[2] The factual circumstances leading up to the termination are complex and are comprehensively set out in the Commissioner's decision. They do not need to be reiterated in detail in this decision. The appellant does not, in general, cavil with the Commissioner's findings of fact. Rather, she challenged the legal characterisation of the findings. For the purposes of this decision, the facts may be briefly summarised as follows -

• the respondent operates an abattoir at Peterborough, South Australia;

• the appellant was one of about 56 employees employed at the abattoir;

• she was employed by the respondent from about 1992, originally as a labourer;

• as a result of a number of injuries sustained by the appellant commencing in 1994, she was transferred to "light duties";

• these "light duties" took the form of clerical duties which the employer provided and the appellant performed on a relatively ongoing basis;

• during 1999-2000, the respondent incurred a dramatic reduction in production and engaged in a substantial restructuring/downsizing exercise;

• during the course of this exercise, an enterprise agreement, the Metro Velda Pty Ltd (AMIEU - Meat Processing) Peterborough Enterprise Agreement 2000 (the 2000 Agreement)[2], was entered into with the appellant's union

• the agreement came into force on 19 October 2000, prior to the termination of the appellant's employment, and contains a redundancy provision[3] which operates where "the employer decides to scale down all or part of its operations, a position(s) becomes surplus to Company requirements or the Company calls for expressions of interest in redundancy"[4];

• a major effect of the agreement was the facilitation of a reduction in the number of permanent positions at the abattoir;

• contemporaneously with the restructuring/downsizing exercise, the respondent conducted a "stocktake" of its workers compensation recipients;

• the respondent, at that time, had a significantly high level of injured employees, of which the appellant was one, performing "light duties";

• the object of the "stocktake" was to ascertain whether or not the employment of some or all of these employees performing "light duties" could or should be terminated so that such positions would be available for other employees who might, due to injuries, need to be rotated through "light duties" positions;

• at all times during the restructuring/downsizing exercise, the appellant appears to have been treated in the same manner as all other employees in that, for example, she received all communications and notices sent to the employees concerning the exercise and the various offers of voluntary redundancy;

• in early November 2000, the appellant's treating general practitioner confirmed the advice that he had been giving for some months that she should only be doing clerical duties;

• the relevant WorkCover officer formed the view that WorkCover would not, in the circumstances, oppose the respondent not providing the appellant with work;

• the appellant was given four week's notice of termination;

• upon termination, the appellant was paid her statutory entitlements but was not paid any severance pay in accordance with the terms of the agreement.

[3] In his decision, the Commissioner makes the following findings -

• that the appellant was not redundant and not made redundant [para 142],

• that the termination of the appellant's employment was due to the frustration of her contract of employment because she was unable to perform the duties for which she had been contracted and unable to perform suitable work of any kind that was reasonably available [paras 142 and 143],

• that this frustration of the contract of employment constituted a valid reason for the termination of the appellant's employment [para 149],

• that, in relation to the procedural fairness requirements identified in s.170CG(3) of the WR Act, the appellant was given a "fair go" [paras 151-161],

• that he was not satisfied that "in all the circumstances ... the termination of the applicant by the respondent was harsh, unjust or unreasonable in the terms of s.170CG of the Act [para 162].

[4] At the hearing of the appeal on 11 September 2001, an application for leave to amend the appellant's notice of appeal was granted without opposition from the respondent. As a result, the grounds of appeal are -

• that the Commission erred in law failing to find that the appellant's position [was] redundant for the purposes of clause 2.4.1 of the Metro Velda Pty Ltd (AMIEU - Meat Processing) Peterborough Enterprise Agreement 2000, and

• that the Commissioner erred in failing to consider whether the failure to make a severance payment amounted to a failure to afford a fair go all round in the circumstances.

[5] The appeal in this matter is against a decision dismissing an application for relief in relation to termination of employment brought pursuant to s.170CE(1)(a) of the WR Act. That sub-section provides, in so far as is relevant, that "... an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment ... on the ground that the termination was harsh, unjust or unreasonable".

[6] The decision was made following an arbitration proceeding conducted pursuant to 6

[7] The appeal, subject to the grant of leave, is brought pursuant to 8 in the following terms:

If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.

[8] Neither counsel dealt with the question of leave to appeal separately from the merits of the appeal. In the circumstances, it is both convenient and appropriate that we consider the question of leave in conjunction with the merits. However, the proper approach to the granting of leave to appeal should be reiterated.

[9] Section 45(1) of the WR Act makes it clear that an appeal lies to a Full Bench only with leave of the Full Bench. Section 45(2) requires a Full Bench to grant leave if it forms the opinion that the matter is of such importance that, in the public interest, leave to appeal should be granted. If such an opinion is formed, the Full Bench is obliged to grant leave. However, that obligatory basis for granting leave is additional to and does not replace the conventional grounds for granting leave. Such conventional grounds include "whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Bench, or whether substantial injustice would result if leave were refused".[9]

[10] The central issue for determination in an arbitration under s.170CG(3) of the WR Act is whether or not the termination in question was harsh, unjust or unreasonable. That is a decision which is to be reached having regard to all the relevant circumstances. So much is clear from the obligation that the Commission "must have regard to" each of the matters identified in s.170CG(3) of the WR Act, including matters that might fall within paragraph (e) of that sub-section.

[11] The Commissioner approached his determination of this central issue by first addressing the question as to whether the termination of the appellant's employment was due to redundancy or the frustration of her contract of employment. In particular, it appears that the Commissioner considered it necessary to make a finding in relation to that question for the purposes of determining whether or not there was a valid reason for the termination.

[12] The Commissioner concluded that the contract of employment was frustrated firstly because of the appellant's incapacity to undertake the duties for which she was employed, namely the labouring duties, and secondly because of her inability to perform suitable work of any kind that was reasonably available [paras 142 and 143]. He went on to find that this "frustration" constituted a valid reason for the termination of the appellant's employment [para 149]. We do not comprehend the Commissioner's reference to "frustration" as being a reference to the legal concept of "frustration". It is true that he does state that -

... this would not be the first time that the Commission has found that frustration of a contract of employment, specifically a worker's incapacity to undertake the duties for which he or she was employed, constituted a valid reason for termination. [para 149]

However, in the immediately preceding paragraph, he notes that "frustration of the contract of employment in the sense argued by the respondent still requires a dismissal at the employer's initiative" [para 148]. Indeed, in our view, frustration of a contract in the legal sense would more than likely mean that the termination of the employment was not at the initiative of the employer, in which case the Commission would not have jurisdiction to hear an application for relief.

[13] In our view, the Commissioner's approach was neither necessary nor appropriate. In respect to the issue of valid reason, the matter identified by s.170CG(3)(a) as being a matter to which the Commission must have regard is "whether there was a valid reason for the termination related to capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service". It mattered not whether the termination was for reasons of redundancy or "frustration". The proper approach is to ascertain the reason for the dismissal and then determine whether or not it is a valid reason related to capacity, conduct or operational requirements.

[14] In our view, it is apparent from the material before the Commissioner that the termination occurred for reasons related to both the capacity of the appellant and the operational requirements of the respondent's undertaking. The appellant was unable, for medical reasons, to perform the duties of a labourer. For occupational health and safety reasons relating to the rest of the workforce, namely the need for the capacity to rotate injured employees through clerical duties, the "light duties" job that she was capable of performing was no longer available. As we understand it, the appellant accepted the former as a fact and accepted that the latter, for the purposes of this appeal, constituted a valid reason. Whilst we consider that the Commissioner was correct to reach a conclusion that there was a valid reason for the termination, we do not consider it necessary, for that purpose, for any distinction to have been made between a redundancy and frustration.

[15] The Commissioner also recognised in his decision that the termination occurred against a background of the conduct by the employer of a major restructuring/downsizing exercise. Indeed, the fact that the "light duties" jobs were no longer available was, as the Commissioner found, a result of "the respondent's need to drastically prune its workforce" [para 141]. For all intents and purposes, the appellant was treated, during that exercise, in the same manner as her fellow employees. The "stocktake" of employees on workers compensation was conducted simultaneously with and, in effect, as part of an investigation by the respondent of the most effective way of restructuring/downsizing its operations. The restructuring/downsizing exercise led to the employment of many of the appellant's fellow employees being terminated by reason of redundancy, voluntary or otherwise. Each of these employees were being given the benefit of the redundancy provisions in the 2000 Agreement. The appellant was not.

[16] The Commissioner considered this background in determining the question of whether the termination was due to redundancy or frustration and, thus, in our view, for the purposes of determining the question of valid reason. He then dealt with issues relating to procedural fairness, e.g. the notification of a reason, the opportunity to respond, the giving of any prior warning and the investigation of alternatives to termination. However, we are unable to discern anywhere in the Commissioner's decision that he had any regard to this background in determining whether or not the termination was harsh, unjust or unreasonable by reason of the fact that the appellant was not paid, upon termination, in the same way as those of her fellow employees whose employment had been terminated for redundancy reasons.

[17] In our view, the fact that, in the circumstances that pertained at the relevant time, the appellant was not paid, upon termination, a severance payment calculated in accordance with the redundancy provisions of the 2000 Agreement was a matter that, under s.170CG(3)(e) of the WR Act, should have been considered relevant and to which he should, therefore have had regard. We read his references to a "fair go" as being limited to matters referred to in paragraphs (b) to (d) of s.170CG(3). In failing to take into account such a material consideration, the Commissioner has failed to address a matter falling within paragraph (e) of s.170CG(3) and has made an error of the kind described in House v The King, one which warrants intervention on appeal.

[18] Section 45(7) prescribes the actions a Full Bench may take on the hearing of an appeal. For the reasons set out above, we consider that the Commissioner's finding that the termination of the appellant's employment by the respondent was not harsh, unjust or unreasonable constitutes an error for the purposes of s.170JF(2) of the WR Act. We, therefore, grant leave to appeal and, pursuant to s.45(7)(a), quash the Commissioner's decision.

[19] We have considered whether, pursuant to s.45(7)(b), we should ourselves make an order dealing with the subject-matter of the Commissioner's decision or, pursuant to s.45(7)(c), we should direct Commissioner Dangerfield or another member to take further action to deal with that subject-matter in accordance with any directions we might give. We consider that the appropriate course in this case is the former. In view of the peculiar circumstances that preceded and related to the termination of the appellant's employment, we consider that the failure of the respondent to treat the appellant, for the purposes of a severance payment, in the same way as those employees were treated as being terminated for reasons of redundancy, rendered the termination harsh and unjust. We, therefore, make such a finding.

[20] We would emphasise that our conclusion in this respect should not be taken as supporting a proposition either that the appellant was terminated for reasons of redundancy or that the termination, if it had been effected other than against the background of the restructuring/downsizing exercise that existed in this case, would necessarily have been unfair.

[21] We remit the matter back to Commissioner Dangerfield for the purpose of determining what, if any, remedy is appropriate in the circumstances. Determination of such a remedy is to be made in accordance with the provisions of s.170CH and the decisions made in relation to that section. If the Commissioner finds that a remedy is appropriate and that such remedy should be payment in lieu of reinstatement, it does not necessarily follow that the amount of such a payment should be equal to the amount that the appellant would have received if her employment had been terminated for reasons of redundancy.

J. Weatherill and A. Wynman for Lorraine Jutta Taylor.

5 Windsor Smith v Liu and others Print Q3482, 13 July 1998; Woodman v The Hoyts Corporation Pty Ltd Print PR906309, 11 July 2001.

6 Edwards v Giudice [1999] FCA 1836; (1999) 169 ALR 89. See also Chubb Security Australia Pty Ltd v John Thomas Print S2679, 2 February 2000; King v Freshmore (Vic) Pty Ltd Print S4213, 17 March 2000; Ellawala v Australian Postal Corporation Print S5109, 17 April 2000.

7 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 174 ALR 585, 74 ALJR 1348.

8 [1936] HCA 40; (1936) 55 CLR 499, at 505. This passage was cited with approval by the majority in Coal & Allied Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 174 ALR 585, 74 ALJR 1348.

9 Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1998) 84 IR 314, 333.

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