Supreme Court of SA|1999-07-23

The application was heard by a Commissioner of the Industrial Relations Commission. On 27 June 1997 the application was dismissed on the ground that the Commissioner considered that a demotion in these circumstances did not constitute a dismissal for the purposes of s 105 of the Act. The application was accordingly dismissed for want of jurisdiction.

Mr Grivell appealed against that decision to the Full Industrial Relations Commission. On 27 July 1998 the Full Commission allowed the appeal and found that there had been a dismissal for the purposes of s 105. It remitted the matter to the Commissioner for hearing on the merits.

The question at issue is whether a demotion, where there is continued and uninterrupted employment by the employer in the circumstances I have described, constitutes a dismissal for the purposes of s 105 of the Act. The answer to that question will depend on the provisions of the Act as they impinge on the common law. The same answer may not necessarily apply in a different legislative setting.

The Industrial Relations Commission of South Australia has two jurisdictional avenues by which it may deal with dismissals. The first and most commonly recognised is that contained in Part 6 of the Act. As it stood at the relevant time s 105 relevantly provided:

"105. (1) If an employer dismisses an employee, the employee may, within 14 days after the dismissal takes effect, apply to the Commission for relief under this Part."

The ability to provide remedies by the Commission depended on a finding by the Commission that the dismissal was harsh, unjust or unreasonable. Section 107 provided:

"107. (1) At the hearing of an application under this Part, the Commission must determine whether, on the balance of probabilities, the dismissal was harsh, unjust or unreasonable. (2) If an employer dismisses an employee, and makes a redundancy payment in accordance with an award or enterprise agreement that relates to the employee's employment, the dismissal cannot be regarded as a harsh, unjust or unreasonable dismissal solely on the ground that the payment is inadequate. (3) In deciding whether a dismissal was harsh, unjust or unreasonable, the Commission must have regard to - (a) the Termination of Employment Convention; and (b) the rules and procedures for termination of employment prescribed by or under Schedule 8."

The Termination of Employment Convention is the convention concerning termination of employment at the initiative of the employer adopted by the General Conference of the International Labour Organisation on 22 June 1982. The English language text of the Convention is set out in Schedule 7 of the Act. While the reference in s 107 to the Convention only has effect in relation to deciding whether a dismissal is harsh, unjust or unreasonable, s 111 provided in part:

"111. (1) In enacting this Part, it is Parliament's intention to give effect to the Termination of Employment Convention."

The Act does not adopt the terminology of the Convention, and it does not import any definitions from the Convention. However, for purposes of interpretation of the Act, Parliament's intention is made clear.

In this context I should add that after the happening of the events in question and before Mr Grivell's appeal to the Full Industrial Relations Commission was heard, the Act was further amended by repealing s 111 and by inserting in s 3 the following new object:

"(j) to provide employees with an avenue for expressing employment-related grievances and having them considered and remedied including provisions for a right to the review of harsh, unjust or unreasonable dismissals - (i) directed towards giving effect to the Termination of Employment Convention; and (ii) ensuring industrial fair play;"

However, it was accepted before us that those provisions have no application to the resolution of these proceedings.

Schedule 8 referred to in s 107(3)(b) merely specifies certain procedures to be undertaken upon termination of employment which are not relevant for present purposes.

Section 108 specified the remedies which might be ordered. It relevantly provided:

"108. (1) If the Commission is satisfied on an application under this Part that an employee's dismissal was harsh, unjust or unreasonable, the Commission may - (a) order that the applicant be re-employed by the employer in the applicant's former position without prejudice to the former conditions of employment; or (b) if it would be impracticable for the employer to re-employ the applicant in the applicant's former position, or re-employment in the former position would not, for some other reason, be an appropriate remedy - order that the applicant be re-employed by the employer in some other position (if such a position is available) on conditions determined by the Commission; or (c) if the Commission considers that re-employment by the employer in any position would not be an appropriate remedy - order the employer to pay to the applicant an amount of compensation determined by the Commission. (2) If the Commission makes an order for re-employment under this section, then, subject to any contrary direction of the Commission - (a) the employee must be remunerated for the period intervening between the date that the dismissal took effect and the date of re-employment as if the employee's employment in the position from which the employee was dismissed had not been terminated; and (b) the employer is entitled to the repayment of any amount paid to the employee on dismissal on account of or arising from the dismissal; and (c) for the purposes of determining rights to annual leave, sick leave, long service leave, and parental leave, the interruption to the employee's continuity of service caused by the dismissal will be disregarded."

The other source of jurisdiction is to be found in the general arbitral jurisdiction of the Commission in s 26 of the Act. That relevantly reads:

"26. The Commission has - .... (b) jurisdiction to make awards regulating remuneration and other industrial matters; and (c) jurisdiction to resolve industrial disputes; and (d) jurisdiction to hear and determine any matter or thing arising from or relating to an industrial matter; ...."

"Industrial matter" is relevantly defined in s 4 as follows:

"'industrial matter" means a matter affecting the rights, privileges or duties of employers or employees (including prospective employers or employees), or the work to be done in employment, including, for example - .... (j) the dismissal of an employee by an employer; ...."

For the purposes of s 26(c) "industrial dispute" is defined in s 4 as follows:

"'industrial dispute" means a dispute, or a threatened, impending or probable dispute, about an industrial matter (and an industrial dispute does not come to an end only because the parties, or some of them, cease to be in the relationship of employer and employee);"

The Commission therefore has power to order the reinstatement of employees in the exercise of its general jurisdiction, and this power is not qualified by the existence of Part 6 of the Act. See R v Industrial Commission of SA; Ex parte Corporation of the City of Salisbury (1982) 31 SASR 51; St John Ambulance Australia South Australia Inc v Industrial Commission of SA (1993) 174 LSJS 34.

Although Mr Grivell did not invoke the general jurisdiction of the Commission, there are some common features which need to be referred to. The word "dismiss" or "dismissal" as used in Part 6 and in the definition of "industrial matter" is not defined. Both areas of jurisdiction relate to the dismissal of an employee. "Employee" is defined in s 4 of the Act as meaning "a person employed for remuneration under a contract of employment....", and "contract of employment" is relevantly defined as meaning:

"(a) a contract recognised at common law as a contract of employment under which a person is employed for remuneration in an industry;"

It can therefore be seen that, for the purposes of the Act, an employee must be a person who has a contractual relationship with the employer under a common law contract of employment. Without a contract of employment there can be no employee and no employment. It follows that if a contract of employment is terminated, as opposed to being varied by mutual agreement, employment under that contract must also cease. There will be a termination of employment.

Section 105 and the other sections in Part 6, where they refer to a dismissal, are only concerned with the consequences of action taken by the employer. In Smith v Director-General of School Education [1993] NSWIRComm 134; (1993) 31 NSWLR 349 at 365 the Full Court of the Industrial Court of New South Wales had occasion to consider the word in its undefined form as used in the New South Wales Industrial Relations Act 1991. The Court said, at 365:

"The Industrial Relations Act does not define 'dismissal', but, as we have said, s245(5)(a) includes in the concept the Crown's dispensing with the services of an employee. It is to the ordinary meaning of 'dismiss' that assistance may be obtained (sic); the Oxford English Dictionary, 2nd ed (1989) defines the word in appropriate respects as follows: '2.a.... To send away (a person); to give permission to go; to bid depart. b.... 3.a.... To send away or remove from office, employment, or position; to discharge, discard, expel. b.... 4. To deprive or disappoint of or from some advantage." We apprehend no real issue may be taken with the ordinary meaning of the word 'dismissal' as so applied to s245, and, indeed, it seems to us that it is in that defined sense of an employee being sent away from employment that unfair dismissal cases in industrial jurisprudence have been concerned. The terms of s245 of the Industrial Relations Act would suggest no latent limitation in that respect. Therefore, we find no difficulty in accepting the ordinary meaning of 'dismissal' suggested by Brereton J in Ex parte Wurth; re Tully (1954) 55 SR (NSW) 47 as being 'the termination of services by the employer without the employee's consent'; we would add that where an employee does not freely consent to the termination, understood in a broad sense, then the circumstances may still amount to a dismissal by the employer as a constructive dismissal: see Willis v Director-General of Education [1977] 1 NSWLR 134 at 136, 137, Ex parte Wurth (at 59, 60), Re Michaelis Bayley Trading Co and New South Wales Sales Representatives and Commercial Travellers Guild Re Dismissal [1979] AR (NSW) 392 at 393 and Western Excavating (ECC) Ltd v Sharp [1978] 1 CR 221 at 225, 226."

I have no difficulty in adopting the same definition of the word when it is used in the Act, namely the termination of services by the employer without the employee's consent.

It follows that where an employee voluntarily abandons employment or lawfully terminates the contract (for example by giving the requisite notice) or where the contract of employment terminates by effluxion of time or by agreement, there is no dismissal and the employee has no remedy.

It is now also clearly established that s 105, as did its predecessors, applies to both lawful and unlawful dismissals: R v Industrial Court of South Australia; Ex parte General Motors-Holdens Pty Ltd (1975) 10 SASR 582. (Gnatenko's Case)

A contract of employment may be terminated by an employer in a number of ways, any one of which may give rise to an application under s 105. The contract may be terminated lawfully, for example by the employer giving the notice required by the contract or by giving reasonable notice of termination if no notice is specified. The employee may commit a repudiatory breach of the contract, for example by a serious act of misconduct evidencing an intention by the employee no longer to be bound by the contract. The employer, by accepting that repudiation, lawfully terminates the contract. In each of those cases where the employer terminates the contract, there is at the same time a termination of the employment under the contract. Continued employment cannot survive the termination of the contract. There is a dismissal: Ayres v Dehy Fodders (Australia) Pty Ltd (1981) 48 SAIR 707 at 722; Woakwine Pastoral Co Pty Ltd v Dempsey and Howell (1988) 55 SAIR 262.

In each of those cases, the employee may apply under s 105 of the Act. The lawfulness of the termination is not determinative of the entitlement to the remedy. Entitlement to the remedy merely depends on whether, in all the circumstances, the dismissal is harsh, unjust or unreasonable.

Another method by which a dismissal in the sense discussed may be effected is by way of repudiation of the contract by the employer. For example, the employer, either without notice or with inadequate notice, terminates the services of the employee by sending the employee away or refusing to continue to employ the employee in the position in which the employee is employed. It may also come about by the employer refusing to comply with a fundamental condition, such as refusing to pay the employee at the same rate or to pay the employee at all. It is now well accepted that contracts of employment subject to that type of repudiation are in no different position from any other contract. The repudiation does not, in itself, automatically terminate the contract. The contract continues on unless and until the employee accepts the repudiation: Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435; Consolidated Press Ltd v Thompson (1952) 52 SR (NSW) 75. In the latter case, Street CJ said at 80:

"The point at issue in Watson's Case was whether, upon dismissal without justification, an employee could recover wages for the period in which he continued to present himself and offer to serve, or whether he could only recover unliquidated damages for the breach of contract. The question is so stated by Dixon J. himself, and the conclusion he reached was that the wrongful dismissal operated to discharge the employee from the obligation to render any further service, although the employee remained ready and willing to serve, and as wages or salary were only to be paid for service, it was not competent for him to claim to recover the amount which he would have earned as wages had work been made available for him. It is implicit throughout his Honour's judgment that the contract still remained open notwithstanding the breach by the employer due to the wrongful dismissal, but the right to recover wages had gone and only damages could be recovered. Latham C.J., in the course of his reasons, states the principle by saying: 'An employer terminates the employment of a servant when he dismisses him, though, as I say hereafter, such a dismissal does not put an end to the contract between the parties.... The contract of employment is, upon any view, still in existence. But if, under the contract, wages cannot be earned without work, the continued existence of the contract cannot entitle the servant to wages without work.' (1946) 72 C.L.R. at 454-455. Again, his Honour says: 'I agree that the contract cannot be terminated by a wrongful unilateral act.... One party to a contract cannot by a wrongful unilateral act bring the contract to an end. If an employer wrongfully dismisses a servant he breaks, but does not terminate, the contract....'. (1946) 72 C.L.R. at 456-457. Williams J. says: 'The employer cannot discharge the contract of employment by a unilateral breach.' (1946) 72 C.L.R. at 476."

See also Byrne v Australian Airlines Ltd (1995) 185 CLR 410 per Brennan CJ, Dawson and Toohey JJ at 427-428.

Thus, there may be cases where the employee may be dismissed or sent away or his employment terminated in circumstances amounting to repudiation by the employer, but that repudiation is not accepted by the employee, and the contract remains on foot. In appropriate circumstances that may give rise to one of the rare occasions when a court will order specific performance of the contract, as in Hill v C A Parsons Ltd [1972] Ch 305.

There may also be a course of conduct which, although not amounting to repudiation by the employer, is nevertheless sufficient to justify an employee terminating the contract in circumstances which the courts have considered to be constructive dismissal by the employer. See Blaikie v SA Superannuation Board (1995) 65 SASR 85 and other cases referred to therein. It is not necessary to enter that difficult field in order to resolve this case.

In most cases, however, the employee will accept the employer's repudiation because the employee may consider that he or she has little choice. The repudiation may be accepted expressly or, more often, by implication from conduct. The employee leaves and seeks alternative employment. An action may be brought at common law for damages for breach of contract, in which case, if the repudiation has not otherwise been accepted, the bringing of the action will constitute such acceptance. The employee may also bring an application under s 105 of the Act. The generally accepted view seems to be that that action too will constitute an unequivocal act of election, at least in respect of the former contract of employment. That was the view expressed by the Chief Justice, with whom Olsson and Duggan JJ concurred in Woolworths (SA) Pty Ltd v Russian (1996) 186 LSJS 196 at 197, relying on Gnatenko's Case (1975) 10 SASR 582 at 586 per Bray CJ (and I would add, per Walters and Wells JJ at 601), Brown v Mt Pleasant District Hospital Inc 45 SAIR 324 per Stanley J at 329 and R v Prince Alfred College 46 SAIR 598 per President Olsson (as he then was) at 605. However, whether the contract is at an end or not, on any view there will have been a dismissal or termination of employment by the employer, and the Commission may entertain the application.

I return to the situation of termination of the contract by the employer - whether lawfully or by acceptance by the employee of a repudiatory breach by the employer. In some situations the employee may then accept an alternative offer of employment by the same employer. Depending on the facts, it may well be under a fresh contract of employment containing different terms as to the work to be performed and the rate of payment. It will be a matter of the proper construction of that contract as to whether the employment is treated as continuous for employment-related benefits, but such a provision may well be incorporated into the new contract. On the other hand, some of those benefits may be required to be granted by operation of law, such as by the provisions of the Long Service Leave Act 1987 which, in some circumstances, will deem employment to be continuous regardless of the terms of the contract. There may also be the provisions of an industrial award which require that credit for past service be given in the provision of annual leave or sick leave. However, leaving such statutory or award requirements aside, there may be a fresh contract of employment

In those circumstances the position at common law may still enable the employee to sue the employer for damages for breach of the original contract, notwithstanding that he has accepted employment with the employer in some other but lower paid capacity. The employee would be entitled to damages for breach of the repudiated contract. The amount that could be recovered may not be large, and the employee will have mitigated his or her loss by accepting employment with the employer under the new conditions. However, unless as a condition of the new contract the employee waives any rights accrued under the old contract, action for damages for breach of the unlawfully terminated contract could still be brought.

Of course, if the employee accepts the new contract in the lower paid position after a lawful termination by the employer of the first contract, the employee will have no right to claim damages because the first contract was lawfully terminated.

Such is the position at common law, about which there can be little doubt. What of the employee's right to apply for re-employment or compensation under the Act in consequence of the termination of the first contract?

I deal first with the situation where the contract is lawfully terminated by the employer. With the termination of the contract necessarily comes termination of employment under that contract. The employment could not survive without the contract. With a non-consensual but lawful termination of the contract by the employer and subsequent acceptance of a fresh contract there will still, by virtue of the termination of the contract of employment, have been a termination of employment or a dismissal by the employer.

In each of these events there has been a termination of employment at the initiative of the employer or, a dismissal in the sense described above, notwithstanding that there may have been a subsequent re-engagement by the employer under a fresh contract of employment.

The situation, however, may not be as clear as that. Not every notice of termination of contract or unilateral action by the employer, even if repudiatory, will necessarily constitute or result in a termination of the contract. There may be further negotiations which result in termination of the contract by agreement and the substitution for that contract of a fresh contract, perhaps in a lower paid classification. In that case, the termination of the contract, and hence of the employment, will not have come about by the unilateral action by the employer, but by agreement. There is then no dismissal. Alternatively, the circumstances may suggest not a termination of the original contract but a consensual variation of it to reflect changed terms. In either case there is no dismissal; there is a termination or variation by agreement. The employee has no right to apply under s 105 of the Act.

Such agreement may be expressed or may be implied from conduct. If an employer gives lawful notice of intention to terminate a contract by demoting an employee to a lower paid position, and the employee, on expiry of the notice, continues to work in the lower paid position without protest, such agreement may be readily inferred. It will be a matter of fact in each case as to whether such agreement can be inferred. For example, in Marriott v Oxford and District Cooperative Society Ltd [1969] 3 All ER 1126 a question arose as to the plaintiff's entitlement to redundancy payments under the UK Redundancy Payments Act 1965. That provided that an employee should be taken to be dismissed "if, but only if.... the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice....". Entitlement thus turned on termination of the contract, rather than termination of employment. The appellant was employed as a foreman. The employer considered that there was insufficient work for foremen, and decided to offer the appellant the position of supervisor at a reduced wage. He protested and tried to obtain work elsewhere. On 24 January 1968 the employer wrote to him advising him that from the end of that month his wages would be reduced. He protested again but did not leave at once. His wages were reduced, and after three or four weeks he left to take another job. The Court of Appeal held that he was entitled to redundancy payments. It held that there had been a repudiation by the employer of the contract of employment. Lord Denning MR said at 1128:

"If the appellant had accepted the repudiation and said 'I will not agree to this reduction in my wages', and left at the end of the week, the contract would clearly have been terminated by the respondents, and he would be entitled to redundancy payment. There can be no doubt about it. Does he lose his redundancy payment simply because he stayed on for three or four weeks whilst he got another job? I think not. He never agreed to the dictated terms. He protested against them. He submitted to them because he did not want to be out of employment. By insisting on new terms to which he never agreed, the respondent did, I think, terminate the old contract of employment."

That conclusion was dictated by the Court interpreting the letter given to the appellant not as an offer to the employee which he accepted but a dictation to him of the terms on which he was to work. There would appear to be no doubt that the situation could have been different if the letter had been cast in different terms or if there had been no protest by the employee.

Similarly, in O'Connor v The Argus and Australasian Ltd [1957] VicRp 53; [1957] VR 374 a purported reclassification of a journalist to a lower grade without his consent was held to constitute a termination of the existing contract of employment, notwithstanding that the journalist agreed to continue working for the same employer in a different classification but under protest. There had been no agreement to terminate or vary the contract. However, in the circumstances of that case it did not constitute a breach of the award because there had been no termination of "employment" as that word was used in the relevant award.

Where an agreement to terminate the contract and to substitute a fresh one is inferred, the employee has no remedy under s 105. This is not because there has been no termination of employment but because there has been no termination by the employer. The action may have been initiated by the employer, but it has resulted in an agreement to terminate.

Depending on the original contract, there may also be a term of that contract that the employer reserves the right to direct the performance of higher duty for such period as the employer shall determine and to pay the employee at the higher rate for only so long as such duty is performed. If in those circumstances the employer determines that there will be no more higher duty performed, the employer will be acting within the terms of the contract. There will be no termination of the contract by the employer and no repudiation, because the employer was acting within the terms of the contract.

Such are the principles by which, in my opinion, this application should be determined. If those principles are correct, the application of them to the facts produces only one answer.

Mr Grivell was appointed to the position of foreman. His contract of employment was not in terms that would allow the employer at will to reclassify him at any time. That was his substantive position. His demotion was on less than one week's notice, and it was presented as a non-negotiable requirement by his employer. It was not presented in the form of an offer that could be accepted. By its action The Advertiser made it quite plain that it no longer intended to be bound by the contract. It repudiated his contract of employment. As from Monday, 20 January 1997 the company refused to employ him as a foreman. It had dismissed him. By his protest he may well not have accepted the repudiation until he commenced the proceedings in the Industrial Relations Commission. In the circumstances it does not matter whether he was dismissed on 20 January or by formal termination of his contract. What is more significant, however, is the fact that, at least until the hearing of his application by the Industrial Relations Commission, he had never accepted his demotion, and there was nothing from which it could be inferred that he had agreed to the termination of his old contract and the substitution of a new one, such that it could be said that there was no dismissal but a consensual termination or variation of the old contract. His dismissal still stood, and the Commission had jurisdiction to entertain his application.

Ms Layton QC, for The Advertiser, argued, however, that there is a consistent line of authority in this State and elsewhere to the effect that if an applicant remains in the employment of the employer, as Mr Grivell has, there is no effective dismissal. Dismissal, in order to clothe the Commission with jurisdiction, must be from all employment, and mere demotion, albeit against the will of the employee to a lower position, cannot constitute dismissal. The authority in this State is founded on obiter dicta from Judges of this Court which now call for examination. Independently of that, however, it is said that there is authority of the Federal Court of Australia which is to like effect.

I begin with a consideration of the decision of the Full Commission of the (then) Industrial Commission of South Australia in Zubrinich v Pasminco Metals - BHAS Pty Ltd (1994) 61 SAIR 154. The legislation was different but the Commission's jurisdiction to order re-employment was still dependent upon there being a dismissal (Industrial Relations Act 1972 s 31). This was a case involving a non-consensual demotion at the instance of the employer, and on approximately one day's notice. The employee protested, and the Commission at first instance found that there was no consensual variation to the contract of employment. At first instance the Commission considered that the contract of employment had been rescinded and a fresh contract had been entered into under protest. Those findings were not disturbed by the Full Commission.

In the first place, all members of the Commission relied on a dictum of Bray CJ in Gnatenko's Case (1975) 10 SASR 582 at 586 which they interpreted as requiring that in order for there to be a dismissal, the employee must not have been in the employment of the employer between the date of dismissal and the date of re-employment. I shall return to consider that dictum in due course. In the second place, the majority considered that the language of s 15(4) of the then Industrial Relations Act 1972, prescribing the action to be taken upon the Commission directing re-employment, was not apposite to use in circumstances where the employee was still in the employment of the employer. The Commission also referred to but did not regard as crucial a dictum of Mullighan J in Fosters Brewing Group Ltd v Industrial Commission of SA [1993] SASC 4261; (1993) 61 SASR 329 at 337, where it was said that dismissal, for the purposes of the then s 31(1) of the Industrial Relations Act 1972 meant dismissal from employment and not just from a particular position within the organisation of the employer. I shall return to consider that dictum also. However, it was essentially for these reasons that the Industrial Commission in Zubrinich held that there had not been a dismissal, such as would enable the Commission to exercise the jurisdiction granted by s 31 of the then Industrial Relations Act. In my opinion, Zubrinich v Pasminco Metals - BHAS Pty Ltd was wrongly decided, and the dicta on which the Court relied, if taken literally, do not represent the rationes decidendi of the cases concerned and they are either stated too widely or have been taken out of context.

In Gnatenko's Case it was held unanimously, but for different reasons, that the provisions of the then s 15(1)(e) of the Industrial Conciliation and Arbitration Act 1972 were inconsistent with a law of the Commonwealth, namely an award of the (then) Australian Conciliation and Arbitration Commission given effect to by the Conciliation and Arbitration Act 1904. Accordingly, by virtue of s 109 of the Constitution the section of the State Act was invalid to the extent of the inconsistency. It was that section which at the time conferred jurisdiction on the Industrial Court of South Australia "to hear and determine any question as to whether the dismissal from his employment of an employee.... was harsh, unjust or unreasonable". The Court then had power to direct the employer to re-employ the employee in his former position on terms not less favourable to the employee than if he had not been dismissed from his employment. That was the only remedy that could be granted. Bray CJ considered that the award in question was intended to cover the whole field of termination of employment by the employer, and he did not think that it mattered in that case whether that meant termination of the contract of employment or only termination of the relationship of master and servant (at 590). However, in the course of discussing the effect of s 15(1)(e) of the then Industrial Relations Act 1972, the former Chief Justice said (at 586):

"Finally, I think that it is an essential condition of the jurisdiction that the employee should have been dismissed. The words 'dismissed' and 'dismissal' are used throughout. The power is to direct re-employment, not reinstatement, and the word 're-employ' seems to me to imply that the employee has not been in the employment of the employer between the date of the dismissal and the date of re-employment. In the application under consideration the respondent speaks of his dismissal. In short, I think that if the employee wishes to contend, not only that his purported dismissal was unlawful, but that it was invalid and that he has not been dismissed at all and that he is still in the employment of the employer, or if he wishes to invoke the exceptional power to grant an injunction restraining the employer from terminating the employment referred to and acted on in Hill v. C. A. Parsons and Co. Ltd. [1971] 3 All E.R. 1345, then his remedy is to apply to a court of equity and an application under s. 15(1)(e) would be misconceived." (My italics)

It is the passage in italics on which particular reliance was placed by the Court in Zubrinich.

I agree that the applicant must have been dismissed. That is what s 15(1)(e) said at the time and that is what s 105 presently says. However, that begs the question as to what "dismissal" means, other than that there has been some form of sending away from employment. However, that does not necessarily mean that there must have been no subsequent employment at all. It may merely mean that there has been no employment under the contract of employment from which the employee was dismissed. Placed in their context the remarks of the former Chief Justice seem to mean that there can be no re-employment whilst the contract of employment itself remains on foot, and he seems to be equating "employment" with the continuation of the contract.

For reasons I have given, I do not think that that is necessarily so. It is contrary to the view expressed by von Doussa J in Fryar v Systems Services Pty Ltd (1994) 1 ICR 246 at 254. It is also contrary to the view of Wilcox CJ in Siagian v Sanel Pty Ltd (1994) 1 ICR 1 at 19 and of Gray J in APESMA and Stephenson v Skilled Engineering Pty Ltd (1994) 1 ICR 106 at 116. It is not consistent with the principles expressed in Automatic Sprinklers Pty Ltd v Watson, Consolidated Press Ltd v Thompson and the dictum to which I have referred in Byrne v Australian Airlines Ltd. Furthermore, the meaning of the word "dismiss" cannot be determined by the use of the word "re-employment", rather than "reinstatement". I accept that those words have different meanings, but both of them imply a period of non-employment before they are effected. As Gnatenko's Case itself shows, re-employment means the entry into a fresh contract of employment, with no necessary entitlement to accrued benefits. It was because of the power to direct re-employment on terms not less favourable to the employee than if he had not been dismissed that Walters and Wells JJ considered that an inconsistency arose by way of direct collision between the terms of the Act and the terms of the award. They said (at 600-601):

"The exercise of the power so amplified would, in our opinion, bring the Court's order into collision with several provisions of the Award the effect of which is, generally speaking, to improve the rights and privileges of a workman according as his period of continuous service grows. For example, as sub-clause (e) of clause 6 discloses, an employee with twelve months' continuous service is in a privileged position, compared with employees with less continuous service, if he falls to be retrenched; wage rates increase as a workman's service with G.M.-H. rises successively from one to five or more years (clause 8); a workman's entitlement to annual leave accrues after twelve months' continuous service (clause 24); entitlements to sick leave depend in various ways upon length of service (clause 25); bereavement leave becomes available after one month's continuous service (clause 26). There are no provisions in the Award by virtue of which, in favourable circumstances, a workman becomes entitled to be re-employed under conditions that place him in a position, with respect to his rights and privileges, that is the equivalent of that occupied by him before his employment ended. If a workman, whose employment has been duly terminated under the Award, is subsequently re-employed, in the absence of some special arrangement (to which the Award gives him no right), he takes his place with all others who are employed for the first time. It seems to us to follow that par. (e) purports to confer upon the Court the power to direct re-employment on terms that must conflict directly with certain terms of the Award on which, if he were re-employed, his employment would, for varying periods, be governed."

So much for re-employment. Reinstatement, on the other hand, means reinstatement of the old contract of employment as if there had been no termination and with continuity of benefits. The parties are put back to where they were before the termination. Both words place emphasis on the contractual position, not the status of the employee. It does not follow, because the word "re-employment" is used in the Act, that there is an implication that, in order to invoke the jurisdiction of the Commission, the employee must not have been in the employment of the employer between the date of dismissal and the date of re-employment. At most, and taken in context, the dictum of Bray CJ means that the original contract of employment must have been terminated, but that allows the possibility of either reinstatement or re-employment.

Whatever may be the precise import of the dictum, two points can properly be made. First, it does not form any part of the ratio decidendi of the case and is therefore not binding on this Court. Secondly, it does not appear to represent the majority view of the Court. In their joint judgment Walters and Wells JJ (at 602) spoke of the section being concerned only with a person "who finds himself finally and effectively dismissed". I respectfully agree that that is the only criterion. Accordingly, in my opinion, the dictum of Bray CJ relied on by the former Industrial Commission in Zubrinich does not justify a requirement that there be no employment in some other capacity at the time when an application for re-employment is made.

The passage of the reasons of Bray CJ to which I have referred has also been criticised by von Doussa J in Fryar v Systems Services Pty Ltd 1 ICR 246 at 254, where he described the meaning attributed to "dismissal" by Bray CJ and the Industrial Commission in Zubrinich as "a narrow and technical one". von Doussa J considered that "dismissal" as used in the South Australian Act was to be construed broadly, as was the word "termination" in the Federal Act. When speaking of Part 6 of the present Act he said (at 255):

"In my opinion 'dismissal' in Pt 6 is to be construed broadly, as is 'termination' in the Act. The narrow technical meaning accorded to 'dismissal' by Bray CJ is not consistent with the context or purpose of Pt 6."

When the decision of von Doussa J went on appeal to the Full Court of the Industrial Relations Court of Australia (1995) 60 IR 68, Wilcox CJ and Beazley J (at 84) found it unnecessary to determine whether the criticism of the dictum of Bray CJ was correct, whilst Gray J (at 87) considered (as I do) that the dictum had been misunderstood and mistakenly applied by the South Australian Industrial Commission in Zubrinich.

The next point relied on by the majority in Zubrinich was based on s 31(4) of the Industrial Relations Act 1972 which required that, on an order for re-employment being made, unless the Commission otherwise directed, the employee was to be remunerated for the period between the date of dismissal and the date of "re-employment as if the employee's employment in the position from which the employee was dismissed had not been terminated". It also required repayment of any amount paid to the employee on dismissal on account of any accrued entitlement to recreation leave or long service leave, and that the interruption to the employee's continuity of service caused by the dismissal should be disregarded. The Commission considered that the language of that subsection was not apposite to use in circumstances where an employee had been dismissed but was still in the employment of the employer, albeit in a lower position. Those provisions, it was said, contemplated that the dismissed employee had not been in the employment of the employer between the dates in question. On the contrary, it seems to me that the subsection in question places particular emphasis on dismissal from a particular position, rather than dismissal generally. It seems to me that there is no reason why those provisions should not apply to a person who receives benefits on his compulsory demotion. The subsection had its equivalent in the Act in s 108(2).

The third matter which seems to have had some influence in Zubrinich's Case is the dictum of Mullighan J to which I referred. Fosters Brewing Group Ltd v Industrial Commission of South Australia [1993] SASC 4261; (1993) 61 SASR 329 was a case in which it was held (by a majority) that s 31 of the Industrial Relations Act 1972 applied to cases of genuine redundancy. In the course of his reasons for judgment in discussing the effect of s 31 Mullighan J said (at 337):

"It is concerned with unfairness which arises when an employee is dismissed from employment. The circumstances in which the section operates are indicated by the opening words of s 31(1), 'Where an employer dismisses an employee'. The only sensible meaning to be attributed to that clause is that the dismissal must be from the employment with the employer, not just from a particular position within the organisation of the employer. So, in so far as attracting the operation of s 31 is concerned, the fact that the position which the employee held before the dismissal has been abolished is nothing to the point. It is the dismissal from the employment which can attract the operation of the section."

It is important to understand the context in which that statement was made. His Honour had referred to Belton v General Motors-Holden's Ltd (1984) 154 CLR 632 where the High Court had rejected a suggestion that the former s 15(1)(e) did not have practical operation in the case of a retrenched employee because it only enabled re-employment to be directed in the employee's former position, which no longer existed because of the redundancy. The argument had also been rejected by Zelling J in this Court in R v Industrial Court (SA); Ex parte General Motors-Holden's Ltd (1983) 35 SASR 161 at 168. Mullighan J pointed out that s 15(1)(e) had been repealed, and s 31(with which he was then dealing) provided the additional remedies of re-employment in another position and compensation. He expressed the view that there is "no merit in the argument that s 31 can have no application to cases of genuine redundancy because the position from which the employee was dismissed no longer exists". It was in that context that he made the statement which I have quoted above. However, in my opinion the dictum is expressed too widely, and it was not necessary for the argument he was dealing with. It certainly does not form part of the ratio decidendi of the decision.

For these reasons, any justification for the decision in Zubrinich v Pasminco - BHAS Pty Ltd disappears, and the reasoning on which the decision is based cannot be supported.

Furthermore, in my opinion Zubrinich leads to some curious and unjust results not intended by this remedial legislation. The effect of the decision is that a person who wishes to challenge his or her arbitrary demotion must accept the repudiation of the contract or its lawful termination, as the case may be, and leave the employment of the employer, probably without any alternative employment to go to, without being able to mitigate the loss by continuing under a new contract in a different position with the same employer. The employee would be in the anomalous position of being able to accept employment in the new position whilst being able to pursue any common law remedies, or even possibly an injunction or specific performance, whilst being denied access to the range of beneficial remedies provided by Part 6 of the Act. The interpretation may well also severely restrict the general dispute-settling powers of the Commission where there arises a serious industrial dispute over a unilateral demotion or series of demotions. However, the anomalies to which I have referred are avoided by holding that in the absence of any genuine agreement, a unilateral demotion with continued employment in some other capacity constitutes a dismissal for the purposes of s 105 of the Act.

The question of what constitutes a dismissal was further considered by the Full Court of the Industrial Court in Russian v Woolworths (SA) Pty Ltd (1995) 62 SAIR 806 and by this Court on appeal in Woolworths (SA) Pty Ltd v Russian (1996) 186 LSJS 196. As a result of what the employer considered to be acts of misbehaviour, the employer unilaterally demoted the employee to a lower position without notice. The employee did not accept the proposed change, and did not return to work on the day on which the changes were due to take effect. Thereafter he provided the employer with sickness certificates, he continued to use a company vehicle and was paid sick leave payments at the reduced rate. The Industrial Relations Court held that there was a dismissal. The Court observed that the Industrial Commission in Zubrinich had felt constrained to take the narrow approach to the notion of dismissal by reason of the dicta of Bray CJ in Gnatenko's Case. The Court distinguished Zubrinich, however, on the basis that it was a decision made under s 31 of the Industrial Relations Act 1972, whereas they were dealing with s 105 of the Act, and they relied on a broader definition of "dismissal" applicable to s 105 in the light of the provisions of s 111 of the Act, and the stated intention to give effect to the Termination of Employment Convention. In the light of the decision of von Doussa J in Fryar v Systems Services Pty Ltd (supra), the Court felt constrained to adopt the broader meaning of dismissal rather than the narrow one adopted in Zubrinich. In my opinion the decision was correct but not for the reasons given by the Court. There was insufficient change in substance between the provisions of s 31 of the Industrial Relations Act 1972 and the provisions of Part 6 of the present Act to justify that change in meaning.

When the matter came before this Court on appeal, the Court found it unnecessary to resolve the debate over the broad or narrow meaning of the word. Doyle CJ (at 186 LSJS 198) recognised the force of the argument which had appealed to von Doussa J in Fryar v Systems Services Pty Ltd, but the Court concluded that whatever meaning was given to the word "dismiss", the respondent, in the circumstances of that case, had been dismissed.

It remains to consider the decision of the Full Court of the Industrial Relations Court in Brackenridge v Toyota Motor Corporation Australia Ltd [1996] IRCA 628; (1996) 142 ALR 99. The applicant was a chef supervisor at a canteen operated by the respondent. As a result of an incident involving another employee she was suspended from employment on full pay pending an investigation of the incident, following which she was informed that she was demoted to the position of canteen assistant, her salary being maintained at the current rate but with future increases to be applied only in accordance with award increases to the lower classification. Her solicitors wrote saying that she did not consent to what was described as the unilateral termination of her employment contract. She nevertheless continued working for the respondent as a canteen assistant. The Full Court of the Industrial Relations Court considered that in the circumstances there had been a termination of her contract of employment as a chef supervisor. However, the touchstone for the exercise of jurisdiction under s 170EA(1) of the Industrial Relations Act 1988 was that the applicant suffered "termination of his or her employment". It was held that that had not occurred where the applicant continued to be employed by the respondent, albeit in a different position.

Section 170CA of the Industrial Relations Act 1988 provided as follows:

"170CA(1) The object of this Division is to give effect, or give further effect, to: (a) the Termination of Employment Convention; and (b) the Termination of Employment Recommendation, 1982, which the General Conference of the International Labour Organisation adopted on 22 June 1982 and is also known as Recommendation No 166, and a copy of the English text of which is set out in Schedule 11. (2) Without limiting subsection (1), the references in paragraph 170DF(1)(f) to sexual preference, age and physical or mental disability, have been included in order to give effect, or further effect, to: (a) the Convention concerning Discrimination in respect of Employment and Occupation, a copy of the English text of which is set out in Schedule 1 to the Human Rights and Equal Opportunity Commission Act 1986; and (b) the Recommendation referred to in paragraph 170BA(c). (3) Without limiting subsection (1), the reference in paragraph 170DF(1)(g) to other parental leave has been included in order to give effect, or further effect, to the Family Responsibilities Convention and to the Recommendation referred to in paragraph 170KA(1)(b)."

In addition, and of some significance, s 170CB of the Act provided:

"170CB. An expression has the same meaning in this Division as in the Termination of Employment Convention."

It is reasonably clear the constitutional support for the reinstatement provisions of the Industrial Relations Act was to be found in s 51(xxix) of the Constitution, the external affairs power, and the ratification by Australia of the Termination of Employment Convention and of Recommendation No 166. Not only was it an object of the Act to give effect to the Convention, but expressions used in it were to have the same meaning in the Act. By reference to preparatory work in relation to the Convention, such reference being authorised by Andersen v Umbakumba Community Council (1994) 1 IRCR 457 at 461-462 and Christie v Qantas Airways Ltd (1996) 138 ALR 19 at 36-37, the Court concluded that the phrase "termination of employment" used in the Convention and therefore as used in the Industrial Relations Act was restricted to the termination of the employment relationship, such as to exclude situations of demotion by the employer. The Court did not address the question of how it would have construed the phrase "termination of employment" unaffected by the requirements of the Convention. The applicant's claim for reinstatement therefore failed. However, she also brought a common law claim for damages based on breach of contract. There was no doubt that the Court found that the original contract of employment had been terminated (104-109) but that in the circumstances it had been lawfully terminated by the respondent, and she was not entitled to damages.

I have already expressed the view that "dismissal" is the same as termination of employment at the instance of the employer. That is the view expressed by von Doussa J in Fryar v Systems Services Pty Ltd (supra) at 254, a view that was not overruled on the successful appeal against that decision. In s 107(3)(b) and Schedule 8 and in s 108(2)(a) of the Act Parliament has used the phrase "termination of employment" and like expressions where they can only be coterminous with the word "dismissal" as used in the Act.

Although the terms used in the South Australian Act and the Commonwealth Act mean the same, in my opinion Brackenridge's Case should be distinguished. I have no reason to doubt that the terms in their ordinary and natural meaning are the same. However, the Industrial Relations Court in Brackenridge was constrained to give the phrase "termination of employment" a meaning restricted by the proper interpretation of the phrase as used in the Termination of Employment Convention. As has been demonstrated, the interpretation of the South Australian Act does not require the importation of that restriction. The word "dismiss" is to be given its ordinary and natural meaning. There is no requirement that terms used in the Convention are to have the same meaning as terms used in the Act. The only reference to the Convention in the Act is by way of declaration of the Parliamentary intention to give effect to the Convention (s 111), and the requirement in s 107 that the Commission must have regard to the Convention in deciding whether a dismissal was harsh, unjust or unreasonable.

Section 22(1) of the Acts Interpretation Act 1915 provides:

"22. (1) Subject to subsection (2), where a provision of an Act is reasonably open to more than one construction, a construction that would promote the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) must be preferred to a construction that would not promote that purpose or object. (2) This section does not operate to create or extend any criminal liability."

In my opinion the word "dismiss" in its ordinary and natural meaning is only open to the one construction, and s 22 of the Acts Interpretation Act does not require the adoption of the meaning given to the phrase "termination of employment" in the Convention. The Parliamentary intention is to give effect to the Convention. The interpretation I have adopted does that, and indeed goes further.

It should also be remembered why s 111(1) was inserted in the first place. The provisions of the Industrial Relations Act 1988 had been amended to include s 170EB which read as follows:

"170EB. The Court must decline to consider or determine an application under section 170EA if satisfied that there is available to the employee by or on whose behalf the application was made an adequate alternative remedy, in respect of the termination, under existing machinery that satisfies the requirements of the Termination of Employment Convention."

I have already set out the terms of s 111(1) of the South Australian Act indicating Parliament's intention to give effect to the Convention. The remaining subsections of s 111 provided as follows:

"(2) If, in any respect, this Part does not provide a remedy that is an adequate alternative remedy (within the meaning of section 170EB of the Commonwealth Act) to the remedy available to an employee in respect of termination of employment under the Commonwealth Act, this Part is to be read subject to the modifications necessary to provide an adequate alternative remedy. (3) The Court may, on application by the Minister, declare what (if any) modifications to this Part are necessary to provide an adequate alternative remedy as required under subsection (2). (4) The modifications specified in a declaration under this section take effect as if they had been enacted by the Parliament."

The purpose in enacting s 111 was plainly to ensure that, so far as the Parliament was able to provide, the provisions of Part 6 provided an adequate alternative remedy, such as to deprive the Commonwealth Industrial Relations Commission of jurisdiction in unfair dismissal cases. It was not by way of ratification or implementation of the Convention. As it happened, the attempt was unsuccessful: Fryar v Systems Services Pty Ltd (1995) 60 IR 68. Furthermore, reference in the Act to the Convention was not for the purpose of limiting the operation or effect of the Act but for the purpose of extending its reach, should that be necessary, to ensure that it provided an adequate alternative remedy to that provided by the Commonwealth Act.

All this merely demonstrates, despite the similarity in the ordinary meaning of the expressions used in the two Acts, that there is good reason for distinguishing Brackenridge v Toyota Motor Corporation Australia Ltd because the Commonwealth Act is restricted in its meaning by the meaning given to the relevant phrase in the Convention.

I have already pointed out, although it is not really relevant to this decision, that the Act has since been amended. The provisions of the former s 107 now find expression in s 108. The former s 111 has been repealed, and the new object to which I have already referred has been inserted in s 3. If anything, the Parliamentary intention to give effect to the Convention has been weakened. The stated object of the Act is now expressed to provide provisions for "a right to the review of harsh, unjust or unreasonable dismissals.... directed towards giving effect to" the Convention (my emphasis), and to ensure industrial fair play. Far from detracting from the views I have expressed about the operation of Part 6, in my opinion those amendments can only go to enhance that view, at least in respect of cases arising after the amendments.

It is for these reasons that in my opinion the Industrial Relations Commission has jurisdiction to entertain Mr Grivell's application, and the plaintiff's application to this Court should be dismissed.

MARTIN J. For the reasons given by Bleby J, I agree that the plaintiff's application for judicial review should be dismissed.

Industrial and Employee Relations Act 1994(SA)s 105, s

Long Service Leave Act 1987(SA)

Acts Interpretation Act 1915(SA)s 22(1), referred

Rights and Equal Opportunity Commission Act 1986

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Workplace Relations Act 1996 (Cth) ;
Industrial and Employee Relations Act 1994 (SA) s 105, s 107, s 108, s 111, s 26, s 4;
Long Service Leave Act 1987 (SA) ;
Industrial Relations Act 1988 (Cth) s 170;
Acts Interpretation Act 1915 (SA) s 22(1), referred to.
R v Industrial Commission of SA; Ex Parte Corporation of the City of Salisbury (1982) 31 SASR 51;
Smith v Director-General of School Education [1993] NSWIRComm 134; (1993) 31 NSWLR 349;
St John Ambulance Australia South Australia Inc v Industrial Commission of SA (1993) 174 LSJS 34;
Ayres v Dehy Fodders (Australia) Pty Ltd 48 SAIR 707;
Woakwine Pastoral Company Pty Ltd v Dempsey & Howell 55 SAIR 262;
Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435;
Consolidated Press Ltd v Thompson (1952) 52 SR(NSW) 75;
Byrne v Australian Airlines Ltd (1995) 185 CLR 410;
Woolworths (SA) Pty Ltd v Russian (1996) 186 LSJS 196;
R v Industrial Court of South Australia; Ex Parte General Motors-Holdens Pty Ltd (1975) 10 SASR 582;
Brown v Mt Pleasant District Hospital Inc 45 SAIR 324;
R v Prince Alfred College 46 SAIR 598, applied.
Brackenridge v Toyota Motor Corporation Australia Ltd [1996] IRCA 628; (1996) 142 ALR 99, distinguished.
Zubrinich v Pasminco Metals - BHAS Pty Ltd (1994) 61 SAIR 154;
Fosters Brewing Group Ltd v Industrial Commission of South Australia [1993] SASC 4261; (1993) 61 SASR 329, not followed.
Hill v C A Parsons Ltd [1972] Ch 305;
Siagian v Sanel Pty Ltd (1994) 1 ICR 19;
APESMA and Stephenson v Skilled Engineering Pty Ltd (1994) 1 ICR 106;
Russian v Woolworths (SA) Pty Ltd (1995) 62 SAIR 806;
R v Industrial Court of South Australia; Ex Parte General Motors-Holdens Pty Ltd (1975) 10 SASR 582;
Marriott v Oxford and District Cooperative Society Ltd [1969] 3 All ER 1126;
O'Connor v The Argus and Australasian Ltd [1957] VicRp 53; [1957] VR 374;
Fryar v Systems Services Pty Ltd (1994) 1 ICR 246;
Fryar v Systems Services Pty Ltd (1995) 60 IR 68, discussed.
Blaikie v SA Superannuation Board (1995) 65 SASR 85;
Belton v General Motors-Holden's Ltd (1984) 154 CLR 632;
R v Industrial Court (SA); Ex parte General Motors-Holden's Ltd (1983) 35 SASR 161;
Andersen v Umbakumba Community Council (1994) 1 IRCR 457;
Christie v Qantas Airways Ltd (1996) 138 ALR 19, considered.

On 7 February 1997 Mr Grivell commenced proceedings for relief in respect of termination of employment under the Workplace Relations Act 1996 (Cth) in the Australian Industrial Relations Commission. On 21 March 1997 the proceedings under the Workplace Relations Act were discontinued, apparently on advice following the decision of the Full Court of the Industrial Relations Court of Australia in Brackenridge v Toyota Motor Corporation Australia Ltd [1996] IRCA 628; (1996) 142 ALR 99 that under the Commonwealth legislation a demotion did not constitute a 'termination' for the purposes of that Act.

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At a glance

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ADVERTISER NEWSPAPERS P/L v IRC OF SA AND GRIVELL No. SCGRG-98-1294 Judgment No. S300 [1999] SASC 300 (23 July 1999)