FEDERAL COURT OF AUSTRALIA

Kanes Hire Pty Ltd v Mitchell [2010] FCA 756

THE COURT ORDERS THAT:

1.                  The appeal be 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

Introduction

1                                             This is an appeal against a judgment of the Chief Industrial Magistrate of New South Wales given on 13 January 2010: Mitchell v Kanes Hire (unreported, Chief Industrial Magistrates Court of New South Wales, Newcastle, Chief Industrial Magistrate Hart, 125735 of 2008, 13 January 2010).

2                                             The appellant, Kanes Hire Pty Ltd, operated premises on the Central Coast of New South Wales. Its principal business was hiring out a range of equipment and goods. This equipment, to illustrate the nature of the business, included grinding machines, sanding machines, lawn mowers, mulchers, box trailers, cement mixers, portable toilets, fuel, sandpaper, gumboots, spades, shovels and gardening equipment. The respondent, Mr Mitchell, was employed by the appellant from 2003 until he was retrenched on or about 14 February 2008. Around that time the appellant's Central Coast operation was closed due to a downturn in business, and all employees including Mr Mitchell were made redundant. Mr Mitchell later filed an application for recovery of money against the appellant in the Chief Industrial Magistrate's Court. The application was brought under the small claims procedure in s 725 of the Workplace Relations Act 1996 (Cth). He claimed payment of the sum of $10,000, being the maximum amount allowed under that section. The application relied on, in terms, a failure:

… to pay Robert Mitchell, full time Grade 4 Shop Assistant in Charge with the duty of buying and in charge of nil to 4 employees 14 weeks severance payment in accordance with clause 33 – Redundancy, Subclause 33(4) – Severance Payment of the Notional Agreement Preserving the Shop Employees (State) Award, on 14 February 2008.

3                                             The appellant defended the matter on a number of grounds. It disputed that the Notional Agreement Preserving the Shop Employees (State) Award ("Shop Award") applied to its business.  It is unnecessary to detail the legal characteristics of the Shop Award.  It is sufficient to note that it was, in substance, a state award made under New South Wales state industrial legislation which was legislatively transformed into an industrial instrument given legal effect by the Workplace Relations Act.  The appellant further contended that Mr Mitchell's position at the time of his termination put him outside the classification structure of the Shop Award. Finally, it contended that Mr Mitchell had engaged in serious and wilful misconduct during the course of his employment, and that had the appellant discovered the misconduct during the course of Mr Mitchell's employment it would have been entitled to and would have summarily dismissed him. The misconduct was particularised in the reply as "accessing explicit pornographic material from the Internet and forwarding it on to third persons".

4                                             The area of operation of the Shop Award was established by a number of provisions:-

Clause 2 – Definitions

(i)        'General Shops' means and includes all shops other than special shops, and confection shops as defined in this award.

(ii)      'Special Shops' means and includes audio shops, book shops, video shops, cake and pastry shops, cooked provisions shops, take-away food shops, fish shops, flower shops, garden plant shops, hairdressers' shop, newsagencies, pet shops, souvenir and gift shops, tobacconists' shops (each as defined in Schedule 1 to the Shops and Industries (Trading) Regulation 2002 to the Shops and Industries Act 1962), small shops (as defined in Section 78B of the Shops and Industries Act 1962) and retail liquor shops.

(iii)     'Confection Shops' means and includes confectioners' shops, refreshment shops and fruit and vegetable shops as defined in Schedule 1 of the Shops and Industries (Trading) Regulation 2002 to the Shops and Industries Act 1962).

…

(v)      'Shop' - See Section 78 of the Shops and Industries Act 1962.

5                                             Prior to its repeal, section 78 of the Shops and Industries Act 1962 (NSW) provided:-

"Shop" means place, building, stall, tent, vehicle, boat, or pack in which goods are sold or offered or exposed for sale by retail, or from which goods are sold by retail, or in which the business of a hairdresser, pawnbroker or farrier is carried on, and includes any portion of a building which is separated from the rest of the building by a permanent and substantial partition or wall, and in which goods are sold or offered or exposed as aforesaid, or in which any such business as aforesaid is carried on, and includes where the context requires it, kind or class of shop.

6                                             Clause 37 provided:

Clause 37 – Area, Incidence and Duration

This award rescinds and replaces the following award:

(a)          Shop Employees (State) Award published 2 June 1995 (286 I.G. 28) as varied.

It shall apply to all classes of employees employed under classifications in this award who work in or in connection with a retail shop, employees employed in the sale of goods by retail away from the employer's place of business in the State within the jurisdiction of the Retail Employees (State) Industrial Committee and the Salesmen, Outdoor (State) Industrial Committee, excluding the County of Yancowinna.

It shall take effect from the beginning of the first pay period to commence on or after 7 March 2001 and shall remain in force for a period of 12 months.

The changes made to the award pursuant to the Award Review pursuant to section 19(6) of the Industrial Relations Act 1996 and Principle 26 of the Principles for Review of Awards made by the Industrial Relations Commission of NSW on 28 April 1999 (310 I.G. 359) and take effect on 14 July 2004.

This award remains in force until varied or rescinded, the period for which it was made already having expired.

7                                             The Shop Award went on to set out the jurisdiction of the Retail Employees (State) Industrial Committee. Relevantly, the jurisdiction of that Committee was:

Industries and Callings

Section I

All persons employed in or in connection with a shop and/or automatic vending device including (but without limiting the generality of the foregoing) sales assistants, self-service employees, demonstrators, ticket writers, checkout operators, grocery orderperson, reserve stock hands, display hands, window dressers, persons engaged in the hiring of goods in a shop, office assistants, telephone attendants, delivery clerks, persons employed on machines designed to perform or assist in performing any clerical work whatsoever, and cashiers employed solely as cashiers and/or on other clerical duties, in the State, excluding the County of Yancowinna;

excepting-

Van salesperson; Storeperson and packers; Employees other than sales assistants, in restaurants, tea shops and cafeterias; Persons employed selling motor oils, accessories and petrol at or in motor garages and parking and/or service stations or petrol from petrol pumps; Drivers of trolleys, drays, carts, motor and other power-propelled vehicles, loaders, brakesperson, extra hands, grooms, stableperson and yardperson; Cleaners; Employeees, other than sales assistants, in or in connection with hospitals, mental hospitals, public charitable institutions or ambulance work; Butchers, persons engaged in the sale of uncooked meat by retail, carters and other persons delivering such meat, and cashiers in butchers' shops;

and excepting persons employed by – Sydney Electricity; The Australian Gas Light Company;

and excepting also employees within the jurisdiction of the following Industrial Committees – Commercial Travellers (State); County Councils (Electricity Undertakings) Employees, Models and Mannequins (State); Motor Vehicle Salesperson (State); Northern Rivers County Council; Pharmacies (State); Shortland County Council.

Note: 'Shop' in this constitution shall have the same meaning as 'shop' as defined in section 78 of the Shops and Industries Act 1962, or in any Act amending or replacing that Act.

8                                             Also relevant is the clause prescribing wage rates and the classifications it comprehends. It provided:

Clause 38 – Wages

(a)           The minimum rate of pay for each classification incorporating both the base rate and supplementary payments is expressed for each classification as set out in Table 1 – Wages.

(b)           The rates of pay in this award include the adjustments payable under the State Wage Case 2005. These adjustments may be offset against:

(i)        any equivalent over award payments, and/or

(ii)      award wage increases since 29 May 1991 other than safety net, State Wage Case, and minimum rates adjustments.

(c)           Junior employees – Junior employees and improver waiters/waitresses shall receive the percentages set out in (iv) of Table 1 – Wages of the appropriate adult rate prescribed in Group No 1 of Table 1 – Wages.

PART B MONETARY RATES

Table 1 – Wages

                (Emphasis added)

9                                             The specific clause dealing with redundancy pay provided:

Clause 33 – Redundancy

(1)     Application

(i)    This clause shall apply in respect of full-time and part-time employees

(ii)   This clause shall apply in respect of employers who employ 15 employees or more immediately prior to the termination of employment of employees, in the terms of subclause 3, Termination of Employment.

(iii)  Notwithstanding anything contained elsewhere in this clause, this clause shall not apply to employees with less than one year's continuous service, and the general obligation on employers shall be no more than to give such employees an indication of the impending redundancy at the first reasonable opportunity, and to take such steps as may be reasonable to facilitate the obtaining by the employees of suitable alternative employment.

(iv)  Notwithstanding anything contained elsewhere in this clause, this clause shall not apply where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect of duty, or in the case of casual employees, apprentices or employees engaged for a specific period of time or for a specified task or tasks or where employment is terminated due to the ordinary and customary turnover of labour.

…

(4)     Severance Pay

          (i) Where an employee is to be terminated pursuant to subclause 3, Termination of Employment, subject to further order of the Industrial Relations Commission of New South Wales, the employer shall pay the employee the following severance pay in respect of a continuous period service:

                 (a)    If an employee is under 45 years of age, the employer shall pay in accordance with the following scale:

Years of service                               Under 45 years of age entitlement

Less than 1 year                               Nil

1 year and less than 2 years               4 weeks

2 years and less than 3 years             7 weeks

3 years and less than 4 years             10 weeks

4 years and less than 5 years             12 weeks

5 years and less than 6 years             14 weeks

6 years and over                               16 weeks

(b)    Where an employee is 45 years of age and over, the entitlement shall be in accordance with the following scale:

Years of service                               Over 45 years of age entitlement

Less than 1 year                               Nil

1 year and less than 2 years               5 weeks

2 years and less than 3 years             8.75 weeks

3 years and less than 4 years             12.5 weeks

4 years and less than 5 years             15 weeks

5 years and less than 6 years             17.5 weeks

6 years and over                               20 weeks

The Chief Industrial Magistrate's decision

10                                          The Chief Industrial Magistrate first considered whether the Shop Award applied to the appellant's business. Mr Mitchell submitted that he performed work in or in connection with a shop within the meaning of clause 37. The appellant contended that Mr Mitchell was not employed in connection with a shop. It contended that its business was not in the retail sector and that any sale of goods to members of the general public was so insignificant as to be irrelevant to any assessment of award coverage.

11                                          The Chief Industrial Magistrate made a number of findings about the appellant's business at [22]:

… the core business of the Respondent was the hiring out of a wide range of equipment and goods which would be used and then returned to the Respondent’s premises by the customer. Many of these transactions were accompanied by the sale of “consumables”, incidental to and associated with the hiring out of the equipment. The consumables which were sold included fuel such as diesel, two stroke, petrol and LPG gas. Sanding machines which were hired out frequently involved the sale of sandpaper, the hiring out of grinding machines of various types frequently involved the sale of discs for use in such grinders. In addition, goods were available for sale and were sold in circumstances where the sale was not associated with the hire of equipment.

            While the appellant challenged the findings in so far as the Chief Industrial Magistrate said "many" of the transactions were accompanied by a sale, these findings are broadly consistent with the evidence.

12                                          In addressing this first issue, the Chief Industrial Magistrate considered the decision of the Full Bench of the Industrial Relations Commission of NSW in Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks Union of Australia (NSW) [2001] 106 IR 217. In that case, a union brought proceedings against an employer, contending that employees were covered by an award and had not been paid in accordance with it. At first instance, Glynn J held that the reservation consultants and retail sales officers employed by Thrifty Car Rental were covered by the Clerical and Administrative Employees (State) Award. The Full Bench dismissed the appeal. The relevant principles of Kingmill were extracted in the judgment of the Chief Industrial Magistrate in the present proceedings at [19]:-

68                 The authorities set out in [Bryce v Apperley (1998) 82 IR 448] considered the circumstances in which it may be appropriate to apply the award-maker's intentions to the circumstances in which the award was made and to the practical effects of a particular construction. The decision in [Perisher Blue v Australian Workers' Union (1999) 91 IR 274] indicated the desirability of considering the terms of an award in the context in which they appeared and emerged. Those principles apply with equal force to the circumstances in which it may be appropriate to have regard to other aids of construction such as the 'major and substantial' or 'principal purpose' tests.

69                 Those principles apply to a clause which established the coverage of an award in the same way as they do to other clauses in the award. It is thus appropriate to consider the scope clause of the award in the context in which it appears and, in particular, by reference to the other provisions of the award.

70                 It should be noted that the application of aids to construction, such as the 'major and substantial' or 'principal purpose' tests, should be approached with caution. The automatic adoption of such an approach may, depending on the terms of the award, have the potential for awards to be interpreted inconsistently with their plain words and, therefore, unnecessarily restrictively. This potential may be greatest when the scope of the award's coverage clause is expressed in broad and inclusive terms.

13                                          The Chief Industrial Magistrate proceeded to analyse the term 'shop' as found in the Shop Award, and the terms 'retail' and 'wholesale' by reference to their dictionary definitions and common usage. The Chief Industrial Magistrate found at [21] that "the word 'retail'… has a wider meaning than in common everyday usage." The Chief Industrial Magistrate found at [23] that "the fact that the bulk of the income derived from [the appellant] was related to the hiring out of goods does not suggest that the business was a non retail business within the meaning of the industrial instrument. In the context of the Award, it does not matter whether goods were sold or hired to customers providing the place of work was a retail shop within the meaning of the Award itself." The Chief Industrial Magistrate held at [33] that "the business conducted by the Respondent at its Central Coast branch constituted a retail shop within the meaning of the [Shop Award]", and at [35] he "expressly rejected the Respondent's submission that the business of the Respondent was in the wholesale sector rather than in the retail sector".

14                                          The Chief Industrial Magistrate then turned to whether Mr Mitchell's position at the time in a managerial capacity fell within the classification structures of the Shop Award. At the time of his termination, Mr Mitchell held the title 'Assistant Manager/Sales Representative'. The Chief Industrial Magistrate found at [41] that "[t]he authorities are clear that the title given to an employee is by no means decisive in determining the nature of their role." The Chief Industrial Magistrate at [43] held that "the duties and responsibilities of [Mr Mitchell] were not managerial in nature, but were rather consistent with a supervisory function" and at [44] "reject[ed] the submission that the industrial instrument… does not apply to his period of employment with the Respondent."

15                                          The Chief Industrial Magistrate then considered the appellant's submission that Mr Mitchell was guilty of serious misconduct which would have justified summary dismissal had the business been aware of it at the time. The appellant contended that after Mr Mitchell's termination, the business had arranged for IT consultants to check his computer and discovered that Mr Mitchell received obscene pornographic material and sent it on to others, both within and outside the business. For his part, Mr Mitchell did not deny receiving or sending the pornographic material, or the fact that some of it was of an explicit hard core character. Rather, Mr Mitchell denied that the appellant could have relied on the misconduct to dismiss him, contending that the viewing and distribution of such material was commonplace within the company and that business management was not only aware of it but countenanced, acquiesced and to a degree participated in it. The Chief Industrial Magistrate found at [53] that "… the accessing and distribution of such material was part of the workplace culture, and the local manager participated in it". However, the Chief Industrial Magistrate was not satisfied that the appellant had established that, in all of the circumstances, it would have been able to sustain a case for summary dismissal of Mr Mitchell, given the relevant surrounding circumstances, in particular the workplace culture.

16                                          In the result, the Chief Industrial Magistrate granted Mr Mitchell's application for relief for fourteen weeks severance pay, and awarded him $10,000, being the maximum amount allowed under the small claims procedure provided in s 725 of the Workplace Relations Act.

This appeal

17                                          This Court's appellate jurisdiction in this matter arises under s 853(1) of the Workplace Relations Act. The appellant filed a notice of appeal on 3 February 2010 and an amended notice of appeal on 5 March 2010. The grounds in the amended notice of appeal were:-

1.                   The Chief Industrial Magistrate (CIM) erred in finding that the Notional Agreement Preserving the Shop Employees (State) Award of NSW (NAPSA) applied to the Appellant's business and covered the employment of the Respondent.

2.                   The CIM erred in finding that the Respondent was employed in or in connection with a retail shop.

3.                   The CIM erred by failing

(a)      to exclude hearsay evidence tendered by the Respondent

(b)      failing to admit into evidence some of the Appellant's affidavits or parts of affidavits; and

(c)      to consider a CD admitted into evidence.

4.                   The CIM erred in finding the Respondent had an entitlement to a redundancy payment pursuant to clause 33 of the NAPSA.

5.                   The CIM erred in holding that the Appellant was not entitled to summarily dismiss the Respondent retrospectively in light of his serious misconduct and applied the wrong test to determine whether the Respondent had committed an act of serious and wilful misconduct.

18                                          Mr Mitchell was unrepresented in the appeal and took a limited role in defending this matter. Submissions in the appeal supporting the ultimate conclusion of the Chief Industrial Magistrate were made by the Fair Work Ombudsman, who was given leave to intervene.

19                                          The appellant contends in grounds one, two and four that the Chief Industrial Magistrate erred in both his approach and application of the principles of interpretation of industrial awards which led to an erroneous interpretation of the Shop Award.  Importantly, however, the appellant concedes that if the Shop Award applied to the appellant's business then Mr Mitchell's employment fell within a classification in that award.

20                                          The appellant initially submitted that there may be a divergence between the approach taken by Commonwealth courts to the interpretation of industrial instruments and that taken by state courts and industrial tribunals.  The appellant has not pressed, I think correctly, the existence of this distinction in the oral submissions it makes in the appeal.  The appellant submits that, as an approach, the Court might use what has sometimes been described as the 'major and substantial' or 'principal purpose' tests evident in the decisions of Ware v O'Donnell Griffin (Television Services) Pty Ltd [1971] AR(NSW) 18, Comdox (No 272) Pty Limited (t/as Ronald Stead Golf) v Dawson (1993) 49 IR 458 and Softplay Pty Ltd v Department of Industrial Relations (Inspector McMahon) (1999) 94 IR 175. The appellant submits that the application of those tests should result in a finding that the major and substantial function of the respondent's employment, in both a temporal sense and as the defining feature of his employment, was not the sale of goods by retail but rather the hiring out of goods. Further or in the alternative, the appellant submits that the premises on the Central Coast were not a 'retail shop' so as to bring its activities and employees under the Shop Award.

21                                          The appellant contends in grounds three and five that the Chief Industrial Magistrate erred in not viewing all of the evidence, namely the pornography the subject of the respondent's emails, and in finding that the appellant had not made out a basis for summary dismissal. In particular, the appellant contends that the Chief Industrial Magistrate's finding that sending such emails was part of a widespread culture does not exculpate the respondent or otherwise preclude Mr Mitchell's summary dismissal. The appellant submits that notwithstanding the actions of the manager whom the Chief Industrial Magistrate found participated in the misconduct, the appellant did not condone the misconduct. Additionally, the appellant submits that the Chief Industrial Magistrate's finding that a fair and reasonable employer would have provided a warning rather than summary dismissal is irrelevant. The appellant also contends that there was no evidence to support the Chief Industrial Magistrate's finding that the appellant had prior knowledge of the misconduct.

22                                          The intervener accepts that the appellant's business principally involved the hire of equipment and goods, as opposed to the sale of items. The intervener does not join in the appellant's submission that the correct approach to the construction of an industrial instrument is either the 'major and substantial' or 'principal purpose' test, contending that "the danger of utilising such a test is that it distracts from a focus upon the terms of the coverage clause and of the award as a whole". Rather, the intervener submits the correct approach is that outlined by Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 at 184:-

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

The appellant does not take issue that this approach is an appropriate one.

23                                          The intervener contends that the proposition that an employee may be deprived of an award redundancy benefit by reason of discovered misconduct after the event is not established by the authorities upon which the appellant relies. The intervener submits that the redundancy benefit is not conditioned on the respondent's conduct in the manner asserted by the appellant. Additionally, the intervener does not accept the Chief Industrial Magistrate erred in not viewing all of the evidence. Rather, the intervener submits that having regard to the nature of the proceedings as a small claims procedure, the Chief Industrial Magistrate was not bound by the rules of evidence, could act without regard to legal forms and technicalities, and was otherwise entitled to act in an informal manner.

Consideration

24                                          The first issue to be resolved is whether the appellant's premises are a retail shop for the purpose of clause 37 of the Shop Award. During the course of the hearing, counsel for the appellant conceded that it was a shop for the purpose of s 78 of the Shops and Industries Act 1962 (NSW). This concession was almost certainly correct but it involves a concession that the premises in question were a place or building from which goods were offered for sale and sold by retail.  That was the central element in the definition of shop under that state Act.  Both the definition of shop in that legislation and, necessarily, the definition of shop in the award focus on two elements.  The first is a location.  The second is activity.  If the location has one of the defining characteristics (place, building, stall etc) then the definition is satisfied if the defined activity is undertaken.  That defined activity is selling, offering or exposing for sale goods by retail. Obviously in most instances all three activities would be undertaken.  Comparatively rarely would items be sold without being offered or exposed for sale and one would expect infrequently would goods be offered or exposed for sale and not sold (perhaps other than in relation to businesses which were doomed in a commercial sense). 

25                                          For my part, I think this is one of these cases where it is a distraction to focus on the major and substantial activity of the employer which was one aspect of the approach of the Commission in Softplay Pty Ltd v Department of Industrial Relations (Inspector McMahon), a distraction adverted to by the Commission in Kingmill.  The outcome in the first mentioned case (that the Shop Award (when simply a state award) did not apply to employees employed in the child-care centre at which some goods were sold) would have arisen simply by virtue of the fact that the employees engaged in selling goods did so only as a comparatively insignificant incident to their more general employment at the child-care centre. The employees were not comprehended by a classification to which the Shop Award applied.  That was the route by which Maidment J concluded the Shop Award (as a state award) did not apply to the employment of the individual in question in the pro-golf shop in Comdox (No 272) Pty Limited (t/as Ronald Stead Golf) v Dawson.

26                                          Accordingly in order to assess whether the appellant's premises are a retail shop for the purposes of clause 37, "it is appropriate to consider the scope clause of the award in the context in which it appears, and, in particular, by reference to the other provisions of the award": Kingmill at [69]. In my opinion, the "plain words" (Kingmill: [70]) of the Shop Award in clause 37 ("employees..... who work in or in connection with a retail shop") clearly encompass employees engaged in or in connection with the retail activities of selling goods undertaken at the appellant's premises.

27                                          However clause 37 also requires, to render applicable the State Award to any given employee, that the employee be "employed under classifications in this award".  Given the concession of the appellant noted earlier that if the Shop Award applied to the appellant's business, then Mr Mitchell's employment fell within a classification in that award it is unnecessary to explore exhaustively this question.  It is conceivable that employees working in a shop (understood in the way I have just discussed) would not be engaged in work picked up by the classifications to which the award applies.  That might be so, for example, because the selling of goods occurred at premises at which the activities overall travelled well beyond simply the offering for sale and sale of goods and for those employees at those premises engaged in selling, that work was such an insignificant part of more general duties that they could not be said to be employed as a sales assistant or any one of the other classifications in the Shop Award.  But that would not preclude a conclusion that the Shop Award would potentially apply to employees at those premises (because it was a shop) if employees were performing duties comprehended by one of the award classifications, perhaps on the basis that a small number of employees were engaged to sell while a remainder of the workforce did other work. 

28                                          Because of the concession of the appellant I need not take this matter any further.  However it should be noted that the classifications covered by the Shop Award (see the description of group number 1 under Table 1 - Wages) include the classification of "employees principally engaged in hiring out activities in a shop" which would rather indicate that once premises can properly be characterised as a shop (because goods are offered or exposed for sale or sold at the premises) then employees engaged in hiring out activities at those premises will be comprehended by the Shop Award. Though it is unnecessary to express a concluded view about this matter, this might conceivably be so even if no employee was a shop assistant in the sense of principally engaged in the selling of goods.

29                                          The next issue concerns the question of whether Mr Mitchell had an entitlement to severance pay having regard to the appellant's contention that he had engaged in misconduct which would have warranted his summary dismissal at the time he was, in fact, retrenched.  In my respectful opinion, the approach of the Chief Industrial Magistrate was misconceived as also is the argument of the appellant in this appeal.  The Shop Award creates legal rights and imposes legal obligations.  Many of the rights are conditional in the sense that those rights arise and only arise if a particular matrix of facts exists.

30                                          Severance pay is payable under clause 33 when an employee is to be terminated pursuant to sub-clause (3).  In this respect, the clause creates a right to be paid severance pay and an obligation on the employer to pay it.  Both the right and obligation arise in particular circumstances.  The circumstances are that the employee is to be terminated in a particular way provided for by the clause.  The appellant did not put in issue in this appeal that apart from the argument about the misconduct, Mr Mitchell had a right to be paid severance pay.  Accordingly it is not in issue that, at the time, his employment was to be terminated pursuant to sub-clause (3) whether or not, as a matter of fact, that sub-clause was given effect to precisely in accordance with its terms.  That sub-clause requires that notice of termination of varying lengths (depending on length of service and up to five weeks) be given in what might compendiously be described as a redundancy situation arising from changes in organisation or structure and a longer and fixed period (three months) if a redundancy situation arises from technological change.  Accordingly the right to severance pay and the obligation to pay arises if there is a redundancy situation and an employee is given notice that their employment is to be terminated.

31                                          It is true that sub-clause (1) contains limitations on the operation of the clause and it is clear that in certain circumstances it does not apply. In particular, paragraph (iv) provides that the clause does not apply "where employment is terminated as a consequence of conduct that justifies instant dismissal".  However this limitation, in terms, operates only when there has been a termination for misconduct presumably in circumstances where a redundancy situation has arisen and probably additionally, when notice had been given in accordance with subclause (3) but during the notice period the employee engaged in serious misconduct and was summarily dismissed. It is an understandable limitation intended to preserve the right of an employer to summarily dismiss an employee during the notice period.  This limitation is not expressed to concern a situation where unbeknownst to the employer the employee had engaged in conduct which might or even would have justified summary dismissal and the employer comes to know of the conduct after the termination has been effected in accordance with clause 33.

32                                          The appellant relied on two High Court authorities which establish that an employer who has dismissed an employee for misconduct can, when defending that course of action in proceedings by the employee, rely not only on the misconduct known and acted on at the time, but other misconduct which became known to the employer after the dismissal.  One was Byrne v Australian Airlines Ltd (1995) 185 CLR 410 and the other was Concut Pty Ltd v Worrell (2000) 176 ALR 693. 

33                                          It is unnecessary to detail the facts of each case.  It is sufficient to note that in Byrne two employees had been dismissed for misconduct.  They alleged in proceedings in this Court that their dismissal was contrary to an award provision which prohibited termination which was harsh, unjust or unreasonable.  The employer sought to defend the proceedings on a basis which included reliance on conduct during the employment and prior to the dismissal which came to the employer's knowledge after the dismissal.  Brennan CJ and Dawson and Toohey JJ observed at 430 that facts which existed at the time of dismissal, but which came to light only subsequently, might justify the dismissal when otherwise it would be harsh, unjust or unreasonable. Similar observations were made by McHugh and Gummow JJ at 467 - 468.  This approach is not surprising but does not assist the appellant in this matter.  The award prohibition was on termination which was harsh, unjust and unreasonable.  Whether it had that characteristic was to be assessed on facts existing at the time the prohibition would operate, namely at the time of the termination.  All the High Court decided was that the existing facts could include facts not known to the employer at the time of the termination.

34                                          Concut Pty Ltd was a broadly similar case though the cause of action was based on the common law.  An employee who had been dismissed brought proceedings seeking damages for wrongful dismissal.  One subsidiary issue at the trial was whether facts revealing misconduct not known to the employer at the time of dismissal could be called in aid by the employer to defend the action for damages for wrongful dismissal.  The High Court confirmed that the trial judge was correct in concluding such facts could be, referring to earlier authority of the Court, namely Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359.  Again the legal issue was whether on the facts existing at the time of dismissal, it could be characterised as wrongful.  Again all the High Court confirmed was that the existing facts could include facts unknown to the employer at the time of the dismissal.

35                                          In my opinion, Mr Mitchell had a right to be paid severance pay at the time of his termination and the appellant's obligation to pay cannot be nullified by a later assertion (even if made out in a court) that it could have avoided the obligation imposed by subclause (4) by asserting the right conferred by subclause (1)(iv) to summarily dismiss Mr Mitchell having regard to facts now known but not known to the appellant at the time of the termination. 

36                                          The appeal should be dismissed.

Associate:

Dated:         21 July 2010