Fair Work Act 2009

s.604 - Appeal of decision

Melba Support Services Australia Ltd T/A Melba Support Services

Appeal against decision [2021] FWC 3233] of Deputy President Hamilton at Melbourne on 4 June 2021 in matter number C2021/884 - application to deal with a general protections dispute involving a dismissal - no employment relationship - no dismissal - permission to appeal refused.

[1] By her notice of appeal dated 22 June 2021, Ms Susanne Kelly seeks permission to appeal and appeals a decision made on 4 June 2021 by Deputy President Hamilton to dismiss her application for the Fair Work Commission (Commission) to deal with a general protections dispute involving a dismissal.[1] The Deputy President dismissed the application on the basis that there was no employment relationship formed between Ms Kelly and the respondent, with the result that there was no dismissal within the meaning of the Fair Work Act 2009 (Cth) (Act).[2]

[2] Ms Kelly's application for permission to appeal and the appeal were listed for hearing on 3 August 2021. Following a request by Ms Kelly, and with the consent of the respondent, the hearing was vacated and the appeal, together with the application for permission to appeal, have been dealt with on the basis of the written submissions filed and served by the parties.

[3] The Deputy President described the relevant factual background to Ms Kelly's application as follows:[3]

"[4] In or around December 2016, the Victorian Government decided to transfer its public disability services to the non-government disability sector. As part of this process, employees were seconded and then later transferred to direct employment with certain providers. In September 2020 the Applicant received a letter confirming the details of her transfer of her duties and received a letter of offer with employment said to commence on 1 January 2021. The letter of offer confirmed that the offer of employment was conditional on the Applicant satisfactorily completing safety screening requirements, including criminal history (police) checks, Working With Children checks and any other safety screening mandated by the Respondent.

[5] The Applicant attended the Respondent's office to sign the letter of offer and provide the Respondent with a valid Working with Children Check and four points of identification to allow the Respondent to complete a police check. It is at this point that the Respondent alleges that the Applicant failed to complete all the necessary preconditions to the letter of offer and did not provide a satisfactory police check or cooperate in obtaining a check. On 16 December 2021, the Respondent wrote to the Applicant to remind her that it was a condition of her employment commencing that she provide a satisfactory police check prior to 1 January 2021. On 30 December 2020, the Respondent extended the timeframe for the Applicant to comply with the conditions in the letter of offer to 31 January 2021.

[6] By 27 January 2021, the Applicant had not provided a completed police check to the Respondent in its view and the Applicant was advised by the Respondent that she had failed to meet the obligations required in the letter of offer in order for the employment to commence. On 10 February 2021, the Respondent wrote to the Applicant confirming that, due to her failure to meet the safety screening requirements, the employment offer had in effect lapsed, although the language used was 'termination of employment'.

[7] This matter has some peculiar features. The applicant was advised that she needed to provide a 'current' police check and cooperate in relation to the police check to gain employment, and was reminded of this on two occasions. The requirement was put on three occasions. She was given an extension of time to respond and behave appropriately. She did not respond, although she was represented and engaged in numerous discussions with the employer. The employer said that it has no record of such a check being received. It appears that somehow the applicant or her representative was unable to ring the employer on the telephone and respond orally instead of by letter or in addition to a written response, and accurately communicate and cooperate on the issue of police checks which she knew were required from the letter of offer and her own evidence about attempts to provide a police check. Overall this dispute was pointless and avoidable."

[4] The Deputy President commenced his consideration of Ms Kelly's application by reviewing the terms of the offer of employment made to her by the respondent:

"[9] The employer offered the applicant employment in a letter of 29 September 2020. The offer and commencement of employment was expressed as conditional only:

'This Letter of Offer sets out the terms and conditions of Melba's offer of employment to you. This offer lapses 28 days after the date of this Letter of Offer.

Your employment commences on 1 January 2021 provided that:

1.1 you accept employment with Melba as set out in this Letter of Offer by signing this Letter of Offer and returning it to [email address] within 28 days of the date of this Letter of Offer;

1.2. prior to 1 January 2021, you have satisfactorily passed any safety screening specified at clause 17 (Safety Screening);

1.3. as at 1 January 2021, you continue to meet the requirements listed in clause 18 (Inherent Requirements); and

1.4. between the date of this Letter of Offer and 31 December 2020 (i.e. immediately prior to the commencement date in clause 1), you are in continuous employment with the Department in a position seconded to Melba; i.e. during that period, your employment with the Department is not terminated.'

[10] One of the conditions of commencement of employment on 1 January 2021 was that the applicant has 'satisfactorily passed any safety screening specified at clause 17'. Clause 17 is in two parts...

[11] Clause 17.1 requires the applicant to 'cooperate with Melba' regarding safety screening checks:

'17.1. You must co-operate with Melba so as to enable us to perform criminal history record checks, Disability Work Exclusion Scheme checks, Working with Children checks and any other safety screening check mandated by Melba from time to time.'

'17.2. You are required to hold a current Working with Children Check and criminal history record check (police check) and provide evidence of this prior to the commencement of employment.'"

[5] The Deputy President found that Ms Kelly did not respond to the respondent's requests for a current police check to be provided, and her failure to do so constituted a lack of cooperation and a breach of clause 17.1 of the letter of offer of employment.[4] This meant, so the Deputy President reasoned, that "the condition for employment commencing on 1 January 2021 or 31 January 2021 given the extension of time was not met, and prima facie the applicant was not employed".[5]

[6] The Deputy President next considered the line of authority concerning the distinction between a condition which is precedent to the formation or existence of a contract and a condition which is precedent to the obligation of a party to perform their part of the contract. As Justice Mason explained in Perri v Coolangatta Investments Pty Ltd,[6] "In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on the fulfillment of the condition and non-fulfilment entitles him to terminate".

[7] The Deputy President then drew attention to the distinction between an employment contract and an employment relationship, quoting from the decision of the majority of the Full Bench of the Commission in Khayam v Navitas English Pty Ltd,[7] where it was held:

"The analysis of whether there has been a termination at the initiative of the employer for the purpose of s 386(1)(a) is to be conducted by reference to the termination of the employment relationship, not by reference to the termination of the contract of employment operative immediately before the cessation of the employment."

[8] The Deputy President's essential reasoning for his decision to dismiss the application is set out in paragraphs [47] and [50]-[51] of the decision:

"[47] Section 386(1)(a) of the Act requires the person's "employment with his or her employer [to have] been terminated on the employer's initiative". References to "employment" and "employer" in s.386(1)(a) require an employment relationship to have existed at the time of dismissal. In this case there is no question that employment commenced, or that services were provided by the applicant or similar, and that wages were received in return. The wage/work bargain had not commenced.

[50] In this case the offer provided that the employment would not commence until 1 January 2021 unless certain conditions were satisfied. The terms of the offer are clear on this. Nor is there anything in what happened which displaces that. No payment was received and no services performed by the applicant. There was no employment or contract until the conditions were met, and even then not until 1 January 2021 or 31 January 2021, the extension time. The conditions were not met so the offer lapsed and employment never commenced. I accept that Melba described its letter as a 'termination of employment' letter. However, the letter of offer of 29 September 2020 makes it clear that as discussed earlier the commencement of employment is subject to conditions. The follow up letter of 16 December 2020 provides that 'a condition of your employment commencing with Melba (Letter of Offer clause 1.2) is that you complete a police check'. The language used is imprecise as can be expected from time to time, particularly where staff are not legally trained and are simply trying to do their job in rather trying circumstances where an applicant is not cooperating. The substance of the negotiations are as I have described, and a failure of the employer and possibly not legally qualified staff to understand and use correct technical language should not be held against it.

[51] On the evidence before me, the offer of employment was withdrawn due to the preconditions contained within the offer not being met. While an offer had been made of future employment, acceptance was not fulfilled as the pre-employment requirements were not met in accordance with the terms contained within the offer, as I discuss above. It follows that I must find that Ms Kelly was not an employee of Melba when it withdrew its offer of employment, and she was not dismissed."

[9] Section 604 of the Act provides for an appeal by an aggrieved person to the Full Bench of the Commission, but only with the permission of the Full Bench. The Act does not confer on a party a right to appeal a decision of the Commission.[8] An appeal under the Act is conditional on permission to appeal being granted. It follows that Ms Kelly requires permission to appeal from the decision, in accordance with s 604(1) of the Act.

[10] Subsection 604(2) of the Act requires the Commission to grant permission to appeal if satisfied that it is "in the public interest to do so." The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.[9] In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

"... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters."[10]

[11] Other than granting permission to appeal on a public interest basis, the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if refused.[11]

[12] Further, it will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[12] However, the fact that the member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.[13]

[13] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.[14] However, it is necessary to engage with the appeal grounds to consider whether they raise an arguable case of appealable error.

[14] Ms Kelly's notice of appeal contains two appeal grounds.

[15] The first appeal ground contends that the Deputy President made an error of law in concluding that Ms Kelly's compliance with clause 17 of the contract was a condition precedent to the formation of an employment contract. It is submitted that the Deputy President erred by disregarding contractual principles concerning the distinction between a condition precedent to the formation of a contract and a condition precedent to the performance of a contract.

[16] Ground 2 of the notice of appeal contends that the Deputy President erred in finding that there was a lack of cooperation by Ms Kelly with respect to obtaining a police check and a failure to comply with clause 17.1 of the contract. In particular, Ms Kelly submits that the Deputy President erred in fact by finding that she did not respond to the respondent, and failed to consider, or alternatively failed to give adequate weight to, her cooperation by (a) attending the respondent's headquarters on 21 October 2020 to complete the check and (b) through communications between Ms Kelly's union representatives and the respondent in relation to the police check.

[17] The respondent submits that s 375A(1) of the Act has application to this appeal, and requires that the Commission must not grant permission to appeal in general protections matters unless it considers that it is in the public interest to do so.

[18] The respondent submits that permission to appeal should be refused on the basis that the Deputy President correctly determined that there was no employment relationship between Ms Kelly and the respondent. It is submitted that Ms Kelly has miscomprehended the distinction drawn in the decision between an employment relationship and an employment contract, with the result that Ms Kelly has failed to address the fact that no employment relationship existed between Ms Kelly and the respondent. The respondent submits that the appeal does not raise any matters of significant public importance and the question of whether an employment relationship is established will depend on the circumstances of each case. The respondent also submits that the Deputy President did not err in fact or in law as alleged by Ms Kelly.

[19] If a person has been dismissed and the person or their representative alleges that the person was dismissed in contravention of Part 3-1 (general protections) of the Act, then the person may apply to the Commission for it to deal with the dispute.[15] It is a condition of a person's entitlement to make an application under s 365 of the Act that the person "has been dismissed".[16] If there is a dispute as to whether the person "has been dismissed", the Commission has jurisdiction and power to resolve the dispute and must resolve it before exercising the powers conferred by s 368 of the Act to conciliate or otherwise deal with the application (other than by arbitration).[17]

[20] The respondent raised a dispute before the Deputy President as to whether Ms Kelly had been dismissed. The meaning of dismissed is governed by s 386 of the Act. As the Deputy President correctly observed, "the analysis of whether there has been a termination at the initiative of the employer for the purpose of s 386(1)(a) is to be conducted by reference to the termination of the employment relationship, not by reference to the termination of the contract of employment operative immediately before the cessation of the employment."[18] Whether an employment relationship exists is a question of fact.[19] Unless and until an employment relationship exists, it cannot be terminated.

[21] Although there can be no employment relationship without a contract of employment, a contract of employment may come into existence before an employment relationship is formed.[20] For example, an employer and an employee may enter into a binding contract for the employee to commence employment with the employer in, say, six months' time. If the offer of employment is withdrawn after the contract has been made but before the employment commences, the employer may be liable for breach of contract but the employment relationship will not come into existence.[21]

[22] Importantly, in this appeal Ms Kelly has not challenged the Deputy President's clear finding that there was never an employment relationship between Ms Kelly and the respondent.[22] Absent a successful challenge to that finding, Ms Kelly's appeal against the Deputy President's conclusion that Ms Kelly was not dismissed cannot succeed.

[23] Furthermore, we are satisfied that the Deputy President's finding that there was never an employment relationship between Ms Kelly and the respondent was correct. There is no arguable error in connection with that finding in circumstances where there is no dispute that no services were provided by Ms Kelly to the respondent (other than at an earlier time when she was on secondment to the respondent) and no wages or similar payments were made by the respondent to Ms Kelly.[23] That the respondent paid Ms Kelly, in February 2021,[24] her leave entitlements accrued while she was an employee of the Department of Health and Human Services (Department), together with five weeks' pay in lieu of notice, does not alter the fact that Ms Kelly's employment with the respondent did not "commence".[25] The payment of Ms Kelly's leave entitlements is explained on a practical level by the respondent's submission that Ms Kelly's leave entitlements accrued while she was an employee of the Department were transferred to the respondent from the Department on 31 December 2020 and it was administratively easier for the respondent to make that payment to Ms Kelly than to transfer the monetary amount of the entitlement back to the Department for it to make the payment.[26] The respondent says that it made the payment in lieu of notice to Ms Kelly in order to avoid a contractual dispute with her.[27]

[24] The unresolved issues between the parties in connection with the "safety screening" required of Ms Kelly by the respondent in accordance with clauses 1.2 and 17 of the offer of employment meant that the proposed employment relationship between Ms Kelly and the respondent never got off the ground. It follows that the Deputy President did not err in concluding that there was no dismissal because there was no termination of an employment relationship.

[25] We accept that the Deputy President made a finding, at [50], that there was no employment contract made between Ms Kelly and the respondent because the conditions stated in the letter of offer were not met. We also accept that the Deputy President erred in so finding, because the letter of offer does not contain any clear words which would justify a conclusion that the terms in question were conditions precedent to the formation of a contract, as distinct from a condition precedent to the performance of an obligation under the contract.[28] Indeed, clause 22 of the letter of offer provides that "this Letter of Offer ... if signed by you becomes the contract of employment..."[29] Ms Kelly signed the letter of offer on 21 October 2020.[30] The letter also makes it plain that it is the "commencement" of Ms Kelly's "employment" with the respondent that is conditional on a range of matters, including that Ms Kelly "satisfactorily passes any safety screening specified at clause 17".[31]

[26] Notwithstanding this error and the fact that Ms Kelly did enter into a binding employment contract with the respondent for her to be employed in the future if certain conditions were met, the parties did not resolve their differences in relation to whether the conditions had been met and the employment relationship never came into existence. It follows that the error in the contractual analysis did not have any bearing on the correctness of the conclusion reached by the Deputy President on the question of whether or not Ms Kelly was dismissed by the respondent.

[27] Similarly, Ms Kelly's second ground of appeal does not go anywhere. Even if it be accepted that the factual errors for which Ms Kelly contends were made (about which we make no finding), a conclusion that Ms Kelly did not breach clause 17 of her employment contract with the respondent would not advance her contention that she was dismissed. That is because a finding that Ms Kelly had complied with the "safety screening" requirements of clause 17 would not have any impact on the question of whether, in fact, she entered into an employment relationship with the respondent. Ms Kelly has not challenged the finding that she did not enter into an employment relationship with the respondent and, for the reasons given above, we consider that finding to be correct.

[28] On the question of permission to appeal, we reject the respondent's submission that s 375A of the Act is relevant to the present appeal. That provision only applies to an "appeal from a decision made by the FWC under subsection 369(2) (which is about arbitration of a dismissal dispute)". Section 369(2) of the Act provides that the Commission "may deal with the (dismissal) dispute by arbitration". However, subsection 369(2) only applies if the requirements set out in subsection 369(1) have been met, including the issue of a certificate stating that all reasonable attempts to resolve the dispute (other than by arbitration) have been, or are likely to be, unsuccessful and the parties having notified the Commission that they agree to the Commission arbitrating the dispute. Those steps were not taken in the proceedings below because the matter did not progress beyond a determination by the Deputy President that Ms Kelly had not been dismissed.

[29] We do not consider that the Deputy President's decision to dismiss Ms Kelly's application for the Commission to deal with a general protections dispute involving a dismissal is attended with sufficient doubt to warrant its reconsideration, or that the decision manifests an injustice. The appeal does not raise any issues of general application; it turns on its own facts. Although we have identified an error in the contractual analysis undertaken by the Deputy President, we are not persuaded that the matters set out in the grounds of appeal and submissions raise any concern about the correctness of the ultimate conclusion reached by the Deputy President on the question of whether or not Ms Kelly was dismissed by the respondent. We do not consider the grant of permission to be in the public interest, nor do we consider that there is any other basis upon which permission to appeal should be granted.

[30] Permission to appeal is therefore refused.

Respondent's written submissions dated 27 July 2021.

[1] [2021] FWC 3233 (decision)

[6] (1982) 149 CLR 537 at 551

[7] [2017] FWCFB 5162 (Navitas) at [75]

[8] DP World Brisbane Pty Ltd v Maritime Union of Australia (2013) 237 IR 180; [2013] FWCFB 8557 at [42]

[9] O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch [2011] HCA 4; (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54; (2011) 192 FCR 78 at [44] -[46] .

[10] [2010] FWAFB 5343, 197 IR 266 at [24] - [27].

[11] Also see CFMEU v AIRC [1998] FCA 1404; (1998) 89 FCR 200; and Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481.

[12] Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481 at [30]

[13] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]- [27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

[14] Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]

[16] Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152 at [54]

[19] Metropolitan Fire and Emergency Services Board v Duggan [2017] FWCFB 4878 at [27]

[20] Broadlex Services Pty Ltd v United Workers' Union [2020] FCA 867 at [61]- [62]

[22] Decision at [47] and [50]-[52]

[28] Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 552

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