[2011] FWAFB 2929 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT |
|
Appeal against decision [[2011] FWA 1058] and order [PR507042] of Commissioner Hampton at Adelaide on 28 February 2011 in matter number U2010/12466 - constructive dismissal - repudiation of contract of employment - public interest requirement in granting permission to appeal.
[1] This is an application for permission to appeal, and if permission is granted, an appeal pursuant to s.604 of the Fair Work Act 2009 (the Act) by Allied Express Transport Pty Ltd (the Company) against a decision made by Commissioner Hampton on 28 February 2011.
[2] The background to the matter included the decision by the Company, in the context of discussions and negotiations about the duties of Ms Owens in the last weeks before she was to proceed on maternity leave and without agreement being reached, to transfer her to another position with a significantly lower salary. In these circumstances, the Commissioner found that Ms Owens had been dismissed by the Company within the meaning of s.386 of the Act and that the dismissal was harsh, unjust and unreasonable. The Commissioner decided that reinstatement was not an appropriate remedy in the case and made an award of compensation.
[3] In the appeal proceedings, the Company submitted that Ms Owens had not been dismissed but had resigned from her employment. The relevant facts may be set out as follows.
[4] Ms Owens commenced employment with the Company on 11 January 2010 as its Customer Service and Accounts Manager in South Australia. She reported to Mr Phillip Preece, the South Australian State Manager but also had a parallel responsibility to Ms Michelle McDowell, the Managing Director. The role involved extensive travel, visiting clients using her own car, which took up something like two and a half days per week.
[5] Ms Owens earned $70,000 per annum inclusive of 9 percent superannuation. This included an allowance for the use of her vehicle. There was a dispute as to the extent of the vehicle allowance. Ms Owens contended that it was $5,000 whereas the Company asserted that it was $10,000. The Commissioner preferred Ms Owens’ version.
[6] In April 2010, Ms Owens informed Mr Preece that she was pregnant and it was subsequently agreed that she would take six months (unpaid) maternity leave from 29 October 2010. It was also mutually understood that Ms Owens would resume her substantive role upon the conclusion of that leave.
[7] Although there were no medical complications with Ms Owens’ pregnancy, she became tired and the travel associated with her role became somewhat taxing, particularly in the latter period.
[8] Ms Owens took various days off as sick leave including on 4 and 5 August 2010. Upon her return to work on 6 August, there was a discussion between her and Mr Preece. Mr Preece observed that Ms Owens looked tired and that the amount of travelling was becoming difficult for her. She accepted that she was tired. Mr Preece offered to explore the transfer of some of her work to Ms Sue Penley who would be taking over the applicant’s position whilst she was on maternity leave. This would have involved Ms Owens “coming off the road”, losing her travel allowance and undertaking a lesser role. No details were broached and no agreement was made. It was however agreed that Mr Preece would approach Ms McDowell to discuss the matter and this was welcomed by Ms Owens.
[9] On 13 August 2010, Ms Owens discussed the matter with Ms McDowell who had telephoned her to discuss it. Ms Owens confirmed that she desired to come off the road and acknowledged that this was likely to involve a reduction in salary, partly as a result of the loss of the travelling allowance and potentially due to the change in her role. Ms McDowell told Ms Owens that it was Ms Owens’ choice whether or not she changed her role.
[10] On 17 August 2010, Mr Preece advised Ms Owens that Ms McDowell had agreed to her coming off the road. He then gave her a hand-written note outlining what he understood would be the reduction in salary ($10,000 plus superannuation). Ms Owens said that she would not agree to the change if it involved a reduction of $10,000 to her annual salary. She said that she would discuss the matter with her husband.
[11] On 24 August 2010, Mr Preece discussed the proposed changes in role and remuneration with Ms Owens. As the Commissioner noted, the conversation of 24 August 2010 was “the pivotal part of the factual dispute between the parties.” It is of that conversation that Mr Preece made a contemporaneous record, which was attached to his witness statement. The Commissioner deals with the conversation of 24 August at paragraphs 41 to 43 of his decision. Although the Commissioner made no finding to that effect, having regard to the contents of the file note, it would be fair to conclude that at the end of that conversation Mr Preece might have thought that Ms Owens was reluctantly accepting her reduced role at $60,000 per annum.
[12] The next contact that Ms Owens had with Mr Preece was the following day, 25 August, when he handed her a contract transferring her to the position of “Telephonist/Customer Service” and reducing her salary by $10,000 per annum. Ms Owens declined to sign the letter and walked out of the meeting.
[13] As the Commissioner noted, she took sick leave on 26, 27 and 30 August 2010, and returned to work on 31 August when she received another letter adjusting her salary to $52,000 per annum. This was apparently at the instigation of Mr Colin McDowell, the Chief Executive Officer of the Company and Ms McDowell’s father. The further reduction was to ensure that the salary that Ms Owens was to receive was commensurate with that of other people throughout the Company who performed similar work. Ms Owens declined to indicate her acceptance of either offer when she refused to sign the Company’s counterpart. However, later that afternoon, 31 August, she went into Mr Preece’s office and asked why the Company “was doing this to me given I had no performance issues in the past and had no prior warnings.” She asked whether it was because of her pregnancy. Mr Preece said nothing. He was not cross-examined on this conversation. There is no doubt that there had been no discussion about her salary being further reduced to $52,000 as was effected by the letter of 27 August.
[14] Ms Owens worked out the remainder of the week commencing 31 August and went on her pre-arranged annual leave on 6 September 2010. It was during this time that she sought legal advice which led to a letter from her solicitors dated 7 September 2010 asserting that as she had not consented to the variations of her employment contract on the terms and conditions outlined in the letters of 25 and 27 August 2010, the Company had unilaterally varied the terms of her contract of employment resulting in its repudiation and entitling Ms Owens to view the contract as at an end effective from the date of the letter.
[15] This prompted a response dated 13 September 2010 from the Company’s solicitors to the effect that the Company had merely accommodated Ms Owens’ request to come off the road. The letter went on to advise that should Ms Owens wish to resume her substantive position this was an option. Ms Owens did not accept this offer, treated her employment as having been terminated and brought her application for relief.
[16] As the Company contended that Ms Owens had resigned, it was necessary for the Commissioner to ascertain whether there had been a “dismissal” in order that the jurisdiction of Fair Work Australia (FWA) was enlivened. The Commissioner referred to s.386 of the Act which relevantly reads:
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
…
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
…
[17] The Commissioner said:
“[57] I have found that although the concept of the applicant coming off the road was agreed in principle, there was no agreement to the terms of any revised role or to a significant reduction in the remuneration package. These changes were applied by the respondent in announcing the new role and actually reducing the applicant’s remuneration package initially by $10,000 and later by $18,000.
[58] When considered in the context of the decision to push ahead with these changes despite the evident lack of agreement, and in the case of the $18,000 reduction, the absence of any discussions leading to that further change, this conduct is such that the probable result was the conclusion of the employment relationship. To the extent that the applicant’s solicitor’s letter of 7 September 2010 or her failure to agree to resume her duties following the respondent’s solicitor’s letter of 13 September 2010 were considered to be a resignation, this in my view was forced by the conduct of the respondent within the meaning of s.386 of the Act.
[59] In reaching that conclusion, I have considered the fact that the applicant did not contact Ms McDowell after the receipt of the advice that the salary package was to be reduced. This would have been an option and is a relevant factor. However, despite knowledge within the organisation that the applicant had expressed serious concerns about the proposals and the apparent motive of the employer, and later refused to sign the amended terms of employment, no one within Human Resources or a decision maker from head office contacted the applicant during that period. This aspect also forms part of the objective consideration of the overall circumstances and the respondent’s course of conduct.
[60] I turn now to the exceptions in s.386(2) of the Act. To the extent that the position of Telephonist/Customer Service was a demotion for the applicant, it did in my view involve a substantial reduction in remuneration and duties. The loss of $18,000 in the context of the original package of $70,000 is significant and this alone is sufficient for the exception in s.386(2)(c) not to apply. The exceptions in s.386(2)(a) and (b) are not relevant in this matter.
[61] In the circumstances I find that the applicant was dismissed by the respondent within the meaning of s.386 of the Act.”
[18] Section 604 of the Act provides that a person who is aggrieved by a decision such as the one made here may appeal to a Full Bench of FWA.
[19] However s.400 of the Act limits that right in unfair dismissal cases. It provides:
400 Appeal rights
(1) Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by FWA in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.
[20] As was said by a Full Bench in GlaxoSmithKline Australia Pty Ltd v Makin 1:
“[3] Prior to the introduction of the Act the manner in which an appeal against an unfair dismissal decision proceeded was the same as with appeals from other decisions, but only on the grounds that the Australian Industrial Relations Commission was in error in deciding to make the order. 2 The conventional grounds for granting leave to appeal3 otherwise applied under the Workplace Relations Act 1996, being whether the decision was attended by sufficient doubt to warrant its reconsideration or whether substantial injustice would result if leave were refused. However, even absent the conventional grounds, if the Commission was of the opinion that the matter was of such importance that it was in the public interest that leave should be granted the Commission was required to grant leave. Alternatively, leave could be granted if error could be demonstrated.4
[4] It can be seen that a significant change to the granting of permission to appeal was wrought by the introduction of the Act.”
[21] The Full Bench indicated some of the situations in which the public interest might be attracted:
“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. 5
[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
[22] The grounds of the appeal were essentially that the Commissioner erred in finding that there was any dismissal and in finding that the termination of Ms Owens’ employment was at the initiative of the Company. Inferentially the grounds were also to the effect that if there was a termination of the employment at the initiative of the employer, the termination was fair and, even if it was unfair, the award of compensation was excessive.
[23] As FWA can only deal with an application for relief under s.394 where a person has been dismissed, the appeal raises issues going to the jurisdiction to deal with the application.
[24] In the circumstances was there a repudiation by the Company of Ms Owens’ contract of employment?
[25] In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd 6 the High Court observed:
“Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party’s inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligation and not in any other way.” 7
...
“The question is what effect the [defaulter’s] conduct “would be reasonably calculated to have upon a reasonable person” (per Lord Herschell L.C., Carswell v. Collard (89); Forslind v. Bechely-Crundall (90)). It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it.” 8
[26] Was the conduct of the Company such it would convey to a reasonable person, in the situation of Ms Owens, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it?
[27] When viewing the evidence in its entirety, we think the Commissioner was correct in concluding that there had been a repudiation of Ms Owens’ contract of employment. Although the change to Ms Owens’ contract occurred because there was a mutual desire to ease her burden prior to going on maternity leave, there appears to have been misunderstanding and miscommunication between Ms Owens and the Company and between Mr Preece and his superiors. It is likely that at all times the Company’s Managing Director and the Chief Operating Officer were of the view that Ms Owens had agreed to the transfer.
[28] However, the conversation of 31 August 2010 between Mr Preece and Ms Owens is a clear indication that Ms Owens had not agreed to the alteration to her position and that she believed that the Company had acted unilaterally in effecting it. Mr Preece should have been left in no doubt that Ms Owens had not agreed to the reduced position at an annual salary of $52,000. He did not tell her that she still had the option of retaining her substantive position at $70,000 per annum. Contrary to what was put on the Company’s behalf in the appeal she effectively had no option to elect whether to come off the road at $52,000 or to remain on the road at $70,000. Mr Preece’s, and therefore the Company’s, actions were such as they would convey to a reasonable person in Ms Owens’ position, that the Company did not, as at 31 August 2010, intend to abide by its contract with Ms Owens. It had repudiated the contract and Ms Owens, through her solicitors, accepted the repudiation and treated her contract of employment and her employment as at an end.
[29] The learned Commissioner did not err in concluding that there had been a termination of Ms Owens’ employment at the initiative of the Company.
[30] In the grounds of appeal it is complained that the Commissioner erred in finding that the treatment of Ms Owens was “very poor indeed” and that the Commissioner’s award of 26 weeks less contingencies ($25,821) as compensation was excessive. The Company relied on the submissions it made to the Commissioner, but this aspect of the appeal was not developed in the hearing.
[31] The hearing before the Commissioner focused almost entirely on whether there had been a dismissal. Very little was put as to fairness or remedy. The same approach was adopted before us. In answer to a question from the bench, the Company’s solicitor said that he adhered to what he said to the Commissioner. Given that approach, nothing that was put to us indicates that the Commissioner erred in finding that the dismissal was unfair or in awarding the remedy that he did.
[32] Although permission to appeal on public interest grounds is often given when questions of jurisdiction fall to be determined, given that we have concluded that no error on behalf of the Commissioner has been demonstrated the public interest is not attracted on that basis. In our view the present matter does not raise issues of importance or general application as it relates to the particular and somewhat special circumstances of this case.
[33] We recognise that the process embarked upon by the Company and Ms Owens was directed at trying to find ways in which to accommodate the position of an employee who had indicated a preference for changed duties in the period leading up to the taking of maternity leave. There can be no criticism of the Company for making endeavours and exploring options for assisting the employee in this way. However, as was found by the Commissioner on the evidence in this case, the process went astray when no agreement was reached between the parties as to the new functions and appropriate remuneration level and the Company nevertheless went ahead with implementing changes.
[34] In all the circumstances, we are unable to form the view that it is in the public interest that permission to appeal should be granted and we decline to grant it. The appeal is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
J. Hassett, solicitor for the Appellant.
N. Healy, Counsel for the Respondent.
Hearing details:
2011.
Adelaide:
May 5.
1 (2010) 197 IR 266, [2010] FWAFB 5343.
2 Workplace Relations Act 1996, s.685.
3 Wan v Australian Industrial Relations Commission (2001) 116 FCR 481 at [26].
4 S.170JF(2) of the pre-Work Choices Workplace Relations Act 1996.
5 Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210.
6 (1988-1989) 166 CLR 623.
7 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1988- 1989) 166 CLR 623 at p. 647 per Brennan, J.
8 Ibid at p.658 per Deane and Dawson, JJ.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR509529>