[2014] FWCFB 7198
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.604—Appeal of decision

Thinh Nguyen
(C2014/5360)
Thanh Le
(C2014/5361)
v
Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter

JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER WILSON

 

MELBOURNE, 21 OCTOBER 2014

Unfair dismissal appeal - s.394 Fair Work Act 2009 (Cth) - remedy - reinstatement - loss of trust and confidence - public interest not enlivened - permission to appeal refused

Introduction

[1] Thinh Nguyen and Thanh Le (the Appellants) were dismissed from their employment with Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australian Chapter (the Respondent) on 3 February 2014 and subsequently lodged an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Cth) (the FW Act)

[2] On 30 May 2014 Senior Deputy President O’Callaghan dismissed a range of jurisdictional objections to the applications 1 and the merits of the applications were the subject of a determinative conference on 24 June 2014. At the determinative conference the Respondent conceded that the Appellants had been unfairly dismissed, within the meaning of s.387 of the FW Act. We note that this concession was made by counsel on behalf of the Respondent, who had been granted permission to appear pursuant to s.596(2). On the basis of the Respondent’s concession and the information before him his Honour found that the Appellants had been unfairly dismissed and that the Commission’s discretion to order a remedy was enlivened.2 In a decision issued on 8 July 2014 the Senior Deputy President concluded that reinstatement was inappropriate and made an order for compensation.3 The Appellants have appealed his Honour’s decision and that is the matter before us.

[3] An appeal under s.604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 4 There is no right to appeal, rather an appeal may only be made with the permission of the Commission.

[4] The decision subject to appeal was made under Part 3.2 - Unfair Dismissal - of the FW Act. Section 400 (1) provides that permission to appeal must not be granted from such a decision unless the Commission considers that it is in the public interest to do so. Further, in such matters appeals on a question of fact may only be made on the ground that the decision involved a ‘significant error of fact’ (s.400(2)). In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as ‘a stringent one’. 5 The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so’.

[5] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment 6. In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

[6] As we have mentioned the appeal concerns his Honour’s finding that reinstatement was inappropriate in the circumstances. In the proceedings at first instance the Appellants - who had been employed as teachers at the Respondent’s school, for many years - sought orders for reinstatement and the payment of lost remuneration. The Respondents opposed reinstatement, submitting that it was neither practical nor appropriate on the basis that, among other things, the relationship between the parties had been so damaged that it could not be restored and changing teachers part way through the year would be detrimental to the students.

[7] Before turning to his Honour’s decision we propose to set out the relevant legislative provisions and to consider the authorities relevant to the Commission’s determination of the remedy for an unfair dismissal.

[8] Remedies for unfair dismissals are dealt with in Division 4 of Part 3-2 of the FW Act (ss.390-393). Section 390 is the relevant provision for present purposes, it states:

[9] The question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one. No party in the proceedings at first instance suggested that his Honour exercise his discretion not to order a remedy at all. Indeed the Respondent was not opposed to an appropriate amount of compensation being awarded. 8 It is implicit from his Honour’s decision that he concluded that a remedy was appropriate in the circumstances, the issue became the form of the remedy.

[10] Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair dismissal as the discretion to order a remedy of compensation may only be exercised if the Commission is satisfied that reinstatement is ‘inappropriate’. Further, one of the objects of Part 3-2 of Chapter 3, in which the unfair dismissal provisions appear, is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement”. 9 We would observe that to describe reinstatement as the ‘primary remedy’, is to simply recognise that reinstatement is the first, perhaps even the foremost, remedy under the Act.10 The relevant question in determining whether to grant the remedy of reinstatement of an employee in relation to a dismissal that is found to have been ‘unfair’ is whether reinstatement is appropriate in the particular case.11

[11] Before turning to the authorities relevant to this question we propose to briefly set out the legislative development of the remedy provisions pertaining to unfair dismissal relief. In the federal context remedies for ‘unfairly’ dismissed employees first commenced on 30 March 1994 when Part VIA of the Industrial Relations Act 1988 (IR Act) commenced. The jurisdiction to order a remedy was conferred on the Federal Court 12 and section 170EE (2) of the IR Act then provided:

[12] On 25 November 1996 the IR Act was renamed the Workplace Relations Act 1996 (WR Act) and from 31 December 1996 the unfair dismissal scheme was amended such that remedies in respect of a harsh, unjust or unreasonable dismissals were thereafter dealt with by the Australian Industrial Relations Commission (AIRC) by conciliation and if needed, by arbitration. 13 Section 170CH(3) of the WR Act relevantly provided that the AIRC may make an order requiring the employer to reinstate the employee if it “considers it appropriate”. Section 170CH(6) of the WR Act provided as follows:

[13] The remedy provisions of the WR Act are to the same effect as section 390 of the Act. Both schemes emphasise reinstatement as the primary remedy with compensation available as a remedy only when reinstatement is inappropriate and the only relevant question as to remedy under both schemes is whether reinstatement is appropriate.

[14] The earlier IR Act provision required a consideration of the ‘practicability’ of reinstatement, whereas the latter WR Act provisions (at s.390 of the FW Act) focussed attention on whether reinstatement of the employee is ‘appropriate’ and permitted orders of compensation to be made only if the Commission thought that reinstatement is ‘inappropriate’.

[15] In Australia Meat Holdings Pty Ltd v McLauchlan 14 a Full Bench of the AIRC gave consideration to the differences in the provisions of the IR Act and the WR Act and concluded that “a consideration of appropriateness of reinstatement involves the assessment of a broader range of factors than practicability . . . [I]n considering whether to order the reinstatement the Commission is not confined to an assessment of the practicability of such an order are that must decide whether such an order is appropriate”15. We agree with this observation.

[16] We now turn to the relevant question concerning the appropriateness of reinstatement.

[17] Reinstatement might be inappropriate in a whole range of circumstances, for example if such an order would be futile such as where reinstatement of an employee would almost certainly lead to a further termination of the employee’s employment because the employer has since discovered that the employee engaged in an act of serious misconduct which was only discovered after the employee’s termination 16 or if the employer no longer conducts a business into which the employee may be reappointed.17 The fact that the employer has filled the position previously occupied by the dismissed employee would rarely, of itself, justify a conclusion that reinstatement was not appropriate. As a Full Bench of the AIRC observed in Smith v Moore Paragon Australia Ltd18,:

[18] A similar observation was made by Northrop J in Johns v Gunns Ltd 19

[19] Reinstatement may be inappropriate if an employee is incapacitated because of illness or injury. The weight to be accorded to ongoing incapacity when considering whether reinstatement is appropriate will depend upon all of the circumstances of the case. 20

[20] The most common argument advanced in support of the proposition that reinstatement is inappropriate is the proposition, variously expressed, that there has been a loss of trust and confidence such that it would not be feasible to re-establish the employment relationship.

[21] In Perkins v Grace Worldwide (Aust) Pty Ltd 21 the Full Court of the Industrial Relations Court considered the effect of a loss of trust and confidence on the question of the “practicability” of a reinstatement remedy and said:

[22] As the Full Bench of the AIRC observed in McLauchlan, although Perkins was decided under the IR Act, the Court’s observations reproduced above remain relevant to the question of whether reinstatement is appropriate in a particular case. 23

[23] In speaking of ‘trust and confidence’ in this context we are concerned with that which is essential to make an employment relationship workable. It is not to be confused with an implied term in a contract of employment of mutual trust and confidence, the existence of which was recently eschewed by the High Court in Commonwealth Bank of Australia v Barker. 24

[24] While it may be accepted that trust and confidence is a necessary ingredient in any employment relationship, it would be wrong to assume that it is the sole criterion or even a necessary one to determine whether or not reinstatement is appropriate. 25 As Justice Gray observed in Australasian Meat Industry Employees’ Union v G & K O’Connor Pty Ltd (O’Connor) the development of the law relating to trust and confidence in the employment relationship commenced when that relationship invariably involved a close personal relationship between the employer and employee, but with the emergence of corporate employers, the importance of trust and confidence in the employment relationship has diminished.26

[25] Justice Gray’s remarks were considered by Deputy President Gostencnik in Colson v Barwon Health 27 in which the Deputy President observed:

[26] Permission to appeal from Deputy President Gostencnik’s decision was refused. 30

[27] The following propositions concerning the impact of a loss of trust and confidence on the question of whether reinstatement is appropriate may be distilled from the decided cases:

[28] Ultimately, the question is whether there can be a sufficient level of trust and confidence restored to make the relationship viable and productive. In making this assessment, it is appropriate to consider the rationality of any attitude taken by a party.

[29] In the decision subject to appeal his Honour proceeded on the basis that reinstatement was the primary remedy and set out the parties’ contentions. 36 His Honour’s consideration of whether reinstatement was an appropriate remedy is set out at paragraphs [10]-[17] of his decision:

[30] His Honour then set out the passage from Perkins which appears at paragraph [21] above.

[31] It is apparent from this extract from his Honour’s decision that he had regard to the following matters in determining that reinstatement was inappropriate:

[32] The Appellants submit that there was no evidence in support of the proposition set out at (iii), that is, that reinstatement would be disruptive for the School and its students. Contrary to the Appellants’ submission this matter was the subject of evidence in the proceedings at first instance. Ms Lan Han, the School Supervisor, gave evidence in those proceedings and the following exchange took place during the course of her cross examination by Ms Le:

[33] The Senior Deputy President was entitled to rely on this evidence in support of the finding he made that reinstatement would be disruptive for the School and its students.

[34] The Appellants’ submissions canvassed a range of other matters but the essence of their submission is that the decision not to order reinstatement was unfair in circumstances where the Respondent had acted unlawfully (in unfairly dismissing them), they (the Appellants) had done nothing wrong and they had been working for the Respondent for a long time.

[35] The Appellants’ submissions appear to proceed on the basis that reinstatement automatically follows from a finding of unfair dismissal. This is not correct. There is no right to reinstatement consequent upon a finding that an applicant has been unfairly dismissed. The Commission has a discretion as to whether a remedy will be awarded in a case where a dismissal has been found to be unfair. Reinstatement will only be awarded if the Commission is satisfied that it is appropriate to do so.

[36] The matters raised by the Appellants do not persuade us that the Senior Deputy President erred in his consideration of the question of remedy. There is however one matter which was raised during the course of oral argument which we wish to deal with. At paragraph [14] of his decision the Senior Deputy President states that he has had regard to the underpayment litigation in his consideration of whether reinstatement is appropriate. His Honour says, at paragraph [14]:

[37] In pursuing their underpayment claim the Appellants are exercising a workplace right, within the meaning of s.341(1)(b) of the FW Act. Part 3-1 of the FW Act prohibits an employer from taking adverse action against an employee because, relevantly, that employee exercises a workplace right. It would be incongruous if the exercise of a workplace right operated as a barrier to reinstatement in an unfair dismissal proceeding in circumstances where Part 3-1 of the FW Act prohibits an employer from terminating the employment of an employee who exercises a workplace right.

[38] The fact that the Appellants have pursued an underpayment claim and that this has given rise to a degree of acrimony between the parties is not a matter which should be taken into account in determining whether reinstatement is appropriate. It follows that the Senior Deputy President made an error in his consideration of this issue, in that he took account of an irrelevant consideration.

[39] However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.  39 As we have mentioned, s.400(1) provides that permission to appeal must not be granted unless the Commission considers that it is in the public interest to do so.

[40] While the Senior Deputy President took account of an irrelevant consideration in his determination of the appropriateness of reinstatement we are not persuaded that, in the circumstances of this case, such an error enlivens the public interest. It is apparent from his Honour’s decision that the irrelevant consideration was not the only matter to which he had regard in deciding that reinstatement was not appropriate. In particular, he had regard to the fact that reinstatement would be disruptive to the School and the students and, importantly, his Honour relied on his direct observation of the interaction between the parties during the determinative conference. On the basis of his observation of the parties his Honour said, at paragraph [15] of his decision,:

[41] His Honour also took into account the declaration signed by 20 of the School’s teachers and that it identified the potential for disruption and conflict between the Appellant’s and these teachers. 40

[42] It seems to us that - absent the irrelevant consideration - there was a sound and rational basis for concluding that it was inappropriate to restore the employment relationship. The damage to the relationship between the parties that was evident to His Honour during the conduct of the proceedings combined with the potential for conflict between the Appellants and a significant number of the School’s teachers seems to us to provide proper basis, without more, for coming to that conclusion. In such circumstances we are not persuaded that his Honour’s error in having regard to an irrelevant consideration manifests an injustice. In short, we are satisfied that the outcome would be the same whether or not the irrelevant consideration was taken into account.

[43] For the reasons given we are not satisfied that it is in the public interest to grant permission to appeal and accordingly permission to appeal is refused.

PRESIDENT

Appearances:

Mr Nguyen & Mrs Le on their own behalf

Mr Austin, counsel, for the Respondent

Hearing details:

Melbourne;

19 September 2014.

Final written submission received 8 October 2014.

 1   [2014] FWC 3574; Print PR55152

 2   [2014] FWC 4314

 3   [2014] FWC 4314 and PR552590

 4   This is so because on appeal FWC has power to receive further evidence, pursuant to s.607(2); see Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.

 5   (2011) 192 FCR 78 at paragraph 43.

 6   O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at paragraph 69 per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54 at paragraphs 44 - 46.

 7   (2010) 197 IR 266 at paragraph 27.

 8   Transcript 24 June 2014 at paragraph 183

 9   Section 381(1)(c) Fair Work Act 2009 (Cth)

 10   Wark v Melbourne City Toyota, Print R4864, 20 May 1999 per Williams SDP, Acton SDP and Tolley C; Newtronics Pty Ltd v Salenga, Print R4305, 29 April 1999 per Polites SDP, Acton DP and Smith C; Rowley v EDI Rail Pty Ltd [2008] AIRCFB64; Colson v Barwon Health [2014] FWCFB 1949

 11   Regional Express Holdings Limited trading as REX Airlines v Richards [2010] FWAFB 8753 at [23]-[24]; Colson v Barwon Health [2014] FWCFB 1949 at [30]-[31]

 12   The then Australian Industrial Relations Commission could make an award that provided a remedy of a kind that could be granted by the Court under section 170EE of the IR Act if the parties made an election to have the matter dealt with by content arbitration; see section 170EC of the IR Act.

 13   See generally subdivision B of Division 3 of Part VIA of the WR Act

 14   (1998) 84 IR 1

 15   Ibid at 17

 16   Such discovery might also be relied upon by the employer as a valid reason for the employee’s dismissal which is the subject of an unfair dismissal remedy application.

 17   Chelvarajah v Global Protection Pty Ltd (2004) 142 FCR 296

 18   (2004) 130 IR 446 at 452, [15]

 19   (1995) 60 IR 258 at 271-271

 20   See generally Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [48]-[54]

 21   (1997) 72 IR 186 at 191

 22   Ibid

 23   (1998) 84 IR 1 at 18. Also see IGA Distribution (Vic) Pty Ltd v Cong Nguyen [2011] FWAFB 4070; Colson v Barwon Health [2014] FWCFB 1949

 24   [2014] HCA 32 (10 September 2014)

 25   See Tenix Defence Pty Ltd v Galea, PR928494, 11 March 2003; see also Liddell v Lembke (1994) 1 IRCR 466, per Gray J at 495 and Abbott-Etherington v Houghton Motors Pty Limited (1995) 63 IR 394, per Marshall J at 396-397; Tenix Defence Pty Ltd v Galea [2003] AIRC 231 (11 March 2003) at [7]-[8]

 26   [2000] FCA 627 at [42]

 27   [2013] FWC 8734 at [21]-[22]. A Full Bench refused permission to appeal: [2014] FWCFB 1949

 28   Australasian Meat Industry Employees’ Union v G & K O’Connor Pty Ltd [2000] FCA 627

 29   Ibid.

 30   See [2014] FWCFB 1949

 31   Tenix Defence Pty Ltd v Galea [2003] AIRC (11 March 2003) at [7]-[8]

 32   Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at 191

 33   Ibid.

 34   Ibid.

 35   Ibid.

 36   [2014] FWC 4314 at [8]-[9]

 37   See for example Ngyuen v IGA Distribution (Vic) Pty Ltd [2011] FWA 3354 where this approach was not challenged on appeal and EDI Rail Pty Ltd v Rowley [2008] AIRCFB 64

 38   Transcript of the proceedings on 24 June 2014 paragraphs 424-425 and 444

 39   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27]; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler; [2011] FCAFC 54; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

 40   [2014] FWC 4314 at [16]

Printed by authority of the Commonwealth Government Printer

<Price code (C) PR556511>