MacPherson v Coal & Allied Mining Services Pty Ltd (No 2) [2009] FMCA 881 (9 September 2009).

This decision by Federal Magistrate Raphael deals with a couple of sections of the Workplace Relations Act 1996 (Cth) not been previously judicially considered.  The decision will also have ramifications under the Fair Work Act 2009 (Cth). The case involves whether an employer could require an employee to work additional hours based upon a new roster and whether by refusing to do this work, the employee has been stood down contrary to the Act.  The Federal Magistrate’s Court has recently been doing a considerable amount of cases involving industrial matters and has provided sound guidelines for employers and employees as to how to use the new statutory industrial regime.

The company conducts open cut coal mine operations at both Mt Thorley and Warkworth.  The worker, Mr MacPherson, was in a maintenance crew repairing mining equipment on a regular basis and on breakdowns. As a result of an increase in work, the company proposed that rosters be changed so that the previous roster where persons such as Mr MacPherson were averaging 40 hours per week would be increased to, on average, 44 hrs per week.  This new roster would require the workers to work a rotating 2 week cycle of 4 day shifts being 3 x 12 hours shifts and one 8 hour shift. Mr MacPherson and others, when advised of this change, were unhappy and a number of them expressed their displeasure. Prior to the rosters being designed, there had been no relevant consultation with the employees or their families or the Union (at [7]).

A presentation had been made and a date was set for the commencement of the new roster. At least nine members of the crew in which Mr MacPherson worked said they would not be working a full 12 hours and would be leaving work after 8 hours for “personal or family reasons”.  Mr MacPherson was asked what his “personal reasons” were, however he declined to discuss them (at [17]).  The company felt that this group refusal was part of a “collective protest against the new roster, rather than a real response to genuine personal concerns“ (at [17]).

Mr MacPherson was further the subject of enquiry as to his reasons for suggesting he would leave work. Once again, Mr MacPherson said they were personal and said that he would be leaving notwithstanding the direction to remain. A supervisor of Mr MacPherson then told him “I’ve got no choice, I have to stand you down without pay until you are willing to comply with the contract”.  Mr MacPherson did not return to work the next day. However the day afterwards he returned to work and he signed a document indicating that he was working under protest (at [20]). A few days after his return to work, Mr MacPherson was provided with a written warning in relation to his refusal of what was said to be a reasonable direction (at [21]).

This case brings into sharp focus s 226 of the Workplace Relations Act 1996 (now s 62 of the Fair Work Act 2009). This provision says that an employee must not be required or requested by an employer to work more than 38 hours per week except if additional hours are reasonable. What “reasonable additional hours” are is defined generally in s 226(4) of the Workplace Relations Act 1996 (see s 62(3) of the Fair Work Act 2009).  This provision commenced in March 2006 and had not been judicially considered before (at [39]). Both sides called expert evidence in relation to the effect that working hours have upon employees and the popularity or otherwise of certain shift patterns, including 12 hour shifts.

Mr MacPherson was called and identified that he wished to spend more time with his family and that the additional hours would preclude him from being the soccer coach of the team in which his sons played. It was noted that this was a case brought by Mr MacPherson and did not relate to the impact upon his colleagues of the new roster system (at [31]). The expert evidence did not focus upon this particular roster and the effect upon Mr MacPherson (at [31]).

The company’s expert’s evidence noted that “preferences for hours of work are very personal and individual to each employee.  Data from workers shows us that these preferences can change over time as an individual’s personal circumstances change, especially interest in additional pay or time off” (at [36]).  However, the Magistrate found that in order to ascertain in this particular case whether the additional hours were reasonable, one had to take into account more than mere preference for one expert over another. The section requires that all relevant factors must be taken into account (at [38]). The Magistrate then went through each of the factors found in s 226(4) and weighed them up in order to determine whether or not the additional hours were reasonable. The Magistrate found a lack of evidence that an additional 6 hours over the 38 hour norm was not reasonable.  In addition to the personal interests an employee might have, there is also a balance needing to be made against the operational requirements of the workplace and the enterprise (at [48]). In this regard, the circumstances of both employer and employee must be looked at (at [48]).

The Magistrate noted the Applicant’s difficulty was that “[t]he law now requires every individual contract be looked at and the number of hours to be worked over 38 to be assessed as reasonable or not” (at [57]). The Magistrate, having looked at all the factors, said he found that the new rosters provided significant benefit to the employer justifying additional capital investment in machinery with the consequent preservation of jobs for its permanent employees. As a consequence, he did not find the imposition of the hours unreasonable upon the employee (at [61]). He found however that no appropriate consultation had taken place. He found that consultation was no empty term and replaced a responsibility to give those consulted an opportunity to be heard and express their views so that they may be taken into account. He cited the decision of Justice Toohey in TVW Enterprises Limited v Duffy (1985) 60 ALR 687 at 694.

Having so decided, he then dealt with the question as to whether the company had breached ss 691A and 691B in relation to the prohibition of unauthorised stand downs.  He looked at the stand down provision in the relevant industrial instrument which could only be operative in relation to persons not being able to be employed on productive work because of an industrial dispute or machinery breakdown. In all the circumstances, the Magistrate found that Mr MacPherson did not fall within the provisions of the industrial instrument nor within the provisions of s 691. Under the Fair Work Act 2009, the relevant sections are ss 522–524 where stand downs are able to be only used in certain similar circumstances.  The Magistrate found that what happened to Mr MacPherson was in effect an unauthorised penalty imposed upon him by his employer for Mr MacPherson’s refusal to perform work in accordance with the new roster. The Magistrate found that what the company had done in breach of s 691B was in effect a suspension which it was not entitled to do. He relied upon the Federal Court decision in AWU v Stegbar Australia Pty Ltd [2001] FCA 367 at [24] and also PSA v Macquarie Generation re Suspension of PSA Delegate [2003] NSWIRComm 9.  However, the Magistrate said that in relation to the imposition of a penalty which he would hear the parties on, he did not believe it was appropriate to do so, keeping in mind that the company’s direction in relation to the new roster was lawful and Mr MacPherson was wrong in refusing to work a full shift although he said he maintained an open mind on the matter.

This is a useful exploration of these two provisions which will have continued effect under the new Fair Work regime.

Gough & Gilmour Holdings Pty Ltd & Ors v Caterpillar Australia Limited & Ors [2009] HCA Trans 210 (4 September 2009).

The High Court has refused Gough & Gilmour special leave to appeal against the NSW Court of Appeal judgment denying jurisdiction for the dealership agreements and related matters pursuant to s 106 of the Industrial Relations Act 1996 (NSW).  See “Casenote: Nothing fails like success”, being an analysis of the Court of Appeal’s judgment.

Counsel for the Applicant, Mr Brett Walker SC, could not have been heartened by the first question posed by Justice Gummow.  He was asked:

“Before we descend into this pit, what do you say about the provisions of s 26 of the Fair Work Act 2009 (Cth) and s 7 of Independent Contractors Act 2006 (Cth)?”

This question recalls the bog found in Pilgrims’ Progress.

Those two provisions have all but abolished the jurisdiction that the unfair contracts jurisdiction can perform in New South Wales other than for partnerships, natural persons and State government bodies.

The Respondent had argued that any public interest which the case may have had had vanished as a result of the Federal legislation denying the force of the State Act to corporations.

The development of this jurisdiction has come a long way from the judgment of Chief Justice Barwick in Stevenson v Barham (1977) 136 CLR 190 when his Honour said (at 192):

“Notwithstanding the wide language of s 88F, I have difficulty in becoming convinced that it was within the contemplation of the legislature that agreements for business ventures, of which the present may be a specimen, freely entered into by parties in equal bargaining positions, should be so far placed within the discretion of the Commission as to be liable to be declared void.  However, I have come to the conclusion that the language of s 88F of the Act is intractable and must be given effect according to its width and generality.  The legislature has apparently left it to the good sense of the Industrial Relations Commission not to use its extensive discretion to interfere with bargains freely made by a person who is under no constraint or inequality or whose labour was not being oppressively exploited.”

What has happened recently is that despite the “intractable language”, arguments which look to the substance not to the form of the agreement sought to be set aside, have become crucial.  The industrial flavour of the contract or arrangement has given way to the size and extent of the operations under which the contract is being performed.  In submissions before the High Court, Mr Ian Jackman SC (Hugh’s brother) suggested that “the matter remains one of substance not form, hence one might treat differently the individual truck driver with his private contract from the way in which one treats a distributorship employing 700 people or 350 people” (at p 11).

In finally dealing with the matter, Chief Justice French, in refusing leave said:

“The dealership agreements did not fall within s 106 because of the industrial context to which it applies.  The Court of Appeal generally applied principles established by this Court in three cases on s 106 of the Act (Fish v Solution Six Holdings Limited [2006] HCA 22; Batterham v QSR Ltd [2006] HCA 23; Old UGC Inc v Industrial Relations Commission of New South Wales in Court Session [2006] HCA 24) and also took into account the legislative changes which had not applied in those three cases (see s 106(2A)).”

The original cases referred to as trucking cases will continue to be considered, not by the Industrial Court of New South Wales, but more likely by the Federal Magistrate’s Court and/or the Federal Court pursuant to the provisions of the Independent Contractors Act 2006.

Visscher v The Hon President Justice Giudice [2009] HCA 34 (2 September 2009).

A majority of the High Court (Heydon, Crennan, Kiefel and Bell JJ – Gummow J dissenting) has handed down an interesting employment case dealing with the often contested jurisdictional point in unfair dismissal cases as to whether the employment was terminated at the initiative of the employer or the employee. If the former, the Australian Industrial Relations Commission (AIRC), had jurisdiction to hear whether the dismissal was “harsh, unjust or unreasonable”; if the latter, the matter would be struck out.

The appellant, Timothy Visscher, relevantly was employed as a Chief Officer or Chief Mate by Teekay Shipping (Australia) Pty Ltd on a number of its ships.  Mr Visscher, a member of the Australian Maritime Officers Union (AMOU) was one of those unfortunate individuals whose individual interests were squeezed between the demands held in concert by the employer and the union in relation to union policy. Such occurrences are not unknown in Australian industrial law where individuals are sometimes left out in the cold because their attitude or position conflicts with union policy supported by the employer (see Latham v Singleton [1981] 2 NSWLR 843; Turner v Australasian Coal and Shale Employees’ Federation (1984) 6 FCR 177).  Further, Mr Visscher is also one of those indomitable characters who, despite set backs in lower Courts and on appeal, was prepared to take his case to the highest Court in the land to vindicate his position.  Such courageous characters are not unknown and in fact form the basis of a book by a Professor of Political Science at the University of California, Peter Irons, entitled “The Courage of Their Convictions” (Penguin, 1990). That book recounts the struggles of 16 Americans who fought their way to the United States Supreme Court in order to protect their rights. The Visscher decision is a very important one on a number of bases in relation to employment law and no doubt will be the subject of many academic papers and will make its way well and truly into the text books.

The facts of this case were that Mr Visscher was a Third Mate on one of the Teekay Shipping’s vessels.  In August 2001, he was qualified for and offered promotion to the position of a Chief Mate (also referred to as a Chief Officer or First Mate) which he accepted on 7 September 2001. The AMOU disputed the promotion and said that Teekay should have held open vacancies for permanent positions of Chief Officer to allow employees with longer service to obtain the necessary qualifications. An industrial dispute was brought before the AIRC and Commissioner Raffaelli issued a statement critical of the promotions and recommended that the employer rescind them.

Teekay notified Mr Visscher on 20 September that it intended to comply with the recommendation and that his “recent promotion to permanent First Mate is unfortunately rescinded”. Mr Visscher did not accept the rescission. However, he remained in Teekay’s employ, continued to undertake the role and duties of a Chief Officer and received an amount equal to the salary of a Chief Officer (see [40]–[41]). The pay which Mr Visscher was receiving was said to be the pay of a Third Mate with a loading for acting in higher grade. The employer maintained that on the revocation of the permanent position of Chief Officer he reverted to his substantive position of Third Mate. A further development in the case was the certifying of an industrial agreement by the AIRC in March 2002. The Certified Agreement was expressed to be binding on employees of Teekay who were members of the AMOU (which included Visscher) engaged as Masters or Deck Hands on vessels operated or managed by Teekay. It dealt with a number of subjects including clause 23.4 which provided that the “grading (or rank/service) list attached will be the basis for future promotion/transfers etc”.  Mr Visscher was listed in that attachment as a Third Officer, that is a Third Mate. In about July 2002, Teekay wrote to Mr Visscher and offered him a permanent position as a Second Mate. His evidence was he rejected the offer as unnecessary, given his existing contract of employment as a Chief Officer. Subsequent to this letter, Mr Visscher’s name appeared in the gradings listed as a Second Mate (see [42]–[43]). At the time of his promotion to Chief Officer, Mr Visscher was engaged on the Samar Spirit and continued to perform the duties of a Chief Officer on that vessel until early January 2004 (see [44]). In or about January or February, directions were given to Mr Visscher upon the conclusion of his tour of duty on the Samar Spirit – he was directed to sail as a Second Mate. By email in late February 2005, Mr Visscher said: “The requirement to sail as a Second Mate constituted a demotion and that he considered his employment as terminated by Teekay upon his leaving the Broadwater, the vessel upon which he was currently serving.

Mr Visscher filed an application for unfair dismissal with the IRC on 11 March 2004 (see [45]–[46]).  A preliminary point was run before Commissioner Redmond who found that Mr Visscher had resigned and therefore there was no jurisdiction to hear his unfair dismissal claim. Mr Visscher appealed that finding to the Full Bench of the AIRC which dismissed the appeal.

Mr Visscher challenged that matter before the Full Court of the Federal Court of Australia. Justice Buchanan with whom Ryan and Madgwick JJ agreed, held that Teekay’s letter of 20 September 2001 amounted to a breach of contract. However, His Honour considered that it had the effect in law of bringing Mr Visscher’s employment as a Chief Officer to an end, even though Teekay’s conduct was wrongful (see [51]).

Mr Visscher then took the matter to the High Court. The majority of the High Court however found that Justice Buchanan had erred by confusing the concepts of termination of an employment relationship and the discharge of a contract of employment. The concepts are different. It was said that “it did not follow from the fact that a wrongful dismissal is effective in bringing the employment relationship to an end that it thereby discharges the contract of employment” (see [53]).

This is particularly so in Mr Visscher’s case when he continued to work after 20 September 2001 still fulfilling the role of a Chief Officer. In the Full Federal Court, Justice Buchanan had noted that the employment relationship continued after 2001 however his Honour assumed that the relationship continued by reference to a new contract of employment, one by which Mr Visscher was a Third Mate (see [56]). At no stage did Mr Visscher accept the repudiation of his contract of employment by Teekay. Accordingly, up until February 2004, the High Court held that Mr Visscher continued to be employed as a Chief Officer and the purported demotion in February 2004 amounted to a dismissal at the initiative of the employer (see [81]).

A further important matter argued by the employer before the High Court was that the Certified Agreement which purported to place him on a list of deck hands as a Third and subsequently a Second Mate was determinative of his contract of employment. If the Certified Agreement had directly touched upon that issue, it would have prevailed over the terms and conditions of his employment agreement to the extent of any inconsistency (see [71]). However, the High Court considered the terms of the Certified Agreement and found that the subject matter of it did not include a reallocation of the position of individual officers. The listing made to it of Mr Visscher as a Third Mate initially had been assumed, at least by the AMOU, as a statement correctly reflecting the position achieved by Teekay’s letter of 20 September. The High Court said “that it was wrong, there would be no impediment to its correction along with other changes to personnel made in the annexure and made available to employees on a monthly basis. The statement in the annexure did not constitute a term of employment to which Mr Visscher was bound (see [78])”.

The Certified Agreement therefore was deficient in that it did not have a direct inconsistency in relation to Mr Visscher’s employment and consequently had no effect upon his original contract as an employee.

Like the character Jefferson Smith played by James Stewart in Frank Capra’s classic movie, ‘Mr Smith goes to Washington”, Mr Visscher, despite all the forces ranged against him, by way of his dogged determination, won through. Mr Visscher’s case has been referred back to the AIRC to be heard in accordance with law so as to determine the unfairness or otherwise of the dismissal.

Australian Hearing v Peary [2009] AIRCFB 680, per Justice Giudice, Senior Deputy President Kaufman and Commissioner Larkin, Melbourne, 28 July 2009.

The Full Bench of the Australian Industrial Relations Commission on an appeal to it, handed down its decision on 28 July 2009 in relation to the vexed question as to whether the employment was terminated at the initiative of the employer, it being one of the jurisdictional requirements under s 643 of the Workplace Relations Act 1996 (Cth). The employer, Australian Hearing, had made an application before Commissioner Thatcher, that he dismiss an application on the basis that the worker had resigned and there was no termination of the relevant kind. The Commissioner rejected that application, which then led to the appeal to the Full Bench.  Regard was had to s 642(4) of the Act which reads:

“(4)   For the purpose of this Division, the resignation of an employee is taken to constitute the termination of the employment of that employee at the initiative of the employer if the employee can prove, on the balance of probabilities, that the employee did not resign voluntarily but was forced to do so because of conduct, or a course of conduct, engaged in by the employer.”

Section 642(4) is of recent origin having come into effect with the rest of the WorkChoices legislation on 27 March 2006.  Because it was the first time the Full Bench had considered the construction and application of s 642(4), it found there was sufficient importance in the public interest that leave should be granted to hear the appeal.

The circumstances in relation to this case involved staff at the Lismore office of Australian Hearing.  As a result of various interpersonal and reporting difficulties, there was concern that the staff, including Mrs Peary, were not communicating properly. Mrs Peary took some sick leave citing depression, the reason for it being that she had been unsuccessful in obtaining a meeting to discuss her concerns.  Mrs Peary’s medical condition deteriorated and personal relations among the staff in the region became difficult.

The employer had engaged an Employee Assistance Program provider and had also obtained an occupational health and safety adviser to contact Mrs Peary and offered her assistance. A number of complaints had been made against Mrs Peary which were found to have been correct in relation to her dealings with another employee. She was advised that it would be inappropriate for her to continue working with that employee and that she should conform to the recommendations of her rehabilitation consultant. It was further recommended that she take up a different assignment at either Tweed Heads or Ballina for a period of three months with salary maintenance. Prior to the date when she had to indicate her preference, Mrs Peary provided a medical certificate from her general practitioner indicating that she was unfit for work for a month and that she was suffering “major depression” (at [13]).

She lodged a workers’ compensation claim.  She commenced working at the Ballina office a few days per week and at one stage Australian Hearing organised a hire car for Mrs Peary to travel to work herself. Consistent with her general practitioner’s advice, she returned to full time work in September at Ballina. In September 2008, her workers’ compensation claim was rejected (at [18]). While in Ballina, Mrs Peary sent an email to a technician at the Lismore office which was critical of the Lismore office’s environment. Her employer informed her that it regarded the email as quite disrespectful to and undermining of the Acting Office Manager’s authority. A disciplinary proceeding was activated and Mrs Peary was requested to provide a written response. Mrs Peary again went on sick leave. Mrs Peary sent a doctor’s certificate to her employer indicating that she was suffering from a medical condition and in a subsequent email she forwarded in a response to a request as to whether she had resigned, said she was resigning “due the high level of stress I am experiencing at work”.

After recounting the facts and dealing with the findings of the Commissioner below, the Full Bench dealt with various submissions made by the appellant employer. They found there was “no warrant for requiring the employee to prove an additional matter, that the employer intended to force the employee to resign” (by its conduct or course of conduct) (at [30]).  In dealing with the submission regarding course of conduct by placing Mrs Peary in isolation at Ballina, it found that she was “cut off from contact with staff at Lismore, of whom there were eight, working mainly alone on unstimulating tasks, travelling 32 kilometres twice a day.” She could not return to Lismore until she had attended mediation and could not attend mediation until she had undergone six sessions of psychological counselling at her own expense. There was also an implied threat to withdraw her transport to and from Ballina. The Full Bench found that there was no doubt that there was an adequate basis for finding that she was forced to resign (at [35]). As no error was evident, the appeal must fail, so said the Full Bench (at [38]). However, the Full Bench emphasised that there needs to be a distinction between whether termination is at the initiative of the employer and whether such termination of employment is an unfair one. Even if the employer’s conduct forces an employee to resign, it does not automatically follow that the termination was harsh, unjust or unreasonable. All circumstances must be taken into account in order to make such findings (at [39]). As Commissioner Thatcher had made a number of findings relevant to the question of termination and its harshness or otherwise, should conciliation be unsuccessful, the application should proceed before another member of the Commission (at [40]).

At the conclusion of their findings, the Full Bench referred to a matter of some significance being as follows: Even though an employer has a right to seek to have a claim brought to an end early on the basis of whether the resignation was at the employer’s initiative, that involves considerable overlap and in come cases a complete overlap on the question of unfairness or harshness (at [41]).  In noting that, it said that significant duplication with added costs to both sides might result should arbitration be necessary. Although no criticism was made of Australian Hearing, it might, in an appropriate case, be a question which could sound in costs should such an application to summarily dismiss the matter under this section occur if the strike out application does not prove to be warranted.

Real Estate is a tough business.  In the film version of the David Mamet play “Glengarry Glen Ross”, the head office motivator says “It takes brass balls to sell real estate”. 

In a case in the Supreme Court of New South Wales, delivered on 5 June 2009, Acting Justice Debelle, in Marlov Pty Ltd v Col [2009] NSWSC 501 once again shows how tough the real estate business is.  This case was one seeking an injunction to restrain a former employee from working for a competitor.  The Plaintiff, a real estate agent, claimed that the Defendant, a former employee, was acting in breach of his employment agreement when he was employed by a competitor.  A restraint of trade clause within the Defendant’s employment contract restricted him expressly for six months from working within 7.5 kilometres of the Plaintiff’s office after his employment with the Plaintiff ceased.  After a few days of having ended his employment, he commenced with another real estate agent which was within 2.1 kilometres as the crow flies but about 4.5 kilometres by road (at [6]).  The Plaintiff sought declarations and orders restraining the Defendant from working for the other real estate agency. 

In relation to various claims by the Plaintiff that the Defendant was soliciting clients, the Judge, as a question of fact, found that not to be the case.  The Judge then was called upon to consider the validity of the restraints found within the employment contract (at [18] and following).  His Honour relied on old authority to determine the reasonableness of the restraint both in the interests of the party for whose protection it was drafted and at the same time whether it was injurious to the public interest.  He referred to the well known decision of Lord Macnaughten found in Nordenfelt v Maxim Guns & Ammunition Co [1894] AC 535 at 565.  Also, reference was made to the rugby league case of Buckley v Tutty (1971) 125 CLR 353 at 376.  His Honour considered the special type of business which is a real estate agency in that it does not sell goods on a regular or frequent basis, but as a general rule has clients who only consult it on an irregular basis (at [25]). 

The part of the restraint which the Judge did not uphold was that part which restricted the Defendant from employment with existing agents within the area.  In the general area, 34 businesses of that description served that area of which 30 were just outside the 7.5 kilometres radius of the Plaintiff’s office.  Therefore, the Plaintiff was in competition with three to four other real estate agencies that carry on business within the radius (at [27]).  There was no suggestion that the Defendant had taken any confidential information with him nor that he had in any way set up the goodwill of the business.  He was one of six agents who worked for the Plaintiff.  The Defendant had undertaken not to solicit any of the Plaintiff’s customers for the six month period and it was shown he had no special relationship with any of them.  In all the circumstances, the Judge found that the restraint was not valid.  The Judge found that the restraint was a covenant against mere competition and did not protect any legitimate interests of the Plaintiff in its business connections or goodwill. Accordingly, he found that part which prevented the employment of the Defendant was invalid.

This case is consistent with many other cases in relation to restraint of employees being employed by another.  However, it cannot be used as authority in relation to the sale of businesses where the restraint of trade doctrine is more stringently enforced.