FWAFB 4022
FAIR WORK AUSTRALIA
Fair Work Act 2009
s.604 - Appeal of decisions
VICE PRESIDENT LAWLER
MELBOURNE, 26 MAY 2010
Appeal – unfair dismissal – valid reason – incapacity to perform the inherent requirements of a position or job – whether tested against modified duties or restricted duties or against the substantive position or job.
 This is an application by the appellant (Boags) for permission to appeal and, if permission is granted, an appeal against a decision and order of Senior Deputy President Kaufman on 13 January 2010 allowing Mr Button’s application for an unfair dismissal remedy.
 Mr Button was employed by the respondent as a Brewery technician in June 2005.
 Mr Button was born with a congenital defect in his bladder. This defect led to the removal of his bladder and the surgical installation of a drain known as an ileal conduit when he was a child. He will require this drain for the rest of his life. The drain does not have an indefinite life and, barring earlier complications, must be replaced about every ten years. Mr Button had already had two such revisions; the latest being “a few years ago”.
 In about March 2008 Mr Button was diagnosed with a hernia at the site of the drain. On 11 August 2008 Mr Button was reviewed by Dr Pan, a urology registrar, whose report included the following:
“On examination his stoma is nice and healthy. However, there is a parastomal hernia clearly palpable on coughing.
I have advised him strongly against heavy lifting, especially anything over the weight of 5kg. I plan to see him in 6 months with a repeat U&E and upper tract imaging just to make sure there is no deterioration in renal function or upper tract dilation. I emphasized again to him that he should stop doing any heavy lifting from now on at work, otherwise his parastomal hernia is just getting bigger and will need surgery repair in the future.”
 Sometime shortly thereafter Mr Button was placed on a restricted duties plan to ensure that he did not perform tasks that were involved lifting weights above the limits that was specified by Dr Pan.
 In October 2008 Boags arranged for an occupational therapy assessment of Mr Button by Advanced Personnel Management (APM), conducted an. APM’s report notes that:
“Mr Button is not due to undergo a further operation to replace the bag for approximately 10 years. As such medical staff are reluctant to operate on the hernia. In consideration to Mr Button’s current medical status, the following restrictions apply:
 APM recommended that Mr Button continue to perform his restricted duties and that he “[remain] in close contact with medical professionals to discuss future treatment options”.
 In November 2008 Mr Button sought overtime work in the Christmas lead up, the respondent’s busiest period, and was informed by a Manager that no employee on light duties would be given overtime.
 In March 2009 Boags requested a medical report by Mr Brough, Mr Button’s treating surgeon.
 On 6 April 2009 Mr Brough, Mr Button’s treating surgeon, provided a short report to Ms Williams of Boags’ parent company, Lion Nathan. It is not entirely clear how Mr Brough came to be providing a report to his patient’s employer however it would seem that the request for the report was conveyed through Mr Button. Mr Brough’s report was as follows:
“Thank you for your note about Allan. He has a ileal conduit urinary stoma. He has developed a hernia around the stoma which is asymptomatic but it does mean that he will not be able to lift more than 5kg in his occupation and I would regard this as an indefinite restriction.” (emphasis added)
 Shortly thereafter the respondent retained another occupational health consultant, Konekt, to perform a further occupational therapy assessment in light of Mr Brough’s opinion that Mr Button had a definite restriction on lifting more than 5kg.
 That assessment occurred on 24 June 2009. On that same day Mr Button met with two managers, Mr Turner and Mr Roy. Mr Turner noted in relation to his understanding: 1
“I had previously understood, through my conversation with Ms Williams and Ms Button, that it was likely Mr Button’s condition was operable and could be resolved (Mr Button then being able to return to full duties).”
 On about 26 June 2009 there was a telephone hook-up between relevant Boags managers “to discuss various options for dealing with Mr Button’s employment depending on the outcome of [Konekt’s] report”. Mr Hargan, one of those managers, said of this meeting: 2
“17. … We discussed different scenarios. Nothing was decided as we did not yet have the benefit of [Konekt’s] written report. We considered whether it was viable for Mr Button to carry on with restricted duties and assistance from his colleagues, however given the extent and indefinite nature of the restrictions, and the impact it was having on the rest of the team, this did not seem to be a viable option.”
18. We also considered redeployment opportunities, however, none were apparent that did not involve lifting outside of Mr Button’s restrictions (the production roles are all very similar and would require the same physical capabilities as Mr Button’s current role) and that were suitable to Mr Button’s skill set. We also discussed the potential eventuality that Mr Button’s employment be terminated. … No decision was made in relation to Mr Button’s employment at this stage. …”
 The Konekt report, dated 1 July 2009, notes that the “objectives of assessment” were:
“1. To assess the physical requirements of Mr Button’s position.
2. To determine if Mr Button can safely perform his duties based on medical information received from his treating Urologist.
3. To determine if Mr Button can safely perform his duties with task modification or restructure of current staffing.”
 The report noted that “[t]he assessment was requested by Boags Brewery (BB) and they are concerned that Mr Button is at risk undertaking his normal duties due to the inherent physical requirements of his role.” The report analyses the physical requirements of Mr Button’s pre injury duties and concludes:
As outlined, many of the tasks within Mr Button’s role involve lifting, pushing and pulling weights of greater than 5kgs. In addition to the duties described above, all of the machinery needs to be disassembled to some degree for clean-downs. This involves frequent lifting and assuming awkward positions.
It is noted from Mr Button’s Pre-employment assessment that his previous work history has primarily included machinery and forklift operation roles. This makes redeployment into more skilled areas of the Company difficult without Mr Button undergoing further training.
Due to the physical requirements of these roles and the number of operators in each area, restructuring the staffing to allow Mr Button to perform only the duties he can manage will be difficult and may increase the chance of other staff experiencing ‘overloading’ or repetitive strain injuries.
Summary and Recommendations
1. In my opinion, Mr Button can not continue to safely perform his current duties.
2. Mr Button is unable to be redeployed at this time as his transferable skills do not match the requirements of other roles within the company.
3. As Mr Button’s condition is largely stable and his restrictions are likely to be permanent, he may find locating other employment difficult due to the nature of his transferable skills. As such, Mr Button should be assisted in undertaking further study to increase his opportunities for employment outside of Boags.
4. If further study is to be undertaken, I would recommend Mr Button undergo a Vocational Assessment to ensure his training has a stronger chance of having a tangible outcome. A vocational assessment includes assessing an individual’s interests, existing skill set and an assessment of the local labour market to help determine an appropriate redeployment/training direction.”
 On 7 July 2009 Boags decided that Mr Button could not perform the inherent requirements of his substantive role, could not be redeployed and should have his employment terminated however there was a delay in conveying this decision to Mr Button.
 Mr Button was provided with a copy of the Konekt report on or shortly after 21 July 2009. On 28 July 2009 Mr Button, accompanied by a union representative, met with two Boags managers. A further meeting occurred on 4 August 2009 by which time it was clear that Mr Button’s employment would be terminated.
 On 7 August 2009 Mr Button was charged with a drink driving offence.
 Mr Button was given a formal letter of termination on 11 August 2009, with such termination to take effect on 11 September 2009.
 The Senior Deputy President found that there was no valid reason for Mr Button’s dismissal:
“ As I have indicated, almost universally, if a person cannot perform the inherent requirements of his or her position there will be a valid reason for the termination of that person’s employment simply because he or she is unable to perform the role for which the employment contract provides. However, as I have said, this case is unusual.
 It was put on behalf of Mr Button that he was able to perform and did perform the inherent requirements of his job because Boags had altered those requirements when it arranged, through Mr Jensen, for assistance to be provided to Mr Button, as required. He, and his team, worked in that manner for over eight months. Given my finding that Boags knew that Mr Button’s condition was long term, there is validity in that submission. The inherent requirements of the position, as performed by Mr Button since at least October 2008, did not necessitate that he perform work beyond his restrictions. Accordingly, there could be no valid reason for the termination based on Mr Button’s capacity. I also find that Mr Button’s incapacity had no adverse impact on the safety or welfare of his team members.
If I am wrong as to that, I would nevertheless find that there was no valid reason for the termination. If the inherent requirements of the position included the work that Mr Button was not able to perform, he had been satisfactorily performing his work with the willing assistance of his team members. Nothing had changed in that regard (other than the reluctance of Boags’ insurer to continue to cover Boags in respect of Mr Button) and yet his employment was terminated. In those circumstances, I would conclude that there was no valid reason for the termination of Mr Button’s employment.
 There being no valid reason for the termination leads me to conclude that Mr Button’s dismissal was harsh, unjust and unreasonable.”
 The Senior Deputy President found that there was no valid reason for the dismissal of Mr Button on the basis of an inability on the part of Mr Button to perform the inherent requirements of his job. The Senior Deputy President proceeded on the basis that Mr Button was able to, and had been, performing the inherent requirements of the restricted duties in which he had been working since October 2008. This conclusion involved error.
 When an employer relies upon an employee’s incapacity to perform the inherent requirements of his position or role, it is the substantive position or role of the employee that must be considered and not some modified, restricted duties or temporary alternative position that must be considered.
 In X v Commonwealth 3 the High Court was concerned with an allegation of discrimination on the grounds of disability contrary to the Disability Discrimination Act 1992 (Cth) by a solider who had been dismissed from the army on account of being HIV positive. Section 15(4) of that Act contains an exemption from liability if the person “would be unable to carry out the inherent requirements of the particular employment”. Gummow and Haynes JJ addressed the notion of “inherent” requirements:4
“ The reference to "inherent" requirements invites attention to what are the characteristic or essential requirements of the employment as opposed to those requirements that might be described as peripheral. …[T]he requirements that are to be considered are the requirements of the particular employment, not the requirements of employment of some identified type or some different employment modified to meet the needs of a disabled employee or applicant for work.”
 Although the High Court was concerned with the meaning of the expression “inherent requirements” in a statute, this analysis is equally applicable to a consideration of what constitutes the “inherent requirements” of a position as a valid reason for dismissal. Thus, in Hail Creek Coal Pty Ltd v CFMEU 5 a Full Bench noted:
“ The phrase "inherent requirements" has been judicially considered to mean something that is essential to the position. [See generally X v The Commonwealth (1999) 200 CLR 177] To determine what are the inherent requirements of a particular position usually requires an examination of the tasks performed, because it is the capacity to perform those tasks which is an inherent requirement of the particular position. [Qantas Airways Ltd v Christie (1998) 193 CLR 280 at 304 per McHugh J] As her Honour Gaudron J said in Qantas Airways Ltd v Christie:
"A practical method of determining whether or not a requirement is an inherent requirement, in the ordinary sense of that expression, is to ask whether the position would be essentially the same if that requirement were dispensed with." [ibid. at 295]”
 In Qantas Airways Ltd v Christie 6 Gaudron J, with whom Brennan CJ agreed, noted that the expression “inherent requirements”, in its natural and ordinary meaning “directs attention to the essential features or defining characteristics of the position in question.”7 Her Honour noted:8
“ There may be many situations in which the inherent requirements of a particular position are properly identified as the characteristic tasks or skills required for the work done in that position. But that is not always so. In the present case, the position in question is that of captain of B747-400 aircraft flying on Qantas' international routes, a matter as to which there is no real dispute between the parties. To identify the inherent requirements of that position as "the characteristic tasks or skills required in being a pilot", as did Marshall J in the Full Court, is to overlook its international character.
 Moreover, the international character of the position occupied by Mr Christie cannot be treated as irrelevant simply because it derives from his contract of employment or from the terms and conditions of the industrial agreements which have, from time to time, governed his employment with Qantas. It is correct to say, as did Gray J in the Full Court, that an inherent requirement is something that is essential to the position. And certainly, an employer cannot create an inherent requirement for the purposes of s 170DF(2) by stipulating for something that is not essential or, even, by stipulating for qualifications or skills which are disproportionately high when related to the work to be done. But if a requirement is, in truth, essential, it is irrelevant that it derives from the terms of the employment contract or from the conditions governing the employment relationship.”
 Gaudron J also noted 9 that the fact that a requirement is stipulated in an employment contract does not, of itself, direct an answer one way or another as to the question whether it is an inherent requirement of the particular position in question.
 McHugh J drew attention to the distinction between an employee’s job and their position: 10
“ In my opinion, however, there is a distinction between a person's job and a person's position and that distinction may sometimes prevent the Convention jurisprudence on Art 1(2) from being applicable. The term "a particular job" in Art 1(2) of the Discrimination Convention has been construed by reference to the preparatory work and the text of the Convention to mean "a specific and definable job, function or task" and its "inherent requirements" those "required by the characteristics of the particular job". A person's job is therefore primarily concerned with the tasks that he or she is required to perform. No doubt the term "job" is often used to signify a paid position of employment. But in the context of determining the requirements of a job, it seems more natural to regard the term as referring to particular work or tasks that the person must perform. A person's position, on the other hand, is primarily concerned with the level or rank from which he or she performs those tasks. Position concerns rank and status. What is required of a person's position, however, will usually require an examination of the tasks performed from that position. That is because the capacity to perform those tasks is an inherent requirement of the particular position.
 In most cases, the distinction between the requirements of a position and the requirements of a job will be of little significance. But it is a mistake to think that there is no distinction between "a particular position" and "a particular job". In some cases the distinction between the inherent requirements of a particular position and those of a particular job, although subtle, may be material. This is often likely to be the case where qualifications are concerned, particularly those qualifications that are not concerned with the physical or mental capacity to perform the tasks involved in the position. Thus to be an American born citizen is an inherent requirement of the position of President of the United States, but it is not an inherent requirement of the "job" of President if that term refers to the work done by the President.”
 McHugh J endorsed the proposition that “whether a requirement was an inherent requirement of a particular employment was a matter which should be determined according to the dictates of common sense and as a matter of objective fact rather than as a matter of mere speculation or impression.”
 It is well established that a valid reason is one which is “sound, defensible or well founded”, but not “capricious, fanciful, spiteful or prejudiced”. 12 An inability to perform the inherent requirements of a position will generally provide a valid reason for dismissal. But this will not invariably be so. For example, the dismissal may be prohibited by State workers compensation legislation or otherwise unlawful. It is highly likely, bordering on certain, that there could be no valid reason for the dismissal in that event.13 Further, a dismissal based on an incapacity to perform the inherent requirements of a position may not be valid reason for dismissal if the employee has a capacity to perform the inherent requirements of their job. Plainly, there can be a valid reason for the dismissal of an employee where he or she simply does not have the capacity (or ability) to do their job.14 But, again, there may be circumstances where such incapacity does not constitute a valid reason in the relevant sense.15
 In the present case, it is clear that both Mr Button’s position and his job had important features that he could not perform because of his lifting restriction. Mr Button had an incapacity to perform the all of the inherent requirements of his job and, on balance, this constituted a valid reason for his dismissal.
 However, it is also well established that there may be a valid reason for dismissal but the dismissal may nevertheless be harsh, unjust or unreasonable. 16 In this case the Senior Deputy President also noted that he would have concluded that Mr Button’s dismissal was harsh even if his inability to perform the inherent requirements of his position had constituted a valid reason for the for the dismissal:
“ Even had there been a valid reason for the dismissal, based on Mr Button’s inability to perform the inherent functions of his position, I would reach the same conclusion. To dismiss Mr Button after he had been satisfactorily working with his disabilities for the best part of a year, without there having been an intervening occurrence to otherwise warrant his dismissal, is harsh, unjust and unreasonable.”
 In our view, the reason given for this conclusion, while clearly relevant to a consideration of whether the termination was harsh, unjust or unreasonable, is not, of itself, sufficient to justify the conclusion that the dismissal was harsh, unjust or unreasonable. Such a conclusion calls for a consideration of a broader range of circumstances with particular reference to the extent to which the continued employment of Mr Button would have constituted an unreasonable burden on Boags or other employees in the context of the consequences of the dismissal for Mr Button.
 At this point it is convenient to deal with a second basis for the dismissal relied upon by Boags.
Drink Driving Offence
 Mr Button committed a drink driving offence on 7 August 2009, that is, after he had been informed on 4 August 2009 that his employment would be terminated but before the termination formally took effect on 11 August 2009. At the hearing before the Senior Deputy President Boags placed reliance on that drink driving offence as providing a valid reason for dismissal and contended that dismissal for that reason was not harsh, unjust or unreasonable. The Senior Deputy President rejected that contention:
“ It was also submitted by Boags the fact that Mr Button had driven whilst exceeding the prescribed blood alcohol limit warranted his dismissal, even though Boags was not aware of this incident at the time. In other circumstances I would have acceded to this submission. I am satisfied that Boags has a very strict alcohol policy, that it is appropriate and reasonable and that Mr Button was aware of it. However, again, the circumstances are unusual.
 At the time that Mr Button drove whilst exceeding the permitted blood alcohol limit his employment had all but been terminated. Boags had resolved to terminate his employment, and to effect the termination, on 28 July 2009. This was known to Mr Button. At the meeting of 4 August 2009, his representative, and no doubt Mr Button, became aware that a letter of termination had been prepared and that Boags intended to give it to Mr Button at that meeting. He was given a grace period of another week to get his affairs in order, and the termination of his employment was confirmed at the meeting of 11 August with effect from 1 September.
 In the circumstances of this case, where Mr Button’s employment had to all intents and purposes been terminated prior to the drink driving offence, I do not accept that Boags can rely on this, either on the question of whether there was a valid reason for the termination, or on the issue of reinstatement. I accept Boags’ submission that as a matter of law the employment relationship endured until 1 September 2009. However, against this must be weighed the fact that Mr Button had not worked from late June 2009 and that he had been told as early as 28 July that his employment was to be terminated.
 Despite the justifiable seriousness with which Boags treats drink driving offences, and again, I emphasize, that I consider its policies and approach to be proper, in the circumstances of this case, a finding that there existed a valid reason for the dismissal is not open. ... I do not accept that this decision should, or will, in any way diminish the importance of Boags alcohol policy, nor will it set a precedent, either for Boags or for any other employer.”
 Mr Button was still formally employed by Boags at the time of the drink driving offence and still formally obliged to comply with Boags’ reasonable policies albeit that he had long since ceased attending work and had been notified of his dismissal and was merely waiting for it to take effect. Given the significance reasonably attached to the policy by Boags, the drink driving offence involved a breach of the reasonable policy that provided a valid reason upon which Boags was entitled to rely in supporting its decision to dismiss Mr Button. In this regard we disagree with the Senior Deputy President. However, the dismissal, whether on this basis alone or in combination with the reason based on Mr Button’s capacity, might still properly be harsh, unjust or unreasonable. Boags did not apply the policy rigidly. Mr Jensen gave evidence of his knowledge of an employee who lost his licence through drink driving but who did not lose his job. 17 We agree with the Senior Deputy President’s apparent conclusion that the vey unusual circumstances of this case substantially diminish the significance that is properly attached to Mr Button’s breach of policy such that it was well open to his Honour to conclude that dismissal for this particular breach of the policy was harsh.
 We are satisfied that the decision below is affected by error and that permission to appeal should be granted. We have considered whether we should proceed with a rehearing and determine for ourselves whether Mr Button’s dismissal based on his incapacity to perform the inherent requirements of his position was harsh, unjust or unreasonable. We have decided against that course because a determination of whether the dismissal was harsh will turn on which evidence is accepted in relation to the issues identified in paragraph , in relation to which the Senior Deputy President has not made findings nor provided a sufficient indication which witness’ evidence should be preferred. Given the conflict between the evidence of Mr Button and evidence given by some of the witnesses called by Boags (most particularly the evidence of Mr Jensen) going to those issues, in the particular circumstances of this case we think that that assessment should not be made by us because we have not had the benefit of hearing and seeing the witnesses give their evidence. On the other hand, in the all the circumstances, on balance we think it appropriate that the matter be referred to another member of the Tribunal.
 Permission to appeal is granted. The appeal is allowed and the decision of the Senior Deputy President is quashed. The matter is referred to Vice President Lawler to deal with Mr Button’s application for an unfair dismissal remedy consistent with these reasons. To remove doubt, these reasons do not require Vice President Lawler to conduct a full hearing afresh without regard to the evidence before the Senior Deputy President. It will be open to his Honour to determine, after hearing from the parties, what portions of the evidence before the Senior Deputy President ought be admitted in the hearing of the application before him and the extent to which there should be further oral evidence in chief and or cross-examination. In this context we should also note that there was an issue between the parties as to the attitude of other employees to providing assistance to Mr Button. The finding in paragraph  of the Senior Deputy President’s reasons was the subject of argument during the hearing of the appeal. We note that we can detect no error in that finding.
Mr F. Parry SC, of senior counsel, with Mr P. Wheelahan, of counsel, for the appellant.
Mr D. Durkin, solicitor, for the respondent.
1 AB390 at PN 7.
2 AB200 at paras 17 and 18.
3 (1999) 200 CLR 177.
4 (1999) 200 CLR 177 at 209.
5 (2004) 143 IR 354 at .
6 (1998) 193 CLR 280.
7 (1998) 193 CLR 280 at .
8 (1998) 193 CLR 280 at  – .
9 (1998) 193 CLR 280 at .
10 (1998) 193 CLR 280 at  – .
12 Selvachandran v Peteron Plastics Pty Ltd (1995) IR 371 at 373.
13 Ermilov v Qantas Flight Catering Pty Ltd (PR956925, Giudice J, Hamberger SDP and Raffaelli C, 4 April 2005) at .
14 Crozier, in the matter of an application for Writs of Certiorari and Mandamus against the Australian Industrial Relations
Commission  FCA 1665 (Gray, Branson and Kenny JJ) at .
15 See, for example, Stergioti v Toyota Motor Corporation Australia Limited (PR953320, Duncan SDP, 17 November 2004)
16 Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1.
17 Transcript at PN 1560-1.
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