Relations Act 1972 ss.31 and 95; Wynn's Winegrowers P/L v Foster

effected to subsection (3) were procedural only, and accordingly the substituted subsection (3) operated retrospectively, and applied to these proceedings. He then drew attention to the different language of subsection (3) before the amendment, with that currently in operation, in order to support his contention that, under the current provision, the Commission had no power to order compensation where dismissal was a consequence of genuine redundancy. He argued that the legislature, by deleting from the new placitum (c) of subsection (3), the phrase 'where it would be impracticable for the employer to re-employ the applicant in any position' which appeared in the former placitum (b), had thereby indicated that, if re-employment was impracticable because the position formerly occupied by the dismissed employee had been made redundant, the Commission no longer had the power to award compensation to that dismissed employee." 9. The Full Commission, therefore, proceeded to consider the matter after hearing a concession which I do not think to have been sound. 10. In Jackson v Atco (1986) 53 SAIR 95 at 110 the Full Commission said:- "The respondent, through Mr Todd, decided to terminate the applicant's service because it wished to make the position he occupied redundant. That is the company did not want the job performed by any person." 11. I do not think that there was genuine redundancy in that case. Things happened the wrong way around for the redundancy to have been genuine. The termination was done to create redundancy. 12. Moreover, I think that Miss Layton was on sound ground in submitting on the authority of In Re Barrett and Women's Hospital, Crown Street (1947) AR 565 at 566 that (as she wrote in her Outline): "The Full Commission failed to have regard to the established principles that it is not the function of the Commission to take over the running of the employer's business". I think that submission was soundly made in relation to both decisions which I have just mentioned. 13. I do not find any other case to which we were referred on "genuine redundancy" to be decisive. 14. I go still further. I do not think that cessation of employment truly brought about by genuine redundancy is a dismissal in the minatory and hostile sense contemplated by s31. I realise it has often been taken that loss of job by reason of redundancy is a "dismissal". I think that this Court should declare that view to be wrong. 15. There is a decision of this Court which might seem to stand in the way of such a declaration. That decision is The Queen v The Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-Operative and Others (1977) 16 SASR 6. However, I think that this Court in that case, if I may say so with respect, in treating loss of employment by reason of redundancy as a dismissal acted on assumption rather than upon full argument on the point. Moreover, the treating of loss of job by redundancy at dismissal was not essential to the decision in that case. At page 8 Bray CJ said:- "A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone." 16. Not only was this statement made obiter but, as I say with the greatest diffidence and respect, it was really a statement of an assumption. I do not think that that decision binds us nor that it is helpful. 17. In the result I think that the Full Commission has acted in excess of and without jurisdiction. Certiorari should go.

JUDGE2 MULLIGHAN J This application for judicial review raises for consideration whether the s.31 of the Industrial Relations Act 1972 applies to cases of genuine redundancy. 2. The first defendant has not taken any part in these proceedings. It may be assumed that it is content to abide the decision of this Court. 3. The second defendant ("the defendant") was employed in a senior position by the plaintiff and its predecessors for 28 years. He was the National Manager (Finance and Planning Merchandise). On 26th March 1991 the plaintiff terminated that employment due to genuine redundancy. The terms of the termination were that the plaintiff paid to the defendant salary for 14 weeks in lieu of notice and a further payment of salary for 22 weeks making a total amount of $51,923.16. Furthermore, the plaintiff arranged to assist the defendant in obtaining other employment through the services of a consultant. The defendant used the services of that consultant at a cost to the plaintiff of $13,500. Also, the defendant was permitted to retain the use of a motor vehicle, car park and fuel credit card until 30th May 1991. These benefits were in addition to entitlements to annual leave and long service leave. 4. On 12th April 1991 the defendant applied to the Industrial Commission, pursuant to s.31, for a determination that "the dismissal" was harsh, unjust or unreasonable and for an order that he be re-employed by the plaintiff in his former position, or in some other position, if available, on conditions to be determined by the Commission or that the plaintiff do pay to him an amount of compensation determined by the Commission. The application came on for hearing before a Commissioner. Both parties were represented by counsel. The plaintiff contended that the Commission did not have jurisdiction to hear and determine the application on the ground that the defendant's conditions of employment were covered by the Clerical and Salaried Staff (Wool Industry) Award 1977, an award of the Federal Commission. The Commissioner rejected this contention and held that the defendant was employed by the plaintiff at a level senior to the classifications prescribed in the award and found that it had not been established that the position which the defendant held was covered by the Award. The Commissioner held that the Commission had jurisdiction to hear and determine the application. That decision was given on 2nd July 1992 and published on 13th July 1992. 5. The same Commissioner proceeded to hear and determine the application on its merits. The defendant's case was that he had been dismissed from the employment and that the dismissal was harsh, unjust and unreasonable in that the period of notice was inadequate, the number of weeks of salary paid was inadequate and that the termination payment was incorrectly calculated. When the matter came on for hearing, the parties announced their agreement that the dismissal was a result of the defendant's position with the plaintiff becoming redundant and that the only issue before the Commission "would be confined to the question of the redundancy and in particular the amount of the payment paid to the applicant at the time of his termination". The Commissioner decided that the total redundancy package received by the defendant was "very fair and equitable". He declined to order any additional or greater benefit and found that the dismissal was not harsh, unjust or unreasonable. He dismissed the application. 6. The defendant appealed to the Full Commission, on various grounds, that the decision of the Commissioner was wrong in law. It is unnecessary for present purposes to set out the grounds of the appeal, except to say that there was no suggestion that the Commission did not have jurisdiction. The appeal was heard on the merits and on 15th March 1993 it was allowed. The Full Commission concluded that the disparity between the benefits received by the defendant and what, in all the prevailing circumstances, should have been paid, was so great that the dismissal should properly be regarded as harsh, unjust or unreasonable. In reaching this decision the Full Commission accepted that its function, in an application of this nature, is as described by the Full Commission in Wynn's Winegrowers Pty Ltdv Foster (1986) 53 SAIR 347 at p.367:- "Inevitably fair-minded employers will differ on the elements of a payment and on the final figure once the elements have been aggregated. It is the function of the Commission, not to isolate one element for exclusive scrutiny or to substitute its figures for the employer's figures, but rather to set the bounds of a reasonable ultimate payment according to contemporary industrial standards and given all the relevant circumstances. Then, if the amount actually paid to the employee falls below those bounds by a margin which is judged to be significant, the dismissal will attract the operation of the section." 7. The Full Commission went on to say that it agreed with the observations of President Stanley in Jackson v Atco Industries Ltd(1986) 53 SAIR 95 that factors to be taken into account include the nature of the employment, the size of the salary, the importance of the position, the age of the employee, his or her qualifications and experience and length of service with the employer and the likelihood of the employee obtaining other suitable employment. The Commission is a specialist tribunal and has expertise in the consideration and application of such matters. The Full Commission gave careful consideration to these matters in reaching its decision. The appeal was allowed and, by a majority, the plaintiff was ordered to pay an additional amount of $57,427 to the defendant. 8. The plaintiff is dissatisfied with the decision of the Full Commission. There is no appeal. S.95 of the Act provides:- "95. Except as is provided by this Act - (a) every award or decision of the Commission is final and no such award or decision can be removed to any other court; and (b) no award, decision or proceeding of the Commission can be challenged, appealed against, reviewed, quashed or called in question except on the ground of excess or want of jurisdiction." 9. Consequently the plaintiff seeks judicial review in the nature of certiorari and contends that the Commission did not have jurisdiction to hear and determine the defendant's application and consequently acted in excess or want of jurisdiction. No other ground for certiorari is claimed. In brief terms the contention is that s.31 cannot have application to genuine redundancy in respect of which payment or adequacy of benefits is the only issue between the parties and further, that the Commission acted in excess or want of jurisdiction in the manner of determining the amount and quantum of compensation. 10. The relevant provisions of s.31 are as contained in s.31(1), (2) and (3) and are as follows:- "31.(1) Where an employer dismisses an employee, the employee may, within 21 days after the dismissal takes effect, apply to the Commission for relief under this section. (2) An application cannot be made under this section where the dismissal of the employee is subject to appeal or review under some other Act or law. (3) Where in proceedings under this section the Commission is of the opinion that the dismissal of the applicant was harsh, unjust or unreasonable, the Commission may - (a) order that the applicant be re-employed by the employer in the applicant's former position without prejudice to the former conditions of employment; (b) where it would be impracticable for the employer to re-employ the applicant in accordance with an order under paragraph (a), or such re-employment would not, for some other reason, be an appropriate remedy - order that the applicant be re-employed by the employer in some other position (if such a position is available) on conditions (if any) determined by the Commission; or (c) where, after considering whether to make an order under paragraph (a) or (b), the Commission considers that re-employment by the employer of the applicant in any position would not be an appropriate remedy - order the employer to pay to the applicant an amount of compensation determined by the Commission." 11. Of course, s.31 can have no application unless an employer has dismissed an employee from employment. Miss Layton QC conceded, and correctly in my view, that termination of employment due to genuine redundancy is, nevertheless, a dismissal from employment. The very nature of termination of employment due to redundancy means that the employee is dismissed from the employment. It is the employer who brings the employment to an end. Employment may be brought to an end in various ways, such as death of the employee, retirement, resignation or dismissal. Termination of employment by dismissal is none the less a dismissal even when lawful and on proper notice. In The Queen v The Industrial Court of South Australia; ex parte General Motors-Holdens Pty Ltd(1975) 10 SASR 582, it was held that s.15(1)(e) of the Act, the precursor to s.31, applied to all dismissals, whether wrongful or lawful at common law: see Bray CJ at p.586 and Walters and Wells JJ at p.602. At p.586 Bray CJ went on to say:- "A lawful dismissal, in appropriate circumstances, can, I think, be legitimately categorized as harsh and unreasonable, and probably it could even be called unjust." 12. The same view was expressed by Gibbs J in Australian Broadcasting Commission v Industrial Court (SA) [1977] HCA 51; (1977) 138 CLR 399, at p.403. In Belton v General Motors-Holden's Ltd (1984) 154 CLR 632 the High Court said, at p.638:- "Retrenchment and termination of employment are not mutually exclusive or opposed concepts. Generally speaking, termination of employment is either on notice or for cause ... Termination in case of retrenchment is nonetheless termination on notice, retrenchment signifying that the termination takes place or has taken place because the employer deems that it has an excess of employees because it has a reduction in work available." 13. If there is any difference between retrenchment and redundancy, it is of no significance for present purposes as both concepts involve lawful termination of employment on notice. 14. It has been accepted by the Industrial Commission that termination of employment due to genuine redundancy amounts to dismissal from the employment: Jackson v Atco Industries Ltd (supra), Wynn's Winegrowers Pty Ltd v Foster (supra) and Morris v Southern Farmers Group Ltd (1991) 58 SAIR 86. In those cases it was accepted that s.31 applied to cases of genuine redundancy. 15. In Wynn's Winegrowers Pty Ltd v Foster (supra), it was conceded that a dismissal, or a decision to dismiss an employee upon the grounds of redundancy could properly be characterized as one which fell within the statutory criteria of harsh, unjust or unreasonable. However, it was argued that s.31 has, and should have, application on redundancy where the individual characteristics of the dismissed employee motivate the selection of that employee for dismissal. The Full Commission rejected that argument. it said, at p.352:- "We entertain no doubt that, pursuant to Section 31, even where there is a genuine need for redundancy, the dismissal may be properly characterised as harsh, unjust or unreasonable for many reasons. Without necessarily being exhaustive of those reasons it seems to us that, in a given case, the dismissal might fall within the statutory criteria because the employee should not have been the person selected for redundancy, or because the employee could perhaps have been offered a suitable alternative position in the company's employment, or because the method of dismissal adopted might conceivably be considered harsh, or unreasonable, or because the length of notice given might be totally inadequate, or because the redundancy payment was, in all the circumstances, totally inadequate.". 16. The challenge to that approach must, in my view, be resolved by the true interpretation of s.31. The section provides that upon being dismissed, the employee may, within the prescribed period of time, apply to the Commission for relief under the section: subs.(1). Once it is acknowledged that a person whose employment has been terminated on the ground of genuine redundancy has been dismissed, that employee is entitled to make the application. If the dismissal is found to be harsh, unjust or unreasonable the remedies available are to be found in subs.(3). Miss Layton contended that s.31 cannot apply to genuine redundancy because there can never be re-employment in the former position as that position no longer exists. Merely because one particular remedy is not available is no reason to deny the application of the section. Once the qualification for relief is established, i.e. there has been a dismissal and it is adjudged to be harsh, unjust or unreasonable, the Commission must then consider what remedy, if any, is appropriate. It may order that the applicant be re-employed by the employer in some other position (if such a position is available) on conditions (if any) to be determined by the Commission: subs.(3)(b). It is to be noted that the subsection does not speak of such employment being on the same conditions as the former employment, as is the case in subs.(3)(a). If it is adjudged that it would be impracticable or inappropriate to order re-employment, the employer may be ordered to pay compensation. 17. Support for the view that s.31 applies to dismissal by reason of genuine redundancy is to be found in Belton v General Motors-Holden's Ltd (supra). There, the Court was concerned with whether there was inconsistency between s.15(1)(e) and a provision of a Federal award providing for the making of payments to retrenched employees. It was held, in view of the terms of the award, that there was no inconsistency. The Court went on to say at p.639:- "This conclusion makes it unnecessary for us to consider other arguments which were advanced by the parties. However, in passing we should mention that we do not agree with the suggestion that the jurisdiction conferred by s.15(1)(e) of the State Act can have no practical operation in the case of a retrenched employee. What the Industrial Court can do in the exercise of its jurisdiction at the instance of a retrenched employee is not a matter for our determination and it is unnecessary for us to consider the difficulties which the appellant might face on the hearing of his application by the Industrial Court and which are referred to be (sic) Zelling J in his judgment in the Full Court. It is enough for us to decide that the Award leaves the operation of the State Act on foot." 18. S.15(1)(e) empowered the Industrial Court, if it thought fit, upon characterizing a dismissal as harsh, unjust or unreasonable, to order that the dismissed employee be re-employed in his former position on terms not less favourable than if the employee had not been dismissed. It appears that the passage of the judgment of Zelling J referred to in the judgment of the High Court is the following:- "The alternative argument put by counsel for the prosecutor was that by abolishing the position previously held by the employee, General Motors-Holden's could avoid the application of s.15(1)(e). It is sufficient merely to state the argument to show immediately that it must be wrong to construe the sub-section in that way. Section 15(1)(e) gives a right 'to re-employ that employee in his former position'. If the argument on behalf of the prosecutor is right s.15(1)(e) is so much waste paper because an employer can always nullify an application under the sub-section by abolishing or possibly simply reclassifying the position the employee held before he was sacked. I do not believe that that is the effect of the sub-section and I do not believe that General Motors-Holden's has found such a simple way of getting round the words of a remedial section in a statute." The Queen v Industrial Court of South Australia; Ex Parte General Motors-Holden's Limited (1983) 35 SASR 161 at p 168. 19. Of course, Zelling J was not there referring to a case of genuine redundancy but he and the High Court acknowledged the application of s.15(1)(e) to cases of genuine retrenchment even though the section only conferred upon the Industrial Court the power to order re-employment in the former position of the employee. S.15(1)(e) was repealed and s.31, in slightly different terms from the present section, was introduced by Act 19 of 1984 and the additional remedies of re-employment in another position and compensation were introduced. 20. In my view, there is no merit in the argument that s.31 can have no application to cases of genuine redundancy because the position from which the employee was dismissed no longer exists. Such a contention misunderstands the true nature of the operation of s.31. It empowers the Commission to remedy unfairness where it exists. It is concerned with unfairness which arises when an employee is dismissed from employment. The circumstances in which the section operates are indicated by the opening words of s.31(1), "Where an employer dismisses an employee". The only sensible meaning to be attributed to that clause is that the dismissal must be from the employment with the employer, not just from a particular position within the organization of the employer. So, in so far as attracting the operation of s.31 is concerned, the fact that the position which the employee held before the dismissal has been abolished is nothing to the point. It is the dismissal from the employment which can attract the operation of the section. Once there is a dismissal, the jurisdiction of the Commission is attracted if the dismissed employee makes an application within time and the dismissal is not subject to appeal or review under some other Act or law: s.31(2). It is then for the Commission to decide whether the circumstances are such that it is of the opinion that the dismissal was harsh, unjust or unreasonable. If so, the Commission may order a remedy in the exercise of discretion. 21. Whether the dismissal is harsh, unjust or unreasonable is not to be determined merely by the reason for the termination of the employment. In some cases that may be sufficient, e.g. where the termination of the employment was unjustified. However, since it is accepted that the section applies to lawful dismissals, it follows that dismissal, in the context of whether it was harsh, unjust or unreasonable, necessarily means, or includes, the terms or conditions of the termination of the employment. That is the approach taken by the Commission and, in my view, it is correct. In cases of genuine redundancy the Commission must look to the package in order to decide whether the dismissal was harsh, unjust or unreasonable. If it so decides, then it must consider the appropriate remedy. Re-employment in the same position is not possible, so that remedy cannot be ordered. The Commission must then consider if re-employment in some other position would be an appropriate remedy. If not, it may order compensation. Miss Layton contended that none of those remedies can be applied to cases of genuine redundancy, because there cannot be re-employment to the former position, that "impracticable" in s.31(3)(b) does not mean "impossible" and consequently the remedy of re-employment in some other position is only available where employment in the former position is impracticable. I can see no reason to give such a restricted meaning to the word "impracticable". In a sense "impracticable" means much the same as "impossible" in every day human affairs. According to the Shorter Oxford English Dictionary a meaning of "impracticable" is "Not practicable; that cannot be carried out or done; practically impossible". Even though it does not mean "impossible" in the literal sense ("cannot be done"), it is reasonable to interpret the word "impracticable" in s.31 as including the situation that a dismissed employee cannot resume his former position. There may be all sorts of reasons why it is impracticable to re-employ someone in his or her former position and the fact that, by decision of the employer, whatever the reason, it no longer exists, is one such reason. 22. Miss Layton also contended that historically, redundancy has always been treated separately from unfair dismissal provisions in legislation and awards in Australia, and that the remedy for unfair dismissal was initially re-employment which remains the primary remedy and that the introduction of the compensation provisions in s.31 did not extend the scope of the section so as to include genuine redundancy. 23. Miss Layton developed those arguments by reference to considerable authority and to the establishment of redundancy principles in the International Labour Organization Recommendations No. 119 of 1963 and No. 166 of 1982, the International Labour Conventions No. 158 and No. 166 of 1982, the Termination, Change and Redundancy Case ("TCR case") (1984) 294 CAR 175 and the Clerks (South Australia) Award Case (1987) 54 SAIR 258. The argument seeks to establish that redundancy is to be treated separately from notions of unfair dismissal and that if s.31 does apply to genuine redundancy and the remedy of compensation is appropriate, the level of compensation established in awards should be applied. 24. I intend no disrespect to Miss Layton's detailed and thoughtful argument but, in my view, the resolution of the issues raised by this application for judicial review simply depend upon the true interpretation of s.31. There are no terms of art or technical expressions contained within the section, the true meaning of which can only be discerned after reference to the development of features of Industrial law in this country. The approach of the Australian Conciliation and Arbitration Commission to redundancy in the TCR case does not assist in the interpretation of s.31 or in levels of compensation which may be awarded pursuant to the section. The TCR case was concerned with the resolution of industrial disputes between three trades unions and three employers groups at a time when there had been a large number of retrenchments in industry for various reasons. The case decided (inter alia) benefits which should be provided in cases of redundancy and which should be included in the various awards relating to the unions and the employer's groups before the Commission in that case. The Commission applied the recommendations of the International Labour Organization and principles in the Conventions. Whilst it may be true that the TCR case established standards which could be expected to be applied in Federal Awards, these standards do not apply beyond the awards which have embraced them. Perusal of the standards reveals that they would be appropriate in some industries and not in others. They may cease to be appropriate in different economic times. Principles and standards established in the TCR case and in the Clerks (South Australia) Award Case, do not, in my view, have any bearing upon whether s.31 applies to cases of genuine redundancy. 25. Furthermore, the levels of benefits provided in the TCR case and in awards are not binding upon the Commission when awarding compensation under s.31. It is of significance that when the original s.31 was enacted and the power to order compensation was introduced by Act No. 19 of 1984, the jurisdiction to hear and determine unfair dismissal cases was removed from the Industrial Court and was given to the Commission. The difference between the Court and the Commission was discussed by King CJ in The Queen v Industrial Commission (S.A.); ex parte General Motors-Holdens Limited (1985) 124 LSJS 219 at pp.223-224:- "The Industrial Commission is a tribunal which is distinct from the Industrial Court. The Court consists of members who are appointed as judges and are subject to the provisions as to status, qualifications for appointment, security of tenure and retirement as apply to judges. The procedures of the Court are, and are plainly intended by legislation to be, curial in character. Industrial magistrates must be legal practitioners of five years standing. The Commission is differently constituted. In addition to the members of the Court, who are President and Deputy Presidents, it is composed of any

At a glance

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Judgment (11 paragraphs)

FOSTERS BREWING GROUP LTD v. INDUSTRIAL COMMISSION OF SOUTH AUSTRALIA and DAVID ROWLAND PERCIVAL No. 4261 Judgment No. SCGRG 93/951 Number of pages - 12 Industrial law (1993) 61 SASR 329 [1993] SASC 4261 (10 November 1993)

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Legislation Cited (2)

Cases Cited (6)