CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - CAPACITY - VALID REASON - SEVERANCE PACKAGE - HARSH, UNJUST OR UNREASONABLE - EXTENSION OF TIME INDUSTRIAL RELATIONS ACT 1988 , ss170EA, 170 DE Termination, Change and Redundancy Cases (1984) 8 IR 34 (1984) 9 IR 115 Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 Transport Workers' Union of Australia v National Dairies Limited (No.2) (1994) 57 IR 186 IAN JOHN McKEWAN v BOYNE SMELTERS LTD No. QI94/0248 BEFORE: BOULTON JR PLACE: BRISBANE DATE: 24 AUGUST 1995 IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. QI 94/0248 QUEENSLAND DISTRICT REGISTRY BETWEEN: IAN JOHN McKEWAN Applicant AND: BOYNE SMELTERS LTD Respondent MINUTE OF ORDERS CORAM: BOULTON JR PLACE: BRISBANE DATE: 24 AUGUST 1995 THE COURT ORDERS THAT: 1. The time for the making of the application be extended to 1 December 1994. 2. The application be dismissed. NOTE: Settlement and entry of orders are dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. QI 94/0248 QUEENSLAND DISTRICT REGISTRY BETWEEN: IAN JOHN McKEWAN Applicant AND: BOYNE SMELTERS LTD Respondent BEFORE: BOULTON JR PLACE: BRISBANE DATE: 24 AUGUST 1995 REASONS FOR JUDGMENT The applicant, now aged 36, commenced employment with the respondent at its smelter works at Gladstone, Queensland, as a pot-room operator on 12 November 1990. Bauxite ore is processed at the smelter to produce aluminium. The applicant swore that from about March 1991 he started to suffer from asthma related problems. On the other hand, the respondent's position was that the applicant told one of its doctors that it was from October 1991 that he had first gone to a doctor with such problems. For present purposes, nothing turns on this conflict, if conflict there be. On 30 January 1992 the applicant presented at the respondent's occupational health centre and reported respiratory problems. The applicant was reassigned to metal handling on 27 March 1992. He was reviewed on several occasions during which time he remained off potline work. A Dr Cebuliak, who contracted to the respondent on a permanent part-time basis, recommended on 15 April 1992 that the applicant not return to the pot-lines. The applicant continued to be reviewed by Dr Cebuliak, and others. He remained on metal handling work, and was paid make-up pay, by comparison with shift earnings from potline work, from 10 August 1992. That income maintenance ceased on 30 October 1992. Further reviews and lung function tests followed until a Dr Mitchell, a highly qualified respiratory physician, and Dr Cebuliak recommended on 15 July 1993 that the applicant go off the respondent's site completely. Shortly thereafter, the applicant began receiving workers' compensation payments in accordance with a certificate issued by Dr Cebuliak. Further medical reviews occurred, with Dr Mitchell reporting to the Workers' Compensation Board of Queensland by a report dated 16 January 1994. On 20 April 1994 the Workers' Compensation Board awarded the applicant a lump sum settlement based on an assessment of 20 per cent permanent partial disability. By letter dated 5 May 1994 the respondent terminated the applicant's employment, with effect from 3.30 pm the following day, with three weeks pay in lieu of notice, and payment of sick leave to cover the period from 22 April 1994 to the date of termination. The respondent made also an offer of financial assistance to the applicant for vocational assessment and relocation expenses. The applicant subsequently utilised the vocational assessment offer. The applicant is presently in receipt of sickness benefits. He has done some odd carpentry jobs only since termination. He has applied for full-time work, without success. He has a common law action on foot against the respondent, in respect of his current medical condition. The application was made well out of time. The applicant seeks an extension of time for the bringing of his application, this being opposed by the respondent. I propose to deal first with the merits of the application. SUBSTANTIVE ISSUE In submissions, the applicant agreed that a worker who is no longer able to work may be lawfully terminated, his or her employer in those circumstances having a valid reason within the meaning of subsection 170DE(1) of the Industrial Relations Act 1988 ("the Act") for such termination. The applicant's case was put as follows: a termination with three weeks pay in lieu of notice and the offer of financial assistance earlier referred to was, against the background of the applicant's health, harsh, unjust or unreasonable; or to put it another way, such a termination was harsh, unjust or unreasonable because the applicant was terminated without adequate pay in lieu of notice. It was put that what the respondent ought to have done was to keep the applicant on its books, that is, in receipt of pay, until about the end of September 1994 by which time he had undergone a functional capacity evaluation and shortly after, a vocational assessment. It was accepted on the applicant's behalf that if he were otherwise successful in his application, his health was such that there was no reasonable prospect of reinstatement. In essence, what the applicant sought was an order that his termination was in breach of the Act on account of his employer's failure to pay him a severance package of the sort he contended for. It is common ground that the applicant raised the question of his receiving a severance package in discussions with doctors who examined him on behalf of the respondent, and with the respondent's management at various times, and at a meeting on 5 May 1994. At that meeting one option put to the applicant by the respondent's management was that he could remain employed by the respondent, but unpaid until the respondent finalised a separation policy. The applicant was unhappy with this suggestion. It was submitted also on the applicant's behalf that his case was not unique. There were other employees of the respondent who had been transferred from the pot-lines, with asthma related problems. I am satisfied that the risk of respiratory problems from the pot-lines had been recognised, for many years, before the applicant went onto workers' compensation. Dr Mitchell had encountered close to 130 cases of occupational asthma at the respondent's workplace over the past 13 years. As to a separation policy, from August 1993 the respondent had been working on devising a severance package for its employees who had to be terminated for health reasons. A Mr Moren, who was the principal adviser, Human Resources Projects of the respondent until 30 June 1995, agreed that the aim of such a package is to cover the transition from the respondent's employment to other employment, a bridging amount to take an employee through a period of retraining for other employment. Such a package was desirable for a larger employer to have in place, as part of a modern industrial approach. It was a way of dealing with occupationally driven health issues. No such package had been offered to anyone in the position of the applicant prior to the latter's termination. A Mr Phillips is the respondent's specialist employee relations adviser. He has worked on developing for the respondent a severance package of the type referred to by Mr Moren. His evidence was that the respondent first offered the package in about October 1994. The package is not regarded by the respondent as an entitlement. Whether it is offered or not rests with the particular worker's manager. Approval to offer it is needed from the general manager. The policy is still developing. The components of the package are tailored to the individual case. If the respondent has medical evidence against there being a link between the worker's health condition and his work with the respondent, the package is confined to relocation and retraining expenses, there not being any additional financial component to it. In this regard, the medical data available to the respondent is most important. Mr Phillips also swore that it was necessary for the respondent to involve the Workers' Compensation Board in discussions about the development of the package, to ensure no overlapping with benefits provided by the Board or some compromise of its position in Queensland as the common law liability insurer. To his knowledge there is presently no similar severance package being offered by any employer in Queensland. Mr Phillips agreed that missing from the applicant's severance package was an offer of money to tide the applicant over until after he had undergone vocational assessment. Dr Mitchell's opinion was that while the applicant had asthma, it had been initiated by a viral respiratory infection and was perpetuated by occasional exposure to pot emissions. In these proceedings, this opinion was not challenged. On behalf of the respondent it was submitted that the applicant's case was not directed to the termination which occurred, but something subsequent to it, namely, the respondent's failure to provide the applicant with a severance package. There being no contest that it had a valid reason within the meaning of subsection 170DE(1) of the Act for the applicant's termination, the onus was on the applicant to prove the reason was not valid - para 170EDA(1)(b). The applicant was paid the compensation instead of notice required by section 170DB, in view of the period of his continuous service with the respondent. On his behalf it was submitted that the specified period of notice is a minimum only, and that in these particular circumstances compliance with the statutory minimum is insufficient. Three weeks notice, it is said, does not put this worker in a position to gain alternative employment. An indicator of reasonable notice is the time it took for the vocational assessment to be performed. The applicant pointed to the Termination Change and Redundancy Cases, (1984) 8 IR 34 and (1984) 9 IR 115, arguing by analogy that a technology driven redundancy should not yield a result different from a technology driven termination, in respect of what should constitute reasonable notice. Despite the ingenious arguments of the applicant's counsel, I am not satisfied the applicant has proved that his termination was in breach of subsection 170DE(2). I hold that the applicant's termination was not harsh, unjust or unreasonable in consequence of the respondent's failure to pay him a severance package of the sort advanced on his behalf. I am influenced in this by the following: The applicant was not treated by his employer any differently from other employees similarly terminated. He was paid in full his statutory entitlements, and additional benefits (the latter without any award or other lawful requirements so to do.) His employer was only then developing a severance package more generous than what the applicant received, and apparently unique in Queensland. The unchallenged expert medical opinion of the cause of the applicant's condition. EXTENSION OF TIME I will not say much about this aspect, having found against the applicant in any event. The applicant had written notice of termination of employment on 5 May 1994. His application was not filed until 1 December 1994. I am satisfied that he was ignorant of the rights made available to him under the Act, to challenge a termination of employment based on medical grounds. Once he learnt of his rights, he was not dilatory. Bearing in mind the approach of Wilcox J (as he then was) in the Hunter Valley case (1984) 3 FCR 344, and the later discussion of the principles there referred to by Keely J in Transport Workers Union of Australia v National Dairies Limited (No. 2) (1994) 57 IR 186, I am prepared to extend the time for the making of the application to 1 December 1994, the actual date of filing. ORDERS The orders I make are: (1) The time for the making of the application be extended to 1 December 1994. (2) The application be dismissed. I certify that this and the preceding FIVE (5) pages are a true copy of my Reasons for Judgment. Judicial Registrar: Date: 24 August 1995 Counsel for the Applicant: Mr Logan Solicitor for the Applicant: C.A. Sciacca & Associates Counsel for the Respondent: Mr Giudice Solicitor for the Respondent: Freehill Hollingdale & Page Date of hearing: 24 & 25 July 1995 Date of judgment: 24 August 1995