FEDERAL COURT OF AUSTRALIA

Coal & Allied Mining Services Pty Ltd v MacPherson [2010] FCAFC 83

THE COURT ORDERS THAT:

1.                  The appeal is allowed.

2.                  The declaration made by the Federal Magistrates Court on 9 September 2009 is set aside.

3.                  The cross-appeal is dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

MARSHALL AND COWDROY JJ

1                     This matter raises the issue of the proper operation of Div 7 of Pt 12 of the Workplace Relations Act 1996 (“the Act”), as at November 2008.  Coal and Allied Mining Services Pty Ltd (“Coal and Allied”) appeals from a judgment of the Federal Magistrates Court which declared that Coal and Allied had stood down Mr Allan MacPherson in breach of s 691B of the Act.  Mr MacPherson has cross-appealed from his Honour’s refusal to make any orders compensating him for wages lost, as a result of the breach of s 691B, the subject of the declaration.  The cross-appeal also raises an alleged entitlement in Mr MacPherson to be paid for a shift which he did not work by reason of the operation of a certified agreement that applied to his employment.

Background facts

2                     Coal and Allied conducts open cut mine operations at Mt Thorley in the Upper Hunter Valley of New South Wales.  As at November 2008 it employed Mr MacPherson as an electrical fitter on its field services crew. The employees in that crew maintained mining equipment used on site and attended to breakdowns of that equipment.

3                     Prior to 11 November 2008 Mr MacPherson worked a rotating day/afternoon shift roster on weekdays with an average working week of 40 hours.  From 11 November 2008 Coal and Allied varied that roster to one which averaged 44 hours per week.  The new roster involved a two week cycle of four day shifts, 12, 12, 12 and 8 hours respectively.

4                     At a pre-shift meeting on 12 November 2008, Mr MacPherson gave notice to management of his intention to work only until 2.30 pm on that day.  At approximately 1.00 pm on 12 November 2008, Mr Rabe (the field maintenance superintendent) asked Mr MacPherson why he was leaving work early.  Mr MacPherson said he was doing so for personal reasons which he did not want to discuss.  Mr Rabe then told Mr MacPherson that Coal and Allied expected him to work until the end of the shift and asked him if he intended to do so.  Mr MacPherson said that he did not intend to work until the end of the shift.  Mr Rabe then said that the matter would have to be referred to Mr Gloster, the maintenance manager.

5                     At about 1.20 pm Mr Gloster told Mr MacPherson that his contract of employment required him to work a full shift and asked him whether he intended to do so.  Mr MacPherson said that he did not.  Mr Gloster asked Mr MacPherson for his reasons for that approach, to which Mr MacPherson replied that they were personal and that he would not discuss them.  Mr Gloster then said words to the effect to Mr MacPherson:

Then you leave me no choice but to stand you down indefinitely and without pay until you are prepared to work in accordance with your contract of employment.

6                     Mr Watkins, a member of Mr MacPherson’s trade union asked Mr Gloster:

Under what part of the certified agreement are you standing [Mr MacPherson] down under?

Mr Gloster replied:

I am not standing him down under any clause of the certified agreement. I am standing him down because he is in breach of his contract of employment.

The industrial instrument

7                     The Mount Thorley/Warkworth Operations Workplace Agreement 2007 (“the Agreement”) was binding on Coal and Allied and applied to the employment of Mr MacPherson.  Clause 10.4 of the Agreement is headed “Stand-down” and provides:

The Company may stand down an employee for any day or shift the employee cannot be usefully employed in productive work because of an industrial dispute, or because of machinery breakdown. In the case of machinery breakdown, employees will only be stood down if the breakdown has continued for four consecutive days (including the day of the breakdown if it is a workday). An employee is not entitled to payment when stood down.

The legislative context

8                     Division 7 of Pt 12 of the Act restricts the right of an employer to stand down an employee from his or her employment.  Part 12 is entitled “Minimum Entitlements of Employees” and largely sets out benefits to which employees are entitled such as meal breaks, public holidays, equal remuneration for work of equal value and parental leave.

9                     Section 691B (1) provides:

An employer must not stand down an employee from his or her employment if the stand down is not authorised by:

 (a)       subsection 691A (2); or

(b)        a provision of a contract of employment, or an industrial instrument…that is binding on the employer in respect of the employment of the employee…

10                  Section 691A (2)(a) permits an employer to stand down an employee if the provisions of s 691A (1) are met.  Under s 691A (1) a stand down is permitted if an employee cannot be usefully employed during a period because of a strike, a breakdown of machinery or a stoppage of work for any cause for which the employer cannot reasonably be held responsible.  That section will have that operation if the relevant contract of employment or industrial instrument applicable does not permit a stand down in the circumstances described above.

The explanatory memorandum

11                  The Supplementary Explanatory Memorandum which accompanied the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 (“the Supplementary Memorandum”),at Sch 4, Item 4, relates to Div 7.  The Supplementary Memorandum at [245] refers to s 691A providing “a default right for an employer to stand down an employee, if the employee could not be usefully employed because of particular circumstances”.  The circumstances are those set out in s 691A (1)(b) save that the Supplementary Memorandum refers to a strike as including one undertaken by a “third party” which affects the employer and a stoppage for which the employer cannot reasonably be held responsible as including but not limited to natural disasters.

12                  At [250] of the Supplementary Memorandum, s 691A(2) is described in the following way:

...This proposed amendment ensures that an employee will only be stood down where it is permissible to do so under legislation, an industrial instrument or a contract of employment.

13                  Significantly neither the Supplementary Memorandum nor the Act indicates that the stand down provisions, now contained in ss 691A and 691B, were intended by Parliament to have the operation of a code which would operate to exclude any other circumstances giving rise to a stand down.  Those circumstances would be impossible to anticipate and understandably no attempt has been made by the Act to make provision for them.  The Act does however relate to the specific circumstances where stand down may be effected, those being instances where the employer is unable to use the services of the employee.

The type of stand down encompassed by Division 7

14                  In Textile Industry (Woollen and Worsted Section) Award 1950 (1963) 5 FLR 328 at 333-334, the Commonwealth Industrial Court described a stand down of the type contemplated by Div 7 of Pt 12 of the Act and by cl 10.4 of the Agreement in the following way:

…a stand down of its own term implies that the normal working week of the employees is five days and the stand down is a special direction to the employee that he need not present himself for work on a particular day or days.

15                  Properly understood, a stand down, in that context, encompasses a large range of situations where, for various reasons, an employer is unable to provide useful work for its employees, for a particular period of time, for circumstances beyond its control.  The employer may be temporarily deprived of electricity to run its operation.  It may not have sufficient component supplies to manufacture its goods, due to industrial disputation by the employees of its suppliers.  The employer’s factory may have been flooded. Numerous examples readily come to mind.  The need for clauses in industrial instruments dealing with stand downs of this type has long been recognised because, in the absence of such a provision, an employee is prima facie entitled to wages for attending work even if no work is available: see Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust) Pty Ltd (1966) 8 FLR 70 at 74-75.

Mr MacPherson’s “stand down”

16                  Mr MacPherson’s situation in November 2008 was far removed from the concept of stand down as properly understood within the context of Div 7 of Pt 12 and cl 10.4 of the Agreement.  Although Mr Gloster used the language “stand down”, in context, it is beyond doubt that he was not standing Mr MacPherson down because he could not be usefully employed.  There was work for Mr MacPherson to do but Mr MacPherson chose not to continue to perform that work for the duration of his shift.  Mr Gloster told Mr Watkins that he was not invoking a stand down under the agreement (i.e. cl 10.4).  Mr Gloster said he was acting as he did because Mr MacPherson was in breach of his contract of employment.

17                  Better expressed, Mr Gloster may have told Mr MacPherson that he was refusing to pay him for any period of time during which Mr MacPherson was not prepared to work in accordance with his contract of employment.  Mr Gloster might have said that he was “putting MacPherson off pay” until he was prepared to work in accordance with his roster.

18                  As Rogers J said in Csomore & Anor v Public Service Board of New South Wales (1986) 10 NSWLR 587 at 595:

Unless an employer waives the usual requirement of a contract of employment that an employee perform the full range of work properly assigned to him or unless the award under which the employee works makes a contrary provision, payment of wages is conditional upon performance by the employee of the full range of work assigned or, at least, a readiness and willingness to do so.

19                  At 597, Rogers J referred to the failure of the relevant employees “to render substantial performance” involving “a refusal to carry out a substantial part of their duties”.  The right to deduct pay in such circumstances was described by his Honour as “the common law principle”, which was not displaced by an industrial instrument or a statute.

20                  In Gapes v Commercial Bank of Australia Ltd (1980) 41 FLR 27 a Full Court of this Court held that an employee was entitled to be paid his full salary notwithstanding his failure to perform the full range of his duties.  In Gapes the employee refused to perform part of his duties but was permitted by the employer to remain at work and perform his other duties. At 33, Deane J (with whom Smithers and Evatt JJ agreed in this respect, at 28) said:

If, when the appellant refused to perform a significant part of his duties, the bank had simply directed him to refrain altogether from working in his job, I would have been of the view that the appellant was not entitled to be paid his salary during any period in which he was absent from his duties in accordance with that direction or in which he performed some of his duties in defiance of the bank’s continuing direction to abstain from working altogether. An employer is entitled to decline the services of an employee who refuses to perform significant parts of the job which he is employed to do, at least for so long as that refusal of the employee persists.

21                  Since Gapes had undertaken alternate duties, he was found entitled to his remuneration even though his usual work was available to him and he had declined to perform it.  In the proceedings before us, Mr MacPherson refused to perform all of his duties by refusing to work until the end of his shift.  In consequence Coal and Allied directed him not to attend for work until he was prepared to perform his duties under his contract of employment.  Coal and Allied effectively placed Mr MacPherson in a “no work as directed, no pay” situation until Mr MacPherson chose to resume his duties.

22                  Counsel for Mr MacPherson relies on the dictionary definition of “stand-down” as a “suspension of an employee without pay” (see Macquarie Dictionary 4^th ed).  Counsel contend that Mr MacPherson was stood down within the meaning of s 691B because Coal and Allied suspended him without pay.  Counsel said that the suspension was unlawful because there is no right at common law to suspend a contract of employment.  Counsel relies on authorities such as Australian Workers’ Union v Stegbar Australia Pty Ltd [2001] FCA 367 and Gregory  v Phillip Morris Ltd (1998) 24 IR 397 where the word “suspension” has been read interchangeably with the words “stand down”.  However, these submissions do not address the essential persuasive contention raised that ss 691A and 691B were not intended to deal with a situation in which an employer declines to accept the services of an employee who refuses to perform work in accordance with the terms of his contract of employment.

23                  Division 7 prohibits an employer standing down an employee in circumstances which include the following:

·                    the employee can be usefully employed;

·                    the stoppage of work was one for which the employer could reasonably be held responsible; or

·                    the employer was responsible for the circumstance that led it to wish to stand down the employee.

24                  Division 7 does not prohibit an employer from making a direction to an employee to work in accordance with a contract of employment, so as to substantially fulfil the conditions of that contract or be refused pay until the employee agrees to do so.

25                  Mr MacPherson chose not to work in accordance with his contract and knew that he could resume work when prepared to work in accordance with his contract.  That is, his non-attendance at work was not caused by any “stand down” or “suspension”.  He was told that until he was prepared to work in accordance with his contract, he was “stood down” (see [5] above).  Mr MacPherson provided no indication of the period during which his withdrawal of services would terminate.  Accordingly, the period of the stand down was entirely dependent upon his election to return to work.

26                  Mr MacPherson could have attended work on 13 November, as work was available to him, but he chose not to do so until 14November.  At no time did Coal and Allied prevent him from fulfilling his duties by working his roster.  His non-attendance for the afternoon of 12 November and his failure to attend on 13 November 2008, was a direct consequence of his own decision, not that of his employer who at all times had work available for Mr MacPherson to perform.

27                  It follows that Mr MacPherson was not “stood down” as that expression is usually understood in an industrial context, which connotes an absence of work to be done, for whatever cause.  There was work for him to perform but he was not ready and willing to perform it until such time as he chose to return to work.

28                  In the circumstances, Coal and Allied acquiesced in Mr MacPherson’s decision to withdraw his services.  There is no basis to suggest that arising from this circumstance, Coal and Allied engaged in disciplinary conduct against Mr MacPherson nor in any conduct of the kind contemplated by the stand down provisions of the Act.

29                  The circumstances now before the Court are quite distinct from that encompassed by Div 7 of Pt 12 of the Act.  Those provisions concern circumstances where an employer cannot usefully use the services of an employee, because of a particular circumstance which affects an employee’s ability to work. The provisions under Div 7 of Pt 12 of the Act are not appropriate to describe the nature of Coal and Allied’s direction to Mr MacPherson that he not attend for work until he agreed to work in accordance with the new roster.

30                  Accordingly, it cannot be said that Coal and Allied breached s 691B(1) of the Act because that provision did not deal with the situation which confronted Coal and Allied in respect of Mr MacPerson’s refusal to work in accordance with his roster.  Coal and Allied was entitled to decline his services until Mr MacPherson agreed to work in accordance with his roster.

31                  At [76] of his reasons below, the Federal Magistrate said:

…I am of the view that what s 691A and B do is provide for legal stand downs in what I would describe as “force majeure” situations and prohibit all others, which, paradoxically, would include a suspension or stand down for disciplinary reasons that is not specifically permitted by the contract.

32                  With respect to his Honour, that analysis is flawed. If Div 7 had intended to remove from an employer a common law right to decline to provide work to an employee when that employee refused to perform a substantial part of his or her duties, it would have made that very clear.  Parliament has not expressed such intention. Division 7 is essentially concerned with an employer’s direction to an employee that the employee not attend for work because there is nothing useful for that employee to do.

33                  The use of the word “stand down” by Mr Gloster was a misnomer, but the use of that term was inconsequential since Coal and Allied was given no choice but to accept that Mr MacPherson had withdrawn his services until he chose to reinstate them.  However, it is clear that the use of the word “stand down” was not causative of the non-attendance of Mr MacPherson.

34                  Counsel for Mr MacPherson has drawn the Court’s attention to the decision of Finkelstein J in Stegbar. In that decision Stegbar Australia Pty Ltd initiated a lockout by its employees, and action was taken pursuant to s 170MU of the Act against the company by the Australian Workers’ Union alleging that the lockout had injured its employees or altered their position to their prejudice because the employees were engaging in a protected industrial action.  His Honour referred to s 170MU(2)(b)(i) which was relied upon by the company as a defence to the action brought against it.  Such subsection provides that s 170MU(1) did not apply where an employer was refusing to pay the employee where “under the common law, the employer is permitted to do so because the employee has not performed work as directed”.  The company’s action was allegedly the result of a threat of industrial action by members of the union.

35                  At [24] Finkelstein J said:

This provision will protect Stegbar if it has the right to stand down an employee who indicates he will not work in accordance with his contract of employment. However, under the common law, in the case of threatened misconduct, an employer has no right to suspend an employee without pay. The employer may dismiss the employee, or it must permit the employee to carry out his duties, albeit otherwise than in performance of his obligations. In Hanley v Pease & Partners Ltd [1915] 1 KB 698 at 705 Lush J said:

"[a]fter declining to dismiss the workman - after electing to treat the contract as a continuing one - the employers took upon themselves to suspend him for one day; in other words to deprive the workman of his wages for one day, thereby assessing their own damages for the servant's misconduct at the sum which would be represented by one day's wages. They have no possible right to do that. Having elected to treat the contract as continuing it was continuing. They might have had a right to claim damages against their servant, but they could not justify their act in suspending the workman for one day and refusing to let him work and earn wages."

36                  There is a distinction between the facts relevant to the proceedings before Finkelstein J and the facts presently before the Court.  In the present circumstances, Mr MacPherson did not merely threaten misconduct, that being the circumstance then considered by Finkelstein J.  Rather, Mr MacPherson refused to work even though there was work available for him to perform. At [25] of his Honour’s decision, Finkelstein J said:

A right to suspend or stand down an employee without pay may be granted by contract (Warburton v Taff Vale Railway (1902) 18 TLR 420), including by a term implied by custom or usage (Marshall v English Electric Co Ltd [1945] 1 AllER 653) or by statute (Browne v Commissioner for Railways (1935) 36 (SR)NSW 21). But no such right has been asserted here.

37                  Counsel for Coal and Allied submitted that if his Honour’s observations at [24] were intended to have universal application, the decision is erroneous.  We do not consider it necessary to make any such finding, because Finkelstein J was clearly not referring to a situation in which the employee had withdrawn his services by his refusal to work.  If, however, his Honour did intend his observations to apply in such circumstances, we respectfully do not agree with his Honour’s decision.

38                  In Miles v Wakefield Metropolitan District Council (1987) 1 AC 539, an employee of a council, who had been appointed to the position of Superintendent Registrar of Births, Deaths and Marriages for the respondent’s registration district, declined to fulfil all of his duties on Saturdays.  In holding that the worker was not entitled to be paid, Lord Templeman said at 561:

It cannot be right that an employer should be compelled to pay something for nothing whether he dismisses or retains a worker. In a contract of employment wages and work go together. The employer pays for work and the worker works for his wages. If the employer declines to pay, the worker need not work. If the worker declines to work, the employer need not pay. In an action by a worker to recover his pay he must allege and be ready to prove that he worked or was willing to work.

39                  Having reviewed the decisions of the Supreme Court of Victoriain Welbourn v Australian Postal Commission (1983) 52 ALR 669 and the Supreme Court of New Zealand in  McClenaghan v. Bank of New Zealand [1978] 2 NZLR 528 his Honour said at 564-565:

In my opinion, wages are remuneration which must be earned; in a claim for wages under a contract of employment, the worker must assert that he worked or was willing to work. The principle is elegantly expressed in the speech prepared by my noble and learned friend, Lord Oliver of Aylmerton, and is supported by the additional authorities to which he refers. When a worker in breach of contract declines to work in accordance with the contract, but claims payment for his wages, it is unnecessary to consider the law relating to damages and unnecessary for the employer to rely on the defences of abatement or equitable set-off. The employer may or may not sustain and be able to prove and recover damages by reason of the breach of contract for each worker. But so far as wages are concerned, the worker can only claim them if he is willing to work.

40                  Lord Oliver of Aylmerton, reaching the same conclusion said at 570:

But where the employee declines to work at all for a particular period–and I have already said that, in my judgment, this case has to be approached on the basis that the plaintiff was simply withholding his services on Saturdays–then, subject to the question of whether the wages or salary payable are apportionable on a periodic basis, I see no ground upon which the employee who declines to perform that condition upon which payment depends can successfully sue for the remuneration which is dependent upon its performance. An employee, for instance, who is rightly dismissed from his employment can recover salary which has become due and payable at the date of his dismissal but cannot recover sums becoming due and payable at some later date and on the condition that he has performed his contractual duties down to that date: see Boston Deep Sea Fishing and Ice Co. v. Ansell (1888) 39 Ch.D. 339, 364, per Bowen L.J.

41                  His Lordship, having referred to other authorities, said at 572:

The same approach appears from the opinion of Lord Salvesen in Alexander Graham & Co. v. United Turkey Red Co. Ltd., 1922 S.C. 533, 546. There was, it appears, nothing particularly novel in this so far as the law of Scotland is concerned. The same principle appears as long ago as 1861 in Johnston v. Robertson (1861) 23 D. 646. Lord Justice-Clerk Inglis observed, at p. 656:

“in a mutual contract, where one party seeks performance of the stipulations in his favour, he must show that he has given or tendered performance of his part of the contract. Every action on a mutual contract implies that the pursuer either has performed, or is willing to perform, his part of the contract; and it is, therefore, always open to the defender to say that under the contract a right arises also to him to demand performance of the contract before the pursuer can insist in his action”.

42                  In his learned article entitled “Exploring the Common Law: Lay-Off, Suspension and the Contract of Employment” (1989) 2 AJLL 211 Professor Ronald McCallum said at 226:

In my view, at common law it is not helpful to characterise an employer refusal to accept portion only of the work as a type of suspension. In such circumstances, the employees will almost certainly have committed breaches of their contracts. Although minor contractual breaches may not give an employer the legal grounds or the desire to summarily dismiss them, these circumstances are equivalent to a strike. In a strike or in a ‘no work, no pay’ situation where part performance is rejected, the employees are then free to resume work in accordance with their employment contracts.

43                  We consider that the above extract correctly encapsulates the correct consequence of an employee refusing to supply his services.

44                  The use of the term “stand down” was an attempt by Mr Gloster to describe the status of the relationship between Coal and Allied and Mr MacPherson for so long as he refused to offer his services.  However, this was not a “stand down” within ss 691A and 691B of the Act, an essential element of which is that the employer cannot gainfully employ the employee.

45                  For the above reasons, we consider that the Federal Magistrate erred in holding that Coal and Allied had breached s 691 B(1) in respect of Mr MacPherson.  The appeal must be allowed and the declaration made below set aside.  It follows that Mr MacPherson’s cross-appeal concerning the failure of the Court below to impose a penalty must also be dismissed.

46                  That leaves for consideration the submission by counsel for Mr MacPherson that their client is nonetheless entitled to be paid for the shift he did not work on 13 November 2008.

47                  Counsel rely on s 719(6) of the Act which provided:

Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision…, the Court may order the employer to pay the employee the amount of the underpayment.

48                  An “applicable provision” is defined in s 717(a)(iv) to mean, amongst other things, “a collective agreement”.  The Agreement Mr MacPherson comes under, was a collective agreement.  Mr MacPherson alleges that Coal and Allied breached the Agreement by failing to pay him for 13 November 2008.  He says the Agreement provided for the payment of an annual salary which did not depend on the performance of work.

49                  Clause 14 of the Agreement entitled “Annual Salary” provided:

Full time and fixed term employees will be paid an annualised salary that includes compensation for the maximum ordinary hours under the Australian Fair Pay and Conditions Standard and provision for all other entitlements associated with meal breaks, annual leave loading, overtime penalties and all other disability payments and allowances. It covers 35 ordinary hours and payment for reasonable additional hours worked up to 40 hours.

50                  Clause 18 of the Agreement entitled “Salary Payment” provided:

Salary and overtime payments following adjustment where relevant, for a salary sacrificing agreement shall be paid fortnightly by electronic funds transfer to accounts (maximum of 5) with a bank or other recognised financial institution. The pay fortnight will end on a Friday, and lodgement will be made on Thursday in the week following the end of the pay fortnight.

51                  Clause 19 of the Agreement entitled “Overtime” provided:

In addition to the hours rostered to work and included in Base Salary and in Work Pattern Allowance, an employee may be required by the Company to work reasonable overtime. An employee may work, but the Company shall not require an employee to work, in excess of 14 continuous hours.

All time worked by an employee in excess of or outside rostered hours of work shall be paid at the Overtime Rate set out in Appendix 1, provided that by agreement with the Company an employee may be allowed time off in lieu of overtime on an hour for hour basis. Overtime payment shall be in substitution for any weekend, public holiday, afternoon, and night shift penalties.

52                  Senior Counsel for Mr MacPherson submits that Gapes is authority for the proposition that if the terms of an industrial instrument provide unconditionally for the payment of a yearly salary in stated propositions at stated times during the employment relationship, it does not matter that, absent the prescription of the relevant award or agreement, the common law may have allowed deductions from salary.  Mr MacPherson’s Senior Counsel acknowledges that Gapes is distinguishable from the factual circumstances before us.  Nevertheless, Senior Counsel submits that the rationale of Gapes applies equally in the present circumstances to provide an entitlement to payment where there has been no performance of duties, unless in the relevant industrial instrument or applicable contract, there is an express exception providing for such payment.

53                  The answer to counsels’ contention lies in the proper interpretation of the Agreement.  The Agreement does not evince an intention to provide for the payment of wages or salary irrespective of the performance of work.  The reference to “annualised salary” in cl 14 is to a salary that takes into account other allowances and entitlements that would have previously been separately calculated.  Clause 18 merely deals with the frequency of payments, on a fortnightly basis, of the salary derived from cl 14.

54                  Other clauses of the Agreement demonstrate that actual performance of work is expected in return for payment of salaries, putting to one side sick leave, annual leave and like matters. As counsel for Coal and Allied point out, the salary provided by the Agreement included payment for a “Work Pattern Allowance”, which was also provided for in cl 14.  The Work Pattern Allowance is designed to compensate for overtime, shift penalties, and work on public holidays.  It contemplates the actual performance of work for which compensatory adjustment is made.  Further, as counsel for Coal and Allied submit the payment of salary unconditionally would make unnecessary the requirement in cl 25.2 of the Agreement (“Unpaid Carer’s Leave”), for unpaid leave of absence at the time of an annual shutdown or unpaid carers leave.  The same can be said of the requirement to be paid accident pay in cl 22 of the Agreement.  The Agreement cannot be construed properly as providing for the payment of salary irrespective of the performance of work.

55                   It follows that the cross-appeal is rejected.

Associate:

Dated:         12 July 2010

REASONS FOR JUDGMENT

BUCHANAN J:

56                  The appellant/cross-respondent (“Coal and Allied”) is the operator of a coal mine at Warkworth in New South Wales.  The respondent/cross-appellant (“Mr MacPherson”) was employed by Coal and Allied as an electrical fitter.  The terms and conditions of Mr MacPherson’s employment were regulated, in part at least, by an industrial agreement known as the “Mount Thorley/Warkworth Operations Workplace Agreement 2007” (“the Agreement”).

57                  Mr MacPherson worked for a considerable period of time in accordance with shift arrangements which averaged 40 hours per week.  Commencing with effect on 10 November 2008, Coal and Allied directed new work arrangements involving shift arrangements averaging 44 hours per week.  Adjustments of pay as provided by the Agreement accompanied the new arrangements.  Mr MacPherson’s first shift under the new arrangements was on 11 November 2008 and on that day he worked in accordance with those arrangements.  On 12 November 2008, Mr MacPherson was rostered to work a 12 hour shift.  At the start of the shift, he informed his supervisor that he would only be able to work until 2.30 pm (a period of eight hours) rather than working until 6.30 pm (twelve hours) in accordance with the new roster.  Mr MacPherson was one of nine employees who took the same position, each citing personal or family reasons for their refusal to work the full shift.  Mr MacPherson was informed that he was stood down without pay indefinitely until prepared to comply with his contract of employment.  That occurred at about 1.20 pm and he ceased work as a result.  He left the site at 2.30 pm.  Mr MacPherson did not work on 13 November 2008 but returned to work on 14 November 2008 after signing a document committing to work ordinary hours and reasonable additional hours.  He thereafter worked full shifts under the new arrangements, as did other employees who had taken a similar position to him.

58                  Mr MacPherson contended that he was “stood down” in a manner which was prohibited by the operation of s 691B of the Workplace Relations Act 1996 (Cth) (“the WR Act).  Coal and Allied contended that s 691B of the WR Act was not engaged.  It has argued that it was entitled to refuse partial performance of Mr MacPherson’s duties and that, despite the words used in the directive to him, the appropriate legal characterisation of the events is that he was “stood aside”, as the common law permits.

59                  Mr MacPherson commenced proceedings in the Federal Magistrates Court of Australia (“the FMCA”) seeking a declaration that Coal and Allied had breached s 691B of the WR Act, a declaration that Coal and Allied had “breached a term of the Australian Fair Pay Conditions Standard by requiring [him] to work more than an average of 38 hours per week and reasonable additional hours” and an order requiring Coal and Allied to pay Mr MacPherson an amount equivalent to the wages lost by him arising from Coal and Allied’s conduct, together with ancillary orders imposing penalties on Coal and Allied, such penalties to be paid to Mr MacPherson.

60                  Division 7 of Part 12 of the WR Act deals with the subject matter of “stand downs”.  Section 691A permits an employee to be stood down in specified circumstances owing to which an employee “cannot usefully be employed during a period because of a particular circumstance”.  Section 691A of the Act does not apply to permit a stand down if provision permitting a stand down is made by a contract of employment or a relevant industrial instrument.  The Agreement is such an industrial instrument.  In the present case, cl 10.4 of the Agreement permitted stand downs and deductions from salary as follows:

10.4          Standdown

The Company may stand down an employee for any day or shift the employee cannot be usefully employed in productive work because of an industrial dispute, or because of machinery breakdown.  In the case of machinery breakdown, employees will only be stood down if the breakdown has continued for four consecutive days (including the day of the breakdown if it is a workday).  An employee is not entitled to payment when stood down.

61                  That provision had no application on the facts of the present case.

62                  Although the term “stand down” is not defined by the WR Act, “authorised stand down” is defined by s 4 to mean a stand down which is authorised as mentioned in s 691B(1).  Section 691B(1) of the WR Act refers to stand downs which are authorised by s 691A or by a provision of a contract of employment or industrial instrument binding on the employer.  Section 691B prohibits a stand down which is not so authorised.

63                  In a judgment delivered on 9 September 2009 (MacPherson v Coal & Allied Mining Services Pty Limited (ACN 104 081 290) (No 2) [2009] FMCA 881), the FMCA declared that Coal and Allied was in breach of s 691B of the WR Act by standing down Mr MacPherson on 13 November 2008, reserved its decision on penalty for that breach and otherwise dismissed the application.  In particular, the FMCA declined to award any amount for wages lost by Mr MacPherson on 12 or 13 November 2008.  The parties have each appealed from that judgment.  Coal and Allied resists any orders against it.  Mr MacPherson seeks to support the orders so far made in his favour and seeks, in addition, an order for the payment of wages lost due to the actions of Coal and Allied, with interest.  No order is now sought for a declaration that Coal and Allied breached the Australian Fair Pay Conditions Standard.  The FMCA, by a later decision, imposed a very modest penalty of $110 on Coal and Allied for breach of s 691B (MacPherson v Coal & Allied Mining Services Pty Limited (No 3) [2009] FMCA 1205).  That order has not been appealed by Mr MacPherson.

64                  The first question which is presented by the appeal is whether Coal and Allied infringed s 691B of the Act.  That question turns on what is meant by the term “stand down” in s 691B and, in particular, whether its meaning in that statutory context is broad enough to apply to Coal and Allied’s conduct towards Mr MacPherson on 12 November 2008.  If Coal and Allied’s direction to Mr MacPherson on 12 November 2008 was a stand down, it was not authorised as mentioned in s 691B(1) and was therefore prohibited.   If Coal and Allied’s conduct was a breach of s 691B the next question is whether Mr MacPherson was entitled to be paid for some or all of his absences on 12 and 13 November 2008.  A further question is whether the Agreement required Mr MacPherson to be paid even if the prohibition in s 691B was not engaged.

65                  Before I return to the question of statutory construction which is at the heart of the appeal it is instructive to place the common law position in a proper context.  In order to do that it will be necessary to discuss the concepts of “suspension”, “stand down” and “no work as directed, no pay” as they have been developed in relation to employment law in a common law setting.

66                  Normally, the exchange of work for pay represents the fundamental consideration provided by parties to a contract of employment.  Attendance at work as required under a contract of employment, and in accordance with the lawful instructions of an employer, is a basic common law obligation.  Refusal to comply with such an obligation provides grounds for dismissal at common law (see Adami v Maison de Luxe Ltd (1924) 35 CLR 143).  Furthermore, a right to payment normally depends on actual service, not mere preparedness to serve (Visscher v Honourable President Justice Guidice (2009) 239 CLR 361 at [54] citing Automatic Fire Sprinklers Ptd Ltd v Watson (1946) 72 CLR 435 at 465 per Dixon J; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 428 per Brennan CJ, Dawson and Toohey JJ). However that principle does not exclude a claim for payment under a continuing employment relationship where an employer has wrongly prevented work from being performed.

67                  In the United Kingdom, it was established in the early part of the 20^th century that there is no common law of right of suspension of an employee as a disciplinary measure or as retaliation for misconduct or refusal to work (Hanley v Pease and Partners Ltd [1915] 1 KB 698 (“Hanley”) esp at 705 per Lush J).  The case has been cited as authority for the proposition in Australia on a regular basis.

68                  Professor McCallum has suggested that there are only a small number of Australian cases which consider whether there is any common law right to suspend obligations under a contract of employment, whether by suspension (as a disciplinary or retaliatory measure) or by lay-off (stand down) (“Exploring the Common Law: Lay-Off, Suspension and the Contract of Employment” (1989) 2 AJLL 211).  He mentioned, in particular, the following three cases.

69                  In Browne v Commissioner for Railways (1935) 36 SR (NSW) 21, Jordan CJ said (at 23):

… in the absence of express provision, a breach of [a] contract between private persons confers no right on the injured party to suspend the contract.

70                  In Re Application by Building Workers’ Industrial Union of Australia (1979) 41 FLR 192, J B Sweeney J rejected the suggestion that in Australia or the United Kingdom there existed any common law right to stand down employees from work (whether they could not be usefully employed or otherwise) if a contract of employment was silent on the subject. 

71                  In Gregory v Philip Morris Ltd (1988) 80 ALR 455, Wilcox and Ryan JJ said (at 472):

… suspension of an employee without pay is a course which, in the absence of a relevant term in the contract of employment or award, is not open to an employer.  Ordinarily, an employer is not entitled to stand down an employee without wages …

72                  In discussions of this kind (as in those cases) there is usually no need to make a distinction between the concept of suspension and that of stand down because the common law principle at work is the same in both instances; namely, that there is no right of unilateral action by an employer in the absence of a relevant contractual term.  That remains the case, so far as the common law is concerned, even though award provisions dealing with those subjects tended, as they developed, to concentrate on misconduct by employees (in the case of suspension) and lack of useful work for employees (in the case of stand down clauses).  Those developments in the award system are interesting but they do not, in my view, inform or alter the underlying common law principle, which is commonly traced back in both instances to Hanley.

73                  In a case where an employee complains that wages due under a subsisting contract of employment have not been paid due to some breach by an employer which has prevented the actual performance of work, discussion often commences with the proposition that an employee must, as an element of a successful case, demonstrate that he or she was ready, willing and able to perform normal work and was prevented from doing so by the wrongful conduct of the employer.  A principle developed, both in the particular industrial jurisprudence of this country, and in the common law in the United Kingdom and Australia, to the effect that a refusal to perform normal duties disentitled an employee to payment, even though some duties were performed.  Arising from the same idea (that employees were not at liberty to perform duties selectively) there developed a recognition of the right of an employer to refuse to accept the performance of any duties while the refusal to perform all ordinary duties continued.  This was variously referred to as putting an employee “off pay”, a right to “stand aside” an employee, as “no work, no pay” or, more precisely, as “no work as directed, no pay”.  In Electricity Commission (NSW) v Federated Engine Drivers and Firemen Association of Australasia (NSW) [1975] AR (NSW) 504 (“Swieringa”) the Industrial Commission of New South Wales in Court Session said (at 514):

Cases abound in this Commission and elsewhere which state categorically that in order to be entitled to payment of the wage which the terms of his employment prescribe, an employee must be ready and willing and able to perform in accordance with the lawful and reasonable directions of his employer the service for which he contracted, and that any failure on his part to do just that of itself, and so long as the failure continues, disentitles him to such payment.

74                  Swieringa, and a later decision by the same Commission in which the same principle was applied (New South Wales Teachers Federation v Department of Education; re Quality Education Campaign [1980] AR (NSW) 860 (“Quality Education”)), involved a partial refusal of duties where the work actually performed was all part of normal duties and there was no absence from work.  Depending on the circumstances, partial or entire disentitlement to payment resulted from the application of the principle that the conduct of the employee had removed the foundation for a claim to payment. 

75                  In Electrical Trades Union of Aust. v Illawarra County Council (1982) 3 IR 101 (“Illawarra C.C.”), Cahill J said (at 103) that Swieringa and Quality Education:

. . . were cases in which there were refusals by employees to comply with specific directions to carry out particular work embraced within the relevant contracts of service.  In both cases the Commission in Court Session held that the employees were not entitled to payment from the employer for the particular period in dispute.  It is clear, however, that both cases treated the refusal by the employee to carry out work as directed as a demonstration of the employee’s unreadiness and unwillingness to perform the service to which his contract of employment related.

76                  His Honour went on (in a passage cited by Fisher P in Spotless Catering Service Ltd v Federated Liquor and Allied Industries Employees Union of Australia, NSW Branch (1988) 25 IR 255 (“Spotless Catering”) at 260) to say (at 105):

… it is clear that the employees in question were not ready and willing to carry out, during the relevant period, work which they were obliged to perform under their contracts of employment.  They were ready and willing to perform part of such work, but a readiness and a willingness to perform part, but not the whole, particularly when the banned work was of an important and significant nature having regard to the enterprise carried on by their employer (as was the case here), are insufficient to demonstrate the preparedness of the employees to carry out the terms of their contract.  In the circumstances, it is my opinion that it was not incumbent on the employer to allow the employees to commence work on terms which they, the employees, desired to dictate, terms different from the terms of their contracts of employment, and that, in law, the employees have no right to payment while they maintained that attitude.

            (Emphasis in original)

77                  In Spotless Catering, Fisher P said (at 262):

There can be no doubt that where employees are not ready, able and willing to perform their ordinary duties as directed, that they are thereby disentitled to payment.  When such a situation occurs an employer has a wide discretion as to how he may react.  The employer is entitled to take steps to exclude employees from the premises or to take other steps to close the operations down as suggested in this case by the union.

78                  The principle stated in these cases was applied by Ryan J in this Court in Independent Education Union of Australia v Canonical Administrators (1998) 87 FCR 49 (“IEUA”) and in United Firefighters’ Union of Australia v Metropolitan Fire Brigades Board (1998) 86 IR 340 (“United Firefighters”).  In IEUA,Ryan J referred (at 72) to the judgment of the House of Lords in Miles v Wakefield Metropolitan District Council [1987] AC 539 (“Miles”) as being also in support of the principle.

79                  In Miles a number of civil servants (including the plaintiff) complied with a trade union direction not to perform certain duties on Saturdays.  The plaintiff remained prepared to, and did, attend work to perform other duties on Saturday, despite being told that if he was not prepared to perform the full range of his duties he need not attend for work on Saturdays and would not be paid if he did.  Lord Brightman said (at 552-3):

If an employee offers partial performance, as he does in some types of industrial conflict falling short of a strike, the employer has a choice.  He may decline to accept the partial performance that is offered, in which case the employee is entitled to no remuneration for his unwanted services, even if they are performed.  That is the instant case.  Or the employer may accept the partial performance.  If he accepts the partial performance as if it were performance which satisfied the terms of the contract, the employer must pay the full wage for the period of the partial performance because he will have precluded or estopped himself from asserting that the performance was not that which the contract required.

Lord Templeman said (at 561):

In an action by a worker to recover his pay he must allege and be ready to prove that he worked or was willing to work.  Different considerations apply to a failure to work by sickness or other circumstances which may be governed by express or implied terms or by custom.  In the present case the plaintiff disentitled himself for his salary for Saturday morning because he declined to work on Saturday morning in accordance with his duty.

Where industrial action takes the form of working inefficiently, the employer may decline to accept any work and the worker will not then be entitled to wages.

Lord Oliver of Aylmerton said (at 568):

The question to be asked … is not so much “has the employer a right to withhold from an employee who voluntarily absents himself from work wages for the period in which he is absent?” but “is the employee entitled to sue for and recover from his employer wages in respect of a period during which he has made it perfectly clear that he is not ready and willing to perform his own contractual obligations?”

            (Emphasis in original)

and (at 570):

… I see no ground upon which the employee who declines to perform that condition upon which payment depends can successfully sue for the remuneration which is dependent upon its performance.

and (at 574):

A plaintiff in an action for remuneration under a contract of employment must, in my judgment, assume the initial burden of averring and proving his readiness and willingness to render the services required by the contract (subject, no doubt, to any implied term exonerating him from inability to perform due, for instance, to illness).

and (at 575):

It may well be that different considerations apply where an employer claims to withhold remuneration under a subsisting contract on the ground of past misconduct or where the employer has, by accepting and directing the employee’s services, precluded himself from denying that the employee was ready and willing to perform (albeit possibly incompletely) the services which his contract obliged him to render.

80                  Reference was made by both Lord Templeman and Lord Oliver of Aylmerton to the judgment of Fullagar J in the Supreme Court of Victoria in Welbourn v Australian Postal Commission [1984] VR 257 (“Welbourn”) which they each distinguished on its facts.  In Welbourn, postal employees implemented selective industrial bans but remained at work performing other duties.  Fullagar J found that the employer intended the employees should remain at work, notwithstanding the bans, and consciously took the benefit of work done.  Fullagar J distinguished an earlier judgment of a Full Court of the Supreme Court of Victoria in Australian National Airlines Commission v Robinson [1977] VR 87 (“Robinson”) where airline pilots had threatened to disrupt normal services.  The airline suspended normal operations.  The Full Court rejected a claim for payment by a pilot.  The Full Court in Robinson said (at 92):

If an employee, on presenting himself for work at his place of employment, indicates to his employer by his words or actions that he is only willing to perform his duties under his contract of employment if another term is, in effect, added to the contract and that term is a significant one, there would be little difficulty in reaching a conclusion that the employee was not ready and willing to perform his obligations under the existing contract of employment.

and (at 96):

… the respondent did not show, as he was obliged to do, that he was ready and willing to perform his contract of employment.

81                  The learned Federal Magistrate, in the judgment under appeal, referred to the judgment of Rogers J in Csomore v Public Service Board of NSW (1986) 10 NSWLR 587 (“Csomore”).  Csomore was decided some months before Miles.  In Csomore,officers of the New South Wales Public Service implemented a ban by their union on the performance of some, but not all, of their ordinary duties.  They were thereupon instructed by their employer to cease the performance of all duties.  Rogers J held that at common law an employer was entitled to decline partial performance of ordinary work, direct that the balance of ordinary duties not be performed and withhold pay for as long as the refusal to perform part of the duties continued.  Rogers J said (at 595):

Unless an employer waives the usual requirement of a contract of employment that an employee perform the full range of work properly assigned to him or unless the award under which the employee works makes a contrary provision, payment of wages is conditional upon performance by the employee of the full range of work assigned or, at least, a readiness and willingness to do so.

82                  Rogers J referred, in support of his analysis and conclusion, to the United Kingdom judgment of Walton J, sitting in the Chancery Division, in Cresswell v Board of Inland Revenue [1984] ICR 508; [1984] 2 All ER 713 (“Cresswell”) and to the judgment of Deane J, sitting as a member of a Full Court of this Court in Gapes v Commercial Bank of Australia Ltd (1980) 41 FLR 27 (“Gapes”).

83                  In Cresswell,Walton J said (at 522-523):

No work (or, at any rate, readiness to perform whatever work it is the employee ought to be willing to perform if physically able to do so) – no pay.  This is such an obvious principle, founded on the simplest consideration of what the plaintiff would have to prove in any action for recovery of pay in respect of any period where he was deliberately absent from work of his own accord, that direct authority is slight, slight but sufficient.

84                  Reliance on Gapes is more problematical.  In Gapes,officers of a bank refused to perform certain of their ordinary duties as part of an industrial campaign.  Initially the bank refused to accept partial performance of duties but subsequently accepted partial performance of duties although declaring that payment would be withheld.  All members of the Court (Smithers , Evatt  and Deane JJ) took the view that payment could not be withheld in those circumstances.  That approach was echoed later in Welbourn and was accepted in Miles as a matter of principle.

85                  In order to understand the reasoning in Gapes beyond that critical conclusion on the facts (which was explained in the reasons of Deane J), it is necessary to appreciate that Smithers and Evatt JJ agreed with Deane J’s judgment in two respects and disagreed in a third respect.  Smithers and Evatt JJ agreed that, on the facts of the case, no entitlement to make a deduction from salary had arisen.  They also, importantly, agreed with the interpretation of the award given by Deane J.  The point of departure arose in relation to the possibility that the bank might have exercised a common law right to refuse part performance of duties.  On that issue the majority took the view, it would appear to me, that payment would nonetheless have been compelled notwithstanding the common law principles to which I have referred.  That conclusion requires further explanation shortly.

86                  First, it is instructive to identify in greater detail those matters upon which Deane J and the majority agreed.  The essence of the first conclusion, to which all three judges subscribed, may be seen from the following passage in the judgment of Deane J (at 34):

In the view I take, the critical factors in the present case are that the appellant, being an employee of the bank, actually worked in his job for the three days in question and that he so worked with the knowledge and consent of the bank. The essential question is whether, in those circumstances, the express provision of the award that the appellant is entitled to be paid a salary at a specified rate are to be qualified by an implication that he is only so entitled while he remains ready, willing and able to carry out in full the contract of employment between himself and his employer. In my view, the terms of the award cannot properly be read as subject to any such implication.

87                  The second matter of agreement is important also.  In order to understand its significance it is necessary to distinguish between three possible scenarios: (a) circumstances in which an employer accepts partial performance of duties (such as the factual position in Gapes); (b) circumstances in which an employee remains at work performing only selected duties despite a direction to the contrary; and, (c) circumstances where an employee is excluded from work through non-preparedness to perform all work required (such as the facts of the present case).  The second matter upon which Deane J and the majority in Gapes were agreed falls within scenario (b).  Deane J said (also at 34):

Where … an award contains a specific provision for payment of an employee at an annual rate and spells out in some detail the circumstances in which deductions from that annual salary can properly be made, it will not ordinarily be permissible for employer and employee to emasculate the express terms of the award entitling the employee to payment by engrafting upon it provisions such as that the employee will only be entitled to such payment while he complies with contractual conditions that he work honestly or diligently or, as suggested in the present case, while he is ready and willing to perform all the duties of his employment.

and (at 35):

There is … no room under the award for an employer bank and an employee to reach agreement between them that even though the employee is performing duties for the employer bank of a type covered by the award, he will not be entitled to be paid the salary for which the award makes provision in the event that there are other duties which the employee is refusing to perform or by reference to a general attitude of the employee as not being ready, willing and able to perform his duties or not performing his duties diligently or honestly.

88                  These passages are important because it is clear that all members of the Court agreed that the award in Gapes comprehensively defined the circumstances in which payment would be due if employees (who had not been excluded from all work) continued to perform ordinary duties, even though selectively.  It follows from the analysis that the common law principles gave way to the provisions of the award.

89                  The point on which Deane J and the majority disagreed is introduced in the judgment of Deane J in the following way (at 33):

If, when the appellant refused to perform a significant part of his duties, the bank had simply directed him to refrain altogether from working in his job, I would have been of the view that the appellant was not entitled to be paid his salary during any period in which he was absent from his duties in accordance with that direction or in which he performed some of his duties in defiance of the bank's continuing direction to abstain from working altogether. An employer is entitled to decline the services of an employee who refuses to perform significant parts of the job which he is employed to do, at least for so long as that refusal of the employee persists. The appellant would, in my view, have been "absent from duty" for the purposes of cl. 12(c) of the award during any period in which he refused to carry out a significant part of his duties and was, as a result, either excluded altogether from the performance of his duties or working in defiance of an instruction from the bank to abstain from working in his job altogether.

90                  That passage reflects an aspect of the common law principles discussed earlier although Deane J’s reasoning on this particular point depended upon exclusion from all work (or defiance of such an exclusion) rather than “working inefficiently” (per Lord Templeman in Miles).  Deane J was of the view that the provisions of the award in Gapes could, in those circumstances, be accommodated to and leave room for the common law position, through the operation of cl 12(c) of the award, if the bank directed that no work at all be performed.  That is the point on which the majority disagreed.  Smithers and Evatt JJ were of the view that the comprehensive nature of the award provisions continued to dictate that payment must be made even if the bank had declined to accept performance of any duties. In my view, there is no escape from the fact that the majority view (albeit obiter dicta in the circumstances) was that an obligation to pay salary would nevertheless have continued.  In particular, the majority said (at 28):

We desire … to make the following observations because we are unable to satisfy ourselves that had the respondent rejected part performance of the duties of the appellant and excluded him from carrying out such part performance cl 12(c) of the award would have been applicable.  This is because we feel that cl 12(c) is directed to circumstances where the absence of the employee is essentially his own voluntary act.

and:

The obligation under the award to pay a salary depends upon its terms express or implied. If the terms of the award provide unconditionally for the payment of a yearly salary in stated proportions at stated times during the continuance of the relevant relationship of employer and employee, it is not to the point that at common law obligations to pay salary under a similar class of contract to which no award was relevant might have been regarded by the law as conditional on a particular degree of work performance. Where there is an award applicable to a contract of employment it is necessary to ascertain that the award does provide expressly or impliedly about payment of remuneration.

and (at 29):

In this case it is impossible to find any factor by reference to which the obligation to pay salary, being expressed absolutely, may be construed as subject to an implication that the obligation to pay is conditional on the duties of the employment being performed to some lesser or greater degree.

This does not mean that breach of the promise of the employee to perform his duties is not a breach of contract with appropriate legal consequences. It only means that the breach does not touch the obligation under the award to make the specified payments of salary.

91                  There is a further theme running through the judgment of the majority in Gapes which is not easily reconciled with the position that was taken about the “absolute” obligation to pay salary.  That further theme depends on the suggestion that a “state of employment” was at all relevant times in existence and was neither brought to an end nor suspended.  This line of reasoning appears to me to depend upon the factual circumstance that the bank had accepted partial performance of duties.  The line of reasoning may be seen from the following passages (at 29):

On the proper construction of the award the obligations created therein with respect to payment of salary do not depend upon actual performance of particular duties. Accordingly there being a state of employment to which this award is applicable the obligation to pay salary as and when provided therein is not conditional on work performance. The obligation persists while the relevant state of employment exists. In this case the state of employment in the relevant category was in existence at all relevant times because while the employee was performing duties appropriate to his classification, although not all of such duties, and the employer was accepting such performance, it could not be said that the relevant state of employment did not exist.

and (at 31):

Whether when an employee refuses to perform a significant part of his duties and the employer rejects performance of the remaining part of the duties and excludes the employee from rendering such part performance, the state of employment upon which the relevant obligations under the award depend, has come to an end or is suspended is a question that does not arise here. Such a situation is in substance that which existed in Australian National Airlines Commission v. Robinson [1977] V.R. 87. The decision in that case played a significant part in the judgment of the learned judge. But in this case the employer did not reject part performance. Accordingly the state of employment upon which the obligations of the award depended continued at all times.

92                  This subsidiary line of reasoning must be distinguished from the rather stricter departure from Deane J’s reasoning exemplified in the earlier passages I extracted, although I confess it is not altogether easy to disentangle the two.

93                  I shall return to the decision in Gapes when I deal with Mr MacPherson’s claim for wages.  The result in Gapes is readily enough explicable on its facts but the further observations, particularly those of the majority, sit uncomfortably with the common law principles I have identified unless confined to the particular award provisions at issue in that case.  Gapes is, however, an illustration of the principle that the common law must yield to any statutory (or statutorily authorised) provision inconsistent with its operation.

94                  Most of the cases to which I have so far referred concerned the selective performance of duties rather than the threat of absence from duty, although Robinson and Creswell are in the latter category.  So also is the present case.  Here, Mr MacPherson appeared to Coal and Allied to be unwilling to perform the whole of his duties as required from time to time because he and others, whose working arrangements had been changed by Coal and Allied, proposed to absent themselves for part of a shift on 12 November 2008 (the second day of the new working arrangements) and, presumably, might do so again.  Coal and Allied took the view that it was entitled to require a commitment from Mr MacPherson that he would perform all his duties as required and was entitled to stand him aside until he gave such a commitment (which in fact he did two days later).

95                  From the point of view of the common law, there is no reason, in my view, to make a distinction between unaccepted performance of selected duties without absence from work (Swieringa, Quality Education, Miles, Csomore, IEUA) and situations in which employees are directed not to work until they agree to perform all normal duties (Robinson, Illawarra CC, Cresswell, Spotless Catering, United Firefighters).  If the present case turned solely on the common law principle recognised and applied in all those cases Coal and Allied would succeed without further discussion.  However, the common law position must yield to the superior force of any statute or statutory instrument.

96                  Gapes is an illustration of that requirement.  In Csomore,Rogers J also referred (at 597) to the need to accommodate the common law position to the overriding force of any statue or statutory instrument although, on the facts of Csomore, he found that there was no basis to depart from the application of the common law. 

97                  Attention must therefore be given to the question whether, notwithstanding the common law principles to which I have referred, Coal and Allied’s conduct was nevertheless prohibited by s 691B of the Act because the prohibition it contains operated to remove the common law right of an employer to refuse partial performance of duties involving selective non-attendance at work.

98                  Sections 691A and 691B were introduced into the WR Act in 2006.  Section 691A provided a general permission to stand down an employee without pay provided certain conditions were met and provided there was no existing right to similar effect under a contract of employment or relevant industrial instrument.  The conditions to be met (whether in s 691A, a contract of employment or an industrial instrument) were:

(a)                that an employee could not usefully be employed for a period;

(b)                the reason was (i) strike, (ii) breakdown of machinery, or (iii) a stoppage of work for any cause for which the employer could not reasonably be held responsible.

Section 691B then operated to prohibit a stand down not authorised by s 691A or a similar provision in a contract of employment or relevant industrial instrument.

99                  Over a long period, stand down clauses in awards took on a general and familiar appearance.  Section 691A of the WR Act is a modern example of the subjects with which such clauses deal.  Clause 10.4 of the Agreement is another example (although the right to stand down in the case of machinery breakdown is more limited than is usually the case).  Coal and Allied argued that its conduct did not amount to a stand down of Mr MacPherson because that term should be understood as confined to limited circumstances conforming to the traditional nature of a stand down. 

100               Counsel for Mr MacPherson contended, to the contrary, that the term “stand down” in s 691B was not confined to some narrow, more traditional, view about matters with which stand down clauses in awards normally deal.  On a wider view, a stand down includes suspension of employees from their duties for disciplinary or industrial reasons, as well as stand downs of the more traditional kind.  It includes any direction not to work. 

101               In order to identify which of these contentions should be accepted it is necessary first to return to common law concepts for a moment.  As earlier indicated, there is no common law right to stand down an employee.  However, what constitutes a stand down now requires further discussion because, as has been seen, there is an undoubted common law right for an employer to refuse selective performance of duties or attendance by an employee and, if necessary, to direct that no work be performed for as long as the refusal to perform ordinary duties persists.  Exercise of that right of refusal is not to be equated with stand down, any more than it is with suspension.  Counsel for Mr MacPherson referred to the fact that some judges have used the concepts of suspension and stand down interchangeably.  Counsel then suggested that, as Mr MacPherson had been suspended from duty, he should readily be found to have been stood down as well.  The common law prohibition on suspension and stand down is based on the same principle, as I earlier indicated.  I agree with counsel for Coal and Allied that the facts of the present case did not disclose that Mr MacPherson was suspended.  It is well established that suspension of an employee at the discretion of an employer is not available at common law.  It is also established, for the reasons given earlier, that at common law an employer has the right to refuse to accept partial or selective performance of duties by an employee.  Such a refusal cannot be equated with a suspension, at least for the purposes of the common law.  Nor, at common law at least, may it be equated with a stand down.

102               What is it, then, that gives a stand down a character that distinguishes it from a “no work as directed, no pay” situation or vice-versa?

103               In my view, it is an essential ingredient of a stand down, as commonly understood and as permitted by s 691A (or a provision in a contract of employment or industrial instrument to similar effect) that it is a unilateral decision taken by an employer to withhold work and payment even when an employee is prepared to perform all normal duties as directed.  The unavailability of work to offer, for reasons beyond the control of an employer, is also important and distinguishes a stand down from a suspension but it is not, without the additional element I have identified, sufficient to distinguish a stand down (which is not available at common law) from “no work as directed, no pay” (which is permitted at common law).  Concentrating, for the moment, on the operation of s 691A and the distinction between stand down and “no work as directed, no pay”, it is important to bear in mind that s 691A gave a general right to stand down in situations where none previously existed.  It had no impact of any kind on a “no work as directed, no pay” situation quite apart from the fact that the preconditions it imposed were quite different.  It operated in circumstances affected by different common law principles providing quite different outcomes.  It is possible, therefore, to conclude with some confidence that a “no work as directed, no pay” situation, and specifically the directive to Mr MacPherson on 12 November 2008, is not within the ordinary (i.e. common law) meaning of “stand down”.

104               However, the enquiry does not end at that point because it is still necessary to examine the operation of s 691B.  Section 691B identifies an “authorised stand down” and prohibits a stand down which is not an authorised stand down.  It certainly prohibits a conventional, traditional or common law prohibited type stand down which does not possess the features identified in s 691A.  One example, shortage of orders, was given in argument.  Another is available in the present case from a comparison between s 691A and cl 10.4 of the Agreement.  A stand down for reason of mechanical breakdown preventing useful work being available would be permitted under s 691A but not permitted under cl 10.4 unless the breakdown continued for more than four days.  A stand down after two days would therefore be prohibited by s 691B. 

105               Counsel for Mr MacPherson readily accepted that s 691B operates satisfactorily on this narrower view of the meaning of stand down but argued it involved an impermissible limitation of ordinary language.  However, if s 691B goes beyond imposing a legislative limit on circumstances in which a traditional type of stand down may be imposed it would have some potentially dramatic effects.  For example, it would then apply to prohibit any right of suspension for which provision had been made in awards, state statutes and, perhaps, federal statutes as well.  In the absence of some language compelling that conclusion it should not be accepted.  Nor should it be accepted that s 691B operates (without language apparently directed to this end) to remove an established operation of the common law worked out in a succession of cases in both the United Kingdom and Australia over a long period.  The common law principles not only permit a response to a refusal to carry out ordinary duties but limit rights to claim payment in such a circumstance.  In United Firefighters,Ryan J said of the application of this aspect of the common law principle (at 355):

… a statute or award is not to be construed as taking away the employer’s right acknowledged by the common law to withhold payment of wages for periods of non-performance of duty unless the language of the award or other statutory instrument intractably compels such a construction.

I am satisfied that s 691B does not contain such language.

106               There is one remaining matter to be considered.  Does any other aspect of the WR Act suggest that s 691B might have a broader operation?

107               In 2005, before s 691A and s 691B were introduced into the WR Act, a number of “guarantees” were inserted into the WR Act.  Together they are called the Australian Fair Pay and Conditions Standard (“the AFPC”).  Section 172(1) of the WR Act provides:

(1)    The Australian Fair Pay and Conditions Standard provides key minimum entitlements of employment for the employees to whom it applies.

It is not possible to “contract out” of the AFPC.  Section 173 of the WR Act provides:

A term of a workplace agreement or a contract has no effect to the extent to which it purports to exclude the Australian Fair Pay and Conditions Standard or any part of it.

108               Two aspects of the AFPC are of potential relevance.  Section 182 of the WR Act guarantees a basic periodic rate of pay.  The default requirement is the federal minimum wage which is specified by s 195 of the WR Act.  Calculation of the guaranteed basic periodic rate of pay is governed by a calculation of “guaranteed hours” in accordance with s 183 of the WR Act.  Relevantly, s 183(1) provides:

 (1)       For the purposes of section 182, if an employee is employed to work a specified number of hours per week, the guaranteed hours for the employee, for each week, are to be worked out as follows:

(a)        start with that specified number of hours (subject to subsection (4));

(b)        deduct all of the following:

(i)         any hours in the week when the employee is absent from work on deductible authorised leave (as defined in subsection (6));

(ii)        any hours in the week in relation to which the employer is prohibited by section 507 from making a payment to the employee;

(iii)       any other hours of unauthorised absence from work by the employee in the week;

(iv)       any hours in the week when the employee is stood down (but only if the stand down is an authorised stand down);

(c)        if, during the week, the employee works, and is required or requestedto work, additional hours that are, under the terms and conditions of the employee’s employment, not counted towards the specified number of hours—add on those additional hours.

            (Emphasis added)

109               So far at least as the scheme of the AFPC is concerned there does not appear to be any recognition of the possible operation of the “no work as directed, no pay” principle.  The only, presently relevant, exceptions to the obligation to pay for “guaranteed hours” are those in s 183(1)(b)(iii) and (iv).  Section 183(1)(b)(iii) is similar in content to cl 12(c) of the award considered in Gapes.  In accordance with the views of the majority in Gapes, it may be “directed to circumstances where the absence of the employee is essentially his own voluntary act”.  The exception identified in s 183(1)(b)(iv) depends upon the concurrent engagement of the provisions of s 691B(1) of the WR Act, namely that there is an authorised stand down.  Section 183(1)(b)(iv) was added to the WR Act when ss 691A and 691B were enacted.  In that context, s 691B must be given a construction that operates in harmony with the guarantees in ss 182 and 183.

110               However, for the purpose of the present case it is unnecessary to pursue this matter further.  The possibility that a calculation of payment required by s 182 would not permit deduction of pay in a “no work as directed, no pay” situation would not arise from the necessity to read s 691B (and “stand down”) more widely than I have suggested but from limitations imposed by s 183 (not s 691B).  Moreover, there is no claim made in the present case for a federal minimum wage.  Mr MacPherson’s claim to be paid on 12 and 13 November 2008 is based on the Agreement.

111               For the moment, it is only necessary to observe that the operation of the AFPC affords no reason to read s 691B as prohibiting Coal and Allied’s directive to Mr MacPherson on 12 November 2008.  

112               I would uphold the appeal by Coal and Allied.

113               The cross-appeal does not stand or fall on Coal and Allied’s appeal because Mr MacPherson’s claim for wages was pressed even if s 691B did not prohibit what Coal and Allied did.  It was argued that the Agreement provided an unqualified entitlement to wages because the rates of pay in the Agreement were “annualised” and no relevant deduction was permitted by the Agreement itself.  Although it is not possible to overlook the support which Gapes gives to this argument it is not necessary to decide in the present case that Gapes should not be followed, for two reasons.  First, it is not strictly necessary to deal with the observations in Gapes which were not necessary for the decision in that case (which was based on the fact that the bank accepted partial performance of duties).  Secondly, the Agreement must be construed by reference to its own terms, which are not the same as those considered in Gapes.

114               However, for my own part I think the judgment in Gapes is not free from doubt on this issue (as it is not with respect to the matters earlier discussed).  The allocation of an annual salary for bank officers does not seem to me to suggest that they might, individually or collectively, choose not to perform selected duties with impunity, or upon pain only of outright dismissal.  The suggestion is not realistic in present times and I doubt that it was in 1980 either.  A suggestion to similar effect was decisively rejected by the House of Lords in Miles a few years later.  I prefer the analysis of Northrop J at first instance (Gapes v Commercial Bank of Australia Ltd (1979) 38 FLR 415).  Northrop J referred to Swieringa and Robinson, amongst other cases.  His Honour gave careful attention to the requirements of the award under consideration and to the circumstances in which deductions from a rate of annual salary were expressly authorised.  He concluded (at 429) that:

… the award does not place a duty on the respondent to make payment of salary to the claimant where the claimant neither performs all his duties nor is ready and willing to perform all his duties.

That conclusion conformed to the principles applied in the long line of authority which preceded and succeeded Gapes.

115               In Csomore Rogers J preferred to analyse a similar issue in a different way by emphasising the need for an employee to make out a case for an entitlement to payment rather than an employer justifying a deduction.  That approach is consistent with the approach taken in the great majority of cases to which I have referred.  Rogers J said (at 598):

The right of the employer is not a right to deduct or a right to set-off.  It is the right to deny payment on nonfulfilment by the other party of the obligation which makes the weekly or fortnightly salary payable.

116               Here, in any event, the claim must be tested against the proper construction of the Agreement.  The Agreement, in my view, provided an entitlement to pay depending on service, or at least a willingness to work.  Although the “base salary” was “annualised” under the Agreement it provided payment for working a normal 35 ordinary hours and reasonable additional hours up to 40 hours.  In addition, a “work pattern allowance” provided further payment for working rostered hours in excess of hours covered by the base salary.  Employees working under the Agreement are entitled to various forms of leave, some paid and some unpaid.  Periods of stand down under cl 10.4 are not paid.  There can be no serious suggestion that unilateral absence by an employee, signifying a lack of willingness to perform ordinary duties, has no effect on an entitlement to claim payment for the period.  Failure to work the hours for which payment was due under the Agreement would remove any absolute or unqualified right to such payment because it is clear from the structure of the Agreement that payment depends on performance of work or authorised leave with pay.  Other absences are unpaid.  In order to successfully claim payment for periods where no work was performed, and which were not authorised paid leave, Mr MacPherson would need to show that he was ready, willing and able to perform his duties without restriction.  He is not able to satisfy that requirement from the time of his declaration that he would leave work during his shift (and Coal and Allied’s response) until he gave an assurance on 14 November 2008 that he would work without restriction.

117               The cross-appeal should therefore be dismissed.

Associate:

Dated:         12 July 2010