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Workplace Relations Act 1996

s.45 appeal against decision and order [Print PR908082]

of Cribb C on 4 September 2001

Enhance Systems Pty Ltd


James Cox

(C 2001/4973)

s.170CE application for relief in respect of termination of employment

James Cox


Enhance Systems Pty Ltd

(U No. 30161 of 2000)






[1] This is an appeal for which leave is required by Enhance Systems Pty Ltd (the appellant) against the decision and order of Commissioner Cribb on 4 September 2001.1 In that decision, the Commissioner found that the appellant's termination of the employment of James Cox (the respondent) on 6 January 2000 was harsh and ordered that the appellant pay to the respondent the sum of $14,422.00 in lieu of reinstatement.

[2] The factual circumstances leading up to the termination are comprehensively canvassed in the Commissioner's decision. We do not need to reiterate them in detail in this decision. The appellant does not, in general, challenge the Commissioner's findings of fact, which, for the purposes of this decision, may be briefly summarised as follows -

Decision and order subject to appeal

[3] In her decision, the Commissioner, after setting out the facts and the parties' submissions, noted that none of the statutory considerations contained in s.170CG(3) of the Workplace Relations Act 1996 (the WR Act) "is, in itself, determinative of whether the termination is harsh, unjust or unreasonable" [para 128]. In respect of these statutory considerations, she made the following findings -

[4] The Commissioner then went on to state -

[5] On the question of remedy, the Commissioner found that it was appropriate to make an order providing for a remedy [para 149], that reinstatement was not an appropriate remedy [para 150] but that an order for an amount in lieu of reinstatement was appropriate [para 151]. After referring to the decisions in Sprigg v Paul's Licensed Festival Supermarket (Sprigg)2, Ellawalla v Australian Postal Corporation (Ellawalla)3 and Maluk v Sutton Tools Pty Ltd4 and the provisions of s.170CH(7) of the WR Act, the Commissioner went on to state -

Notice of appeal

[6] The notice of appeal in this matter was lodged in the Registry on 25 September 2001. On the same date, the Commissioner issued a formal order5 in the following terms -

[7] There is some doubt as to whether or not there was any need for this formal order to be issued. The Commissioner's decision, as stated earlier, concludes with the statement -

There is considerable case law in relation to appeal under the Conciliation and Arbitration Act 1904 which supports the view that such a statement would constitute an order from which an appeal may lie.6 The statement appears to us to clearly express an intention on the part of the Commissioner to make an order. On the other hand, it may be argued that the order issued on 25 September 2001 superseded the earlier "order". If so, we note that the time provided in each of the orders for the payment of the amount varies.

[8] The question is of some relevance in this matter in that there has been no appeal lodged against the later order. However, there was no objection from the respondent to leave being granted, if necessary, for the notice of appeal to be amended to include an appeal against the order issued on 25 September 2001. To the extent that it is necessary, we grant such leave.

Appellate Principles

[9] The appeal in this matter is against a decision and order granting an application brought pursuant to s.170CE(1)(a) of the WR Act. That sub-section provides, in so far as is relevant, that -

[10] The appeal, subject to the grant of leave, is brought pursuant to s.45 of the WR Act. The powers that may be exercised by a Full Bench on the hearing of an appeal are set out in s.45(7). Those powers are exercisable only if there is error on the part of the primary decision-maker.7 The Commissioner's decision in this case may be appropriately described as a discretionary decision. The errors that might be made in exercising such a discretion were described in House v The King8 in the following terms:

Leave to Appeal

[11] In the circumstances, it is both convenient and appropriate that we consider the question of leave in conjunction with the merits. We would, however, reiterate the proper approach to the granting of leave to appeal.

[12] Section 45(1) of the WR Act makes it clear that an appeal lies to a Full Bench only with leave of the Full Bench. Section 45(2) requires a Full Bench to grant leave if it forms the opinion that the matter is of such importance that, in the public interest, leave to appeal should be granted. If such an opinion is formed, the Full Bench is obliged to grant leave. However, that obligatory basis for granting leave is additional to and does not replace the conventional grounds for granting leave. Such conventional grounds include -


[13] In relation to the Commissioner's finding that the termination of the respondent's employment was harsh, the primary submission of the appellant was that the Commissioner, having found that there was a valid reason for the termination, that the respondent had been notified of the reason for the termination, that the respondent had been given an opportunity to respond to that reason and that there were no other matters which she considered relevant, was obliged by the provisions of s.170CG(3) to conclude that the termination was neither harsh, nor unjust nor unreasonable. In effect, it was submitted that, in reaching a decision as to the fairness or otherwise of a termination, the Commission is obliged by s.170CG(3) to have regard only to the matters set out in that sub-section. There is no overarching discretion to which the Commission may have regard and which would allow a matter not identified in that sub-section to be considered for the purposes of reaching such a decision.

[14] The central issue for determination in an arbitration under s.170CG(3) of the WR Act is whether or not the termination in question was harsh, unjust or unreasonable. In making such a decision, the Commission must "have regard to all the circumstances of the case" and, in doing so, must treat each of the matters identified in paragraphs (a) to (e) of that sub-section, in so far as they are relevant to the factual circumstances of the case, as a matter of significance in the decision making process.10 It is true that, as was submitted on behalf of the respondent, s.170CG(3) does not in terms require the Commission to have regard only to those matters. Indeed, the sub-section commences with the stricture that the Commission is to "have regard to all the circumstances of the case". On the other hand, the requirement in paragraph (e) of that sub-section that the Commission must have regard to "any other matters that [it] considers relevant" is a clear indication that the decision is to be reached having regard only to relevant circumstances. As the Commission could not have regard to an irrelevant circumstance, it is difficult, if not impossible, to conceive of a matter to which the Commission might have regard that would not be encompassed by the requirements specified in the various paragraphs of s.170CG(3).

[15] It is clear, on any reading of the Commissioner's decision, that, despite her finding in paragraph [142] that there were no other matters which she considered relevant, she in fact identified matters in paragraphs [143] and [144] as being relevant to her decision that the termination was harsh.

[16] The first such matter was that the termination of the respondent's employment was disproportionate to the gravity of the respondent's conduct. It is well established that a termination of employment may be harsh because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct.11

[17] The second was the appellant's failure to try and resolve the issue between it and the respondent as to the respondent's entitlement to leave. We agree with the Commissioner that an employer has a responsibility, in circumstances such as those that pertained in this case, to try to resolve issues between it and an employee. Whether that amounts to a legal duty is not, in the facts of this case, important. The responsibility arises from the existence of the employment relationship. The responsibility is mutual. Employees must also contribute to the rational resolution of questions or disagreements that arise in relation to employment related issues. It is for these reasons that awards and agreements contain dispute resolution and grievance procedures.

[18] The Commissioner was entitled, in our view, to take both of these factors into account in determining whether or not the termination was harsh.

[19] We recognise that there is a logical inconsistency between the Commissioner's statement that there were no other matters which she considered relevant and the fact that she did have regard to other matters. That is no more, in our view, than a misunderstanding on the part of the Commissioner as to the breadth of the application of s.170CG(3)(e). The matters to which she had regard were matters which properly fell within the purview of that paragraph. They were matters that formed part of the circumstances of the case. The fact that she had regard to those matters does not, in our view, constitute an error of the kind described in House v The King.

[20] It was also submitted by the appellant that, unless otherwise dealt with as being a relevant consideration, the stage at which proportionality of penalty should be taken into account is at the stage of determining whether or not there was a valid reason for the termination. In support of that submission, the appellant referred to the following statement by Moore J in Edwards v Giudice and others12 -

[21] We do not see how this submission advances the appellant's case. It is well established that for a reason to be a valid reason for termination of employment it must be "sound, defensible or well founded".13 We can accept the proposition that, if a punishment is inappropriate to the circumstances, there can hardly be a defensible reason for that punishment.14 The reason for termination must be considered in the context of the penalty of termination and, for that reason, the termination needs, amongst other things, to be proportionate to the reason upon which reliance is placed. If the reason for the termination is particular conduct and that conduct does not justify termination, then the reason for the termination may not be valid.

[22] However, as the appellant recognised in its submissions, the issue of proportionality may arise under either paragraph (a) or paragraph (e) of s.170CG(3). In our view, whether or not, in a particular case, there is a valid reason for a termination of employment, the termination may still be found to be harsh on a number of bases including lack of proportionality.

[23] The remainder of the appellant's submissions in relation to merit essentially went to whether or not the Commissioner's conclusions were against the evidence or the weight of the evidence. We are not satisfied that, on the evidence before the Commissioner, it was not open to her to reach the conclusions that she did in respect to each of these matters.

[24] The appellant's submission in respect to remedy was not that no amount should have been ordered in lieu of reinstatement. The challenge was to the way in which the Commissioner calculated that amount.

[25] In making her calculation, the Commissioner purported to apply the principles set out in Sprigg and Ellawalla. Both of those decisions deal in some detail with the appropriate method for determining "lost remuneration" for the purposes of s.170CH(7)(c) of the WR Act.

[26] In Shorten and others v Australian Meat Holdings Pty Ltd15, Ross VP had applied, in respect to the assessment of an award of compensation for unfair dismissal, the approach adopted by the former Industrial Relations Court of Australia to assessing the amount of compensation to be awarded in unlawful termination cases. He described that approach as follows -

[27] In Sprigg17, the Full Bench stated that Steps 1 to 4 as set out above -

[28] In Ellawalla19, the Full Bench stated -

[29] In the decision subject to appeal, the Commissioner's approach involved an assessment by her that it was likely that the respondent's employment would, but for the termination, have continued for at least a year and, accordingly, the amount payable for that period was calculated at $36,054.00. The appellant contends that this assessment failed to take into account that the respondent would have continued to exercise what he perceived to be his entitlement and to take time off in lieu when a public holiday fell on a rostered day off. Such conduct would, it was submitted, have resulted in his dismissal within a period of twelve months.

[30] In both Sprigg20 and Ellawalla21, Full Benches have recognised that the assessment of remuneration lost is often difficult and involves an element of speculation. However, as was accepted in Sprigg the "assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law." We do not consider it appropriate that we interfere with the Commissioner's assessment. She formed her view having heard all the evidence and having had the opportunity to observe both the respondent and the relevant management employees of the appellant. She was clearly of the view that the appellant could do more to resolve the issue between it and the respondent. She was entitled to take the position that, with further discussion, that issue may have been resolved.

[31] The Commissioner went on to reduce the amount of $36,054.00 by 60% as a deduction for contingencies "on the basis that the applicant made little effort to mitigate his loss arising from his termination". In this respect, the Commissioner appears to have confused the making of an appropriate deduction for contingencies with the possibility of reducing the amount for failure on the employee's part to mitigate his or her loss. In our view, this aspect of her decision constitutes an error of the kind described in House v The King warranting intervention on appeal.

[32] In our view, bearing in mind the requirement of s.170CH(7) that the Commission "must have regard to" each of the circumstances identified in paragraphs (a) to (e) of that sub-section, not only must each of those circumstances be treated as a "a fundamental element" in assessing an amount to be ordered in lieu of reinstatement22, they must be so treated separately one from the other. The matter referred to in paragraph (c) is but one of four separately specified matters to which the Commission is required to have regard.23 There can be no suggestion that any one such matter is to receive more or less weight than any other.

[33] The "steps" contained in Shorten, Sprigg and Ellawalla are concerned with the manner in which lost remuneration is to be calculated for the purposes of s.170CH(7)(c). The fact that s.170CH(7)(d) separately directs attention to the mitigation efforts of the employee requires that the failure to mitigate is a matter that is to be taken into account as a separate and distinct matter from the calculation of lost remuneration. To do otherwise would involve an element of "double counting" for failure to mitigate.

Disposal of appeal

[34] For the reasons set out above, we consider that the Commissioner's determination of the amount to be ordered to be paid in lieu of reinstatement constitutes an error for the purposes of s.170JF(2) of the WR Act. We, therefore, grant leave to appeal.

[35] We intend to exercise the power conferred by s.45(7)(b) and ourselves make a decision in relation to this aspect of the subject-matter of the Commissioner's decision. It is appropriate to do so on the basis of the material before the Commissioner. Each party has had an adequate opportunity to address the issue of remedy and to call all evidence relevant to its case in the proceedings before the Commissioner. We do not see any compelling ground to reopen the evidence at this appeal stage.

[36] Having regard to the requirements of s.170CH(2) of the WR Act, we consider that it is appropriate that a remedy be ordered. For the same reasons as expressed by the Commissioner, we do not consider that reinstatement is an appropriate remedy. We do, however, consider that, in all the circumstances, it is appropriate that an amount be ordered to be paid in lieu of reinstatement.

[37] We have already accepted that the Commissioner's assessment of the "anticipated period of employment" as being at least one year was one with which we would not wish to interfere. We adopt that assessment which provides a starting figure of $36,054.00. No remuneration had been earned by the respondent between the date of termination and the final date of hearing before the Commissioner.

[38] Any discount for contingencies depends upon the circumstances of each particular case. As was said in Ellawala:

[39] For the period from the date of the termination of employment until the hearing of this application by the Commission at first instance, the economic effect of the termination of the respondent's employment is known and capable of calculation. There is considerable force in the argument that any discount for contingencies should only be applied in respect to an "anticipated period of employment" that is not actually known, i.e. a period that is prospective to the date of the decision.25 We make no discount for the period actually known.

[40] In relation to the "anticipated period of employment" that is not actually known, there appears to us to be no warrant for adopting any percentage figure as a general rule for discounting.26 It may well be that the percentage figure should be related to the length of the "anticipated period of employment", i.e. the shorter the "anticipated period of employment", the lesser the percentage. In this case, we are satisfied that, for the unknown portion of the estimated "anticipated period of employment", the amount of deduction for contingencies should be 15 per cent. We have considered the impact of taxation but we elect to settle a gross amount and leave taxation for determination.

[41] Applying the above, the amount provisionally arrived at would be calculated in the following manner:

[42] There was no material before the Commissioner which would suggest that an order for that amount would affect the viability of the appellant's undertaking, establishment or service. We do not consider that the length of the respondent's service militates against an order for that amount. We do accept, however, that the amount should be reduced by reason of the respondent's failure to make a reasonable effort to mitigate his loss. In this respect, we adopt the Commissioner's findings at paragraph [148]. We do not consider it necessary that the amount of the deduction to be made needs to be specified in percentage terms. There are no other matters which we consider relevant to this question.

[43] In all the circumstances, we consider that the amount ultimately fixed by the Commissioner as the amount to be ordered in lieu of reinstatement is appropriate. We, therefore, dismiss the appeal.




P. Burchardt for Enhance Systems Pty Ltd.

P. Rozen for James Cox.

Hearing details:



October 15.

1 Print PR908082.

2 (1998) 88 IR 21.

3 Print S5109, 17 April 2000 (Ross VP, Williams SDP and Gay C).

4 Print R0486, 6 January 1999 (Ross VP).

5 Print PR909707.

6 See for example Re Meat Industry (Shops and Smallgoods Factories) Award (1955) 84 CAR 41; Federated Ship Painters and Dockers Union v Federated Ironworkers' Association of Australia (1962) 99 CAR 585.

7 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 174 ALR 585, 74 ALJR 1348.

8 (1936) 55 CLR 499, at 505. This passage was cited with approval by the majority in Coal & Allied Pty Ltd v Australian Industrial Relations Commission (2000) 174 ALR 585, 74 ALJR 1348.

9 Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1998) 84 IR 314, 333.

10 See generally Edwards v Giudice (1999) 169 ALR 90, at 92 (per Moore J); Chubb Security Australia Pty Ltd v John Thomas, Print S2679, 2 February 2000 (McIntyre VP, Marsh SDP and Larkin C); King v Freshmore (Vic)Pty Ltd, Print S4213, 17 March 2000 (Ross VP, Williams SDP and Hingley C); Ellawalla v Australian Postal Corporation Print S5109, 17 April 2000 (Ross VP, Williams SDP and Gay C)

11 Byrne and another v Australian Airlines Ltd (1995) 185 CLR 410, at 465 (per McHugh and Gummow JJ); Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1, at 10.

12 (1999) 169 ALR 88, at 92.

13 (1995) 62 IR 371, at 373 (Northrop J).

14 Ricegrowers Co-operative Limited v Schliebs Print PR 908351, 31 August 2001 (Duncan SDP, Cartwright SDP and Larkin C).

15 (1996) 70 IR 360.

16 (1996) 70 IR 360, at 381.

17 (1998) 88 IR 21.

18 (1998) 88 IR 21, at 32.

19 Print S5109, 17 April 2000 (Ross VP, Williams SDP and Gay C).

20 (1998) 88 IR 21 at 32.

21 Print S5109, 17 April 2000 (Ross VP, Williams SDP and Gay C), para [33].

22 Queensland Medical Laboratories v Blewett (1988) 84 ALR 615, at 623 (per Gummow J); R v Hunt; Ex parte Seas Investment Pty Ltd (1979) 25 ALR 497, at 504 (per Mason J).

23 In Windsor Smith v Liu and others Print Q3462, 13 July 1998 (Giudice J, Polites SDP and Gay C), the Full Bench, in dealing with the requirements of s.170CG(3), stated that whether there was a valid reason for a termination "is only one of four separately specified matters" to which the Commission must have regard.

24 Print S5109, 17 April 2000, at para [43]. See also Henderson v Department of Defence Print T0775, 14 September 2000 (Giudice J, Williams SDP and McCutcheon C).

25 Ellawalla v Australian Postal Corporation Print S5109, 17 April 2000; Smith v Capral Aluminium Print P1054, 19 November 1999.

26 Ellawalla v Australian Postal Corporation Print S5109, 17 April 2000.

Printed by authority of the Commonwealth Government Printer

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