Employer’s repudiation of employment contract did not end contract: High Court

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Employer’s repudiation of employment contract did not end contract: High Court

The High Court (4:1) has held that the Australian Industrial Relations Commission must reconsider an employee’s application for wrongful termination because his contract had not been legally terminated by the unilateral repudiation of an earlier contract by the employer.

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The High Court (4:1) has held that the Australian Industrial Relations Commission must reconsider an employee’s application for wrongful termination because his contract had not been legally terminated by the unilateral repudiation of an earlier contract by the employer.
 
The Commission had held that he had not been demoted from the position of chief officer on a oil tanker, in early 2004, because his earlier promotion to that position in September 2001 had been rescinded by his employer.
 
The High Court held by a 4-1 majority (Justices Heydon, Crennan, Kiefel and Bell, with Justice Gummow dissenting) that general principles of contract law applied to the employee’s actions and required the employee to have accepted the employer’s repudiation before the contract came to an end.
 
The AIRC had not determined the matter according to those principles. A Full Court of the Federal Court had also upheld the AIRC’s decision on the basis that the employee’s status fell to be determined according to the Certified Agreement, but the High Court held that that was not a subject dealt with in the agreement.
 
High Court’s reasoning
 
The majority concluded:
‘Teekay's [employer’s] notice of rescission did not automatically bring the contract appointing Mr Visscher a Chief Officer to an end.
 
It was necessary that Mr Visscher accept the repudiation before the contract could be terminated.
 
Nothing said in Automatic Fire Sprinklers Pty Ltd v Watson suggests any different contractual principle as applying to a contract of employment.
 
In order to decide whether Teekay had repudiated Mr Visscher's contract of employment in January and February 2004 it was necessary for the AIRC to determine the true contractual position between the parties at that time. It was necessary then to determine whether what was said by Teekay at that time amounted to a repudiation such that the termination of the employment relationship could be said to be at its initiative; or whether it amounted to a demotion within the meaning of s 170CD(1B) [Workplace Relations Act 1996].
 
The correct legal starting point was not that Teekay had rescinded the agreement. Neither the Commissioner nor the Full Bench of the AIRC asked the correct question, as to the contract under which the parties continued after September 2001. This was an error going to jurisdiction.’
Dissent
 
Justice Gummow upheld the Full Federal Court's finding that the certified agreement had demoted the employee.
 
 
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