[2008] AIRC 1157 |
|
DECISION |
Workplace Relations Act 1996
s.643—Termination of employment
COMMISSIONER WILLIAMS |
PERTH, 29 JULY 2008 |
Termination of employment – extension of time and employment for specified period of time
[1] On the 4 June 2008 Mr Derek Peters (the applicant) lodged an application on the grounds under s.643(1)(a) of the Workplace Relations Act 1996 (the Act) that his termination of employment by the City of Stirling (the respondent) was harsh, unjust or unreasonable.
[2] The application indicates that Mr Peters was employed by the respondent as the Manager of Human Resources from the 22 November 2004 to the 9 November 2007, that being the date on which his termination took effect.
[3] Attached to the application were a number of documents, including an ‘Attachment 6,’ which is identified as an employment contract between the applicant and the respondent dated 25 October 2004.
[4] In response to the application a Notice of Motion to Dismiss the Application for Want of Jurisdiction was lodged by the respondent’s representatives on behalf of the respondent.
[5] The notice of motion moved for dismissal of the application on the jurisdictional ground that the applicant was employed under a contract for a specified period of time, from 22 November 2004 until 21 November 2009. Consequently, pursuant to section 638(1)(a) of the Act the respondent contended that the applicant was engaged for a specified period of time and is excluded from the operation of the unfair dismissal provisions of the Act. Therefore, the Commission has no jurisdiction to hear the applicants claim.
[6] The notice of motion refers to clauses 2 and 9 of the contract of employment that was identified as Attachments 6 to the application. The respondent also indicated that it objected to conciliation before this motion was dealt with by the Commission.
[7] In addition, the respondent’s Notice of Employer's Appearance indicated that it objected to the Commission extending the time for lodgement of the application and also objected to conciliation before the application to extend time was determined by the Commission.
[8] Consequently, I issued a ‘Notice of Invitation’ pursuant to s.648 of the Act seeking further information from both parties on the application to extend the time for the lodgement of the application and the respondent’s jurisdictional objection asserting that the applicant was engaged under a contract of employment for a specified period of time and therefore excluded from making this type of application.
[9] Detailed submissions were received from both parties on both of these issues and the parties had an opportunity to reply to each other's submissions.
[10] I have considered the nature of the issues and the information provided by the parties, as well as the respondent's statement that legal fees would be incurred in preparing for and attending any hearing on these issues and I believe it is appropriate to determine this matter on papers.
Was the Applicant Engaged for a Specified Period of Time?
[11] The application is made under s.643(1)(a) of the Act. This section is contained within Part 12 - Minimum entitlements of employees, Subdivision B - Application for relief in respect of termination of employment.
[12] However, the Act provides that not all employees are able to lodge an application under this section. A range of excluded employees are identified in s.638 of the Act. The relevant parts of this section are:
Exclusions from Subdivisions B, D and E and sections 660 and 661
(1) The following kinds of employee are excluded from the operation of Subdivisions B, D and E and sections 660 and 661:
(a) an employee engaged under a contract of employment for a specified period of time;
(b) an employee engaged under a contract of employment for a specified task;
(c) an employee serving a period of probation, if the duration of the period or the maximum duration of the period, as the case may be, is determined in advance and, either:
(i) the period, or the maximum duration, is 3 months or less; or
(ii) the period, or the maximum duration:
(A) is more than 3 months; and
(B) is reasonable, having regard to the nature and circumstances of the employment;
(d) a casual employee engaged for a short period, within the meaning of subsection (4);
(e) a trainee whose employment under a traineeship agreement or an approved traineeship:
(i) is for a specified period; or
(ii) is, for any other reason, limited to the duration of the agreement;
(f) an employee:
(i) who is not employed under award-derived conditions (see subsection 642(6)); and
(ii) to whom subsection (6) or (7) applies;
(g) an employee engaged on a seasonal basis, within the meaning of subsection (8).
Note 1: The expression employee engaged under a contract of employment for a specified period of time (used in paragraph (a)) has been addressed in a number of cases before the Industrial Relations Court of Australia, including, in particular, Cooper v Darwin Rugby League Inc (1994) 57 IR 238, Andersen v Umbakumba Community Council (1994) 126 ALR 121, D’Lima v Board of Management, Princess Margaret Hospital for Children (1995-1996) 64 IR 19 and Fisher v Edith Cowan University (unreported judgment of Madgwick J, 12 November 1996, No. WI 1061 of 1996).
[13] In this instance, the respondent submits that the applicant was an employee engaged under a contract of employment for a specified period of time and is therefore is excluded from the operation of subdivision B by s.638 (1)(a) of the Act and so is unable to make this application
[14] The relevant parts of the applicant’s contract of employment are clauses 2 and 9. Clause 2 relevantly provides that:
2 Employment
2.1 Term
Subject to the terms and conditions of this Agreement the Local Government shall employ the Officer as the Manager Human Resources, for a term of 5 years, commencing on 22 November 2004 and expiring on 21 November 2009.
2.2 Extension of Term
(a) In accordance with section 5.39(4) of the Act, this Agreement is renewable by agreement.
(b) There is no compulsion on either the Local Government or the Officer to agree to an extension of the Term however the Local Government must invite the Officer in writing not later than 9 months prior to the expiry of the Term to discuss the possibility of the parties entering into a new Agreement for a further term with the intend of finalising those discussions not later than 6 months prior to the expiry of the Term.
(c) In the event that the Local Government and the Officer agree to an extension of the Term, this Agreement shall continue to apply unless varied in writing by the parties.
[15] Clause 9 of the contract of employment relevantly provides that:
9. Termination
9.1 Conclusion of Fixed Term
The employment of the Officer shall, unless the Term is extended, conclude on the expiry date specified in clause 2.1 of the Agreement without the requirement of either party giving notice.
9.2 Termination by Local Government: Officer’s Default
(a) The Local Government may terminate the employment of the Officer on a date specified by the Local Government prior to the expiry of the Term by the providing three (3) months’ notice in writing if:
(i) the Officer is guilty of any wilful or grave misconduct or wilful neglect in the discharge of the Officer’s responsibilities or obligations under this Agreement;
(ii) the Officer wilfully disobeys any reasonable and lawful direction of the Council;
(iii) the Officer commits a serious or persistent breach of any provision of this Agreement;
(iv) the officer is convicted and under sentence for a crimes or has been convicted of a “serious local government offence” within the meaning of section 2.22 of the Act;
(v) the Officer becomes incapacitate by injury or illness from discharging in full any of the responsibilities and obligations which the Officer is required to fill under this Agreement for an aggregate period of more than 90 days in any period of 12 consecutive months during the Term (but such period shall not include any accumulated leave taken);
(vi) the Guardianship and Administration Board makes a guardianship order in relation to the Officer pursuant to Section 43 or Section 64 of the Guardianship and Administration Act 1990;
(vii) the Officer becomes of unsound mind;
(viii) the Officer fails to substantially measure up to and achieve the Performance Criteria and continues to do so for a period of 28 days after the Local Government serves on the Officer written notice of that failure and of the course of action which the Local Government wishes the Officer to follow in order to address and correct that failure.
(b) The termination of the employment of the Officer by the Local Government shall be without prejudice to the rights and remedies of the parties under this Agreement or at law or in equity which have accrued before or on such termination.
(c) The parties acknowledge that notwithstanding clause 9.2(a), the Award provides that “termination of employment by an employer shall not be harsh, unjust or unreasonable.
9.3 Termination by Officer: Local Government’s Default
The Officer (without prejudice to any other rights of action which he/she may have) may terminate his employment on a date specified by the Officer prior to the expiry of the Term by three (3) months’ notice in writing if the Local Government breaches any of the provisions of this Agreement and does not remedy that breach within twenty eight (28) days of the Officer serving written notice of the breach upon the Local Government.
9.4 Confidential Information and Property
Upon termination, the Officer must deliver up to the Local Government all:
(a) Confidential Information, which may be in custody, possession or control of the Officer and all copies thereof and the Officer may not keep or retain or make any copies (whether electronic or otherwise) whatsoever; and
(b) all property of the Local Government including equipment, credit cards, keys and motor vehicles which may in the custody, possession or control of the Officer.
9.5 Early Termination by Officer: liquidated damages
If, in breach of this Agreement, the Officer terminates employment before expiry of the Term, the Council may at its option either request the Officer to work for a further period of up to three months, whilst a replacement Officer is found to fill the Position, or may deduct an amount equal to three months’ remuneration from any moneys held by the Council and which would otherwise have been payable by the Council to the Officer on termination.
It is expressly acknowledged and agreed that an amount equal to three months’ remuneration is a genuine pre-estimate of the loss which would be suffered by the Council as a result of the Officer’s early termination.
9.6 Early Termination by the Council: liquidated damages
If, in breach of this Agreement the Council terminates the Officer’s employment before expiry of the Term, the Council shall pay the Officer an amount equal to 100% of the annual Remuneration Package then payable or the balance of the Remuneration Package then payable under this Agreement until its expiry date, whichever is the lesser.
It is expressly acknowledged and agreed that the amount referred to herein is a genuine pre-estimate of the loss which would be suffered by the Officer as a result of the Council’s breach of this contract. For the avoidance of doubt, termination by the Council pursuant to clause 9.2 is not a breach of the Agreement.
[16] The principles to be applied in deciding whether or not a particular contract is a contract of employment for a specified period of time were outlined by Hampton DP in Ogilvie v Warlukurlangu Artists Aboriginal Association Incorporated 1 and adopted by the Full Bench of the Commission in Jeannie Ledington v University of Sunshine Coast 2 as follows;
[34] … With respect, we adopt and apply that statement in this context:
"[13] The concept of a fixed term employment contract has been considered by the Commission in a number of authorities including by the Full Bench in Grycan v Table Tennis Australia Incorporated (Giudice J, Boulton J and Cribb C, Print R7452 23 July 1999), Trigar v La Trobe University (Giudice J, Acton SDP and Gay C, Print T2860 1 November 2000), and Pacific Rim Employment Pty Ltd v Lloyd and Clarke (Giudice J, Kaufman SDP and O'Connor C PR912882, 4 January 2002). Without overlooking the detail of those authorities, the following broad principles of potential application to this matter appear to arise:
¬ A specified period of time is a period of employment that has certainty as to its commencement and time of completion.
¬ A contract, which provides that after a specified period of time it may be reviewed and extended by consent, may still be a contract for a fixed period.
¬ Where a contract provides for termination during its life on grounds that are analogous to the common law right to terminate an agreement for misconduct or other breach, such may still be a contract for a fixed period.
¬ Where a contract provides a broad or unconditional right of termination during its term, the period of the contract is indeterminate and thus not for a specific period of time.
¬ The terms of the contract are to be objectively construed and in the absence of ambiguity their plain meaning is to be applied unless such would result in absurdity or clear injustice.
¬ A series of fixed term contracts may give rise to an understanding that the employment is in fact ongoing and not genuinely fixed term in nature.
¬ The whole of the contract is to be taken into account and provisions that are inconsistent with an intention to provide a fixed term (such as references of long service or entitlements beyond the stated period) may create ambiguity and need to be taken into account;. Ogilvie v Warlukurlangu Artists Aboriginal Association Incorporated (28 August 28 2002) [PR921908] at [13].”
[17] Applying these principles, the respondent submits that the Commission should be satisfied that the contract of employment in this case was for a specified period of time and therefore the applicant is excluded from the operation of the unfair dismissal provisions of the Act.
[18] In reply, the applicant explained the background of how he came to be employed, indicating that it was not until he received a first draft of the contract that he was made aware that the position was for an initial period of five years. In the face of this he was hesitant to accept the position on this basis and says that he accepted the job with the understanding that if he performed satisfactorily in his role his employment would be ongoing. He states that this assurance had been given to him by the recruitment agents at the time.
[19] The applicant also submits that it was custom and practice within the respondent’s business that similar contracts with senior managers would be extended and that this occurred after their final annual performance review, subject only to this review having been satisfactory.
[20] The applicant argues that the contract was for a period of five years, because this is required by the Local Government Act 1975 (the Local Government Act), not because the position was of a project type. The job was of an ongoing nature. The applicant urges the Commission to heed the custom and practice within the respondent’s business and the expectation that senior managers such as himself would have been employed under similar contracts of ongoing employment. On this basis, the applicant submits that he should not be excluded from making this application.
[21] Having considered the terms of the applicant’s contract and the submissions of both parties it is clear that the contract does, on its face, have certainty as to its commencement and time of completion.
[22] Clause 2.1 identifies the term of the contract and expressly states that the Local Government Authority (the respondent) shall employ the applicant for a term of five years, commencing on 22 November 2004 and expiring on 21 November 2009.
[23] Whilst an extension of the term is provided for in the contract, this is expressly to only occur by agreement between the parties and is expressly subject to there being no compulsion on either party to agree to an extension of the term.
[24] On its face, the contract of employment is for a specified period of time.
[25] However, the contract does include provisions in clause 9 ‘Termination’ that allow for the contract to be terminated with notice during its life by either party. But this clause does expressly limit where this can occur, to instances of defaults by either party. These, in my view, amount to grounds that are analogous to the common law right to terminate a contract for misconduct or other breach. It cannot be said at all that the contract provides a broad or unconditional right of termination during its term.
[26] I am satisfied that the terms of the contract can objectively be construed as I have done so. The plain meaning of the terms of the contract are without ambiguity and the interpretation of the contract as I have found above does not result in any absurdity or clear injustice.
[27] I am satisfied then that the applicant’s contract of employment with the respondent was for a specified period of time and therefore, by virtue of s.638(1)(a) of the Act, the applicant is excluded from making this application.
The Application to Extend the Time for Lodgement
[28] Notwithstanding my finding that the application cannot be made I will for completeness also consider the application to extend time for lodgement.
[29] The application was lodged in the Australian Industrial Registry on 4 June 2008. The application indicates that the date the termination of employment took affect was 9 November 2007.
[30] Section 643(14) of the Act prescribes that:
“An application under subsection (1) or (3) must be lodged within 21 days after the day on which the termination took effect, or within such period as the Commission allows on an application made during or after those 21 days.”
[31] This application was lodged over six months later than the date required by the legislation.
[32] The applicant has requested that the Commission exercise its discretion under s.643(14) of the Act to extend the time for filing this application.
The Principles to be Applied
[33] The decision of Mr Justice Marshall of the Industrial Relations Court of Australia in Brodie-Hanns v MTV Publishing Ltd 3 sets out relevant principles for the Commission when considering whether or not to extend the time within which an application may be lodged. These principles where summarised as follows by Marshall J at 299:
(1) Special circumstances are not necessary but the Court must be positively satisfied that the prescribed period should be extended. The prima facie position is that the time limit should be complied with unless there is an acceptable explanation for the delay which makes it equitable to extend.
(2) Action taken by the Applicant to contest the termination, other than applying under the Act, will be relevant. It will show that the decision to terminate is actively contested. It may favour the granting of an extension of time.
(3) Prejudice to the Respondent including prejudice caused by delay will go against the granting of an extension of time.
(4) The mere absence of prejudice to the Respondent is an insufficient basis to grant an extension of time.
(5) The merits of the substantive application may be taken into account in determining whether to grant an extension of time.
(6) Consideration of fairness as between the Applicant and other persons in a like position are relevant to the exercise of the Court's discretion.
The Submissions of the Parties on the Extension of Time Application
[34] The applicant indicates that he was terminated suddenly, without any prior notice and that he shortly thereafter sought advice over the phone from this Commission and the Workplace Ombudsman about the situation. In addition, he sought legal advice from a firm of lawyers.
[35] Those lawyers wrote to the respondent on 21 November 2007 and again on 27 November 2007 seeking information from the respondent on the applicant’s behalf.
[36] On 28 November 2007, the respondent replied to this correspondence, refusing access to the documents that applicant's lawyers had requested.
[37] As the applicant points out, those communications with the respondent were within the 21 day statutory time limit for lodging an application such as this with the Commission.
[38] On 7 December 2007 the applicant's lawyers wrote to the respondent seeking a meeting to mediate the situation. The penultimate paragraph of this letter stated:
“That said; please advice (sic) whether or not the City is willing to meet with our client on the terms suggested. If not, please advise whether or not you have instructions to accept service of District Court proceedings.”
[39] That correspondence implied that if the mediation meeting did not occur, then District Court proceedings would be commenced on behalf of the applicant.
[40] A reply was received from the respondent’s lawyers on 19 December 2007 that rejected the proposal for a mediation meeting and indicated that any District Court action would be vigorously defended.
[41] The applicant explains that after this he sought further advice from the Workplace Ombudsman regarding his circumstances and lodged a complaint with them on 9 April 2007.
[42] On 9 May 2008 the applicant received a written response from the Workplace Ombudsman indicating that they would not be taking any further action in relation to his matter.
[43] On 3 June 2008 a follow-up phone discussion with an officer of the Workplace Ombudsman led the applicant to believe he had the option of lodging this application, which he then did.
[44] The applicant says that it was only when he became aware, from this discussion with the officer from the Workplace Ombudsman, that he was employed under “award-derived conditions” and therefore had a basis on which to lodge an application with this Commission, did he do so.
[45] I take it from the applicant’s submission that up until the final conversation with the Workplace Ombudsman he believed he was excluded from making a claim because of s.638(1)(f) of the Act.
[46] In reply to the applicant’s submissions on the extension of time the respondent argues that these reasons do not provide an acceptable explanation for the applicant’s delay, particularly given that the applicant sought legal advice and was himself the Human Resource Manager of the respondent.
[47] A cursory inspection of the contract of employment would have demonstrated that the applicant’s employment was based on award-derived conditions. The respondent points to a number of references in the contract to the Local Government Officers (City of Stirling) Award 2000, including clauses 1.1, 5.1, 8.3, 9.2 and 11.
[48] As the respondent emphasises, the applicant has not argues that there was, nor provided any evidence of an error made by his representatives.
[49] The respondent also notes that it appears that the applicant preferred to pursue a common law claim in the District Court, rather than a potential unfair dismissal claim such as this application.
[50] The respondent disputes the applicant’s position that he was only aware of the award-derived nature of his employment immediately prior to lodging the application. The respondent referred to a submission the applicant made to the respondent’s Council in March 2008 that referred to a number of the clauses in his contract of employment, which contained award-derived conditions.
[51] The respondent also draws attention to the correspondence from the Workplace Ombudsman dated 9 May 2008, which it contends clearly explains that in the Workplace Ombudsman’s view various provisions of the award were applicable to the applicant’s employment. That correspondence also points out references to the award contained in his contract.
[52] On this basis the respondent says the applicant does not have an acceptable explanation for the delay.
Applying the Principles
Was there an acceptable explanation for the delay?
[53] The applicant says that he initially believed he was not able to pursue an application such as this, but as soon as he became aware that he could, he lodged this application. The applicant then submits this is a reasonable explanation for the delay and that the Commission should exercise its discretion to extend the time for lodgment.
[54] It is notable in this case, that the applicant himself was the Human Resource Manager for the respondent and so could be expected to have the professional abilities and experience to read and interpret his contract far beyond that of a majority of applicants in this jurisdiction.
[55] Even if the applicant was not able to do this, I note that he sought and received legal advice with respect to his termination and his legal advisors had access to his contract of employment. It appears that his advisors actively considered avenues to dispute his termination on his behalf, and in particular District Court proceedings had been foreshadowed.
[56] I also note that it was on 9 May 2008 that the Workplace Ombudsman detailed their view of the relationship between the applicant’s common-law contract of employment and the applicable local government award in writing to the applicant. This was nearly one month prior to this application being filed.
[57] Considering these facts, the applicant was well placed during the period exceeding six months that elapsed between the termination and lodging this application to have appreciated that his employment was based on award-derived conditions and that he may well have a right to make an application such as this.
[58] However, it is not necessary for me to decide whether the statements by the applicant in regard to when he became aware of his right to make this application should be accepted or not. This is because what the applicant’s submission amounts to is simply that the reason for the delay in making the application was that he was unaware of his legal rights to do so until immediately before making the application.
[59] If I accept the submission that the application was lodged as soon as he became aware of his rights and that the delay in becoming aware of his rights was an acceptable explanation for the delay, then such a submission could potentially be made by any employee who is initially unaware of his or her legal rights in this jurisdiction and becomes aware of such rights any time after their termination has taken effect.
[60] As has been held many times in this jurisdiction, ignorance by an applicant of the law in this area does not amount to an acceptable explanation for a delay; see JH Galvez v York Security Group Pty Ltd 4; Snow v John Fairfax Publications Pty Ltd5; Harris v Torrens Transit Services Pty Ltd6; Qi Lu v Commercial Kitchen Pty Ltd.7 This is particularly so in the applicant’s circumstances, as I have outlined above in paragraphs [54] to [56].
[61] I have considered the submissions of both parties on this point. I do not accept the applicant’s argument that the circumstances he has outlined amount to an acceptable explanation for the delay of six months in filing this application.
Was the termination otherwise contested?
[62] In this case I do accept that the applicant did contest his termination, both through his lawyers and in seeking the Workplace Ombudsman's view on what he saw as breaches of his employment contract. However, I note that there was a significant period between the last correspondence on 7 December 2007 by the applicant’s lawyers to the respondent and the lodging of the complaint with the Workplace Ombudsman on 9 April 2008.
Would the respondent be prejudiced if an extension is granted?
[63] There was no information provided by the respondent to suggest any prejudice.
What are the merits of the substantive application?
[64] On the basis of the submissions and material contained in the application it is only following a full hearing of the issues could the substantive merits of the claim be determined.
[65] I therefore find that the issue of merit in this instance is neutral in determining the extension of time application.
Consideration of fairness between the applicant and other persons
[66] The presumption is always against the grant of an extension of time, however, there is nothing particular known about the respondent’s position that causes this issue to be a significant factor in this instance. I do not find that the consideration of fairness between the applicant and other persons in a like position is of relevance in this matter.
Consideration
[67] Having considered the principles to be applied in these circumstances, the issues of consideration of fairness to other persons is not relevant and there is no evidence of prejudice if an extension is granted. The merits of the case are neutral in this instance, and there is some evidence that the applicant did contest the termination. However, in my view a critical element is missing, this is that there is not an acceptable explanation for the delay in lodging the application.
[68] That being the case, I have decided that I should not exercise my discretion in favour of allowing the applicant an extension of time to lodge this application.
Conclusion
[69] With respect to the respondent’s motion to dismiss the application, I find that the applicant is excluded from making this application under s.638(1)(a) of the Act because he was engaged under a contract of employment for a specified period of time. An order dismissing this application will issue in conjunction with this decision.
[70] For completeness, if I am wrong on this point of jurisdiction, I have decided that I would not exercise my discretion in the applicant’s favour to extend the time for lodgement of this application. Given that the application has been lodged later than the twenty-one day statutory time limit the application cannot proceed any further.
BY THE COMMISSION:
COMMISSIONER
Final written submissions: Received 8 July 2008.
1 Ogilvie v Warlukurlangu Artists Aboriginal Association Incorporated, (28 August 28 2002) [PR921908]
2 Jeannie Ledington v University of Sunshine Coast (3 September 2003) [PR 937250] at [34]
3 Brodie-Hanns v MTV Publishing Ltd (1995) 67 IR 298
4 JH Galvez v York Security Group Pty Ltd (21 September 2008) [T0983] at [23]
5 Snow v John Fairfax Publications Pty Ltd [2008] AIRCFB 87 [PR980534] at [10] and [24]
6 Harris v Torrens Transit Services Pty Ltd [2007] AIRC 148 [PR976273]
7 Qi Lu v Commercial Kitchen Pty Ltd [2007] AIRC 888 [PR979422]
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