Thompson v Sons of Gwalia Ltd [1996] IRCA 487

DECISION NO: 487/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - preliminary issue - whether employee on PROBATION pursuant to Reg 30B - meaning of "determined in advance". Industrial Relations Act 1988 (Cth) Ss 170CA, 170CC, 170EA. Industrial Relations Regulations Reg 30B. Acts Interpretation Act 1901 (Cth) S 15AA. Mobbs v Portseal Pty Ltd IRCA No. 349 of 1996, Patch JR, 10 July 1996, unreported. Mohazab v Dick Smith Electronics (No. 2) (1995) 62 IR 200. Ryan v Furney Stockfeeds Limited IRCA No. 112 of 1996, Beazley J, 28 March 1996, unreported. Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. Carl THOMPSON -v- SONS OF GWALIA LTD WI 1328 of 1996 BEFORE: R. D. FARRELL JR PLACE: PERTH DATE: 8 October 1996

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 1328 of 1996 BETWEEN: Carl THOMPSON Applicant AND: SONS OF GWALIA LTD Respondent MINUTE OF ORDERS BEFORE: R. D. FARRELL JR PLACE: PERTH DATE: 8 October 1996 THE COURT DECLARES THAT: 1. The applicant was not on probation within the terms of the Regulation 30B of the Industrial Relations Regulations, and the unlawful termination provisions of the Act therefore apply. 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 WESTERN AUSTRALIA DISTRICT REGISTRY WI 1328 of 1996 BETWEEN: Carl THOMPSON Applicant AND: SONS OF GWALIA LTD Respondent REASONS FOR DECISION 8 October 1996 R. D. FARRELL JR 1. This is an application under Section 170EA of the Industrial Relations Act 1988 for reinstatement or, in the alternative, compensation arising from the alleged unlawful termination of the employment of the applicant, Mr Carl Thompson ("Mr Thompson"), by the respondent, Sons of Gwalia Ltd ("the Company"). 2. The application was initiated on 24 June 1996, and was referred to the Court by the Australian Industrial Relations Commission on 8 August 1996. After further mediation, the Respondent applied for the matter to be set down for hearing of a preliminary issue. The Respondent was successful, and the Court ordered that the matter be set down for hearing of the preliminary issue of whether the applicant was on probation within the terms of the Regulation 30B of the Industrial Relations Regulations. 3. At the hearing, the parties argued the preliminary matter on the basis of a set of facts which had been agreed for the purposes of that argument; the parties reserved the right to dispute certain of those facts if the application proceeds to a full hearing on the merits. 4. I will now recount those agreed facts, to the extent that they are relevant, and including some facts which were added, by agreement, in the course of the hearing. Agreed Facts 5. The Company is engaged in the mining industry and runs the Copperhead Gold Mine at Bullfinch ("the Mine"). Mr Thompson was a university student. 6. In about March 1996, the Company placed an advertisement at the Geology Departments of Curtin University and the University of Western Australia for a position at the Mine ("the position"), in the following terms: "Position Student Geologist/Pit Technician (Approx 1 Yr Position) Copperhead Gold Mine (Burmine) Bullfinch, via Southern Cross, WA (4 Hrs E of Perth) Suit 2nd or 3rd Yr Student wanting to defer for a year Hours are long - 12 day fortnight, 10.5 hrs/day Work is demanding Money is good, Approx $40,000/annum Learn aspects of pit geology/grade control/surveying Mature, enthusiastic, dedicated, hard worker required (Must have "A" Class licence) Enquiries in first instance to: Jim Whitelock, Senior Geologist (Phone Number provided)" 7. Mr Whitelock is and was the Senior Geologist at the Mine, whose duties included the hiring of subordinate staff. He had hired many such staff before his dealings with Mr Thompson. 8. Mr Thompson telephoned Mr Whitelock in March 1996 about the position. Mr Whitelock asked Mr Thompson to travel to the Mine for an interview later in March. Bullfinch, where the Mine is located, is about 400 kilometres east of Perth, near Southern Cross. Mr Thompson travelled to the Mine, and was interviewed by Mr Whitelock for employment in the position. 9. Following the interview, Mr Whitelock told Mr Thompson "You have the job subject to you satisfactorily completing the pre-employment medical". 10. In late March or early April 1996, Mr Whitelock telephoned Mr Thompson and said "We have received your medical report. When can you start work?" Mr Whitelock arranged with the applicant for the applicant to begin work on Monday, 15 April 1996. 11. Mr Thompson deferred his studies at University. 12. On Friday 12 April, 1996, Mr Thompson telephoned Mr Whitelock and said "I am coming up to Bullfinch on Sunday 14 April. Where do I go?" Mr Whitelock told Mr Thompson he was booked into the Bullfinch Hotel, and should telephone Mr Whitelock at home when he arrived. 13. When Mr Thompson arrived and telephoned Mr Whitelock, Mr Whitelock instructed him to report for work at 6.30am the next morning at the office where he had been interviewed and that there would be an induction and there would be paperwork and safety regulations for him to read when he arrived. 14. Mr Whitelock's duties included conducting inductions for new staff. He had conducted many such inductions before his dealings with Mr Thompson. A document entitled "Induction Procedure" sets out a checklist of various tasks to be completed at an induction. One of the tasks listed is to "Read and Sign Conditions of Contract". 15. Mr Thompson reported for work at about 6.30am the next morning, and was the only person present. He filled out the forms he was able to, but not those requiring a witness signature, including the "Conditions of Contract" forms. 16. Mr Whitelock arrived at about 7.30 am, and asked Mr Thompson to go to the "safety hut" to view videos, while he attended to some other matters. 17. When Mr Thompson returned from viewing videos, Mr Whitelock was going through the paperwork. He asked Mr Thompson "Do you understand the Conditions of Contract?" to which the Mr Thompson answered "Yes". Mr Whitelock asked if Mr Thompson had any questions, to which Mr Thompson replied that he did not. 18. Mr Thompson then signed the "Conditions of Contract" documents, with Mr Whitelock signing and dating them as a witness. 19. The "Conditions of Contract" documents were comprised of six pages, and list many obligations and entitlements relating to the employment. They included the following clause: "Probation Period Employment will be initially for a period of eight (8) weeks. If at the end of that period conduct and ability is considered adequate, permanent employment will be offered." 20. The induction was completed by about 9.00am that day. Mr Thompson worked for the rest of the day at the Mine until 4.30 pm. He was paid for the time taken to carry out his induction. Summary of Factual Background 21. In summary, for the purposes of this preliminary matter, I have proceeded on the basis that Mr Thompson was advised by the Company of many of the proposed terms of employment, including but not limited to the rate of pay, the hours, the fact that there was shift work, and the requirement that he have an "A class" driving licence through the advertisement, the telephone conversations with Mr Whitelock and the initial interview with Mr Whitelock. 22. By the conclusion of the telephone conversation between Mr Whitelock and Mr Thompson in late March or early April, in the course of which it was agreed that Mr Thompson would start work on 15 April 1996, a binding agreement was entered into. At that time Mr Thompson knew nothing of any probationary period. 23. Mr Thompson accepts that he learnt of the probationary period when reading the Conditions of Contract after 6.30 am on 15 April 1996 during the induction process. He accepts that in signing documents he was agreeing to a probationary period applying to his employment. He concedes that even if he had known about the probationary period from the beginning of his dealings with Mr Whitelock, he would still have accepted the employment. The Issue 24. The regulations may exclude specified employees from the operation of specified provisions of Part VIA Division 3 - Termination of Employment of the Act: s 170CC. 25. Regulation 30B of the Industrial Relations Regulations (Cth) excludes from the operation of the Unlawful Termination provisions of the Act an employee serving a period of probation, if the duration of the period: "(i) is determined in advance; and (ii) is reasonable, having regard to the nature and the circumstances of the employment." 26. The parties were in agreement that the duration of the period of probation was reasonable, so I am not required to consider that question. The only issue before me was whether the period of probation was determined "in advance". 27. As the respondent points out, the regulation does not state precisely or at all what it is that the period of probation has to be determined in advance of. Authority 28. No judicial authority has come to my attention which deals with this question. 29. In Mobbs v Portseal Pty Ltd (unreported, IRCA, Patch JR, 10 July 1996, No. 349 of 1996), the applicant was given and signed a contractual document at least a half an hour after he started work. The document prescribed a period of probation, which had not been raised before that point. The Judicial Registrar in that case expressed the view in his ex tempore decision that the period of probation had not been determined in advance and that the unlawful termination provisions were therefore not excluded by Section 170CC. He went on to find that the termination of the applicant's employment was unlawful. 30. The respondent contends that the Judicial Registrar's finding was obiter, which I do not accept, and that it is in any event not binding upon me, which is correct. I note that the respondent in Mobbs v Portseal Pty Ltd was not legally represented and that the Judicial Registrar does not address the issue at any length. On the facts of that case his conclusion no doubt seemed obvious. 31. The respondent in this case submits that Mobbs v Portseal Pty Ltd is distinguishable because in that case work, as distinct from induction, had already commenced. The respondent also submits that the decision in Mobbs v Portseal Pty Ltd is wrong and against the principle of the legislation, which the respondent says is to enable the employer to assess whether an employee is suitable for the position, and/or to enable employees to know with some certainty for how long they will be on probation. The Purpose or Object of Regulation 30B 32. Section 15AA of the Acts Interpretation Act 1901 (Cth), which applies to any regulation as if it were an Act, reinforces the common law principle that a construction of a regulation that would promote the purpose or object underlying the Act (and, in this case, the regulation), whether or not the purpose or object is stated, should be preferred to a construction which does not promote that purpose. 33. The object of Part VIA Division 3 of the Act is chiefly to give effect to the Termination of Employment Convention and Recommendation: s 170CA. 34. The terms of Regulation 30B are in fact drawn from Article 2 of the Convention and clause 2 (2) of the Recommendation, neither of which indicate what it is that the period of probation has to be determined in advance of. 35. As I understand it, the respondent submits that the purpose of the regulation is to enable the employer a reasonable opportunity to "assess an employee's overall suitability for the position" (Ryan v Furneys Stockfeeds Limited, unreported, IRCA, Beazley J, 28 March 1996, No. 112 of 1996 at page 7) before the obligations of the Act apply to the employer. I accept that any proper construction of the regulation must allow this opportunity to the employer. 36. The respondent also concedes that a principle of the regulation is to enable employees to know with some certainty for how long they will be on probation. 37. However, the regulation requires not merely that the period of probation be "determined", but that it be determined "in advance". The employee must not merely know with some certainty for how long they will be on probation, they must know it "in advance". 38. The general provision for exclusion from the unlawful termination provisions of employees who are serving a period of probation is to the benefit of employers. The limitations on that general provision, requiring that the period of probation be reasonable and be determined in advance, are to the benefit of employees. 39. The benefit to the employee of requiring that the employee be provided with such knowledge must be that it enables the employee to make decisions concerning his or her employment on an informed basis. The point at which such knowledge is most useful is the point at which the employee is considering whether or not to accept the employment. Having accepted the employment, it will often be the case that an employee acts to their detriment by, for example, resigning their existing job or, as in this case, by deferring their studies. It is therefore often difficult for an employee to resist where an employer introduces the concept of a probationary period at a later time. By then the knowledge as to the duration of their period of employment is of little use to the employee. I note that Mr Thompson says he would not have acted any differently. The regulation must however be consistently applied in all cases. I must therefore, in considering the proper construction, have regard to all likely factual situations, rather than restrict myself to the facts of this particular case. 40. I am of the view, therefore, that the purpose of the regulation is to enable the employer a reasonable opportunity to assess whether an employee is suitable for the position before the employer is subject to the obligations imposed by the Act, and to enable the employee to know how long their period of probation will be (during which they are denied the protection afforded by the Act) in advance of their acceptance of the employment. "In Advance" of the Employee's Commencement of Duties? 41. The respondent submits that the regulation can only be sensibly read as requiring that the period of probation be determined in advance of the employee's commencement of duties. 42. This was so, it was submitted, because the purpose of the regulation is to enable the employer a reasonable opportunity to assess an employee's overall suitability for the position, and because that assessment cannot be made until the employee has commenced his or her duties. The assessment cannot, for example, be made during an induction, because the attributes required to be assessed are not used or displayed by the employee. 43. Certainly, I can conceive of no construction of the regulation which would require the period of probation to be determined later than the commencement by the employee of his or her duties. However, the construction proposed by the respondent does not promote the other part of the purpose of the regulation, which I have found to be to enable the employee to know how long their period of probation will be in advance of their acceptance of the employment. 44. Knowledge of the existence and duration of a probation period will often be of relatively little use to an employee by the time he or she is about to commence their duties because they are already committed, certainly in a practical sense and probably in a legal sense, to taking the job. 45. Accordingly, I do not accept this construction of Regulation 30B. "In Advance" of the Commencement of Paid Employment? 46. The respondent considered the proposition that the regulation might be construed as requiring that the period of probation be determined in advance of the employee's commencement of employment. I understood the respondent to mean the employee's commencement of "paid employment" (which would have commenced from the beginning of the induction in this case) rather than the employee's commencement of duties. 47. The respondent disputed this construction, but submitted that, if it were to be adopted, then the Regulation must, like the Act's substantive provisions, be read and "applied in a practical, commonsense way to ensure that the employer and employee are treated fairly": Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 per Northrop J at 373. 48. Any finding of failure on the part of the respondent to comply with the regulation on this construction would, the respondent submitted, be merely technical. The intention of the legislation, it submits, would be met by treating the word "contemporaneous" as, in all but the most formalistic sense, equating to "in advance". 49. I agree with the respondent that it makes no sense to fix upon the commencement of paid employment as the point in advance of which the period of probation must be determined. The reason it does not make sense, however, is again because such a construction does not promote that part of the purpose of the regulation which is to enable the employee to know how long their period of probation will be in advance of their acceptance of the employment. Again, an employee will often already be committed to taking the job by the point at which they commence paid employment. "In Advance" of the Commencement of the Employment Contract? 50. Alternatively, the respondent submits that the regulation should be construed as requiring that the period of probation be determined in advance of the commencement of the employment pursuant to a contract of employment. 51. In applying such a construction to the facts of this case, the respondent accepts that a contract of employment was entered into during the telephone conversation between Mr Whitelock and Mr Thompson in late March or early April, in the course of which it was agreed that Mr Thompson would start work on 15 April 1996. Alternatively, there was an agreement to enter into a contract in the future. 52. Even assuming the former proposition were true, the respondent submits that, when Mr Thompson signed the "Conditions of Employment" document on 15 April 1996, a new contract of employment was entered into, rather than a mere variation of the earlier contract. The earlier contract was therefore discharged by novation. The new contract is not expressed to apply retrospectively. 53. The respondent cited many cases dealing with contract law in support of it's submissions as to the effect of Mr Thompson signing the written "Conditions of Contract". The applicant sought to argue that the original oral contract was merely varied, but I accept that it was replaced by the new written contract. 54. Thus, the respondent submits, the period of probation was determined in advance of the contract of employment under which the applicant was working at the time his employment was terminated. 55. With regard to whether Mr Thompson was able to know how long his period of probation was in advance of his acceptance of the employment, the respondent points out that Mr Thompson had the option of relying on his oral contract of employment, and refusing to accept the written conditions. Mr Thompson would then have been working under the terms of the earlier contract, and the respondent concedes for the purpose of this submission that regulation 30B would then have applied. Instead, he chose to enter into a new contract. The respondent submits that the Court must give effect to the applicant's actions in without demur executing the written contract during his induction. The Court cannot, it says, simply ignore the fact of the applicant's entering willingly and freely into the written contract and then deny it or its terms any validity or meaning. 56. For the reasons explained more fully below, I do not accept this construction, which in my view places undue emphasis on the complexities of contractual analysis which I am confident would be rarely within the grasp of the contracting parties. 57. The respondent's construction also attaches arbitrary consequences to the application of contractual doctrines which were developed for other purposes. The doctrines governing novation of contract were developed in order to determine the extent of the contractual rights and obligations applying to the parties in particular situations. We are concerned here with statutory rights, rather than contractual rights. 58. It is not in dispute between the parties that, as a matter of contract, there was a probation period applying to the employment. To that extent, effect is given to Mr Thompson's actions in executing the written contract and its terms are given validity and meaning. It does not follow that the regulation applies to exclude the parties from the unlawful termination provisions. 59. The fact that the new contract includes a probation clause may well be a matter which the court would take into account in considering all the circumstances when applying the unlawful termination provisions, but it does not necessarily deny the Court jurisdiction. "In Advance" of the Commencement of the Employment Relationship? 60. The unlawful termination provisions are concerned with termination of employment. It is now clear that the expression "termination of employment" comprehends the termination of the employment relationship: Mohazab v Dick Smith Electronics (No 2) (1995) 62 IR 200. 61. I find that the purpose of the regulation is best promoted by a construction that requires that the period of probation be determined in advance of the commencement of the employment relationship. 62. This will usually be the point at which an employee first accepts the employer's offer of employment. Such a construction will therefore enable the employee to know how long their period of probation will be in advance of their acceptance of the employment. 63. This construction also still gives the employer a reasonable opportunity to assess whether an employee is suitable for the position before the employer is subject to the obligations imposed by the Act. 64. The respondent sought to illustrate that this construction might restrict the employer's opportunity to assess whether an employee was suitable for a position, by citing the example of an employee who was originally employed to do a relatively unskilled job who then applies for a skilled job with the same employer. Were the employer to be given the skilled job, there would probably be a new contract of employment, but the employment relationship would continue. There would therefore, the respondent submitted, be no capacity for the employer to assess whether that employee was suitable for the skilled position. 65. The respondent did not accept that such an employee should, if they proved unsuitable for the skilled position, be entitled to return to their former unskilled position. I would have thought that it would be desirable that it be made very clear to an employee in such a situation that they were surrendering any job security they had in applying for the skilled position. A requirement that they resign from their old position before accepting the new position might serve to reinforce in their mind the risk that they were assuming. If an employee resigned in those circumstances, then it may be held that the employment relationship was brought to an end. 66. In any event, with reference to Justice Northrop's injunction that the legislation be read and "applied in a practical, commonsense way to ensure that the employer and employee are treated fairly", the other constructions of the regulation, which I have considered above, would not treat the employee fairly. Those constructions would offer no protection to those employees who have acted to their detriment, having accepted new employment without properly knowing the extent of their job security in that new employment. 67. A construction that requires that the period of probation be determined in advance of the commencement of the employment relationship causes little if any unfairness to an employer. All that is required is that the duration of the period of probation is settled with the employee before the job is offered. It would be most unusual if other terms which are generally accepted as important, such as rates of pay and hours of work, were not discussed prior to this point. The effect of the regulation is to require that probation periods, which affect the employee's job security, are treated by employers as equally important. 68. If the respondent is right in the illustration that I discussed earlier, then an employer may in limited circumstances suffer the prejudice of having to keep open an existing employee's old job, where that employee's suitability for a new position with different or additional skills is being assessed. Such an outcome may be appropriate in any event. Conclusion 69. I find that, properly construed, Regulation 30B requires that the period of probation be determined in advance of the commencement of the employment relationship. 70. The employment relationship in this case commenced during the telephone conversation between Mr Whitelock and Mr Thompson in late March or early April, in the course of which it was agreed that Mr Thompson would start work on 15 April 1996. The period of probation was not determined until 15 April 1996. The applicant was therefore not on probation within the terms of the Regulation 30B of the Industrial Relations Regulations, and the unlawful termination provisions of the Act therefore apply.