FEDERAL COURT OF AUSTRALIA

INDUSTRIAL LAW – Termination of employment – whether unlawful – valid reason – extent of employer’s obligation to accord preference to existing employee over outside applicants for vacancy –whether existing employee satisfied relevant criteria for appointment to vacancy – interpretation of internal employee impact statement – nature of discretion to order reinstatement.

Industrial Relations Act 1988 (Cth) ss 170DE(1), 170EE

Industrial Relations and other Legislation Amendment Act 1995 (Cth)

Selvachandran v Peteron Plastics (1995) 62 IR 371

Minister for Health v Ferry (1996) 65 IR 374

Liddell v Lembke (1994) 1 IRCR 466

Fryar v Systems Services Pty Ltd (1995) 60 IR 68

Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186

Patterson v Newcrest Mining Ltd (1996) 68 IR 419

Anthony Smith & Associates v Sinclair (1996) 67 IR 240

BLOOD TRANSFUSION SERVICE OF THE AUSTRALIAN RED CROSS v LEO RAFFOUL

VG 676 of 1997

RYAN, MOORE AND MARSHALL JJ

MELBOURNE

26 NOVEMBER 1998

ON APPEAL FROM A JUDGMENT OF A SINGLE JUDGE OF THE FEDERAL

COURT OF AUSTRALIA

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.         The appeal be dismissed.

Note:   Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGMENT OF A SINGLE JUDGE OF THE FEDERAL

COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT

This is an appeal by the Blood Transfusion Service of the Red Cross Society (“the Service”) from a judgment of Gray J (“the primary judge”) reported as Raffoul v Blood Transfusion Service of the Australian Red Cross Society (1997) 76 IR 383.  The primary judge found that the Service had terminated the employment of the respondent to this appeal, Leo Raffoul, in breach of s 170DE(1) of the Industrial Relations Act 1988 (Cth) (“the IR Act”).  His Honour made an order pursuant to s 170EE(1) of the IR Act requiring the Service to reinstate Mr Raffoul.

The Service is responsible for processing blood taken from donors in the State of Victoria.  Mr Raffoul commenced employment with the Service as a trainee medical scientist in its Haematology Unit on 6 October 1986.  He subsequently qualified as a Grade 1 Medical Scientist and between June 1990 and September 1993 performed, in rotation with other staff members, the higher duties of Medical Scientist, Grade 2.

In March 1993 the Service decided to re-organise its Haematology Unit.  As a result, three fewer staff members were required in the Unit. An employee impact statement was provided by the Service to the three employees who were re-deployed from the Haematology Unit. One of those employees was Mr Raffoul.

Speaking of the affected employees as “these individuals” the statement stipulated:

“In the interim period, these individuals will be given the opportunity to transfer to another Unit whether it be a laboratory or other, if positions are available and position criteria met.

If by 1 December 1993 there has not been a satisfactory redeployment, then these individuals will be transferred to the Donor Services Unit, where they will continue to retain the first option of transferring to another Unit.

...

In accordance with Section 2.5 of the RRR Health Sector Agreement, these individuals will be given preference to vacant positions within the organization, provided the redeployees meet the relevant criteria for the position.  To this end, the Personnel Officer has been notified and a memo sent through the latter to all Laboratory Unit managers.

...

Training requirements will be identified once new positions have been allocated to these individuals.  It is envisaged that in some areas, re-training will be required.  Costs of any retraining program will be borne by the organization.  Efforts should also be made to compensate these individuals by introducing them to multi-skilling.”

In December 1993 Mr Raffoul was transferred to the Donor Services Unit. In January 1994 he applied unsuccessfully for a position as Medical Scientist, Grade 1, in the Red Cell Serology Unit.  In late February 1994, Mr Raffoul was transferred to the position of Trainee Medical Scientist in the Red Cell Serology Unit.  After proving unsuitable for that work he returned to the Donor Services Unit in June 1994.

By letter dated 10 May 1995, Mr Raffoul was advised by the Service that his position in the Donor Services Unit had been made redundant. “Immediate discussions” were sought with him on the issue of re-deployment.  On 18 May 1995, Mr Raffoul applied for a position as a Medical Technician in the Distribution Unit but did not meet the criteria for appointment to that position.

On 3 July 1995 Mr Raffoul ceased working in the Donor Services Unit and spent eight weeks seeking employment with the assistance of a consultant from an “outplacement agency”.  During July 1995 he applied for a position as a Medical Scientist, Grade 1, in the Virus Serology Unit.

The primary judge’s findings of fact, in respect of the process of selection for appointment to a position in the Virus Serology Unit, (which, as it turned out, was one permanent and another temporary position) were expressed as follows, at 390:

“In July 1995, the respondent advertised a vacant position for a Medical Scientist Grade 1 in its Virus Serology Unit.  The applicant applied.  He was interviewed, again by three persons.  Two of them, Mr Gregory Cooper and Mr Simon Payne gave evidence.  Mr Cooper was the Unit Manager of the Virus Serology Unit.  Mr Payne was the respondent’s Training Manager.  The recruitment specification for this position was also in evidence.  The criteria were far less specific than the criteria for the position in the Distribution Unit, for which the applicant had applied unsuccessfully. Previous experience in various areas was expressed to be ‘desirable’.  It is clear that the applicant satisfied the criteria so specified.  Mr Payne, whom the applicant called to give evidence, said so expressly and was not shaken in cross-examination.  Mr Cooper, who was called on behalf of the respondent, would not be led into giving evidence that the applicant failed any of the expressed criteria.  Counsel for the respondent did obtain from him evidence that the applicant would not have been able to work in the Virus Serology Unit without training.  Mr Cooper agreed with counsel for the respondent that, in this sense, the applicant did not meet the criteria.  There is nothing in the recruitment specification, or in the advertisement for the position, suggesting that an applicant for the position should not need training.  Further, it must be remembered that Mr Conte’s employee impact statement had recognised specifically the respondent’s need to train members of group C when they were redeployed to other units.  I therefore find that the applicant satisfied the criteria for this position.  As a result of the selection process, two appointments were made to positions of Medical Scientist Grade 1 in the Virus Serology Unit, one on a permanent basis and the other temporary, for 12 months.  Neither position was offered to the applicant.  Each was filled by an applicant from outside the respondent’s organisation.

Prior to interviewing applicants for the position in the Distribution Unit, Ms Hewitson sought guidance from the personnel department as to whether, and if so how, she should give preference to the applicant.  She was told that, so long as he or she met the criteria for a position, it was the respondent’s policy to try to appoint an internal applicant, rather than an external one.  Prior to the interviews for the position in the Virus Serology Unit, Mr Cooper sought similar guidance.  The applicant had approached him, claiming that he was entitled to preference.  Mr Cooper consulted Mr Joe Goddard, the respondent’s Human Resources Manager, who told Mr Cooper that he was to select the most qualified and most suitable candidate.  In other words, no preference was to be given to the applicant at all.”

On 3 August 1995 Mr Goddard wrote to Mr Raffoul advising him that the termination of his employment would take effect on 2 September 1995 unless an alternative position were offered to him in the interim period.  No such position was offered to Mr Raffoul and his employment was terminated with effect from 2 September 1995.

THE LEGISLATIVE CONTEXT

At all material times s 170DE(1) of the IR Act provided as follows:

“An employer must not terminate an employee’s employment unless there is a valid reason, or valid reasons, connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking, establishment or service.”

Section 170EE of the IR Act as it applied at the material time was in the following form:

“(1)   In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, the Court may, if the Court considers it appropriate in all the circumstances of the case, make the following orders:

(a)    an order requiring the employer to reinstate the employee by:

          (i)     reappointing the employee to the position in which the employee was employed immediately before the termination;  or

         (ii)     appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and

(b)     if the Court makes an order under paragraph (a):

          (i)     any order that it thinks necessary to maintain the continuity of the employee’s employment; and

         (ii)     an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination.

(2)    If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may, if the Court considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.

(3)    In working out the amount of the compensation for the purposes of subsection (2), the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation:

(a)    must not exceed, in respect of any employee, the amount of the remuneration that would have been received by the employee in respect of the period of 6 months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect; and

(b)    must not exceed, in respect of an employee who is not employed under award conditions, the applicable amount on the day on which the termination took effect.

(4)        The applicable amount for the purposes of paragraph (3)(b) is:

(a)        subject to paragraph (b), $30,000; or

(b)    if regulations made in accordance with Subdivision CA prescribe a formula for the annual indexation of the amount referred to in paragraph (a) – the amount worked out using that formula as it applies from time to time.

(5)    In respect of a contravention of section 170DB constituted by the termination of employment of an employee, the Court may make an order requiring the employer to pay to the employee an amount of damages equal to the amount of the compensation which, if it had been given by the employer to the employee when the employment was terminated, would have resulted in the employer not contravening that section.

(6)    Nothing in this section limits the Court’s power to make an interim or interlocutory order in relation to an application referred to the Court under section 170ED.

(7)    For the purposes of this section, an employee is taken not to be employed under award conditions if wages and conditions of employment of the employee are not regulated by one or more relevant awards that bind the employer of the employee.

(8)    In this section:

“relevant award”  means an award or a State award;

“termination of employment” means a termination of employment that occurred before, or occurs after, the commencement of this section, but does not include a termination of employment in respect of which an application under section 170EA was made to the Court before that commencement if the Court pronounced final judgment in respect of the application before that commencement.”

REASONING OF THE PRIMARY JUDGE – VALID REASON

After noting that by s 170EDA(1) of the IR Act cast on the employer the onus of proving that there had been a valid reason or valid reasons of the kind referred to in s 170DE(1), his Honour continued, at 391:

“In the present case, the respondent undertook the task of proving that there was a valid reason for terminating the applicant’s employment, based on the operational requirements of the respondent’s undertaking.  In its simplest form, the respondent’s case was that it had decided, for sound operational reasons, to combine the finger pricking and testing functions, performed by the applicant, with the interview function, performed by others, and to have the combined functions performed by registered nurses.  The result was that the applicant’s job disappeared and his employment was terminated because there was nothing else for him to do.

On the facts as they emerged, the flaw in this line of reasoning is obvious.  The applicant was not employed in the Donor Services Unit doing finger pricking for any reason other than that the respondent had placed him there until another position was found for him.  In July 1995, immediately prior to the notification to the applicant that his employment would be terminated, the respondent took steps to fill a vacancy for a Medical Scientist Grade 1 in the Virus Serology Unit.  Although the applicant sought this position, it was filled by someone from outside the respondent’s employment.  At about the same time, a second position in the same unit was filled by another medical scientist from outside.  The applicant was qualified as a Medical Scientist Grade 1 and had worked for the respondent as a Medical Scientist Grade 1, until he was transferred to the Donor Services Unit to await his transfer to another job.  Whilst there was a valid reason, based on operational requirements, for the applicant to cease finger pricking in the Donor Services Unit, it did not follow that there was a valid reason for terminating his employment.  All of the operational requirements of the respondent would have been satisfied if the applicant had been appointed to one of the vacant positions of Medical Scientist Grade 1 in the Virus Serology Unit.  As I have found, he met the criteria specified in the recruitment specification for this position.  It follows that, even in the absence of any obligation on the respondent to give preference to the applicant for any other position within its organisation, there was no valid reason for the termination of the applicant’s employment, based on the operational requirements of the respondent.”

Despite that conclusion, the primary judge went on to discuss Mr Raffoul’s contention that the Service had assumed an obligation to accord him preference in making appointments of, amongst others, Medical Scientists Grade 1 to the Virus Serology Unit.  Of that issue his Honour said, at 392:

“It must be remembered that the applicant was working in the Donor Services Unit on the basis that he would be given preference, or priority, for a position as a Medical Scientist Grade 1 for which he met the relevant criteria.  Counsel for the respondent accepted that the respondent was under an obligation to afford preference to the applicant.  The basis for this concession was not expressed.  It may be that the obligation to give preference (or ‘priority’ as it was called in the letter of Mr Conte dated 3 May 1993) became an express term of the applicant’s contract of employment.  The applicant was offered preference, or priority, in consideration of his agreeing to perform work, which was not that of a medical scientist, in the Donor Services Unit.  Alternatively, it was an implied term of the contract of employment that the respondent would not, without reasonable cause, conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between it and the applicant.  See Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144, at 151, and the cases there cited.  Having given the applicant the understanding that it would afford him preference, or priority, in relation to a vacant position for a Medical Scientist Grade 1 for which the applicant met the relevant criteria, the respondent was in breach of this implied term, and therefore of the contract of employment, by failing to do so.”

His Honour then observed that various witnesses had expressed different views of “the content of the obligation to give preference”.  The primary judge referred to the evidence of Ms Casey, the Personnel Services Manager of the Service, on this issue, noting at 393 that:

“At the other end of the spectrum was Ms Casey’s view that preference to the applicant meant no more than that he was entitled to be offered a position if he was one of two candidates of equal merit and there was no candidate of greater merit.  This view cannot be accepted.  It would rob the word ‘preference’, or the word ‘priority’, of any significant meaning to hold that it required that the applicant be the best, or the equal best, candidate for a position before he would be offered it.  In the absence of any particular express meaning given to the word ‘preference’, or the word ‘priority’, or of any evidence that those words had any particular connotation within the relevant industry or trade, the ordinary meaning of each expression is the relevant one.  That is to say, the word ‘preference’ and the word ‘priority’ must be understood as they would have been understood by ordinary people.  In my view, in the context in which they were used, they would have been understood as meaning that the applicant was to be offered any position for which he applied and satisfied the relevant criteria, even though more worthy candidates from outside the respondent’s organisation, or from within it but with no entitlement to preference, might present themselves.  As I have said, preference or priority in this sense was what the respondent failed to give to the applicant when it engaged outside candidates for the permanent and temporary positions in the Virus Serology Unit in July 1995.”

Accordingly, it was found that the termination of Mr Raffoul’s employment had contravened s 170DE(1) of the IR Act and it was unnecessary for his Honour to reach a concluded view on whether there had also been a breach of s 170DC.

THE CONTENTIONS OF THE SERVICE ON APPEAL

The Service contended that its decision to terminate Mr Raffoul’s employment “arose directly and causally from the decision to cease (Mr Raffoul’s) employment in the Donor Services Unit and the trial judge should therefore have found that the termination of employment was for a valid reason”.  It was further submitted that the Service’s failure to appoint Mr Raffoul to either of the two positions available in the Virus Serology Unit had not been the cause of the termination of his employment.  Accordingly, it was submitted, the Service did not have to justify its failure to appoint Mr Raffoul to either of those vacancies.

The Service challenged the primary judge’s finding that Mr Raffoul had satisfied the criteria for appointment in July 1995 to one of the vacancies in the Virus Serology Unit.  That finding was said to have been against the evidence of Mr Cooper, that Mr Raffoul would require extensive training before he could be entrusted with the duties of a Medical Scientist Grade 1 in the Virus Serology Unit.

Mr Cooper’s evidence emphasised his view of the importance of the work done in the Service’s laboratory as imposing on him a duty to ensure that the best candidates were appointed to work there.  He also expressed the opinion that to train Mr Raffoul to work competently as a Medical Scientist in the Virus Serology Unit would require an undue diversion of laboratory resources.  That evidence included this passage:

“...I would have had to expend an enormous amount of resources within our laboratory to actually ensure that Mr Raffoul was competently trained to actually undertake that work.  I would have had to allocate one of my scientists to work with Mr Raffoul and we had a detailed training program within the laboratory but it would have meant probably taking someone out of the routine work of the laboratory which is ... it’s the largest single virus serology laboratory in Australia.  We processed about 900 to a thousand samples a day.”

Although he acknowledged that Mr Raffoul had presented favourably at interview, Mr Cooper went on to describe, in these terms, past difficulties which had been encountered in trying to train Mr Raffoul to work in the Red Cell Serology Unit:

“...I’m not certain of the exact details, but other staff had been placed to work with Mr Raffoul in order to provide him with training so that he could be effective within the red cell serology area.  This was done in order to give him the opportunity to find a place within the organisation where he could be effective.  Through the process of the Unit Manager’s Meetings, it was stated that they had found it incredibly difficult to train Mr Raffoul.  He had been provided with the standard operating procedures for the laboratory, and had been given an enormous amount of time by a number of staff members, and they found that Mr Raffoul was incredibly difficult to train, and when they actually left him to operate the ...(indistinct)... machine, there were quite a number of problems associated with his work, such that they felt that thetraining had not been effective.”

Mr Cooper then described one of the successful candidates for appointment to the Virus Serology Unit as:

“...a lady who had worked in our laboratory before, who had – who was very competent, who had worked in the immunology area at the Alfred Hospital, I believe, and she had assumed the position as person in charge when the scientist running the laboratory was not present.  And consequently she was the preferred candidate because she would not require extensive retraining.  It was a temporary position; she’d already proved herself as competent and capable of performing the tasks of the laboratory and she was a highly skilled and professional individual.”

After conceding that every new medical scientist appointed to work in the Service’s laboratories needed a degree of training, Mr Cooper contrasted that amount of training with what he considered was required for Mr Raffoul, saying:

“...if you have a very competent scientist, they start work, the time that you take, or that is required for that training, is usually a short period of time; maybe two, three – maybe around three weeks to actually get someone to be completely competent.  If the individual has been working in laboratories for a long time, there are a number of tasks that they can start doing immediately, and this being a temporary position, you really need someone who can come in and start working and be productive as soon as possible.

Q. As far as you were concerned, did Mr Raffoul meet that criteria?

A. No, he didn’t.”

It was further contended on behalf of the Service that the obligation to appoint to other available positions, in preference to other employees and applicants from outside, the individuals who had been redeployed from the Haematology Unit and who satisfied the criteria for appointment to the new positions enured only until the interim period expired on 1 December 1993.  After that, so it was argued, those individuals had only “the first option” of transferring to another Unit which entailed no more than a right to be appointed to another Unit “all other things being equal” or in the absence of another candidate with superior claims.

CONSIDERATION OF THE CONTENTIONS OF THE SERVICE AS TO THE APPLICATION OF S 170DE(1)

In our view the primary judge correctly examined the whole of the evidence to determine whether there was a valid reason based on the operational requirements of the undertaking of the Service, for terminating Mr Raffoul’s employmentby the Service.  It was not appropriate to confine the inquiry to whether there was a valid reason for ceasing to employ Mr Raffoul in the Donor Service Unit since, as his Honour noted, at 392:

“The applicant was not employed in the Donor Services Unit…for any reason other than that the (Service) had placed him there until another position was found for him.”

In considering whether an employer has discharged the onus of proving that a termination was based on the operational requirements of the undertaking establishment or service, it is necessary to examine as a whole the nature of the employer’s operations and the part taken in them by the relevant employee throughout his or her employment.  In December 1993 Mr Raffoul had been transferred to the Donor Services Unit in conformity with the employee impact statement.  For a short time in 1994 he was given a position in the Red Cell Serology Unit for which he was not suited and returned to the Donor Services Unit.  His return to that Unit did not render inapplicable to him the requirement under the employee impact statement that he be:

“…given preference to vacant positions…provided (he met)…the relevant criteria for the position.”

Although the employee impact statement referred to the RRR Health Sector Agreement, the statement itself was totally separate and distinct from that agreement.  It was an undertaking by the Service to treat Mr Raffoul, and the other two employees who were re-deployed in 1993, in a certain way as a consequence of their re-deployment by giving them preference over other applicants for vacancies which might arise in the Service for which those employees satisfied the relevant criteria.  The Service agreed in 1993 to treat Mr Raffoul in a certain way in the future as a consequence of his re-deployment.  To fail to accord him preference in selection for a vacant position for which he satisfied the relevant criteria therefore precluded the Service from contending that therewas a valid reason for the termination of his employment based on the operational requirements of the Service’s undertaking with the Service.

It is not without significance that counsel for the Service conceded before the primary judge that the Service had been under an obligation to give preference to Mr Raffoul in accordance with the employee impact statement and that, if Mr Raffoul satisfied the criteria for a position in the Virus Serology Unit, then his case had “some difficulty”.

It was strongly argued on appeal that one of the relevant criteria, either in terms of the employee impact statement or as a matter of the operational requirements of the Service’s undertaking, for appointment as a Medical Scientist Grade 1 in the Virus Serology Unit was an ability to be trained within a reasonable time to perform safely the duties of the position.  On the evidence of Mr Cooper, the Service contended that Mr Raffoul did not satisfy that criterion and, as a result, there was a valid reason for not appointing him to one of the vacancies.

Mr Burnside QC who appeared with Mr Burchardt for the Service on the appeal, candidly acknowledged that no argument had been addressed in these terms at first instance.  That explains the primary judge’s concentration on the express criteria for appointment to the relevant vacancies as evidenced by the recruitment specification and the advertisement.  It also relieved his Honour of the need to make findings of fact about what was a reasonable amount of training for a person appointed as a Medical Scientist Grade 1 in the Virus Serology Unit and whether Mr Raffoul would have been capable of performing those duties after undergoing only that amount of training.  In our view, while the existence or otherwise of the further implied “reasonable training” criterion may arguably be determined as a matter of law from the evidence adduced at trial, the way in which the Service conducted its case at first instance precluded Mr Raffoul from rebutting or testing the evidence given by Mr Cooper that he, Mr Raffoul, did not satisfy that implied criterion. 

A further difficulty which confronts the Service, in seeking to rely on Mr Raffoul’s alleged inability to be trained for the vacancy within a reasonable time as discharging its onus of showing a valid reason under s 170DE(1) of the IR Act, is that the evidence does not permit a finding that an inability of that kind was relied on by either of the other two selection panel members who declined to appoint Mr Raffoul to either vacancy.  It is clear, on the evidence, that it was never communicated by Mr Cooper, the technical member of the panel, to Mr Payne, the Service’s training manager.  Mr Payne gave evidence that two positions had been available, one temporary and one permanent.  Mr Payne said that “almost all applications met the selection criteria… and that we then selected the strongest candidates from that field.”  He said that he was under no instruction from the Service’s personnel section to give preference to Mr Raffoul.  In answer to a question from Mr Raffoul, who represented himself before the primary judge, Mr Payne said:

“My memory is that from the report you met the selection criteria for the position… .”

Counsel for the Service before the primary judge did not challenge that evidence but rather confirmed it by eliciting a positive answer from Mr Payne to this question:

“You have given evidence to the Court that Mr Raffoul was impressive in the interview and he met the performance criteria.”

The issue was then revisited when Mr Payne was asked:

“Yet you can recall that Mr Raffoul met the criteria?”

Mr Payne responded as follows:

“Yes, I’m sure – I know he met the criteria, but I can’t – I couldn’t detail for you what the criteria were.”

Mr Payne went on to add that from his memory “it was a fairly routine position conducting standard tests in the laboratory.”

Later, Mr Payne said of Mr Raffoul that:

“…we were looking for a base grade scientist and… he satisfied that requirement…”.

Mr Payne’s evidence was that he believed any successful applicant would need some training on commencement.  He could not recall “any distinction between the permanent and temporary position in terms of the selection criteria…”.

The criteria for the position of Medical Scientist Grade 1 in the Virus Serology Unit were in evidence before the primary judge and his Honour had regard to those criteria and to the evidence of Mr Payne in concluding, at 390, that:

“It is clear that the applicant satisfied the criteria so specified. Mr Payne … said so expressly and was not shaken in cross-examination.”

No evidence whatsoever was adduced from the third member of the selection panel, all the members of which, presumably, participated in the decision to select outside candidates rather than Mr Raffoul. Accordingly, the Service, for this additional reason, did not discharge the onus which it sustained.  A review of all the relevant evidence fails to dispel the impression that the selection was made in the exercise of what was understood to be an unfettered discretion, indeed a positive duty, to select the best available candidate and that Mr Raffoul’s unreceptivity to training was perceived from a comparison with other candidates rather than as an absolute disqualification from appointment.  Had it been seen in the latter way, it is likely that he would have been excluded from the selection process at an early stage or not involved in it at all.  

We reject the alternative submission raised on appeal that the preference obligation in the employee impact statement applied only in the interim period.  There is nothing in the employee impact statement that favours the construction contended for by the Service.  The reference to continuing “to retain the first option of transferring to another Unit” can only mean transferring on the basis set out in the paragraph immediately above that is, “if positions are available and position criteria met”.  In those circumstances, the obligation to give preference to Mr Raffoul and the other two employees arose in the interim period andcontinued unchanged throughout their employment by the Service.  There is no warrant in the paragraph commencing with the words “in accordance with section 2.5 ...” for continuing its application to the interim period.

The failure to accord preference to Mr Raffoul as provided for in the employee impact statement in making the appointments to the Virus Serology Unit had a direct causal link with Mr Raffoul’s termination.  Even if that specific breach of Mr Raffoul’s contract ofemployment is disregarded, the Service remained obliged on and from 1 December 1993 to assist in his re-deployment in the Service in accordance with the employee impact statement.  To terminate Mr Raffoul’s employment in disregard of its obligations under the employee impact statement was to do so otherwise than for a valid reason. On no objective analysis can the termination be seen as “sound, well-founded or defensible”, see Selvachandran v Peteron Plastics (1995) 62 IR 371 at 373.  The primary judge did not err in finding that the Service had acted in breach of s 170DE(1) of the IR Act.  We note that, in analogous circumstances where an employer had terminated the employment instead of re-deploying the employee in accordance with an award obligation, a Full Court of the Industrial Relations Court of Australia (“IRCA”) held that a breach of s 170DE of the IR Act had occurred:  see Minister for Health v Ferry (1996) 65 IR 374.

REMEDY

The primary judge proceeded from the premisethat reinstatement is the primary remedy provided for by s 170EE of the IR Act and held that the reinstatement of Mr Raffoul was not impracticable. In coming to this view, the primary judge noted that the Service “employs a large number of persons in the classification Medical Scientist Grade 1 in a variety of its operations”.  He also held that it was irrelevant to the operation of s 170EE of the IR Act that no such position might currently be vacant.

On appeal the Service took issue with the primary judge’s view that “if reinstatement is possible it should be ordered. Its practicability is not a matter of mere convenience, or even its undesirability”.  In expressing those views of the approach to be taken to s 170EE of the IR Act, his Honour affirmed what he had said in Liddell v Lembke (1994) 1 IRCR 466, 494 and Fryar v Systems Services Pty Ltd (1995) 60 IR 68, 86, 90.  However, the primary judge’s conclusion about the practicability of Mr Raffoul’s reinstatement turned not on those views but on his careful analysis of whether, on the facts before him, the reinstatement of Mr Raffoul would be practicable.

In so deciding the primary judge had regard to the following factors:

·        The employment by the service of 50-60 Grade 1 Medical Scientists at any time.

·        The existence of some turnover in these positions.

·        The possibility of Mr Raffoul’s being given “a holding position” until a vacancy for him could be found.

·        Mr Raffoul’s previous experience of more than 6 years as a Medical Scientist, Grade 1 and at times, Grade 2.

·        The absence of any formal warnings or complaints about his work performance apart from occasional lapses which supervisors had discussed with him.

·        Mr Raffoul’s personal limitations which he will need to address in order to “fit back into the workforce”, and the need for him to “act with sensitivity”.

In so analysing the facts to determine whether the reinstatement of Mr Raffoul was practicable, his Honour did not ultimately take a different approach from that endorsed by a Full Court of the IRCA in Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 in respect of the practicability of reinstatement in the context of s 170EE of the Workplace Relations Act 1996 (Cth).  See also Patterson v Newcrest Mining Ltd (1996) 68 IR 419 where Wilcox CJ said at 421:

“The requirement to consider the impracticability of reinstatement necessarily requires the Court to have regard to all the relevant circumstances of the case relating to the employer and the employee; as I said in Nicholson (sic), to evaluate the practicability of a reinstatement order in a commonsense way.”

Mr Burnside QC submitted that what was comprehended by impracticability in s 170EE(2) of the IR Act had to be assessed, on the proper construction of the legislation, having regard to the requirement in both s 170EE(1) and (2) that the power to order either reinstatement or compensation be exercised only “if the Court considers it appropriate in all the circumstances of the case”.  However, the approach discussed by the Full Court in Perkins (supra) concerned s 170EE in its amended form.  That is, after the introduction of the phrase “if the Court considers it appropriate in all the circumstances” by the amendments made by the Industrial Relations and other Legislation Amendment Act 1995 (Cth).  The Full Court in Perkins viewed that phrase as creating an additional consideration to be addressed after the issue of impracticability had been determined.  We see no reason to depart from this approach which, in our opinion, is consistent with the legislative history of s 170EE.  The addition of this phrase by the 1995 amending legislation was not intended to alter what was comprehended by the notion of “impracticable” in s 170EE(2).  Rather, it was intended to add a further discretionary consideration that the Court should address before making orders under s 170EE.

The primary judge did not proceed on any wrong principle in deciding, in his discretion, to order Mr Raffoul’s reinstatement.  The Service referred to evidence before the primary judge of a reduction in staff numbers by some four employees at the time of the hearing before the primary judge.  However, a reduction to that small extent in a relatively large organisation is not so significant that it must dissuade the Court from providing the remedy of reinstatement if it is otherwise not impracticable.  In any event, there is no reason to suggest that, in an organisation of the size of the Service, a position may not be fashioned for Mr Raffoul until an appropriate vacancy arises.  See Anthony Smith & Associates v Sinclair (1996) 67 IR 240, 244.

CONCLUSION

For these reasons we have concluded that the appeal must be dismissed.

Associate:

Dated:              26 November 1998