T9147
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Kenneth James Farrell and Crown in Right of State of Tasmania
Industrial dispute - termination of employment - within jurisdiction of Commission - extension of time granted - dismissal for valid reason - reasonable severance payment made - notice period reasonable - no procedural unfairness - dismissal fair - instrument of appointment - technical breach of formal notice requirement - order for payment of one weeks wages in settlement of industrial dispute REASONS FOR DECISION Arrangement These Reasons for Decision contain the following parts:
The Application On 11 August 2000, Kenneth James Farrell (also known as Ken Farrell) (the applicant), applied to the Acting President, pursuant to s.29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with the Crown in Right of State of Tasmania, through agency of Department of Premier and Cabinet - Office of the Leader of the Opposition (the respondent) arising out of the termination of his employment. On 24 August 2000, the Acting President convened a hearing at `Lyndhurst', 448 Elizabeth Street, North Hobart, Tasmania before myself, to commence on Thursday, 21 September 2000 at 9.30 am. At the hearing Mr R Young, a legal practitioner, sought and was granted leave to appear on behalf of the applicant, and Mr C Willingham appeared for the respondent. Background The background to this dispute, as established through the evidence, is as follows: Mr Kenneth James Farrell commenced work on 14 December 1998 as an adviser to the then Leader of the Opposition, the Honourable Tony Rundle, MHA. Mr Farrell's principal role was economic analysis of state government initiatives and appropriate matters in the public domain. On 8 February 1999 he was appointed to that position, by an Instrument of Appointment ("the Instrument"), formalising his appointment from the date he commenced (14 December 1998). The Instrument contained provisions relating to the terms of his employment, in particular the duration of the appointment and the manner in which it could be terminated. Schedules to the Instrument set out conditions of employment in relation to remuneration, superannuation, expenses, general employment conditions, and severance pay entitlements should the appointment be terminated in accordance with the provisions of the Instrument. The Instrument allowed for the termination of the appointment by the giving of two weeks notice in writing either by Mr Farrell or by the Premier or his delegate. Should the employment not be terminated by either party in the above manner, then the appointment would remain in place until 31 October 2002, or the end of the term of government, whichever occurred sooner. On 2 July 1999, the Honourable Sue Napier became the new Leader of the Opposition, and Mr Farrell's employment continued as before. On 1 February Mrs Napier verbally advised Mr Farrell that she had decided to terminate his employment on the basis that she wished to have a political adviser rather than an economic adviser; that Mr Farrell did not have the required political policy skills; and that consequently there would not be a job in her office for a full time economic adviser. Mr Farrell was advised that his employment would terminate on 1 June 2000, that is, four months later. This advice was confirmed, in writing, by Mrs Napier to Mr Farrell in a letter dated the following day, 2 February 2000. In that letter Mrs Napier said that action would be initiated to conclude his appointment with effect from close of business on 1 June 2000. On 13 February 2000 Mr Farrell, in a letter to Mrs Napier, outlined the substance of the discussions which had taken place at the meeting between himself and Mrs Napier on 2 February 2000. In that letter he requested that, if he was unable to find new employment prior to 1 June 2000, then he would be assisted were he to be able to take leave without pay at that point, for a period of one month, and, by doing so, delay his termination date until 1 July 2000. On 9 May 2000, Mr Farrell, in a letter to Mrs Napier, repeated his request for leave without pay for the period 2 June 2000 until 3 July 2000 and that his appointment be concluded with effect from close of business 3 July 2000. The evidence was that Mrs Napier granted that request, however she subsequently advised Mr Farrell, by letter dated 25 May 2000 that, whilst she was prepared to extend his period of employment until 3 July 2000, and would advise the Premier accordingly, leave without pay was contrary to Departmental policy, which required employees to utilise recreation leave credits before leave without pay could be granted, unless there were exceptional circumstances. Mrs Napier requested that Mr Farrell provide details of any such exceptional circumstances, or, alternatively, that he submit an application for recreation leave. Mr Farrell neither provided details of exceptional circumstances, nor did he apply for recreational leave. Mr Farrell continued to attend for work until 1 June 2000, after which date he went on a vacation with his partner and her children, returning to Hobart on 15 June. He did not present for work again. Mr Farrell's salary continued to be paid into his credit union account, with payments made on 7 July, and 21 July. Both pay advice slips described the payments as "normal pay", not as recreation leave payments. The evidence was that the absence was subsequently regarded as recreation leave on the part of the Department. On 22 June 2000, the Secretary of the Department of Premier and Cabinet, Linda Hornsey, formally advised Mr Farrell, in writing, that in accordance with his Instrument of Appointment, the Premier had given approval for the termination of his appointment, effective from close of business on Monday 3 July 2000. Mr Farrell's evidence was that he did not receive the letter until Monday 26 June 2000. On or about 6 July 2000 Mr Farrell received a salary payment advice dated 3 July setting out the details of the payment that had been made to him on the termination of his employment. On 5 July 2000 Mr Farrell wrote to Ms Hornsey and to the Premier, the Honourable Jim Bacon, MHA, stating that he did not accept the termination or the terms of the termination, and requesting that it be reviewed. He also asked what procedures he should follow in order to initiate such a review. In a letter dated 18 July 2000, Mr Geoff Owen, Acting Director, Corporate Services, responded to both letters, saying inter alia, that Mr Farrell's employment had been terminated by the Premier in accordance with the provisions of the Instrument of Appointment. On 28 July 2000, Mr Farrell wrote again to the Premier, advising that he disputed that the termination of his employment was valid and that he disputed that he was on recreation leave during the month of June. On 11 August 2000, Mr Farrell made application to this Commission for a hearing in respect of an industrial dispute, alleging unfair termination of employment. Jurisdiction The question of whether the Commission has jurisdiction to hear this matter was raised. In order to address this question, it is necessary to look at the terms of the Instrument of Appointment. A Minute Paper for His Excellency the Governor-in-Council submitted by the Department of Premier and Cabinet, signed by the Premier, and dated 8 February 1999 reads:
The Instrument of Appointment is expressed in the following terms:
The relevant extracts from the Schedules are as follows: "Schedule 1
It is also necessary to consider the provisions of the Industrial Relations Act 1984 ("the Act"], the relevant provisions are: Section 4
Section 29
Section 3 - Interpretation
[a] a State employee; or
Put at its simplest, the question to be determined is whether or not Mr Farrell was an employee under the terms of the Act. Mr Willingham for the respondent Mr Willingham initially said that if Mr Farrell is "anything at all he is a private employee within the meaning of the Act"2 however, he invited the Commission to consider whether or not Mr Farrell was excluded from the Act altogether by virtue of section 3 of the Act - the definition of "state employee" which excludes any person -
The question Mr Willingham raised can be summarised as follows: Mr Young, in his opening statements had indicated to the Commission that Mr Farrell's salary was class 12 as per the Administrative and Clerical Employees Award. In Mr Farrell's written statement which was tendered as part of Mr Young's opening comments, Mr Farrell had said:
The instrument of Appointment states that the appointee shall receive the remuneration as set out in Schedule 1 of the Instrument, which says:
Is Mr Farrell, in that case, an excluded employee for the purposes of section 3[1] - Interpretation, in that he was a state employee who is expressly excluded from the jurisdiction by the provisions of the interpretation of state employee? An argument may be made out that the Governor has determined the salary consistent with the terms, not only of the State Service Act but also the Industrial Relations Act, in that an award of the Commission is an extension of the enabling legislation itself. Mr Willingham concluded by submitting that Mr Farrell is indeed a state employee excluded from the jurisdiction of the Commission in relation to any matter.5 Mr Young for the applicant The substance of Mr Young's submission is as follows: Because section 4 of the Act binds the Crown, then it binds the Governor. Section 3 defines an "industrial dispute" as including the termination of an employee or former employee. An "employee" is defined as a private employee or a state employee. An "employer" means a private employer or a controlling authority. A "controlling authority" of a person employed under the terms of the Tasmanian State Service Act 1984 is the Minister administering that Act. Mr Farrell was not employed under that Act. In the case of any other State employee, the controlling authority is the principal officer of the State authority by which the employee is employed. A "state authority" means -
Mr Farrell does not fit within that definition because the Governor is the operative body and the Governor is not constituted by an Act of the state parliament and the employer is not a body appointed under a Royal Prerogative. However, if the Governor and Council can be classified as an authority, then the Commission would have jurisdiction because the employer would be a controlling authority. If Mr Farrell was appointed by the Executive Council, not the Governor, then he is a state employee, but the Instrument of Appointment is not signed by the Executive Council, it is signed by the Governor. A state employee is an employee employed in an agency or by a state authority. Mr Farrell was not employed in an agency or by a state authority, whilst he did work inside "some sort of" state authority, it was no different from, for example, an accountant being hired to work on an inquiry into remuneration for government servants, pursuant to some contract which required him to work inside the offices. Mr Farrell's remuneration is not specified in an Act, it is specified in the Instrument of Appointment, which says that remuneration shall commence at a particular rate and shall be varied according to the variation that occurs to a person employed on a similar wage in the Tasmanian State Service. The Instrument does not say that Mr Farrell is paid under that Act. A "private employee" is an employee other than a state employee or a person appointed under the Tasmanian State Service Act or whose remuneration is specified in any Act. Mr Farrell's remuneration is not specified in any Act, he is paid by reference to similar levels of salary. Nor was Mr Farrell paid under the State Salaries Act 1979. Nor was Mr Farrell an employee appointed under the Tasmanian State Service Act or an employee under section 38 of that Act. Mr Farrell is not a state employee, by a process of exclusion, therefore he must be a private employee. Findings - Jurisdiction As indicated on the day of the hearing, I reject Mr Willingham's submission that the Commission has no jurisdiction to hear the matter. I now elaborate and expand upon the reasons given at the time, which were:
My reasons for concluding that Mr Farrell was not a state employee under the terms of the Act are that: In order to be a state employee, an employee must be employed in an Agency or by a State authority. "Agency" means a Government Department or State authority or other organisation specified in Column 1 of Schedule 1 to the Tasmanian State Service Act 1984. The Department of Premier and Cabinet, within which department Mr Farrell worked, is specified as an Agency under that Schedule. However, nowhere in Mr Farrell's letter of appointment does it state that he is to be employed in that Agency - instead it appoints him to the position of "Advisor, Office of the Leader of the Opposition". I accept Mr Young's analogy that Mr Farrell was appointed to do a special job which happened to be located within a particular department. This is a different situation to a "normal" employee, employed under the terms of the State Service Act in a position within an Agency. However, if I am wrong on this point, then Mr Farrell would, subject to the exclusion provisions, fall under the definition of "state employee" and this Commission would have jurisdiction to hear the matter on that basis. In my view, as stated extemporaneously, Mr Farrell is not one of the class of state employees who fall under the specified exclusions listed under the definition of "state employee". He is not an employee according to sections 7, 29, 60 or 38[1][b] of the Tasmanian State Service Act, which sections refer to the Commissioner for Public Employment, Heads of Agencies, the Commissioner for Review, or a special contract of service which can only be effected by the Minister on behalf of the Crown in accordance with Employment Instructions issued by the Commissioner for Public Employment. Nor can Mr Farrell be a person whose remuneration is determined under the Statutory Salaries Act 1979, for a number of reasons, not the least of which is that that Act has been repealed by the Statutory Salaries Act (Repeal) Act 1996. I reiterate that, in my opinion, Mr Farrell is not excluded on the basis of being a person whose remuneration is specified under any Act or determined by the Governor under any Act. I do not accept the argument that because the salary specified in Schedule 1 of the Instrument of Appointment was set at a rate specified in an award, then therefore it is specified in an Act or determined by the Governor under any Act. Mr Farrell's remuneration was not determined by the Administrative and Clerical Employees Award, it was determined by the Instrument of Appointment. In addition, in my view, an award rate is not a rate specified in any Act. The Industrial Relations Act empowers the Commission to make and vary awards. The Act does not specify the award rates. Neither the State Service Act or the Industrial Relations Act confer upon the Governor the right to specify remuneration under those Acts. It was not suggested that the remuneration as specified in the Instrument was determined by the Governor under any other Act. Therefore, I find that Mr Farrell's remuneration was not determined by the Governor under any Act. However, for the reasons already given, Mr Farrell is excluded from the category of "state employee". The next question to be decided is - does he fall under the definition of "private employee"? Under the Act "employee" means a private employee or a state employee. There are exclusions from the definition of "private employee". They are the same exclusions as for a state employee, with the additional exclusion of state employees. Therefore, had Mr Willingham been successful in his arguments regarding remuneration being specified under any Act, or determined by the Governor under any Act, then Mr Farrell would also have been excluded from the category of private employee. However, for the reasons outlined, I have rejected Mr Willingham's submission in that regard. I find, therefore, that Mr Farrell is a private employee for the purposes of the Act, and that, accordingly, the Commission does have jurisdiction to hear and determine the matter. Extension of Time Section 29[1B] of the Act says:
The notice of termination received by Mr Farrell stated that his termination was effective from close of business on Monday 3 July 2000.7 Mr Farrell''s application to the Commission for a hearing was dated 11 August and was received on that same date. The application, therefore, was made nineteen days after the expiration of the fourteen day period. Mr Willingham, for the respondent, said that the applicant had a -
Mr Young tendered a written statement9, with attachments, which, he said, showed the sequence of events between 3 July 2000 and the filing of the application. The sequence of events, according to Mr Farrell's written statement, was as follows: On 5 July, Mr Farrell wrote to the Secretary of the Department of Premier and Cabinet, Ms Linda Hornsey, saying that he did not accept the termination, and asking what his rights of review were.10 On or about 6 July Mr Farrell received a salary payment advice slip containing details of his termination payment. He telephoned the contact person whose number was shown on the advice slip, and spoke to Ms Susie Leonard, and asked her, amongst other things, the reasons for his "alleged" termination, and to provide him with a copy of the Ministerial Delegation under which Linda Hornsey had "allegedly" terminated his employment. On 21 July he received a response to his letter to Ms Hornsey , signed by the Acting Director of Corporate Services, Mr Geoff Owens, dated 18 July, which said, inter alia:
On 28 July Mr Farrell wrote to the Premier, saying, in effect, that his previous enquiries had not been satisfactorily addressed, and saying that he disputed the validity of the termination of his employment. He said that the termination payment, paid into his credit union:
During the week ending 28 July, Mr Farrell sought advice from the office of the Commissioner for Review, where he was told that the State Industrial Commission may have jurisdiction to hear his case, and that the terms of his employment were "most unusual". At this stage it was suggested to him by a friend that he contact the legal firm, Ayliffe and Ayliffe, which he did, and attended the earliest appointment he could get with them, which was on 28 July. The advice he received from Ayliffe and Ayliffe was that his employment was unusual, and there was some doubt as to the jurisdiction of the State Industrial Commission. On 4 August, Mr Farrell visited the Commissioner for Review and was advised that the State Industrial Commission might hear his case, and that there might be a time limit. Mr Farrell then visited the Industrial Commission, where he was advised by the Registrar that he could apply to extend any time requirements. On 11 August he again saw Ayliffe and Ayliffe, who advised him that the Industrial Commission appeared to have jurisdiction to hear the matter and that he should file his application with the Commission, which he did that day. He was told either at that time or at a later time, by an officer of the Commission, that the question of the extension of time would be dealt with as a preliminary matter. Mr Young referred the Commission to the principles stated in a decision of this Commission, Terence James O'Connor and Capital Hill Corporation,13 which confirmed that the principles to be followed in relation to applications for extension of time were those in the decision of Wilcox J in Hunter Valley Developments v the Honourable Barry Cohen, Minister for Home Affairs14 summarised as follows:
Mr Young submitted that the employer was well aware of Mr Farrell's claim as a result of his correspondence of 5 July and his telephone calls. The employer has suffered no prejudice. The delay arose because of Mr Farrell's unusual form of employment, which was not according to a contract or an award and he was not a state employee within the meaning of the Act. Mr Farrell therefore did not know where to turn for advice. He did not receive a response when he asked for advice from the pay office. The Commissioner for Review was not sure what to do. His lawyers needed time to look at the matter in order to give him advice about the jurisdiction of the Commission. When he received that advice he acted upon it immediately. In his submission, Mr Young said that, in the circumstances, it was a proper thing to extend, when applying the principles that were considered in O'Connor. Decision - Extension of Time As indicated on the day of the hearing, I decided to grant the request for an extension of time, and I said that the reasons for that decision would be published in due course.15 I now do so. The Act allows a Commissioner to grant an extension of time where the Commissioner "considers it appropriate in the circumstances".16 This does not mean, however, that such extensions are given lightly. I am required, when applying the principles in the precedent cases referred to, to be positively satisfied that there is an acceptable explanation for the delay. In all of the circumstances, I am persuaded that, in this case, there is such an explanation. In my view, the difficulties Mr Farrell experienced in obtaining advice as to jurisdiction is an acceptable explanation for his failure to lodge the application within the fourteen day time limit. The action taken by Mr Farrell in contesting his termination is also relevant. His letter to the Premier dated 5 July, just two days after the date of the termination, and other action taken, made it clear that the decision to terminate was actively contested. This favours the granting of an extension of time. It was not a case where the employer would have believed that the decision to terminate was not contested. I was not made aware of any prejudice to the employer as a result of defending proceedings occasioned by the delay. Due to the unusual nature of Mr Farrell's employment I do not consider that the question of fairness between the applicant and other persons in a like position is a relevant consideration in this case. For all of these reasons, I decided to grant the extension of time applied for. I now turn to the substantive matter in dispute. Was Mr Farrell's dismissal unfair? The evidence of Mr Farrell Mr Farrell said, in his written statement,17 that he was a 54 year old economist who had worked with Government virtually all of his life. He commenced as an adviser to the Honourable Tony Rundle, MHA on 14 December 1998. On 8 February 1999, by the Instrument of Appointment, he was appointed as adviser to the Office of the Leader of the Opposition, on the terms contained in the Instrument. The term of his appointment was until 31 October 2002, and any termination of his appointment was to be by the Premier or his delegate upon two weeks notice in writing. On 1 February 2000, at a meeting, Mrs Napier, the Leader of the Opposition, advised him that she was reviewing the staffing of the office and had decided to terminate Mr Farrell's appointment. On 2 February he received a letter from Mrs Napier in which she said:
On 13 February Mr Farrell wrote to Mrs Napier confirming the details of the conversation of 1 February 2000.
Mrs Napier told Mr Farrell that she was aware of a position with Dr Dennis Napthine, Victorian Liberal Leader, as an economic adviser. Because of Mr Farrell's domestic circumstances, he advised Mrs Napier that he was not prepared to leave Tasmania. On 9 May he wrote to Mrs Napier requesting leave without pay for the month of June, in the following terms:
His letter was returned with a tick. Mr Farrell received another letter from Mrs Napier, dated 25 May, which said:
Mr Farrell ceased work on 1 June 2000 and he and his partner went away, returning on 15 June. He said that he did not know what his situation was. He tried to use his security pass to Parliament House and found that it no longer worked. His regular pay was still being paid into his credit union. On 26 June 2000 he received a letter dated 22 June 2000 from Linda Hornsey which said:
Mr Farrell said that the notice did not say he was actually terminated, merely that approval had been given to terminate his employment. He had not, he said, received the two weeks notice that was required under his Instrument of Appointment, and the letter did not say that Ms Hornsey was the Premier's authorised delegate. Cross examination Under cross examination Mr Farrell said that he believed that technically his position was not terminated. He said that it was not until 26 June that it appeared to him that some action had been taken to terminate his job. He said:
Later, however, Mr Farrell said that he read Mrs Napiers's letter of 2 February to mean that his employment would come to an end on 1 June. "That's how I read it."24 He appeared to reverse this view a little later, when he said that Mrs Napier's letter was only a "stated future intention and there is no certainty about any action that might be taken in the future."25 Mr Farrell said that there were other people in the Liberal Party who thought that Mrs Napier had made a poor decision, and that he did not agree with her stated reason for terminating his employment. He said that he had told her that he was good at political advice as well as economic advice.
Mr Farrell agreed that the representations that he had made to Mrs Napier did not convince her to change her mind. He said that he expected his employment to be terminated on 1 June 2000 but he did what he could to have "that advice of Mrs Napier's intention reversed."27 In answer to questions about why his employment had not terminated on 1 June, as had been his expectation, but on 3 July, Mr Farrell said that he had applied for leave without pay for the month of June because "I wanted to preserve my rights until the following financial year"28. He agreed that he had initiated the delaying of his termination date, the reason being that he wished to receive payment for his accrued entitlements in the new financial year, so that his income for the 1998-99 financial year would be reduced, thus minimising his tax payment for that year. It was established that the first time Mr Farrell had written anything challenging his termination was on 5 July 2000, two days after his termination. In answer to a question from the Commission, as to what Mr Farrell had done to indicate that he objected to the termination of his employment, and when, Mr Farrell said that he had done so at the meeting with Mrs Napier on 1 February, on the grounds that he believed he was a good political adviser. In his letter of 13 February he had said that his loss of income would leave him in a very difficult position financially, and that he had spoken to a number of members of the opposition about the intention to terminate his employment. He said: "I've certainly objected very loud and vehemently."29 In his letter to Mrs Napier of 13 February, Mr Farrell had not challenged the validity of the termination, because, he said, what he wanted to do in that letter was record the substance of what Mrs Napier had told him. However, he said:
Mr Farrell was asked to show where, in the evidence, he had challenged the validity of the decision to terminate during the period from 2 February (when Mrs Napier first said she intended to terminate his appointment) until 3 July (the date on which the employment was terminated). Mr Farrell agreed that the first time he had done so, the first time that he had said that he did not accept the termination and the reasons for it was on 5 July 2000. He said that the reason for the five month delay was:
He agreed that he had not indicated to Mrs Napier that he was aggrieved about the decision to terminate or that he intended to take some action if his position was terminated, but he had said to Mrs Napier that he did not think it was fair. In answer to questions about the Instrument of Appointment, Mr Farrell said that he understood clause 4[b] to mean that his employment could be terminated by the giving of two weeks notice and if so he would be entitled to the entitlements set out in Schedule 3. He was also asked whether he considered it to be a fair clause, to which he replied "Yes, it's a fair clause."32 During re-examination, Mr Farrell said that Mrs Napier had not arranged any job interviews for him, apart from saying that she had spoken to Dr Dennis Napthine, nor had she arranged for any out-placement for him, nor had any other steps been taken to minimise the effect of the intended termination. He had had the flexibility to attend interviews and Mrs Napier had said that she would provide a referee report. Mr Young for the Applicant Mr Young submitted that the unfairness of Mr Farrell's dismissal was that he should have been able to rely upon his Instrument of Appointment and its terms including the term in paragraph 1[a] which said that the appointment shall be for a term expiring on 31 October 2002 or the resignation or termination of the government. The terms of a contract cannot be varied unilaterally, they may only be varied by agreement. The mere fact that there may have been plenty of warning does not give the ability to vary the arrangement. It is unfair to vary the arrangement. Mr Young said that there is no doubt that that Mrs Napier and the Liberal Party can say what sort of advisers they want. They are entitled to have those views, but they can only do it in accordance with the contract. It does not matter how much notice they give, it does not matter how many concessions are made, the contract may not be breached. It was not within Mrs Napier's power to terminate the appointment. She could only recommend to the Premier who could then act, or not, as he saw fit. Mr Young said that if there was to be a termination prior to the expected expiry date then that could only be done under the power set forth in the Instrument. When Mr Farrell received the notice from Ms Linda Hornsey it said that the Premier had given approval to terminate, it did not say that the Premier had given instructions to terminate. It did not say that the writer had been given instructions to terminate and had been appointed to act upon those instructions. Mr Young referred to the case of Harding v Hassett33 (actually Hassett v Harding & Ors) which concerned a union rule that three months notice of intention to resign must be given. The Australian Industrial Court said that there was a difference between a notice of intention to do something and actually doing it. In Mr Farrell's case, he said, the notice of termination fails in itself in that it does not give two weeks notice. It only gives eleven days. It was signed on 22 June to operate on 3 July. It was not received until 26 June, only seven days before its operative date. Mr Young referred extensively to the case of Martin v Tasmanian Development Authority34. Mr Martin was employed under a fixed term contract with a statutory authority. In his case one of the requirements of the contract was that one months notice was required for the termination of the employment on the grounds of operational requirements. His employment was terminated by a payment in lieu of notice. It was held by Mr Justice Heerey that:
In Mr Young's submission, in Mr Farrell's case there was notice but not of the length specified in the contract. It was an invalid notice. The law is that an invalid notice is not notice at all. It has been called a nullity. The authority in support of this is Gunton v Richmond-Upon-Thames LBC reported in the Chancery Reports, where, at page 447 Lord Justice Brightman said: "An invalid notice has been called a nullity." Mr Young said that, in resolving the dispute the Commission has a duty, if it thinks reinstatement appropriate, to order reinstatement. If not, the only other alternative is to award some reasonable monetary compensation, bearing in mind that breach (the invalid notice). In determining what that sum should be, Mr Young referred the Commission to the case of Kilburn v Enzed Precision Products Pty Ltd35 in the Supreme Court of Victoria. The court held:
The ILO Convention concerning termination at the initiative of the employer, Article 11, says that:
The parties (to the "contract") have agreed that the reasonable period be two weeks, but that was not given. The question is, Mr Young said, what is a fair measure of damage in Mr Farrell's case? The courts have held that once there is a termination, damages are "at large". In Martin the claim was for the balance of the salary and other benefits he would have received had his contract run for its full term, plus compensation for the loss of the chance to have his contract renewed. Mr Young presented a number of authorities dealing with the question of the quantum of compensation. In the case of Clunne v Nambucca Shire Council36 the Industrial Relations Court of Australia decided loss of income for the residue of the term of the contract, loss of opportunity to obtain further employment at the end of the contractual term and compensation for physical injury as a result of the breach. In Bostik (Australia) v Gorgevski37, three judges of the Federal Court dealt with the case of the dismissal of an employee caught smoking contrary to company policy and they held that the employer was bound both by the award and the implied term of the contract not to dismiss the employee harshly, unjustly or unreasonably, and they found that, had the employee not been unlawfully dismissed it was likely that the employment would have continued indefinitely. In Transport Workers Union v Dingjan and Ryan38 a question that had to be considered was what was a reasonable period of notice when there was an arbitrary termination which was not in accord with the terms of the contract. In that case Mr Justice Munro decided that, in the circumstances, 18 months was a reasonable period of notice. In Patterson v Middle Harbour Yacht Club39, the judge said, on the question of damages for wrongful dismissal, that the Club was not entitled to terminate Patterson's employment by payment of four weeks salary and that he was entitled to damages for the breach of his contract in terminating it before the expiry of its fixed term. Mr Young's submission was, that in Mr Farrell's case, there is a breach of contract. There was an expectation that his employment would run for the full term, that is, the term of the current government. His performance was good. In determining the amount the Commission should take into account: the ILO recommendations; the contemplation of the parties at the time of the appointment; the term of the contract; Mr Farrell's performance; the long trauma and difficulty that flowed from the botched termination; breaches of industrial standards in the lack of assistance given a senior employee; the fact of Mr Farrell's age and the likely difficulty in obtaining other employment. It is appropriate, in resolving the dispute, that the measure of damages should be far more than just a reasonable period of notice because that period of notice may never have been given. Mr Young submitted that the unfairness was not just the fundamental question (of the breach of contract), but the whole of the lead up to the termination was unfair. There is no evidence that the change of job description (from economic adviser to political adviser) has occurred. There is no evidence that the position has actually changed. There is evidence of an intention to change. Whilst the primary aim is reinstatement, he said, if there is no reinstatement, then Mr Farrell should be paid compensation. It might be called severance pay, it might be called compensation, or it might be called damages. He said that in determining the figure, Mr Farrell was a highly paid employee and if the payment was to the middle of September 2002, the amount he would have earned between 3 July and then would be in excess of $141,000. If there was a chance of the renewal of contract for a period of twelve months then the amount would be $200,000 odd, less the notice already paid. Mr Farrell ought to be paid a very large sum.40 Mr Willingham for the Respondent Mr Willingham said that the precedents, cases and authorities which ought to apply are those of the Tasmanian Industrial Commission. He said that the Martin case is clearly distinguishable from this case on a number of grounds. The court held that the treatment Mr Martin got was little better than might be afforded an employee caught thieving. Mr Martin had been treated in an unnecessarily humiliating fashion. The court found no valid reason for termination. Mr Willingham said that Mr Young has presented no evidence to show that Mr Farrell's termination was unfair. The two standard tests of unfair dismissal are: is there a valid reason, and was the employee given the opportunity to have a say. The tests for valid reason are that the termination was connected with the performance or the conduct of the employee or with the operational requirements of the employer. The reasons for the termination advanced by the Leader of the Opposition have not been challenged, he said. Mr Farrell, whilst he did not think it fair and he didn't like it, did not challenge the validity of the termination until after he had left his employment. The reasons for the termination were abundantly clear, they were reduced to writing, and they were acknowledged as such by the applicant, who agreed that "his time was up" on 1 June 2000. Mr Willingham said that Mr Farrell had a chance to speak to Mrs Napier, and he did so. He had a chance to put his case, and he did so. He had a chance to challenge the changes to the office structure. He could have asserted a challenge to the decision that Mrs Napier took but he did not. He did not challenge the right of the Leader of the Opposition to have employees of their choice. Mr Willingham said that Mr Young's argument was that Mr Farrell was entitled to expect his contract to run for four years (which underpins his submissions for relief), but the evidence was that the contract included the right of the employer to terminate for basically any reason, or for no reason. Mr Farrell's contract was not a fixed term contract, Mr Willingham said. A fixed term contract would not have that provision (the ability to terminate) in it. It cannot be a fixed term contract if either party has the capacity to terminate the contact ahead of its nominated expiry date. The applicant had failed to demonstrate any unfairness, Mr Willingham said. The evidence showed the reverse. An open and transparent decision was made by the Leader of the Opposition, which was not challenged for five months. Mr Farrell was provided with "a heck of a lot" of notice. He was provided with time off to attend interviews. His request to have his termination date changed to 3 July was agreed to. It was not until 5 July, two days later, that Mr Farrell cried official foul. Mr Willingham said that the claim made by Mr Farrell for unfair dismissal rests not on unfairness as would commonly be understood, but on a procedural defect, that at its worst was that two weeks notice should have been given. The notice was not received by Mr Farrell until 26 June, falling seven days short of the notice that Mr Young asserted should have been given. The Industrial Commission is not the place to bring a breach of contract action, it is the place to bring an unfair dismissal case, he said. The applicant had failed lamentably to prove that there was anything unfair about the dismissal itself. The Commission, Mr Willingham said, is required to act according to equity and good conscience and the merits of the case without regard to technicalities or legal forms. Decisions are based on the notion that can be articulated as "a fair go all round". In this case the employee was given five months clear notice of intention to terminate his employment, with reasons given in writing. The reasons were not challenged, the notice period was extended at the request of the employee, and it was not until after the employee had left the employment that there was a challenge. There has been no violation of ILO Convention 158. The core of Mr Young's submission was that there had been a breach of contract, rather than an argument about unfair dismissal. Mr Young asserts that, by dint of the Instrument of Appointment, a fortnight's notice must be given. Mr Willingham submitted that Mr Farrell was given far more than this, that notice of termination was given to Mr Farrell on 2 February. In contrast to the Martin case, relied upon by Mr Young, where Mr Martin had been given notice and frogmarched out of the building within two hours, Mr Farrell had a five month lead-in period. The cases are just not comparable, Mr Willigham said. The judge found in Martin that the employee had been treated with demonstrable unfairness. In this case Mr Young is hard pressed to demonstrate any unfairness in the actions of the employer.41 FINDINGS Valid Reason I am required, under the Act, to consider whether or not the dismissal of an employee the subject of a dispute before the Commission is unfair. Under section 31(1A) of the Act, if there is a finding that the termination is unfair, before deciding whether or not to make an Order, I am required to take into account the standards of general application contained in Part II of the International Labour Organisation Convention concerning the Termination of Employment at the Initiative of the Employer. Part II Standards of General Application of the ILO Convention, at Article 4 says:
It was common ground, in this case, that the dismissal was not for reasons of capacity or conduct. It remains to be determined whether or not Mr Farrell was dismissed because of "operational requirements". If he was dismissed for operational requirements, then the dismissal would not be unfair in terms of the reason for the termination of employment. Operational Requirements "Operational requirements", in my view, is a term which should not be read too broadly. The prohibition on termination of employment other than for operational requirements (or conduct or capacity) is meant to protect employees at large. Usually it is used to refer to a major structural change, undertaken for a genuine reason, involving the abolition of positions. There must be a factual basis to the change. It must relate to the required results and the work performed by the persons affected. It is not acceptable to call the desired end the reason, for example "we want to be smaller" or "we want a flatter structure". The operational requirements must be related to the person - it must be demonstrated that the work performed by the individual is no longer required in the restructured environment. The evidence was that Mrs Napier informed Mr Farrell on 1 February 2000 that his employment was to be terminated because she wished to have a political adviser, rather than an economic adviser. This was confirmed in writing the next day in a letter from Mrs Napier to Mr Farrell, and confirmed again in a letter from Mr Farrell to Mrs Napier on 13 February. There was no evidence before me to refute the reason given for the termination, which was that a review had been undertaken of the "broad skill needs of the office", and that the Leader of the Opposition had decided to change the position held by Mr Farrell from that of economic analyst to a position of "overall political and policy directions."42 Mr Farrell said, in his evidence, that he had said to Mrs Napier that he believed that he had the skills to provide political advice. Mr Farrell may have had that belief but the facts, as established through the evidence, were that Mr Farrell was appointed to provide economic analysis of State government initiatives and appropriate matters in the public domain. I take "appropriate matters" to mean economic matters. Mr Farrell had many months in which to persuade Mrs Napier that he had the skills she required, or to demonstrate that he had them. It is clear from the result that he either did not do so, or was unable to do so. Having said, above, that the term "operational requirements" should not be applied too broadly, I am of the view that, in this case, the requirement to obtain one kind of advice, in preference to another, falls within the test of what operational requirements means. This is a case where the work performed by the individual employee, Mr Farrell, is no longer required in the restructured environment, as described to him by Mrs Napier. I also accept, to a certain extent, the submissions of Mr Willingham, (which were not challenged by Mr Young), that in the case of a person employed in a sensitive political environment at a high level, the circumstances are somewhat different to those of an "ordinary" worker, and that the Leader of the Opposition has a right to determine who his/her advisers should be, and the nature of the advice they require. However, I do not consider this to be an unfettered "right". In my opinion, it would still be necessary, even at that level, to provide a reason for the termination of an employee's employment, and it would need to be a valid reason, as has been demonstrated in this case. For all of the above reasons, I find that Mr Farrell was dismissed for a valid reason, which was a genuine redundancy situation arising out of the operational requirements of the Office of the Leader of the Opposition, and in this respect the dismissal was not unfair. Severance Pay Article 12 of ILO Convention 158, states, in the case of a person whose employment has been terminated because of operational requirements, that they shall be entitled to:
Having found that Mr Farrell was dismissed for operational requirements, he is entitled, under the terms of the Convention, to a severance allowance. This amount can be seen to be "compensation" for the loss of employment and the resulting loss of accrued benefits, opportunities etc, arising from the worker's service with the employer. In Mr Farrell's case, the Instrument of Appointment, at Schedule 3, sets out an amount of money to be paid to him should his appointment be terminated for the reasons set out in clause 4(b) of the Instrument, which included termination of employment by the Premier or his delegate. Schedule 3 reads:
This Schedule is consistent with the requirements of ILO Convention 12, which I am required to take account of. Mr Farrell received an amount, based on the above schedule, of six weeks severance pay. He had completed approximately eighteen months of service. This equates to four weeks pay for each year of service or part thereof. I find that the amount of severance pay was fair, in the circumstances. The "Contract" of Employment Mr Farrell's employment was regulated by the terms of his Instrument of Appointment - the "contract". Mr Young claimed that this contract was a fixed term contract and therefore should run until the end of its term, ie, until 31 October 2000 or until the end of the term of government, whichever came sooner. In Mr Young's submission, because the contract was a fixed term contract, Mr Farrell should be paid an amount equal to what he would have been paid had he worked for the remaining term of his contract. Mr Willingham argued that, by virtue of the fact that the contract contained within it, at clause 4(b), a provision which allowed either the appointee, or the Premier, or the Premier's delegate, to terminate the appointment by the giving of two weeks notice, for any reason, or for no reason, the contract was not a fixed term contract. I find that because the Instrument of Appointment contains a clause which gives the unqualified right to either party to terminate the contract at any time upon the giving of two weeks notice without reason, and a term which provides for a severance payment in those circumstances, Mr Farrell's contract is not a fixed term contract. The term of appointment described in clause 1(a) (expiring on 31 October 2002 or on the termination of the government) is, in my opinion, doing no more than stating the maximum duration of the contract. The Martin Case Much was made of the case of Martin v Tasmanian Development Resources, in which the dismissed employee, Mr Martin, successfully claimed substantial damages for loss of salary for the balance of his contract and compensation for the loss of the chance to renew his contract. It was suggested by Mr Young that there were many similarities in the circumstances of the termination of Mr Farrell's employment and that of Mr Martin, and that I should take this into account when deciding Mr Farrell's case. It is my view that there are many more differences than there are similarities. The major ways in which the cases can be differentiated are: 1. In Martin, there was a requirement that one month's notice be given. It was not given, an amount of money was paid in lieu of notice. Mr Martin was escorted from the building within a few hours of being given notice. The effect of his "notice" was immediate termination of the contract of employment. In the case of Mr Farrell he was given four months notice of the date of his termination, which he was able to work out, plus an additional month at his own request. 2. There was a requirement that Mr Martin be consulted, by virtue of the expressed terms of his contract (drawn from the ILO Convention.) He was not consulted. In Mr Farrell's case the evidence was that he had the time and opportunity to put his case. 3. In Martin, Heerey J found that the employee had been treated in an unnecessarily humiliating fashion. There was no evidence before me to show that Mr Farrell was treated in any such manner. 4. In Martin's case there was no attempt to assist him with obtaining other employment. In the case of Mr Farrell, the evidence was that Mrs Napier had shown a willingness to assist him, for example, with obtaining a similar position with the Victorian Leader of the Opposition. Of particular significance, in Mr Martin's case, is that he was given no opportunity, because of the fact that he was removed immediately from his employment, to put his case or to persuade his employer to reconsider his termination or to place him in another position within the organisation. Justice Heerey said that if Mr Martin had been given his one month's notice and/or been given the opportunity to be consulted, it by no means follows that the result would have been the same - namely that Mr Martin's employment relationship would have been terminated. In the case of Mr Farrell, he had five months in which to try to influence the final outcome. In this important way, Mr Farrell's case differs from that of Mr Martin. Notice Article of ILO Convention 158 states:
I am sympathetic to the arguments expressed by Mr Young in relation to the difficulties of finding alternative employment for someone in Mr Farrell's circumstances. In determining what would be reasonable notice such factors as the age of the employee, their seniority and length of service should be considered. The length of time the employer knew of the likelihood of the abolition of the position is also a consideration. From the evidence, it is clear that Mr Farrell was on notice that his employment would be terminated for five months before the date on which the termination took place. I would expect someone in his position to be given the maximum period of notice possible. However, I do not consider five months to be unreasonable. Mr Young's submission was that Mr Farrell was not given notice of termination of employment, but only given notice of intention to terminate the employment. I reject this argument in the circumstances of this case. In my view, the ILO Convention requirement for a worker to be given a reasonable period of notice applies to the commonsense every day understanding of what notice is. It is something that happens that puts someone on notice that something else is going to happen. It should not be vague or equivocal. It should clearly specify what it is that is going to happen. Most importantly, the worker must be aware that they have been given notice, or, as in the case of constructive notice, the accompanying circumstances must be such that the knowledge of the notice can be imputed to the worker. In my opinion, the letter of Mrs Napier to Mr Farrell on 1 February 2000, was very clear notice that his employment would come to an end on 1 June 2000 (later changed at Mr Farrell's request to 3 July 2000). Mrs Napier's letter said:
The wording was clear and unequivocal. It was in no way uncertain or ambiguous. It clearly set out what was going to happen, which was that action would be taken which would lead to the termination of Mr Farrell's appointment. The date of the termination was clearly stated. The letter was personally addressed to Mr Farrell. The reasons for the termination were spelled out. These are the elements of valid notice of termination of employment in industrial terms. From the final result (which was termination), it is evident that Mrs Napier had the authority to commence the process which would lead to the termination of Mr Farrell's appointment. It was not put to me that Mrs Napier did not have the authority to do so, or was not delegated to do so (although Mr Young did, in the course of objecting to a question, state that Mrs Napier did not have the power to terminate).45 Having considered all of the evidence, I have no doubt that Mr Farrell knew that his employment was going to be terminated five months before the date of the termination, and that he accepted it as notice. Examples of evidence which show that Mr Farrell accepted that his employment would be terminated include:
"... I have commenced efforts to find new employment but in the event I am unable to do so by 1June 2000 it would assist ... if I were to take leave without pay from 1 June for a month with termination on 1 July..."46
"... I would be grateful if you would agree to me taking leave without pay for the period in the attached application, and that my appointment be concluded with effect from close of business on 3 July 2000."48
"... could not see any point in putting off my execution for another week."49 Mr Farrell was aware five months before the event that, unless he was able to persuade Mrs Napier to change her mind, his employment was going to be terminated and exactly when it was going to be terminated. For the above reasons, and taking into account the terms of ILO Convention 158, Article 11, I find that Mr Farrell was given reasonable notice. The Formal Notice Required by the Instrument of Appointment The enforcement of the Instrument of Appointment is outside of my jurisdiction, in that it is not an award, or an agreement, or an enterprise agreement registered in this Commission. What I am required to do is to consider whether or not the period of notice that was given was reasonable, and I have found that it was. However, having found that, in accordance with the ILO Convention, Mr Farrell was given reasonable notice of the termination of his employment, the question remains of the requirement, under the terms of his Instrument of Appointment, to be given two weeks notice in writing by the Premier or his delegate. The Instrument does not specify that it must be a formal delegation. Mr Farrell received, in effect, only one weeks formal notice, in a letter from the Secretary of the Department of Premier and Cabinet, Linda Hornsey. There was no evidence that Ms Hornsey had a delegation from the Premier to issue this notice, but there was no evidence to say she did not have such a delegation. As the most senior officer of the Department of Premier and Cabinet, it is, in my view, reasonable to assume she was at least instructed to issue the notice by the Premier, even if not in possession of a formal delegation to do so. Mr Young claimed that the deficiency of this notice meant that there was no notice. I reject this argument in terms of the general notice requirements of the ILO Convention, which I am required to take account of. I have found that there was five months notice in the commonly understood meaning of the term. It is true that the formal notice as required under the terms of the Instrument of Appointment was not properly given. However, it is interesting to consider that had notice been given strictly according to, and only according to, the terms of the Instrument, then Mr Farrell would have had only two weeks notice of the termination of his employment, compared to the five months that he was given. I make no finding in respect of the failure to comply with the letter of the Instrument of Appointment. I reiterate that, in my view, according to the everyday understanding of what notice means in industrial terms, Mr Farrell was given reasonable notice. Procedural Fairness I have already found that the termination of Mr Farrell's employment was for a valid reason, and that the severance payment he received was reasonable, as was the period of notice that he was given. It is also necessary to consider whether Mr Farrell was afforded procedural fairness. The evidence was that he was given clear reasons for his dismissal, and ample opportunity to try to persuade Mrs Napier to reconsider her decision. The evidence also showed that Mr Farrell did not indicate that he intended to challenge the decision to terminate until after the date of the termination - not until 5 July 2000. I therefore consider that there was no breach of procedural fairness in this respect. There was however, a procedural breach in terms of the failure of the employer to follow, to the letter, the final formal requirements for the termination of his employment, that is, the written notice from the Premier or his delegate 14 days before the last day of his employment. I agree with Mr Willingham, that this is very much a technical breach, because the reality is that Mr Farrell was given five months notice of the termination of his employment. The question is, was Mr Farrell treated unfairly as a result of this procedural breach? Mr Young submitted that Mr Farrell was entitled to rely upon his Instrument of Appointment, and in this respect I agree with him. In terms of any unfairness to Mr Farrell, the result of this failure was that, had the full 14 days notice been given, based on the date of the receipt of his letter, he would have received an additional week of employment. I find that it is unfair that he did not receive the additional week of employment. I find that the only aspect of Mr Farrell's dismissal which was unfair was that he did not receive the additional week of employment. I do not find that the dismissal itself was unfair, either procedurally or substantively. Other Issues Mr Farrell, in his evidence, said that a number of comments had been made by various members of the Liberal Party, to the effect that they disagreed with Mrs Napier's decision to terminate his employment. In my opinion, these comments, which were hearsay only, are not relevant to the industrial questions to be decided. Remedy Having concluded that the termination of employment was for a valid reason and that the period of notice given Mr Farrell was reasonable, and that the only unfairness to Mr Farrell was a procedural breach resulting in the loss of one week of employment, it is not necessary for me, when considering what the remedy should be, to consider in any detail the various authorities put forward by Mr Young, excepting for the case of Martin v Tasmanian Development Authority, (which I have dealt with earlier in this decision) because they deal with compensation payable when the dismissal itself was been found to have been unfair, thus differentiating them from the instant case. Having found that Mr Farrell's dismissal was not unfair it is not necessary for me to consider the question of reinstatement. On the same basis, there can be no compensation for unfair dismissal. I am required, pursuant to s.20(1)(b) to do "... such things as appear to it be right and proper for ... settling industrial disputes." I have decided that in settlement of this industrial dispute, Mr Farrell should be paid one weeks wages. The reasons for this being that I find that Mr Farrell was dismissed for a valid reason, paid reasonable severance pay, given reasonable notice and given the opportunity to put his case prior to his dismissal. The only unfairness to Mr Farrell was the failure in timing, by one week, in the issuing of his formal notice under the terms of the Instrument of Appointment. Mr Farrell received the notice on 26 June 2000 and his employment was terminated on 3 July 2000. Had the notice been properly given he would have continued in his employment until 10 July 2000, and have thus been in receipt of an additional weeks employment, and therefore an additional weeks wages. Whilst it is not in my power to order that the terms of the Instrument of Appointment be complied with, section 31(1) of the Act says: "... where a Commissioner presiding at a hearing under section 29 is of the opinion, after affording the parties at the hearing a reasonable opportunity to make any relevant submission and considering the views expressed at the hearing, that anything should be required to be done, or that any action should be required to be taken, for the purpose of preventing or settling the industrial dispute in respect of which the hearing was convened, that Commissioner may, by order in writing, direct that that thing is to be done or that action is to be taken." On that basis, I issue the following Order: ORDER PURSUANT TO the power conferred on me by Section 31(1) of the Industrial Relations Act 1984 I HEREBY ORDER that, in settlement of the industrial dispute referred to in matter T 9147 of 2000, that the Crown in the Right of Tasmania pay to Mr Kenneth Farrell, of 43 Burwood Drive, Blackman's Bay Tasmania, 7052, the sum of One Thousand Two Hundred and Forty Dollars and Five Cents, in full settlement of this dispute, such payment to be made on or before the close of business on Wednesday, 22 November 2000
P C Shelley Appearances: Date and place of hearing: 1 Exhibit Y1A |