Arthur v Commonwealth of Australia [1997] IRCA 251

DECISION NO:251/97 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - ALLEGED UNLAWFUL TERMINATION - FIXED-TERM CONTRACT OF EMPLOYMENT - WHETHER POWER IN EMPLOYER TO TERMINATE PRIOR TO EXPIRY OF TERM - OPERATIONAL REQUIREMENTS - PROCEDURAL FAIRNESS - NOTICE - ASSOCIATED JURISDICTION WORKPLACE RELATIONS ACT 1996, s170EA, 170DE(1), 170DB Public Service Act 1922 ss82AE(1), 82AH(1) Tonkin v Human Rights & Equal Opportunity Commission No SI96/1094 Farrell JR 29 November 1996 unreported Westen v Union des Assurances de Paris No NI 95/2819 Madgwick J 17 December 1996 unreported MARGARET ANNE ARTHUR -v- COMMONWEALTH OF AUSTRALIA QI 96/1170 BEFORE: BOULTON JR PLACE: CAIRNS (HEARD IN BRISBANE) DATE: 16 JUNE 1997 IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. QI 96/1170 QUEENSLAND DISTRICT REGISTRY BETWEEN: MARGARET ANNE ARTHUR Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent BEFORE: BOULTON JR PLACE: CAIRNS (HEARD IN BRISBANE) DATE: 16 JUNE 1997 MINUTES OF ORDERS THE COURT ORDERS THAT: 1. 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 96/1170 QUEENSLAND DISTRICT REGISTRY BETWEEN: MARGARET ANNE ARTHUR Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent BEFORE: BOULTON JR PLACE: CAIRNS (HEARD IN BRISBANE) DATE: 16 JUNE 1997 REASONS FOR JUDGMENT BACKGROUND The applicant, now aged 35, is a solicitor of the Supreme Court of Queensland. She commenced employment with the Legal Aid Office (Qld) on a part-time basis in June 1989. In December 1990, she became a full-time employee with that office within its Family Law division. In September 1993, she went on six months unpaid maternity leave, returning in March 1994 on a part-time basis, 2˝ days per week. The Family Court of Australia advertised a position for a Deputy Registrar - Legal 2 in Brisbane in December 1994. The advertisement stated that a fixed-term employment contract would be offered to the successful applicant for a minimum period of 12 months. The applicant learnt that the vacancy had arisen as a result of two permanent officers, Susan Gardiner and Andrea Bowler, electing to work on a part-time basis three days per week. The applicant applied for the advertised position and was successful. She was granted leave by the Legal Aid Office, to enable her to take up the position in the Family Court, for a period of 12 months. The applicant commenced work in the Brisbane registry of the court on 6 March 1995 on a part-time (14 hours, 42 minutes or two days per week) fixed-term contract to expire on 29 March 1996. Her engagement mirrored that of Ms Bowler. In December 1995, Ms Bowler applied for an extension of her permanent part-time arrangements for a further 12 month period. In anticipation of this application being approved, the Senior Registrar of the Brisbane registry of the court suggested to the Registry Manager that the applicant be offered a further fixed-term contract. The extension sought by Ms Bowler was granted. On 8 February, 1996, the then Regional Manager Northern approved a request to extend the applicant's fixed-term contract. The applicant learnt by memo dated 22 March 1996 that her contract had been extended to 27 September 1997. By letter dated 29 March 1996, the Regional Manager Northern formally advised the applicant of the extension of her contract. A coalition government was elected at the Federal elections held on 2 March 1996. It soon emerged that the court was facing a significant funding cut in the next financial year. The new government's approach included requiring each portfolio minister to prepare a strategic plan to accommodate funding cuts which would incorporate, amongst other things, the strict control of the engagement of temporary employees and the termination of contracts, as appropriate in the particular circumstances of the agency. On 23 April 1996, the Chief Executive Officer of the court issued a memo to all staff indicating that the court's share of the government's proposed reduction in outlays had been refined to about $3.52 million. In May 1996, the court restructured its three regional offices into two, with the consequence that the former Regional Manager East of the court, Ms Klarkowski, became the new Regional Manager North. In that position, she was responsible for the management of all aspects of the work performed by the court staff in the region including the registry's financial performance against budget allocation. As a result of directives from the Chief Executive Officer to implement cost cutting measures, Ms Klarkowski reviewed the staffing budgets and levels of staffing in the northern region and concluded that in order to meet the court's targets, the number of Deputy Registrar positions in the Brisbane registry would have to be reduced by at least half a position. She decided that the termination of the applicant's position would cause the least disruption to the operation of the Brisbane registry. The applicant had gone on maternity leave on the expiration of the initial term of her contract. She was not due to return to work until 12 September 1996. Having made the decision to terminate the applicant's employment, Ms Klarkowski asked Senior Registrar Dittman of the Brisbane registry to call the applicant at home in July 1996 to give her as much warning as possible that, two weeks after her return to work, her contract would be terminated. Senior Registrar Dittman did this on 17 July 1996. Because of illness, the applicant did not in fact return to work until 19 September 1996. By letter dated 11 October 1996, Ms Klarkowski formally wrote to her terminating her employment with the court with effect from close of business, 25 October 1996. In consequence of the termination of her employment, the applicant has brought the present proceedings. ISSUES Termination of Fixed-Term Contract The respondent's position at trial was that the sole reason for the termination of the applicant's employment was the requirement that the court reduce the number of its staff, amongst other cost cutting measures, due to the funding cuts announced by the government in 1996. It claimed that no matters of conduct or capacity played a part in its decision to terminate the applicant's contract. It relied on operational requirements as providing it with a valid reason to terminate the applicant's employment within the meaning of subsection 170DE(1) of the Workplace Relations Act 1996. The principal submission advanced on behalf of the applicant was that the respondent had no power to terminate the applicant's fixed-term contract before the expiration of its term, on 27 September 1997. Alternatively, the argument ran that even if such a power existed, it did not exclude the applicant's common law rights to damages for breach of contract. The applicant argued further that in any event, the respondent had not proved a valid reason for the termination of her employment based on its operational requirements. It also argued that as a result of a failure to consult properly with the applicant, the decision-maker did not take into account relevant matters. This was said to infect the defensibility of the decision to terminate. As to the power to terminate the applicant's fixed-term contract before its expiry, the respondent points to provisions in the Public Service Act 1922 (the Act) upon which it relies. I turn now to these provisions. The relevant provisions are contained in Division 10 of the Act. Subsection 82(1) refers to a fixed-term employee as meaning a person employed under section 82AE. Subsection 82AE(1) provides: Subject to this section, the Secretary of a Department may, with the approval of the Board, engage persons as fixed-term employees in the Department. Subsection 82AH(1) provides: Subject to this section, the Secretary of a Department may, at any time, terminate the employment of an employee in the Department. I can find nothing in Division 10 nor in the terms of subsection 82AH(1) which causes me to put a construction on that subsection different from the construction it seems it plainly bears, namely that a Secretary may, at any time, terminate the employment of a fixed-term employee such as the applicant prior to the expiry of the term. By that, I do not mean to say that a Secretary, in so doing, is relieved from the obligation to justify such a decision and accord procedural fairness as understood in the industrial context. I reject the submission that the respondent was unable to terminate the applicant's fixed-term contract before the expiration of its term. There is no suggestion in this case that Ms Klarkowski was other than a duly authorised delegate capable of exercising the subsection 82AH(1) power. For completeness, I mention that no argument was addressed to me that the applicant was an employee who is an officer within the meaning of Division 8C of the Act. Subsection 82AH(3) specifies the grounds on which such an employee (one who is an officer within the meaning of Division 8C) shall be terminated, these grounds being limited generally to matters of capacity or conduct on the part of such employee. I note that the formal notification (the letter of 29 March 1996) the applicant received of the extension of her contract made reference to the fact that she was not covered by Division 8C of the Public Service Act. Counsel for the applicant referred me to a decision of Farrell JR in Tonkin v Human Rights & Equal Opportunity Commission No SI96/1094 29 November 1996, unreported. That concerned an employee said to have been engaged as a fixed-term employee pursuant to section 82AE of the Act. The Judicial Registrar took the view that in the absence of repudiation of the contract by the applicant, the contract was breached by the respondent's premature termination of it. She does not appear to have been referred to subsection 82AH(1). If this decision is authority for the proposition that the Act does not permit termination of a fixed-term contract before the expiry of its term, I decline to follow it. Operational Requirements It is now necessary to turn to the evidence said to prove that its operational requirements provided the respondent with a valid reason to terminate the applicant's employment. I accept the evidence of Ms Klarkowski in this regard. On the evidence before me, there is no basis for concluding that matters concerning the applicant's capacity or conduct played any part in Ms Klarkowski's decision. I accept that as at July 1996, the number of Deputy Registrars employed in the Brisbane registry of the court exceeded the nominal number allocated to that registry for the 1996-1997 financial year under the court's budget projections. This was in part due to the return to the registry of Ms Gardiner, to whom I earlier made reference, who had been acting as Director of Mediation in the chief executive office. As part of the process of determining the reduction in staff numbers in the Brisbane registry, Ms Klarkowski looked at what she termed the temporary Deputy Registrar positions. These were held by a Mr Green, who was full-time, a Ms Liddy, part-time, a Mr Tanzer, full-time and the applicant. A policy decision had been taken not to reduce mediation services offered by the court. Liddy and Tanzer worked in that area. That left Green and the applicant. Green's contract too was terminated. Some operational areas in the Brisbane registry were understaffed. These did not, however, require persons with legal qualifications. There was a prospect in July 1996 of transferring one Deputy Registrar position from the Brisbane registry to Lismore. Ms Klarkowski did not consider approaching the applicant to send her to Lismore. This was to be a full-time position. She knew of the applicant's family circumstances (a toddler and a baby) and the fact that the applicant's husband worked in Brisbane. On the applicant's behalf, it was submitted that she might have been considered for a new position of Deputy Registrar Co-ordinator. In late September 1996, the Principal Registrar had written that Brisbane was to be the first registry to pilot the proposal. I understood this submission to be that the applicant's employment ought not to have been terminated at a time when there was some uncertainty as to future staffing requirements. It was also put on the applicant's behalf that Ms Klarkowski gave no consideration to terminating any probationary employees. She distinguished their position from that of the applicant by pointing out that probationers can, in the ordinary course, expect to have their employment confirmed. They are different from fixed-term employees who do not go through a probationary period. She also pointed to the fact that the shedding of probationers was not noted as a specific part of the strategic plan. It was not contended on the applicant's behalf that the respondent was not faced with a genuine need to reduce its employee numbers. The need to reduce staff numbers had been apparent since soon after the March 1996 Federal election. Ms Klarkowski had probably decided about June 1996 on the applicant as the employee to be terminated. That decision may well have been implemented sooner except for the fact that the applicant was then on maternity leave. I am unconvinced that Ms Klarkowski ought to have waited to make her decision until the applicant returned from maternity leave. I can find nothing capricious or indefensible in Ms Klarkowski's selection of the applicant as one of the employees whose contract was to be terminated. Given the exigencies she faced, I do not consider that her decision, when made, was premature. Further, I do not consider that her decision was vitiated by her failure to consider the applicant for the Lismore or Deputy Registrar Co-ordinator's positions. Termination of the employment of any of the probationers, in preference to her selection of the applicant, was not a real option available to her. I am satisfied that the respondent has proved it had a valid reason within the meaning of the Workplace Relations Act based on its operational requirements for the termination of the applicant's contract of employment. PROCEDURAL FAIRNESS It was argued on the applicant's behalf that there was a failure to consult with her, coupled with a lack of consideration of her circumstances. I am satisfied that the respondent did what it could in this regard, by having Mr Dittman inform the applicant in mid-July 1996 of the prospect that her employment would be terminated after her return to work from maternity leave. The respondent maintained its stance from that moment on and the applicant could not have been in any doubt about the fate of her continued employment after her return to work. ASSOCIATED JURISDICTION Claims were brought by the applicant in the associated jurisdiction. The primary claim was that because there was no statutory power to permit the respondent to terminate the applicant's fixed-term contract before its expiry, the respondent was in breach of contract and liable to the applicant in damages. This claim fails because of my conclusion that the Act permits early termination of such contracts. It was argued in the alternative to the above that there should be an implication of a term in the contract as to the giving of reasonable notice of termination. I do not cavil with that proposition - Westen v Union des Assurances de Paris No NI 2819 of 1995 Madgwick J 17 December 1996, unreported. The notice given to the applicant in this case was the minimum required by subsection 170DB(2) of the Act, namely two weeks. I am not persuaded in the circumstances of this case that a reasonable period of notice exceeded the statutory minimum. In so concluding, I have had regard principally to the length of employment of the applicant with the court. I have also taken into account that the applicant was effectively on notice from mid-July 1996 of the likelihood of the termination of her employment upon her return from maternity leave. The applicant also sought a declaration that the respondent was estopped from taking action to recover the sum paid to the applicant by way of maternity leave allowance. The respondent has claimed repayment of this sum from the applicant. I ruled at the outset of the trial that the substantive application and the declaration sought did not depend on common transactions and facts such that they arose out of a common sub-stratum of facts. I declined to deal with the issue. The applicant appeared to include in her claim for damages a component for depression said to have been suffered by her in consequence of hearing the news in mid-July 1996 that her employment was likely to be terminated upon her return from leave. I do not need to deal further with this aspect, having found neither a statutory nor contractual breach associated with the termination of the applicant's employment. The same fate befalls her claim for the cost of a practising certificate, said to have been an expense incurred by reason of the respondent's breach of contract. MISCELLANEOUS I think it appropriate to make some general comments before concluding. The first concerns the language employed in the court's standard notification to an employee of that person's selection for fixed-term employment and extension of such employment. The sentence following appears in the notifications the applicant received of her original selection, and the extension of her employment, namely: Should your services be terminated by the Chief Executive Officer or a delegate prior to the completion of your engagement period, you may be eligible to receive compensation, as outlined in the attachment. The attachment refers to a document styled Conditions of Service for Fixed-Term Employees. It is apparent from a perusal of the attachment that the drafter of the standard letter in referring to compensation is referring only to the fact that in the event of termination of employment before expiry of the fixed-term, the employer is obliged to provide its employee with a reasonable period of notice. It is inapt and misleading to use the word compensation when the intent is simply to advise that an early termination of employment will be accompanied by a reasonable period of notice. The standard letter ought to reflect that fact. I am not unsympathetic to the applicant's plight. It was undesirable that approval of the extension of the term of her employment occurred in the shadow of a Federal election when it had been well-publicised that if elected, the then Opposition had policies likely to impact adversely on staffing levels in the Australian Public Service. It is even more undesirable that steps were taken to implement the approval after the election and change of government had occurred. Indeed, Ms Klarkowski made clear, in answer to a question from me, that she would not have made the decision, had she been the decision-maker, to extend the applicant's contract against the background of a Federal election. She stated that the decision to formally appoint the applicant was surprising, having come subsequent to a memo dated 15 March 1996 from the Chief Executive Officer in which he made reference to the court's share of likely cost cutting measures amounting to an estimated $3.7m a year for the next three years. The applicant's plight has been compounded by the fact that on the basis of the extension of her contract with the court, she advised her former employer, the Legal Aid Office (Qld), that she would not be returning to her permanent position there. Her position there has since been filled and she has been unable to obtain further employment with the Office. ORDER I order that the application be dismissed. I certify that this and the preceding EIGHT (8) pages are a true copy of my Reasons for Judgment. Judicial Registrar: Date: 16 June 1997 Counsel for the Applicant: Mr Allen Counsel for the Respondent: Mr Murdoch Solicitors for the Respondent: Australian Government Solicitor Dates of hearing: 22 & 23 May 1997 Date of judgment: 16 June 1997