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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.45 appeal against decision [PR919363]
issued by Whelan C on 24 June 2002
s.170CE application for relief in respect of termination of employment
SENIOR DEPUTY PRESIDENT POLITES
SENIOR DEPUTY PRESIDENT O'CALLAGHAN
SYDNEY, 12 SEPTEMBER 2002
Appeal re termination of employment.
 This is an appeal from a decision of Whelan C dismissing for want of jurisdiction an application for relief in respect of termination of employment by RMIT University (RMIT). Ms Elizabeth Gorczyca's (the appellant) employment history is set out in Whelan C's decision and we shall not set it out in full. It is sufficient to say that on 21 June 1996 the appellant was promoted to Associate Professor which was the position she occupied before her demotion by letter dated 21 December 2001. The relevant passage reads as follows:
"Having considered carefully the options available to the University, I have determined that the appropriate action in this instance will be a demotion from your current classification level of Academic D/4 to Academic C/1. This demotion will be effective from the date of this letter."
 In demoting the appellant, Whelan C appears to have found that the Vice-Chancellor was acting under Schedule 2 of the certified agreement known as the Royal Melbourne Institute of Technology, Academic and General Staff (PACCT) Enterprise Agreement 2000 [PR900398 [AG804836]] (the certified agreement). It is convenient here to set out some of the provisions of that schedule.
"1. TERMINATION OF EMPLOYMENT AND DISCIPLINARY ACTION
(a) All decisions to discipline or terminate the employment of an academic employee must be in accordance with this Agreement.
(b) All actions of the Vice-Chancellor under this clause shall be final except that nothing in this Agreement shall be construed as excluding the jurisdiction of any external court or tribunal which, but for this Agreement, would be competent to deal with the matter.
. . .
3. DISCIPLINARY PROCEDURES
(i) `Termination of employment' means termination of employment at the initiative of RMIT University.
(ii) `Disciplinary action' means action by RMIT University to discipline a member of academic staff for unsatisfactory performance, misconduct or serious misconduct and is limited to:
(1) Formal censure or counselling;
(2) Demotion by one or more classification levels or increments;
(3) Withholding of an increment;
(4) Suspension with or without pay;
(5) Transfer to another position in the same or another department, at the same or another RMIT campus or site;
(6) Termination of employment.
(iii) `Serious misconduct' shall mean:
(1) Serious misbehavior of a kind which constitutes a serious impediment to the carrying out of an academic's duties or to an academic's colleagues carrying out their duties.
(2) Serious dereliction of the duties required of the academic office.
(3) Conviction by a court of an offence which constitutes a serious impediment of the kind referred to in paragraph (iii)(1).
(iv) `Misconduct' shall mean conduct or behaviour which is not serious misconduct, but which is nonetheless conduct or behavior that is unsatisfactory.
(v) `Supervisor' shall mean the head of the academic unit in which the academic is employed. However, the Vice-Chancellor may delegate in writing another academic staff member classified at Level C or above to be supervisor of one or more academics or a group of academics.
(b) . . .
(viii) The terms of this clause shall cover exhaustively the subject matter concerned, and are to the complete exclusion of:
(1) The RMIT Act 1992 and any other State law (including any written or unwritten law pursuant to which the Visitor to RMIT may exercise any jurisdiction or power) in respect of any matter subject to this clause; and
(2) any law of the Commonwealth in respect of which the Australian Industrial Relations Commission has power to make an award which is not consistent with that law (including any written or unwritten law pursuant to which the Visitor to RMIT may exercise any jurisdiction or power) in respect of any matter subject to this clause to the extent that this clause is not consistent with that law; and
(3) any procedural requirements imposed by laws referred to in sub clause (viii)(1) and (2) are entirely displaced and extinguished by force of this clause.
(ix) Disciplinary action may only be taken by the Vice-Chancellor."
 The argument before Whelan C was in essence as follows. The respondent submitted that the Workplace Relations Act 1996 (the Act) did not operate to alter the reasoning of the Commission in Hermann v Qantas Airways Limited (Hermann Case) [PR903096] and Boo Hwa Chan v Christmas Island Administration (Boo Hwa Chan Case) [Print S1443] that a demotion which might otherwise amount to a termination of employment will not do so if the employee's contract contains an express term allowing demotion or where an award gives the employer the option of redeployment or demotion as an alternative to terminating employment.
 The applicant submitted that there was a termination of employment within the meaning of s.170CE(1) of the Act. In particular, the applicant relied upon s.170CD(1B) of the Act, a provision inserted into the Act in August 2001 by the Workplace Relations Amendment (Termination of Employment) Act 2000. That provision reads:
"(1B)For the purposes of this Division, termination or termination of employment does not include demotion in employment if:
(a) the demotion does not involve a significant reduction in the remuneration or duties of the demoted employee; and
(b) the demoted employee remains employed with the employer who effected the demotion."
 It is not an issue before us that the demotion of the appellant involved a significant reduction in the remuneration of the appellant or that she continues to work for RMIT.
 Mr Irving, of Counsel, who appeared for the appellant, sought to develop his submission by arguing for three contentions. First, he submitted that in s.170CD of the Act termination should be defined as meaning termination of employment at the initiative of the employer. He then referred to s.170CD(1B) of the Act which we have set out earlier and submitted that if an employee falls within the phrase "termination of employment" then the employee may pursue an unfair dismissal case unless he/she has been demoted and the demotion is not significant in relation to remuneration or duties. He contrasted that position with the position under the former Act where he submitted demoted employees could not pursue an unfair dismissal application and in that regard referred, inter alia, to Strachan v Liquor land (Australia) Pty Ltd (Strachan) [IRC of A, NI 1266R of 1995, 6 February 1996, unreported] and Brackenridge v Toyota Motor Corporation Australia Ltd (Brackenridge) [(1996-1997) 142 ALR 99].
 Mr Irving also drew attention to the fact that the provisions of Subdivision B of the Division are not linked to the Termination of Employment Convention, 1982 (the Convention) as are the provisions of other subdivisions within the Division. In this respect he drew attention to Bluesuits Pty Limited t/a Toongabbie Hotel v Graham [(1999) 101 IR 28] and Boo Hwa Chan. He submitted that in late 1999 and 2000 a number of decisions expressed doubt as to whether Brackenridge continued to apply but the legislative change effected in 2000 which lead to s.170CD(1B) clearly resolved the uncertainty. Mr Irving in fact traced the history of the legislation through the Parliament including its consideration by Senate Committee, but we do not find it necessary to set this detail out here.
 Mr Irving's second contention was that the employment of an employee is terminated if the employee is demoted and receives a significant reduction and continues in employment. He submitted that the appellant met all of those criteria and in those circumstances, he submitted that in the absence of a contract or certified agreement removing the right to do so, the appellant had a right to pursue an action under Division 3 of Part VIA. In relation to the contract he submitted that Whelan C had made a finding that there was no provision in the contract of employment omitting the demotion of the appellant. That finding was not contested.
 I then move to his second point which was the existence of the certified agreement. He submitted that whether there was a termination of employment or not for purposes of the Act was a jurisdictional fact and he submitted "If a certified agreement or a contract says that certain events do not count as terminations of employment, then that does not bind in a determinative way this Commission" [Transcript PN113]. He submitted that it was a question for the Commission to look at all the facts and to decide for itself whether or not the person is an employee and whether or not there has been a termination of employment. He submitted that it was not the role of contracts or certified agreements to narrow or expand the jurisdiction of the Commission over unfair dismissals. It is convenient to set out his concluding submissions from transcript as follows:
"Now, assume one had a provision in a agreement which said: If you are dismissed on the grounds of sex, then that is not a termination of employment for the purposes of your employment - or for the purpose of this agreement. Assume you had a agreement which narrowed the scope of section 170CK by eliminating grounds. In this case you have got a agreement which it is said grants the employer the right to demote and therefore narrows the operation of what would otherwise be meant by termination of employment.
Subsection 170LU(2) indicates that the intention of the legislature was that rights under Division 3 of Part VIA could not be undermined by provisions of agreements. And subsection 170LZ seals it. See, subsection 170LZ deals with the relationship between agreements and other pieces of legislation. And it provides in subsection (1) the way in which LZ interrelates with State laws and awards, and in (2) and (3) including rules on termination.
And in (4) to the extent of any inconsistency a agreement displaces prescribed conditions of employment specified in a Commonwealth law that is prescribed by the regulations. That is, if you have got a Commonwealth law granting rights, then it can be displaced by a agreement if the Commonwealth law is one of those special class of prescribed laws. There are a special class of prescribed laws under the regulations, the details of which - if you will bear with me for two seconds, your Honours - the details of which are contained on a page of the regulations which is not re-printed in my CCH version, unfortunately. Your Honours may have a different CCH version.
It is somewhere between 30A and 30ZN from recollection. I think it may be - yes, it is 30ZE. Agreements can displace those Commonwealth laws but the Workplace Relations Act is not mentioned there. Division 3 of Part VIA isn't mentioned there. Agreements cannot displace the minimum entitlements contained in Part VIA in my submission. Agreements cannot narrow or expand the jurisdiction granted by Part VIA.
And the proper relationship is not that as described by her Honour in paragraphs 76, 83 and 84 of her decision. The proper relationship between Part VIB and Part VIA. In my submission, the proper relationship is better described as this. When determining whether or not an event adds up to a termination of employment one of the matters the Commission may look at are the powers granted by a agreement or even a contract. It is part of the factual stew, matrix, so to speak but it is not determinative as her Honour approached it as.
In my submission, if one thinks about the - speaking of the power to demote in the agreement there is similarly a power to terminate the employment, just sack a worker, but one does never pretend that the power to sack a worker might take away your right to unfair dismissal claim. Similarly, the power to demote should not take away your right to run an unfair demotion claim. If I am wrong, if I am wrong and a agreement can narrow the scope, can prevent an employee who has suffered a significant reduction, can prevent such an employee running an unfair dismissal case, then this agreement doesn't do so.
If I take your Honours to page 66 - sorry, tab 4 of exhibit I1, page number 66. This is the clause under which the Vice Chancellor acted. On page 66, paragraph 1(b), behind tab number 4 there, it provides that:
`All actions of the Vice Chancellor under this clause -'
and the Vice Chancellor was acting under this clause -
`All actions of the Vice Chancellor under this clause shall be final except that nothing in this agreement shall be construed as excluding the jurisdiction of any external court or tribunal which, but for this agreement, would be competent to deal with the matter.'
And that is - whatever else is said about the relationship between agreements and Part VIA, that, in my submission, is the end of the matter. So that clause is clear. It provides that even if, even if the agreement would have prevented the appellant claiming in the Industrial Relations Commission that it had jurisdiction to hear the termination of employment claim, then that clause provides that nothing in the agreement shall prevent the Commission being competent to hear such a claim.
The employment of the appellant was terminated by the employer. She has a right as a result of the changes to the legislation in 2001, she has a right to run an unfair demotion claim because there has been a significant reduction in her pay. Neither the agreement, nor any contract denies the appellant that right granted by the Act. In my submission, leave to appeal should be granted and the order of Commissioner Whelan should be set aside. If you bear with me for one second, your Honours, I think they will be my submissions in this matter." [Transcript PN120-131]
 For the respondent, Mr Bourke, of Counsel, submitted that Whelan C never adopted an approach where the certified agreement could oust the unfair termination divisions of the Act. What Whelan C did, he submitted, was to construe a term of the Act and the way it operated in the context of the Act as a whole. He submitted that the parties had agreed in a certified agreement that there was a right to demote which did not amount to termination and that if the procedure in the certified agreement was followed, there was no termination. He referred to both Brackenridge and Advertiser Newspapers Pty Ltd v Industrial Relations Commission of South Australia and Grivell [(1999) 74 SASR 240] and submitted that what s.170CD(1B) did was clarify the contractual position to the effect that if you have an insignificant breach of contract it is not a termination of employment, there needs to be a significant breach. He submitted that the intent of the new subdivision was not to disturb the common law position.
 He next submitted that a plain reading of the Act would not confine its operation to a strict analysis of the contractual position. He submitted that the position was that a strict demotion may be a termination if there was no right under the contract of employment to make a significant demotion or there is no right under an industrial instrument to make a significant demotion then there is a termination, but where the right exists under either it is not a termination. He gave as an example a relocation or a change of duties. He submitted that Hermann's Case was correct and that Whelan C was entitled to rely on the following passage:
"The express term which is the express term to `demote overrides the common law position that the demotion of the applicant under the circumstances of this case could have amounted to a termination of his contract of employment'." [Transcript PN160]
 Mr Bourke then submitted that there was clear authority in industrial law that irrespective of the contractual position an industrial instrument could permit demotion and that was so at the time the amendments were put into force. He submitted that the approach in Boo Hwa Chan was adopted by Beasley J in Ryan v Furneys Stockfeeds Limited [(1996) 66 IR 298] and he relied on the passage from the judgement of Latham CJ in Amalgamated Collieries of W.A. Ltd. v True (Amalgamated Collieries) [(1938) 59 CLR 417] quoted in Boo Hwa Chan. He also referred to Quickenden v O'Connor and others [(2001) 109 FCR 243]. He submitted that whilst a certified agreement does not oust the jurisdiction, he submitted that where rights and obligations are imposed, not only by way of contract but by an industrial instrument, those provisions must be applied in a practical and common sense way.
 Mr Bourke also made some submissions about Pawel v Australian Industrial Relations Commission and another [(1999) 94 FCR 231] and the word "termination" in the context of the Convention but we do not propose to repeat those submissions here. Finally, when asked about paragraph 1(b) of Schedule 2, Mr Bourke submitted:
"Well, that says the obvious, that the procedures - disciplinary procedures do not oust the jurisdiction. That only restates what the legal position is, that the agreement could not purport to oust the jurisdiction of the Commission by way of the right to bring an application for unfair termination. And even without that provision, that would be the law. It does not take it any further. So all we are saying is that the agreement, just to repeat myself, does not purport to limit the jurisdiction, it sets out the relevant factual matrix from which you can assess the rights and obligations of the parties the same way as a contract can.
So even without that provision, I think it is in clause 1(a) or (b), that would be the law, and that was really only to put it beyond doubt that it was restated. We say that point misses the point because it has really got nothing to do with the aim and it wasn't the way it was argued." [Transcript PN231-232]
 We turn first to determine whether the certified agreement gave the Vice-Chancellor an unfetted right to demote the appellant. We think it did. We have set out the provisions earlier and in our opinion they provide that, assuming the correct procedures were followed and it was not suggested they were not, the appellant could be demoted. Such a demotion does not in our view constitute at law a termination. This is because whatever be the contractual position, and Grivell's Case would appear to us at least in so far as this case is concerned, to reflect it, the certified agreement provides for the demotion. The certified agreement derives its legal effect from the Act. It prevails over the contractual position. So much is clear from the judgements in Amalgamated Collieries and Byrne and Frew v Australian Airlines Limited (Byrne and Frew) [(1995-96) 185 CLR 410].
 In Amalgamated Collieries Latham CJ said:
"But an award never deals with all the matters which affect the relations of any particular employer and any particular employee. The creation of the relation of employer and employee depends upon an agreement between them and not upon any award. Thus, the existence of the obligations under an award in relation to a particular employer and employee always depends on the existence of a contract between them. So, also, there are terms of their relationship which do not depend upon any award. For example, the employee must always obey the lawful orders of his employer, but awards do not commonly include a term to that effect.
. . .
I am, therefore, of opinion that the concluding words of the section are not limited to cases of evasion by contract or pretended contract and that they apply in the present case. This court (Latham CJ, Dixon and McTiernan JJ), in the case of McKerlie v. Lake View and Star Ltd. [(1937) 58 CLR 396], considered sec. 176 when it appeared in an earlier statute. In that case a worker sued for a balance of wages alleged to be due, and the facts would have supported a contention that there was a settled account between the worker and his employer. Such a defence was excluded by the section. The particular point which calls for decision in the present case (whether the section is limited to cases of evasion by a contract or pretended contract) was not decided in McKerlie's Case, but the view which I have taken is consistent with the reasoning in the judgments in that case." [(1937-38) 59 CLR 417 at p.423 and p.425]
 In Byrne and Frew the Court said:
"In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award [See Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284] and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations." [(1995-96) 185 CLR 410 at p.421]
 It is appropriate to regard the certified agreement in this as the equivalent of the award on the passages mentioned. This position adopted in both these cases is consistent with the decisions of the Commission in Herman's Case and Boo Hwa Chan.
 As we understand the submission of Mr Irving however, he argues that not withstanding this position the Act itself creates an inalienable right to contest a termination if the criteria in s.170CD of the Act is attracted. His submission it is in effect that the entitlement cannot be excluded either by operation of contract, award or certified agreement. Put simply the Act gives a right to contest the termination in the circumstances defined.
 The difficulty with this approach is, however, that we do not believe that there has been a termination. Mr Bourke rightly argued that the question of whether there had been a termination is a question of jurisdictional fact. Where there is a contract of employment in existence and the contract is brought to an end, it is easy to establish that there is a termination. However, in a case such as this termination must be implied from all of the circumstances, for in reality, the appellant continues to work for the respondent. On her behalf it was argued in effect that the provisions of s.170CD(1B) of the Act mean there has been a termination because of her demotion with the resultant loss of income. The respondent argues there has not been a termination because the certified agreement permits the demotion without regard to the income loss and provides in effect that it is not a termination. We think that the latter proposition is correct. There has not been a termination because the certified agreement operates to preclude there being one in the circumstances of this case. Put another way we think, at law there has been no termination and if there has been no termination we do not see, notwithstanding the provisions of s.170CD(1B) that there has been a termination for purposes of the Act.
 Our conclusion in this regard is fortified by the decision in Quickenden v Commissioner O'Connor [109 FCR 243, 265]. In that case Black CJ and French J in a joint judgement at paragraph 69 said albeit in dealing with another point:
"The broad brush complaint that common law contractual rights were displaced by the certified agreement faced another threshold issue. For while the agreement bound Dr Quickenden by force of law, it did not thereby terminate his contract of employment. It created rights and obligations which were statutory in character and could operate in addition to the rights and obligations under his contract and, where inconsistent, no doubt displace them. There is nothing in the agreement however which expressly sets aside or displaces the terms of existing or common law rights generally. The agreement itself is not, on the face of it, and is not expressed to be, exhaustive of the rights and duties of those bound by it. If anything it focuses upon the rights of employees, rather than their obligations.
Having regard to the ambulatory nature of the terms and conditions of Dr Quickenden's contract with the University, the absence of any demonstrable specific detriment arising from the agreement, and its co-existence, subject to its terms, with the common law contract, there has been no acquisition of property. The certified agreement and the statutory provisions under which it was made are not therefore laws to which s.51(xxxi) applies."
and in a separate judgement Carr J said at paragraph 131:
". . . an award imposes certain statutory terms and conditions which do not necessarily displace underlying common law contractual relations. If they conflict, the award or certified agreement may modify the contractual provisions, but otherwise they continue to co-exist."
 We believe the dicta in these cases reinforces the view that where, as in this case, a certified agreement gives a right to demote without termination, then by virtue of the operation of the Act there is not termination. The fact that in another Division of the Act termination may be defined to include a demotion does in our, simply not assist the appellant in this case. As we have pointed out earlier, what needs to be established to attract the operation of that Division is a termination and in this case by virtue of the operation of other provisions of the Act there has not been a termination.
 There is one matter we should mention. Paragraph 1(b) of Schedule 2 reads as follows:
"All actions of the Vice-Chancellor under this clause shall be final except that nothing in this Agreement shall be construed as excluding the jurisdiction of any external court or tribunal which, but for this Agreement, would be competent to deal with the matter."
 It was suggested that the effect of this paragraph would enliven the jurisdiction of the Commission under s.170CE of the Act. We do not accept this argument. All paragraph 1(b) of Schedule 2 of the certified agreement does is to preserve the jurisdiction of "any external court or tribunal which, but for this Agreement, would be competent to deal with the matter". It was not suggested by the respondent that the Commission's jurisdiction under s.170CE was excluded by the certified agreement. Rather it was suggested that there is no termination of employment which would be sufficient to attract the jurisdiction. We agree with this submission. We do not think that paragraph 1(b) of Schedule 2 of the certified agreement operates to afford jurisdiction where there has not been (as we think there has not) a termination of employment at the initiative of the employer.
 For these reasons we agree with the conclusions reached by Whelan C and dismiss the appeal.
BY THE COMMISSION:
SENIOR DEPUTY PRESIDENT
M. Irving of Counsel on behalf of the appellant.
J. Bourke of Counsel on behalf of RMIT University.
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