University of Wollongong v National Tertiary Education Industry Union

The termination of employment 9 On 26 February 2001, Professor G R Sutton, Vice-Chancellor and Principal of the University, wrote to Dr Steele indicating his "grave concern" with Dr Steele's "recent conduct following upon media reports of [his] statement of 9 January 2001 and subsequently". Professor Sutton summarised the relevant course of events and concluded: "Having reviewed the position at length, I have come to the following views: (a) that you have engaged in serious misconduct by wilful or deliberate behaviour that is inconsistent with the continuation of your employment and (b) that your conduct has caused serious risk to the reputation of the University of Wollongong, your employer. Accordingly, pursuant to Clause 59 of the Enterprise Bargaining Agreement and Section 170CM(1)(c) of the Workplace Relations Act 1996, I advise you that your employment with the University of Wollongong is terminated, effective immediately." 10 The Union and Dr Steele took the view that cl 59 of the Agreement did not authorise the Vice-Chancellor summarily to terminate Dr Steele's employment. They thought the Vice-Chancellor's proper course was to utilise cl 61 of the Agreement. As was agreed before Branson J, the University "did not take any of the actions or follow the procedures provided for in clause 61 of the Agreement".

The proceeding 11 The University did not accept the view of the Union and Dr Steele. Accordingly, on 14 May 2001, they instituted a proceeding, pursuant to ss 178, 179, 179A and 413A of the Act, seeking interpretation of the Agreement. The question raised by that application, as identified by the learned primary Judge, was "whether the University of Wollongong … is entitled under the Agreement to dismiss a member of its academic staff whom the Vice-Chancellor considers has engaged in serious misconduct of a kind envisaged in par 170CM(1)(c) of the Act without following the procedures provided for by cl 61 of the Agreement." 12 The application was heard by Branson J on 5 July 2001. On 8 August 2001 her Honour ordered that: "Upon the true meaning and intent of clause 61 of the University of Wollongong (Academic Staff) Enterprise Agreement 2000-2003 ('the Agreement'), clause 61 prescribes the steps that are to be taken before the Vice-Chancellor takes disciplinary action against an academic staff member for reasons of unsatisfactory conduct, whether amounting to 'misconduct' or 'serious misconduct' within the meaning of the Agreement, including for reasons of misconduct of the kind envisaged by par 170CM(1)(c) of the Workplace Relations Act 1996 (Cth)." 13 Branson J gave leave to the parties to apply in relation to other orders.

The judgment of Branson J 14 In her reasons for decision, Branson J held that cl 59.2 of the Agreement is concerned with the notice - in the sense of the period of notice, or compensation in lieu of notice - to be given to an academic staff member before his or her employment is to be terminated; it is not concerned with procedures to be followed before arriving at a decision to terminate the employment of the staff member. The learned Judge said: "This conclusion is, I consider, compelled by the opening words of the subclause, ie: 'The University must not terminate the employment of an academic unless the academic has been given notice and/or compensation as required by Clause 14 of this Agreement ….' The remaining portion of the subclause qualifies the operation of the broad prohibition contained in the opening words; it does not alter the subclause's subject matter. The above conclusion is reinforced, in my view, by the use of the phrase "an academic found to have engaged in conduct of a kind …" in subcl 59.2 [Branson J's emphasis]. The concept of a "finding" as to conduct is, I consider, suggestive of a procedure leading to a determination as to that conduct. Clause 61 of the Agreement provides for such a procedure. On the argument advanced by the respondent, an academic staff member could be "found to have engaged in conduct of a kind envisaged in Section 170CM(1)(c) of the [Act] …" within the meaning of subclause 59.2 merely because the Vice-Chancellor had formed the view that he or she had engaged in conduct of that kind. Having regard to the procedure required by cl 61 of the Agreement to be followed before "findings" may be made as to conduct which could constitute mere misconduct, as opposed to serious misconduct (see subcl 61.10.2), the interpretation of the above phrase for which the respondent contends seems to me to give inadequate weight to the context in which the phrase is found. The references made within cl 61 of the Agreement to conduct of the kind envisaged in par 170CM(1)(c) of the Act are also of significance. The first of these references is found in subcl 61.3, which authorises the Vice-Chancellor to suspend a staff member, on full pay or alternatively without pay, if the Vice-Chancellor is of the view that the alleged conduct of the staff member is conduct of the kind envisaged in par 170CM(1)(c) of the Act. The second of these references is found in subcl 6.10.2 which authorises the University to terminate without notice the employment of an academic found to have engaged in conduct of a kind envisaged in par 170CM(1)(c) of the Act. Each of these references reflects an intention that cl 61 of the Agreement provide a procedure which is capable of being followed in respect of misconduct of the kind envisaged in par 170CM(1)(c) of the Act. It would, in my view, render the Agreement unworkable in a practical sense if the references were required to be read and understood, as the submissions of the respondent would require them to be read and understood, as references to a subclass only of misconduct of the kind envisaged by par 170CM(1)(c) of the Act (ie misconduct of the kind envisaged by par 170CM(1)(c) of the Act which is also "serious misconduct" within the meaning of cl 61 of the Agreement). It is, in my view, of some significance to note that subcl 61.3 of the Agreement authorises the Vice-Chancellor to suspend a staff member without pay if the Vice-Chancellor is of the view that the alleged conduct of the staff member amounts to conduct of the kind envisaged by par 170CM(1)(c) of the Act, and subcl 61.7 allows a suspended staff member to be effectively excluded from the University. Having regard to these provisions, there would seem to be limited room for the University to be embarrassed by an interpretation of the Agreement which requires compliance with the procedures provided by cl 61 in the case of a staff member believed to have engaged in conduct of the kind envisaged by par 170CM(1)(c) of the Act."

The appeal: preliminary matters 15 On 3 September 2001 the University filed a "Notice of Appeal" against "the whole of the judgment" of Branson J given on 8 August 2001. In response, the Union and Dr Steele filed a notice of contention complaining of the failure of Branson J to have regard to certain extrinsic materials which, they claimed, supported their construction of the Agreement. 16 There are two problems about the document filed by the University. First, considered as a notice of appeal, it was out of time. Order 52 rule 15 of the Federal Court Rules requires that a notice of appeal be filed within 21 days of the date when the judgment appealed from was pronounced or leave to appeal given. A later date may be fixed by the Court or a judge. The University's "Notice of Appeal" was filed 26 days after her Honour's orders. 17 Order 15 rule 5 imposes a similar 21 day requirement in regard to applications for leave to appeal. This provision is relevant to the present case because leave to appeal is clearly necessary. Counsel for the University, Dr G Flick SC and Ms C Ronalds, argued otherwise on the basis that Branson J's order "finally determines the right of the University to terminate employment without compliance with cl 61 of the Enterprise Agreement". However, it was pointed out by counsel for the respondents, Mr J W Shaw QC and Mr P Ginters, that Branson J expressly refrained from dealing with all the issues raised in the proceeding. A final judgment (which does not need leave to appeal) is one that finally determines all the rights of the parties that are in issue in the proceeding: see Computer Edge Pty Ltd v Apple Inc (1984) 54 ALR 767. 18 We propose to grant leave to appeal nunc pro tunc and to extend time for filing the notice of appeal up to and including 3 September 2001. We do so on pragmatic grounds. If we did not take this course, the further hearing before Branson J would proceed without final resolution of the University's challenge to her interpretation of the Agreement. After final orders were made, presumably on the basis of that interpretation, it would be open to the University to appeal as of right, within 21 days of the final orders, and then agitate the correctness of her Honour's interpretation of the Agreement. It seems preferable to determine that question immediately, especially as it has been fully argued, and thereby facilitate resolution of any remaining issues.

Arguments on the merits of the appeal 19 Dr Flick and Ms Ronalds contend that cl 59 of the Agreement imports a power to terminate employment without notice where it would be "unreasonable to require the University to continue employment during a period of notice". That power, they argue, is exercisable without complying with the procedural requirements imposed by cl 61. Counsel say this conclusion is entailed by the natural construction of cl 59. In answer to questions from the Court, Dr Flick said he used the term "without notice" as meaning without any prior notification to the employee; that is, summarily and without warning. Dr Flick pointed out that s 170CM of the Act has been construed as permitting termination without notice or compensation, although the onus of establishing "serious misconduct" justifying such termination remains on the employer: see Kennelly v Incitec Ltd [1998] 1470 FCA per Carr J. Dr Flick reminded the Court that the common law has always recognised a right in an employer to dismiss without notice for serious misconduct: see Macken, McCarry & Sappideen, The Law of Employment (1997) at 189-192 citing North v Television Corporation Limited (1976) 11 ALR 599 at 609. Smithers and Evatt JJ there spoke of "conduct inconsistent with the fulfilment of the express or implied conditions of service". 20 Dr Flick and Ms Ronalds argued that the construction of the Agreement adopted by Branson J was "an exceptional construction". They said: "No matter how exceptional a fact situation may be - involving (for example) unquestioned concerns as to the physical safety of staff or students - such a construction would compel the Appellant University to:- - give notice; - entertain submissions; - constitute a Committee; - permit an opportunity for any such committee to conduct "interviews", allowing a staff member to be represented by an "agent"; and - receive and consider a "report" from a Committee. Clause 61 is a self-evident attempt to ensure - inter alia - procedural fairness. But even the rules of procedural fairness accept that in some circumstances those rules may be dispensed with." 21 Dr Flick and Ms Ronalds submitted there is no ambiguity in cl 59; consequently, there is no occasion for the Court to have regard to extrinsic evidence, as was suggested to Branson J by counsel for the Union and Dr Steele. They also put submissions about the relationship between the "Serious Misconduct" referred to in cl 59.5 of the Agreement and "conduct of a kind envisaged in (s 170CM(1)(c) of the Act)" referred to in cl 59.2. 22 On behalf of the respondents, Mr Shaw and Mr Ginters supported the reasoning adopted by Branson J. They agreed the Agreement was unambiguous, but asserted the unambiguous meaning favoured their clients. However, they submitted that, if the Court found the Agreement to be ambiguous, the extraneous materials should be considered.

Conclusions 23 In our opinion there is no relevant ambiguity in the Agreement. It is not necessary to go to extrinsic material. The conclusion reached by Branson J is clearly correct. We respectfully agree with her reasoning. 24 The argument put by the University is based on a misunderstanding of the word "notice", in the phrase in cl 59(2) of the Agreement, "the University may terminate without notice". Contrary to the argument of counsel for the University, this does not mean without warning or notification under cl 61. It means without having to comply with the command of cl 14 that the terminating party provide a "period of notice", or payment of compensation in lieu of the employee working out that period of notice. 25 The Agreement makes this meaning clear. The opening words of cl 59.2 are: "The University must not terminate the employment of an academic unless the academic has been given notice and/or compensation as required under Clause 14 of this Agreement". [Emphasis added] That is the general rule: in the case of an academic, the University may not terminate without providing the notice (calculated in weeks) specified in cl 14 or compensation in lieu. 26 There is a proviso to the general rule: "provided that the University may terminate without notice" - plainly, this is the same notice as is referred to in the statement of the general rule - "the employment of an academic found to have engaged in conduct of a kind envisaged" in s 170CM(1)(c) of the Act "such that it would be unreasonable to require the University to continue employment during a period of notice". [Emphasis added] This means that, if the academic has been found to have engaged in conduct so serious that "it would be unreasonable to require the employer to continue the employment of the employee concerned during the required period of notice" - to use the words of s 170CM(1)(c) - the University is not obliged to allow the academic to serve out the period of notice stipulated by cl 14, or to provide compensation in lieu. 27 Clause 59.2 is concerned with the notice obligation imposed under cl 14, and nothing else. 28 This view of cl 59.2 is supported by other considerations. As Branson J observed, the word "found" in the phrase "found to have engaged in conduct", suggests a conclusion reached at the end of an inquiry, such as an inquiry by a committee constituted under cl 61 of the Agreement. Also, it is clear that the drafters of the Agreement did not intend to exclude cases of s 170CM(1)(c) conduct from the reach of cl 61: see cl 61.3 and 61.10.2. The latter reference is particularly important because it sets up two alternative courses of action: to terminate "with notice or payment in lieu of notice as provided for under Clause 14 of this Agreement" or to "terminate without notice the employment of an academic found to have engaged in" s 170CM(1)(c) conduct. 29 The opening words of cl 61.1 are also important. They are couched in mandatory terms, the only exception being a case where the subject matter of complaint has already been dealt with under cl 60. Clause 61 is headed "Misconduct and Serious Misconduct" and cl 61.1 applies to "disciplinary action against a staff member for reasons amounting to misconduct or serious misconduct". Those terms are defined (by cl 59) in such manner as to include s 170CM(1)(c) conduct. 30 As Branson J pointed out, and contrary to the submission put to us by counsel for the University, the application of cl 61 to all cases of alleged misconduct would not cause a situation that was intolerable from the University's point of view. The clause enables the Vice-Chancellor immediately to suspend an employee, with or without pay (cl 61.3), and to exclude the employee from the University (cl 61.7). 31 Another relevant matter is the unlikelihood that the parties would have negotiated a detailed procedure for dealing with allegations of misconduct (cl 61) but agreed to allow the Vice-Chancellor unilaterally to override that procedure in cases where the misconduct reaches s 170CM(1)(c) proportions. 32 It might be thought that, the more serious the alleged misconduct, the more important it is to ensure a right of defence and an impartial investigation of the relevant facts. From the employee's point of view, this will always be the case. It may also be the case from the employer's point of view. A disputed allegation of serious misconduct may open up issues of administration that it is in the public interest for the University to investigate and resolve. 33 Counsel for the University argued the appeal on the basis that dismissal without notification of impending action and provision of a hearing is the norm, rather than the exception. As mentioned, they referred to the common law right of an employer to dismiss without notice for serious misconduct and cited Macken, McCarry and Sappideen. However, this reference involves the same misconception as the University's principal submission. As the reference to North makes clear, the learned authors were there speaking of the giving of a period of notice, or compensation in lieu. They were not dealing with giving notification of impending action and a hearing. 34 Whatever might have been the position in bygone days, most contemporary employees enjoy a right to be notified of any allegation of misconduct, and an opportunity to answer the allegation, before disciplinary action is taken against them. This situation reflects the principle embodied in Article 7 of the Convention Concerning Termination of Employment at the Initiative of the Employer adopted by the International Labour Organisation in 1982 and subsequently ratified by Australia. That Article reads: "The employment of a worker shall not be terminated for reasons related to the worker's conduct or performance before he is provided an opportunity to defend himself against the allegations made, unless the employer cannot reasonably be expected to provide this opportunity." 35 The international principle has influenced the content of numerous Australian statutes, industrial awards and enterprise agreements. It is unlikely any trade union, today, would accept a proposed enterprise agreement that permitted the employer to dismiss an employee for misconduct without prior warning and an opportunity to make a defence. Common fairness requires the provision of these rights. It is disappointing to find a university, of all employers, claiming not to be under an obligation of common fairness.

36 The appeal should be dismissed with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate: Dated: 28 March 2002 Counsel for the Applicant: Dr G Flick SC with Ms C Ronalds

Counsel for the Respondent: Mr J Shaw QC with Mr P Ginters

Solicitor for the Respondent: Maurice Blackburn Cashman