Westen v Union Des Assurances De Paris [1996] IRCA 660

DECISION NO:660/96 CATCHWORDS COURTS - JUDGMENTS AND ORDERS - Discretion to correct unperfected orders - Leave to re-argue issue STATUTORY INTERPRETATION - Workplace Relations Act 1996 (Cth) s 170de(1) - Meaning of "valid reason" TERMINATION OF EMPLOYMENT - claim of unlawful termination - Whether a valid reason CONTRACT OF EMPLOYMENT - IMPLIED TERM - Whether an implied term of reasonable notice where award provides for notice - BREACH OF CONTRACT - DAMAGES Workplace Relations Act 1996 (Cth): ss 170ca, 170db, 170de(1) & (2), 170ha, 178(5)(ca) & (6), 179. ILO General Survey 1995 Insurance Officers (Clerical Indoor Staffs) Consolidated Award 1985 (Print No. H4379) Andersen v Umbakumba Community Council (1994) 1 IRCR 457 Autodesk v Dyason (No. 2) (1992-3) 176 CLR 300 Brackenridge v Toyota Motor Corporation (1995) 64 IR 77 Brackenridge v Toyota Motor Corporation (1996) 67 IR 162 Burazin v The Blacktown City Guardian (Industrial Relations Court of Australia, NI 3718 of 1995, Madgwick J, 15 December 1995, unreported) Byrne v Australian Airlines (1995) 47 FCR 300; 52 IR 10 Capay Holdings Pty Ltd trading as Cuddles Long Day Centre v Slattery (Industrial Relations Court of Australia, Full Court, 11 December 1996, unreported) Fryar v System Services Pty Ltd (1996) 137 ALR 321 Gibson v Bosmac Pty Ltd (1995) 60 IR 1 Haig v Minister for Immigration & Ethnic Affairs (1994) 85 LGERA 143 Hawkins v Smorgon Meat Group (Industrial Relations Court of Australia, Madgwick J, 31 July 1996, unreported) Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366 Kerr v Jaroma Pty Ltd, (Industrial Relations Court of Australia, No 470 of 1996, Marshall J, 7 October 1996, unreported) Leontiades v F T Manfield Pty Ltd (1980) 43 FLR 193 Metal Trades Employees Association v AEU (1935) 54 CLR 387 Nettlefold v Kim Smoker Pty Ltd (Industrial Relations Court of Australia, Lee J, 4 October 1996, unreported) R v Graziers' Association of NSW; Ex parte AWU (1956) 96 CLR 317 R v Kelly; Ex parte Victoria (1950) 81 CLR 64 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 Smorgon Meat Group v Hawkins (Industrial Relations Court of Australia, Full Court, 6 December 1996, unreported) Strachan v Liquorland (Australia) Pty Ltd (Industrial Relations Court of Australia, Moore J, 6 February 1996, unreported) UTA v Nweiser (1991) 28 NSWLR 471 Victoria v Commonwealth (1996) 66 IR 392 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 GERARD WESTEN v UNION DES ASSURANCES DE PARIS NI 2819 of 1995 CORAM: MADGWICK J PLACE: SYDNEY DATE: 17 DECEMBER 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NI 2819 of 1995 BETWEEN GERARD WESTEN Applicant AND UNION DES ASSURANCES DE PARIS Respondent CORAM: MADGWICK J PLACE: SYDNEY DATE: 17 DECEMBER 1996 REASONS FOR JUDGMENT There are three outstanding questions in this case following my judgments of 28 August and 11 September, 1996. These are: (1) Whether the applicant should have leave following the High Court decision in Victoria v Commonwealth (1996) 66 IR 392, to re-argue the question of whether there was a "valid reason" for the termination of his employment; (2) If leave be so granted, whether there was such a reason; necessarily, this question would involve conclusions as to the interpretation of the phrase "valid reason" in s 170de(1) of the Workplace Relations Act 1996 (Cth); (3) In any case, whether (a) the applicant's contract of employment with the respondent contained an operative term implied by law that, absent serious misconduct (which it was not suggested had occurred in this case), his services might only be terminated upon reasonable notice; (b) if so, what such notice might be; and (c) whether, and in what amount, damages for breach of contract on account of termination otherwise than upon reasonable notice should be awarded. 1. Leave to re-argue "valid reason" (a) Legal principles The respondent accepts, correctly in my view, that there is a discretion in the Court to correct unperfected orders, that is, those pronounced in Court on the occasion of announcing a decision but before the entry of formal orders in the records of the Court. It is submitted however that the test is that special circumstances, amounting to a serious oversight, a departure from due process or a mistake, must be shown and that they do not exist here. Reliance was placed upon a statement to that effect by Kirby P (as he was) in Haig v Minister for Immigration & Ethnic Affairs (1994) 85 LGERA 143 at 153. I assume that this is a correct statement of the law: it places emphasis on the public interest in maintaining the finality of litigation and recognises that the power to reopen a case to enable a re-hearing must be exercised "with great caution": Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684. It does not, however, require that, in a case such as this, before a judge from whom an appeal lies, the applicant for re-opening be faultless. Brennan J, in Autodesk v Dyason (No. 2) (1992-3) 176 CLR 300 at 308, who would have confined reopening before the High Court, in its appellate jurisdiction, to the case of an applicant who "without fault on the part of that person, has not had an opportunity to be heard as to why [the judgment in question] should be pronounced", entered a caveat as to courts other than final courts of appeal: "The approach of Courts from which an appeal lies is not so strict, for it may be preferable to recall an unperfected but erroneous judgment rather than allow it to stand until it is quashed on appeal: see, e.g. In re Harrisons Share under a Settlement, [1955] Ch. 260 at pp. 282-284": p.300, footnote (25) For myself, I think that the ultimate question is whether the interests of justice require the re-opening: c.f. Gaudron J in Autodesk at 328; see also UTA v Nweiser (1991) 28 NSWLR 471 at 478. It is surely that consideration which underlies Kirby P's formulation in Haig and the following approach of Mason CJ in Autodesk: "What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the parties seeking the re-hearing. The purpose of the jurisdiction is not to provide a back-door method by which unsuccessful litigants can seek to reargue their cases" (p 303) While the interests of justice are the ultimate test, I nevertheless stress the importance of caution in embarking upon a course which might tend against the finality of litigation. (b) Unforeseen developments Mr Westen's case was that his employment as the respondent's Claims Manager was, without notice, terminated by his being placed in what was another and, materially, quite different post. It was very shortly, little more than formally, submitted on his behalf that such termination had not been shown by the respondent under s 170de(1) to be for a "valid reason". With encouragement from myself, counsel concentrated more fully on s 170de(2), which was in the following terms: "170de(2) A reason is not valid if, having regard to the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid." Despite the admonition of Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 to consider the validity of the reason under s 170de(1) before embarking on the considerations relevant to sub-s (2), I confess that I scarcely did so. I said merely: "There was, apart from s 170de(2), a valid reason for the termination, namely bona fide reorganisation of the respondent's business in pursuit of increased profits. However the question is whether that reason is robbed of its validity by s 170de(2) through harshness, injustice and/or unreasonableness." and went on to discuss at some length considerations relevant to s 170de(2). I upheld Mr Westen's claim under s 170de(2) and awarded him compensation. Two things emerge from this. First, if the applicant by his counsel was at fault in not focussing more fully the Court's attention on s 170de(1), I contributed to this. Second, it would more accurately have described my state of mind about whether there was a s 170de(1) valid reason if I had said that I assumed there was such a reason. After I had prepared and announced my reasons for judgment, the High Court, on 4 September 1996, declared in Victoria v Commonwealth (the Validity case) that s 170de(2) was invalid. It is fair to say that this conclusion caught by surprise virtually everyone connected with the administration of the unlawful termination provisions of the Act - judges and practitioners alike. The effect here was to ensure the success of an inevitable appeal by the respondent against the award of compensation which Mr Westen had secured, and to necessitate at least a reconsideration of part of his case which I had not needed to deal with, namely, his common law claim in the Court's associated jurisdiction for damages for dismissal in alleged breach of contract. Mr Westen would also have a right of appeal against my perfunctory (I regret to say) rejection of his s 170de(1) claim. A Full Court hearing the appeal would need to hear the same arguments that Mr Westen and the respondent could now put to me, if permitted to do so. That is not all. One judge of this Court has held since the Validity case that what is a valid reason must be determined "undistracted" by s 170de(2) and that an employer must show that "a reason it alleges to be based on its operational requirements, in fact, was justified or objectively defensible in the circumstances": Kerr v Jaroma Pty Ltd, (Industrial Relations Court of Australia, No 470 of 1996, Marshall J, 7 October 1996, unreported). Another judge has observed that it is "arguable" that "the phrase 'valid reason' used in subs 170de(1) . . . impose(s) a requirement that in all the circumstances a termination of employment at the initiative of the employer not be unjust or unfair": Lee J in Nettlefold v Kim Smoker Pty Ltd (Industrial Relations Court of Australia, Lee J, 4 October 1996, unreported). Finally, I confess that my own concentration on s 170de(1) has been fastened wonderfully by the demise of s 170de(2). It is, for example, clearly arguable that I did not give any proper regard to the implications of Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366 at 372-3. (c) Leave should be granted There is a very real possibility of "serious oversight" or "mistake" having adversely affected Mr Westen. In the event that leave to re-open the question is granted, the respondent has made clear that it does not wish to call further evidence. Neither does Mr Westen. If this aspect of the matter were not re-opened, it is common ground that it would nevertheless be necessary to re-open the case to deal with Mr Westen's common law claim. Given the availability of an appeal to Mr Westen on the s 170de(1) point, there is no prejudice to the respondent and little, if any, additional cost in my reopening the matter. I regard the circumstances as very unusual, indeed exceptional. I think that the interests of justice require that the point be re-opened. The meaning of "valid reason" in s 170de(1) The reasoning of the High Court in the Validity Case hinged on the construction accorded to s 170DE(2). The changing onus was relied on as showing that an independent ground of unlawfulness of termination, not limited to the validity of the reason for termination, was being established. What was objectionable about s 170de(2) was that, on its proper construction, it purported to set out "an additional ground of unlawful termination [going] beyond the requirement [in s 170DE(1) that] the reason for termination . . . be valid": the Parliament was taken to have intended that the criterion, which it labelled as "harsh, unjust or unreasonable", be "broader than what otherwise would be the test for validity". That is not to say, however, that on the proper construction of the words "valid reason", considerations of the harshness, injustice or unreasonableness of a termination are irrelevant. It remains, after the Validity Case, for that question to be resolved. My conclusion, upon more mature reflection, is that such considerations are not so irrelevant; indeed, they could hardly be so. The relevant provisions of the Convention are these (with emphasis added): Article 1: The provisions of this Convention shall, in so far as they are not otherwise made effective by means of collective agreements, arbitration awards or court decisions or in such other manner as may be consistent with national practice, be given effect by laws or regulations. Article 2.1: This Convention applies to all branches of economic activity and to all employed persons. . . . PART II. STANDARDS OF GENERAL APPLICATION DIVISION A: JUSTIFICATION FOR TERMINATION Article 4: The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service. . . . Article 8.1: A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator. Article 8.2: Where termination has been authorised by a competent authority the application of paragraph 1 of this Article may be varied according to national law and practice. Article 8.3: A worker may be deemed to have waived his right to appeal against the termination of his employment if he has not exercised that right within a reasonable period of time after termination. Article 9.1: The bodies referred to in Article 8 of this Convention shall be empowered to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified. . . . Article 9.3: In cases of termination stated to be for reasons based on the operational requirements of the undertaking, establishment or service, the bodies referred to in Article 8 of this Convention shall be empowered to determine whether the termination was indeed for these reasons, but the extent to which they shall also be empowered to decide whether these reasons are sufficient to justify that termination shall be determined by the methods of implementation referred to in Article 1 of this Convention. Article 10: If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate. There is nothing in the text of the Convention to indicate that the notion of a "valid reason" for termination should be accorded a narrow meaning. The plain meaning of the words is not a narrow one. In Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373, Northrop J reviewed dictionaries to ascertain the ordinary meaning, in context, of "valid". He concluded that the relevant statutory provision "should be given the meaning of sound, defensible or well-founded", and, following Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, that it "must 'be applied in a practical, commonsense way to ensure that' the employer and employee are each treated fairly" [emphasis added]. That Northrop J concluded that fair treatment is a criterion for judging the validity of a reason for termination is unsurprising: the Macquarie Dictionary gives the phrase a valid reason as its first example of the principal meaning of "valid", and that meaning is "sound, just or well-founded". I see no reason to go beyond that meaning. I see no reason to prefer the adjective "defensible" to "just". I adopt with gratitude the considerations raised by Lee J in Nettlefold that (in my own words): (a) the community also has rights and interests to be accommodated in the ascertainment of the point of balance between the competing interests of employer and employee. I would not limit these public rights and interests to the important requirement, specifically mentioned by Lee J, of good husbandry of the labour force viewed as an economic asset. The community also has an interest in the inculcation and maintenance of appropriate standards of fair and proper dealings between citizens, including employers (or their human agents in the case of corporations) and employees. We do not live by bread alone. (b) the textual requirement that "[an] employer must not terminate ... unless there is a valid reason . . ." [emphasis added] is indicative that, objectively, the termination ought to be valid and that, accordingly, the employer must prove that the operational requirements of the undertaking etc "provided proper ground" for the termination. (c) "operational requirements" is a broad term, apt to encompass everything that might affect the economic or efficacious performance (or cessation, or alteration of the mode of performance) of the undertaking, but necessarily including "the application of good management to the undertaking", which in turn involves "management of the undertaking that meets the employer's obligations to employees". Parenthetically, "capacity and conduct of the employee" are also obviously broad terms, but the capacity and conduct concerned are those which assume circumstances of sufficiently appropriate behaviour by an employer to enable the employee reasonably to perform and accept his/her obligations and benefits under the contract of employment: see Burazin v The Blacktown City Guardian (Industrial Relations Court of Australia, NI 3718 of 1995, Madgwick J, 15 December 1995, unreported), upheld on this aspect by the Full Court (judgment given 12 December, unreported). In the second place, there are broader considerations about the Convention. In modern, industrialised societies with cultural traditions similar to those that inform our own legal system or our wider society, or both, provision for access by employees to independent judicial or quasi-judicial review of the merits of decisions to terminate their employment is either general or is becoming so. Indeed, this was largely the position when the Convention was adopted in 1982. Recent debate in this country has rather missed the point that, in this area of civil justice, by international standards Australia was less a bold leader (let alone an adventurist) than a follower. There would have been little point in the ILO's prescribing a standard of employee protection much less favourable than was already being quite considerably practised, including in countries such as South Africa, with large, technologically undeveloped economic sectors. But that would be the result if a "valid reason" meant merely a reason that was simply not capricious or that could reasonably be regarded as valid. (For the above information, and broader perspectives on the Convention than apparently were before the High Court in the Validity Case, I am indebted to a recent Research Report prepared under the auspices of this Court by Ms Anna Chapman, Prof Breen Creighton, Mr Richard Naughton and Ms Wai-Quen Chan (available in the Court's library). Next, in my view, the terms of Article 9 paragraph 3 show that the framers of the Convention actually intended that the notion of a "valid reason" for termination based on operational requirements should encompass both of the questions (a) "whether the termination was indeed for [reasons so based]" and (b) "whether these reasons are sufficient to justify that termination". If that were not so, it would have been pointless and unnecessary to reserve for disposition under Article 1 the subject of the extent to which Article 8 courts, etc. might decide that latter question. Because both questions are inherent in the composite notion of a "valid reason", and because in Australia that composite notion has been committed, by the legislation implementing the Convention, for decision, ultimately, by the Court, it must be taken that both aspects of that notion are for the Court to decide. There is no reason to suppose that, as to cases concerned with the supposed "capacity or conduct of the worker", the concept of a valid reason for termination connected therewith did not also, in the intentions of the Convention's framers, include (a) "whether the termination was indeed for" such a reason, and (b) "whether those reasons are sufficient to justify that termination". Likewise, too, in Australia, both these aspects are for the Court to decide. I am greatly fortified in this conclusion and as to the significance of Article 9, para 3 by the following discussion of that paragraph in the ILO General Survey 1995 into matters concerning the Convention. The Survey authors said: 214. From the outset of the preparatory work [on the Convention], it was considered that it would be best to leave each country to determine the question whether the bodies to which dismissals may be appealed should be authorized to review the sufficiency of reasons related to the operational requirements of the undertaking. This provision therefore affords a certain amount of flexibility by allowing each member State to determine to what extent the competent bodies should be authorised to review the employer's judgment as to the sufficiency of reasons based on operational requirements. Where workforce reductions are concerned, the employer must therefore clearly have a valid reason within the meaning of Article 4 of the Convention. But it is left to each country to determine the extent to which the impartial bodies before which appeals may be brought against termination of employment should be empowered to review the employer's judgment as to operational requirements, that is, the extent to which they are to be empowered to decide whether these reasons, which are valid by their nature, are sufficiently important to justify the termination of employment. The text therefore allows each country to restrict the power of the competent body, when investigating whether termination of employment was justified, to review the employer's judgement in relation to workforce numbers. [emphasis added] 215. The idea put forward by some governments that the justification for termination of employment based on operational requirements should be examined by the competent bodies before the termination was not retained. However, a State may institute such a system if it considers it to be appropriate. 216. In some countries, examination of the justification for an economic reason is not the responsibility of the appeal body. This is the situation, for example, in Bulgaria. The Bulgarian Government stated that a decision to reduce the volume of work, which may bring about a reduction in the number of workers, is not subject to legal review. 217. In other countries, however, the judge is empowered to investigate the validity of the reason based on the economic requirements of the undertaking. For example, in Cameroon, if the reason (or the order of terminations of employment) is contested, the burden of proof rests on the employer. Likewise in Italy, it is the employer who is responsible for providing proof of the existence of reasons to justify the predominance or overriding importance of production technology requirements. As to the legitimacy of having regard to such materials as aids to the interpretation of the Convention see Andersen v Umbakumba Community Council (1994) 1 IRCR 457. Marshall J in Kerr v Jaroma Pty Ltd (Industrial Relations Court of Australia, VI 3306 & 3307/95, Marshall J, 7 October 1996, unreported) brought to light some other pertinent remarks in the ILO's 1995 General Survey of matters touching the Convention. His Honour said: "Unlike some countries referred to in the General Survey, Australia, through its National Parliament has adopted the general term "valid" as the criterion by which terminations are adjudged. At paragraph 88 of the 1995 General Survey the following is said: '88 The more general the terms used in the applicable provisions, the more the definition of valid reasons for termination of employment depends on how these provisions are interpreted by the bodies that apply them (courts, industrial tribunals, arbitrators or other bodies). ...' " In other words, the Australian parliament deliberately opted for a broad and general term, "valid reason", and thereby left the policy implications of this to be spelled out by the relevant courts. It follows that relevant Australian courts have a policy choice. The choice ought to be, in my opinion, to treat the values inherent in the judgment of whether a reason for termination is valid as being those values which best accord with the court's conception of broadly accepted Australian community standards. The standard that commanded very broad respect, at least in all respectable quarters, in the public debate of the last couple of years, is that of the "fair go all round". In a triumph of the demotic, that phrase and that concept have indeed now been enshrined in the statute: see the new s 170ca of the Act. Such a standard in my view necessarily involves an examination of the merits of the reasons for termination. It also involves what, from its inception, all judges of this Court have insisted upon: that the relevant legal provisions be applied, in Wilcox CJ's words, in a practical, commonsense way, in order to ensure that both parties to the employment contract really do receive a "fair go". The interpretation to be accorded the phrase "valid reason" appears most problematic in relation to the extent to which a bona fide reason for an employee's termination, which reason is not capricious, should be judicially examined as to its merits. No doubt the Court's approach would proceed on a case-by-case basis, and any effort to re-state the phrase in more concrete form will not soon be essayed. However, the first task is to focus on the relevant enquiry. This is not whether some change in the functioning of the undertaking, which change accompanies or immediately precedes or follows the employee's termination, is made for a valid reason based on the operational requirements of the undertaking. The enquiry is whether there is a valid reason for the actual termination in question. This was brought out by the Full Court's judgment in Kenefick. Thus, in this case, the intended reorganisation which would abolish Mr Westen's former post was bona fide and rationally undertaken with a view to having the respondent trade more profitably. The Court is ill-equipped to enquire further into the actual merits of that decision. There is in any case no evidence which would enable that to be done. There is no reason, therefore, to think that there was not a valid reason, in the sense of its being sound, just or well-founded, for the reorganisation. But there is no acceptable evidence that, consistently with such a reorganisation, there was no reasonably practicable alternative to the termination of Mr Westen's employment or that there was no reasonably practicable and acceptable alternative employment that might have been offered to or arranged with him. In particular, he was not told why there was no such alternative; nor was he invited to propose one. In my view, it will often be difficult for an employer to show that there was no such alternative unless the employee has been offered such an explanation and/or opportunity. It was not a necessary consequence of the staff reorganisation that there would be a termination of any employee's employment which would be unacceptable to the employee: often enough an employee in such circumstances can be acceptably accommodated by the employer in another job, whether "equivalent" to the last one or not. Nor was there any offer to Mr Westen of a redundancy payout or package. That the question of the material consequences of a termination of an employee's employment may be intimately connected with the validity of the reason for termination is, in my view, readily demonstrable. In the first place, the entire purpose of the Convention and the relevant Division of the Act is to do a measure of material justice as between employer and employee. In the second place, to my mind it is clear that it may add to the soundness, justice and good foundation of an employer's reason for terminating an employee's employment that the employer intends voluntarily and adequately to compensate the employee for the loss of his/her job. In the third place, the relevance of the material consequences of a termination to the validity of the reason(s) for the termination may be deduced from the structure of the Division, and from the Convention, themselves. Section 170db is squarely based on Article 11 of the Convention which is in the following terms: "Article 11: A worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof, unless he is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue his employment during the notice period." Under s 170db the limited notice therein prescribed, or compensation in lieu of it, must be given unless the employee is guilty of "serious misconduct" defined as "misconduct of a kind such that it would be unreasonable to require the employer to continue the employment during the notice period". Since the s 170db right to notice is, in effect, conditioned on conduct that at least falls short of "serious misconduct", the Convention and the Act themselves view the material consequences of a termination as related to what may reasonably be seen as the degree of validity of the reason for it. The validity of such reason cannot, therefore, be separated from the material consequences of the termination. Section 170de applies to termination of employment whether or not notice pursuant to s 170db or otherwise has been given. A challenged termination may have been effected: (a) without notice; (b) upon the minimal notice periods prescribed by s 170db; (c) more generously, as to notice; and/or (d) in any case with or without any other monetary compensation or solation, or other material balm, e.g. the offer of redeployment to a position of more or less comparable pay and status. In many cases, what, if anything, has been provided to the employee will, for the foregoing reasons, be a relevant, and in some cases a highly relevant, consideration in determining the validity of the reasons for termination. And so it is, in my view, here. I note also von Doussa J's rejection, in Fryar v System Services Pty Ltd (1996) 137 ALR 321 of a submission that the failure to make an adequate severance payment in a case of bona fide redundancy could not, as the allegedly mere consequence of a termination, bear upon the validity of the reason for the termination. Much of the reasoning in that case had its focus upon the then extant s 170de(2) but, in my opinion, remains valid in principle after the striking down of that subsection. For these reasons, in my view the respondent failed to prove, within the meaning of s 170de(1), that there was a valid reason for the termination of Mr Westen's employment, and it was therefore unlawful. Accordingly, I confirm the compensation I have proposed for him.

The common law claim for dismissal without reasonable notice It is trite law that, in general, a term is implied into contracts of employment that, absent misconduct, the employment may only be terminated upon reasonable notice: see, for example, Byrne at 433. The major question argued in this case, and a question of some importance generally, is whether such a term is to be implied, or is to be regarded as operative, if the relevant award makes provision for termination of employment upon a specified period of notice. A threshold question is whether the Act enables the award to have the effect contended for by the respondent. Section 170ha provides: "On and after 26 February 1994, when the Termination of Employment Convention takes effect, any award or order of the Commission that is inconsistent with the requirements of that Convention does not have effect to the extent of the inconsistency." Article 11 of the Convention provides: "A worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof, unless he is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue his employment during the notice period." Thus, the award simply cannot have the effect attributed to it. So much, in my opinion, disposes of the respondent's point. However, in deference to the importance of the underlying question, I offer the following observations. Before any examination of legal doctrine as to the possible effect of awards upon such implied terms, it is necessary to understand what is the true nature of their provisions. It was not disputed in this case that the relevant award provisions were contained in the Insurance Officers (Clerical Indoor Staffs) Consolidated Award 1985 (Print No. H4379) as made and varied under the Act (and its predecessor), nor that such provisions were in force at all relevant times. The key provision is clause 19 which provides: "19. Termination of service (a) The employment of an employee shall not be terminated in the case of an employee with five or more years service without at least four weeks' notice and, in the case of an employee with less than five years of service without at least two weeks' notice given by the respondent and an employee shall give to the respondent at least two weeks' notice of the employee's intention to terminate employment. If two or four weeks' notice as the case required, be not given by the respondent, two or four weeks' salary as the case may be, shall be paid and if an employee leaves without giving and working out two weeks' notice the employee shall forfeit an amount equal to wages in respect of a period equal to that part of the notice which has not been worked. Provided that the contract of employment may be terminated by any respondent without liability to pay for more than time actually worked, for serious misconduct. (b) A statement of service shall be given by the employer if requested by the employee." Clause 19 has a very wide operation. Clauses 3(a) and 3(c) provide: "(a) "Employees" shall mean and include all of the administrative and clerical indoor staff of a respondent together with employees who work in connection with electronic data processing installations, inspectors employed in the insurance industry, messengers, operators of office machinery but shall not include inspectors employed by life officers or life superintendents or life agents. ... (c) "Employees who work in connection with electronic data processing installations" for the purposes of this Award means: (i) any persons whose duties involve the direct operation, monitoring or control of a computer; (ii) any person engaged in the programming of a computer; (iii) any person involved in systems analysis for the purpose of computerisation; and (iv) includes any person engaged in a combination of the foregoing duties, and any person engaged in the supervision and/or the departmental management of person engaged in the foregoing duties." Clause 37 provides: "This Award shall be binding upon the employers named in the schedule of respondents hereto with reference to all their employers [obviously a misprint for "employees" - "employers" is not defined in clause 3], as defined in clause 3 of this Award employed at the date of the making of the Award or thereafter in the insurance industry in the Commonwealth of Australia, including the Australian Capital Territory and the Northern Territory and upon The Australian Insurance Employees' Union and its officers and members." So clause 19 applies to every employee from the junior messenger, through occupations such as keyboard operators, and on and up through assessors, underwriters and actuaries and so on to, finally, the general managers. Without the award provision, for many classes of employees, their implied right to reasonable notice would considerably exceed the minimal periods specified in the award. However, there would be some employees for whom reasonable notice would be less than four weeks and even less than two weeks. The language of the clause, except where an express obligation is cast upon employees to give at least two weeks' notice or to forfeit wages therefor, is that of limitations being placed upon respondent employers: the clause is not one which is aimed at adding, except, possibly, in the respects mentioned, to their rights. Nevertheless, the award establishes, overall, fairly low minima for periods of notice which must be given. The purpose, one deduces, of the award provisions is to relieve the less-skilled employees against a low common law measure of reasonable notice, to be judged simply against the market - often and increasingly a rather cold place for such people. In other words, the clause is mainly intended to augment the common law rights of the more needful employees; not to cut such rights away from the others. The clause does not say, nor does it necessarily imply, that the right of reasonable notice, for employees for whom such notice might be months longer than four weeks, is to be abolished or made inoperative. The award can have a sensible and reasonable operation if it is read as meaning that an employer's obligation to give reasonable notice is assumed and endures, but, reasonable or no, the employer must give the minimum periods of notice prescribed in the award. Considerations of the legal reach, in general, of federal awards aid this conclusion. An award may, by operation of the Act, have the practical effect, at least as to money payments, of augmenting the enforceable rights of an employee who is not a member of a registered organisation bound by an award and, as in the usual case, who is not personally a party to the underlying industrial dispute in settlement of which the award has been made: see ss 178(5)(ca) and (6) and 179. But nothing in the Act empowers an award to reduce the rights of such non-unionists: Metal Trades Employees Association v AEU (1935) 54 CLR 387 at 405, 406, 422, 433; R v Kelly; Ex parte Victoria (1950) 81 CLR 64 at 82; R v Graziers' Association of NSW; Ex parte AWU (1956) 96 CLR 317; Leontiades v F T Manfield Pty Ltd (1980) 43 FLR 193 at 195-7. There may be constitutional difficulty in supporting any such effect for an award: it is not easy, for example, to see how any such effect would be incidental to the award-making process. The consequence is that the award could not affect the implied contractual right of a non-unionist to more than four weeks' notice if that were reasonable. It would be a curious result if the award should be construed so as to worsen the position of unionists, vis-a-vis non-unionists, as to notice or if the award should be regarded as having that effect. In any case, there is no evidence as to whether Mr Westen was or was not a member of the relevant organisation at any particular time. A propos which, it would also be curious if an employee's right to reasonable notice might fluctuate as he/she might move in and out of the relevant union. I would add that s 170DB can hardly be said to take up where the award thus, as it were, left off. As I said in Hawkins v Smorgon Meat Group (Industrial Relations Court of Australia, Madgwick J, 31 July 1996, unreported), now approved in Smorgon Meat Group v Hawkins (Industrial Relations Court of Australia, Full Court, 6 December 1996, unreported) "the section imposes minimal obligations upon employers; it does not give them rights". When the object of the Termination of Employment Division of the Act is to give effect to the Convention (s 170ca(1)), and the Convention contains Article 11, how could it be otherwise? It is clear from the above that, in my view, it is unnecessary to venture into the doctrinal difficulties apparently seen as possible in Byrne v Australian Airlines (1995) 47 FCR 300; 52 IR 10 by Brennan CJ et al. It is also clear that, in this case, there is no reason to doubt, indeed every reason to confirm, the implication of a requirement that Mr Westen should have had reasonable notice of his termination. I have said enough in the reasons I delivered in August last to indicate that while a considerable period of notice is appropriately regarded as reasonable, there is no reason to make it lavish. If the money value of reasonable notice is insufficient compensation, the way forward is in the development of a new and better common law remedy, by discarding the shibboleths of nineteenth century English attitudes to employer-employee relations which would limit damages to the equivalent of pay for the period of reasonable notice, not in pretending that only a period much longer than any jury, or for that matter, most union leaders, would regard as reasonable will suffice to be so. I think that three months, co-incidentally the period estimated by Mr Westen, would have been reasonable. I would therefore award damages on the breach of contract cause of action in the sum equivalent to three months' salary. Of course, Mr Westen does not get the amount of that award twice.

Addendum on "demotion" as a termination of the employment Strachan v Liquorland (Australia) Pty Ltd (Industrial Relations Court of Australia, Moore J, 6 February 1996, unreported) ("Strachan") has recently been cited by a Full Court in Capay Holdings Pty Ltd (trading as Cuddles Long Day Centre v Slattery (Industrial Relations Court of Australia, Full Court, 11 December 1996, unreported) ("Capay") as purported authority for the proposition that "a contract of employment may be terminated by the demotion of an employee without the employment relationship terminating", so that the unlawful termination provisions of the Act would not apply. The Court cannot have had non-consensual and unaccepted demotions in mind. Strachan was concerned with a consensual demotion. Capay was not a demotion case at all. In the case of a consensual change to or termination of a contract of employment, it is difficult to see how this, in any case, could be said to occur "at the initiative of the employer" within the meaning of the Convention and, therefore, within the meaning of "termination" in the Act. Brackenridge v Toyota Motor Corporation, both at first instance ((1995) 64 IR 77) and in the Full Court ((1996) 67 IR 162), is another case that denied that a termination of employment was constituted by a demotion. But, in Brackenridge, the employee continued to work on and would seemingly have accepted the position to which she was demoted if she could not regain her original job. (In the present case, Mr Westen only worked on, after his employment contract was terminated at the respondent's initiative, in order to assist the respondent and without prejudice to his rights). In Brackenridge a Full Court also, in my opinion, used language capable of application beyond the limited facts of the case, and appears to have attributed to Strachan an effect which Moore J, its author, is unlikely to have contemplated for it. To deny the protection of the Convention and the Act to employees demoted without their acceptance of the lower position, in cases where the contract of employment (or other legal framework for the employment such as a statute governing a public bureaucracy) did not provide for such possible demotion, would be to perpetuate plain injustice: must a professional employee, for example, endure, with only the uncertain remedies of the common law, his or her relegation to the ranks of the minimally-skilled at the whim of a capricious employer? Such an intention would scarcely be attributed to the framers of the Convention merely because (a) the cognate Recommendation counselled, in an admittedly "comparatively small part" of it (Strachan at 18), that "measures . . . be considered with a view to averting or minimising terminations of employment for reasons of an economic, technological, structural or similar nature [which] might include . . . internal transfers" and (b) such framers obviously did not contemplate that a consensually demoted employee should necessarily have a right to the severance allowance or separation benefit provided for by Art 12 of the Convention. Conclusion I think that I need not alter the orders I have already proposed to give effect to these conclusions. Unless I receive submissions, by facsimile, within 48 hours to the contrary, I will formally make those orders.

I certify that this and the preceding 24 pages are a true copy of the Reasons for Judgment of the Honourable Justice Madgwick. Associate: Dated: 17 December 1996 APPEARANCES Counsel for the Applicant: R. Reitano Solicitor for the Applicant: Carroll & O'Dea Counsel for the Respondent: C. Barton Solicitor for the Respondent: Freehill, Hollingdale & Page Date of hearing: 1 & 2 February 1996