STATE OF SOUTH AUSTRALIA v DAY No. SCGRG-00-430 [2000] SASC 451

2 LANDER J: I agree for the reasons given by Bleby J that this appeal should be allowed. The order of the Full Court of the Industrial Relations Court should be set aside and so also should the order made by the Senior Judge of that Court.

3 There should be an order that the appeal to the Full Court of the Industrial Relations Court should be allowed and the decision of the Senior Judge of that Court should be set aside.

4 In lieu thereof there should be an order that the appeal to the Senior Judge of the Industrial Relations Court from the Industrial Magistrate should be dismissed.

5 By those orders the decision of the Industrial Magistrate that the respondent's application should be dismissed will be confirmed.

6 BLEBY J: Since 1987 the respondent has been a teacher in the Department of Education and Children's Services in its various guises from time to time. At all material times prior to ceasing work in November 1995 she had been engaged by the Minister of Education as a .8 time contract teacher pursuant to s 9 of the Education Act 1972. According to an application for renewal of her contract made in 1996, she had been employed from April 1995 to December 1995 at the Highbury Primary School.

7 In about June 1995 the respondent suffered a disability arising out of or in the course of her employment which affected her voice. As a result, she became incapacitated for work from 13 November 1995. She lodged a claim for income maintenance in accordance with the Workers Rehabilitation and Compensation Act 1986 ("the Compensation Act"). For the purposes of the Act, the appellant, her employer, is an exempt employer. It accepted the claim and weekly payments of income maintenance were made as from 20 November 1995 until 22 January 1998, when she was fully recovered and resumed teaching duties at St Agnes Primary School.

8 There is no dispute that throughout that period she was paid income maintenance in accordance with the requirements of the Compensation Act. Although, from time to time, she performed other functions in circumstances to which I will later refer, she was not paid wages or salary for any part of that period. For the first twelve months, until 13 November 1996, she was paid at the rate of $529.40 per week, being the amount of her notional weekly earnings computed in accordance with the requirements of the Compensation Act. After one year that payment was reduced to 80 per cent of her notional weekly earnings, namely $428.62 per week: see s 35(1)(b).

9 Being an exempt employer, s 63 of the Compensation Act required the appellant to establish rehabilitation programmes for its employees, having the objectives set out in s 26 of that Act. In accordance with s 28A of the Compensation Act, the appellant established a rehabilitation and return to work plan for the respondent. Section 28A relevantly reads:

(a) must consult with the worker and the employer out of whose employment the disability arose; and

(i) review medical records relevant to the worker's condition; or

(ii) consult with any medical expert who is treating the worker for the compensable disability.

(4) A rehabilitation and return to work plan may impose obligations on the worker and on the employer.

(5) The Corporation must give the worker and the employer a copy of the rehabilitation and return to work plan.

(6) The plan is binding on the worker and the employer."

By virtue of the appellant's exempt status, a reference in those subsections to the Corporation is in effect a reference to the appellant: s 63(1)(a).

"28B. (1) A worker or employer may apply for review of -

(a) a decision to establish or not to establish a rehabilitation and return to work plan; or

(b) a provision of a rehabilitation and return to work plan,

on the ground that the decision or the provision is unreasonable.

(2) On review of a rehabilitation and return to work plan (or in consequent appellate proceedings), the plan may be modified to the extent necessary to ensure that the plan does not impose unreasonable obligations on the worker or the employer.

(3) Proceedings on a review under this section (or consequent appellate proceedings) do not suspend obligations imposed by a rehabilitation and return to work plan."

11 A number of return to work plans for the respondent were prepared, agreed upon in writing and were obviously successfully implemented. The first covered the period 6 May 1996 to 29 July 1996. Others followed, covering the periods 22 July 1996 to 7 October 1996, 8 November 1996 to 30 January 1997, 11 February 1997 to 5 May 1997, 29 May 1997 to 1 December 1997, and finally, 8 December 1997 to 28 February 1998. The gaps were small and were obviously not intended to cause suspension of the overall plan. They appear to have been caused by delays in the reviews.

12 The plans involved, among other things, the performance by the respondent of functions usually performed by a School Services Officer (SSO), commonly known as a school assistant or teacher aide. She performed those duties at a school other than the school at which, in 1995, she had been performing teaching duties. As the programme evolved, she began performing more and more teaching duties over extended periods of time, until she was able to cope with the full .8 teaching duties that she had performed before becoming incapacitated. As the rehabilitation consultant supervising her programme described in evidence, the respondent "followed the programme very closely and it was a classic graduated programme". It merely needs to be added that each of the rehabilitation and return to work plans set out quite clearly a number of obligations, for the period of each plan, on the respondent, the appellant and the rehabilitation consultant.

13 After the first anniversary of her incapacity, when the amount of income maintenance was reduced to $428.62 per week, the respondent was still performing functions of preparation of the classroom and clerical duties, library assistance and classroom assistance. They were the functions of a SSO. The minimum rate of pay for a SSO Level 1, 1st year of service working .8 time was $374.18 per week. This was less than the amount of weekly income maintenance then being received by the respondent. However, s 35(1)(b) of the Compensation Act provides that a worker, if partially incapacitated for work, is entitled to weekly payments equal to 80 per cent of the difference between the worker's notional weekly earnings and the weekly earnings that the worker is earning or could earn in suitable employment that the worker has a reasonable prospect of obtaining.

14 Ultimately, the worker's case is that she was earning or could earn in suitable employment as a SSO the sum of $374.18 per week, and that 80 per cent of the difference between that figure and her notional weekly earnings brought her total weekly payment to something substantially above that which she was in fact receiving by way of income maintenance. If that is so, she was receiving more by way of income maintenance than she was entitled to. Her complaint before the Industrial Relations Court and before this Court is that she should have been paid wages as a SSO for the relevant period. If there was any justification for the claim, there is no reason why it should have been limited to apply only from 13 November 1996. To be consistent, it should have applied from the date when she first started performing the duties. It can be reasonably inferred that the respondent did not claim for the earlier period because it made no practical difference to the amount she received. However, to exclude that period from the claim is to ignore both a conceptual difficulty facing the respondent and the basic facts said to give rise to her claim.

15 The case at all levels before the Industrial Relations Court seems to have proceeded upon an assumption by the Industrial Magistrate and the Judges who heard the appeals that the minimum rate of pay payable to a SSO for the time that the respondent carried out the duties exceeded the amount of compensation that she was in fact receiving, and that that was the reason for the claim. That is a misconception, and it is not how the respondent's counsel put the case at first instance. However, I do not think that it affects the principles which should determine the outcome. Nor do I think that if the Industrial Relations Court had properly understood the respondent's case, their answers would have been any different.

16 In order to rectify what the respondent perceived to be an injustice, she commenced proceedings by invoking the jurisdiction of the Industrial Relations Court under s 14 of the Industrial and Employee Relations Act 1994 ("the Industrial Act"). That section confers jurisdiction on the Court to hear and determine a monetary claim for a sum due to an employee or former employee from an employer or former employer under an award or contract of employment. No doubt the reason for taking that course was that in the circumstances the respondent could not complain about the amount of income maintenance she was being paid. On her case, she was receiving more by way of income maintenance than she was entitled to.

17 The award under which she said she was entitled to wages was the School Services Officers (Government Schools) Award, an award of the Industrial Relations Commission of South Australia. By Clause 1.3.1 of that award it applies to the occupations of "all persons employed as non-teaching staff in schools established and maintained by the Minister (of Education) pursuant to the provisions of s 9 of the Education Act 1972....". By Clause 1.3.3 it is expressed to be binding upon "all persons engaged in the industry referred to in sub-clause 1.3.1 of [the] award whether as employers or employees and whether members of an association or not".

18 Given that the jurisdiction of the Industrial Relations Commission is limited to making an award "regulating remuneration and other industrial matters" (s 26(b), Industrial Act), and given that the definition of those terms contained in s 4 of the Industrial Act limits the subject matter of an award (including for public employees) to the relationship of employer and employee at common law, the award must be construed as having application only to those persons who have entered into a common law contract of employment and who come within the ambit of the award which I have described. That is, the person must have entered into a contract of employment and be "employed as non-teaching staff" in schools established by the Minister. Therefore, if the respondent's claim was to be brought under the award, she had to establish that she was employed by the appellant under a contract of employment as a member of the non-teaching staff in a Department school.

19 Although her claim in the Industrial Relations Court was not framed in this manner, she could also have claimed wages due under a contract of employment, not necessarily governed by an award. In other words, if she could establish that she was employed at all material times as a teacher (a position not covered by the award) and that there was a variation to her contract of employment whereby, for a limited period of time, she would be required to perform only the duties of a SSO and would be paid the appropriate award rate, or some other agreed rate, she could invoke the jurisdiction of the Industrial Relations Court to claim wages allegedly unpaid under such a contract of employment.

20 Because of the differing reasons given by the Senior Judge of the Industrial Relations Court, on the one hand, and subsequently by the Full Court in its joint judgment, on the other hand, in granting the respondent's claim, I will consider the matter on both the alternative bases to which I have referred.

21 Since 1987 the respondent had been employed as a contract teacher in a variety of primary schools in the State. For some years she was employed less than full-time and for less than a full year. It seems that in May of each year she would complete an Application for Employment form as a teacher for the following calendar year. Such application forms were in evidence in respect of the calendar years 1995, 1996, 1997 and 1998. I infer that there was no obligation on the appellant to employ the respondent after the end of a calendar year.

22 Thus, at the end of 1995, after the respondent had suffered her injury and was incapacitated, there was no obligation on the part of the appellant to employ the respondent in subsequent years. There was no evidence before the Industrial Magistrate to show that her application for employment in 1996 and 1997 had been accepted, although there was an obligation under s 58B of the Compensation Act to provide suitable employment for the respondent when she was able to return to work, that work being, so far as is reasonably practicable, the same as or equivalent to the employment in which she was employed immediately before the incapacity. Although her contract in force at the time of her injury may have expired at the end of 1995, there was a reasonable expectation on the respondent's part that, as soon as she was able to return to teaching duties, she would be provided with work as a teacher, as indeed she was in February 1998.

23 I have already referred to the statutory provisions concerning rehabilitation and return to work plans. The performance by the respondent of the functions of a SSO was but part of a total rehabilitation plan devised for her and implemented from time to time during the period of her incapacity. The obligations contained in those plans included obligations to undertake appropriate medical treatment and speech therapy, as well as to participate in reviews of the plan. They also provided obligations on the employer to provide the duties which were regarded as being suitable for her rehabilitation from time to time. The plan was binding on the respondent and the appellant not by contract but by virtue of s 28A(6) of the Compensation Act. There were sanctions provided in the Compensation Act for failure to comply with the terms of the plan: see s 36(1)(f) and (1a)(e). The plan was able to be reviewed in accordance with Part 6A of the Compensation Act: s 28B. That enabled, if necessary, an external body to determine the terms of the plan, including the nature of any work to be performed. In each of the programme documents the respondent was described not as a SSO but as a Contract Teacher.

24 There is no evidence to suggest that the respondent was ever engaged by the appellant pursuant to a contract of employment as a SSO. The work was carried out at the Parafield Gardens Primary School. She was regarded as a supernumerary at that school. In other words, all the available positions of SSO at that school had been filled. She never applied for a position as a SSO. The only discussions she had about performing the functions were with her independent rehabilitation provider, who was not an employment agent of the school or of the Department of Education and Children's Services. She never applied for reclassification. She continued to be paid and to accept income maintenance under the Compensation Act throughout the period at a rate which, if she had been employed as a SSO, she would not have been entitled to receive. Had it been hers or the appellant's intention to employ her under a contract of employment, one would have expected some reference to that in the plan, but there was none. One would also have expected some action to have been taken either to discontinue (under s 36(1)) or to reduce (under s 36(2)) or to review (under s 38) the payments of income maintenance under the Act. No such action was taken.

25 There was certainly no attempt to comply with the requirements of the award. Clause 5.1.2 of the award required the Chief Executive, Department for Education and Children's Services, or his or her delegate, upon initial engagement of an employee, properly to classify the employee within one of the four classifications provided in the award, which classifications relate to the level of skill at which work is performed. That was never undertaken. Indeed, the scheme under which the respondent was performing her functions had the potential for conflict with the award. Clause 4.2.1 provided:

"Each employee will be engaged either as a full-time employee or a part-time employee or a temporary employee or a casual employee to work a stipulated number of ordinary hours per week and weeks per year. The basis of engagement will not be altered except by mutual agreement between the employer and the employee."

26 It is quite clear, under the terms of the rehabilitation plan, as supported by the Compensation Act, that the nature and extent of the duties required not only the agreement of the appellant and the respondent but of her rehabilitation consultant, and in the event of a dispute could have been determined under the provisions of the Compensation Act.

27 In my opinion, the functions of a SSO performed by the respondent were not performed under a contract of employment as a SSO but pursuant to a series of rehabilitation and return to work plans given statutory force by s 28A of the Compensation Act. There was never any intention on the part of the appellant and the respondent to enter into contractual relations, let alone a contract of employment to perform the duties of a SSO. As there was no contract to perform those duties, there was nothing on which the award could operate, and her claim, in so far as it was based on the award, was bound to fail.

28 For similar reasons, there was no variation to any existing contract of employment whereby the respondent would perform the duties of a SSO and be paid wages for the work performed. On the evidence led before the Industrial Magistrate, it is doubtful whether any contract of employment existed at all. If it did, it was a contract to perform the duties of, and in return to be paid as, a teacher, not as a SSO. It may well have been in a state of suspension because of the inability of the respondent to perform the duties of a teacher, thereby relieving the employer of the obligation to pay wages, but there was no evidence of any variation of an existing contract. The indications were against that. She continued to be described in the plan as a contract teacher. Because she was a supernumerary at the Parafield Gardens Primary School, there was no reason apparent why the appellant would want to employ her as a SSO. If there was any continuing contract at all, it was for the respondent to perform the work of, and to be paid as, a teacher, subject to her being fit enough to do so.

29 In my opinion the Industrial Magistrate was correct in dismissing the respondent's application. However, I should say something briefly about the reasons which prompted both the Senior Judge and the Full Court of the Industrial Relations Court to reach the opposite conclusion.

30 The Senior Judge correctly considered that s 58B of the Compensation Act imposes an obligation on the part of an employer to make available "suitable employment" where an incapacitated worker is able to return to work. He interpreted that as meaning that the obligation was to make that work available pursuant to a contract of employment. He considered that the duties of a SSO performed by the respondent were performed pursuant to that obligation, and were therefore performed under a contract of employment. Alternatively, he considered that there had been a consensual variation to the original contract of employment whereby the respondent was to be paid as a SSO.

31 In my opinion, so to hold is to ignore the facts that were before the Magistrate and to make an assumption, contrary to those facts, that because an employer has an obligation to offer work under s 58B, that course was necessarily followed on this occasion. Whether there was in fact a breach by the employer of s 58B is not for us to determine. I point out that there is a qualification in subsection (2) which says that the obligation does not apply if it is "not reasonably practicable" to provide employment in accordance with the subsection. It is quite possible that that defence may have been open to the employer in this case, given that the respondent was performing duties as a supernumerary at the Parafield Gardens Primary School.

32 There is no reason why a rehabilitation and return to work plan should not include, if appropriate, the fact that a willing employer would employ a worker subject to rehabilitation on a contract of employment in a particular capacity. There is nothing in the Act to prevent that. On the evidence, it did not happen in this case.

33 The Full Court of the Industrial Relations Court held that the Magistrate was correct in that the express terms of the respondent's engagement did not allow or provide for the application of the award. The Full Court also considered that the Senior Judge was correct in holding that the performance of the respondent's duties was pursuant to a contract of employment. However, the Court did not consider that that followed from s 58B of the Compensation Act, nor did it follow from any consensual variation of the contract. The Court held that there was to be a term implied in any contract of employment that if the employee becomes disabled as a result of an injury or illness arising out of or in the course of the employment:

".... the employer will give him or her a reasonable opportunity to be reintegrated back into the productive workforce and that an employer is entitled to expect to be able, upon offering suitable duties to a disabled worker, to impose its own sanctions to ensure his or her proper compliance with the normal obligations of employment, independently of the statutory scheme of compensation. We consider that such implied terms give effect to societal norms and must be implied of necessity into the contract of employment because they are 'necessary for [its] reasonable or effective operation': Hawkins v. Clayton (1988) 164 C.L.R. 539 at 573 per Deane J. These terms are not to be implied into every contract of employment. But, they prevail unless expressly declared in a particular contract or by virtue of a particular statute, award or enterprise agreement, not to apply."

34 That was an argument which had not been put before the Full Court of the Industrial Relations Court. Very properly, Ms Layton QC, for the respondent, did not seek to justify that conclusion of the Full Court.

35 As was observed by the majority of the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, for a term to be implied in a contract, the following conditions must be satisfied:

(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) it must be so obvious that "it goes without saying";

(5) it must not contradict any express term of the contract.

See also Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 per Gibbs CJ at 65, Deane J at 121. In my opinion it is sufficient to say that the clause sought to be implied by the Full Court of the Industrial Relations Court meets none of those requirements for the implication of terms in a contract, and there was no justification for the unargued and unarguable excursus into holding that there was an implied term of that nature.

36 In my opinion the appeal from the Full Court of the Industrial Relations Court should be allowed, and the order of that Court and of the Senior Judge of the Industrial Relations Court should be set aside. The decision of the Industrial Magistrate that the respondent's application be dismissed should be confirmed.