(c) Clause 25 of the award is entitled "Superannuation" and provides benefits by reference to the Superannuation Guarantee legislation with additional provisions as to an industry superannuation fund, employer membership of the fund, employee eligibility, definition of ordinary time earnings for contribution purposes and employer contributions.
Consideration and conclusions
34 Both the appeal and the cross appeal require determination of the same point. The issue might be described as follows: was the respondent's employment frustrated as a result of her illness or incapacity and therefore determined by operation of law; and if so, on what date? The practical significance of these questions, for present purposes, is the consequent effect any resolution of them will have on the respondent's rights as to payment for long service leave and, in terms of the parties' agreement, annual leave.
35 The appellant has referred us to numerous authorities in the course of its submissions including, as earlier referred to, Marshall v Harland & Wolff , Simmons Limited v Hay , Finch v Sayers, Durham v Westrail and Cachia v State Authority Superannuation Board .
36 Counsel for the appellant contended that the principles in Marshall v Harland & Wolff were applicable to the determination of this appeal. In that case a shipyard fitter with some 25 years of service, was absent from work due to illness from October 1961 until the plant at which he worked closed in April 1971. The employee was terminated on notice of the plant closure. The employee sought redundancy. The Court was required to determine whether or not the employment had been avoided at a point earlier than the notice given, on account of the contract having been frustrated. The principles espoused by the Court, on which the appellant in these proceedings relies, are to be found at 903 - 904 of the report:
In the context of incapacity due to sickness, the question of whether or not the relationship has come to an end by frustration sounds more difficult than it is. The tribunal must ask itself: 'Was the employee's incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the employer under the agreed terms of his employment?' In considering the answer to this question, the tribunal should take account of:
(a) The terms of the contract, including the provisions as to sickness pay; The whole basis of weekly employment may be destroyed more quickly than that of monthly employment and that in turn more quickly than annual employment. When the contract provides for sick pay, it is plain that the contract cannot be frustrated so long as the employee returns to work, or appears likely to return to work, within the period during which such sick pay is payable. But the converse is not necessarily true, for the right to sick pay may expire before the incapacity has gone on, or appears likely to go on, for so long as to make a return to work impossible or radically different from the obligations undertaken under the contract of employment.
(b) How long the employment was likely to last in the absence of sickness; The relationship is less likely to survive if the employment was inherently temporary in its nature or for the duration of a particular job than if it was expected to be long term or even lifelong.
(c) The nature of the employment; Where the employee is one of many in the same category, the relationship is more likely to survive the period of incapacity than if he occupies a key post which must be filled and filled on a permanent basis if his absence is prolonged.
(d) The nature of the illness or injury and how long it has already continued and the prospects of recovery; The greater the degree of incapacity and the longer the period over which it has persisted and is likely to persist, the more likely it is that the relationship has been destroyed.
(e) The period of past employment; A relationship which is of long standing is not so easily destroyed as one which has but a short history. This is good sense and, we think, no less good law, even if it involves some implied and scarcely detectable change in the contract of employment year by year as the duration of the relationship lengthens. The legal basis is that over a long period of service the parties must be assumed to have contemplated a longer period or periods of sickness than over a shorter period. "These factors are inter-related and cumulative, but are not necessarily exhaustive of those which have to be taken into account. The question is and remains: 'Was the employee's incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and accepted by the employer under the agreed terms of his employment?' Any other factors which bear on this issue must also be considered."
37 It was conceded by the appellant, however, that none of the authorities relied on related to a circumstance in which the employment of the worker in question was governed by an industrial award. The closest example would be that of Durham v Westrail . We have found a number of the authorities to which we have been referred of limited assistance in determining this matter.
38 We consider that the authority which provides relevant assistance is the judgment of Wootten J in the Equity Division of the Supreme Court in Finch v Sayers . His Honour's judgment was described by the Full Industrial Court in Cachia v State Authority Superannuation Board at 273 - 274 as "the principal relevant authority relating to the question of frustration of employment contracts" in New South Wales, and that the reasoning of Wootten J was "overwhelmingly persuasive in a modern industrial context". We consider that those observations are correct and that his Honour's judgment has particular significance in relation to award-related employment. Such employment (except where casual in nature) may usually be described as employment of indefinite duration. Such employment is the subject of terms drawn from either the award or the contract of employment which invariably provide a ready facility for termination of the employment by either party to the contract of employment. That is the situation in the present case.
39 The significance and utility of the judgment in Finch v Sayers lies not only in Wootten J's conclusions but also in his Honour's careful analysis of contemporary employment law and regulation and the way in which such circumstances have affected legal notions developed in times when employment relations and attitudes to such relationships were very different. It is not necessary for the disposition of these appeals to refer in detail to the whole of his Honour's exposition of the pertinent legal and policy considerations. However, the following passage from the judgment (at 546 - 547) usefully provides the basis of his Honour's reasoning:
One cannot but feel reluctance to embrace a view of the law of contract which produces a result not only contrary to what was a common assumption and basis of action of both parties, but contrary also to what common experience tells one is the normal basis on which employers and employees conduct their relationships today in this community, when permanent or indefinite employment is contemplated. If, as the defendants contend, the authorities constrain me to this course, I must adopt it. But I cannot accept that the proper starting point for consideration of this particular matter is the view adopted by the courts in England one hundred years ago of the consequences of an opera singer being disabled by illness: Bettini v Gye (1876) 1 QBD 183; Poussard v Spiers (1876) 1 QBD 410 or even the general view of the rights of an ordinary servant at that time: Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125. Certainly one can no longer assimilate an employee becoming ill to a chartered ship going aground, as was considered natural in the judgment last cited. Decisions of that era are quite natural and sensible expositions of the terms to be implied in contracts of employment in the laisse faire society of one hundred years ago, when the usual rights and obligations of an employee were quite different from what they are in the highly unionised welfare society of today. But it is a misconception to attempt to weave out of these decisions on the construction of contracts at that time rules of law to be applied automatically to regulate the rights of parties today.