FEDERAL COURT OF AUSTRALIA INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - VALID REASON - OPERATIONAL REQUIREMENT - whether operational imperative to terminate employment - whether decision to terminate capricious - whether REINSTATEMENT impracticable - Workplace Relations Act 1996 (Cth) ss170DE(1), 170EA, 170EE Safety, Rehabilitation and Compensation Act 1988 (Cth) MARAZZATO -V- QANTAS AIRWAYS LIMITED VI 1174 of 1997 PARKINSON JR MELBOURNE 9 JULY 1997 IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VI 1174 of 1997 ) GENERAL DIVISION ) B E T W E E N: Nadia MARAZZATO Applicant AND: QANTAS AIRWAYS LIMITED Respondent JUDICIAL REGISTRAR : PARKINSON PLACE : MELBOURNE DATED : 9 JULY 1997 MINUTES OF ORDER THE COURT ORDERS THAT: 1. Pursuant to Subsection 170EE(1)(a)(i) of the Workplace Relations Act 1996, the Respondent on Monday 14 July, 1997 re-appoint the applicant to the position of Flight Attendant in which she was employed immediately before the termination of the employment. 2. Pursuant to Subsection 170EE(1)(b)(i) of the Workplace Relations Act 1996, the employment of the applicant by the respondent be treated for all purposes as having been continuous between the date of the termination of employment and the date of re-appointment made in accordance with Order 1 herein. 3. Pursuant to Subsection 170EE(1)(b)(ii) of the Workplace Relations Act 1996, the respondent pay to the applicant, within 21 days of the date of this Order, remuneration lost by the applicant as a consequence of the termination of the employment, between the date of the termination of the employment and the date of re-appointment. 4. The parties have leave to apply to the Court upon 24 hours notice in the event that agreement cannot be reached in relation to the calculation of the amount of lost remuneration ordered pursuant to Order 3 herein. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VI 1174 of 1997 ) GENERAL DIVISION ) B E T W E E N: Nadia MARAZZATO Applicant AND: QANTAS AIRWAYS LIMITED Respondent JUDICIAL REGISTRAR : PARKINSON PLACE : MELBOURNE DATED : 9 JULY 1997 REASONS FOR JUDGMENT This is an application made pursuant to Section 170EA of the Workplace Relations Act 1996, ('the Act'). The applicant was employed by the respondent as a Domestic Flight Attendant in April, 1980. She was engaged in flying duties until October, 1990, when during the course of a rough landing she suffered spinal injury. As a consequence of this spinal injury the applicant suffered disablement and was unable to continue to perform flying duties. Between the date of her injury and early 1994, the applicant was significantly disabled and there was one unsuccessful attempt at returning to work in October, 1991. In the following period no further rehabilitation attempts were made until the applicant engaged her own rehabilitation service provider, Workplace Solutions Pty Ltd and was involved in a range of rehabilitation programs including medical treatment, exercise, physiotherapy and hospitalisation, from early 1994. In March, 1994 discussions took place with the respondent as to return to work. A detailed plan of a return to work was established. In April, 1994 the applicant returned to work, initially on very limited hours of work per day, in a clerical and administrative capacity. It was part of the rehabilitation program and workers compensation obligation that the respondent provide alternative employment where available. The applicant, as a person rehabilitating from a compensable injury, was entitled to salary maintenance at the rate of a flight attendant and also maintenance of her substantive classification as a flight attendant. This was also confirmed in writing by the respondent in its correspondence to the applicant dated 8 December, 1995, (Exhibit R1), in relation to additional alternative duties in the property department, wherein the respondent confirmed the continued application of the Flight Attendants Award. She initially started working for a few hours and gradually built her hours of work up to 24 per week. In around August 1995 the respondent advised the applicant that they had retained an alternative rehabilitation provider to provide her with a comprehensive rehabilitation program. The program was designed by Mr. Chris Fitzgerald of Risk Management Services Pty Ltd. This company was a rehabilitation service provider retained by the respondent for the purposes of providing rehabilitation services in respect of its employees. The purpose of the applicant's program was to attempt progressive introduction of flight attendant work and exposure to environment, for the purpose of determining finally whether the applicant had any reasonable likelihood of returning to flying duties again. This program involved initially an extension of the duties the applicant was performing and was to ultimately involve introduced lifting and pushing exercises and some flight work. The evidence is that this program was introduced with the co-operation of the applicant's own treating doctor and the enthusiasm of the applicant. I am satisfied that it was understood by all parties that this would be a developing program over an extended period of time and that the outcome of the program would determine, with some finality in all parties minds, the capacity of the applicant to return to flying duties. It is apparent that some progress was being achieved in relation to the applicant's rehabilitation at this time and that all parties were enthusiastic as to the viability and appropriateness of the program and its objectives. This was the evidence of Ms Newnham, (the Flight Attendant Duty Manager and Rehabilitation Case Manager), Mr. Moody, (the Rehabilitation Co-ordinator) and the applicant. In October, 1995, Comcare, the workers compensation insurer, notified the respondent that it had made a determination that the applicant was no longer entitled to workers compensation and that it was terminating the applicant's benefits, including any provision of rehabilitation assistance. A review of that decision occurred, with the interim ruling being confirmed by a Comcare review officer and notified to the respondent and the applicant's solicitors in February, 1996. The applicant's entitlements ceased from that time. The decision was the subject of an appeal to the Administrative Appeals Tribunal. In March, 1996, Mr. Fitzgerald, of the rehabilitation provider, wrote to the respondent in relation to a discussion held between himself and Mr. Moody, sometime in February, as to the applicant's ongoing rehabilitation program, (Exhibit R36). In that correspondence Mr. Fitzgerald set out the proposed framework for an intense flight attendant work conditioning program which had been agreed by the respondent. The program was to be conducted over a two week period in the Flight Training Centre and involved exposure to and monitoring of the applicant's capacity to perform all aspects of a flight attendant's duties. It is apparent that this program was directed towards obtaining a conclusive outcome of the rehabilitation program, that is a final determination of the question as to whether there was any reasonable likelihood that the applicant would be able to return to flight attendant duties. It was also a program which was a significant upgrading of the level of physical duty required of the applicant and was a significant step in the overall rehabilitation process. This aspect of the program was never undertaken and the evidence of both Ms. Newnham and Mr. Moody is that the respondent did not allow it to proceed, because of their awareness of the decision of Comcare to deny liability for ongoing entitlements. In about June, 1996 the applicant was absent from work for approximately 3 months, as a consequence of contracting Scarlet Fever. When her sick leave entitlements ran out in this time, the applicant was paid out of her accrued leave entitlements. The applicant returned to work on 17 September, 1996. At that time the applicant was informed that there would need to be some alterations to arrangements as a result of the Comcare decision. At a meeting held on 8 October, 1996 between the applicant, Ms. Newnham and Mr. Moody, the applicant was given a letter dated 5 October, (Exhibit R6). In that letter the applicant was advised that as a result of the decision of Comcare it was necessary to formalise her interim working arrangements. The applicant was informed that the respondent was no longer prepared to retain her in the position of flight attendant classification nor to pay her the rate of pay of a flight attendant, and that she was required to agree to accept a clerical classification. The letter states that the position offered to the applicant was being offered on a temporary basis, subject to ongoing review, pending a final outcome on her claim status. The duties proposed were those duties the applicant was already performing. The document nowhere addresses what the ongoing consequences for the applicant would be as a result of accepting the offer of temporary duties. The evidence of the applicant is that no information was given to her in relation to the ongoing consequences for her employment as a flight attendant, despite her inquiry in the course of the meeting on 8 October, 1996. The applicant's evidence was that she was concerned that by accepting such an offer, she would no longer have any possibility of returning to the classification of flight attendant, nor access to the Fitzgerald rehabilitation program. As noted in the applicant's submission; "exhibit R6 is silent on the issue of what would happen to Ms Marazzato's employment or rehabilitation program, if she accepted the offer and succeeded in her appeal.". Further at no time in any of the discussions or correspondence between the parties was there any information provided in that regard. I accept that the absence of this information constitutes the proposed agreement for temporary transfer, as uncertain, and it was not unreasonable for the applicant to refuse the proposal on that basis. In my view also relevant to the reasonableness of the applicant's conduct, in relation to the proposal, is the fact that the document was also silent upon the consequences for the applicant in the event that her appeal was not successful. Ms. Newnham's evidence was that during the course of that meeting she reiterated that the reclassification was only temporary and subject to the outcome of the Comcare appeal. But that observation is ambiguous and capable of many interpretations. Mr. Moody's evidence was that he was unable to recall whether any discussion as to the future arrangements took place in that meeting. The applicant's evidence was that he used words to the effect that "he may have to come to her cap in hand" and "may provide a rehabilitation program". Mr. Moody was unable to recall saying this. The notes of the meeting and the correspondence to the applicant and the applicant's solicitors make no reference to the future of the applicant after the determination of the Comcare entitlements. The applicant was in an extremely vulnerable and uncertain position during the time when the discussions as to her future were occurring. I am satisfied that there were a number of factors influencing her decision making at that time, including that her workers compensation entitlements had been terminated, her rehabilitation program stopped, she was facing the additional anxiety of the workers compensation appeal process, her long held desire to return to flying was looking less and less likely and she was being forced in the circumstances of all of these factors to face the most unpalatable possibilities in terms of her own career desires. It ought to have been apparent to those supervising the applicant, including Ms. Newnham and Mr. Moody, that the applicant's rehabilitation process was at a critical stage, with the applicant drawing nearer to the point where there would be a final decision as to her capacity to ever perform flight attendant's work again. I accept the applicant's evidence that flying again was her principal and only goal during the entirety of the rehabilitation process and I also accept that the respondent's officers, Mr. Moody and Ms. Newnham knew this to be so, although it is clear that Ms. Newnham in her evidence sought to detract from the significance of this aspect of the applicant's concerns. In the circumstances it was not unreasonable of the applicant to be wary as to the proposal for interim reclassification which was proposed by the respondent. On 22 October, 1996, the applicant declined to accept the reclassification from flight attendant to clerical employee. As a consequence of the applicant refusing to accept reclassification to a clerical grade, the respondent advised the applicant that she would be medically assessed to determine whether she was immediately fit to return to duties as a flight attendant. This assessment, with the respondent's doctor, took place on 27 October, 1996. The assessment was that at that time and in the foreseeable future the doctor did not believe that the applicant could return to flight attendant's duties. Whilst this was a view Dr. Morrison confirmed in his evidence, he nevertheless conceded that the applicant's rehabilitation could have been affected by the length of time until the intensive program of rehabilitation commenced. On 9 December, 1996 the applicant attended a meeting with the respondent. At that meeting she was informed that as she was unable to perform her flying duties, her employment was to be terminated. The applicant was given two options, to accept either medical retirement or medical resignation. The consequences of the former were that the applicant, upon recovery, was entitled to seek to be considered for a position, if one became available and she satisfied the selection criteria and in addition she would also retain certain travel privileges. The latter involved the final termination of the employment and payment of any superannuation entitlements with no right to apply for re-employment. The applicant declined to accept either of the alternatives, reasserting that all she was seeking was the finalisation of her rehabilitation program with a view to returning to flying duties and to then consider her options. Once again the applicant raised the possibility of utilising her leave entitlements. In this case her long service leave. This was refused. As a consequence of the applicant failing to elect to take medical retirement, the respondent terminated the applicant's employment. The grounds of the termination were stated to be: (Exhibit R37 - Document SGRV14 ) "1. Comcare have ceased liability in relation to your claim. 2. For medical reasons you are unable to perform your duties as a flight attendant, hence cannot fulfil your contract of employment. 3. You chose to reject the offer alternative employment that was recently made to you. " I am not satisfied that the decision of the respondent to terminate the employment of the applicant was for valid reason, based upon the operational requirements of the business, nor the conduct or work performance of the applicant. I am not satisfied that the respondent terminated the employment as a consequence of any operational imperative upon it. The respondent acted hastily, with no regard for the individual circumstances of the applicant, nor the effort put in by her in relation to her own rehabilitation. In this sense the termination of the employment may be described as being not sound, defensible or well founded. The timing and failure to take into account other alternatives to terminating the employment also constituted the termination of employment as capricious. The applicant is a person who was committed to her career as a flight attendant. This position she undertook competently for many years prior to her injury. The injury incurred during the course of her employment and through no fault of her own, caused her career to be placed in jeopardy. Indeed for a substantial period of time her capacity to perform any work in paid employment was in doubt. Due to her own diligence and determination the applicant was able to return to work under a limited hours rehabilitation program. The evidence is that these hours were increasing at the time the employment terminated and that the applicant's capacity for work was improving. At a critical point in the process of the rehabilitation, whether it would have resulted in her flying again or as crucially, the applicant finally accepting that she would be unlikely to do so and turning her attention to other career options within the respondent, the respondent acted to terminate her employment. It acted to terminate the employment at a time when it was apparent that the applicant had available to her an appeal processes which, on the view of the company representatives in the proceedings, including Ms. Newnham and Mr. Moody, were likely to result in her workers compensation entitlements being reinstated. The consequence of this would have been that the applicant, or the respondent as appropriate, would have been repaid all monies relevant for the period. It also acted in circumstances where the only change sought to be implemented by the respondent was a reclassification in title to clerical staff from flight attendant grade and a consequent reduction in salary entitlements. The alternatives discussed by the applicant during the process, together with her evidence, satisfy me that the issue of reduction in salary was not the fundamental matter of issue between the parties at that time. The respondent in the proceedings sought to take issue with the reason why the applicant refused to accept the reclassification. It submitted that the applicant acted unreasonably in circumstances where the change was only temporary and that if the applicant won her appeal, she would revert back to flight attendant status and be repaid salary entitlements. What was not explained to the Court was why there was on the part of the respondent such an imperative on the respondent to alter the applicant's status prior to the appeal being determined and why it was necessary when she refused to agree to such alteration, to then proceed to terminate her employment? The evidence establishes that there were alternatives available to the respondent other than terminating the employment. These included allowing the applicant to use her leave entitlements until her appeal had been determined. The applicant's leave entitlements would have adequately provided for the period of time which was to elapse until the appeal was heard. This request, made by the applicant, was not acceded to by the respondent, although no adequate explanation as to the reason was given to the Court. The circumstances of this case were made doubly hard in view of the abrupt termination of a rehabilitation program, in which the applicant had some faith. I accept that the applicant had what might be viewed, in the context of the previous history, an unrealistic expectation that she would be able to be rehabilitated fit enough to perform the arduous physical work of a flight attendant. However until the termination of the benefits by the Workcare insurer, the respondent had not indicated to the applicant that this was a view it took. Rather it had encouraged the applicant in the furtherance of the rehabilitation program and participated in the arrangements for what was likely to be a final attempt to facilitate her return to flying duties. Abruptly all arrangements for the program were put on hold and no co-operation was given to the applicant by the respondent when she indicated on 8 October, 1996, that she would like to continue the program by paying for it herself. This is not a case where the " end of the road " had been reached in terms of the conclusion of possible rehabilitation processes. The evidence of the respondent was not that it had come to the conclusion that there was no possibility of rehabilitation to flight attendant duties, or that such a rehabilitation process continuing was inherently unreasonable or burdensome on it. The evidence in the proceedings is that the status quo, as to the applicant's rehabilitation program and employment status, was altered only because of the decision of Comcare to cease benefits, not because of any decision being taken by the respondent that the applicant could not be rehabilitated to the duties of a flight attendant. No such decision was taken at any time prior to the termination of the applicant's employment and such a decision would have been inconsistent with the rehabilitation process, which was in progress with the endorsement of all parties at the time. The focus of Dr. Morrison's examination was upon the applicant's immediate capacity to return to flight attendant duties and not upon the detail and potential value of the rehabilitation program. The respondent terminated the applicant's employment after the applicant refused to agree to what she understood to be a potentially permanent reclassification into the clerical area, with no guarantees as to recovering her flight attendant status or rehabilitation opportunities. Ms. Newnham's evidence was that it was always intended and understood that the reclassification would be a temporary one. However, as discussed earlier herein, I am not satisfied that the respondent adequately explained to the applicant that the reclassification was only a temporary arrangement and that in the event that her appeal was upheld she would revert to her former classification. There were other aspects of the implementation of the decision which in my view constitute it as capricious. The respondent's officers were aware at the time that the employment terminated that a date for the hearing of the review of the Comcare claim had been set down. The hearing was to take place on 10 February, 1997. The evidence was also that the respondent's officers fully expected that the applicant's appeal would be allowed and her entitlements reinstated. Had there been no administrative ruling by Comcare, the rehabilitation process would have proceeded and the respondent would have taken no steps to terminate the applicant's employment. In such circumstances there was no significant prejudice to the respondent in waiting for the determination of the appeal. The period of notice accorded to the applicant of 4 weeks expired on 6 January, 1997. On 10 February, 1997 consent orders were granted in the Administrative Appeals Tribunal, setting aside the Comcare decision and reinstating the applicant's entitlements to ongoing benefits under the Safety, Rehabilitation and Compensation Act 1988 (Cth), including rehabilitation entitlements. The applicant is a person who was injured in the course of her employment and until early 1994 did not have the benefit of a fully integrated and employer supported rehabilitation program. Whilst the outcome of the final stages of that rehabilitation program are uncertain, nevertheless I am not satisfied that the inevitable result of even an unsuccessful outcome would have resulted in the termination of the applicant's employment. This is because at that point in time when the parties had met their commitments to each other fully, the applicant's attitude to a reclassification may well have been significantly different. Further it is apparent from the correspondence from the rehabilitation provider and the evidence of Mr. Moody, that the rehabilitation process was for the purpose of determining whether the injured flight attendants were, to quote from Exhibit R31, "likely to return to their original work or if longer term redeployment options should be pursued". That process had not been completed in respect of the applicant. In the circumstances I am not satisfied that the respondent had valid reason for the termination of the applicant's employment. Consequently there has been a contravention of Section 170DE(1) of the Act. I turn now to consider the question of remedy. The entitlements of the applicant to ongoing support pursuant to the Safety, Rehabilitation and Compensation Act 1988 (Cth) have been established. She is entitled to continuance of rehabilitation. The applicant seeks reinstatement and in the circumstances I am satisfied that such remedy would not be impracticable. Having regard to the ongoing rehabilitation support available to the applicant, which support was interrupted at a most unfortunate time in the rehabilitation process, I am satisfied that it is not impracticable to reinstate the applicant to the position she occupied immediately prior to the termination of her employment. There is no evidence before the Court to suggest that a continuation of that process of rehabilitation and return to work is impracticable. The Order of the Court will be that the applicant be reinstated to the position of Flight Attendant, the position she occupied immediately prior to the termination of the employment. The applicant is entitled to payment for remuneration lost by her as a consequence of the termination of her employment to the date of the Order for reinstatement, less any amounts which were paid to the applicant at the termination of the employment, being payment on account of notice, annual leave entitlements and long service leave entitlements. The usual deductions are to be made from the amount paid on account of remuneration lost, including PAYE taxation. The applicant's entitlements in relation to annual leave credits and long service leave credits are to be re-credited by the respondent. An Order for continuity of employment will be made. Leave is reserved to the parties to apply in the event that agreement cannot be reached as to the amount of the remuneration lost by the applicant. I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment of Judicial Registrar Parkinson. Associate : Dated : 9 July 1997 APPEARANCES Counsel for the Applicant : Ms. M. Young Solicitors for the Applicant : Ryan Carlisle Thomas Counsel for the Respondent : Mr. N. Green Solicitors for the Respondent : Blake Dawson Waldron Dates of hearing : 26 & 27 May 1997