Contract of employment not a workplace instrument under FW Act


Contract of employment not a workplace instrument under FW Act

An adverse action claim and other claims under the Fair Work Act by a manager were blocked in the Federal Court because the manager’s claims did not come under the legislation.


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An adverse action claim and other claims under the Fair Work Act 2009 by a manager were blocked in the Federal Court as the manager’s claims did not come under the legislation.

[Full text of this case: Barnett v Territory Insurance Office [2011] FCA 968 (24 August 2011)]

This proceeding involves a short question of law. It is whether the applicant’s contract of employment with the respondent-employer was ‘a workplace instrument’ for the purposes of s341(1) of the Fair Work Act.

Justice Mansfield determined the matter.

The issue explained
Justice Mansfield set-out the issue before the court:
‘If the contract is not a “workplace instrument” for the purposes of s 341(1) of the FW Act, then it is agreed that the application cannot succeed and must be dismissed. That is because, in the particular circumstances, the applicant has no other cause of action against the respondent in respect of the termination of his employment.

He has no cause of action for unfair dismissal under s 382 of the FW Act because his contract of employment fixed a level of remuneration above the high income threshold specified in s 382(d)(iii), and he was not covered by a modern award or an enterprise agreement.

It is also accepted that, in the particular circumstances including the terms of the contract, he has no claim for damages for breach of contract.

If the applicant’s contract of employment is a “workplace instrument” as defined in s 12 of the FW Act, then it will be necessary to apply the relevant provisions of that Act to determine if he is entitled to compensation in accordance with them.

[The facts]
The relevant facts are agreed. They can be stated shortly. The applicant was employed by the respondent in the position of Manager, Claims Operations — Property from 31 May 2010 until his employment was terminated on 10 August 2010 by notice in writing, without any prior notice, explanation or consultation in relation to the termination of his employment.

The applicant’s employment with the respondent was pursuant to the terms of a written contract of employment, governed by the common law.

[The claim]
Consequently, his claim is framed in the following way.

He seeks compensation for termination of his employment under the FW Act as a result of “adverse action” taken by the respondent, namely by dismissing him on 9 August 2010, because he had exercised a “workplace right” in carrying out a role or responsibility under a “workplace instrument”, and in order to prevent him from exercising that right.

Section 340 of the FW Act prohibits the taking of adverse action. It is in the following terms:
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or

(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
Hence, it is necessary to identify the “workplace right” relied upon, as the applicant requires its existence to demonstrate the adverse action. The term “workplace right” is defined in s 341(1) of the FW Act in the following terms:
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or

(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or

(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or

(ii) if the person is an employee — in relation to his or her employment …’
Contract is not workplace instrument
Justice Mansfield continued and found against the applicant:
‘In the sense of recognition by acknowledging the existence of, and treating as valid, the terms of a contract of employment, subject to the operation of the FW Act, it may fairly be said that the FW Act recognises the contract of employment.

This is the broad interpretation of the first limb of the definition of “workplace instrument” as favoured by the applicant. Such a proposition also, it is argued, should be accepted because it is consistent with the objects of the FW Act as expressed in s 3 and as explained in the Minister’s Second Reading Speech on the Fair Work Bill 2008 (House of Representatives, Hansard, 25 November 2008 at 11193).

[Recognition of instrument]
However, in my judgment, the concept of recognition in the definition of “workplace instrument” does not have that expanded meaning. I do not think that such a meaning can properly be derived from the context and background to that expression, or having regard to other considerations to which I refer below.

The first reason for that conclusion is that, underpinning every employment relationship is a common law contract of employment that is a contract under which a person agrees to work for another person in return for remuneration. The existence, for example, of an award does not create the relationship of employer and employee. That arises from the agreement between the employer to engage, and the employee to be engaged in employment.

The contract of employment may, subject to the law, specify the detailed terms and conditions of that employment relationship. If relevant statutory provisions or instruments such as an award or enterprise agreement sourced from a workplace law or the NES, are superimposed over that contract of employment, the agreed terms of the contract are either suppressed or unlawful to that extent. But the contract of employment itself stands. The legislative structures are built upon the premise of an agreement to employ and to be employed …

His Honour then went on to note the relevant case law including Amalgamated Collieries of WA Ltd v True [1938] HCA 19; (1938) 59 CLR 417 and Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 ….

[More refined meaning]
In my view, the concept of recognition by a workplace law in the definition of “workplace instrument” has a more refined meaning than that contended for by the applicant ….

… The mere fact of the existence of a contract of employment does not enliven the relevant concept of recognition contained within the definition of “workplace instrument”. If it were simply the existence of a contract of employment on which the particular enactment operated, the expression of “made under or recognised by” would have been unnecessary.

… It is also clear enough to say that the FW Act has regard to the fact that not all employees or national system employees will be employed under a “fair work instrument”. As mentioned, s 12 defines “an award/agreement free employee” as an employee to whom neither a modern award nor an enterprise agreement applies. That status as an award/agreement free employee is also recognised in s 43 of the FW Act …

For those reasons, in my judgment the applicant’s contract of employment with the respondent is not a “workplace instrument” for the purposes of s 341(1) of the FW Act. The consequence of that conclusion is that the application itself is to be dismissed. I so order …’
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