Federal Law Review
|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Federal Law Review |
|
Shae McCrystal[*]
In most cases, the employment relationship is capable of withstanding some friction and doubts … It may be difficult or embarrassing for an employer to be required to re-employ a person the employer believed guilty of a wrongdoing. The requirement may cause inconvenience to the employer. … The problems will be of the employer's own making. If the employer is of even average fair-mindedness, they are likely to prove short-lived.[1]
A reinstatement order made by the Australian Industrial Relations Commission ('AIRC') is designed to restore the employment relationship after a finding that an employee has been unfairly dismissed. Unlike the traditional reluctance in the equitable jurisdiction to order specific performance of contracts involving a personal service element, the ability to order reinstatement in the Workplace Relations Act 1996 (Cth) ('WRA') recognises that ongoing work relationships are 'capable of withstanding some friction and doubts'. But what if an employer is not of even average fair mindedness?
The reinstatement of an unfairly dismissed employee by the AIRC is usually the end of the legal process for that worker.[2] However, for Steven Blackadder, an unfairly dismissed abattoir worker, it was only the beginning. Instead of a return to active duties pursuant to an AIRC reinstatement order, Mr Blackadder was instructed to stay home, on full pay, where he remained for five years until the High Court ruled that reinstatement under the federal unfair dismissal jurisdiction means more than just the payment of a wage.
The High Court decision in Blackadder v Ramsey Butchering Services Pty Ltd[3] clarified the meaning of the phrase 'reinstatement' under the federal unfair dismissal regime, denying the ability of employers to undermine the purpose of reinstatement orders by refusing to provide a reinstated employee with work to do. In addition, the case is significant with respect to the interaction between the unfair dismissal regime and the ability of employers to refuse to provide work to employees (while continuing to pay them) under the common law — a practice colloquially referred to as 'garden leave'. The case suggests that the High Court may be prepared to entertain the prospect of a change to the contractual right of an employer to send an employee on indefinite paid leave.
The case note will begin with an overview of the Blackadder litigation. The note will then discuss the decisions in the Federal Court and the High Court with respect to the meaning of reinstatement and will also cover the law on garden leave. Finally the note will canvass the significance of the case, analysing the implications of the decision in the current and forecasted workplace relations climate.
Mr Stephen Blackadder was an abattoir worker in Grafton in northern New South Wales from 1991 to December 1997 when the abattoir closed.[4] He was rehired in April 1998 by the new owners of the abattoir, the respondents, Ramsey Butchering Services Pty Ltd ('Ramsey') under an Australian Workplace Agreement ('AWA'). Mr Blackadder was employed as a boner and almost exclusively worked as a 'cold boner', removing bones from the hindquarters of chilled beef carcasses.
In mid 1999, Ramsey terminated the employment of another boner, Mr Paul Swain, citing unsatisfactory work performance. Mr Swain applied to the AIRC alleging that he had been unfairly dismissed. Mr Blackadder was summonsed by Ramsey to give evidence on its behalf and he appeared in the AIRC on 27 September 1999.[5] His testimony did not expressly support the position of Ramsey in the hearing.[6]
At the beginning of his next shift on the following day, 28 September, Mr Blackadder was instructed by management that he had been assigned to the slaughterfloor to carry out 'hot neck boning' duties. Unlike cold boning of chilled animal carcasses, hot neck boning involves the removal of the neck bone from cattle that have recently been slaughtered and have not been chilled. The facts suggest that hot neck boning is arduous, uncongenial work differing significantly from cold boning in terms of the physical effort involved and the unpleasantness of the work.
A pre-employment medical examination of Mr Blackadder that had been required by Ramsey had revealed that he suffered from a minor restriction of movement in one shoulder. Mr Blackadder refused to undertake the duties requested, citing his medical condition, the potential dangers resulting from the fact that he had not been provided with any training in hot neck boning and his belief that the instruction was designed to victimise him for his AIRC testimony. Over the course of the next week, Mr Blackadder consistently indicated that he was ready, willing and able to perform his normal duties. Management repeatedly responded that Mr Blackadder was only able to return to work if he was prepared to undertake hot neck boning as requested and in accordance with a clause in his AWA that stated: 'An employer may direct an employee to carry out such duties as are within the limits of an employee's skill, competence and training: the employee will follow the direction'.[7] A medical certificate provided by Mr Blackadder certifying him unfit for hot neck boning duties was ignored by Ramsey.
Mr Blackadder brought an unfair dismissal action in the AIRC alleging that the direction to perform hot neck boning duties constituted constructive dismissal and was harsh, unjust or unreasonable, contrary to s 170CE(1)(a) of the WRA. Commissioner Redmond found that Mr Blackadder had been constructively and unfairly dismissed because the direction to undertake hot neck boning in the circumstances was unreasonable, unsafe and resulted in the unfair termination of Mr Blackadder's employment.[8] Redmond C ordered the reinstatement of Mr Blackadder as the most appropriate remedy, noting that Mr Blackadder had been unjustly treated and would have 'grave difficulty' in locating alternative employment in the economically depressed Grafton region.[9] Leave to appeal by Ramsey to the Full Bench of the AIRC against the decision of Redmond C was denied.[10]
After the AIRC reinstatement order, Ramsey insisted that Mr Blackadder undergo a medical examination in order to assess his fitness to return to work. From April 2000 to April 2001, Mr Blackadder remained at home while the parties disputed the validity of the requested medical examination and the circumstances of such an examination if it went ahead. In April 2001, Mr Blackadder submitted to the requested medical examination. After this date he was paid by Ramsey as an employee on a routine basis but was instructed not to return to active duties. Mr Blackadder remained on full pay with no duties from April 2001 until the decision of the High Court in April 2005.[11]
In early 2002, Mr Blackadder commenced proceedings in the Federal Court against Ramsey pursuant to s 170JC(3)(a) of the WRA seeking an order to enforce the original AIRC reinstatement order and the imposition of penalties for breaches of the order. The application was heard at first instance by Madgwick J who held that the meaning of 'reinstatement' in s 170CH(3) of the WRA implicitly includes the return of the employee to the workplace and does not permit an employer to comply with the order by keeping an employee on the payroll without providing any duties.[12] Madgwick J ordered that Mr Blackadder be reinstated and provided with his pre-termination duties.
Ramsey appealed to the Full Federal Court arguing that reinstatement under the WRA involves reinstatement of the employment contract of the dismissed worker without any additional rights.[13] As a contract of employment usually does not give an employee a right to be given work to perform, reinstatement should not give an employee a right to be given work to perform beyond the restoration of contractual obligations. Tamberlin and Goldberg JJ upheld the appeal, agreeing that reinstatement can do no more than reinstate the pre-existing contract of employment in which there is no right to be given actual duties to perform. Moore J dissented on the ground that reinstatement in the WRA means more than the mere restoration of contractual rights and 'requires a re-establishment of the pre-existing employment relationship as a matter of reality'.[14]
On appeal to the High Court, the decision of the Full Federal Court was overturned and the decision of Madgwick J was largely reinstated.[15] In separate judgments, McHugh, Kirby and Hayne JJ, and Callinan and Heydon JJ jointly, agreed that reinstatement under WRA s 170CH(3) requires the restoration of the working relationship in addition to the legal contract of employment.
The central question raised in the Blackadder litigation was the meaning of reinstatement under s 170CH(3) of the WRA. At issue was whether or not Ramsey could comply with the AIRC order of reinstatement by keeping Mr Blackadder on the payroll without providing duties; or whether the reinstatement order required the restoration of the working relationship encompassing the actual performance of work. The interpretative question is whether or not a reinstatement order merely restores the contract of employment between the parties, providing no further rights or obligations, or whether a reinstatement order includes a right to work that is not necessarily encompassed within the terms of the employment contract. This raises the issue of the scope of an employee's right to be given work under the common law contract of employment.
The common law employment contract contains the basic rights and duties as between an employer and employee. In the absence of an express statutory provision, award, agreement or contractual term to the contrary, an employer has no obligation to provide actual work to an employee as long as the employee is paid.[16] This point was succinctly made in an oft quoted passage by Asquith J: 'Provided I pay my cook her wages regularly she cannot complain if I choose to take any or all of my meals out'.[17] If an employer continues to pay an employee in accordance with the contractual obligations, the employment contract will remain valid and enforceable and the employee will have no right to insist on being given work to do.[18] Accordingly, employers will not be in breach of their contracts of employment if they refuse to allow their employees to come to work but continue to pay them. While the idea of full pay without duties may initially appeal, the reality of this situation continuing for more than a few weeks for the average employee is a loss of skills, professional development, personal satisfaction, the sense of community available to those who engage in paid work and, potentially, the opportunity to obtain alternative future employment.
There are limited exceptions to the common law rule that an employer is not obliged to provide actual work to an employee, based upon the nature of the contract of employment and the work to which the contract relates. The position was summarised by Lawrence LJ in Marbe:
Contracts of employment fall under two categories; first those in which the only obligation imposed upon the employer is the payment of the agreed remuneration, and no duty is cast upon the employer to give active occupation — this no doubt is the more usual form of contract; and secondly those in which the employer engages not only to pay the agreed remuneration but also to afford to the employee an opportunity of doing the work for which he is engaged. Whether a given contract falls within the first or second category depends primarily on the express words of the contract, but may also depend upon the character of the employment, and possibly upon the amount and nature of the remuneration.[19]
An obligation to provide work to an employee may be implied or construed within a particular employment contract where the contracting parties have agreed that the employer has an obligation to provide work in addition to wages. This would be implied where it is necessary for the employee to maintain a particular public profile (for example, an actor or television personality) through public performances.[19] Further, an obligation to provide work would exist for an employee working on a full or part commission basis where some or all of their income is dependent on work performance.[20] However, in Australia the necessity for a professional to work in order to maintain a requisite skill base has not been recognised as a sufficient ground for the implication in an employment contract of a right to be given work in the absence of an express contractual right to be given work. Conversely, the English Court of Appeal in William Hill Organisation v Tucker,[21] a case involving a specialist dealer working for a bookmaker, held that a right to be given work may be implied in a contract of employment where an employee holds a specific specialist post, has skills that require constant exercise and requires continuing experience to maintain their position.[22] This case indicates a willingness on the part of the English courts, at least, to entertain a broadening of the narrow exceptions to the rule that employers are not obliged to provide employees with work to do. At present the only obstacle to changing the law in Australia is the questionable decision in Mann where the necessity for a specialist surgeon to work in order to maintain his surgical skills did not justify the implication into his contract of employment of an obligation on his employer to provide sufficient work.[23] The peculiar facts of Mann, in which it was held that it would be too difficult to guarantee a flow of self-selecting patients to a specialist surgeon (whose skills undoubtedly required constant use), suggest that it could be easily distinguished in future decisions.
The argument advanced in Blackadder by Ramsey was that 'reinstatement' under the WRA is limited to the reinstatement of contractual rights and obligations between the parties and does not create any further obligations on the employer, or rights for the employee. According to this argument, once the contractual relationship between Ramsey and Mr Blackadder had been reinstated, Ramsey was in compliance with the reinstatement order provided that it continued to pay Mr Blackadder, and the employment contract was not of the type that fell within the common law exceptions.[24] This argument was accepted by Tamberlin and Goldberg JJ in the Full Federal Court but rejected by Moore J in the minority and by the High Court.
After reviewing the common law position and confirming that Mr Blackadder did not have a right under his contract of employment to be given work to perform, Tamberlin and Goldberg JJ examined the meaning of reinstatement in s 170CH(3) of the WRA. This section provides that:
If the Commission considers it appropriate, the Commission may make an order requiring the employer to reinstate the employee by:
(a) reappointing the employee to the position in which the employee was employed immediately before the termination.
(b) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination.
In exploring the breadth of reinstatement under this section, Tamberlin and Goldberg JJ focused on the word 'position', finding that the emphasis in the WRA on reappointment to the pre-termination position or appointment to an alternate position meant that the emphasis in s 170CH(3) is on the 'contractual position which is either to be restored in its earlier terms or in equivalent terms'.[25] Accordingly, their Honours concluded that s 170CH(3) requires the restoration of all contractual entitlements attached to the employee's position at the time of wrongful dismissal and not any further entitlements or rights which were not previously in existence. As reinstatement constitutes a straightforward restoration of contractual rights, it has the consequence that '[i]f, under the terms of employment, the person was not entitled to be given work then the employer is entitled simply to appoint the person again to the position without providing work'.[26]
Moore J in dissent was critical of the majority decision, arguing that it was 'narrowly and inappropriately focus[ed] on contract law'[27] and failed to give sufficient weight to jurisprudence considering the meaning of reinstatement as a statutory remedy, which was first developed under State industrial legislation.[28] In particular, Moore J noted the decision of the New South Wales Industrial Relations Commission in Retail Traders Association of New South Wales v Shop Distributive and Allied Employees' Association of New South Wales,[29] in which it was held that reinstatement orders are designed to achieve practical reinstatement whereby the employment relationship is restored in reality and not in a fictional sense. In the opinion of Moore J, reinstatement encompasses the restoration of both contractual rights and the restoration of the duties attaching to that position in order to ensure that reinstatement provides a meaningful outcome.[30]
The High Court unanimously upheld the appeal by Mr Blackadder against the decision of the Full Federal Court. All judgments focused on the meaning of 'reinstatement' in the context of the WRA, with the exception of Hayne J who focused on the technical meaning of reinstatement 'to a position' in s 170CH(3).
In their joint judgment, Callinan and Heydon JJ characterised the central question in the appeal as whether or not s 170CH(3) grants the AIRC the power to make a reinstatement order requiring an employer to provide an employee with work to do.[31] Addressing the characterisation of the word 'position' by the majority in the Full Federal Court, Callinan and Heydon JJ noted that 'position' in the context of the section does not refer to the mere restoration of contractual rights because to do so would be 'to treat the word "position" as used in the [WRA] as a formal position only, a title, or something in the nature of an office, entitling the person reappointed to it, to its emoluments and nothing else'.[32] Instead, their Honours held that the word 'position' is not a restricted or technical word, but refers to a position within a workplace rather than a particular office or formal position.[33] In addition, Callinan and Heydon JJ noted that the use of the word 'reinstatement', read in a literal manner, means 'to put back in place', and that merely paying a reinstated employee does not constitute reinstatement.[34] Accordingly, as the scope of the word 'reinstate' can encompass both the reinstatement of contractual rights and the reinstatement of pre-existing work circumstances, s 170CH(3) empowers the AIRC 'to make such an order as would contemplate or require that the employer provide a reappointed or reinstated worker with actual work to do'.[35]
The focus on the word 'reinstatement' over the word 'position' is also evident in the judgments of McHugh and Kirby JJ. While McHugh J characterised the central question in a slightly different manner from Callinan and Heydon JJ, considering whether an employer has reinstated an employee if the employer pays the employee without providing any work for him or her to do, the effect of the question is the same — to assess the obligations encompassed by a reinstatement order under s 170CH(3). Noting, in accordance with the joint judgment, that to reinstate means to 'put back in place', McHugh J concluded that a reinstatement order requires 'restoration of the terms and conditions of the employment in the broadest sense of those terms. … [T]he employee is to be given back his "job" at the same place and with the same duties, remuneration and working conditions as existed before the termination'.[36] In a similar manner, Kirby J focused on the meaning of 'reinstatement', arguing that the power provided by Parliament in s 170CH(3) is a wide power of reinstatement and should not be 'frustrated or negatived' by more restricted obligations under the common law of employment contracts.[37] Noting that 'actual "reinstatement" … is one of the social and industrial purposes of [an] order made under the [WRA]',[38] Kirby J found that reinstatement under s 170CH(3) is meant to be real, practical reinstatement involving the provision of actual work.[39]
In contrast to the emphasis placed on 'reinstatement' in the other judgments, Hayne J focused on the meaning of 'position' in s 170CH(3), arguing that the concept of 'position' encompasses more than the mere restoration of contractual rights and obligations and refers to the 'place in the employer's commercial structure which the employee occupied before termination'.[40] Hayne J argued that the use of the phrase 'position' within s 170CH(3), as opposed to 'employment' or 'contract', reveals that the intention of Parliament was to provide for 'the recreation of the circumstances of employment that preceded the termination' rather than merely the pre-existing 'contractual nexus'.[41] On this reading of the word 'position', Hayne J concluded that the mere restoration of pay and other benefits, without a concomitant restoration of the duties attaching to the position, does not comply with an order for reinstatement under the WRA.
The difference in emphasis between the majority reasoning in the High Court and the decision of Hayne J is of no practical import as both lines of reasoning produce the same outcome whereby an order of reinstatement requires that the employee be provided with duties. However, the reasoning of the majority is a more holistic approach to the concept and purpose of 'reinstatement' that could survive any subsequent amendment of the word 'position' in s 170CH(3) to 'contract' or 'employment'. It is not clear that the interpretative approach of Hayne J would withstand such a change.
The decision of the High Court in Blackadder confirms that it is not possible to sidestep the application of a reinstatement order by subjecting the return to work of an employee to a condition imposed by the employer or by sending an employee on indefinite paid leave. As articulated by Kirby J, '[t]he [WRA] does not grant the employer the unilateral power to buy its way out of the obligations imposed on it under a valid law of parliament'.[42]
However, despite this useful clarification of the meaning of reinstatement, issues still remain as to whether a reinstatement order will automatically give a reinstated employee a right to work, the effect of a reinstatement order on the underlying contract of employment, the scope of rights granted to an employee by a reinstatement order and the effect of the decision on the common law relating to garden leave. It is also useful to consider the effect of the decision in light of the likely changes to the WRA unfair dismissal regime to be effected by the present Coalition Government. Each of these issues will be addressed in turn.
The High Court decision clarifies that the power to make a reinstatement order under s 170CH(3) extends to ordering that an employee be given actual work to do. However, it is not clear from the decision whether a simple order of reinstatement will always require that an employee be given work to do, or whether a reinstatement order requires a clearer indication on the part of the AIRC that actual work must be provided. This issue is only addressed incidentally within the judgments. Kirby J referred to the 'purpose' of a reinstatement order, providing that a reinstatement order is designed to restore the employee to the status quo ante, noting that 'actual reinstatement [is] one of the social and industrial purposes of [an] order made under the [WRA]'.[43] This suggests that the granting of a simple reinstatement order will require that an employee be given work to do because the obligation to provide work is found in the fact of reinstatement itself. This conclusion may also be drawn from the judgment of Hayne J, due to his Honour’s emphasis on the word 'position' within s 170CH(3) whereby reinstatement to a 'position' requires the restoration of duties attached to that position.
Contrary to this, McHugh J and Callinan and Heydon JJ suggested that s 170CH(3) empowers the AIRC or a court to order reinstatement, an order which may or may not encompass an obligation on the part of the employer to provide actual work to do. After determining that s 170CH(3) encompasses the power to order that a reinstated employee be given work to do, McHugh J and Callinan and Heydon JJ construed the original reinstatement order made by Redmond C to ascertain if the Commissioner actually ordered that Mr Blackadder be given work to do. The judges examined the circumstances of the relevant termination and in particular the fact that Mr Blackadder had worked as a boner on chilled meat before he was constructively dismissed by the order to undertake hot neck boning. In light of the constructive dismissal and the questions surrounding Mr Blackadder's fitness to undertake hot neck boning, Callinan and Heydon JJ concluded that 'it is … at least implicit in the reasons for the order of the commission at first instance that the appellant would be provided with actual work to do'.[44]
McHugh J and Callinan and Heydon JJ thus suggested that a reinstatement order must be construed in order to ascertain whether or not it requires the provision of actual duties before such an obligation will be found. The obligation may be implicit within the reinstatement order, reflecting the circumstances of the dismissal and the recreation of the situation that applied before the termination. It should be noted, though, that a situation where an obligation to provide work on the part of an employer would not be implicit within a reinstatement order, particularly where an employee was performing duties until the point of dismissal (constructive or otherwise), may be unusual. It may be different, however, if the employee was on a form of paid leave at the time of dismissal, particularly involuntary or indefinite leave. In such a case, it would be important for a reinstatement order to contain a clear indication with respect to the return to duties of the employee concerned.
All of the High Court Justices, except that of Hayne J, were critical of the focus on strict contractual rights demonstrated within the majority judgment by the Full Federal Court decision.[45] However, the High Court did not address one of the central problems overcome by the focus on contractual rights in the Full Federal Court, namely the ongoing relationship between the contract of employment and the reinstatement order. While the focus on strict contractual rights was flawed in that it failed to take into account well developed jurisprudence on the meaning of reinstatement in the context of industrial legislation,[46] the effect of the Full Federal Court judgment was to restore the status quo, recreating exactly the legal position of employment that existed prior to dismissal. This outcome meant that the relationship between employer and employee continued to exist on the basis of the rights and obligations under the common law employment contract.
In contrast, in finding that the concept of reinstatement is broader than the restoration of strict contractual rights, the High Court found that a reinstatement order made under WRA s 170CH(3) may grant reinstated employees rights that exceed their common law contractual rights without clarifying the nature and scope of those rights once an order is made. Where a reinstatement order either expressly or implicitly encompasses an obligation on the part of the employer to provide work to the employee, the extent or duration of the obligation to continue to provide duties to perform may not be clear. The Court required the reinstated employee to be given the duties that he or she was performing before the dismissal, and one can extrapolate that where an employee is reappointed to a different position, he or she would be given the duties that usually attach to that position. However, the Court did not make clear for how long the obligation will subsist. Indeed, the Court acknowledged that the effect of an order is not to provide 'employment for life'.[47] Kirby J noted that the ongoing position of the reinstated employee will depend upon the circumstances prevailing in the future.[48] However, the most useful judgment for the purposes of this discussion is that of Callinan and Heydon JJ, who clarified the obligation placed upon an employer under a reinstatement order by quoting the dissenting judgment of Moore J in the Full Federal Court:
That is not to say, however, that the employer would be precluded, thereafter, from lawfully altering the position of the employee by requiring the employee to perform other duties, standing down the employee or even dismissing the employee. An employer can. However, if these steps were taken capriciously or unreasonably it may be that they could be viewed as steps designed to nullify the effect of the reinstatement order. The order is intended to have the effect earlier described and, to that extent but only to that extent, overrides any contractual or other rights the employer may have.[49]
This statement suggests that the obligation to provide work to the reinstated employee subsists in relation to the circumstances surrounding the employment prevailing at the time of the unfair dismissal. Accordingly, the obligation will continue as long as the circumstances do not change, or do not change at the instigation of the employer in a manner that is 'capricious', 'unreasonable' or designed to 'nullify' the reinstatement order. Where, however, the circumstances of the employment change through the normal course of events, the obligation to provide work may also change in accordance with a lawful stand down, dismissal or alteration of duties. However, Callinan and Heydon JJ did not consider the ability of the employer to utilise extended involuntary leave at a future point in relation to a reinstated employee, although it could be extrapolated that the use of such leave must occur as a result of the natural development of the employment relationship and not in a manner designed to defeat the operation of the reinstatement order after a technical period of compliance.
An issue raised in the original Federal Court decision by Madgwick J and further discussed by Callinan and Heydon JJ in the High Court relates to the right to be given work under the common law contract of employment and the continuing correctness of the common law principles relating to the contractual right to be given work. While the discussions of Madgwick J and Callinan and Heydon JJ are obiter dicta, the latter discussion in particular signals a willingness on the part of the High Court to entertain the possibility of changing the common law position.
The judgment of Madgwick J provides a useful starting point. After reviewing the limited occasions under which an employee may claim a contractual right to be given work, Madgwick J noted that the ability to send an employee on indefinite leave may be considered out of step with the modern employment environment in which productivity plays an important role.[50] Madgwick J detailed the potentially negative impact of garden leave on an employee denied the opportunity to undertake work and who lacks a contractual right to demand duties, in the context of seeking further employment:
Few would-be employers are likely to be impressed by an aspiring employee who needs to confess that he or she has been obliged by a previous employer to languish on what the English courts have called gardening leave. In modern Australia, at least, such a history is liable to be assumed by a prospective employer to spell trouble.[51]
In the High Court, the correctness of the common law was again raised in obiter dicta, as the interpretation of 'reinstatement' adopted by the High Court meant that the application of the common law did not fall for consideration. Although declining to pronounce on the correctness of the common law, Callinan and Heydon JJ noted the difference between the historical development of the common law of contract and the modern employment environment whereby 'one might question the current relevance of judicial pronouncements made more than 60 years ago in the United Kingdom as to the extent to which an employer might be obliged to dine at home in order to provide work for his cook'.[52] Callinan and Heydon JJ considered that modern employment relationships encompass a range of different expectations than those encompassed by the limited common law circumstances where an employee has a right to be given duties. In particular, expectations like 'job satisfaction' require the provision of actual duties and a wider range of employees than in the past need 'to keep and to be seen to have kept their hands in by actual work'.[53] In other words, the joint judgment contains recognition of an important shift within the approach taken by the courts to the regulation of the employment relationship wherein the benefits that accrue to employees by engaging in actual duties may be recognised as an element of the employment bargain. Such legal recognition would reflect broader social changes to the employment relationship that have taken place over the last two decades. The comments in the joint judgment suggest that at least two members of the High Court may be amenable to argument, in an appropriate case, that the common law is out of date and should no longer be applicable in the modern employment context. This would be in line with the development in the English Courts where William Hill has signalled a change of attitude with respect to the construction of employment contracts when ascertaining whether an employee has a right to be given work or not.
Another potential development in the common law suggested by the High Court decision relates to the 'payment through commission' exception to the Marbe principle. An incident of recent workplace relations changes has been the increased use of 'productivity' bonuses for workers. A side issue in Blackadder related to whether or not Mr Blackadder had a contractual right to be given work due to the manner in which he was remunerated. Remuneration for boners was paid at a base wage with a 'productivity bonus' worked out by calculating the productivity of all the boners in a team over a set period of time. Mr Blackadder's remuneration over his period of paid leave was set at the base wage plus the productivity bonus paid to the working boners. In the majority determination of Tamberlin and Goldberg JJ in the Full Federal Court, the question of whether the productivity bonus meant that Mr Blackadder had a contractual entitlement to be given work was sidestepped on the grounds that his entitlement to the bonus was dependent upon the productivity of all boners in a team and not on his individual efforts. As Mr Blackadder was receiving the same productivity bonus as the other workers, Ramsey was not in breach of contract.[54]
This point was re-examined in the High Court in obiter dicta by Kirby J and by Callinan and Heydon JJ. Kirby J noted that under the productivity bonus, it is possible that the individual efforts of one boner could incrementally increase the productivity bonus available to all workers and Mr Blackadder was denied this opportunity.[55] Callinan and Heydon JJ commented that Mr Blackadder could have increased the amount of the productivity bonus through his own efforts, 'a matter which might of itself at common law justify an order that he be provided with actual work to do'.[56] These comments of three members of the High Court suggest that where the income of an employee is linked in any way to actual performance, even in this more tenuous example of group performance, there will be a basis upon which to suggest that the employee concerned has a contractual right to be given duties to perform. This may impact upon a range of employment contracts containing yearly productivity bonuses, even where those bonuses are discretionary in nature, as it would seem clear that they cannot be earned without concomitant service. This may be a broader construction of the implied right to be given work in cases where income is affected by actual duties than the more straightforward right to be given work where payment is made on a commission or piecework basis.
The final aspect of the High Court decision to note is the potential effect of the High Court obiter dicta in another area of the employment contract. The recognition by three High Court Justices of the importance of work performance for employees suggests that there may be scope for the development of a contractual duty to provide work through the doctrine of mutual trust and confidence.[57] There may be scope to argue that while the employment relation subsists, a part of the content of the duty should be to provide an employee with work to perform in order to ensure that employees are treated 'fairly' at work.[58] Further, while English and Australian jurisprudence suggests that the doctrine of mutual trust and confidence will not sound in contractual damages for the manner of a termination, extension of the doctrine to include a duty to provide work may prove useful in ascertaining which party was at fault in the context of a termination.[59]
The decision of the High Court in Blackadder clarifies the meaning of reinstatement under the unfair dismissal provisions of the WRA. The decision provides that the power to order reinstatement under s 170CH(3) encompasses not only the power to restore the contract of employment, but enables the restoration of the working relationship between the employer and the employee. It would appear from the judgments that simple reinstatement will not automatically encompass a right in the employee to work, but that the order of reinstatement must expressly or implicitly provide that the employee is to be given duties to perform. If the order contains this obligation, an employer who places conditions upon a return to work or unilaterally sends a reinstated employee on paid leave will be in breach of the order.
However, in clarifying the meaning of reinstatement in the context of the WRA, the decision has opened up a number of issues with respect to the common law contract of employment and the circumstances in which a court will be prepared to construe a right to be given work in an employment contract. Opportunities for the High Court to comment on the common law contract of employment are limited and the judgments signal a willingness to view employment contracts within the broader employment context. In particular, the High Court appears to have left an opening for a challenge to the ability of employers to send an employee on garden leave whereby the circumstances under which an employer is obliged to provide actual duties to an employee may significantly expand.
The significance of the possible effects of Blackadder on the common law contract of employment is most easily appreciated in the context of the likely changes to the WRA unfair dismissal regime. The proposed exclusion by the Coalition Government of employees of businesses with fewer than 100 employees from the application of the unfair dismissal provisions would remove access to the federal reinstatement remedy in unfair dismissal cases for these employees.[60] However, Blackadder will remain relevant in the context of reinstatement remedies in the residual unfair dismissal jurisdiction and the existing unlawful termination and freedom of association jurisdictions. Further, the change in the law relating to unfair dismissal may see significant growth in litigation around the contract of employment and may lead to developments in the common law around the issues of mutual trust and confidence and garden leave. The obiter dicta of the High Court recognising the value in work for an employee beyond simple remuneration are a positive indication of the possibility for progressive changes within the common law encompassing a holistic view of employment with benefits for employees measured in more than just wages.
[*] Lecturer, Faculty of Law, Australian National University. I would like to thank Professor Phillipa Weeks, Dr Fiona Wheeler and the anonymous referee for their helpful comments on an earlier draft of this article.
[1] Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186, 191–2 (Wilcox CJ, Marshall and North JJ).
[2] For discussion of potential difficulties that can arise after a reinstatement order is made by the AIRC and not covered by this note see Hedy Meggiorin, 'Reinstatement under the Workplace Relations Act (Cth): Is it Practicable, Appropriate or Just Plain Speculative?' (1999) 27 Australian Business Law Review 438.
[3] [2005] HCA 22; (2005) 215 ALR 87 ('Blackadder').
[4] The facts are taken from the decision of Redmond C in S Blackadder v Ramsey Butchering Services Pty Ltd [2000] IRComnA 314 (Unreported, Redmond C, Print S4537, 29 March 2000) and Madgwick J in Blackadder v Ramsey Butchering Services Pty Ltd [2002] FCA 603; (2002) 118 FCR 395.
[5] See Paul Swain v Ramsey Food Packaging Pty Ltd [1999] IRComnA 1504 (Unreported, Jones C, Print S2209, 24 December 1999).
[6] Commenting on the work performance of Mr Swain, Mr Blackadder stated: 'I am not prepared to say if the applicant was performing his duties correctly or otherwise': ibid [4].
[7] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 99 [51] (Callinan and Heydon JJ).
[8] S Blackadder v Ramsey Butchering Services Pty Ltd [2000] IRComnA 314 (Unreported, Redmond C, Print S4537, 29 March 2000) [62].
[9] Ibid [72–3].
[10] Ramsey Butchering Services Pty Ltd v Blackadder [2000] IRCommA 737 (Unreported, Full Bench, Boulton and Munro JJ, Harrison C, Print S7395, 26 June 2000).
[11] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 103 [64] (Callinan and Heydon JJ).
[12] Blackadder v Ramsey Butchering Services Pty Ltd [2002] FCA 603; (2002) 118 FCR 395, 406–7 [49]–[53].
[13] Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381.
[14] Ibid 397 [21] (Moore J).
[15] Blackadder [2005] HCA 22; (2005) 215 ALR 87. The High Court made some minor alterations to the substance of the original orders that are peripheral to this discussion.
[16] The most extensive discussion of the common law in the Blackadder litigation is found in the judgment of Tamberlin and Goldberg JJ in the Full Federal Court decision: Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 413–15 [65]–[71].
[17] Collier v Sunday Referee Publishing Co [1940] 2 KB 647, 650.
[18] Marbe v George Edwardes (Daly's Theatre) Ltd [1928] 1 KB 269 ('Marbe'); Mann v Capital Territory Health Commission [1981] FCA 160; (1981) 54 FLR 23 ('Mann').
[19] [1928] 1 KB 269, 288.
[19] See White v Australian and New Zealand Theatres Ltd [1943] HCA 6; (1943) 67 CLR 266; Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337.
[20] Turner v Sawdon & Co [1901] 2 KB 653; Wesoky v Village Cinemas International Pty Ltd [2001] FCA 32 (Unreported, Merkel J, 2 February 2001).
[21] [1998] IRLR 313 ('William Hill').
[22] For discussion of the decision in William Hill see Greg McCarry, 'Recent Cases: Termination of Employment, Payment in Lieu of Notice, Garden Leave and the Right to Work' (1999) 12 Australian Journal of Labour Law 56.
[23] [1981] FCA 160; (1981) 54 FLR 23.
[24] There was some argument in the case about Mr Blackadder's entitlement to a productivity bonus and whether or not this gave him a right to work under the common law. This is discussed later in this note.
[25] Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 416 [77].
[26] Ibid 416 [81].
[27] Ibid 406 [44].
[28] Ibid.
[30] Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 397 [21].
[31] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 106 [73].
[32] Ibid 106 [74].
[33] Ibid.
[34] Ibid 106–7 [75].
[35] Ibid 107 [75].
[36] Ibid 90–1 [14].
[37] Ibid 94 [29]–[30].
[38] Ibid 94 [32].
[39] Ibid 95 [33].
[40] Ibid 97 [43].
[41] Ibid 97 [43]–[44].
[42] Ibid 95 [33].
[43] Ibid 95 [32]. See also at [34].
[44] Ibid 107 [76].
[45] Ibid 90–91 [14] (McHugh J); 94 [29] (Kirby J); 106 [74] (Callinan and Heydon JJ).
[46] See Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 395–7 [17]–[21] (Moore J).
[47] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 95 [34] (Kirby J).
[48] Ibid.
[49] Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 399 [24], quoted in Blackadder [2005] HCA 22; (2005) 215 ALR 87, 107–8 [78].
[50] Blackadder v Ramsey Butchering Services Pty Ltd [2002] FCA 603; (2002) 118 FCR 395, 410 [61].
[51] Ibid.
[52] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 108 [80].
[53] Ibid. See also at 94 [32] (Kirby J).
[54] Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20; (2003) 127 FCR 381, 415 [72] (Tamberlin and Goldberg JJ).
[55] Blackadder [2005] HCA 22; (2005) 215 ALR 87, 94 [32].
[56] Ibid 108 [80].
[57] The duty of mutual trust and confidence in the employment contract was recognised in Mahmud v Bank of Credit and Commerce International SA [1997] UKHL 23; [1998] AC 20. For discussion of the development of the doctrine see Adrian Brooks, 'The Good and Considerate Employer: Developments in the Implied Duty of Mutual Trust and Confidence' [2001] UTasLawRw 2; (2001) 20 University of Tasmania Law Review 29; Kelly Godfrey, 'Contracts of Employment: Renaissance of the Implied Term of Trust and Confidence' (2003) 77 Australian Law Journal 764; Joellen Riley, 'Mutual Trust and Good Faith: Can Private Contract Law Guarantee Fair Dealing in the Workplace?' (2003) 16 Australian Journal of Labour Law 28.
[58] For discussion of the potential scope of the duty in the development of the employment contract see Riley, above n 57.
[59] See Johnson v Unisys Ltd [2003] 1 AC 518; Eastwood v Magnox Electric plc [2004] UKHL 35; [2004] 3 WLR 322; New South Wales v Paige [2002] NSWCA 235; (2002) 60 NSWLR 371. For discussion of Johnson v Unisys see Mark Irving, 'Recent Cases: Damages Arising from the Manner of an Employee's Dismissal' (2003) 16 Australian Journal of Labour Law 99; Phillipa Weeks, 'Employment Law — A Test of Coherence between Statute and Common Law' in Suzanne Corcoran and Stephen Bottomley (eds), Interpreting Statutes (2005) ch 10.
[60] Commonwealth, The Howard Government's Plan: Building Better Workplace Relations: Information for Employers (2005) 3, available at
Whether or not these employees will be able to access the State unfair dismissal regimes is a matter that will be clear only once the legislation has been promulgated.
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/journals/FedLawRw/2005/18.html