Australian Salaried Medical Officers' Federation (NSW) v Secretary of Health

Relief sought

1. ASMOF submitted that Dr McCarthy had two separate, concurrent employment relationships with the Health Secretary - one in the ACI Role and one in the SESLHD Role. When Dr McCarthy ceased performing the ACI Role when her contract for that position expired, ASMOF contends she was entitled to be paid untaken entitlements accrued during her employment in that position, pursuant to the AH Act and the LSL Act (the 'Leave Legislation').
2. In its initial dispute notification pursuant to s 130 of the Act, ASMOF sought an order that 'Dr McCarthy is paid…an amount in lieu of the leave she accrued while employed in the ACI position at the rate applying to her work in that position'. At hearing, ASMOF clarified it was seeking a determination about the Leave Legislation pursuant to s 175 of the Act and consequent direction that the Health Secretary pay the leave to Dr McCarthy: 175 Powers of interpretation The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument).
3. In the alternative, ASMOF sought an award applying to Dr McCarthy and the Health Secretary 'compensating her for the loss in value of leave entitlements associated with the rollover to the SESLHD position', as setting fair and reasonable conditions of employment.

Interpretation of industrial relations legislation

1. The entitlement to be paid in respect of long service leave may arise upon termination of the worker's 'services': ss 4(2) and 4(5) of the LSL Act. Section 4 of the LSL Act provides that 'every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer'. Section 4(11) of the LSL Act expressly provides: (a) service of a worker with an employer means continuous service, whether on a permanent, casual, part-time or any other basis, under one or more contracts of employment,"
2. 'Service' and 'services' in these provisions is the employment relationship and the proper construction of section 4 is that the entitlement to be paid in respect of long service leave only arises upon the termination of the employment relationship.
3. The entitlement to be paid annual leave upon termination under the AH Act arises under s 4 'where the employment of a worker who has become entitled to one or more annual holidays provided by this Act is terminated'. The Health Secretary relied upon the decision in Mohazab v Dick Smith Electronics Pty Ltd [1995] IRCA 625; 62 IR 200 at 205-206, where the Full Court of the Industrial Relations Court found that the expression 'termination of the employment' in Federal unfair dismissal legislation referred to termination of the employment relationship. More recently, in Khayam v Navitas English Pty Ltd [2017] FWCFB 5162, the Full Bench of the Fair Work Commission similarly considered that the analysis of whether a termination had occurred at the employer's initiative was conducted by reference to termination of the employment relationship, not the termination of the contract of employment operative immediately before the cessation of employment (at [75] per Hatcher VP and Saunders C).
4. I agree with the submission on behalf of the Health Secretary, that 'services' under the LSL Act and 'employment' under the AH Act should in each case be understood as concepts synonymous with the employment relationship, not an employment contract. Consequently, it is only where the employment relationship is terminated that any right to be paid accrued leave manifests.
5. ASMOF did not dispute that Dr McCarthy was continuously employed in the SESLHD Role. Rather, ASMOF submitted that Dr McCarthy's service or employment with the Health Secretary in the ACI Role was terminated for the purpose of the Leave Legislation, because it was a concurrent yet separate employment relationship with the Health Secretary. Accordingly, when the last contract for the ACI Role concluded, the leave entitlements which accrued during her performance of that role were payable because that employment terminated (even though the other employment in the SESLHD Role continued). Mr Morgan expressed it in oral submissions as follows: "This [the ACI Role] was a standalone and separate contract of employment which was being dealt with concurrently and we say that it is that concurrence and separation which is the distinction…." "There is an employment relationship ongoing, that is…the fundamental aspect of our position…that Dr McCarthy's employment as an emergency physician is ongoing. Dr McCarthy's employment as a director of one of the separate organisations within NSW Health which required in fact a change to her permanent employment to take on a fixed term contract was a separate …and separable contact of employment."
6. ASMOF submitted that there were two separate 'employment relationships' on foot with the one employer, the Health Secretary, due to the 'separateness and uniqueness' of the two contracts under which Dr McCarthy performed work. It was submitted that each contract should be considered at the time it was entered into, to determine the intention of the parties, which in the case of the contracts for the ACI Role was that they were something distinct and separate to the SESLHD Role. In support of this submission, Mr Morgan relied upon the different nature of the work performed by Dr McCarthy in the ACI Role and the SESLHD Role, the fact that one contract was for a fixed term and the other was ongoing, the different work locations and separate administrative arrangements for accrual and access to leave.
7. ASMOF referred to the decision of Commissioner Asbury of the Queensland Industrial Relations Commission in Queensland Independent Education Union of Employees and Moreton Bay College (2002) QIRComm 175. However that decision dealt with the question of concurrent employment contracts, not concurrent employment relationships with the one employer. Commissioner Asbury found there were two contracts of employment operating concurrently, resulting in the application of two different Awards to an employee performing work as a grounds person and caretaker respectively. Further, the issue of statutory leave entitlements paid upon termination under one of the two concurrent contracts was not considered.
8. ASMOF also relied upon the terms of a Queensland Health Human Resources Policy that provided for multiple engagements with Queensland Health at the same time, whereby leave is paid out at the end of such engagement, even though the employment with Queensland Health continues. This policy has no application to the NSW Health Secretary, nor do the provisions of the NSW Leave Legislation apply to Queensland Health. No relevant guidance can be obtained from the approach of a government department in another State that is regulated by a different statutory scheme.
9. I agree with the submission by Mr Dixon that ASMOF's approach erroneously equates 'relationship' with 'contract'. I was not taken to any definitive authority regarding concurrent employment relationships with one employer, in the context of the Leave Legislation or more generally. Further, even if concurrent relationships (as opposed to contracts) could legally exist, I do not consider there is sufficient evidence of the intention of the parties that Dr McCarthy was engaged on such basis, or that her employment was so 'unique' as to somehow create a separate employment relationship with the Health Secretary.
10. The ACI Role contracts expressly state that Dr McCarthy's employment was covered by the Staff Specialists (State) Award, the same Award applying to the SESLHD Role, which specifies the employer as the Health Secretary. Dr McCarthy's continuity of service with the Health Secretary, her sick leave entitlement and her Training, Education and Study Leave (TESL) entitlement accrued during the ACI Role contracts have been maintained. Consistent with this intention, the NSW Health Separation Form completed by Dr McCarthy on completion of the ACI Role in June 2017 expressly states that annual leave and long service leave could be paid out upon 'exit from NSW Health only'. Dr McCarthy has not exited, but remains employed by the Health Secretary within NSW Health, performing the SESLHD Role.
11. I find that Dr McCarthy's employment with the Health Secretary has not terminated for the purposes of the Leave Legislation. Section 3(5) of the AH Act relevantly provides that 'except as provided in section 4 [relating to payment on termination of employment]... payment shall not be made by an employer to a worker in lieu of any annual holiday or part thereof to which the worker is entitled under this Act nor shall any such payment be accepted by the worker'. Section 11 of the AH Act provides for penalties for breach of the AH Act. Section 4(8) of the LSL Act is in the same terms as the AH Act: 'Except as provided by subs (5) [relating to payment on termination of employment] payment shall not be made by an employer to a worker in lieu of any Long Service Leave or part thereof nor shall any such payment be accepted by the worker". The equivalent provisions around penalty then appear in s 10 of the LSL Act. Consequently, if the Health Secretary were to make a payment in respect of long service leave or annual leave to Dr McCarthy in respect of the ACI Role, this would contravene the provisions of the Leave Legislation which prohibit cashing out during employment.

Power to make direction

1. In any event, I do not consider the Commission has power to make an order or direction that the Health Secretary make a payment to Dr McCarthy. The relevant powers of the Commission in arbitrating a dispute are contained in s 136 of the Act: 136 Arbitration of Dispute (1) The Commission may, in arbitration proceedings, do any one or more of the following: (a) make a recommendation or give a direction to the parties to the industrial dispute, (b) make or vary an award under Part 1 of Chapter 2, (c) make a dispute order under Part 2, (d) make any other kind of order it is authorised to make (including an order made on an interim basis). (2) Any such action may be taken by the Commission on its own initiative or on application by any person authorised to notify the Commission of the industrial dispute. Note : Examples of other kinds of orders the Commission may make are orders for secret ballots (section 172), a demarcation order under Part 6 of Chapter 5 and stand-down orders (section 126).
2. In New South Wales Local Government, Clerical, Administrative, Energy Airlines and Utilities Union v Warringah Council [2015] NSWIRComm 1012, Newall C was asked to make orders in in the arbitral phase of an industrial dispute involving changes to rostering arrangements in place for 10 years under an enterprise agreement that was being terminated. The Commissioner noted as follows: [51] Orders can be made arising out the arbitral phase of any industrial dispute. Quite apart from dispute orders under Part 2 of Chapter 3 of the Industrial Relations Act 1996 ('the Act'), which is expressly not the kind of order that I here propose to make, the Commission may pursuant to s.136(1)(d) make any other order that it is authorised to make. [52] I am conscious that the Commission's arbitral powers in s.136 are not at large: NSW Teachers Federation v Department of Education and Training (2003) 121 IR 177 at [31]. [53] However, in my view the Commission is authorised to make an order that the parties to an industrial dispute maintain the status quo ante in relation to, for example, terms and conditions of employment that have operated between them: Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244. The Commission is equally able to make an order that operates to provide fairness: Health Services Union NSW and Central Coast Local Health District re Regrade Policy [2013] NSWIRComm 44, which in this case would hold parties to representations they have made to each other in relation to the subject matter of a dispute. Were I wrong about that, the Commission has in my view power to make orders as it sees appropriate to fulfil the Objects of the Act, in this case particularly the Objects set out in subs.3 (a), (g) and (h).
3. A direction to make a payment of money owed to an individual employee under the industrial relations legislation is of a qualitatively different nature to the orders made by Commissioner Newall to maintain the status quo under a pre-existing, long standing enterprise agreement. None of the orders related to the payment of money to any employee. Further, in the present matter, there is no evidence that the Health Secretary made representations to Dr McCarthy, or conduct itself on the basis, that her leave entitlements would be paid out upon the expiry of her ACI Role.
4. The Commission is not 'at large' to make any order it wishes in resolution of an industrial dispute to rectify unfairness. Even if I considered Dr McCarthy had been treated unfairly by the Health Secretary, that is an insufficient basis upon which to order the payment of money to her. There are provisions in the IR Act which confer power on the Commission to make such an order, contained in s 380 'Small Claims During Other Commission Hearings'. The other provisions in Chapter 2 of Part 7 of the Act 'Recovery of Remuneration and other Amounts' deal with orders that can only be made by an 'industrial court', not the Commission.
5. It is also noteworthy that in the resolution of disputes under Part 2 of Chapter 3, s 137(3) provides that 'a dispute order may not provide for the payment of compensation, lost remuneration or any other amount'.
6. Further, the provisions of Chapter 2 of Part 7 of the Act regarding recovery of remuneration and other amounts, deal with recovery under industrial instruments not the industrial relations legislation (which includes the Leave Legislation). If amounts have not been paid to an employee as required under the Leave Legislation, the cause of action is for contravention of that legislation through the courts. If liability exists, the money can be recovered in addition to imposition of a penalty.
7. In this statutory context, a direction by the Commission in resolution of an industrial dispute that an employer make payment to an employee for an entitlement under the Leave Legislation (so determined) is an exercise of judicial power and beyond the orders that the Commission is authorised to make.

Making an award or recommendation

1. In the alternative ASMOF sought an award applying to Dr McCarthy and the Health Secretary 'compensating her for the loss in value of leave entitlements associated with the rollover to the SESLHD position', as setting fair and reasonable conditions of employment.
2. Section 10 of the Act provides that the Commission may make an award setting 'fair and reasonable conditions of employment for employees'. Section 11 of the Act further provides that an award may be made 'in the course of an arbitration by the Commission under Chapter 3 to resolve an industrial dispute', confirmed by s 136(1)(b) of the IR Act.

Fair and reasonable conditions

1. I have found that Dr McCarthy's employment did not terminate when her ACI Role ended by reason of the expiry of the last contract applying to that role, for the purpose of the Leave Legislation. She accordingly does not have a statutory entitlement to be paid out her annual leave and long service leave. Further, and relevantly in respect of the alternative relief sought by ASMOF, it would be contrary to the Leave Legislation to make such payment. In such circumstances, I am unsure what factors would persuade the Commission to make an award requiring an employer to nevertheless make such payment in resolution of a dispute. However in my view, they are clearly not present in this matter.
2. It was submitted that Dr McCarthy's situation was an 'unusual event' and she has been subject to unfairness that should be remedied by the making of an award in her particular circumstances. Mr Morgan submitted that the usual course would be to second Dr McCarthy to the ACI Role, however this was not offered to her and Dr McCarthy was 'required' to relinquish her SESLHD Role to take up the ACI Role. It was also Dr McCarthy's expectation that she would have some permanency in the ACI Role, which did not eventuate. It was submitted that these factors resulted in unfairness.
3. I do not question the genuineness of Dr McCarthy's feeling that she has been treated unfairly by the Health Secretary. It appears she did not fully understand or think through what may happen with annual and long service leave that she accrued but did not take during the ACI Role, if she was not offered extensions of the ACI Role in 2014 or in 2017. She also appears to be aggrieved by the failure of ACI to offer her an extension in 2017, based on an expectation of permanency. However general considerations of unfairness in the operation of an individual employment relationship do not, in my view, provide a proper basis for making an industrial award setting fair and reasonable conditions of employment.
4. There is also evidence that militates against a finding of unfairness in the circumstances. Dr McCarthy stated that part of her decision to accept the ACI Role was the fact that it was 0.5 Full Time Equivalent and she did not maintain 0.5 Full Time Equivalent hours in the SESLHD Role because she also wanted to work in an honorary position at that time, the duties of which were time-consuming. These are not, to my mind, indications that Dr McCarthy was 'required' to adopt the course that she did. The contracts for the ACI Role were clearly not offered on a secondment basis but rather expressed to be on a temporary fixed term basis. Dr McCarthy nevertheless accepted the contract for the ACI Role on each occasion. Further, the written communication she received in respect of the SESLHD Role in 2011 was that her 'application for a permanent reduction of hours' from 1.0 Full Time Equivalent to 0.25 Full Time Equivalent was approved.
5. The issue of 'cherry picking' between entitlements is also a relevant consideration. As noted above, the Separation Form in respect of the completion of the ACI Role sought for Dr McCarthy's annual leave and long service leave to be 'paid out (Exit from NSW Health Only)', but her sick leave and TESL to be 'transferred'. TESL and sick leave entitlements are valuable entitlements that would typically expire upon termination of employment. However Dr McCarthy remains employed and able to take all of these forms of leave - TESL, sick, annual and long service leave. In my view, creating an award for Dr McCarthy that applies an inconsistent approach between her leave entitlements, retaining some but allowing cashing out of others, goes beyond setting 'fair and reasonable' minimum conditions. This is particularly in circumstances where the Leave Legislation does not permit paying the entitlements during employment, and it is contrary to the expressly stated policy of the employer.
6. If more reason were needed to decline to grant the alternative relief sought, Mr Dixon outlined certain policy considerations which I consider further support the exercise of discretion against making any award: 1. ASMOF did not identify any other circumstances in which NSW Government employees have successfully sought an award in the nature of that claimed for Dr McCarthy; 2. the Government Sector Employment Regulation 2014 (NSW) provides in Part 2 of Schedule 2 that a government sector employee may elect to be paid the money value of accrued leave where the employee commences work in another agency. There is no equivalent right to payment for leave for an employee who commences work and transfers within a State Government sector agency ie. within the Health Service; and 3. the NSW Health Policy Directive PD2017_028 "Leave Matters for the NSW Health Service" which applies to Dr McCarthy's employment provides as follows: 15.3 Employees transferring within the NSW Health Service When employees move between Divisions of the NSW Health Service, there is no termination of service as they retain the same employer and therefore retain their accrued leave entitlements. Dr McCarthy agreed in her 2014 contract for the ACI Role that a condition of her employment was "Compliance with all applicable public health organisation and hospital policies and protocols, and with applicable Policy Directives and Guidelines issued by the NSW Health..":
7. I decline to make an award in settlement of this dispute. The same considerations that form the basis of my view that making a new award is not required to provide fair and reasonable conditions of employment, equally apply to a decision not to make a recommendation that the Health Secretary pay the leave entitlements to Dr McCarthy in the circumstances.

Orders

1. The application is dismissed. JANE SEYMOUR Commissioner DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 August 2018