NSW unfair contracts law excluded by federal coverage

Cases

NSW unfair contracts law excluded by federal coverage

The relationship between awards or agreements made under the federal WR Act and the jurisdiction of the NSWIRC to vary contracts, was considered in a successful appeal.

WantToReadMore

Get unlimited access to all of our content.

The relationship between awards or agreements made under the federal WR Act and the jurisdiction of the NSWIRC to vary contracts, was considered in a successful appeal.

A Full Bench of the NSW IRC sitting in court session concluded that an order under s106(5) of the Industrial Relations Act (NSW) for notice in excess of that provided for in a federal agreement, 'would be in direct collision with the terms of the agreement and, therefore, invalid'.

A key question confronted by the Full Bench was whether the orders would create an inconsistency under s109 of the Australian Constitution in that a relevant federal award and certified enterprise agreement governed the set of rights as to Notice and Redundancy for the employee in issue.

Background

Construction company Hansen Yuncken Pty Ltd applied for leave to appeal against an earlier judgment which found that the employment contract between the company and a former employee had operated unfairly when the employee was terminated without appropriate notice.

Pursuant to s106 of the Industrial Relations Act 1996 (NSW), Justice Kavanagh ordered that the contract be varied and the company should pay the employee 12 months wages as notice of termination.

The employee had worked for Hansen Yuncken as a construction worker/builder's labourer for some 23 years. He was paid some outstanding entitlements and nearly $14,000 from a redundancy trust. A federal enterprise agreement and a federal award applied to the company’s operations and both contained provisions governing redundancy and termination.

The employee sought relief under s106 claiming that '[t]he contract permitted termination of the contract without a period of notice which is reasonable and appropriate in the circumstances'. The relief sought included a variation to provide that the company give the employee 12 months notice.

Justice Kavanagh found that while the federal award and agreement applied to the employee, he was engaged outside their provisions as a permanent employee (rather than a daily or weekly employee) and paid a higher rate than a labourer. Her Honour found, therefore, that the award and agreement did not cover his contract and, consequently 'orders under s106 would not therefore create an inconsistency'.

She said it was unfair that a permanent employee with 23 years skilled service received no notice payment, and this made compensation appropriate. Consequently, she agreed to vary the contract to include the 12 months notice.

Original decision in error

The full bench found the appeal raised substantial issues as to the relationship between awards or agreements made under the federal Workplace Relations Act and the jurisdiction of the NSW Commission in Court Session to vary contracts or arrangements relating to the performance of work in a NSW industry. 'It is appropriate to grant leave to appeal and we do so.'

The full bench found Justice Kavanagh had erred in accepting the employee’s proposition that because he was a 'permanent employee' he was outside the award and agreement and his engagement was governed by a contract. That being the case, it was submitted, no inconsistency arose of the nature countenanced in s152 and 170LZ of the Workplace Relations Act 1996 between any instrument made under State law. This relates to orders under s106 of Industrial Relations Act (NSW), and an award or agreement made under Commonwealth law.

The full bench said the adjective 'permanent' was used, as it often is in industry, only in the sense of distinguishing the nature of the employee’s employment from that of casual employment. 'It did not create a new type of engagement separate from that provided for in the award and agreement.' It went on to say that this 'overaward' arrangement did not mean the award or agreement had no application.

The full bench found the federal award and agreement applied to the employee including determining the nature of his engagement, his employment classification and the notice to be given upon termination of the employment:

'There is no basis for considering that notice of termination was to be derived from the [employee’s] contract of employment as opposed to the agreement.'

Conclusion

The full bench concluded:

'There was no evidence of any overaward arrangement in relation to the giving of notice … that could lead to the conclusion that notice was an element of the [employee’s] employment contract as distinct from a term of the agreement and, therefore, amenable to relief under s 106 of the Act.'

It concluded that an order under s106(5) for notice in excess of that provided for in the agreement 'would be in direct collision with the terms of the agreement and, therefore, invalid'. Consequently, it allowed the appeal and quashed Justice Kavanagh’s earlier orders.

Hansen Yuncken Pty Ltd v Andreas Costopoulos [2004] NSWIRComm 249 - Wright P, Boland and Staff JJ - 31 August 2004.

Related

State case stayed pending federal hearing

Unfair contracts (NSW) jurisdiction excluded

Post details