FEDERAL COURT OF AUSTRALIA EMPLOYMENT LAW – Termination of employment – Alleged unlawful termination – Whether employment terminated at initiative of employer – Public servant retired pursuant to Public Service Act – Effect of provision permitting Secretary to determine provision is not to apply. Public Service Act 1922 – s 76V Industrial Relations Act 1988 – Div 3 of Part VIA MORTIMER JOHN PEACOCK V COMMONWEALTH OF AUSTRALIA NI 1934 of 1996 JUDGE: WILCOX J PLACE: SYDNEY DATE: 16 OCTOBER 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NI1934 of 1996 BETWEEN: MORTIMER john PEACOCK Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent JUDGE: WILCOX J DATE OF ORDER: 16 october 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for review of the decision of Judicial Registrar McIlwaine of 26 June 1998 made by the Commonwealth of Australia be allowed. 2. The orders made by the Judicial Registrar be set aside and, in lieu thereof, it be ordered the application under s 170EA of the Industrial Relations Act 1988 made by Mortimer John Peacock be dismissed. 3. Any moneys paid into Court by the Commonwealth of Australia pursuant to orders made on the application for stay of the Judicial Registrar's orders be paid out to its solicitors. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NI1934 of 1996 BETWEEN: MORTIMER john PEACOCK Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent JUDGE: WILCOX J DATE: 16 october 1998 PLACE: SYDNEY REASONS FOR JUDGMENT WILCOX J: This is an application by the Commonwealth of Australia for review of a decision of a Judicial Registrar, sitting in the Industrial Relations Court of Australia, in a claim by Mortimer John Peacock of unlawful termination of employment. The review turns on a point of law: whether a termination of employment of a public servant pursuant to s 76V of the Public Service Act 1922 is a termination of employment by an employer, so as to be cognizable under Division 3 of Part VIA of the Industrial Relations Act 1988, as the relevant statute then was. Section 76V of the Public Service Act relevantlyprovides: "76V(1) Subject to subsection (2), an officer shall, by force of this subsection, be retired from the Service upon attaining the maximum retiring age. (2) Where the relevant Secretary is of the opinion that it is desirable, in the interests of the Commonwealth, that an officer who has not attained the maximum retiring age should continue, after attaining that age, in employment, and the officer is able and willing so to continue, the relevant Secretary may determine, in writing, that subsection (1) does not apply to the officer. (3) The relevant Secretary may, at the time of making, or at any time after making, a determination under subsection (2) in respect of an officer, determine that the officer shall retire from the Service upon attaining a specified age or upon the expiration of a specified period and, where such a determination is made, the relevant Secretary may, at any time before the officer attains that age or before the expiration of the period so determined, vary the determination. (4) In this section: 'maximum retiring age', in relation to an officer, means: (a) if the officer is included in a class of officers in respect of whom a maximum retiring age, being an age less than 65 years, is fixed by the regulations – the age so fixed; or (a) in the case of any other officer – the age of 65 years;" It is common ground that, in relation to Mr Peacock, the "maximum retiring age" was 65 years. The facts Mr Peacock is a qualified psychologist. He was employed by the Commonwealth from 1971 until the eve of his 65th birthday, 18 July 1996. During the last 15 years of his employment he was Director of Psychology-Navy in the Department of Defence. Seven months before Mr Peacock's 65th birthday, the First Assistant Commissioner of the Public Service issued a circular reporting a decision of the then government to abolish compulsory age retirement in the Australian Public Service and stating this would be an element in legislation intended to be introduced into Parliament during 1996. The circular included this paragraph: "Under subsection 76V(2), a Secretary has the discretion to allow a non-SES employee to continue in employment beyond age 65 'in the interests of the Commonwealth'. In response to an expected increase in requests from staff wishing to continue to work beyond age 65, agencies need to give careful consideration to all relevant factors including the employee's performance, the employee's fitness for duty and the continuing availability of suitable work in making this assessment. Where an officer is to continue in employment the Secretary must determine in writing that subsection 76V(1) does not apply to the officer, prior to the officer reaching the maximum retirement age." (Original emphasis) Apparently encouraged by this circular, on 11 March 1996, Mr Peacock wrote to the Deputy Secretary, Budget and Management, of the Department of Defence. He noted information that the new legislation was unlikely to be enacted before July – it is still not enacted – and sought permission to retain his employment for a period of six months past his birthday. He cited family responsibilities as his reason. This request was referred to the Navy. On 29 April 1996 Rear-Admiral M B Forrest advised the Department: "It would not be to the detriment of the Commonwealth if Mr Peacock was extended for six months beyond his retiring age; however he is not involved in any special projects which would be jeopardised because of his retirement on 18 July 96, nor are there any known special circumstances which would give cause to use the discretion available under section 76V(2) of the Public Service Act." On 15 May 1996 the Deputy Secretary, Budget and Management, responded to Mr Peacock's letter of 11 March advising that his application for extension had been declined. The letter included the following: "2. In your application you have cited personal reasons for wishing to continue in employment, and pointed to your Superior rating at your last two performance appraisals. Unfortunately, these factors by themselves do not provide sufficient justification for invoking subsection 76V(2) of the Public Service Act. The discretion available to delegates to waive compulsory age retirement continues to be used sparingly and in special circumstances, such as where an employee has unique or specialist skills that cannot be easily replaced, or where a project's timely completion depends on the retention of a particular employee because of unique knowledge. 3. Navy was consulted concerning your application and indicated that you are not involved in any special projects or are there any known special circumstances which would give cause to use the discretion available to extend your employment. Regrettably, I cannot approve your request." Mr Peacock did not accept this decision. He lodged an appeal under reg 83 of the Public Service Regulations and the matter was referred to Mr A J Ayers, Secretary of the Department. On 10 July Mr Ayers wrote to Mr Peacock advising his decision to refuse an extension. He set out his reasons. They have been criticised by counsel for Mr Peacock, Mr W Haylen QC. However, I am not concerned with the reasonableness or legal validity of Mr Ayers' reasons. This is not an application for review of a statutory decision pursuant to the Administrative Decisions (Judicial Review) Act 1977 or s 39B of the Judiciary Act 1903. If the argument for Mr Peacock is correct, and his forced retirement was a termination of employment by his employer by reason of his age – and that clearly was the reason he was compelled to retire on 18 July 1996 – the termination offended s 170DF(1)(f) of the Industrial Relations Act. That paragraph prohibits an employer terminating an employee's employment for any one or more of 14 specified reasons, including age. As there is no suggestion that a termination on the basis of age was a reason "based on the inherent requirements of (Mr Peacock's) particular position" (see s 170DF(2)), there would be a clear contravention of the Act. The only possible relevance of Mr Ayers' reasons would be in relation to relief: the proper exercise of the Court's discretion under s 170EE(1) of the Act, the question whether it was impractical to reinstate Mr Peacock to his former position and, if so, the appropriate amount of compensation to be awarded: see s 170EE(2). On the other hand, if the argument for Mr Peacock is incorrect, and his termination of employment was not a termination by the employer but a termination by force of law, regardless of the validity of Mr Ayers' decision this Court has no jurisdiction to grant relief under Division 3 of Part VIA of the Industrial Relations Act: see Victoria v Commonwealth (1996) 187 CLR 416 at 520; Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200, Australian Liquor, Hospitality and Miscellaneous Workers' Union v Commonwealth of Australia ("ALHMWU") (1994) 55 IR 18 at 19 and cases there cited. The parties' contentions Counsel for the Commonwealth, Mr P Hastings QC and Mr D Godwin, cite Victoria v Commonwealth at 520 in support of the proposition that an employer does not terminate the employment of an employee where that employment comes to an end because its term has expired. It matters not, they say, whether the duration of the employment is fixed by agreement, statute or industrial award. In relation to s 76V, they cite ALHMWU as a decision directly in point. Moore J there held that termination of an employee's employment pursuant to s 76V(1) of the Public Service Act was not a termination by the employer. At 19-20 his Honour said: "In my view, the termination of the employment of Mr Simmons was not termination at the initiative of the employer but rather, as is submitted by the respondent, termination resulting from the operation of an Act of Parliament. Accordingly, the application to the Court is one that does not concern termination of the type to which the relevant legislative provisions are directed. The applicant sought to rely upon the provisions of s 76V(2), which enables the effect of s 76V(1) to be modified by the Secretary forming an opinion that it is desirable in the interests of the Commonwealth that an officer whose employment would otherwise be terminated by s 76V(1), to continue in employment. However, in my view, the existence of this discretion does not alter the ordinary operation of s 76V(1). As it applied in this case, it is clear it applied without qualification. Accordingly s 76V(2) has no relevance." Counsel refer also to the decision of the Full Court of the Industrial Relations Court of Australia in Griffin v The Australian Postal Corporation (1 June 1998, not yet reported). In that case, by majority (Spender and von Doussa JJ; Marshall J dissenting), the Court held there was not a termination at the initiative of the employer where the employee had retired pursuant to an award provision in these terms: "(iii) an officer may continue in the employment of Australia Post until attaining the age of 65 years but is entitled to retire from employment on or after attaining the age of 55 years." The legislation governing the present case, counsel say, is even more specific. Section 76V(1) of the Public Service Act provides "an officer shall, by force of this subsection, be retired from the Service upon attaining the maximum retiring age". It is true, say counsel, that the effect of subs (1) can be averted by a contrary decision by the relevant Secretary; but, if there is no such decision, subs (1) operates to determine the person's employment as a matter of law. No act of termination by the employer is required. As Mr Ayers chose not to exercise the power conferred on him by subs (2), Mr Peacock's employment came to an end under subs (1) by force of law on his attaining the maximum retiring age. Mr Haylen argues the critical factor in the termination of Mr Peacock's employment was Mr Ayers' decision not to exercise the discretion conferred on him by s 76V(2) of the Public Service Act. It follows, he says, that this is a case of termination of employment by the employer. ALHMWU is to be distinguished, according to Mr Haylen; the employee in that case (Mr Simmons) did not apply for exercise in his favour of the s 76V(2) discretion. Mr Haylen adopted submissions put to the Judicial Registrar by Mr R Reitano, counsel then appearing for Mr Peacock. These submissions discussed the term "interests of the Commonwealth" and suggested it "virtually mandated, having regard to the international treaty obligations of the Commonwealth of Australia, that an extension beyond the statutory retirement age be granted". Apparently, Mr Reitano had in mind para 5(a) of Recommendation no. 166 of the General Conference of the International Labour Organisation, reproduced as Schedule 11 of the Industrial Relations Act 1988. This Recommendation was designed to supplement the Termination of Employment Convention 1982 which has been ratified by Australia and is Schedule 10 to the Act. Paragraph 5 of the Recommendation reads: "5. In addition to the grounds referred to in Article 5 of the Termination of Employment Convention, 1982, the following should not constitute valid reasons for termination: (a) age, subject to national law and practice regarding retirement; (b) absence from work due to compulsory military service or other civic obligations, in accordance with national law and practice." Another relevant reference is to the 1958 Convention concerning Discrimination in respect of Employment and Occupation (which is Schedule 1 to the Human Rights and Equal Opportunity Commission Act 1986: see s 170CA(2) of the Industrial Relations Act). Conclusions It is not necessary to consider the precise status and effect of the international instruments mentioned above. I do not doubt they were documents that needed to be taken into account by Mr Ayers in determining where lay the "interests of the Commonwealth" in connection with Mr Peacock's application; compare the Full Court's wide interpretation of the term "Australia's interests" in Chaudhary v Minister for Immigration and Ethnic Affairs (1994) 49 FCR 84. But the matters reported by Rear Admiral Forrest, and taken into account by Mr Ayers, were also relevant. Mr Ayers was bound to give effect to Mr Peacock's application only if he reached the conclusion, having regard to all relevant factors, that to do so would be in the interests of the Commonwealth. As I have said, the validity of Mr Ayers' decision is not an issue in this litigation. So I express no opinion about it. The fact is Mr Ayers chose not to exercise the discretion given to him by s 76V(2). Does this mean that Mr Peacock's employment was brought to an end at the initiative of the employer? I do not think so. I think the correct analysis of the situation was that offered by Moore J in ALHMWU: the termination was one "resulting from the operation of an Act of Parliament". That analysis draws directly upon the words of s 76V(1) "by force of this subsection, be retired". The fact that the operation of the subsection may be excluded by a s 76V(2) decision does not derogate from the proposition that, in the absence of such a decision, the subsection does its work. It is immaterial whether or not the particular employee has applied for the exercise in his favour of the s 76V(2) discretion. Order In my opinion the Industrial Relations Court had no jurisdiction to entertain Mr Peacock's claim. The application for judicial review should be allowed and the orders made by the Judicial Registrar on 26 June 1998 set aside. In lieu thereof, it should be ordered the application made under s 170EA of the Industrial Relations Act be dismissed. Any moneys paid into Court by the Commonwealth pursuant to orders made on the application for stay of the Judicial Registrar's orders should be paid to its solicitors. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox Associate: Dated: 16 October 1998 Counsel for the Applicant: W R Haylen QC Solicitor for the Applicant: Geoffrey Edwards & Co Counsel for the Respondent: P Hastings QC and D Godwin Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 8 October 1998