[1] This decision deals with an appeal by MM Cables - A Division of Metal Manufactures Limited (MM Cables) against the decision and order of Commissioner Wilks in Print S3119 made on 10 February 2000. Mr Victor Zammit was the applicant in the proceedings below and is the respondent in the matter before us. In the decision subject to appeal the Commissioner concluded that the termination of Mr Zammit's employment was "harsh, unjust and unreasonable". The Commissioner then considered the question of remedy and decided that it was appropriate to make an order of reinstatement (s.170CH(3)(b)) together with an order to maintain the continuity of Mr Zammit's employment (s.170CH(4)(a)). The order giving effect to the Commissioner's decision is in the following terms:

"1. That Metal Manufactures Ltd appoint the applicant, Mr Victor Zammit to a position on terms and conditions no less favourable than those on which Mr Zammit was employed immediately before the termination of his employment on 5 February 1999.

2. That with the exception of payment of wages only, Mr Zammit's employment with Metal Manufactures is to be treated as continuous for all purposes.

3. These orders come into operation from the beginning of the first pay period commencing on or after 21 February 2000."

[2] Before we turn to examine the decision subject to appeal and the grounds advanced in support of the appeal we propose to briefly set out some of the background to the termination of Mr Zammit's employment.

[3] Mr Zammit commenced employment with the appellant on 2 June 1969. On 15 October 1997 Mr Zammit reported to his supervisor, Mr Gary Allen, that he had injured himself at work the previous day. Mr Zammit sustained an injury to his right shoulder while handling a 24 inch spool at work. As he was sliding the spool off a stack on a pallet it slipped, while he was holding it, and he felt a pinch and a shock to his right upper limb. Mr Zammit continued to perform his normal duties for some two months after his injury, thinking his symptoms would subside. After the Christmas break he reported on-going pain to his shoulder.

[4] On 5 January 1998 the appellant's occupational health and safety officer, Ms Myrna Cruz, sent Mr Zammit to see Dr Goyal at the Liverpool Medical Centre.[1] After examining Mr Zammit Dr Goyal completed an alternative duties form in which he identified the following restrictions:

"(i) Avoid heavy lifting using right hand, more than 5 kg;

(ii) Avoid repetitive use of right shoulder/right hand."[2]

[5] On the basis of Dr Goyal's advice Ms Cruz prepared a rehabilitation program for Mr Zammit.[3] The rehabilitation program describes the restrictions on Mr Zammit's duties as follows:

- no lifting of more than 5 kg using the right hand;

[6] On 5 May 1998 Ms Cruz referred Mr Zammit to Industrial Rehabilitation Service Pty Ltd ('IRS') for further rehabilitation. On 28 May 1998 Ms Royo, an occupational therapist with IRS produced a return to work program for Mr Zammit.[4] Ms Royo was subsequently replaced as Mr Zammit's occupational therapist by Mr Travis. At this time, July 1998, Mr Zammit was performing full time selected duties consisting of two hours per day of modified pre-injury machine operating and six hours per day operating the high speed vertical taping machine.

[7] A copy of the return to work program prepared by Mr Travis is set out as Annexure L to Ms Cruz's witness statement, Exhibit M4. This program involved a progressive return to Mr Zammit's pre-injury duties in three stages:

• 4 hours/day working on the hi-speed vertical taping machine

• full hours working on pre-injury machine operator duties.

[8] Mr Zammit's pre-injury duties were subject to the following modifications:

"Mr Zammit must request assistance to align large spools at the take up end of the machine. Mr Zammit is to roll spools from pallets only when they are stacked one layer high (this eliminates lifting). Mr Zammit is to request removal of pallets which are stacked above 1 layer."

[9] In a report dated 24 July 1998 Mr Travis stated that he anticipated that Mr Zammit "may be capable of resuming his full pre-injury duties from 10 August 1998".[5] This opinion was consistent with that of Mr Zammit's treating doctor, Dr Goyal, who advised on 10 June 1998 that Mr Zammit should be able to resume his pre-injury machine operating duties within six weeks.[6]

[10] On 5 August 1998 Mr Zammit consulted an orthopaedic surgeon, Dr Bokor, in respect of his condition. Dr Bokor's report to Mr Zammit's doctor is in the following terms:

"Thank you for asking me to see the above gentleman, who is 52 years and right hand dominant, for an opinion regarding his right shoulder. He injured himself at work when he was going some lifting in October last year and has had ongoing problems of pain around his shoulder though this seems to have improved with a cortisone injection, physiotherapy and time. Currently he is able to work with modified duties.

Clinical examination shows some tenderness over the greater tuberosity and AC joint. He has a good range of motion with only slight end range restriction. Strength is fairly reasonable though there is mild pain on cuff load.

Review of his x-rays shows some mild degenerative changes in his AC joint and a cured acromion.

This gentleman has mild cuff tendinitis which seems to be improving.

For the moment I would recommend ongoing conservative management by way of activity modification and care in use of the arm. I do not feel at this stage there is an urgency in rushing in and doing any surgery. I have reassured him of this and returned him to you for the ongoing care."[7]

[11] On 13 September 1998 Mr Zammit's rehabilitation file with IRS was closed.

[12] In December 1998 Mr Zammit was examined by Dr Burns. The appellant retained Dr Burns as a consultant occupational physician to manage rehabilitation cases and to liaise with medical specialists in long term rehabilitation cases. Mr Zammit had been seeing Dr Burns every four weeks. On this occasion Mr Zammit experienced what he described as "rough treatment" during the course of Dr Burns' examination. Mr Zammit described what occurred in the following terms:

"… This particular day, for some reason he was very, very rough with me. He lifted my arm, he jerked my arm two or three times, he stuck his thumb between my join - my CD - oh, whatever they call the joint, he stuck his finger in there. He was hurting me real bad and he - after he finished, I was in pain, I didn't say nothing…

I have seen several doctor plus specialist - top specialist, and none of these people have done anywhere near what he done to me on that particular day."[8]

[13] Mr Zammit experienced considerable pain for three to four days after Dr Burns' examination and was unable to sleep as a result. Before the examination his shoulder condition had been improving[9] and it returned to it's normal state some three to four weeks after the examination. Mr Zammit informed Ms Cruz that he did not want to see Dr Burns again. He was informed that he would have to see Dr Burns. In January 1999 Mr Zammit saw Dr Burns for his scheduled examination and at Mr Zammit's request he was accompanied by the union delegate. Mr Zammit described the examination in the following terms:

"He asked me to stand up, he asked me to take the shirt off. He stood about 1 metre away from me and he told me what he wanted me to do by lifting my right arm, put it back. He never touched me, any part of my body whatsoever."[10]

[14] Dr Burns subsequently forwarded a report to the appellant in respect of Mr Zammit's condition. As this report formed the basis of the appellant's decision to terminate Mr Zammit's employment we have decided to set it out in full:

"On 14 October 1997 Mr Zammit was unloading 24' spools from a pallet when he developed pain in his right shoulder. He consulted his General Practitioner and was certified unfit for two days. On returning to normal duties he reports that his shoulder was still painful but he thought that it would settle. He continued on normal duties until Christmas 1997.

On 5 January 1998 he consulted Dr Goyal due to ongoing shoulder pain. He was placed on selected duties with restrictions on lifting with the right shoulder and on working overtime. He was referred to physiotherapy. X-rays and an ultrasound of his right shoulder revealed no acute injury. He remained on restricted duties until June 1998 when a referral was made to IRS for rehabilitation. Assessments were carried out in July 1998 and a rehabilitation plan implemented. Mr Zammit appeared to be making good progress in August and September 1998 and was reviewed by Dr Bokor, Orthopaedic Surgeon in August 1998. It was felt that he had a mild tendonitis in the shoulder associated with degenerative changes.

His rehabilitation case was closed in September 1998 as it was felt that he would return to normal duties in the short term. Unfortunately this has not been the case and his right shoulder has in fact deteriorated. He has been unable to upgrade from his low level of selected duties and appears to have significant discomfort in the right shoulder.

He has now been on selected duties for over 12 months and there is little chance that he will be fit for full duties in the foreseeable future. He has degenerative disease in his right AC joint and shoulder which is being treated conservatively. There are no plans to operate on the area and his disability must now be considered to be permanent.

In conclusion Mr Zammit has a permanent disability in his right shoulder from degenerative changes aggravated by a lifting incident at work in 1997. He is currently unfit for normal duties and will remain so for the foreseeable future."[11]

[15] On 4 February 1999 Mr Zammit was told to go to the office for a meeting the following day. He was not told the purpose of the meeting.[12] Mr Zammit's recollection of what took place at the meeting on 5 February 1999 is set out in his evidence in the following terms:

"Hamavand said, "Vic, you just been terminated." Even though I heard it, I couldn't believe it. Automatically I said, "What?" He said, "Vic, you have been terminated." I have said, "Why?" He said, "Going by Mr Burns report and also by your own doctor report, that your shoulder - your right shoulder - will never be any good any more." I have said, "I'm doing as much production as everybody else." You can get the daily book that we write what we do in the - in our 8-hour and you can compare my work with other people's work. I'm doing just as much." He never answered. He never said nothing. … And then I said, "Hamavand, it looks like you're going to - if you're going to put me in a scrap heap. Scrap heap, you know?" And he looked at me and he give me a smile and he nodded like so …"[13]

[16] At the relevant time Mr Hamavand Shroff was the Factory Manager of Factory 1 for MM Cables. In his witness statement he sets out his recollection of the meeting:

"On 5 February 1999 at 12.30pm I attended a meeting held in my office. The purpose of this meeting was to inform Mr Zammit that, due to his medical condition, his employment was to be terminated. Also present were Mr Zammit, Mr Colin Minns, the National Union of Workers delegate in Factory 1, Ms Butterworth and Ms Cruz. Ms Butterworth handed Mr Zammit a letter and said words to the following effect:

"Victor, based on the medical advice we've got from the doctors you're not able to come back to full duties so the company has to terminate your employment."

I don't recall that Mr Zammit said anything in reply. Annexed to this Statement and marked with the letter "G" is a copy of the letter given to Mr Zammit.

At this point Mr Zammit and Mr Minns left my office to have a separate meeting. This separate meeting lasted approximately 10 minutes. Upon their return I said words to the following effect to Mr Zammit:

"Victor, thank you for your service to MM Cables."

Mr Zammit then left the building."[14]

[17] The letter terminating Mr Zammit's employment is in the following terms:

"You are hereby advised that your employment with this company will terminate on 5 February 1999 by 5 weeks pay in lieu of notice.

Your employment is terminated based on medical advice regarding your medical condition.

This termination is in accordance with the rehabilitation programme and termination procedures in place at MM Cables."[15]

[18] The letter was signed by Ms Michelle Butterworth, the Human Resources Administrator. Ms Butterworth did not give evidence during the proceedings. During the course of his cross-examination Mr Shroff had difficulty recalling what was said during the meeting.[16] It also appears that he was mistaken as to Ms Cruz's attendance at the meeting. In his statement Mr Shroff said that Ms Cruz was in attendance and he confirmed this during his oral evidence.[17] But Ms Cruz says she did not attend[18] and that was also Mr Zammit's recollection.[19] In any event Mr Shroff did not contradict Mr Zammit's recollection of the interview, rather he was simply unable to recall what was said by Mr Zammit.

[19] At the conclusion of the meeting on 5 February 1999 Mr Zammit was escorted off the premises by Mr Renton, the Assistant Factory Manager, at Mr Shroff's direction. Mr Renton apparently accompanied Mr Zammit to his place of work to pick up his belongings, to the change room to change and then to his car so he could leave the premises.[20]

[20] Two further matters should be mentioned. First, the appellant operated a voluntary redundancy scheme in 1998. Mr Zammit had applied for voluntary redundancy in September 1998 but was not accepted. At that stage the appellant had determined that it wished to retain Mr Zammit's skills.[21] Some other grade 3 operators had been accepted for voluntary redundancy.[22] If Mr Zammit's application for voluntary redundancy had been accepted it is reasonable to assume that given his lengthy service he would have been entitled to a substantial redundancy payment.

[21] The second matter concerns the ownership of MM Cables. In December 1998 negotiations took place between Metal Manufacturers and Pirelli concerning the sale of the MM Energy Products Division - of which MM Cables was a part - to Pirelli. The sale was completed on 1 April 1999. Mr Zammit was never an employee of Pirelli. As a consequence it is common ground that the Commission could not make an order reappointing Mr Zammit to the position in which he was employed immediately before the termination.

[22] On 10 May 1999 Mr Zammit lodged an application for relief in respect of the termination of his employment under s.170CE of the Workplace Relations Act 1996 (Cth) (the WR Act). The matter was not settled by conciliation and proceeded to arbitration before Commissioner Wilks.

[23] Mr Zammit's application for relief was heard on 25 January 2000. On 10 February 2000 the Commissioner issued a decision in respect of that application. In relation to the matters in s.170CG(3) the Commissioner found that:

- the reason given for the termination of Mr Zammit's employment was not a valid reason;

- the applicant was informed of the reason for his termination;

- the applicant was not given an opportunity to respond to the reason for his termination;

[24] In relation to s.170CG(3)(e) the Commissioner considered that two matters were relevant:

"Firstly, in relation to the efforts made by the respondent there can be no criticism of it's commitment to rehabilitating the applicant. However, given that the respondent had been quite satisfied to retain the applicant despite pre-existing injuries which hindered his ability to perform the tasks required in the operation of other machines, I find that the almost summary way in which the applicant dealt with the applicant at the time of the termination to be harsh, unjust and unreasonable. This harshness, unjustness and unreasonableness is all the more profound when account is taken of the fact that the applicant had served in the employ of the respondent for over 29 years.

Secondly, despite earlier comments above about the commitment of the respondent to rehabilitation of the applicant, there was not an appreciation by Mr Shroff or by Ms Heine in particular of the fact that the applicant was performing the same tasks (save for assistance which aggregated 15 minutes per week) as he performed pre-injury. The sole basis for the termination was the letter from Dr Burns. There is no evidence before me which demonstrates that the doctor either knew or understood what the applicant's "normal duties" involved. If it was assumed that the applicants "normal duties" involved heavy lifting, this was not a correct assumption, given the evidence about other employees doing the same work also receiving assistance despite being able-bodied."[23]

[25] On the basis of these findings the Commissioner concluded that the termination of Mr Zammit's employment was "harsh, unjust or unreasonable". The Commissioner went on to make orders under s.170CH(3)(b) and s.170CH(4)(a).

[26] There are three broad limbs to the appeal against the order made by Commissioner Wilks.

[27] First, it is contended that the Commissioner failed to properly identify the status of Mr Zammit's employment prior to his termination. In this regard it was contended that Mr Zammit was not performing the full range of his pre-injury duties. In the written submissions filed on behalf of the appellant Mr Moore says:

"Zammit was essentially restricted to one machine requiring assistance as part of a rehabilitation programme at the time of his termination and was not working his 'usual machine' (rewinding machine) (AB:97/2).

The evidence of Heine (AB:82/1) indicates that Zammit's injuries were affecting his ability to be used in a flexible rotation. This was further expanded upon by Schroff (AB:120/10-17). There is no doubt that Zammit could not return to his pre-injury duties. On his own admission all restrictions first identified in January 1998 remained as at the date of his termination (AB:70/8-18) and would also affect his ability to be placed in another position even if this be in Port Kembla."[24]

[28] The extent to which Mr Zammit's injury restricted his capacity to perform his pre-injury duties was a central issue in the proceedings at first instance and on appeal. Prior to his injury Mr Zammit's principal area of work was as an operator of the light rewind/repair machine (P14-51-B) (the "winding machine").[25] In simple terms this machine rewound a large spool of cable onto a number of smaller spools. Mr Zammit operated the machine to ensure that assigned tasks were carried out according to the specifications set out in a job card. He also monitored the quality of the cable as it ran through the machine.[26] According to a workplace assessment carried out by IRS, Mr Zammit's work on the winding machine involved:

• Rolling 24 inch spool weighing 25-30 kg to the head of the machine. A crane is used to load the head of the machine spool.

• The head of the machine weighing 5-8 kg requires changing when the thickness of the spool differs. This is on an occasional basis.

• Once the head is set, the 9 inch spool is rolled in front of the loading side, axle is placed through and a lever is pulled in order to lift the spool into place.

• Once the machine is in operation the operator needs to guide the cable along the spool in order to make it even.[27]

[29] Mr Zammit confirmed that this was an accurate description of the work he did.[28]

[30] Mr Zammit's evidence was that after his injury the time he spent working on the winding machine was progressively increased, consistent with the terms of his return to work program (see paragraph 7 of this decision). At the end of that process he was working on the winding machine for a full shift of eight hours.[29] Mr Zammit received some limited assistance to enable him to perform his duties on the winding machine. In particular he received assistance from the team leader or leading hand to perform two aspects of his work on the winding machine:

- empty spools would be taken off the pallet so that they were only stacked one spool high (this task would only take about 3-5 minutes and depending on the number of operators using the empty spools it may have to be done a number of times a day);

- loading the full spool onto the machine (this task takes about 4-5 minutes and has to be done once a day, on average).

[31] During the time that Mr Zammit was operating the winding machine - either before or after his injury - no complaint was made to him about the work he was doing.[30] Nor did his team leader or leading hand say to him, at any stage, that it was inconvenient or a problem to load the winding machine for him or to unload the empty spools from the pallet. Indeed Mr Zammit's evidence was that his team leader provided similar assistance to a number of other employees who were not suffering from an injury.[31]

[32] Towards the end of his rehabilitation program Mr Zammit worked full-time on the winding machine for about a week and a half.[32] At that time he was directed by his team leader to move to the mica taper machine due to production demands in that area. He remained on that machine until his termination some three to four months later.[33] Mr Zammit needed some limited assistance in operating the mica taper machine - namely in loading the full spools onto the machines. This machine also uses tape cartridges and Mr Zammit's evidence was that he loaded these cartridges himself, without assistance.[34] We note here that Mr Shroff's evidence was that "Mr Zammit was unable to load the cartridges without assistance while he was on restricted duties".[35] But during cross-examination he said that he had been told that Mr Zammit was unable to load the cartridges "by one of the employees working in that section". Mr Shroff does not suggest that he relied on his own observation of Mr Zammit and the employee who provided him with the information was not identified. Nor did Mr Shroff ask Mr Zammit if he could perform this task.[36] In these circumstances we find that Mr Zammit was able to load the cartridges in the mica taper machine.

[33] During his rehabilitation period Mr Zammit also undertook fork lift driving duties[37] and was trained, and performed work, in what is known as the "Defence QAR testing" process.[38]

[34] These issues are important because Mr Zammit's alleged inability to perform his pre-injury duties formed the basis of the decision to terminate his employment. Mr Shroff is questioned about this during cross-examination and re-examination:

"Mr Rothman: Do you understand that Mr - were you ever informed that Mr Zammit had worked the rewinding machine for a full 8-hour shift?

Mr Rothman: And is one of the reasons that Mr Zammit was dismissed his incapacity to work the re-winding machine for a full 8 hour shift?

Mr Shroff: That was one of the reasons, but at the same time there were other reasons as well.

Mr Rothman: Yes. And were you aware that Mr Zammit had, in fact, been allocated the re-winding machine for a period of time, 8 hours a day, say a week and a half or 2 weeks?

Mr Shroff: Not that I can recall."[39]

[35] The following exchange took place during the course of Mr Shroff's re-examination:

"Mr Moore: One of the questions that Mr Rothman asked you was that one reason why Mr Zammit was dismissed was that he never worked a period of 8 hours on the re-wind machine, do you recall that question?

Mr Moore: In answer to that you said: it was one of the reasons, but there were other reasons?

Mr Moore: Are you able to tell the Commission what the other reasons were?

Mr Shroff: The other reasons are also being: he could not operate the Horngear graders which he had the skills for. He also could operate Mica glass taping, which was another operation, only to a limited capacity, and there were various other areas that we had looked at at the time for possible consideration for Mr Zammit and unfortunately the operations did not really suit Mr Zammit's medical condition, and actually exposed him to significant risk."[40]

[36] In our view the evidence supports the following findings in respect of Mr Zammit's capacity to perform his pre-injury duties:

1. Winding machine: This was Mr Zammit's principal area of work prior to his injury. Towards the end of his rehabilitation program he was able to operate this machine for a full shift of eight hours with only limited assistance. The level of assistance provided to Mr Zammit was consistent with that provided to some other employees who were not suffering from an injury.

2. Mica taping machine: Mr Zammit was able to operate this machine with only limited assistance. The assistance provided - namely loading full spools onto the machines - only took 15 minutes per week.

3. Other duties: Mr Zammit also undertook fork lift driving duties and was trained, and performed work, in what is known as the "Defence QAR testing" process.

[37] The issue in relation to the operation of the "Horngear graders" is a little more complicated. Mr Shroff's evidence was that Mr Zammit could not operate these machines because of his post injury restrictions. During the course of his cross-examination Mr Zammit agreed with the proposition that as a result of his injury he would not be able to change the gears on these machines.[41] But there is no evidence about the extent to which gear changing is an integral part of the operation of this machine or indeed how much time was taken in performing this task each week. Further Mr Zammit's evidence is that he last operated these machines about 12 months before the injury to his shoulder. On that occasion, after operating the machine for about seven months, he started to experience some back pain. He told his team leader of this who replied: "no problem just pack everything and I'll take you back to your own job".[42]

[38] We also note that the evidence discloses that prior to his termination there was no discussion with Mr Zammit about the extent to which his injury restricted his capacity to perform his pre-injury duties. Nor is there any evidence of any consultation with Mr Zammit's team leader/leading hand about this issue. The team leader/leading hand was responsible for supervising Mr Zammit on a day to day basis. He was not called by MM Cables to give evidence about the impact of Mr Zammit's injury on his ability to perform his duties and no explanation was provided for the failure to call him.

[39] In our view there is no substance to the appellant's contention that Mr Zammit was "essentially restricted to one machine requiring assistance as part of a rehabilitation programme at the time of his termination and was not working his usual machine." The matters set out in paragraphs 28-38 above are relevant to the determination of whether there was a valid reason for Mr Zammit's termination and that brings us to the appellant's next point.

[40] The second limb to the appeal was the contention that in determining whether there was "a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service" pursuant to s.170CG(3)(a) the Commissioner utilised an "inappropriate or improper test". In the alternative it was argued that the test applied by the Commissioner effectively denied the appellant natural justice as it was never put on notice that it had to defend the "inherent requirements of the position".

[41] The relevant part of the Commissioner's decision is in the following terms:

"On 5 February 1999 the applicant was summoned to the office of the respondent. There he was advised that:

…….. "based on the medical advice we've got from the doctors you're not able to come back to full duties so the company has to terminate your employment" (Exhibit M5.P5)

The doctors advice referred to is to be found in exhibit M4 at attachment "O".

As far as I can ascertain, based on the material before me, that was the only ground for the termination. The applicant gave evidence to the effect that he had protested that he was as productive as any other employee. None of the witnesses for the respondent were able to refute that.

Further, the applicant gave evidence to the effect that his protestations were not responded to. I can find nothing in the evidence which refutes that statement.

s.170CK of the Act specifies certain grounds upon which the termination of an employees employment is prohibited. These grounds include "physical or mental disability". (s170CK(2)(f)).

"Subsection (2) does not prevent a matter referred to in paragraph (2)(f) from being a reason for terminating employment if the reason is based on the inherent requirements of the particular position concerned".

It is necessary therefore that in order for me to determine whether the reason given for the termination was a "valid reason" I must form a view as to whether the applicants disability was such that it affected his capacity to perform the "inherent requirements" of the particular position.

In Seluachandran -v- Peteron Plastics Pty Ltd (1995) 62 IR 371, Northrop J held that a valid reason is one that is "sound, defensible or well founded" (at 373). His Honour went on to say that "the reason must be valid in the context of the employees capacity or conduct or based upon the operational requirements of the employers business". (at 373).

It is common ground that the applicant required assistance in performing some of the heavy lifting tasks associated with the operations of the re-winding machine which he operated prior to his injury. Further, when the applicant asserted that other, able bodied employees required similar assistance in the performance of this task, this was not challenged.

The respondent's case raised the issue of the applicant's capacity to perform a range of other tasks associated with the operations of a number of other machines. However, the operation of those machines was not in issue prior to the shoulder injury sustained by the applicant on 15 October 1997 despite the fact that the applicant had experienced difficulty in operating them due to a back injury which he had sustained some time before in a car accident.

Notwithstanding those difficulties and the lengthy period of rehabilitation of the applicant following the shoulder injury, the Respondent chose to retain the applicant over other employees whom it had made redundant, despite an application by the respondent for voluntary redundancy. In addition, the report provided to the respondent by Dr Burns states that the applicant would not be able to resume "normal duties" for the foreseeable future. In fact the applicant had returned to his pre-injury job (albeit with assistance in lifting heavy weights, assistance which was afforded other able bodied employees) for some time, in accordance with the return to work program developed by IRS. In cross-examination of several witnesses called by Mr Moore, in particular, Mr Cruz and Ms Heine, (who states that she was the person who took the actual decision to terminate the applicant), it emerged that they were not aware of this fact.

In all of the circumstances of this case I am unable to conclude that the applicants incapacity was such that it affected his capacity to perform the inherent requirements of the particular position I therefore find that the reason given was not a valid reason."[43]

[42] We think that there are two difficulties in the approach adopted by the Commissioner to the question of whether there was a valid reason for Mr Zammit's termination of employment. First, the Commissioner seems to have confined himself to determining whether the reason given for Mr Zammit's termination was a valid reason. The question in s.170CG(3)(a) is not so limited. Rather the Commission is obliged to consider whether there was a valid reason for the termination - that inquiry is not limited to the reason given by the employer for the termination.

[43] The second difficulty is in the Commissioner's conclusion "that the reason given was not a valid reason" because he was "unable to conclude that the applicant's incapacity was such that it affected his capacity to perform the inherent requirements of the particular position". The Commissioner seems to have approached his task on the premise that if there was a breach of s.170CK(2)(f) then there could be no valid reason for the termination of Mr Zammit's employment. Section 170CK(2) provides that subject to the exceptions in ss.170CK(3) and (4) an employer must not terminate an employee's employment for any one or more of a number of specified reasons. We readily accept that if a termination was in breach of s.170CK then it could not be said that there was a valid reason for termination. But the converse does not necessarily apply. The absence of a breach of s.170CK does not render a termination "valid" within the meaning of s.170CG(3)(a).

[44] We think that this aspect of the Commissioner's decision is attended by sufficient doubt as to warrant the granting of leave to appeal.

[45] We have considered for ourselves whether there was a "valid reason" for the termination of Mr Zammit's employment. In that context we note that in the proceedings below Mr Rothman SC, counsel for the applicant, characterised the circumstances surrounding Mr Zammit's termination in the following terms:

"… the position is that because of a misunderstanding as to the duties that could have been performed by Mr Zammit, Mr Zammit has been dismissed in circumstances where he could and did engage in, in an acceptable and proper manner, his pre-injury employment and was dismissed in circumstances where everyone believed he had not and could not do so."[44]

[46] In our view the evidence supports Mr Rothman's summation. We have considered the appellant's contentions - both on appeal and in the proceedings below. The appellant relies on Ms Heine's evidence to support the proposition that "Zammit's injuries were affecting his ability to be used in a flexible rotation". It is clear from her evidence that Ms Heine was relying on Mr Shroff's opinion in this regard. For his part Mr Shroff was unaware of the fact that Mr Zammit had been working on the winding machine for a full shift of eight hours during his rehabilitation. Further, neither Ms Heine nor Mr Shroff had any discussion with Mr Zammit about the extent to which his injury restricted his capacity to perform his pre-injury duties.

[47] In all the circumstances we are satisfied that there was not a "valid reason" for the termination of Mr Zammit's employment.

[48] As there was no valid reason for the termination of Mr Zammit's employment paragraphs 170CG(3)(b) and (c) have no application.[45]

[49] In relation to s.170CG(3)(d) the Commissioner found that this provision had no application because the termination was not related to unsatisfactory performance. He said:

"In his submission, Mr Rothman asserted that the termination implicitly related to performance. I disagree with him. The material before me, insofar as it relates to performance at all, relates to capacity to perform."[46]

[50] We doubt that there is a relevant distinction between performance and capacity to perform. But it is unnecessary for us to determine whether the Commissioner erred in his application of s.170CG(3)(d). Even if the Commissioner did err such a conclusion would not assist the appellant because to the extent that s.170CG(3)(d) is relevant it is clear that Mr Zammit was never warned about unsatisfactory performance.

[51] Having regard to the matters referred to in s.170CG(3) the Commissioner concluded, among other things, that the termination of Mr Zammit's employment was harsh. In our view such a finding was reasonably open. Indeed on the material before us we would reach the same conclusion. The harshness of the appellant's treatment of Mr Zammit - an employee with over 29 years satisfactory service - is manifest.

[52] The third limb of the appellant's case relates to remedy. The Commissioner's decision in respect of remedy is as follows:

"[51] I have carefully considered the submissions of Mr Rothman and Mr Moore in relation to remedy.

[52] In considering the appropriate remedy the relevant legislative provisions are to be found in s170CH of the Act. … [53] [The terms of s.170CH are then set out.]

[54] In the course of his submissions Mr Moore emphasised the fact that the respondent has disposed of its interest in MM Cables by sale of that part of its business to Pirelli Cables Ltd.

[55] It was his submission that because of the sale it is not possible to make an order under s170CH(3)(a) which could be complied with.

[56] Mr Rothman, in his submission made the point that Metal Manufactures Ltd, operates a plant at Port Kembla which employs persons in classifications which the applicant could fulfil despite his injury, such as fork-lift driving and machine operation. In his submission an order under s170CH(3)(b) would be appropriate.

[57] Mr Moore submitted that in the event that the Commission found that the termination was harsh, unjust or unreasonable, the Commission should not issue any order, as the employee remains in receipt of workers' compensation payments and retains his rights under NSW law.

[58] I have given careful consideration to all of the circumstances of this case including those referred to in s170CH(2). I have decided to make orders under s170CH(3)(b), and s170CH(4)(a).

[59] I have decided not to make an order under s170CH(4)(b) in light of Mr Rothmans submissions on the subject and, having regard to the fact that the applicant has been in receipt of workers' compensation payments which would approximate the minimum rate of pay the employee would have earned, taking into account the fact that he had not worked over-time for a considerable period."[47]

[53] In the written submission filed in support of the appeal the appellant said:

"9. The Commissioner nowhere in his Decision presents any reasons upon which a finding that it is appropriate to reinstate Zammit could be properly based (see AB:20 para [58]). In the absence of such reasons the Commissioner's finding of appropriateness cannot stand."[48]

[54] During the course of oral argument counsel for the appellant, Mr Moore, advanced the proposition that the Commissioner had decided to reinstate Mr Zammit on the basis of the submissions advanced on his behalf. Implicit in the Commissioner's decision was said to be an acceptance of the submission summarised at paragraph 56 of the decision. In other words the decision to reinstate was predicated on the finding that "Metal Manufactures Ltd, operates a plant at Port Kembla which employs persons in classifications which the applicant could fulfil despite his injury, such as fork-lift driving and machine operation".

[55] The appellant challenged the finding that the applicant could fulfil the requirements of classifications employed by Metal Manufactures. It was submitted that the decision to reinstate must be made on a sound evidentiary basis, in particular the existence of a position to which the applicant is to be reinstated must be supported by some evidence. In this case the evidence as to the availability of an alternate position was limited. It was said that the evidence went no higher than establishing a class of persons employed at the Port Kembla site, not actual positions then available. Nor was it established that Mr Zammit could have performed the work required of such classifications or positions. It was conceded, properly in our view, that the applicant did not need to go so far as to identify a vacancy in a position that he would be capable of fulfilling.[49]

[56] The appellant also challenged the generality of the order subject to appeal. It was submitted that the Commissioner should have clearly identified the position to which he was reinstating Mr Zammit.

[57] The Commissioner ordered that Mr Zammit be reinstated with continuity of employment but made no order in respect of lost remuneration. The Appellant contends that reinstatement should not have been ordered because it was inappropriate to do so.

[58] Section 170CH(3) provides that if the Commission considers it "appropriate" it may make an order requiring the employer to reinstate the employee by:

• reappointing the employee to the position in which the employee was employed immediately before the termination (s.170CH(3)(a));

• appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination (s.170CH(3)(b)).

[59] It was common ground that no order could be made under s.170CH(3)(a) because of the sale of MM Cables to Pirelli.

[60] Section 170CH(4) provides that if a reinstatement order is made then the Commission may also make orders to maintain the continuity of the employee's employment and to require the employer to pay the employee an amount in respect of the remuneration lost, or likely to have been lost, by the employee because of the termination.

[61] The current statutory framework requires the Commission to consider whether reinstatement is "appropriate". Under the former s.170EE(2) the Commission was required to consider whether reinstatement was "impracticable". A consideration of the appropriateness of reinstatement involves the assessment of a broader range of factors than impracticability.[50]

[62] Such a determination requires a judgement to be made by the member at first instance based on the evidence and material before the Commission.[51] In the event that the Commission thinks that the reinstatement of the employee is inappropriate it may make an order requiring the employer to pay the employee an amount in lieu of reinstatement (s.170CH(6)).

[63] In Australia Meat Holdings Pty Ltd v McLauchlan a Full Bench of the Commission said:

"Given the broad nature of the discretion in s.170CH(3) and (6) we think that the question of whether reinstatement is 'appropriate' in a particular case will be a matter for the judgment of the Commission member at first instance based on the evidence and material before the Commission."[52]

[64] The reasons given by the Commissioner for his decision to order reinstatement are brief. In this regard we accept the proposition advanced by the appellant that implicit in the Commissioner's decision was an acceptance of the submission put on behalf of the applicant and summarised at paragraph 56 of the decision. The Commissioner says that he gave careful consideration to all of the circumstances of the case including those referred to in s.170CH(2). He does not detail his consideration of the matters in s.170CH(2). In certain circumstances the failure to deal with the specific matters set out in s.170CH(2)(a) to (d) constitutes an error warranting correction on appeal. As Moore J observed in Edwards v Giudice:

"In my opinion the subject matter of the power to arbitrate under s.170CG, when taken together with the conditional right of appeal conferred by s.45 and the grounds of appeal in s.170JF, point to the conclusion that the Commission is, when determining an application under s.170CE by arbitration, obliged to give reasons for its decision which deal with the material legal and factual issues presented for determination and which deal with the matters the Commission must consider because of s.170CG(3) and the relevant provisions of s.170CH."[53] [emphasis added]

[65] But the circumstances here are very different. There is no contest between the parties with respect to the matters in s.170CH(2)(a) to (d). It was not suggested that an order of the type made by the Commissioner would affect the viability of the appellant's undertaking or that the applicant had failed to mitigate his loss.[54]

[66] In relation to other relevant matters (s.170CH(2)(e)) the appellant relied on the fact that Mr Zammit was an "injured employee" under the meaning of s.91 of the Industrial Relations Act 1996 (the NSW Act). Mr Moore put the appellant's submission on that point in these terms:

"All we say, and perhaps it's no harder than this, is that what was within the range of matters that Commissioner Wilks could have taken of was that there was never an issue between the parties that he had been an injured worker. There was never an issue raised by the employer that he was denied any remedies under that particular section of the State Act. There was a question as to a matter of discretion to the exercise of the power that was with him to reinstate, as to whether that would be appropriate, given the overall circumstances of the matter. That is; the way in which the injury arose and the rights that he had vested in him for a period of two years, if not more, after the termination to apply for reinstatement with the company if he could fulfil a duty."[55]

[67] As an "injured employee" Mr Zammit may apply to the NSW Commission for a reinstatement order pursuant to s.93 of the NSW Act. It is not suggested that Mr Zammit was prevented from making an application for relief under s.170CE by the operation of s.170HB of the WR Act. Section 170HB states:

"(1) An application must not be made under section 170CE in relation to the termination of employment of an employee on the ground that the termination was harsh, unjust or unreasonable, or on grounds that include that ground, if proceedings (the prior proceedings) for a remedy in respect of that termination have been commenced by or on behalf of that employee:

(c) under a law of a State or Territory; alleging that the termination was:

(d) harsh, unjust or unreasonable (however described); or

for a reason other than a failure by the employer to provide a benefit to which the employee was entitled on the termination.

(2) Subsection (1) does not prevent an application of the kind referred to in that subsection if the prior proceedings:

(a) have been discontinued by the party who began the proceedings; or

(3) For the avoidance of doubt, a proceeding under this Act or any other law of the Commonwealth or under a law of a State or Territory seeking compensation, or the imposition of a penalty, because an employer has failed, in relation to a termination of employment, to meet an obligation:

(a) to give adequate notice of the termination; or

(b) to provide a severance payment as a result of the termination; or

(c) to provide any other entitlement payable as a result of the termination;

is taken to be a proceeding alleging that the termination was unlawful because of a failure to provide a benefit to which the employee was entitled on the termination.

(4) If an application of the kind referred to in subsection (1) has been made in respect of a termination, a person is not entitled to take proceedings for any other remedy that, if it had been applied for before the application would, because of the operation of subsection (1), have prevented the application unless the application:

[68] It is clear from the terms of s.170HB that it is not merely the existence of an alternative remedy which is necessary to prevent an application for relief under s.170CE being made. The applicant must also be taking steps to access the alternative remedy. In this regard s.170HB can be contrasted with ss.170FG and 170GC which provide, among other things, that the Commission must refrain from considering certain applications if an alternative remedy is available under a law of a State. In our view the availability of an alternative remedy is not a relevant matter within the context of s.170CH(2)(e). If it was intended that the mere availability of an alternative remedy was sufficient to prevent an applicant from obtaining relief then the Parliament would have so provided - as it did in ss.170FC and 170GC. It would be odd if the mere availability of an alternative remedy did not prevent Mr Zammit from bringing an application for relief but did prevent him from obtaining a remedy.

[69] As the matters in s.170CH favour the granting of a remedy in this case the key issue is whether the finding that the applicant could fulfil the requirements of classifications employed by Metal Manufacturers was reasonably open. In this regard the appellant contends: "It would be a perverse finding faced with clear medical evidence of unfitness to order reinstatement in a location in which Zammit had never worked and in which no detailed identification of functions and duties required to be performed was addressed."[56] We now turn to consider the relevant evidence.

[70] Mr Zammit was an employee of Metal Manufacturers Limited (the MM Group). He worked at MM Cables which was part of the MM Energy Products Division within the MM Group. Since the termination of his employment the MM Energy Products Division has been sold to Pirelli. The MM Group now consists of the following Divisions:

(a) MM Electrical Merchandising, which sells electrical and data componentry and employs approximately 1100 people across Australia;

(b) MM Kembla Products, which manufactures copper pipe and tube aluminium rod and wire, and employs approximately 700 people; and

(c) Vinidex Tubemakers, which is a joint venture with BHP producing plastic plumbing, irrigation and gasline pipes. The joint venture employs approximately 600-700 people.

[71] In his evidence Mr Robert Christian, the Group Human Resource Manager of Metal Manufacturers Limited, said:

"8. As the MM Energy Products Division has been sold to Pirelli I am not aware whether Mr Zammit's former position is any longer available or whether there are any position that would suit his current skills and restrictions.

9. Exhibited to me at the time of making this Statement is a document entitled "Transferable Skills analysis' prepared by IRS Total Injury management in relation to Mr Zammit, dated 1 December 1999. On the information presented in this document regarding Mr Zammit's skills, abilities and current work restrictions I am not aware of any positions that are currently available within MM. The 7.5kg limitation on lifting and the restriction on over-head reaching stated in the IRS report provide significant limitations to his employment. However, I have not been provided with any detailed medical information suggesting that Mr Zammit would be able to perform the duties outlined in the IRS report, at the level required, should they become available within the MM Divisions."[57]

[72] During the course of his oral evidence Mr Christian agreed with the proposition that the MM Group has positions in which people perform duties as fork lift drivers, process workers and machine operators.[58]

[73] It is apparent from his witness statement and oral evidence that Mr Christian:

- does not become involved in day to day operational issues;

- has no personal knowledge of nor any involvement in the circumstances of Mr Zammit's employment or termination; and

- did not know that the limitations as to the amount Mr Zammit could lift only applied to his right hand.

[74] Significantly, Mr Christian says that he is "not aware" of any positions that are currently available within the MM Group which would suit Mr Zammit's skills, abilities and current work restrictions. There is no suggestion that Mr Christian, or indeed anyone else within the MM Group, has investigated the availability of a suitable position for Mr Zammit.

[75] What is clear is that there are positions within the MM Group in which people perform duties as fork lift drivers, process workers and machine operators. According to the "Transferable Skills Analysis" conducted by IRS Mr Zammit has the skills to undertake such duties subject to the restriction in his capacity to lift over 7.5 kg with his right hand.[59]

[76] In relation to fork lift driving Mr Zammit had performed such duties - after his injury - at the direction of his team leader, the supervisor and Mr Shroff.[60] Mr Zammit's performance of these duties was consistent with the medical advice about the range of duties he could perform.[61] Since the termination of his employment Mr Zammit has completed refresher training in forklift driving and holds a forklift licence.[62] He has applied, unsuccessfully, for work as a forklift driver, process worker and labourer.[63]

[77] In the course of his evidence Mr Zammit also said that he was prepared to travel to the appellant's Port Kembla site to work.[64]

[78] We are satisfied that both the Commissioner's decision to reinstate Mr Zammit and the finding upon which that decision was based were reasonably open. In this regard we note that:

• MM Kembla Products employs 700 people including fork lift drivers;

• Mr Zammit has a forklift licence and since the termination of his employment he has completed refresher training in this regard;

• Mr Zammit has performed forklift driving duties since his injury and his performance of such duties was consistent with medical advice. He is prepared to travel to the applicant's Port Kembla site to work.

[79] In relation to the generality of the order subject to appeal we do not think the form of the Commissioner's order constitutes a basis for upholding the appeal. The order is necessarily expressed in general terms given the state of the evidence. There was no evidence which would clearly identify a particular position to which Mr Zammit could be appointed. Such information is peculiarly in the knowledge of the appellant but it chose not to lead any evidence in this regard. To require the specification of a particular position in such circumstances would unfairly deny the applicant access to the remedy of reinstatement. An employer could limit an applicant's remedies to compensation - which is subject to a statutory limit - by the simple expedient of not adducing any evidence (or as in this case only adducing limited evidence) as to the availability of particular positions. In our view such an outcome would not be consistent with the objects of Division 3 of Part VIA of the WR Act.

[80] The appellate jurisdiction conferred on us by s.45 in relation to an appeal concerning an order arising from the arbitration of an application under s.170CE is conditioned by s.170JF(1) which limits the grounds of an appeal. The only ground is that the member of the Commission who conducted the arbitration was in error in deciding to make an order. That can be an error of fact or an error of law.[65] As the order subject to appeal is a discretionary one, the appeal is to be determined in accordance with the principles stated in House v The King.[66] In House v The King, Dixon, Evatt and McTiernan JJ stated these principles as follows:

"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. 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. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."[67]

[81] In order to warrant the grant of leave to appeal the appellant must establish an arguable case of either legal error or that the discretion has been miscarried. This means that the appellant must show that the case has a reasonable prospect of success. In this case we have decided to grant leave to appeal only in respect of the Commissioner's consideration of s.170CG(3)(a). In all other respects leave to appeal is refused. In that regard we note that in order to warrant a decision granting leave to appeal more is usually required than simply establishing a case that might have persuaded the Full Bench to exercise the discretion in another way as if the matter was being considered at first instance. In the absence of an arguable case of either legal error or that the discretion was miscarried the Commission would not grant leave to appeal merely to substitute its decision for the decision under appeal.[68]

[82] In relation to s.170CG(3)(a) we considered for ourselves whether there was a valid reason for the termination of Mr Zammit's employment and concluded that there was not (see paragraphs 44 to 47 of this decision). Accordingly we dismiss the appeal in relation to that ground.

R. Moore, Counsel with J. Bonner for the appellant.

Printed by authority of the Commonwealth Government Printer

[5] See Annexure M to Exhibit M4; Appeal Book at p.308.

[7] See Annexure N of Exhibit M4; Appeal Book at p.311.

[11] See Annexure O to Exhibit M4; Appeal Book at p.312.

[14] Exhibit M5 at paragraph 23; Appeal Book p.317.

[21] Transcript p.71 at lines 19-30; p.109 at lines 1-9.

[22] Transcript p.30 at lines 12-19 (Mr Zammit); p.69 lines 4-11 (Ms Heine) and p.103 lines 1-3 (Mr Shroff).

[23] Print S3119 at paragraphs 47 and 48.

[27] See p.2 of Annexure K to Exhibit M4; Appeal Book at p.301.

[31] Transcript p.23 at lines 3-7 and p.31 at lines 1-5.

[34] Transcript p.20 at lines 3-11, p.46 at lines 5-10.

[35] Exhibit M5 at p.2; Appeal Book at p.314.

[37] Transcript p.23 at lines 13-14; p.24 at lines 22-26 and p.49 at lines 19-25.

[41] Transcript p.48 at lines 29-31; also see photograph 12 annexed to Exhibit M5 at Appeal Book p.325.

[45] Steggles Limited v West, Print S5876, 11 May 2000 per Watson SDP, Williams SDP and Smith C; Fearnley v Tenix Defence Systems Pty Ltd, Print S6238, 22 May 2000 per Ross VP, Polites SDP and Smith C.

[49] See Printing and Kindred Industries Union v Vista Paper Products (1991) 12 CAR 167.

[50] Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1.

[51] See Wark v Melbourne City Toyota, Print R4864, 20 May 1999.

[52] (1998) 84 IR 1 at 19.

[53] [1999] FCA 1836; (1999-2000) 169 ALR 89 at 93. Also see Ellawalla v Australian Postal Commission, Print S5109, 17 April 2000 per Ross VP, Williams SDP and Gay C.

[54] Transcript, 25 January 2000, p.135 at lines 25-36 and p.136 at lines 1-5; Mr Zammit's evidence at p.30 lines 20-24; p.40 lines 17-27 and p.59 lines 28-32.

[55] Transcript 23 June 2000, p.9 at lines 17-27.

[56] Appellant's written submission at paragraph 7.

[57] Exhibit M2, paragraphs 8 and 9; Appeal Book at p.163.

[59] See Annexure B to Exhibit M2; Appeal Book at p.208.

[60] Transcript p.23 at lines 13-14; p.24 at lines 15-26; p.49 at lines 4-22.

[61] Transcript p.43 at lines 6-10; Annexure D to Exhibit M4.

[62] Transcript p.30 at lines 20-24; p.40 at lines 29-31.

[64] Transcript p.56 at lines 14-25; p.57 at lines 1-12.

[65] Edwards v Giudice [1999] FCA 1836 per Moore J.

[66] [1936] HCA 40; (1936) 55 CLR 499 at 504-5; see Construction, Forestry, Mining and Energy Union v Giudice at pp 28-29.

[67] [1936] HCA 40; (1936) 55 CLR 499 at pp 504-505.

[68] Corporation of the Catholic Archdiocese of Brisbane v. A.S.U., Print K7698, 19 May 1993 per Moore VP, Keogh SDP and Bacon C:

"The formation of the opinion under s.45(2) leading to the grant of leave to appeal against a decision ordinarily requires considerably more than establishing a case that might have persuaded the full bench to exercise the discretion in another way as if the matter was being considered at first instance."