Dec 648/98 S Print Q1625
AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
s.45 appeal against a decision [Print P9625]
issued by Commissioner Bacon on 24 March 1998
(C No. 40215 of 1998)
I.W. McLauchlan
and
Australia Meat Holdings Pty Ltd
(U No. 40587 of 1997)
VICE PRESIDENT ROSS
SENIOR DEPUTY PRESIDENT POLITES
COMMISSIONER HOFFMAN SYDNEY, 5 JUNE 1998
Background
On the morning of 13 November 1997 Mr McLauchlan met with the plant personnel manager of A.M.H.'s Beef City Meatworks near Toowoomba, Mr Holmes. Mr McLauchlan was employed by AMH as a liaison officer. In that capacity he was instrumental in providing a line of communication between management and the workforce.
During the course of the meeting between Messrs Holmes and McLauchlan the issue of drug testing was the subject of a lengthy discussion. Mr Holmes advised Mr McLauchlan that he had submitted a urine sample for testing and explained his reasons for doing so. The meeting ended just after 10.45 a.m.
After leaving Mr Holmes' office Mr McLauchlan was returning to the plant when he decided to drop in on Ms Miller, the occupational health nurse, for a drink of water and a `yarn'. A conversation took place between Ms Miller and Mr McLauchlan. The detail of what was said is contested, but the critical part of the conversation is agreed. Ms Miller's recollection of that part of the conversation was:
"Ian McLauchlan walked into my office at approximately 11.00 a.m. today, came to my desk and asked me if I would like to make some extra money. He said the boys and him had been talking and they would like Pat's urine test to make it come back positive. I did not give him the urine test."
There were no witnesses to the conversation. The next day Ms Miller reported the matter to AMH senior management. The matter was put to the applicant who immediately reacted with words to the effect that his comments to Ms Miller had been a joke. Management investigated the matter and concluded that Mr McLauchlan had not been joking when he made the comments to Ms Miller and terminated his employment. In deciding to terminate Mr McLauchlan, Mr Paine, the Beef City Plant Manager, said that he gave consideration to the following matters:
"(a) I believed that Kerry was telling the truth and that Ian had tried to get Pat's sample so that he could tamper with it;
(b) Kerry had nothing to gain and everything to lose by coming to the Company with the information. I had been advised by my staff that they believed Kerry to be very honest and had no reason to lie;
(c) I believe that it would not have been difficult for Ian to obtain a positive urine sample from someone else and that he would have known who to go to;
(d) If Ian had been successful he would have destroyed Pat's career and reputation;
(e) If Ian had been successful he would have severely damaged the credibility of the whole drug testing program and would have caused doubt to be cast on all other staff;
(f) I believe that Ian had attempted to bribe one of my staff members to do something dishonest, immoral and against the interest of the company;
(g) He had put Kerry in such a position that she would be severely affected by whatever course she then took. If she gave over the sample or failed to report the incident she was compromising her nursing career and her personal integrity. On the other hand if she advised the company of Ian's actions, as she has done, she could be the subject of a smear campaign against her in an attempt to discredit her;
(h) I no longer trusted Ian and my senior staff have advised me that they do not trust him;
(i) I considered it to be unfair to expect any staff member to work in the kind of environment that he had created;
(j) I did not believe that I or any of my staff could work effectively with Ian following these events and I believe that the role of liaison officer would be completely compromised and rendered ineffective if neither I nor any of my staff could work effectively with him by reason of his own conduct;
(k) I did not believe that it would be fair to Pat or Kerry or to any other staff member to allow Ian to remain anywhere on the plant when they know he has a lot of influence amongst the meatworkers and that he will try to use that influence against them." [Exhibit AMH8, Affidavit of Mr Paine at paragraph 19]
Mr Paine also said that he had regard to Mr McLauchlan's position as a union representative with many years of service with AMH and that a decision to terminate his employment could have a serious effect on him.
Mr McLauchlan had worked for AMH for 10 years and had worked at the Beef City site for 20 years. He was an active member of the Australian Meat Industry Employees Union and at the time of his termination was the `Shed President' at Beef City.
The applicant applied for relief in respect of the termination of his employment pursuant to s.170CE(1)(a) of the Workplace Relations Act 1996 (the Act). Conciliation was unsuccessful and the matter was referred to Commissioner Bacon for arbitration. The Commissioner heard the matter on 2, 3, 4, 26 and 27 February 1998. On 24 March 1998 be issued a decision, found that there was not a valid reason for the termination, and ordered AMH to reinstate Mr McLauchlan.
In his decision the Commissioner determined that the conclusion reached by AMH management - namely that Mr McLauchlan was not joking - was not reasonably open on the material before him. The Commissioner found that the respondent's conclusion was predicated on the belief that if Ms Miller was telling the truth then the applicant had to be lying. This approach was found to be erroneous on the basis that Ms Miller may have genuinely, but mistakenly, believed that Mr McLauchlan was serious. As the Commissioner put it:
"In this matter the views of the conversation held by the Nurse and the applicant may both be correct. It is reasonably common experience for words meant to be humorous or as a joke to be misconstrued and taken as serious by those who hear them. The respondent urges the rejection of one version of the conversation and this is discussed later herein. The Nurse's view of the critical part of the conversation is accepted. I am in no doubt that she believed the applicant was serious when he made the comments to her on 13 November. Accordingly, she was correct to take the action that she did. Such a finding does not mean that the applicant did not intend his comments to be a joke." [Print P9625 at 3]
The Commissioner decided that the conclusion arrived at by AMH Management was not reasonably open. The Commissioner also had regard to the practicality of implementing the scheme suggested in the conversation between the applicant and Ms Miller. In this context the Commissioner took into account that it was unlikely that drug users at the plant would willingly provide a urine sample to the applicant for the purpose of swapping it with the sample provided by Mr Holmes.
The matter before us is an appeal by AMH against the Commissioner's decision and order.
Submissions on appeal
The appellant challenged the decision and order subject to appeal on three broad bases:
_ the role of the Commission in determining s.170CE(1)(a) applications : the Commissioner purported to apply the approach in Sangwin v Imogen Pty Ltd (No. SA95/116 IR unreported decision of von Doussa J, 8 March 1996, referred to in this decision as Sangwin). In accepting the appropriateness of the Sangwin approach the Commissioner did not fall into error. But while the Commissioner purported to apply Sangwin he did not in fact do so. Rather than consider whether there was a reasonable basis for the employer's belief that Mr McLauchlan was guilty of misconduct the Commissioner formed a view about whether the applicant actually committed the alleged misconduct. To the extent that the Commissioner had regard to material which was not before the employer at the time the decision to terminate was made - such as the evidence of Mr Ingleton in the proceedings below - he took into account an irrelevant consideration and accordingly fell into error.
_ error in the exercise of the Commissioner's discretion : the Commissioner focussed on whether or not the applicant was joking when in the course of his conversation with Ms Miller he suggested that Mr Holmes' urine sample be tampered with so that it returned a positive result. It was submitted that in focussing on this issue the Commissioner made a fundamental error in that he rejected a number of other considerations which had a bearing on the reasonableness of the decision to terminate the applicant.
_ remedy : the Commissioner erred in failing to take into account the practicality of reinstatement as he was bound to do so.
The respondent submitted that the Commissioner applied the approach in Sangwin in his consideration of the matter before him. In this regard it should be noted that the Commissioner reached the following conclusion:
"I have considered the material that has been put forward in this matter and have reached the conclusion that the applicant has not been afforded a fair go all round. To that end I do not believe that the respondent's conclusion that the applicant's comments were not a joke was one that was reasonably open to it." [Print P9625 at 8]
In the alternative the respondent submitted that if the Commission was not satisfied that the Commissioner applied Sangwin then we should conclude that the approach in Sangwin is not appropriate in the light of subsequent authority. The proper approach is whether or not there has been a `fair go all round'. Part of such an approach requires that the Commission decide for itself, based on the evidence before it, whether there was a valid reason for the termination. It is an objective test.
We propose to deal with each part of the appellant's submissions in turn.
The appellant submitted that in circumstances where an employee is terminated for misconduct and the employer believes, on reasonable grounds after sufficient inquiry, that the employee has been guilty of misconduct then a `valid reason' exists for the termination within the meaning of s.170CG(3) of the Act and the Commission should not disturb that decision [see Gregory v Philip Morris Ltd (1988) 24 IR 397, Byrne v Australian Airlines (1994) 47 FCR 300 at 331 per Beaumont and Heerey JJ, with whom Keely J. agreed at 313; Bi-Lo Pty Ltd v Hooper (1994) 53 IR 224 at 229-230; Sangwin v Imogen Pty Ltd (No. SA 95/116 I.R.) unreported decision of von Doussa J., 8 March 1996 at 11-18].
The appellant says that the termination cannot be harsh, unjust or unreasonable because it was determined in a reasonable fashion on the facts available at the relevant time.
In support of this proposition counsel for the appellant relied on the majority judgment in Gregory v Philip Morris Ltd in which their Honours Wilcox and Ryan JJ said:
"Counsel for the appellant submits that the letter from Mr Luckman of 24 November conclusively establishes that the dismissal of his client on 17 October was harsh, unjust and unreasonable. As counsel points out, the reason for the dismissal was that Mr Gregory had been expelled, whereas it was subsequently conceded that the purported expulsion was invalid. It follows, according to counsel, that there was no foundation in fact for the dismissal, with the result that it must be characterised as harsh, unjust and unreasonable.
We cannot accept this submission. The question whether a dismissal is harsh, unjust or unreasonable must be determined in the light of the facts as they appear at the relevant time. We accept that, if the relevant facts are not clear, it is the obligation of the employer bound by a provision such as cl 6(d)(vi) to establish those facts before dismissing an employee; cf the observation of Lord Mackay of Clashfern in Smith v Glasgow District Council [1987] IR LR 326 at 329:
`As a matter of law a reason could not reasonably be treated as sufficient reason for dismissing Mr Smith when it had not been established as true nor had it been established that there were reasonable grounds upon which the special committee could have concluded that it was true.'
But, provided that the employer discharges the obligation to investigate the facts, a dismissal does not contravene the provision merely because it later appears that the true facts differed from those which appeared at the date of the decision to dismiss. Clause 6(d)(vi) is intended to operate in a practical way in a commercial and industrial environment. The information before Philip Morris on 17 October 1986 was that Mr Gregory had been expelled from the union. The company had that information from a reliable source, the Victorian secretary of the union. It was entitled to accept that information at face value and to assume that the expulsion resolution was valid. The officers of the company were in no position to enter on an inquiry into the internal processes of the union so as to determine the matter of validity for themselves. The circumstance that the resolution was subsequently conceded to be invalid does not mean that it was harsh, unjust or unreasonable for Philip Morris to act, on 17 October 1986, upon the basis that it was valid." [(1988) 24 IR 397 at 413]
It was submitted that the above observations are particularly relevant as they were made in the context of construing an award provision to the effect that dismissals should not be `harsh, unjust or unreasonable' - an expression which is relevantly indistinguishable from the language of s.170CE(1)(a).
Counsel for the appellant also relied on the following extract from the decision of the South Australian Industrial Commission in Bi-Lo Pty Ltd v Hooper (1994) 53 IR 224 at 229-230:
"`In a case such as the present one where the employee is dismissed for misconduct in respect of dishonest dealing with the employer's property we do not believe it is a correct test to state as did the learned trial judge that the employer must prove, on the balance of probabilities, on the evidence submitted to the Commission, that the employee actually stole the goods, before it will escape a finding that a dismissal based upon such an alleged theft is to be treated as harsh, unjust or unreasonable.
There can be no doubt that in line with decided authority the ultimate task pursuant to s.31 is for the Commission to determine whether when viewed objectively the dismissal may be properly adjudged to fall within the statutory criteria of harsh, unjust or unreasonable.
An employee is entitled to both substantive and procedural fairness in respect of a dismissal. Substantive fairness will be satisfied if the grounds upon which dismissal occurs are fair grounds. Broadly speaking a dismissal will be procedurally fair if the manner or process of dismissal and the investigation leading up to the decision to dismiss is just.
Where the dismissal is based upon the alleged misconduct of the employee, the employer will satisfy the evidentiary onus which is cast upon it if it demonstrates that insofar as was within its power, before dismissing the employee, it conducted as full and extensive investigation into all of the relevant matters surrounding the alleged misconduct as was reasonable in the circumstances; it gave the employee every reasonable opportunity and sufficient time to answer all allegations and respond thereto; and that having done those things the employer honestly and genuinely believed and had reasonable grounds for believing on the information available at that time that the employee was guilty of the misconduct alleged; and that, taking into account any mitigating circumstances either associated with the misconduct or the employee's work record, such misconduct justified dismissal. A failure to satisfactorily establish any of those matters will probably render the dismissal harsh, unjust or unreasonable.
If a fact or facts come to light subsequent to the dismissal which cast a different light on the Commission of the alleged misconduct, such fact or facts will not necessarily or automatically render the dismissal harsh, unjust or unreasonable. In our view in such circumstances what will need to be considered is whether the employer, if it had acted reasonably and with all due diligence, could have ascertained those facts before the dismissal occurred.
The Commission is required to objectively assess the subjective actions and beliefs of the employer as at the time of dismissal and not at some subsequent time: see Gregory v Phillip Morris (1988) 24 IR 397 at 413; 80 ALR 455 at 471; see also Stearnes v Myer SA Stores Print No 9A/1973 at 5.
Whether the employer will satisfy that objective test will depend upon the facts of each case. The gravity of the alleged offence will dictate the nature and extent of the inquiry which the employer must conduct. An employer must ensure that an employee is given as detailed particulars of the allegations against him/her as is possible, an opportunity to be heard in respect of such allegations, and a chance to bring forward any witnesses he/she may wish to answer those allegations.' [cited with approval in Sangwin v Imogen Pty Ltd]
The decision in Bi-Lo was cited with approval by von Doussa J. in Sangwin v Imogen Pty Ltd. In that case his Honour considered whether an honest belief held on reasonable grounds provided a valid reason for a dismissal in circumstances where the employer's belief was subsequently shown to be erroneous. After examining a range of possible circumstances which may arise in the workplace his Honour concluded his examination of this issue in the following terms:
"These are extreme examples based on human safety issues. Other examples based on the serious risk of property damage or monetary loss which might arise if employees against whom serious allegations of a breach of safe operating practices or dishonesty had been made were allowed to continue performing their normal employment duties would pose similar rhetorical questions. Although the examples may not be representative of the risk of harm that could arise in many workplace situations, they lead me to the view that s.170DE(1) should not be construed so as to exclude from the notion of a `valid reason' an honest belief held on reasonable grounds by the employer, after enquiry of the type envisaged in Bi-Lo Pty Ltd v Hooper, that a state of fact exists which justifies termination of the employment. In my opinion if the employer honestly believes on reasonable grounds after sufficient enquiry that the employee has been guilty of serious misconduct, a valid ground within the meaning of s.170DE (1) exists for terminating the employment of the employee." [emphasis added]
The appellant submitted that the approach adopted by von Doussa J in Sangwin's case is the only approach which can sensibly be adopted in a matter of the type before the Commission in this case.
In our view the authorities relied upon by the appellant must be considered in light of the fact that the statutory framework in relation to unfair dismissals is materially different in the Workplace Relations Act 1996 from that which previously applied under the Industrial Relations Act 1988.
Two particular facets of the statutory framework are relevant. The first relates to the objects of Division 3 of Part VIA of the Act. These are set out in s.170CA which states:
"(1) The principal object of this Division is:
(a) to establish procedures for conciliation in relation to certain matters relating to the termination or proposed termination of an employee's employment in certain circumstances; and
(b) to provide, if the conciliation process is unsuccessful, for recourse to arbitration or to a court depending on the grounds on which the conciliation was sought; and
(c) to provide for remedies appropriate to a case where, on arbitration, a termination is found to be harsh, unjust or unreasonable; and
(d) to provide for sanctions where, on recourse to a court, a termination or proposed termination is found to be unlawful; and
(e) by those procedures, remedies and sanctions, and by orders made in the circumstances set out in Subdivisions D and E, to assist in giving effect to the Termination of Employment Convention.
(2) The procedures and remedies referred to in paragraphs (1)(a) and (b), and the manner deciding on and working out such remedies, are intended to ensure that, in the consideration of an application in respect of a termination of employment, a "fair go all round" is accorded to both the employer and employee concerned.
Note: The expression "fair go all round" was used by Sheldon J in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95."
Section 170CA(2) makes it clear that it was intended that in the arbitration of a claim that a termination was harsh, unjust or unreasonable the Commission should ensure that a `fair go all round' is accorded to both the employer and employee concerned. It would not necessarily be consistent with the provision of a `fair go all round' if an employee was limited, in what could be put to the Commission, to the factual circumstances known to the employer at the time of the termination decision.
The second relevant feature of the statutory framework is s.170CG(3), which states:
"(3) In determining, for the purposes of arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:
(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and
(b) whether the employee was notified of that reason; and
(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and
(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and
(e) any other matters that the Commission considers relevant."
Two points may be made in respect of s.170CG(3). First, it is clear from s.170CG(3)(a) that the existence of a `valid reason' for the termination is a factor to which the Commission must have regard.
However it is not the only factor to which the Commission must have regard. Unlike the position under s.170DE(1) of the former Act the question of whether there was a valid reason for the termination is not determinative but merely one factor which the Commission must have regard to in making its assessment of whether the termination was harsh, unjust or unreasonable.
The second point to be made about s.170CG(3) is that it does not, in terms, limit the Commission's consideration of an application to whether the employer had reasonable grounds, on the facts at the relevant time, for terminating the applicant, as suggested by the appellant. Indeed the requirement in s.170CG(3)(e) to have regard to any other matters that the Commission considers relevant appears to be inconsistent with the limitation suggested by the appellant.
In our view the legislative scheme now makes it clear that the role of the Commission is to determine whether a termination was harsh, unjust or unreasonable and in that regard to consider whether there was a `fair go all round'. In performing this role care must be taken to ensure that a consideration of whether there was a `valid reason' for a termination does not result in a failure to consider the other issues now required by s.170CG(3).
On the basis of the above analysis of the current statutory scheme we are satisfied that the approach taken by the Commissioner does not disclose a reviewable error. However in deference to the other arguments put to us we propose to deal with them.
In addition to the material change in the statutory framework two further points militate against the adoption of the approach proposed by the appellant, namely:
· the judgment of the High Court in Byrne v Australian Airlines; and
· subsequent authorities.
Byrne v Australian Airlines
In Byrne the High Court expressly approved of part of the judgment of von Doussa J in Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427 at 456.
In Lane v Arrowcrest, von Doussa J considered the example of the dismissal of an accountant who held a position of trust where it was discovered after the dismissal that the accountant had been systematically embezzling money from the employer. His Honour said that it would be astonishing if the employer could not resist an allegation that the dismissal was harsh, unjust or unreasonable by pointing to those facts discovered after the dismissal, so long as they concerned circumstances in existence when the decision was made. His Honour concluded at 456:
"Whether the decision can be so justified will depend on all the circumstances. A circumstance, likely to favour the decision to dismiss, would be that fraud or dishonesty of the employee had caused or contributed to the employer's state of ignorance. A circumstance likely to weight against the decision would be that the employer had failed to make reasonable inquiries which would have brought existing facts to its knowledge before the dismissal occurred."
The above conclusion was approved by the High Court in Byrne v Australian Airlines Limited. At 430 their Honours Brennan CJ, Dawson and Toohey JJ said:
". . . it is clear that the use of an unfair procedure may result in a dismissal being harsh, unjust or unreasonable. For example, the failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being in breach of cl 11(a). On the other hand, if an employer were to observe the actual misconduct of an employee in circumstances which allowed no innocent explanation, a summary dismissal might not be in breach of cl 11(a). And facts which existed at the time of a dismissal, but which come to light only subsequently, might justify the dismissal when otherwise it would be harsh, unjust or unreasonable: see Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427 at 456."
The joint judgment of their Honours McHugh and Gummow JJ also cite Lane v Arrowcrest with approval [(1995) 185 CLR 410 at 468].
Both of the judgments in Byrne cite Lane v Arrowcrest with approval and both support the proposition that facts in existence at the time of the dismissal but which are only revealed later might justify a dismissal which would otherwise be harsh, unjust or unreasonable.
It would seem to us that the obverse proposition also applies, that is facts which existed at the time of a dismissal but only come to light after the dismissal may in some circumstances render the dismissal harsh, unjust or unreasonable. The appellant in the proceedings before us disagreed. It was submitted that Lane v Arrowcrest and the comments in Byrne v Australian Airlines do not provide a justification for the obverse proposition. It was argued that the Lane v Arrowcrest principle should be seen as a `clean hands' exception to the general rule expressed in Sangwin. An employee who commits fraud and conceals it from his or her employer is not able to rely on the fact that the employer was unaware of the fact that the employer was unaware of the fraud when the decision to terminate was made.
In our view there is nothing in either Sangwin or Byrne to support the proposition that Lane v Arrowcrest is a `clean hands' exception in the manner advanced by the appellant.
Further, the submissions advanced by the appellant fail to pay sufficient regard to the joint judgment of their Honours McHugh and Gummow JJ in Byrne. In that case their Honours said, at 465-468:
"It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.
Procedures adopted in carrying out the termination might properly be taken into account in determining whether the termination thus produced was harsh, unjust or unreasonable. The submissions for the respondent in the present appeals appear to concede this. But the burden of the respondent's submissions is that there was error in determining the issue without regard to the very material circumstances of the finding of the primary judge as to the complicity of the appellants in pilfering.
Those submissions should be accepted. This means that the primary judge was bound to consider whether, on the evidence given at the trial, the respondent could resist the allegation of breach of cl 11(a), provided that the evidence concerned circumstances in existence when the decision to terminate the employment was made."
The above extract is authority for the proposition that a termination of employment may be:
· unjust, because the employee was not guilty of the misconduct on which the employer acted;
· unreasonable, because it was decided on inferences which could not reasonably have been drawn from the material before the employer; and/or
· 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.
The joint judgment also supports the proposition that the task of the judge at first instance was to consider whether, on the evidence given at the trial, the employer was in breach of the relevant award provision, provided that the evidence concerned circumstances in existence when the decision to terminate the employment was made.
Subsequent Authorities
A number of cases decided after Byrne are also contrary to the proposition advanced by the appellant about the role of the Commission in s.170CE(1)(a) termination cases.
In Yew v ACI Glass Packaging Pty Limited (unreported IRCA, 11 December 1996) Wilcox CJ dealt with an application by a former employer, ACI Glass Packaging Pty Limited, for a review of a decision by a Judicial Registrar in an unlawful termination of employment case. In the course of his decision the Chief Justice said, at 6:
"Before turning to the matter of relief, it is desirable for me to comment on one particular submission by Mr Rothman concerning s.170DE(1). I do so because it indicates a misunderstanding of the operation of that subsection. Mr Rothman said: "The Court does not sit as an appeal from the decision of the employer to dismiss". He also said ACI "was entitled" to believe Mr Swadling's version of events. The implication was that the Court could uphold a claim of breach of s.170DE(1) only if it came to the conclusion that ACI's view about the cause of the fight was one unsupported by any evidence or was otherwise perverse.
That is not the position at all. The effect of s.170DE(1) is to make unlawful a termination of employment effected without a valid reason. If the termination comes before the Court, it is the duty of the Court to determine for itself whether, upon the balance of probabilities, there was a valid reason for the termination. It must do this by reference to the evidence. The Court is not concerned with the question whether, upon the information available to the employer, the conclusion reached by the employer was, or was not, a reasonable one. I agree that the Court "does not sit as an appeal" from the employer's decision; but only because the reference to an appeal implies that the Court is concerned to examine the employer's decision-making process. It is not. It is concerned to ascertain whether there was a valid reason for the conclusion that the employee's employment should be terminated. The Court does this for itself, and on the basis of the evidence of the primary facts placed before it."
The decision in Yew's case was cited with approval and followed by Drummond J in Cornwall v Qantas Airways Limited (unreported, Federal Court of Australia, Drummond J, 8 December 1997), and most recently by Moore J in Sherman v Peabody Coal Limited (unreported, Federal Court of Australia, Moore J, 27 February 1998) [see further: Pahuru v Woolworths Limited trading as Max Liquor (unreported, NI2180 of 1995, 17 June 1997 per Locke JR; Elvidge v Burswood Resort Management Ltd (1996) 70 IR 122].
The appellant sought to distinguish Yew's case on three bases:
· his Honour's remarks seem to travel wider than was required to determine the matter before him namely whether the Court sits on an appeal against the decision of the employer to terminate a persons employment;
· the statement in Yew which is set out above is at odds with his Honour's judgment in the appeal in Imogen v Sangwin which was handed down only nine days after Yew; and
· Wilcox J (as he then was) formed part of the majority in Gregory v Philip Morris which supports the correctness of Sangwin.
In relation to the first point we do not regard his Honour's statement as obiter. It is clearly related to the issue raised before him, namely the role of the Court in dealing with applications for relief in respect of termination of employment.
In Imogen Pty Ltd v Sangwin (1996) 70 IR 254 the Court was dealing with an application for costs in circumstances where the appellant had filed a notice of discontinuance in respect of the appeal the day before it was to be heard. The Court was concerned with the question of whether the appeal had been instituted `without reasonable cause' within the meaning of s.347 of the Act. One of the appeal points advanced by the appellant was in the following terms:
"(iii) in any event, even if Mr Sangwin was not a party to an attempt to steal, on the facts that were either undisputed or found by von Doussa J, Imogen had a valid reason for the termination within the meaning of s.170DE(1):
`In particular, it was open for the Respondent to argue that it had an honest belief albeit mistaken, held on reasonable grounds, that the Applicant was guilty of the misconduct alleged against him. It was open to the Full Court to draw its own inferences of facts on this matter contrary to von Doussa J's conclusions. That is, that the Respondent investigated the allegations as fully as the circumstances permitted that the Applicant was given a fair and full opportunity to respond. If the Full Court made such inferences then it could find that the Respondent had a valid reason.' (Original emphasis.)." [set out at 259]
Wilcox CJ dealt with this submission in the following terms, at 260:
"The third proposition . . . starts with the trial judge's findings and argues that, even so, there was a valid reason for dismissal because Mr Ashcroft and Ms Stanton had an "honest belief albeit mistaken, held on reasonable grounds" that Mr Sangwin had attempted to steal the fasteners. The submission raises the legal issue whether an honest, but mistaken, belief that an employee has been guilty of misconduct can furnish a valid reason for the employee's dismissal. This is an important issue about which we have not heard argument. I prefer to leave it open."
In our view the above statement is not inconsistent with Yew's case. His Honour simply identifies the legal issue involved - whether an honest, but mistaken, belief that an employee has been guilty of misconduct can furnish a valid reason for dismissal - then notes that the Court did not have the benefit of argument on the issue and states that he prefers to leave it open. Given the absence of argument on the point it is perfectly understandable that his Honour preferred not to express a concluded view on the matter. By contrast, in Yew's case his Honour had the benefit of an argument about the role of the Court in termination cases and he did express a view on that issue.
Finally we are not persuaded by the last point raised by the appellant. Gregory v Philip Morris was decided some time ago and in a different legal context - namely the enforcement of award rights whereas Yew's case was decided in the context of the former statutory regime relating to termination of employment. We also note that Gregory v Philip Morris was decided before Byrne.
In Peabody Coal Ltd, Moore J was dealing with a review of a decision by a Judicial Registrar in relation to an application for relief concerning the termination of the applicant's employment. In the course of his decision Moore J considered the meaning of the expression `the ... conduct of the employee' in the context of s.170DE(1) of the former Act. His Honour dealt with this issue in the following terms, at 15:
"(2) The plain meaning of `conduct' is clear
One turns then to the subject matter of the connection, which is `the ... conduct of the employee'. In its ordinary meaning this is a clear expression which fastens attention on an employee's actual conduct. In my opinion, there is no warrant for, in effect, substituting for it, some other expression, such as `the conduct of the employee as honestly and reasonably perceived by the employer after sufficient inquiry' (see Imogen v Sangwin Pty Ltd, considered below)."
His Honour considers Sangwin further at 15-16 of his decision. In short he agrees with von Doussa J in the ultimate result reached in the examples given in Sangwin but arrives at the result by a different process of reasoning. His Honour seems to draw a distinction between the `conduct' and `operational requirement' components of the former s.170DE(1) [now see s.170CG(3)(a)]. In the circumstances of employee conduct resulting in termination the Court examines the employees actual conduct not the employees conduct as honestly and reasonably perceived by the employer after sufficient inquiry. Where the termination is based on `operational requirements' the Court's consideration is limited to whether the employer honestly held a reasonable belief that the termination was due to operational requirements.
The appellant submitted that Moore J is not actually to be taken to contradict the fundamental principle in Sangwin, namely, that even if an employer is mistaken (in the view of the Tribunal) about some factual issue underlying the decision to terminate, and an employee is objectively without blame, the relevant belief of the employer is quite capable of being a valid reason and an employer in such a case will have discharged its obligation not to terminate harshly, unjustly or unreasonably. It was also argued that the termination of Mr McLauchlan was due to both misconduct and operational requirements.
We do not accept this aspect of the appellant's submissions. It appears to us that in Peabody Coal Ltd Moore J does reject the Sangwin approach in relation to terminations based on employee conduct. His Honour's observations in relation to the application of the Sangwin approach to terminations based on operational requirements are obiter. In any event we are satisfied, contrary to the appellant's submissions, that the termination in the matter before us was based on Mr McLauchlan's conduct and not on the operational requirements of the employer's undertaking. A review of the transcript in the proceedings below makes it clear that the reason advanced on behalf of the employer for Mr McLauchlan's termination was misconduct, not operational requirements [Transcript of 27 February 1998 at 537-538; Exhibit AMH8 Affidavit of Mr Paine].
We should also note that after the hearing of the appeal the appellant drew our attention to the decision of a Full Bench of the Commission in Department of Social Security v Uink (1997) 77 IR 244. It was submitted that Uink supported the appellant's contentions and was relied on with one exception. The exception relates to the conclusion derived from the adoption by the High Court in Byrne of the reasoning in Lane v Arrowcrest. For reasons which we have already canvassed the appellant submitted that the principle in Lane v Arrowcrest does not provide a justification for holding the obverse proposition is true.
We are unable to agree with the appellant's characterisation of Uink. It does not support the appellant's contentions in the matter before us. The conclusions we have arrived at are consistent with Uink.
On the basis of the foregoing we are of the view that in determining a s.170CE(1)(a) application the Commission is bound to consider whether, on the evidence in the proceedings before it, the termination was `harsh, unjust or unreasonable', provided that the evidence concerns circumstances in existence when the decision to terminate the employment was made.
Facts which existed at the time of the dismissal but which only come to light after the dismissal might either:
· justify the dismissal when otherwise it would be harsh, unjust or unreasonable; or
· render the dismissal harsh, unjust or unreasonable.
Findings made by an inquiry established by the employer will be relevant to the Commission's determination of the issues before it provided it is established that:
- the employer conducted a full and extensive investigation into all of the relevant matters as was reasonable in the circumstances;
- the employer gave the employee every reasonable opportunity to respond to allegations; and
- the findings were based upon reasonable grounds.
While such findings are relevant they do not conclusively determine whether the termination was harsh, unjust or unreasonable. That issue is to be decided by the Commission on the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient inquiry, that that employee was guilty of the conduct which resulted in termination.
A termination may be unjust because, on the evidence before the Commission, the employee was not guilty of the misconduct on which the employer acted. Further, a termination may be unreasonable because it was decided on inferences which could not reasonably have been drawn from the material before the employer. Even where the findings of an employers enquiry are reasonable the Commission may conclude that a termination of employment on the basis of those findings was harsh because the penalty was disproportionate to the misconduct [Byrne v Australian Airlines Ltd at 465 per McHugh and Gummow JJ].
The approach adopted by the Commissioner in the decision subject to appeal is consistent with our conclusions as to the approach to be taken to the determination of s.170CE(1)(a) applications.
The appellant contended that the Commissioner made a fundamental error in focussing on the question of whether or not the applicant was joking in his conversation with Ms Miller, to the exclusion of a number of other considerations said to be relevant to the reasonableness of the employer's decision to terminate the applicant.
In relation to the factors to which Mr Paine gave consideration (see items (a) to (k) on p.2 of this decision) it was submitted that the Commissioner erred in not considering a number of these factors - in particular those set out at (d) - (k) - in deciding whether the employer's decision was reasonably based.
It is clear from the decision subject to appeal that the Commissioner regarded items (d) to (k) from Mr Paine's statement as being relevant to the question of penalty, not to a consideration of the applicant's alleged misconduct. But we do not discern any error in the approach adopted.
Counsel for the appellant conceded, properly in our view, that the alleged errors in the exercise of the Commissioner's discretion were inevitably intertwined with the submissions made about the proper approach to be taken to the determination of s.170CE(1)(a) applications. We have already dealt with this aspect of the appellant's submissions and concluded, contrary to the appellant's submissions, that the approach to be taken by the Commission is to consider whether, on the evidence in the proceedings before it, the termination was harsh, unjust or unreasonable, provided that the evidence concerns circumstances in existence when the decision to terminate was made.
In the application of such an approach the Commission may conclude that a termination was unjust because, on the evidence before the Commission, the employee was not guilty of the misconduct on which the employer acted. That is what the Commissioner did in the decision subject to appeal.
There was no error in focussing on the question of whether the applicant was joking in his conversation with Ms Miller. Indeed this issue was at the very heart of the decision to terminate the applicant's employment.
We are not satisfied that the Commissioner erred in the exercise of his discretion in the manner suggested by the appellant.
The appropriateness of the remedy
Section 170CH(1) provides that the Commission may, on completion of an arbitration, make an order that provides for a remedy of the kind referred to in ss.170CH(3), (4) or (6) if it has determined that the termination was `harsh, unjust or unreasonable'. The parts of s.170CH which are relevant for present purposes are:
"(3) If the Commission considers it appropriate, the Commission may make an order requiring the employer to reinstate the employee by:
(a) reappointing the employee to the position in which the employee was employed immediately before the termination.
(b) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination.
(4) If the Commission makes an order under subsection (3) and considers it appropriate to do so, the Commission may also make:
(a) any order the Commission thinks appropriate to maintain the continuity of the employee's employment; and
(b) subject to subsection (5) - any order that the Commission thinks appropriate to cause the employer to pay the employee an amount in respect of the remuneration lost, or likely to have been lost, by the employee because of the termination . . .
(6) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement."
In this case the Commissioner made an order reinstating Mr McLauchlan `to his former position of Liaison Officer without loss of wages and with continuity of employment'. In the course of his decision the Commissioner dealt with the question of reinstatement in the following terms:
"There is evidence given to the Commission that management personnel would no longer be able to work with the applicant and that the applicant could no longer be trusted. As a result this would make him ineffectual as the Liaison Officer. Despite the evidence it is my view that the applicant should be reinstated to such position. On the respondent's evidence it is a role which the applicant has fulfilled without cause for complaint by the respondent. The views expressed by the witnesses concerning their inability to believe or work with the applicant are all based on the belief that the applicant did try to bribe the Nurse in order to destroy Pat Holme's career. After these proceedings it has been found that such a conclusion was not reasonably open to the respondent. Whilst no doubt people are unlikely to change their minds as a result of the conclusions I have reached, it is my view that it would be an injustice not to reinstate the applicant to his former position. After five days of hearing over twenty witnesses and a thorough analysis by Counsel of all the material, it has been concluded that it is most likely that the applicant was joking when he made the comments to the Nurse. In such circumstances it is hardly reasonable to expect that the applicant should as a result suffer some penalty." [Print P9625]
The appellant submitted that the Commissioner fell into error in the manner in which he dealt with the question of remedy. The error was said to be the Commissioner's failure to take into account the practicability of reinstatement. The appellant submitted that the Commissioner had an obligation to assess whether reinstatement was practical having regard to the circumstances of the matter before him. In particular it was argued that the Commissioner should have had regard to the following factors in assessing the practicability of reinstatement:
· the position formerly occupied by the applicant, liaison officer, requires the occupant to have the trust and confidence of management and the workforce; and
· the evidence of a number of managers to the effect that their relationship with the applicant had been seriously and/or permanently damaged as a result of the incident which led to his termination [for example see Exhibit AMH5, AMH9 and Exhibit AMH13; Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at 191-192].
The appellant's submissions must be considered in the context of the relevant statutory provisions. It is apparent from the terms of s.170CH that the Commission must first consider reinstatement in circumstances where the Commission determines that a termination was `harsh, unjust or unreasonable'. This follows from the terms of s.170CH(6) which provides that the Commission may only consider the remedy of compensation if it `thinks that the reinstatement of the employee is inappropriate'. In this context it is important to note that the terms of s.170CH(6) are different to those in s.170EE(2) of the former Industrial Relations Act 1988 (the former Act).
Section 170EE(2) of the former Act stated:
"If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may, if the Court considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate."
The terms of the former s.170EE(2) required the Commission to consider the practicability of reinstatement. But the terms of the current Act are different. Subsections 170CH(3) and (6) require a consideration of the appropriateness of reinstatement. Parliament chose to use the word `inappropriate' in s.170CH(6) rather than the word `impracticable'.
The fact that there is a difference in the language used in s.170CE(8) as compared to the former s.170EA(3)(b) is indicative of a legislative intention that a different approach be taken to the exercise of the discretion. In Bridge v Mattis (1953) 52 AR (NSW) 49 at 56-57 the NSW Industrial Commission approved of a statement by the Canadian Supreme Court in The City of Ottowa v Hunter that:
"When we see in Acts in pari materia by the very same Legislative words added to those used in a prior enactment, it would be setting at nought the clear intention of the Legislature to give the later enactment the construction judicially placed on the earlier enactment. To do so would be to read out of the statute expressions which must be held to have been deliberately inserted to make the new Act differ from the old." [(1900) 31 Can. SCR 7 at 10]
The Commission added that this statement was equally applicable to an amendment of a statute whether by way of addition, alteration or withdrawal of words. [Cf: Amalgamated Wireless (A'sia) Ltd v Philpott (1961) 110 CLR 617; Wellbridge v Jackson [1990] VR 689 at 693.]
In our view a consideration of the appropriateness of reinstatement involves the assessment of a broader range of factors than practicability.
The appellant contends that the Commissioner fell into error in approaching the question of reinstatement on the basis of fairness not practicability. We do not agree. The appellant's submissions do not have sufficient regard to the change in terminology referred to above. The question of whether the reinstatement of an employee is impracticable is no longer the focal point of the Commission's consideration of the remedy to be granted. In considering whether to order reinstatement the Commission is not confined to an assessment of the practicability of such an order but rather must decide whether such an order is appropriate.
We accept that the question of whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate. It is one factor to be taken into account, but it is not necessarily conclusive.
In Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at 191-192, the Full Court of the Industrial Relations Court said:
". . . we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.
At the same time it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee's employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court's finding on that question in the resolution of an application under Division 3 of Part VIA of the Act.
If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of loss of confidence in the employee.
Each case must be decided on its own merits."
While Perkins was decided under the former statutory scheme the above observations remain relevant to the question of whether reinstatement is appropriate in a particular case.
In this case the Commissioner clearly had regard to the evidence that management personnel would no longer be able to work with the applicant as they no longer trusted him and as a result he would be ineffectual in the position of liaison officer. The Commissioner balanced this evidence against the impact on the applicant of not ordering reinstatement. In this regard the Commissioner formed the view that it would be unjust not to reinstate the applicant in circumstances where he found that the misconduct that resulted in his termination had not been established. This view is consistent with the approach adopted by Wilcox CJ in Yew v ACI Glass Packaging Pty Limited (11 December 1996, unreported). In that case his Honour dealt with the question of remedy in the following terms, at 7-8:
"I turn to the matter of remedy. Mr Yew sought reinstatement but the Judicial Registrar thought this impracticable. In explanation of her conclusions as to reinstatement, she referred to Mr Yew's evidence `concerning personal abuse and harassment suffered by him in the workplace'. She said: `The Court heard no evidence as to how the applicant would cope again with that position. Accordingly I am of the view that reinstatement is impracticable'.
With respect, this seems a curious approach. It adds to the injury of non-reinstatement to the insults Mr Yew has received. Moreover, it assumes that Mr Wilson, and other relevant ACI officers, have learned nothing from this case, a conclusion that seems hardly fair to them.
Mr Rothman put no submission regarding remedy. However, he adopted the submissions put to the Judicial Registrar by counsel who then appeared for ICI. They were twofold: Mr Yew's actions `were such as to seriously place at risk the safety of not only Mr Swadling but also of Mr Dolphin'; and `(t)o reinstate the applicant, where he has been the instigator of the fight, would be to (indicate) that the Court countenances fighting as acceptable conduct'.
Both these reasons assume acceptance of Mr Swadling's version of the incident. If I accepted that version, the question of reinstatement would not arise; I would hold there was a valid reason for dismissal. If I am unable to be satisfied about that version as is the case, it would be incongruous to refuse to reinstate Mr Yew on either of the stated bases.
I think reinstatement is not impracticable or inappropriate." [see further: Robertson v Northern Sydney Area Health Service, 30 June 1997, unreported per Locke JR]
In our view the approach adopted by the Commissioner was reasonably open to him. The fact that we may not have reached the same conclusion on this question is not to the point. In order to warrant a decision granting leave to appeal more is usually required than simply establishing a case that might have persuaded the Full Bench to exercise the discretion in another way as if the matter was being considered at first instance. In the absence of an arguable case of either legal error or that the discretion was miscarried the Commission would not grant leave to appeal merely to substitute its decision for the decision under appeal. As noted in Corporation of the Catholic Archdiocese of Brisbane v Australian Municipal, Transport, Energy, Water, Ports, Community and Information Services Union [Print K7698, 13 May 1993, per Moore VP, Keogh SDP and Bacon C]:
"The formation of opinion under s.45(2) leading to the grant of leave to appeal against a decision ordinarily requires considerably more than establishing a case that might have persuaded the full bench to exercise the discretion in another way as if the matter was being considered at first instance."
Given the broad nature of the discretion in ss.170CH(3) and (6) we think that the question of whether reinstatement is `appropriate' in a particular case will be a matter for the judgment of the Commission member at first instance based on the evidence and material before the Commission.
Conclusion
Section 170JF deals with appeals from orders arising from the determination of whether a termination was harsh, unjust or unreasonable. It states:
"(1) An appeal to a Full Bench under section 45 may be instituted by any person who is entitled under section 170JD to apply for the variation or revocation of an order under this Part.
(2) For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to any order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."
Section 45(2) provides that a Full Bench shall grant leave to appeal if `in its opinion, the matter is of such importance that, in the public interest, leave should be granted'. Having regard to the terms of s.170JF(2) leave to appeal should generally not be granted unless the appellant satisfies the Commission that there is an arguable case that the member at first instance had either made a legal error or had acted upon a wrong principle, given weight to irrelevant matters, failed to give sufficient weight to relevant matters or made a mistake as to the facts or that the decision was plainly unreasonable or unjust.
We are satisfied that the conclusion reached by the Commissioner was reasonably open on the material before him and the decision subject to appeal discloses no error of principle warranting correction on appeal.
Given the absence of demonstrable error in the exercise of the discretion at first instance we are of the opinion that the matter is not of such importance that, in the public interest, leave to appeal should be granted.
BY THE COMMISSION:
Appearances:
R. Kenzie Q.C. with A. Herbert of Counsel for the appellant.
J.W. Nolan with R.G. Atkinson of Counsel and J. Payne for the respondent.
Hearing details:
1998.
Brisbane:
May 13.
Decision Summary
Termination of employment - unfair dismissal - misconduct - remedy - appeal - Full Bench - liaison officer, meat works - employee dismissed for allegedly attempting to bribe occupational health nurse to provide urine test of another employee so that it could be tampered with - Bacon C found insufficient evidence that employee was not joking when he approached the nurse - held termination harsh unjust and unreasonable and ordered reinstatement - appellant submitted 1) Bacon C incorrectly applied principles in Sangwin v Imogen Pty Ltd [unreported von Doussa J 8 March 1986] - rather than considering whether there was a reasonable basis for employer's belief that employee guilty of misconduct, Bacon C formed a view about whether the employee actually committed the alleged misconduct - 2) Bacon C erred in the exercise of his discretion by focussing on whether or not the employee was joking - 3) Bacon C failed to take into account the practicality of reinstatement - held - 1) appellant's authorities must be considered in light of different statutory framework under WR Act - under former Act, existence of a valid reason for termination is a factor to which Commission must have regard but other issues are also required by s170CG(3) WR Act - principles in Byrne v Australian Airlines (1994) 47 FCR 300 still relevant - approach adopted by Bacon C consistent with this approach - in determining s170CE(1)(a) application Commission bound to consider whether on the evidence in the proceedings before it, the termination was harsh unjust or unreasonable, provided that the evidence concerns circumstances in existence when the decision to terminate the employment was made - facts which existed at the time of the dismissal but which only come to light after the dismissal might either justify the dismissal which would otherwise have been harsh unjust or unreasonable or render the dismissal harsh unjust or unreasonable - findings made by an employer's inquiry will only be relevant to Commission's determination if it is established that employer conducted a full and extensive investigation, gave employee every reasonable opportunity to respond to allegations and the findings were based upon reasonable grounds - test is not whether the employer believed on reasonable grounds after sufficient inquiry that the employee was guilty of the conduct which resulted in termination - 2) Bacon C made no error in focusing on question of whether employee joking in his conversation with nurse - 3) statutory provisions concerning reinstatement as remedy different under WR Act - under former Act test was whether reinstatement "impracticable" - s170CH(3) WR Act approach is whether reinstatement "appropriate" - this test involves assessment of broader range of factors - Bacon C balanced evidence that management could no longer work with employee as liaison officer because they could not trust him with evidence of impact on employee of not ordering reinstatement - conclusion reached by Bacon C reasonably open to him and decision discloses no error of principle - leave to appeal refused. | ||||
Appeal by Australia Meat Holdings Pty Limited against decision [Print P9625] issued by Bacon C on 24 March 1998 | ||||
C No 40215 of 1998 |
Print Q1625 | |||
Ross VP Polites SDP Hoffman C |
Sydney |
5 June 1998 | ||
Printed by authority of the Commonwealth Government Printer
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