John Fuller v Botany Cranes and Forklift Services Pty Limited [1995] IRCA 141

CATCHWORDS INDUSTRIAL LAW - termination of employment - claim for payment in lieu of notice - compensation sought for wages Annual Leave Long Service Leave contributions and Superannuation contributions - interpretation of "termination" - employee in receipt of Workers Compensation payments - whether damages are payable Industrial Relations Act, 1988 ss. 170 EA 170 DB and 170 EE(5) Workers' Compensation Act, 1951 (A.C.T.) ss.13 17B 23. JOHN FULLER V. BOTANY CRANES AND FORKLIFT SERVICES PTY. LIMITED trading as Canberra Cranes and Forklift Services No. AI 182 of 1994 Before: Linkenbagh J.R. Place: Canberra Date: 16 February, 1995 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY AI 182 of 1994 BETWEEN JOHN FULLER Applicant AND BOTANY CRANES AND FORKLIFT SERVICES PTY. LIMITED trading as Canberra Cranes and Forklift Services Respondent ORDER Judicial Registrar Linkenbagh 7 April, 1995 Canberra THE COURT ORDERS: 1. That the Application be dismissed NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY AI 182 of 1994 BETWEEN JOHN FULLER Applicant AND BOTANY CRANES AND FORKLIFT SERVICES PTY. LIMITED trading as Canberra Cranes and Forklift Services Respondent REASONS FOR JUDGMENT Judicial Registrar Linkenbagh Canberra: 7 April 1995 This is an Application under Section 170 EA of the Industrial Relations Act, 1988 ("the Act"). The applicant initially sought Orders for compensation and reinstatement, and such other Orders as would put him in the same position as he would have been had his employment not been terminated. At the hearing his claim was refined to a claim for damages under Section 170 EE(5) only, in respect of an alleged contravention of Section 170 DB of the Act. RELEVANT STATUTORY PROVISIONS: The object of Division 3 of the Act is set out in Section 170 CA (1), as "to give effect to the Termination of Employment Convention and the Termination of Employment Recommendation, 1982". Those documents are Schedules 10 and 11 to the Act. Section 170 CB provides that an expression has the same meaning in the Division as in the Convention, and Article 3 of the Convention defines "termination" as "termination at the initiative of the employer". Section 170 DB, on which the applicant relies for his claim, provides, inter alia, that an employer must not terminate an employee's employment unless the prescribed period of notice has been given, or compensation in lieu of notice has been paid. The appropriate period of notice in this case is five weeks, calculated on the table set out in Section 170 DB(2). Section 170 DB (4) provides that the amount of compensation must "equal or exceed the total of all amounts that, if the employee's employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period." FACTS: The facts were agreed, and the hearing proceeded on that basis. The facts were: - the employment commenced on 28 September, 1983 - the applicant worked as a Dogman - the applicant suffered a work related injury on 4 August, 1994 and from that date was permanently incapacitated for work - the applicant's claim for Workers Compensation under the Australian Capital Territory Workers Compensation Act, 1951, has been admitted and he has received benefits under that Act, since 4 August, 1994. - the applicant continues to receive Workers' Compensation benefits - the respondent terminated the employment without notice on 2 September, 1994 - the respondent paid the applicant all his entitlements for Annual Leave, Long Service Leave and Superannuation up to 2 September, 1994 - the weekly wage prior to termination was $568.00 per week WAS THERE A TERMINATION WITHIN THE MEANING OF THE ACT? The remedies under the Act are only available to employees whose employment has been terminated "at the initiative of" the employer. The Court may consider the process followed, and the reasons for the termination, in determining whether the termination satisfies that test. It is not sufficient that the employer took the final step in the process, and the Court must be satisfied that the employer originated the termination. In this case the employer exercised the choice to bring the employment formally to an end on 2 September, after he had been informed that the employee was permanently incapacitated for work. The question in those circumstances is, whether the employer can truly be seen to have originated the termination, or whether the termination was a natural or inevitable consequence of the fact that the employee could not return to work and perform his duties? There was no other reason for the termination, and the fact of the incapacity of the employee for work was beyond the control of the employer. What real choice did the employer have? The position may not be the same where the employee's medical prognosis as to his capacity for work falls short of the description "permanently incapacitated". The applicant argues that he was entitled to notice pursuant to Section 170 DB. However, that entitlement comes alive only if there has been a termination within the meaning of the Act. The Court finds that the termination does not satisfy the requirement that it be at the initiative of the employer. This application therefore fails. I propose however to address the other issues raised by the parties. THE EFFECT OF THE ENTITLEMENT TO WORKERS' COMPENSATION The applicant has been in receipt of Workers' Compensation payments since prior to the termination. The employer was bound by Section 17B of the Workers' Compensation Act to maintain a prescribed insurance policy, and the parties are prohibited by Section 13 from contracting out of their rights and liabilities under that Act. The legislative provisions could be seen to import into all employment contracts - the obligation on the employer to fulfil his obligations under those provisions - the rights of the employee under those provisions, and - an acknowledgment that, in the event of injury, the provisions of the Act will come into play as a substitute for the rights and obligations of the parties to the employment contract for the duration of any incapacity. In other words, the employee knows and expects that, if and when he is injured at work, his rights to Workers Compensation will substitute for his rights under his employment contract. The applicant argues that the Industrial Relations Act creates rights on termination which are additional to his rights under the Workers Compensation legislation, and that,(assuming the termination was at the initiative of the employer) he should receive the equivalent of payment of wages in lieu of notice, and appropriate amounts for Annual Leave, Long Service Leave and Superannuation contributions in respect of the notice period. He further argues that had the employer actually given the notice, then compensation for wages would not be due, because in that case the employer would not be in breach of Section 170 DB. However, he argues that additional Annual Leave, Long Service Leave and Superannuation contributions calculated to the date on which the notice expired, would be payable. Dealing with the latter submission first, as a matter of practical fact, in the circumstances, the giving of notice would have had no significance to the applicant, who was unable to return to work at all, and the employer would have had the applicant's position reserved for a further five weeks. As notice was not in fact given, further consideration of the submission is not warranted here. Considering the former submission, in the circumstances of this case, if Section 170 DB payments were made, the applicant would receive pay or benefits from his employer twice for the same period of five weeks. This Court doubts whether it was the intention of Federal Parliament that that consequence should flow, and is of the view that, on the proper construction of Section 170 DB(4), it does not. Section 170 DB(4) restricts the amount of compensation to what the employer would have become liable to pay the employee had the employment continued during the notice period. The employer, however, is relieved of his obligations to pay wages and other remuneration whilst the employee is receiving benefits pursuant to a Workers Compensation Claim, and therefore in this case would not have been liable to make any payments to the employee during the notice period. The respondent submitted that the employer is prohibited from making any payments to the employee while he is receiving Workers' Compensation, but could not direct the Court to any provision in the relevant legislation to directly support the submission. Section 23 (1) of the Workers' Compensation Act, 1951 (A.C.T.)provides that a worker shall not be entitled, "in respect of personal injury arising out of or in the course of his or her employment, to receive compensation or any payment by way of compensation from his or her employer both independently of and also under this Act". The respondent's submission is supported by the interpretation that the payments in lieu of notice, which are described as "compensation" in Section 170 DB (4), and "damages" in Section 170 EE (5), are compensation or payments in respect of personal injury and are prohibited by Section 23 (1). The respondent's submission is further assisted by a similar interpretation of Section 23(2), which effectively provides that any damages "in respect of an injury" shall be set off against monies due for Workers' Compensation. Whether such interpretations are to be preferred need not be decided in this case, given that the application fails for other reasons. It is clear, however, that the spirit and intention of the Workers Compensation legislation is that workers are not to be permitted to be paid, effectively, twice for the same period. I certify that this and the preceding three pages are a true copy of my Reasons for Judgment Maria Linkenbagh Judicial Registrar Dated: 7 April, 1995 Representative of the Applicant: Ms. N. Rutherford from the Construction Forestry Mining Energy Union Representative of the Respondent: Mr.F.J.Gillingham from the Master Builders Construction and Housing Association, A.C.T.