PN1

VICE PRESIDENT HATCHER: Yes, can I take the appearances starting in Melbourne. Mr Smith, you appear for the Australian Industry Group.

PN2

MR SMITH: That's correct, your Honour.

PN3

VICE PRESIDENT HATCHER: In Sydney, Mr Nguyen, you appear for the AMWU.

PN4

MR NGUYEN: Yes, that's correct.

PN5

VICE PRESIDENT HATCHER: Mr Maxwell for the CFMEU.

PN6

MR MAXWELL: Yes, your Honour.

PN7

VICE PRESIDENT HATCHER: Ms Whish for the Australian Business Industrial in the New South Wales Chamber.

PN8

MS WHISH: Yes, your Honour.

PN9

VICE PRESIDENT HATCHER: Mr Barlow for the CPSU.

PN10

MR BARLOW: If it please the Commission.

PN11

VICE PRESIDENT HATCHER: Mr Crabb also, is that right?

PN12

MR CRABB: That's correct.

PN13

VICE PRESIDENT HATCHER: Yes, all right. Mr Smith, you'll go first. Is that the idea?

PN14

MR SMITH: Yes, thank you, your Honour. On 8 August we filed a submission which updates and replaces the previous submissions that we filed in this matter. On that day we also filed a list of authorities and other materials on which we'd seek to rely. That document contains web links to all the relevant authorities that we rely upon and also other materials that aren't readily available. So all of those documents have been provided to the other parties in that format. I've also for the assistance of the Bench today provided a folder of paper copies of those relevant authorities which I understand you have before you.

PN15

We at Ai Group regard this as a very important matter. Abandonment of employment is a matter that employers rightly take very seriously and have a strong view about. When an employee takes off and gives no notice there needs to be adverse consequences of that, and it certainly cannot and should not be the case that where an employee leaves the employment, abandons the employment that the employer becomes the one that is terminating the employment with all of the adverse consequences that flow from that, including the obligation to give notice or make a payment in lieu and exposure to unfair dismissal and general protections potential claims.

PN16

Now we accept of course that sometimes an employee goes missing and hasn't abandoned his or her employment. However, we'd submit that this is not a case about that. This is a case about abandonment of employment, it's quite clear on the authorities that an objective test applies to that and we're talking here, in our submission, about a case where an employee has abandoned his or her employment.

PN17

In the matter before you, as you're aware Ai Group opposes the complete removal of all references to abandonment of employment in those six awards; the Metal Industry Award and now the Manufacturing Award has had an abandonment of employment provision in it for about 50 years and it's therefore a huge step, we would submit, to remove all references to abandonment of employment from the award. What we would seek, and are seeking, in these proceedings is the fairly modest change that is set out at paragraph 4 of our submissions, which would simply clarify that where an employee abandons his or her employment that the employer is not required to give notice and the employer is entitled to deduct from any termination pays the notice that the employee has failed to give. That is consistent, we would submit, with the way things have been for that 50 years.

PN18

Now in order for the Full Bench to properly consider the effect of the proposed amendments that we're seeking, we'd submit that it's necessary for the Full Bench to look at this concept of what abandonment of employment is and what the legal effect is of abandonment. That goes to the heart of the employment relationship, and as we argue in section 2 of our written submission:

PN19

Abandonment of employment constitutes repudiation of the employment contract and termination at the initiative of the employee.

PN20

That is if the employer accepts the repudiation.

PN21

There's a whole host of High Court cases, New South Wales Supreme Court decisions and other authorities which are relevant to this issue, one of which is that Koompahtoo High Court decision of 2007 where the High Court looked at the term repudiation and various senses that are associated with that term, but we'd submit that the relevant sense where that term is used that's relevant here is it refers to conduct which evinces an unwillingness or an inability to render substantial performance of the contract, its conduct which evinces an attention to no longer be bound by the contract. In our written submission we include some extracts from Macken's law of employment, but the relevant cases we've - - -

PN22

DEPUTY PRESIDENT GOSTENCNIK: Sorry, Mr Smith. Repudiation itself doesn't terminate the contract. It require something else.

PN23

MR SMITH: Exactly, your Honour, and I'll come to that because in fact in one of your decisions you highlight this point. There was some authority, particularly in the UK, which said that there was automatic termination of employment where an employee repudiates but the authorities in Australia say that the employer must accept the repudiation. But what we - - -

PN24

DEPUTY PRESIDENT GOSTENCNIK: Or the employee, depends on who's engaging in the conduct, yes.

PN25

MR SMITH: Yes, in the context of abandonment the employee but in the context of repudiation by any of the parties, the other party must accept the repudiation. We did put forward the brave argument in our earlier submission that it was automatic and we no longer rely on that. We do accept that there needs to be an acceptance of the repudiation by the employer.

PN26

VICE PRESIDENT HATCHER: Mr Smith, one thing I noticed in the submissions is that your submissions canvass the general common law principles concerning repudiation of employment and the like. The discussion in the Bienias decision was concerned with interpretation of the particular clause in the Manufacturing Award.

PN27

MR SMITH: Yes.

PN28

VICE PRESIDENT HATCHER: But you seem to have treated them as if they're the same thing. That is - I mean I don't think Bienias was meant to be a discussion generally about repudiation of employment. It was an attempt to grapple with how that particular clause in the award operated.

PN29

MR SMITH: Yes, your Honour, and there's only one paragraph in that decision, with respect, that we take strong exception to in terms of disagreeing with and we think the unions are trying to place too much weight on one sentence in the Full Bench's decision.

PN30

VICE PRESIDENT HATCHER: Well, that's what I'm focused on. That sentence was concerned with the way in which that clause was interpreted to operate, it wasn't meant to be some general excursus into the law of repudiation of employment.

PN31

MR SMITH: Yes, and that's what we're arguing in these proceedings, your Honour. The only reason why all of this is relevant is to go to the effect and the merits of what we are seeking, which is to make it clear in the notice of termination by employee clause that that clause applies where termination is at the initiative of the employee, including in the context of abandonment. We say that you can't really consider the merits of that without agreeing or coming to a view on what the legal effect is. If the Full Bench does not disagree with what we're saying then I think all of that case law is really more background to the issue.

PN32

We think the authorities are very clear for all of the reasons we've set out, that if someone does abandon their employment it is repudiation of the employment contract. The employer must accept that, but when the employer accepts it, it is termination at the initiative of the employee. In our assessment of all of those High Court cases, the Supreme Court cases in New South Wales, Purcell v TP litigation, it just seems beyond contention really. The CFMEU's put up an argument about the Dick Smith Electronics case which I think is a misreading of that case but I cannot see there's any doubt about the legal effect where someone generally does abandon employment.

PN33

VICE PRESIDENT HATCHER: I just want to pin down what this case is about, apart from taking out the existing abandonment of employment clause. In the unfair dismissal context, dismissed is given a meaning in section 386 of the Act.

PN34

MR SMITH: Yes.

PN35

VICE PRESIDENT HATCHER: There's nothing he can do by way of an award as far as I can see that effects that. That is that's the operation of the Act upon the facts of a particular case. So let's put that aside. The circumstances of when the employer has to provide notice because these awards just refer to the NES as dealt with in section 117 and it simply operates in circumstances where the employer terminates the employee's employment. That's a formula used by the Act, so again we can't - nothing the award can operate to effect that entitlement or obligation. So are we only talking about what, a circumstance where the employee terminates and you say there needs to be some consequence about that where they fail to give the requisite notice?

PN36

MR SMITH: Well, what we're saying, your Honour, is if you take those variously. Section 117 of course says that the party that is terminating needs to give notice to the other party, and the CFMEU supported by various other unions has argued that - - -

PN37

VICE PRESIDENT HATCHER: Hold on, 117 is about the employer terminating.

PN38

MR SMITH: Yes, sorry, the provision in the NES which states that notice must be given and the argument that the CFMEU has raised, because the NES requires that notice be given, that if a party doesn't give notice then the termination is of no effect if that's what we understand their argument is. But that issue is put to bed by the authority that's at tab 13, which is Gostencnik DP's decision in that D'Souza v Halas case, and this was a decision that Ross J handed to the parties in the payment of wages common issue proceedings recently, and what that decision states, apart from traversing some of these issues about the employment potentially finishing, even though the employment contract may not have been terminated. What that decision is authority for is that if notice of employment isn't given by a party, that is a breach of the NES with the consequences and civil penalty provisions and so on. It doesn't mean that the termination hasn't taken effect. That was the point that Gostencnik DP has made in that decision.

PN39

VICE PRESIDENT HATCHER: Yes, that's not what this case is about, is it?

PN40

MR SMITH: Well, it is in - - -

PN41

VICE PRESIDENT HATCHER: Let me just finish. Termination by the employer and the requirement for notices dealt with in section 117. Is that right?

PN42

MR SMITH: Yes.

PN43

VICE PRESIDENT HATCHER: So we're not concerned about how that operates. It operates by force of the formula that the Act uses.

PN44

MR SMITH: Yes, but what this case is about is whether the notice of termination by employee clause applies in circumstances of abandonment of employment, and in our submission it clearly does. If the Full Bench is with us on that, then it would not be a big step to put a simple reference to that in that clause as we have sought. But if there is any doubt about that then that's what this case is about; arguing on those authorities which we think are very clear that that clause does apply because this is termination at the initiative of the employee, when an employee abandons employment.

PN45

VICE PRESIDENT HATCHER: So this is about circumstances in which the employee notice provision applies, 118.

PN46

MR SMITH: Yes.

PN47

VICE PRESIDENT HATCHER: So 118 authorises award provisions for employee notice.

PN48

MR SMITH: Yes.

PN49

VICE PRESIDENT HATCHER: And this is a case about when the clause in the relevant awards operates.

PN50

MR SMITH: Yes.

PN51

VICE PRESIDENT HATCHER: But isn't it simply dealt with by 118 itself and the power it gives, that is where the employee terminates the employment what notice is required. Why do we need to descend upon what various scenarios of employee termination might be?

PN52

MR SMITH: Well, because when you look at these awards, you know, the Manufacturing Award provisions are flowed into those various other awards. This is an award with 50 years of history where there has been an abandonment of employment provision, and if you look at the history, including the extracts from that industrial information digest from the 60s which talked about all the problems that were occurring back in the 60s with a lack of clarity about abandonment of employment, and a lack of clarity about whether the employer was entitled to deduct notice for the notice not given in those circumstances. So in the 1971 version of the Metal Industry Award that abandonment provision was put in there to clarify that, and it's been there for the last nearly 50 years.

PN53

In the award simplification process it was agreed between the MTFU and ourselves that it should stay there. Senior Deputy President Marsh decided it was an allowable matter at the light of this Full Bench's reasoning we're not challenging that when arguing that her Honour was correct on that. But we do strongly submit there should still be a provision in the award that makes it clear that notice is not required in circumstances where an employee abandons his or her employment - - -

PN54

VICE PRESIDENT HATCHER: You mean employee notice.

PN55

MR SMITH: Well, notice - - -

PN56

VICE PRESIDENT HATCHER: By the employer.

PN57

MR SMITH: Yes, that's correct.

PN58

VICE PRESIDENT HATCHER: But again that just circles back to 117. 117 is the operative provision in the Act. Nothing we can do can change the effect of that section.

PN59

MR SMITH: But, your Honour, if there is a reference to abandonment of employment put into the award provision that hangs off section 118, it will be quite clear to readers of the award that abandonment of employment is termination at the initiative of the employee, and that is the legal effect. We, with respect, we think the Full Bench's decision in Iplex has created a great deal of confusion about this issue because the commentators and the unions who've seen the way they're trying to rely on half of a sentence in your decision to say that it's termination at the initiative of the employer because the employer's got to do something, even though an employee takes, never hear from them again in some circumstances.

PN60

VICE PRESIDENT HATCHER: But again that was - the decision was about the meaning of the existing clause. It wasn't some excursus into the law of repudiation of employment. It was simply trying to interpret how that clause would operate.

PN61

MR SMITH: Yes, and we don't disagree - - -

PN62

VICE PRESIDENT HATCHER: I don't understand how this alleged confusion has arisen.

PN63

MR SMITH: Well, all we're asking for in these proceedings is that clarity in what is the relevant clause, which is that if an employee abandons employment, an objective test applies. There's repudiation of the employment contract, the employer accepts the repudiation by notifying the employee that they're terminated, that they accept the termination, here's your final pay. That's the legal effect of it, it's termination at the initiative of the employee. Notice is required in those circumstances so all this provision that we're seeking does is clarifies that notice is required. If the employee doesn't give notice and they haven't because they've just taken off, the employer can deduct that notice period that should have been given.

PN64

VICE PRESIDENT HATCHER: How is that a permitted matter? How can an award provision allow an employer not to pay an NES entitlement?

PN65

MR SMITH: If that is not a provision then every - - -

PN66

VICE PRESIDENT HATCHER: I am asking you a question. Is it or isn't it? How is that a permitted matter?

PN67

MR SMITH: It is a permitted matter under section 118 and the associated provision about incidental matters in 142, and that's - it's in virtually every award so there's plenty of authority on that.

PN68

VICE PRESIDENT HATCHER: How can that extend to authorising an employer to not pay an NES entitlement?

PN69

MR SMITH: It authorises that under 118 because it says:

PN70

A modern award or enterprise agreement may include terms specifying the period of notice an employee must give in order to terminate his or her employment.

PN71

VICE PRESIDENT HATCHER: So you can say you're required to give four weeks' notice, that's what the section authorises, but how does it go on to authorise that if the notice is not given the employer is entitled to withhold an NES entitlement?

PN72

MR SMITH: Because 142 would come in to play there, that that is a matter that is incidental to that entitlement. The Full Bench in the original award modernisation case was satisfied that that provision was a matter that could go in awards and we've had endless numbers of cases since where no one has challenged that provision.

PN73

All we're seeking to do is to put a modest provision on the end of the existing provision to clarify that it applies in all circumstances where termination is at the initiative of the employee, and that's obviously, in our submission, where that provision should apply.

PN74

VICE PRESIDENT HATCHER: Does 324 authorise or give some support for your proposition that such a clause in the award which allows for a deduction of NES entitlements, in particular (indistinct) seems to me that 324 authorises a deduction where - the deduction is authorised under a modern award and it makes reference to payments that would otherwise be payable under 323, which presumably would include payments on termination.

PN75

MR SMITH: Yes, your Honour. 324(1)(c) would be the relevant provision.

PN76

VICE PRESIDENT HATCHER: That is not a head of power though, is it? The provision would still need to be authorised as a valid provision in a modern award.

PN77

MR SMITH: Yes, and notice of termination by employee clearly is a provision that's authorised and 118 deals specifically with that. There's 142 which allows that to deal with incidental matters, and then we have 324(1)(c) which deals with deductions that an employer is authorised to make under a provision of a modern award. But it would be an extremely big step, of course, in these proceedings for that very longstanding existing provision to be challenged on the basis that we're seeking to simply put a sentence on the end of it to clarify.

PN78

VICE PRESIDENT HATCHER: You have drawn your attention to it so - - -

PN79

MR SMITH: That is fine, your Honour, but we strongly disagree with any suggestion that it's not an allowable matter.

PN80

VICE PRESIDENT HATCHER: All right.

PN81

MR SMITH: Our submissions are set out in significant detail so I won't cover all the points in there. If you're following through the authorities that we've set out, that Visscher decision of the High Court and the various other decisions that are cited in there, we think it's quite clear.

PN82

That litigation in the New South Wales Supreme Court in that TP Australia v Purcell matter, even Brereton J's decision in the matter relating to the injunction that the employer was seeking, that's at tab 5, and his Honour in that matter tracks through this issue about repudiation and the arguments that were there previously about automatic termination and how at least in Australia it has not been upheld. And then we have the other authorities that are referred to there, the decision of Spencer C and those decisions of the Tasmanian Commission.

PN83

So I won't track through all of that but in conclusion on that point, we think it's beyond contention that this is a matter where there is repudiation, it's not automatic, the employer accepts it and then it's termination of the initiative of the employee.

PN84

VICE PRESIDENT HATCHER: The employee may repudiate his or her employment in lots of different ways. Abandonment is one, in effect that's the colloquial phrase, someone who just stops turning up to work without an explanation, but there are other scenarios. For example, an employee may turn up for work but then start refusing to perform their fundamental duties or refuse to repeatedly follow lawful instructions.

PN85

MR SMITH: Yes.

PN86

VICE PRESIDENT HATCHER: I mean, why do we need to descend into defining all the circumstances in which there has been a termination by the employee?

PN87

MR SMITH: This is an exceptional matter, as I've said, in that for 50 years the main award here has had that provision in it. A number of those other awards have been drafted around the manufacturing award and previously the metals award, so that's the difference.

PN88

It's worth just going to that Dick Smith Electronics decision. This is at tab 12. Because just in the context of the point your Honour has just made, the CFMEU rely on some words in this decision. The pages aren't numbered but the fifth page, piece of paper in that folder - - -

PN89

VICE PRESIDENT HATCHER: The page beginning with "The registrar drew"?

PN90

MR SMITH: No, it starts with "process leading to its termination" up the top, the fifth piece of paper.

PN91

VICE PRESIDENT HATCHER: I see. Yes, all right.

PN92

MR SMITH: "Process leading". This is an interesting decision in that the court looked at the phrase "termination of employment at the initiative of the employer" which comes out of the conventions that were referred to in the Workplace Relations Act, and what the Full Court said is that - they refer first of all to dictionary definitions about initiative being the action of initiating something or taking the first step. And then in that page that I've just referred to, this is the extract the CFMEU refers to where the court says:

PN93

An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complicated.

PN94

Then they refer to a decision of Moore J in that Gunnedah Council case. They talk about this particular matter, and in that matter as highlighted by the court, the notice that the employer gave was not reasonable, and then Moore J held that despite the fact that the first step was taken by the employer, that termination was in that matter at the initiative of the employer.

PN95

But the court goes on to look at the situation more fully. It concludes probably with - I think the most significant thing is the statement at the top of the next page which says:

PN96

I agree with the proposition that termination may involve more than one action but I think it is necessary to ask oneself what was the critical action or what were the critical actions that constituted a termination of the employment.

PN97

And in this case, if someone just takes off and doesn't come back, that's the critical action. So in our submission, there's nothing in that decision which in any way disturbs what we're arguing in this matter.

PN98

VICE PRESIDENT HATCHER: The difficulty with that proposition, it seems to me, Mr Smith, that you're trying to reverse engineer a situation where it's clear, for the purposes of a statutory definition of dismiss, that repudiatory conduct by an employer of a particular kind accepted by the employee might be regarded as conduct or a course of conduct by the employer which resulted in the termination of the employment by the employee, the consequence of which is that it falls within the definition of dismissed at the initiative of the employer.

PN99

MR SMITH: Yes.

PN100

VICE PRESIDENT HATCHER: But it doesn't follow that the reverse is true, that repudiatory conduct by an employee will in every circumstances result in termination at the initiative of the employee because the employer accepts the repudiation.

PN101

MR SMITH: We argue - - -

PN102

VICE PRESIDENT HATCHER: Because we're concerned about a statutory definition.

PN103

MR SMITH: Yes. We argue against that proposition for this reason. If you look at the decision of the High Court in that Visscher case and the Purcell litigation, the principles that come out of those cases highlight that when you're looking at the employment contract it cuts both ways, and there's a very good analysis of the law in those areas by Matt Moir, the New South Wales barrister that's looked at that Purcell case and all of these other High Court cases. His article or his case note that was published in a journal is there in the authorities, but we say it cuts both ways.

PN104

If you're looking at termination at the initiative of the employer then yes, there might be extreme examples where there might be some different principles that apply on one side versus the other, but generally it's an employment contract. If one party is responsible for repudiating the employment contract then it cuts both ways.

PN105

VICE PRESIDENT HATCHER: Take an example. An employee in the IT industry is in the process of stealing sensitive information from the employer with a view to working for a competitor, clearly repudiatory conduct. The employer finds out about it, dismisses the employee for serious misconduct. Dismissal at the initiative of the employer?

PN106

MR SMITH: This is different, your Honour.

PN107

VICE PRESIDENT HATCHER: That's where we're getting into finer debates about the nature of the repudiatory conduct and whether it would be termination at the initiative of the employer in a given circumstance.

PN108

MR SMITH: Yes, and no one is suggesting that these circumstances are sometimes not easy but that's exactly what the example was that was given by the Full Federal Court in the Dick Smith matter, that if someone was guilty of - and they said "misconduct" as opposed to "serious misconduct" - misconduct, the employer terminated the employment, that will be termination at the initiative of the employer.

PN109

But here we're talking about a situation where the employee abandons employment. On any assessment, in our submission, that is termination at the initiative of the employee, and as the Full Federal Court said in that Dick Smith matter, if an employee voluntarily leaves the employment that is termination at the initiative of the employee which is exactly what we're talking about here.

PN110

VICE PRESIDENT HATCHER: We already know the clause applies to - that's clause 22 - applies to termination at the initiative of the employee, and I don't know what we're adding to that by what you propose.

PN111

MR SMITH: What we're adding - and I guess it comes down to the issues that we set out in the section of our submission dealing with the modern awards objective. What we're adding is clarity and fairness, because it is very unfair to an employer to have to give notice in circumstances where an employee just takes off and doesn't come back, and abandons employment.

PN112

VICE PRESIDENT HATCHER: Again, that has got nothing to do with this matter. Section 117 defines when they do and do not have to give notice. Nothing an award can do can affect the operation of section 117. That's why I don't understand how that point even arises for consideration.

PN113

MR SMITH: But I think it arises because of the misunderstanding about that half of the sentence in the Iplex decision. There has been a lot of confusion and uncertainty, and the unions are perpetuating that by the interpretation that they're putting on it; but I think it's because there is a view that has now developed that if an employee just takes off, because the employer typically does something – and even if an employee resigns, the employer typically does something. They, you know, organise the final termination pay.

PN114

Because of that misunderstanding that has developed out there - perpetuated by the unions - that if an employer confirms the termination, that is then termination at the initiative of the employer to restore fairness - - -

PN115

VICE PRESIDENT HATCHER: What evidence is there of this misunderstanding? I haven't heard about it.

PN116

MR SMITH: Well, all the articles about the Iplex decision in the journals, the unions' submissions, I think that is the evidence that is needed. The unions' submissions themselves argue this. We say in support of why we think this provision meets all the relevant tests – I've talked about the fairness issue, but even when you come to the modern awards objective, obviously there are things there like the need to increase workforce participation. We say this is consistent with that because it would discourage employees from abandoning employment.

PN117

If this issue is clarified, it would be consistent with the need to promote flexible modern work practices and the efficient and productive performance of work, because obviously it's costly and inefficient and unproductive if someone takes off.

PN118

DEPUTY PRESIDENT GOSTENCNIK: But, Mr Smith, there are two issues, are there not? The first is in circumstances where the abandonment of employment clause has work to do or applies to a particular circumstance, the employer faced with that situation would probably regard the employee's non‑attendance at work for a given period as a species of misconduct. The issue arises as to whether or not notice is required at all or simply termination. That's the first point.

PN119

The second is then given that it's a termination at the initiative of the employer - the employer terminates summarily by accepting the repudiation - why would, in that circumstance, an employer also be justified in making a deduction for the NES entitlement?

PN120

MR SMITH: Your Honour, in our view they are completely different consequences. If an employee fails to turn up for work – or take the circumstance that was there in that decision of Spencer C: the employee applied for leave, was not granted leave, just absented himself from employment. The employer had the option of summarily dismissing the employee for misconduct, but that wasn't what was argued in that case and accepted in that case.

PN121

What was argued and accepted was that that constituted repudiation and an employer is entitled to, you know, rely on that, because if the employer terminates employment for misconduct, it then brings with it the risk of an unfair dismissal case. Termination then is clearly at the initiative of the employer, so it brings with it, you know, the consequences that would flow from a challenge against that. The employer is entitled to say, well, if someone just fails to turn up, that is a repudiation of the employment contract.

PN122

If there is a serious breach of the employment contract, as his Honour Vice President Hatcher said, then perhaps the same might apply, but we're not talking about that here. We're talking about abandonment of employment and on the authorities we say an employer is entitled to regard that as a repudiation of the employment contract and termination at the initiative of the employee.

PN123

VICE PRESIDENT HATCHER: Your clause uses the phrase "abandonment of employment". That's a colloquial phrase, isn't it? It's not a term of art.

PN124

MR SMITH: It's not a term of art, but it has to stand up on its facts with an objective test. That phrase has been in awards for nearly 50 years, abandonment of - - -

PN125

VICE PRESIDENT HATCHER: That gets us back to the old clause which attempted to define it, because then you're left with the question, well, what does constitute abandonment of employment such as would lead to your clause applying? I mean, the easy case is somebody who doesn't turn up and you find they're working for the competitor across the road. That's easy. Then you get the harder cases where the employee doesn't turn up and doesn't say they're sick or send in a certificate, and weeks pass and it turns out they were sick but they just didn't comply with the requirements of the sick leave clause. Is that abandonment of employment?

PN126

MR SMITH: Well, that comes down to the facts with the objective test. That was the very reason why that clause was put into the Metals Award in 1971, because all those arguments were occurring at the time.

PN127

VICE PRESIDENT HATCHER: I mean, your proposal can't change the effect of the current clause because it already applies in the circumstances where the employee terminates. It can only be advanced on the grounds of clarification, but I'm wondering whether it creates more confusion rather than clarification because it's not using something that's capable of any precise definition and may in fact lead an employer down the garden path.

PN128

MR SMITH: If, despite our submissions, the bench isn't minded to accept what we're seeking, we think that what the Full Bench should do is to - in its decision in this matter - clarify that in circumstances where an employee abandons employment and, you know, abandonment stacks up on the facts, that is termination at the initiative of the employee and the clause - - -

PN129

DEPUTY PRESIDENT GOSTENCNIK: Abandonment at common law as opposed to the definition in the award.

PN130

MR SMITH: Well, when you look at the clause in the award, it just says that if the employee terminates employment, then they must give notice. If they - - -

PN131

DEPUTY PRESIDENT GOSTENCNIK: No, I'm not talking about the notice clause. I'm talking about the provision that we considered in Bienias. That is the deemed abandonment clause. Is paragraph (c) of your draft intended to address termination under that clause or is abandonment of employment abandonment at common law?

PN132

MR SMITH: It's abandonment at common law, but the common law isn't disturbed in any way by the Fair Work Act or the provisions of the award.

PN133

DEPUTY PRESIDENT GOSTENCNIK: What do we do with the provision in the award?

PN134

MR SMITH: The provision in the award - what we would like is subclause (c) included, but if you're not minded to do that for the reason that Vice President Hatcher - - -

PN135

DEPUTY PRESIDENT GOSTENCNIK: Subclause (c) is in addition to notice of termination by an employee. It's not in addition to the clause that was considered in Bienias.

PN136

VICE PRESIDENT HATCHER: You say that clause should go, don't you, or you're content for that existing abandonment clause to go?

PN137

MR SMITH: We would like to keep it, but we're not arguing to keep it. What we're suggesting is given your rationale that we're not challenging that, it's not a matter that fits in 136, 139, 142. It can't stay.

PN138

DEPUTY PRESIDENT GOSTENCNIK: Only if that clause is interpreted as automatic termination, which was very much a secondary consideration in that decision. The primary conclusion was that it didn't have that effect, but proceeding on the basis that the employer asserted that it did have that effect, what are the consequences and the consequences if it had that effect - - -

PN139

VICE PRESIDENT HATCHER: We said that if it was interpreted the way contended by the employer, it would not be a permitted matter, but our primary reasoning was that it was not to be interpreted the way contended for by the employer. I think the parties seem to have read the decision as meaning that it was necessarily not a permitted matter when I don't think we needed to go that far, because we interpreted it in a way which caused the appeal to be successful.

PN140

MR SMITH: In framing our application in this matter or our proposed amendment, we were trying to find a way of keeping an abandonment of employment provision in these awards that would be a matter that fits within, you know, 139, 142. In this case it hangs off 118. We don't quibble with the point that you couldn't have a provision in an award that deems termination to occur at a particular point in time. We don't disagree with that despite Marsh SDP's acceptance of the submissions of Ai Group and the MTFU at the time, but we do think it would be very worthwhile to keep a provision in the award.

PN141

If you're not with us on that, then we think if you were to use the opportunity to clarify what you actually meant in the Iplex decision – because it's not just a decision about Iplex. Iplex aren't a member of ours. We weren't involved in that, but obviously this Iplex decision has been the impetus for the current proceedings and therefore, in our submission, the lack of clarity about what the Full Bench meant in the Iplex matter should be addressed. If it's clear on the basis of - - -

PN142

VICE PRESIDENT HATCHER: I think the decision is clear. What people read into it is another thing. I'm not sure that we can do much about that.

PN143

DEPUTY PRESIDENT GOSTENCNIK: No.

PN144

MR SMITH: But I do think that sentence about termination by the employer does need to be clarified in the broader context, because if you agree with the submissions that we have made, then there is repudiation which was - - -

PN145

VICE PRESIDENT HATCHER: I'll say again, Mr Smith, that sentence is not about the common law. It's about what the existing abandonment of employment clause – how it was to be interpreted. That's all. We weren't talking about how the common law operates. We're only talking about what that particular clause meant.

PN146

MR SMITH: Yes.

PN147

DEPUTY PRESIDENT GOSTENCNIK: Which gets back to my question and that is, is it intended that paragraph (c) of proposed clause 22.2 is directed to abandonment of employment at common law?

PN148

MR SMITH: It's directed to circumstances where an employee abandons employment and the common law test, in our submission, is the one that applies under the award, under the NES. There's nothing in either that disturbs the case law - - -

PN149

DEPUTY PRESIDENT GOSTENCNIK: Putting aside whether or not it's a permitted matter, that would work only if the existing abandonment of employment clause in the relevant awards were removed, because otherwise it would create confusion.

PN150

MR SMITH: Yes. If the Full Bench was minded to keep the existing abandonment of employment clause, then we would be very happy with that, but we were starting from the assumption that that wasn't going to happen.

PN151

VICE PRESIDENT HATCHER: That was the purpose of this proceeding; to hear from the parties as to whether the existing clause is a permitted matter or not. There was no starting point assumption. It's just that Bienias gave rise to that question and the Commission is giving the parties an opportunity to address that question. That is, is the existing abandonment of employment clause a permitted matter or not? What do you say?

PN152

MR SMITH: Given the decision in the Iplex matter that it is of no effect, we accept that, that it can't - - -

PN153

DEPUTY PRESIDENT GOSTENCNIK: But it's of no effect based on the submission that the employer put, that it operates as automatic termination.

PN154

VICE PRESIDENT HATCHER: Which we rejected.

PN155

DEPUTY PRESIDENT GOSTENCNIK: Which we primarily rejected.

PN156

MR SMITH: Yes.

PN157

DEPUTY PRESIDENT GOSTENCNIK: But, out of an abundance of caution, we nevertheless addressed that argument and set out the consequence of that interpretation for the clause. Our primary holding was that the clause didn't have that effect. It wasn't automatic termination.

PN158

MR SMITH: Well, perhaps then we have misunderstood the nature of these proceedings and we will be happy to – you know, if the bench was minded to give us an opportunity to come back with a view on that particular clause. You know, our position that we were putting in the written submission is – we perhaps misunderstood what the bench were saying, but we were accepting that that clause can't stay and we were looking for a way of keeping an abandonment of employment provision in the award but also clarifying the misunderstanding that everyone seems to have had or many people - not everyone of course - many people have had about the Iplex decision.

PN159

DEPUTY PRESIDENT GOSTENCNIK: All right.

PN160

MR SMITH: If the Commission pleases.

PN161

VICE PRESIDENT HATCHER: Mr Nguyen, are you next? Mr Maxwell?

PN162

MR NGUYEN: Mr Maxwell goes next.

PN163

MR MAXWELL: Thank you, your Honour. Your Honours and Commissioner, the CFMEU filed a submission on 18 May 2017 in which we supported the findings of the Full Bench in Iplex where clause 21 of the Manufacturing Award was not a term permitted or required in a modern award. We rely on that submission.

PN164

VICE PRESIDENT HATCHER: Mr Maxwell, firstly, can you move the microphone closer because you're cutting in and out.

PN165

MR MAXWELL: Is that better, your Honour?

PN166

VICE PRESIDENT HATCHER: Yes, that's better. Now, secondly, that sentence just raises the very issue which we've raised with Mr Smith. That is, the Iplex decision only said that it was not a permitted matter if the clause was read a certain way and we said it was not to be read that way. So the purpose of these proceedings was to invite submissions about whether the clause properly interpreted is a permitted matter or not.

PN167

MR MAXWELL: Your Honour, we say that the way the employer sought to interpret it in Iplex is the way that the IAG have sought to interpret the abandonment of employment clause and on that basis it is not a permitted matter because it contradicts - - -

PN168

VICE PRESIDENT HATCHER: But we rejected that interpretation.

PN169

MR MAXWELL: There is still an argument about whether the abandonment of employment clause should be a permitted matter to the extent that it deals with notice of termination.

PN170

VICE PRESIDENT HATCHER: Yes, well, that's what we're hoping to hear from the parties about.

PN171

MR MAXWELL: Yes, well, hopefully I can enlighten you with my submission.

PN172

VICE PRESIDENT HATCHER: All right.

PN173

MR MAXWELL: The CFMEU also filed a written submission in reply on that note to the submissions filed by the AMWU, AWU and CEPU which supports the CFMEU position. In our submission of reply, we also responded to the AiG's submissions of 18 May 2017. In that submission, we rejected the AiG claim that termination automatically occurs when an employee abandons his or her employment which is not necessarily for the employer to take any steps to terminate the employee's employment and we rejected their proposed variation to clause 22 to the Manufacturing Award and we also rely on that submission.

PN174

In response to the submissions of the AiG in their written response of 8 August 2017 and in the submissions made today we say the following. A majority of the AiG submission is concerned with supporting an argument that abandonment of employment constitutes repudiation of the employment contract and is termination at the initiative of the employee. The AiG appears to feel compelled to run this argument to counter what they say in paragraph 36 of their written submission is that the union's argument is that abandonment of employment constitutes termination at the initiative of the employer. That is not the argument that we have made.

PN175

Whether the termination of employment is at the initiative of the employee or the employer will depend on the facts and circumstances of each individual case. If it is alleged that an employee has abandoned their employment and there is no notice given by the employee either verbally or in writing that the employee wishes to bring the contract of employment to an end then the contract of employment continues. It continues unless the employer takes a positive action to bring the contract of employment to an end, i.e. it continues until the employer gives the employee notice of the termination.

PN176

This principle that there is repudiation of the contract does not bring the employment contract to an end was recognised by Lord Oliver of Aylmerton in Rigby v Ferodo Limited in the extract quoted by the AiG at paragraph 8 of their written submission which is referred to in Visscher and if you just look at the first sentence of the extract that's quoted there it states:

PN177

Whatever may be the position under a contract of service, whether repudiation takes the form either of a walk-out by the employee or a refusal by the employer any longer to regard the employee as his servant, I know of no principle of law that any breach which the innocent party is entitled to treat as repudiatory of the other party's obligations brings the contract to an end automatically.

PN178

Now, the AiG seem to accept that position in paragraph 17 of their 8 August submission. The crux of the matter here is that if the employee gives notice to terminate the employment contract then there is no abandonment of employment. If the employee does not give notice and appears to abandon their employment, then the employer must give notice to bring the employment to an end. The employer must give the written notice of the day of termination as required by section 117 of the Fair Work Act.

PN179

VICE PRESIDENT HATCHER: Isn't that the proposition that Mr Smith accused you of making?

PN180

MR MAXWELL: I was understanding his submission to be that we say that if an employee abandons their employment it is not termination at the initiative of the employee, but we're not - - -

PN181

VICE PRESIDENT HATCHER: So if an employee walks out the door and the next day is working for the competitor across the street, you say nonetheless it's up to the employer to terminate and provide notice?

PN182

MR MAXWELL: It's up to the employer to take a positive step to terminate the employment. Whether the employee is entitled to notice will then depend on as to whether or not the employer is required to give notice and dependent on whether or not the employee has committed serious misconduct.

PN183

VICE PRESIDENT HATCHER: All right.

PN184

MR MAXWELL: Your Honour, we submit that any provision of - - -

PN185

DEPUTY PRESIDENT GOSTENCNIK: Mr Maxwell, the repudiation cases are concerned with how a contract of employment is to come to an end. The statutory definition which engages termination at the initiative of the employer is concerned with the employment. I think Mr Smith's point is that abandonment of employment whilst is repudiation, the employer accepting that brings the contract to an end, but the employment was brought to an end at the initiative of the employee.

PN186

MR MAXWELL: The issue here, Your Honour, is that whilst abandonment of employment can be seen as repudiation of the contract, the law as referred to in the Visscher case that I referred to is that that doesn't bring the employment contract to an end automatically.

PN187

DEPUTY PRESIDENT GOSTENCNIK: I agree with that, but as the authorities have also recognised, there is a distinction between the contract of employment ending and the employment under-attending and the employment under it can end although the contract nonetheless continues because it hasn't been lawfully terminated. And so that when we're concerned, for example, in 386 with a person's employment with his employment having being terminated at the employer's initiative were concerned with employment not the contract of it. The contract may well subsist, but employment under it has come to an end either by act of the employer or by act of the employee amounting to, in this case, abandonment.

PN188

I mean, for example, an employer says to an employee, "Well, you're no longer welcome at these premises", and the employee says, "Well, I don't accept that", and purports to continue to come to work, but the employer refuses to allow the employee to come to work, the employment has ended because the employer has indicated that the employer no longer wants the employee working for them, but the contract of employment hasn't because the employee hasn't accepted repudiation under it. So, there are a number of cases which discuss this issue and I accept the general proposition that abandonment of employment is a species or arguably a species of repudiation and it requires the acceptance by the employee of the repudiation to bring the contract to an end. But there is, in some circumstances, a difference between the contract coming to an end and the employment under it ending.

PN189

MR MAXWELL: Your Honour, I accept that point, but I think what we're dealing with here is notice of the termination of employment.

PN190

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN191

MR MAXWELL: And clearly section 117 sets out the requirements on the employer of what notice they're required to give to terminate the employment and that should be read in conjunction with I think it's section 123(1)(a) or section 123. Section 118 of the Fair Work Act sets out that awards may include - bear with me, your Honour - section 118 provides that a modern award or enterprise agreement may include certain specifying the period of notice an employee must give in order to terminate his or her employment.

PN192

That sets out what can be included in an award in regards to the notice required to be given. What the AiG seeks to do here is imply that if there is abandonment of employment, no notice is required to be given - sorry, no notice of employment is required to be given by the employer. Now, what we say is that if there is abandonment of employment then there is no notice given by the employee. So to bring the contract to an end, it still requires a positive act of the employer to write to the employees to say that: "Your contract of employment is now terminated." And if the employer does that, then they are bound to give the written notice required by section 117.

PN193

VICE PRESIDENT HATCHER: And if they don't do it?

PN194

MR MAXWELL: If they don't do it, well, then the contract continues until either side does it.

PN195

VICE PRESIDENT HATCHER: No, but the employment has come to an end, hasn't it? The employer is gone. They're not coming back. They're working for a competitor across the road. The employment is over.

PN196

MR MAXWELL: My reading of the - - -

PN197

VICE PRESIDENT HATCHER: The contract might remain on foot for some theoretical purpose. There might be some post-employment contractual obligations like confidentiality or something, but the employment relationship has come to an end and it's come to an end because the employee has walked off and gone somewhere else.

PN198

MR MAXWELL: Yes, yes, it does, but that does not then constitute notice of termination by the employee.

PN199

VICE PRESIDENT HATCHER: No, the employee, in that circumstance, has breached the award by not providing the notice required and is liable to civil penalty.

PN200

MR MAXWELL: Yes. But in the situation of abandonment of employment if the employer brings the contract to an end by rising to the employee then section 117 still applies.

PN201

VICE PRESIDENT HATCHER: All right.

PN202

MR MAXWELL: We say that an abandonment of employment clause that is inconsistent with the NES has no effect pursuant to section 56 of the Fair Work Act and it therefore should not be included in an award and we do so on the basis of the decision that we refer to in paragraph 7 of the CFMEU's 18 May submission, which is the alleged NES inconsistencies decision.

PN203

Your Honour, in regard to that if the Bench is against us on that we say that in regard to the proposed variation by the AiG they have provided no evidence to support the provision is necessary to be included in the Modern Award; that there is no evidence of employees abandoning their employment and having moneys owed, and we submit, on that basis, sir, they have not justified the variation to the award.

PN204

If there are no further questions, your Honour, they're the submissions of the CFMEU.

PN205

DEPUTY PRESIDENT GOSTENCNIK: Mr Maxwell, what is the position of the CFMEU for present purposes that the abandonment of employment clause in the existing awards, on our reading, doesn't operate as an automatic termination, assuming that's correct for the purposes of the question, what do you say should happen to the clause? Do you say it should still be removed?

PN206

MR MAXWELL: We say it should still be removed, yes.

PN207

DEPUTY PRESIDENT GOSTENCNIK: On what basis?

PN208

MR MAXWELL: One, that it's leading to confusion; that it doesn't assist in the interpretation of the award; it is clearly – a number of employers have taken a view that the abandonment of employment is an automatic termination.

PN209

DEPUTY PRESIDENT GOSTENCNIK: But doesn't have the effect of setting out a process which requires the employer to – it starts off, from memory, by deeming certain things to be prima facie abandonment, and then are giving the employee an opportunity to provide an explanation for their actions to the employer before the employer does anything? What's wrong with that clause?

PN210

MR MAXWELL: Sorry, your Honour, I don't have the clause in front of me.

PN211

DEPUTY PRESIDENT GOSTENCNIK: I think it's reproduced in Bienias.

PN212

VICE PRESIDENT HATCHER: Do you have the decision with you, Mr Maxwell?

PN213

COMMISSIONER CRIBB: At paragraph 15.

PN214

MR MAXWELL: Yes, I do, your Honour. Your Honour, I don't think I'm in the position to respond to that at this stage, but perhaps if I can take that on notice and respond?

PN215

DEPUTY PRESIDENT GOSTENCNIK: Yes. Thank you.

PN216

VICE PRESIDENT HATCHER: Who would like to go next? Mr Nguyen?

PN217

MR NGUYEN: Your Honour, I had just prepared some brief submissions about the Ai Group's proposed clause.

PN218

VICE PRESIDENT HATCHER: Yes.

PN219

MR NGUYEN: I just understand from your instructions before, did you want us to make any submissions about the Ai Group's proposed clause or just stick to the question of whether the existing abandonment of employment clause should be removed from the award?

PN220

VICE PRESIDENT HATCHER: That's the second question that the proceedings were meant to be about, but if you want to make submissions about the first issue you may.

PN221

MR NGUYEN: On the second question I do agree with Mr Maxwell that the abandonment of employment clause should be removed. I don't think there's any other way to interpret the clause other than what has been described in the Iplex decision. It does seem to operate that it deems the employment to be terminated by the operation of the clause, and we understand the employers haven't put forward ‑ ‑ ‑

PN222

DEPUTY PRESIDENT GOSTENCNIK: Mr Nguyen, without repeating ourselves that proposition was expressly rejected in Bienias. The discussion about the permissibility of the clause was to address the employer submission that it had the effect of automatically terminating the employment and so that on either bases the termination was not at the initiative of the employer. The primary positon was that it didn't have that effect.

PN223

MR NGUYEN: It didn't have the effect of? Sorry?

PN224

DEPUTY PRESIDENT GOSTENCNIK: Of automatically terminating the employment.

PN225

MR NGUYEN: We wouldn't agree with that interpretation of the clause.

PN226

DEPUTY PRESIDENT GOSTENCNIK: You wouldn't agree with that?

PN227

MR NGUYEN: On the plain reading of the clause it seems to indicate that the employment is terminated by the operation of the clause. I think what this rather than ‑ ‑ ‑

PN228

VICE PRESIDENT HATCHER: So Bienias was wrongly decided? Is that your submission?

PN229

MR NGUYEN: I think what the discussion illuminates is that there is going to be confusion amongst the parties about what constitutes abandonment of employment and I think that is the critical point that should be considered by the Commission in determining what should be included in the modern award as a regulatory instrument that affects the behaviour of employers and employees.

PN230

It's clear all of the parties accept, including the Ai Group, that the employer should be under an obligation to attempt to communicate with that employee and ascertain the current circumstances of the employee before jumping to any conclusions or before forming a view that an employee has through abandoning their employment repudiated the contract.

PN231

Various examples on both sides indicate that there, you know, can be extreme examples where employees are unable to communicate with their employer about why they're absent from employment and may, at some other time, come up with a reasonable explanation for why they're absent from employment including protective reasons such as illness or injury which are protected in the general protections.

PN232

So in considering the impact that the modern award has as a regulatory instrument on the behaviour of parties who are bound by the award it is important to recognise that there is already an imbalance in the system that's tipped in favour of the bosses simply by the fact that employees have to take matters to court in order to resolve disputes involving an employer decision which affects them such as in the instance of deducting from their wages because the employer believes that they have terminated their employment without giving the adequate period of notice.

PN233

So that's actually the current environment in which employees are operating within, which is if an employer makes a decision that an employee has terminated their employment because they see them across the road working for the competitor, doesn't make any effort to contact them, or communicate with them, the employer can make the decision and it's up to the employee to actually go to the court and put forward an explanation which is that, "I assumed that I was able to work on that day because it was my RDO. I had permission from my employer previously to work at other sites when I am", for example, on leave or whatever previously. But if the employer actually makes a decision, "I saw them working at the competitor's site on that day therefore they've abandoned the employment and therefore they haven't given notice of termination and I'm going to deduct that from their wages", then it's actually up to the employee. The employee is the one that has to go to court.

PN234

That's the way that the current system and the regulatory framework exists for employees. It's tipped in favour of employers. This goes also to the Ai Group's proposed clause. All the proposed clause by the Ai Group does is actually strengthen the arm of the employer so that they can point to another clause that says, "Well, here it says you've abandoned your employment", and of course we know the use of the word "abandon" is going to be used in very ordinary and plain meaning which means that someone hasn't turned up for work, and Mr Smith has today used interchangeably the words "abandoned" and "sometimes doesn't turn up for work" without actually going that further step of looking at, well, what is the reason for the employee not turning up for work? Have they actually repudiated the contract and abandoned the employment under the common law. Those are questions which would be determined by a court and under the current framework we say the system is still tipped with the current clause on notice of termination for employees in the favour of employers.

PN235

I mentioned it earlier, but I think it's also important for the Commission to note that the Act does provide for protection for an employee from being dismissed by an employer for temporary absences because of illness or injury. The regulations provide further detail about what this may entail, but in general terms we can say that an employee has up to three months to communicate with an employer and provide a medical certificate or other forms of evidence such as a statutory declaration in order to say that they've been absent because of the illness or injury, and that's probably the extent of that entitlement. But it does go to framing the circumstances in which an employer can say someone has abandoned their employment and it also frames the circumstances and responsibilities on an employer to actually communicate with the employee and have discussions about what is actually happening.

PN236

VICE PRESIDENT HATCHER: So what was the three months you just referred to?

PN237

MR NGUYEN: The regulations at regulation 3.01 provides further details about what ‑ ‑ ‑

PN238

DEPUTY PRESIDENT GOSTENCNIK: The definition of temporary absence.

PN239

MR NGUYEN: ‑ ‑ ‑ may constitute a prescribed illness or injury, and it also defines what is not a prescribed – if I can just pull up the regulation. So sub-regulations 3.01(iv) indicates that an illness or injury is not a prescribed kind of illness or injury if either an employee's absence extends for more than three months or the total of absences of the employee within a 12 month period have been more than three months, and the employee is not on personal or carer's leave, however described for a purpose mentioned in paragraph 97(a) of the Act for the duration of the absence. So that - - -

PN240

VICE PRESIDENT HATCHER: That's not a lot of relevance, is it? I mean, 3.01(ii) says it's prescribed illness or injury if:

PN241

There's a medical certificate or stat dec within 24 hours or such longer period as is reasonably in the circumstances.

PN242

So we're not really in abandonment of employment territory here are we?

PN243

MR NGUYEN: Well, it's to be determined on the facts but this clause draws attention to the circumstance where well what is reasonable in the circumstances, if someone's in a coma and they haven't communicated with their employer because they're in a coma, they don't have close family or friends who, you know, who have told them where they were and can communicate with the employer. Like there is circumstances where someone may not actually be able to communicate with the employer for a period of time. So that goes to the question of well, what's reasonable in the circumstances for the period of time to extend beyond the 24 hours that someone might be required under that regulation to provide their medical certificate or statutory declaration.

PN244

VICE PRESIDENT HATCHER: Somebody who's suffering an illness or injury in circumstances where that has rendered them incapable of informing their employer about it is not someone who's abandoned their employment obviously.

PN245

MR NGUYEN: That's right, and that goes to the difficulty of including a term which provides the use of the word "abandons" which would really only go to strengthen the arm of the employers as well, you abandoned your employment because you didn't turn up to work, which is distinct from what might constitute a repudiation based on the conduct of the employee and what parts of the contract they failed to comply with on their part. I guess that's the difficult question.

PN246

If the Commission does include any abandonment of employment terms in the award, it would need to go to a lengthy explanation about what constitutes abandonment of employment and the submissions of the AiG seem to indicate that that would be a very difficult task in plain and ordinary English. But in the circumstances, it is open to an employer to argue that an employee had actually abandoned their employment and if they had then the notice of termination required by an employee clause would provide to the employer an ability to deduct from the wages which are due to the employee. That concludes my submissions, your Honour, unless you had any further questions.

PN247

VICE PRESIDENT HATCHER: Thank you. Ms Whish, are you next? No, sorry, Mr Barlow.

PN248

MR BARLOW: Sorry, your Honours and Commissioner. If I may be so bold as to take the Bar table for Ms Whish. It may very well be, your Honour, that the CPSU shared a common misapprehension - a misapprehension that was common to the parties at least some of the parties in these proceedings about what exactly we were here to determine. Certainly the CPSU has previously put on two submissions in this matter but neither of them necessarily turned to the issue that you have just addressed to the parties, which was if following the Iplex decision the abandonment of employment clause is not by deeming by automatic effect, then can it nonetheless still be included in an award.

PN249

Now unfortunately, as I said, we haven't specifically - necessarily specifically addressed that issue but I will say two things about that. Firstly, it seems to be - at least in their written submissions it seems to be a common position or may I suggest the misapprehension the CPSU certainly had was whether or not the effect of Iplex was simply that these clauses necessarily had to be removed. Now the question that you've asked I think is one that AiG have not necessarily adequately addressed either.

PN250

The proposal that they have put which is about abandonment - which is about notice of termination and their additions there in the - obviously this is a reference to the Manufacturing Award 22.2 but obviously the CPSU's interest is in the Contract Call Centre Award, but the clauses are in materially the same terms. We just say it's not necessary to be included in a modern award and in some senses the arguments here today have shown that, you know, the facts and the circumstances of abandonment of employment are something that - what it constitutes is obviously something that can only be determined by examining the facts in question, and that's obviously not something that can necessarily be properly defined or included in an award.

PN251

The second thing I would say, your Honours and Commissioner, is it may very well be that you may wish to provide the parties a further opportunity to provide greater assistance to the Full Bench on specifically your question; an abandonment of employment clause of the sort that was included in the award subject to this matter, does not operate as you've determined in Iplex by automatically terminating the employment. Is that nonetheless a permitted matter or term that can be included in a modern award?

PN252

Now it may very well be the CPSU would - if you go down that path, your Honour, may very well put on further submissions in this but in the last few minutes having turned my attention closer to that, the question seems to become does it adhere to the modern award's objective and is it a term that can be included in an award under section 139 of ancillary under 142. The proposal I put forward is no, probably not. 139 does not appear to deal with terms in an award dealing with termination because if the abandonment of employment clause does not operate automatically then it is obviously just grounds - providing grounds in a process for how termination of employment can occur in a particular situation, dealing with repudiation.

PN253

We say it would not thereby - if that is how it would be interpreted or could be adjusted to so be interpreted as to provide better guidance about abandonment of employment constitutes, then it would not - it would not be a term that could be included under section 139. If it's not also ancillary to 117 or 118 because they obviously deal with notice, your Honour. We say that couldn't be included as an ancillary or incidental term either under those heads of power. Your Honour, I may very well leave my submissions there subject to what the Full Bench wishes to do and whether or not you do want to invite the parties to have more specific and lengthy consideration of this matter.

PN254

VICE PRESIDENT HATCHER: Thank you. Ms Whish.

PN255

MS WHISH: I don't purport, your Honour, to recanvas much of what my colleagues have said this morning. I will say that we appear to be in the same boat as many of my friends this morning, and originally had said in light of the apparent inconsistency with the Fair Work Act that we did not oppose the removal of the abandonment of employment clause from the modern awards that we have an interest in. However, I will say the one submission that we have put on for Australian Business Industrial and the New South Wale Business Chamber doesn't go into any great detail to justify that position, as we'd understood that the Iplex decision had determined this issue. So I would also seek to clarify this position for the Bench if that's possible, if that's something that they'll consider granting as a future direction. Otherwise I just had some brief comments in relation to the Ai Group's proposal to insert the subclause (c).

PN256

That was merely to say that we didn't feel that there was any valid rationale as to why the Ai Group's amendment would be sought simply in those five awards as opposed to all modern awards, given that that notice of termination provision appears in all modern awards. We had a concern that putting it in five awards as opposed to all awards could be confusing for the readers and we wouldn't want that to have occurred.

PN257

Secondly, we did have some concerns about the use of the phrase "at the initiative of the employee", particularly in abandonment of employment situations as an employer accepting a repudiation of a contract is often - well can often more appropriately be classified as a termination at the initiative of the employer. With that in mind, the final thing I will is with respect to notice and our position on the payment of notice can be quite separately identified and that depends on firstly, at whose initiative the termination occurred. If we go down the path that it was at the initiative of the employee then we would submit that under section 118 of the Fair Work Act, and will use clause 22.2 of the modern award for manufacturing, that the employee would then be required I suppose to give notice, and in that case clause 22.2 is fine just as it is. If we were to add to that it may be confusing.

PN258

Secondly, what's perhaps more common when we've been dealing with abandonment of employment terminations is if the employer is the party that's required to give notice that would be under section 117 of the Fair Work Act. The employer would take steps to terminate and if they didn't wish to provide notice then they'd need to rely on the serious misconduct provisions to say that they'd - you know, refusal of duty, that they were refusing to comply with their contract of employment. That's it from me today, thank you.

PN259

VICE PRESIDENT HATCHER: Thank you. Mr Crabb.

PN260

MR CRABB: Thank you, your Honour. We're not going to say too much. We've filed submissions, we're going to rely on those submissions. An assertion's been made by the CFMEU, we're in agreeance with that, but accepting as with the decision in Iplex that the clauses do not have the effect of automatically terminating the employment, we made the general submissions that the clause is not a term either permitted by sub-division (b) or required. We also submit that the clauses cannot also be reasonably described as ancillary or incidental, not be reasonably said that the clause was supplement to section 117. So subject to what was discussed by the Bench today and making any further submissions for clarification, we just make the submission that the clauses should be deleted.

PN261

We'd like to say a couple of things just on matters arising out of the material further filed by the AiG on August 8. It appears that their submission for the variation completely relies on the proposition that an abandonment of employment is the termination of the - initiative of the employee. We submit that this is incorrect obviously. An abandonment of employment is a breach, a fundamental breach of the employment contract but it is not a termination. It gives a right to termination but it also potentially could give rise to a right for damages. It doesn't mean that the employment contract must be terminated.

PN262

A difficulty with AiG's proposition is if the employer chooses not to terminate the contract just by the conduct of abandoning the employment, the contract would still exist, so therefore there is no way that the contract could be terminated by the conduct of the employee if the contract actually still exists as a result of the employer's decision not to terminate the contract.

PN263

They have referred to a number of different authorities. As the Full Bench referred to, a lot of these authorities related to termination of employment unfair dismissal provisions of previous versions of the Act; the old section 643 and also the old section 170CD which was referred to in Visscher which relied upon a statutory definition of termination and not a general proposition of termination of employment at the initiative of the employer as a result of a breach that would amount to repudiation.

PN264

So, those are our submissions. We don't want to go back over the same submissions as every other party, but those are our submissions.

PN265

VICE PRESIDENT HATCHER: Thank you. Anything in reply, Mr Smith?

PN266

MR SMITH: Yes, just a few points if the bench pleases. Mr Maxwell put the position that if someone just leaves employment and doesn't come back, even if they go and work for a competitor down the road, that the employer must terminate the employment and must pay notice. That is an outrageous proposition, in our submission, that highlights why there is such merit in what we are proposing.

PN267

Mr Nguyen didn't go that far, although I think ABI way well have virtually supported the CFMEU's submissions in what Ms Whish had to say; but this flies in the face of all the authorities. The decision of Deputy President Gostencnik in that case that President Ross handed out traverses this ground very well. In that decision, at tab 13, there are a series of paragraphs there that we would draw the bench's attention to; from paragraphs 28 through to 36.

PN268

This point the Deputy President raised today about there being a difference between employment and the employment contract, it goes back to that decision of the High Court in Automatic Fire Sprinklers where if there is an end to employment, that doesn't necessarily mean that there has been an end to the employment contract. As you have said, Vice President Hatcher, there are often contractual obligations that continue after employment finishes, in the nature of restraints and so on.

PN269

As we have accepted, it's often a question – well, it's always a question of fact whether there has been an abandonment of employment or not. We can all think of extreme cases where someone is in a coma or whatever, but this is an issue that employers feel very strongly about. It's an issue that employers regularly have to deal with and it's an issue that the award system, at least in those five or six industries where this has been a common award provision, the award system should still continue to deal with the issue.

PN270

VICE PRESIDENT HATCHER: Mr Smith, can I just go back to the basics of what I thought this case was about, which was clause 21.

PN271

MR SMITH: Yes.

PN272

VICE PRESIDENT HATCHER: In Bienias, we found that clause - we're not talking about what the common law says, but that clause did not affect automatic termination of employment; but under that clause a further act of the employer was required to bring the employment to an end. In those circumstances, does your organisation want clause 21 to be retained in that award and the other awards or not?

PN273

MR SMITH: What we want, your Honour, is an abandonment of employment provision to be retained.

PN274

VICE PRESIDENT HATCHER: You didn't answer my question. Clause 21 as it stands, as interpreted in Bienias, does your organisation want that clause to remain in the awards or not?

PN275

MR SMITH: Could I just answer it a little more expansively?

PN276

VICE PRESIDENT HATCHER: All right.

PN277

MR SMITH: Clause 21 cannot stay in the award in its existing terms.

PN278

VICE PRESIDENT HATCHER: Why not?

PN279

MR SMITH: It cannot stay in existing terms because in our view it talks about, you know, the employees deemed to have abandoned their employment and a clause cannot deem an employee to have abandoned their employment, in our view, but - - -

PN280

VICE PRESIDENT HATCHER: Because that would not be a permitted matter if we did that?

PN281

MR SMITH: Yes.

PN282

VICE PRESIDENT HATCHER: Right.

PN283

MR SMITH: But if you go back to the Workplace Relations Act where this was last looked at, in that decision of Marsh SDP, her Honour there said that that clause was an allowable matter because it was about notice of termination. Now, we could argue for an amended form of clause 21 to stay there and it could be reworded to clearly make it, you know, an allowable matter – if that's the right terminology these days – but the relevant head of power for that is 118.

PN284

Of course in 89(a) under the WROLA Act, it did deal with notice of termination, but now that we've got the provisions of the NES, the notice provisions are now in 117 and 118, but 118 allows awards to deal with provisions about notice of termination; so what we have sought to do is to really keep a form, if you like, of clause 21, but put it where it belongs in terms of the relevant head of power in clause 22.

PN285

We wouldn't have any objection to a subclause (d) going in which would say something like, you know, "Before withholding notice in circumstances of abandonment of employment, the employer shall write to the employee" – we would be happy to provide some wording, because that clause does have a very useful effect in that it does deal with the practical realities. Someone just takes off and you really need to take some step to work out whether they're coming back, but taking that step should not lead to the consequences that Mr Maxwell is talking about.

PN286

It's an outrageous proposition that the employer should have to give notice to someone that just takes off. That is just outrageous and it's completely unfair. The fact that that is being argued by the CFMEU and by some of the other parties in Sydney, highlights the merit of putting a provision like that in, so what we would seek to do is to - - -

PN287

VICE PRESIDENT HATCHER: You can give notice under 117 without paying it out. I mean, if someone has walked off – and use our example – and is working for the competitor across the road, you can say, "Okay, well, I'll give you five weeks' notice and the employment comes to an end." That may have no practical consequence whatsoever.

PN288

MR SMITH: But you shouldn't have to do that, your Honour, because that then brings with it – and it goes to this issue that Deputy President Gostencnik raised and really the point ABI made; you shouldn't have to summarily dismiss someone or give them notice either in pay or time if there has been a repudiation of the employment contract. That is termination at the initiative of the employee once the – and there are two potential arguments here.

PN289

One is that the employment contract and the employment is different, and that when the action is taken by the employee that brings the employment to an end and the confirmation of the employer simply brings the employment contract to an end, because it's the acceptance of the repudiation. You could take the view that the acceptance of the repudiation brings the employment to an end, but either way it is termination at the initiative of the employee.

PN290

The relevant test there in the Federal Court decision in the Dick Smith matter, you know, it was the employee voluntarily leaving the employment and termination at the initiative of – you know, the test is set out there. Either school of thought, I think, leads to the view that it is termination at the initiative of the employee. Yes, an abandonment of employment provision should stay in the awards, but it would more logically sit where the head of power for this provision belongs in 22.2 in the case of the Manufacturing Award because it hangs off 118.

PN291

VICE PRESIDENT HATCHER: But a clause made under 118 is premised on the basis that it's about termination by the employee.

PN292

MR SMITH: Yes.

PN293

VICE PRESIDENT HATCHER: That's how the power to make the clause arises.

PN294

MR SMITH: Exactly.

PN295

VICE PRESIDENT HATCHER: How do we get then the power to start defining what clause 118 is talking about when it refers to an employee terminating his or her employment? I mean, that's what the Act says. How do we then start interpreting that in the award?

PN296

MR SMITH: But that's exactly what this is. If it's abandonment of employment, it is termination by the employee. You know, what is termination by the employee; it's termination at the initiative of the employee. The same as, you know, what is termination by the employer; it's termination at the initiative of the employer. Those are the relevant tests.

PN297

VICE PRESIDENT HATCHER: Yes, but the clause already says that. Clause 22 already says it operates where the employee terminates the employment.

PN298

MR SMITH: Yes, but we have to deal with these arguments of the CFMEU and others that say that on the basis of your decision – of the Full Bench decision in Iplex, it means that employers must give notice. That is, in our submission, just not fair and not correct.

PN299

VICE PRESIDENT HATCHER: All right.

PN300

MR SMITH: Just one final point. That is that point the ABI raised about why these five or six awards should be treated differently. These awards are awards which have history. The Metals Award has had a provision in for nearly 50 years. The Contract Call Centre Award was a consent award between Ai Group, the CPSU and the ASU and CEPU that reflected a number of provisions. Same with the Business Equipment Award.

PN301

Most of these awards are awards in which Ai Group has had a significant interest in and the provision out of the Metal Industry Award has flowed into these various awards. There is history there and that's the reason why there should be a different approach to the other awards.

PN302

DEPUTY PRESIDENT GOSTENCNIK: Mr Smith, is your real point – correct me if I'm over‑simplifying it – this: that clause 21 in its operation is intended to remove the obligation of an employer to provide notice where an employee abandons their employment? Its drafting on either interpretation is problematic? It should be removed and replaced with the provision in the notice provision of the kind that you've proposed? That's the more appropriate way of dealing with it under the construct of the Act?

PN303

MR SMITH: Yes, your Honour. We make the point in our submission that in the way we see that clause, it really had two purposes. If you look at the history as set out in those reports from the 1960s, there were two issues. One was an employer is entitled to deduct notice in circumstances where an employee abandons, so it's about the notice that an employee is required to give and doesn't give. The other thing that is difficult is what is the date of termination and historically that clause deemed the termination to take place on a certain date.

PN304

Now, we accept that we couldn't find a way of keeping that concept of the date, but the other concept is entirely an allowable matter. We have got the decision of Marsh SDP that characterises that clause in that way and there is absolutely no reason, in our submission, why that concept should not be kept within the award but, more appropriately, relocated to the other clause.

PN305

DEPUTY PRESIDENT GOSTENCNIK: But you will continue to have the problem of – assuming your clause had operation – determining when the employer is entitled to make that deduction, because that requires there to be some identified period of the employee ending the employment, ending the obligation of the employee to provide notice.

PN306

MR SMITH: Yes, and that complication will remain given that it seems that that part of the clause is no longer allowable, but that complication has been there for, you know, a hundred years or more and it's still there. You saw the inconsistent submissions that are made between the unions about that point, you know, with the AMWU accepting that there is repudiation and it's accepted and, you know, abandonment of employment would constitute termination by the employee, and the CFMEU arguing the opposite. It really does have a lot of merit to clarify this issue.

PN307

It would have a lot of merit putting that provision in all 122 awards, but we're not arguing that. We're seeking to keep it in the provisions where it currently exists, if the Commission pleases.

PN308

VICE PRESIDENT HATCHER: Sorry, I haven't looked at this, but clause 22 is common to most modern awards, is it?

PN309

MR SMITH: It is, yes. It's probably in virtually all of them but I could check that as to how many but it's a very common provision, it comes out of the - not only the original TCR case but the 2004 redundancy case and was kept in modern awards.

PN310

VICE PRESIDENT HATCHER: Right, thank you.

PN311

MR SMITH: Just going back to that one point that Gostencnik DP raised earlier, it's allowable in the context of 118 but that other provision about the ability to put provisions in awards enabling deductions of pay is also very relevant.

PN312

DEPUTY PRESIDENT GOSTENCNIK: Don't we still have the problem with section 55 which requires or prohibits terms of - I'll just find it. A modern award relevantly must not exclude provision of the NES and a provision which allows an employer effectively not to pay an NES entitlement might be problematic.

PN313

MR SMITH: Your Honour, our answer would be to refer to 55(2) which says that a modern award may include any term that an award is permitted to include by a provision of the National Employment Standards, and here we have 118 - - -

PN314

DEPUTY PRESIDENT GOSTENCNIK: I understand that but that doesn't detract from (1) does it. I mean you can't - for example you couldn't have - you couldn't rely upon the express permission to include a term - and I accept that that provision isn't confined in the way that subsection (4) and (5) are confined later on by the "no provision can detract from the NES entitlement", but (1) seems to be a clear prohibition on an award term excluding an NES entitlement. (2) is a machinery provision which simply allows - is a power provision that allows an award to include matters that are expressly permitted but that surely must be read subject to one.

PN315

MR SMITH: But (1) of course needs to be read in the context that throughout the NES there is an ability for awards to deal with provisions that would otherwise be inconsistent with the NES. So 118 is part of the NES.

PN316

DEPUTY PRESIDENT GOSTENCNIK: But the term in 118 - - -

PN317

MR SMITH: Yes.

PN318

DEPUTY PRESIDENT GOSTENCNIK: - - - is a term empowering the inclusion by a modern award of a term specifying notice to be given. What 22.2 does, it does more than that does it not?

PN319

VICE PRESIDENT HATCHER: Sorry, what's the provision of part 22 which expressly authorises.

PN320

DEPUTY PRESIDENT GOSTENCNIK: It's 118.

PN321

MR SMITH: 118.

PN322

COMMISSIONER CRIBB: 118.

PN323

MR SMITH: 118 seems to me to be confined to notice.

PN324

VICE PRESIDENT HATCHER: And 22 seems to go further than notice. It provides for a consequence of not giving notice.

PN325

MR SMITH: This issue, you know, has been accepted throughout the award system as a - since 2009 as being consistent with the provisions of 118. It's in - - -

PN326

DEPUTY PRESIDENT GOSTENCNIK: I know it's in numerous awards, I'm not quarrelling with that. I'm just raising the issue.

PN327

MR SMITH: We haven't contemplated any suggestion until the issue was raised today.

PN328

DEPUTY PRESIDENT GOSTENCNIK: I appreciate that.

PN329

MR SMITH: That would disturb this clause in virtually every modern award if that argument was right, but we obviously don't agree with that argument.

PN330

DEPUTY PRESIDENT GOSTENCNIK: No, and I haven't formed a concluded view about it. I'm just raising it as an issue.

PN331

VICE PRESIDENT HATCHER: Anything further?

PN332

MR SMITH: No, your Honour, but if it would assist, if the Bench would like us to come back with a possible paragraph (d) in the context of rewording clause 21 to fit it in clause 22.2 but - - -

PN333

VICE PRESIDENT HATCHER: The proceedings were about clause 21.

PN334

MR SMITH: Yes.

PN335

VICE PRESIDENT HATCHER: You, and we might invite further submissions about that, but you have raised clause 22 which then starts giving rise to issues about how clause 22 operates and whether it's valid. So there's two baskets; there's clause 21 which we can deal with.

PN336

MR SMITH: Yes.

PN337

VICE PRESIDENT HATCHER: You're raising clause 22 and that made lead to a whole further line of inquiry which some of the questions have foreshadowed. That's something you might want to think about.

PN338

MR SMITH: Yes.

PN339

VICE PRESIDENT HATCHER: Anyway, just give me a second, Mr Smith. What I think we might do is we might adjourn for about half an hour to work out what course we should take with these proceedings, having regard to the submissions which the parties have and have not made this morning. Can I ask the parties to return at approximately 11.30, 11.35. I will now adjourn.

SHORT ADJOURNMENT [11.06 AM]

RESUMED [11.34 AM]

PN340

VICE PRESIDENT HATCHER: The Full Bench will make a short statement about the further disposition of this proceeding.

PN341

(1) This proceeding was concerned with clause 21 of the Manufacturing Award and its equivalents in a number of other modern awards.

PN342

(2) The primary question which arose for determination in the proceeding was whether clause 21 was, under the Fair Work Act, a permitted matter which might be included in a modern award.

PN343

(3) In the decision in Bienias v Iplex Pipelines Australia Pty Ltd [2017] FWCFB 38, the Full Bench expressed the view that clause 21, if interpreted in the way contended for by the employer in that case – that is, that the clause effected automatic termination if a deemed abandonment of employment arose – would not be a permitted matter under the Fair Work Act. However, it should be made clear – and we think this was made absolutely clear in the decision – that interpretation of the employer was rejected. Therefore, the decision in Bienias v Iplex cannot be read as expressing any definitive view about the permissibility of clause 21.

PN344

(4) We, therefore, again invite submissions concerning whether clause 21 is a permitted matter under the Fair Work Act having regard to the interpretation that the Full Bench placed upon the clause in Bienias v Iplex. We propose to allow the parties a further 21 days to make submissions about that question in writing.

PN345

(5) We regard clause 22 of the Manufacturing Award and its equivalents in other modern awards as a separate issue which is beyond the remit of this Full Bench in this proceeding. If any party seeks a variation to clause 22, they should do so by way of separate application and that application would then be dealt with as determined by the President of the Commission.

PN346

(6) There may be a separate issue about whether clause 22 is permissible given that it apparently permits a denial of NES entitlements in certain circumstances. However, we do not regard that as a question to be determined in this proceeding. The parties will be notified if the Commission considers that is a matter requiring determination; but if that were to occur, it would happen in a separate proceeding before a separate Full Bench as allocated by the President.

PN347

Are there any questions or matters which the parties wish to raise in the light of that statement?

PN348

MR SMITH: No, your Honour.

PN349

MR NGUYEN: Your Honour, may I just ask a question?

PN350

VICE PRESIDENT HATCHER: Sorry, Mr Nguyen?

PN351

MR NGUYEN: In relation to point number 3 regarding the interpretation of clause 21, is it possible just for the bench to refer the parties to the specific paragraphs where the alternative interpretation is identified by the Full Bench in that decision?

PN352

VICE PRESIDENT HATCHER: I'm not sure why this is necessary, Mr Nguyen, but to give you assistance it is paragraphs 36 through to 48.

PN353

MR NGUYEN: Thank you, your Honour.

PN354

VICE PRESIDENT HATCHER: All right. If there is nothing further, we will adjourn and await the further submissions of the parties.

ADJOURNED INDEFINITELY [11.39 AM]