of Mr Lee: see Master Builders’ Association of Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation (1981) 54 FLR 358 at 360-363.
The applicants submit in reply that the specific references to vehicle accidents and termination of employees in cl 9.5 and cl 9.6 of the Queensland Agreement are an indication that the parties did in fact turn their minds to the matters addressed by the proposed declaration and thus the Court may make an interpretation of the Queensland Agreement in relation to such matters.
The applicants further submit that while the declaration sought is of a more general nature than the specific circumstances of Mr Lee’s accident and termination, such declaration is nevertheless only concerned with deductions of a coercive nature and accordingly is not so wide as to preclude the parties from creating genuinely consensual arrangements where deductions to wages may be appropriate in the given circumstances.
Consideration
The reasons above demonstrate that K&S was not entitled to terminate Mr Lee under the Queensland Agreement, nor under the employment contract. The Court has also found that the Queensland Agreement neither authorised K&S to require Mr Lee to sign the deduction authorisation form or be dismissed. Whether such a conclusion applies generally is however a different question.
In Kucks at 184, Madgwick J stated that:
A court is not free to give effect to some anteriorly derived notion of what would be fair and just regardless of what has been written into the award. Deciding what an award means is a process quite different from deciding, as an arbitral body does, what might be fairly put into an award.
Madgwick J’s approach in Kucks has been described by the Full Federal Court as the ‘proper approach to construction of certified agreements’: see Ansett Australia Limited (subject to Deed of Company Arrangement) v Australian Licensed Aircraft Engineers’ Association [2003] FCAFC 209 at [8].
To similar effect French J (as his Honour then was) observed in City of Wanneroo v Holmes (1989) 30 IR 362 at 379 that:
It is of course no part of the court’s task to assign a meaning in order that the award may provide what the court thinks is appropriate – Australian Workers Union v Graziers Association (NSW) (1939) 40 CAR 494. Indeed it has been said that a tribunal interpreting an award must attribute to the words used their true meaning even if satisfied that so construed they would not carry out the intention of the award making authority. [Citations omitted]
Clearly, the declarations sought are of a more general nature than the specific circumstances pertaining to Mr Lee. Those circumstances included a single accident where fault was in dispute, a limited investigation process undertaken to establish negligence, a payment plan that dictated 100% of the repair costs be covered by the employee, a minimum weekly repayment of $100 and the threat and subsequent application of a summary termination. K&S correctly submits that the declaration sought by the applicants would be significantly wider than the circumstances now before the Court, and would seek to invalidate not only any future attempt by K&S to require its drivers to repay the company for repair costs associated with a negligently damaged vehicle but also any attempt to terminate workers who refused to authorise such payment, whatever the circumstances of the employee, the accident or the termination.
Finding
Before the Court can make the declaration sought, it must be satisfied that the Queensland Agreement was intended to regulate the subject matter of the declaration, in this case wage reduction, negligent vehicle damage and employee termination. If the Queensland Agreement can be said to ‘cover the field’ in this respect, the Court is empowered to make the declaration sought. Alternatively if such agreement is silent on the relevant matters and relevant terms cannot be implied, it cannot be said that the parties have reached agreement in regard to such matters and accordingly it would not be open to the Court to make the declaration sought.
The Court concurs with the applicants’ submission that there is no provision contained in the Queensland Agreement which requires an employee to authorise deductions from their weekly wages in order to pay for the repair costs of a K&S vehicle which has been damaged negligently. Nor is there any provision within the Queensland Agreement authorising K&S to dismiss an employee for a refusal to authorise such deductions. These are the undisputed facts.
The Court is of the opinion however that the Queensland Agreement did not adequately address the issues of vehicle damage and termination of employees so as to enable the Court to make the declaration as sought.
Any declaration made by the Court would be binding on all future circumstances governed by the Queensland Agreement. K&S provided to the Court, by way of example, details of scenarios in which an employee’s contribution toward repayment of repair costs caused by negligence might be entirely appropriate. Without making any specific finding on the examples provided, such examples sufficiently demonstrate the disparity between the specific facts regarding Mr Lee’s termination and the terms of the declaration sought.
The Court is satisfied that in the particular circumstances of Mr Lee’s case, the various agreements and policy documents governing his employment did not authorise the requests that were made of him and his subsequent termination. The Court is not however satisfied that such result would necessarily apply in all cases under the Queensland Agreement, particularly in circumstances where the Court is satisfied that the parties to the agreement did not contemplate the prospect of employee wage-deductions for the payment of repairs in respect of negligent damage.
The Court is satisfied that the parties to the Queensland Agreement did not turn their minds to the prospect of employee contributions for the repayment of negligent damage. Accordingly, the Court finds that a declaration in the terms sought would not be appropriate, and declines to make the declaration sought.
COSTS
In view of the provisions of s 824 of the WR Act, the Court is satisfied that the parties should bear their own costs.
I certify that the preceding two hundred and seventeen (217) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. Associate:
Dated: 12 November 2010
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