CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and HORNETT v BORG MANUFACTURING PTY LTD [1997] IRCA 14

DECISION NO:14/97 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - whether probationary employee - whether period of probationary employment determined in advance - whether contract of employment governed by enterprise flexibility agreement made after employment commenced - power of Australian Industrial Relations Commission to determine commencing date of period of operation of agreement. Workplace Relations Act 1996 Workplace Relations Regulations Reg 30B "determined in advance" Reed v Blue Line Cruises (unreported, Industrial Relations Court of Australia, Moore J, 26 November 1996) Federated Engine-Driver's and Firemen's Association of Australasia v Adelaide Chemical and Fertilizer Company Ltd (1920) 28 CLR 1 R v Foster: Ex parte Crown Crystal Glass Pty Ltd (1945) 70 CLR 405 No. NI 1573R of 1996 CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION and RICHARD HORNETT v BORG MANUFACTURING PTY LTD MOORE J SYDNEY 6 FEBRUARY 1997

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1573R of 1996 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Applicant AND: RICHARD HORNETT Second Applicant AND: BORG MANUFACTURING PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 6 February 1997 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The order of the Judicial Registrar of 19 September 1996 dismissing the application under s 170EA is set aside. 2. The application under s 170EA is remitted to a Judicial Registrar for hearing and determination. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1573R of 1996 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Applicant AND: RICHARD HORNETT Second Applicant AND: BORG MANUFACTURING PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 6 February 1997 REASONS FOR JUDGMENT On 29 April 1994, an application was lodged under section 170EA of what is now entitled the Workplace Relations Act 1996 ("the Act") by the Construction, Forestry, Mining and Energy Union ("the Union"). The application related to the termination of the employment of Mr Richard Hornett with Borg Manufacturing Pty Ltd ("Borg") on 27 April 1996. After the matter had initially been dealt with by the Australian Industrial Relations Commission ("the Commission") the application came before this Court. The Judicial Registrar determined as a preliminary issue that Mr Hornett had been serving a period of probation at the time of the termination. Thus the relevant provisions of Division 3 of Part VIA upon which Mr Hornett sought to rely did not apply to his employment by operation of reg 30B of what are now the Workplace Relations Regulations ("the regulations"). The Judicial Registrar dismissed the application under s 170EA. An application was then made under s 377 of the Act for a Judge to review the Judicial Registrar's decision. The evidence before the Judicial Registrar was constituted by several documents and oral evidence of Mr Hornett. Many of the relevant facts are not contentious though there was an issue about Mr Hornett's understanding of a document that he signed concerning his employment. I will discuss that in more detail shortly. Mr Hornett applied for employment with Borg on Friday 8 March 1996. He did so having been told by his wife that work may be available there. On that day he went to Borg's factory and filled in an application form. He was contacted later that day and asked to attend on Saturday 9 March 1996 for an interview. Mr Hornett said in evidence that the interview, conducted by Mr Borg, commenced at approximately 11.00 am and lasted for 45 minutes. He said at no time during the interview was he requested to sign any documents, nor was there any mention of any employment being for a probationary period. He was offered employment which would commence at 6.00 am on Monday 11 March 1996. Mr Hornett denied, in cross-examination, that he was told at the interview that he would be employed for a three month period as a probationary employee. On Monday 11 March 1996, Mr Hornett commenced working at Borg's factory. Mr Hornett's evidence was that at 6.00 am he was taken to a press and introduced to the press team leader. The press was used to manufacture kitchen doors and the team leader showed Mr Hornett how to use the equipment. This period of instruction lasted approximately 10 to 15 minutes. I infer from the evidence of Mr Hornett that, after the initial training, he then worked on the machine. At some stage during the Monday Mr Hornett was taken into a staff room and asked to sign various documents. He described them as "tax declarations, superannuation, just general details, just the general banking details of me pay going into the bank". He was also given a form called a staff induction form which, according to his evidence, he simply took, filled in the date and his name at the top and gave back to the pay master, Mr Burns, who had given it to him. That form was also signed by him but his evidence was that it was signed several days later. It was signed in circumstances where, according to his evidence, he was approached on the factory floor by the quality control manager who asked him to sign it. He then received no explanation of the document and simply signed it using the press table as a base. Mr Hornett denied having received a copy of an enterprise agreement which is referred to in the form. The circumstances in which the form was signed are of some significance having regard to its contents. At the head of the document are spaces for filling out the date and the name of the employee. Mr Hornett accepted that he filled these details out on Monday 11 March 1996. The remainder of the document is in four sections. Three of them take essentially the same form. They are sections dealing, first, with personnel matters, second, with matters concerning the finance/pay officer and, third, with matters concerning the quality manager. Each of these sections contains matters that the relevant manager must address and provision is made for the managers to sign the section confirming, I assume, that the matters have been addressed. The section dealing with the matters concerning the finance/pay officer is, in fact, signed by the pay officer, Mr Burns. The form is completed in a way that signifies that, amongst other things, the new employee has been provided with a copy of the enterprise agreement. The last section of the document reads, in its typed form: "I,________________, hereby acknowledge that I have received the documents above and I have been briefed by the appropriate persons. I understand that I am on six months probation and my performance will be reviewed monthly. _____________________ Employee's signature" In the completed form in evidence, the typed words "six months" have been crossed through and a handwritten "3" has been inserted in lieu. The space provided for the employee's signature did not contain a signature though Mr Hornett's signature appears in the earlier space where it was intended the name of the employee would be printed or written. The reference to the enterprise agreement was to the Borg's Manufacturing Enterprise Flexibility Agreement 1995 ("the 1995 EFA"). That document assumes some significance as it provides that the employment of all full time and part time employees during their first three months of employment will be as probationary employees. The 1995 EFA was approved by a member of the Commission on 27 March 1996. In giving his decision to approve the implementation of the agreement, the Commissioner said "pursuant to section 170NJ, the agreement will come into force from the first pay period on or after 7 March 1996 and shall remain in force until 6 March 1997". I will discuss the legal significance of this decision shortly. Prior to the 1995 EFA taking effect, the employment of Borg's employees was regulated by the Timber Industry Award 1990 ("the 1990 Award"). Mr Hornett's employment was terminated on 26 April 1996. The review proceeded on the basis that no fresh evidence was to be called and I could pay regard to the evidence before the Judicial Registrar. The Judicial Registrar plainly had reservations about the credibility of Mr Hornett. Mr Hornett had said that he had not read the staff induction form. The Judicial Registrar concluded that it was unlikely that the applicant was unaware of the nature of the clause he was signing. That is, he was not unaware that the clause involved an acknowledgment that he had received certain documents and referred to the employment as probationary employment. The Judicial Registrar does not, however, make an affirmative finding that Mr Hornett received a copy of the 1995 EFA either on Monday 11 March 1996 or a few days later when he appears to have signed the form rather than filled in his name and the date. The Judicial Registrar also concluded that the alteration of the probationary period from the typed version of six months to the handwritten version of three months was made by Mr Hornett. The Judicial Registrar had the benefit of the original staff induction form which enabled an analysis to be made of the type of pen used to both sign the form and make the alteration. The original staff induction form does not form part of the bundle of exhibits in the Court file, cannot be located elsewhere in the file and, as far as I am aware, is not retained by either party. As will become apparent shortly, the rejection by the Judicial Registrar of the evidence of the applicant that he had not read at least the final paragraph of the staff induction form is not material having regard to the fact that the form was not shown to the applicant till after he commenced his duties and was signed several days later. The issues raised in this review concerned the operation of reg 30B. That regulation relevantly provides: "Subject to subregulation (2), for the purposes of section 170CC of the Act, the following employees are excluded from the operation of Subdivisions B, C, D and E of Division 3 of Part VIA of the Act: (a) ... (aa) ... (b) ... (c) an employee serving a period of probation or a qualifying period of employment, if the duration of the period or the maximum duration of the period, as the case requires: (i) is determined in advance; and (ii) is reasonable, having regard to the nature and circumstances of the employment; (d) ..." Two issues arise concerning the application of reg 30B. The first is whether there was, apart from the effect of the 1995 EFA, the determination of a period of probation in advance having regard to what was said and done in relation to the engagement of Mr Hornett. The second is whether the determination by the Commissioner that the 1995 EFA would operate on and from 6 March 1996, and thus seemingly commence to operate prior to the time Mr Hornett was engaged, resulted in the determination in advance of the duration of a period of probation. I recently discussed what I understand to be the purpose of reg 30B in Reed v Blue Line Cruises (unreported, Industrial Relations Court of Australia, 26 November 1996) I said: "[R]egulation 30B ... reflects employment described in Article 2(2) of the Convention. Article 2(2) of the Convention identifies three classes of employment which the drafters of the Convention thought might reasonably be excluded from its operations. The first two, in paragraphs (a) and (b), are employees on contracts for a specified duration or task and probationary employees. They have a common characteristic. They concern employment where, at the point of engagement, the employee would know that the employment would or might come to an end at a specified time or event. Thus there is no apparent justification for imposing on an employer of such employees a regime regulating and limiting the employer's capacity to terminate the employment." There are now several decisions of Judicial Registrars of this Court which consider what is meant by the expression "determined in advance": see Mobbs v Portseal Pty Ltd (unreported, Patch JR, IRCA decision no 96/0349), Bjelica v Mainline Security Pty Ltd (unreported, Murphy JR, IRCA decision no. 96/0219), Potter v Pilot Freight Pty Ltd (unreported, Ryan JR, IRCA decision no 96/0222) Thompson v Sons of Gwalia (unreported, Farrell JR, IRCA decision no. 96/0487). It was also considered more generally by Beazley J in Ryan v Furneys Stockfeeds Ltd (1996) 66 IR 298. I agree generally with the approach adopted in these decisions. Consistent with the remarks I earlier quoted from my judgment in Reed (supra) the purpose of reg 30B is to relieve employers from the obligations imposed by Division 3 of Part VIA in certain circumstances. However the legislation is beneficial legislation and the exclusionary provisions of reg 30B should, in my opinion, not be liberally construed. It is unlikely that it was intended by reg 30B that an employee could commence employment to which the protective provisions of Division 3 of Part VIA would apply but, by virtue of an express or implied agreement reached after the employment had actually commenced, those protective provisions would no longer apply to the employment because there was then agreement, express or implied, that the employment was probationary employment. In my opinion, the regulation is intended to operate on probationary employment that is probationary employment at the outset. In the absence of an industrial instrument or legislation deeming employment to be probationary, its character as probationary employment must result from the contractual arrangements between the employer and the employee. That requires that there be agreement, express or implied, that the employment is to be probationary employment. I consider first the circumstances of the engagement of Mr Hornett. The evidence does not justify a finding that Mr Hornett was told on Saturday 9 March 1996 that his employment was to be probationary employment. Mr Hornett denied he was told such a thing. No evidence was called on behalf of Borg to establish that such a statement had been made, though it was put to Mr Hornett in cross examination that it had. In particular, Mr Borg was not called. It is likely that Mr Borg who conducted the interview on the Saturday, and took him to meet the team leader on the Monday morning, was conscious of the terms of the 1995 EFA, which had been executed but not yet approved, concerning probationary employment when he interviewed him. However that is too slight an evidentiary foundation, in my opinion, to infer that Mr Hornett was told on Saturday 9 March 1996, or before he commenced work on Monday 11 March 1996, that his employment was probationary. The evidence before the Judicial Registrar and the view she took about what was said by Mr Hornett would suggest that he became aware of his employment was probationary in character several days after he commenced working. This arose as a result of his alteration of the typed "six months" in the staff induction form to three months. He may well have known, at the time, of the terms of the 1995 EFA which provided for three months probation. It does not appear to me that the Judicial Registrar formed the view that Mr Hornett was not to be believed when he said that on Monday 11 March 1996 he simply filled in the date and his name on the staff induction form. Even assuming that, at the time he filled in his name and the date on Monday 11 March 1996, he became aware of and agreed to the probationary character of his employment and its duration, reg 30B would not be enlivened as that occurred after he had commenced his employment. Accordingly, I am not satisfied that as a result of any agreement, express or implied, between Mr Hornett and his employer, his employment was probationary employment for a period determined in advance. It is necessary now to consider the operation of the 1995 EFA. Enterprise flexibility agreements are dealt with in Part VIB of Division 3 of the Act. Section 170NJ provides that an enterprise flexibility agreement comes into force when its implementation is approved: see s 170NJ(1). Other more general provisions in the Act deal with the commencement of awards. "Award" is defined in s 4 to include an enterprise flexibility agreement. Section 145 deals with the date of an award and in relation to an enterprise flexibility agreement, provides that the date of an award is the day when the implementation of the agreement was approved: see s 145(b). Section 146 then deals with when an award comes into force. That section provides: "(1) An award shall be expressed to come into force on a specified day. (2) Unless the Commission is satisfied that there are exceptional circumstances, the day specified in an award for the purposes of subsection (1) shall not be earlier than the date of the award." The effect of s 146 is to confer a power on the Commission to make an award having legal effect in relation to facts and circumstances occurring prior to the date upon which the award is made: see Federated Engine-Drivers' and Firemen's Association of Australasia v Adelaide Chemical and Fertilizer Company Ltd (1920) 28 CLR 1. However, in relation to enterprise flexibility agreements, the language of s 170NJ is unambiguous. An enterprise flexibility agreement comes into force when its implementation is approved. In my opinion, the express provisions of s 170NJ operate to the exclusion of s 146. That is, an enterprise flexibility agreement comes into force on the day it is approved, and it is not open to the Commission to specify some other day as being the day on which it comes into force in exercise of the power conferred by s 146(1). It is to be remembered that, when an enterprise flexibility agreement is in force, its terms prevail over the terms of an award: see s 170NL(1). It may be accepted that s 170NJ draws a distinction between the time at which an enterprise flexibility agreement comes into force and the period of the agreement. "Period of agreement" is defined in s 170NJ(5) as the period of operation of the agreement specified in the agreement. Indeed, one of the matters the Commission is obliged to be satisfied about before approving its implementation is that an agreement specifies its period of operation: see s 170NC(1)(j). In the present case, the copy of the 1995 EFA in evidence contains clause 4 which reads: "DATE OF OPERATION AND DURATION OF AGREEMENT (i) This Agreement shall take effect from the _________ day ________ of __________ 19___ and shall remain in force for a period of one year." The 1995 EFA does not, in my opinion, specify a period of operation as it does not specify the day upon which the period of one year is to commence. The expression "period of operation" is not simply the period for which the agreement will operate from and to an indeterminate point in time. Rather it is the period it will operate from by reference to a fixed time and thus conclude at a fixed time. So much is clear from the terms of s 170NK which provide for the extension of the period of operation and plainly operate in relation to an identifiable date on which the period of operation would otherwise conclude. For a consideration of a broadly analogous provision, see R v Foster: Ex parte Crown Crystal Glass Pty Ltd (1945) 70 CLR 405. The pronouncement by the Commissioner that the 1995 EFA was to operate from an earlier date had, in my opinion, no legal effect. It follows, in my opinion, that the case of Borg at its highest is that the 1995 EFA came into force on the day it was approved. Any legal obligations or rights it imposed or conferred on both the employer and the employees of Borg were legal obligations and rights arising on and effective from that date. It is unnecessary to consider whether, had the agreement itself specified the commencing day of it operation as 6 March 1996, which was the date determined by the Commissioner, it would have resulted in the determination in advance of a period of probation for the purposes of reg 30B. However, I doubt that it would because the determination of the probationary period would have resulted from the combined operation of the approval of the Commissioner and the making of the agreement including the identification of a date for its commencement. Without the approval by the Commissioner it had no effect, at least in circumstances where the 1990 Award regulated the employment of Borg employees. Until approval was given on 27 March 1996 there was no determination of a probationary period. The effective determination of a probationary period by operation of the 1995 EFA occurred after Mr Hornett commenced employment and it cannot, in my opinion, be said to be a determination in advance. In my opinion, regulation 30B had no application to Mr Hornett's employment. Accordingly, I propose to set aside the order of the Judicial Registrar dismissing the application and order that the application under s 170EA be remitted to a Judicial Registrar for hearing and determination. I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Alexandra George Dated: 29 January 1997 APPEARANCES Counsel for the Applicant: Mr S Galitsky Counsel for the Respondent: Mr P.J. Newall Date of Hearing: 13 December 1996 Date of Judgment: 6 February 1997