[2012] FWA 9634 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
L.M.
v
Standard & Poor’s (Australia) Pty Ltd
(U2012/11824)
COMMISSIONER ROE |
MELBOURNE, 12 NOVEMBER 2012 |
Jurisdiction – minimum employment period.
[1] L.M. (Applicant) has made an application under s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for unfair dismissal from Standard & Poor’s (Australia) Pty Ltd (Respondent). The Applicant was supported by Ms Carryl Fenner and the Respondent was represented with leave by Mr Jack Tracey. L.M. opposed leave being granted. I granted leave on the basis that the case largely depended upon the proper interpretation of the Act and not the contest of evidence and consequently I did not consider that there would be unfairness to the Applicant and that the matter would proceed more efficiently.
[2] There is no dispute that the employer is a national system employer of more than 15 full time equivalent employees. There is no dispute that the Applicant commenced employment with the Respondent on 1 February 2011 and was dismissed at the initiative of the employer on 23 July 2012. There is no dispute that this constitutes a period of continuous service. There is no suggestion that the termination was for reasons of redundancy. The Applicant is protected from unfair dismissal under the Act (s.382) if it is established that she had at least 6 months continuous service with the Respondent.
[3] It is also not in contention that the period of time during the period of continuous service that the Applicant was working or on authorised paid leave totalled four months and three weeks. It is accepted that the Applicant suffered from a prolonged illness which prevented her from attending work during the remaining period and the Applicant provided medical certificates for her periods of absence. The Applicant did not work at all between early August 2011 and her termination in July 2012. During much of the period of unpaid absence the Applicant did receive income protection insurance payments. The income protection policy was associated with her employment with the Respondent but the payments to the Applicant were made pursuant to the policy by the private insurer through the superannuation fund of which the Applicant was a member. Consistent with the insurance policy, payments ceased 60 days after her termination. The insurance policy was linked to the Applicant’s membership of the Standard and Poor’s Superannuation Fund and a successor AMP Fund and the premiums were paid by the Respondent.
[4] I am satisfied that the unpaid absence of the Applicant was authorised by the Respondent.
[5] The Applicant submitted that she was advised by the employer that she had satisfactorily completed the six month probation period specified in her contract of employment. The Applicant also submitted that she received four weeks pay in lieu of notice consistent with the contract of employment and not the two week’s pay provided for in her contract of employment applicable to termination during the period of probation. In my view this is not relevant. Whether or not the period of authorised unpaid absence or authorised unpaid leave counts towards the completion of six months continuous service is a matter determined by the Act.
[6] There is no dispute that if more than five weeks of the period of authorised unpaid absence does count towards the length of the period of continuous service then the Applicant had at least six months continuous service and she is protected from unfair dismissal. There is also no dispute that if that minimum period of authorised unpaid absence does not count towards the length of the period of continuous service then the Applicant is not protected from unfair dismissal and the case must be dismissed.
[7] The period of employment for the purposes of unfair dismissal jurisdiction is defined in Section 384 as follows:
(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.”
[8] The term continuous service is defined in s.22 of the Act. The Explanatory Memorandum for the Fair Work Bill 2008 at paragraph 103 states that “Clause 22 defines the meaning of service and continuous service in general terms that apply to the Bill as a whole (including the NES), and also in the specific context of identified Divisions of the NES where a particular meaning is required.” There is no alternative definition of service or continuous service associated with Part 3-2 of the Act which deals with unfair dismissals and hence there is no doubt that Section 22 applies. The relevant part of Section 22 is as follows:
“22 Meanings of service and continuous service
General meaning
(1) A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).
(2) The following periods do not count as service:
(a) any period of unauthorised absence;
(b) any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or
(ii) a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c) any other period of a kind prescribed by the regulations.
(3) An excluded period does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service.
(3A) Regulations made for the purposes of paragraph (2)(c) may prescribe different kinds of periods for the purposes of different provisions of this Act (other than provisions to which subsection (4) applies). If they do so, subsection (3) applies accordingly.”
[9] I am satisfied that for the reasons that follow that there are no regulations which have been made for the purpose of paragraph 2(c) or 2(b)(iii). The Applicant argued to the contrary.
[10] The Applicant argued that I should have regard to Regulation 3.01 and 6.04 Temporary Absence – illness or injury (Fair Work Regulations 2009).
“3.01 Temporary absence — illness or injury
(1) For section 352 of the Act, this regulation prescribes kinds of illness or injury.
Note Under section 352 of the Act, an employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations.
(2) A prescribed kind of illness or injury exists if the employee provides a medical certificate for the illness or injury, or a statutory declaration about the illness or injury, within:
(a) 24 hours after the commencement of the absence; or
(b) such longer period as is reasonable in the circumstances.
Note The Act defines medical certificate in section 12.
(3) A prescribed kind of illness or injury exists if the employee:
(a) is required by the terms of a workplace instrument:
(i) to notify the employer of an absence from work; and
(ii) to substantiate the reason for the absence; and
(b) complies with those terms.
(4) A prescribed kind of illness or injury exists if the employee has provided the employer with evidence, in accordance with paragraph 107 (3) (a) of the Act, for taking paid personal/carer’s leave for a personal illness or personal injury, as mentioned in paragraph 97 (a) of the Act.
Note Paragraph 97 (a) of the Act provides that an employee may take paid personal/carer’s leave if the leave is taken because the employee is not fit for work because of a personal illness, or personal injury, affecting the employee.
(5) An illness or injury is not a prescribed kind of illness or injury if:
(a) either:
(i) the employee’s absence extends for more than 3 months; or
(ii) the total absences of the employee, within a 12 month period, have been more than 3 months (whether based on a single illness or injury or separate illnesses or injuries); and
(b) the employee is not on paid personal/carer’s leave (however described) for a purpose mentioned in paragraph 97 (a) of the Act for the duration of the absence.
(6) In this regulation, a period of paid personal/carer’s leave (however described) for a purpose mentioned in paragraph 97 (a) of the Act does not include a period when the employee is absent from work while receiving compensation under a law of the Commonwealth, a State or a Territory that is about workers’ compensation.”
[11] Regulation 6.04 is in relevant terms identical to Regulation 3.01 save that it commences as follows:
“6.04 Temporary absence — illness or injury
(1) For paragraph 772 (1) (a) of the Act, this regulation prescribes kinds of illness or injury.
Note Under section 772 of the Act, an employer must not terminate an employee’s employment because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations.”
[12] Regulation 3.01 defines the kinds of illness or injury which can be taken into account for the purposes of s.352 of the Act which prohibits the dismissal of an employee because that employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations. This regulation is specifically “for s.352 of the Act”. Further s.352 of the Act is in a different Part of the Act; namely Part 3-1 General Protections not Part 3-2 Unfair Dismissal. I can see no basis for an argument that Regulation 3.01 is a regulation which prescribes periods of unpaid leave or unpaid authorised absence which are exempted from Section 22(2)(b). Regulation 3.01 does not mention the term “unpaid leave or unpaid authorised absence”. Regulation 6.04 is similarly of no relevance because it is for the purposes of Section 772 of the Act and again that Section is in a different Part of the Act.
[13] The Full Bench in Workpac Pty Ltd v Babach ((2012) FWAFB 3206 at paragraph 29) reached the conclusion that “No regulations have been made pursuant to s.22(2)(b)(iii) or (c)”
[14] Hence the matter comes down to a question: Is the period of absence due to the illness a period of unpaid leave or unpaid authorised absence?
[15] In Webster v Toni and Guy Port Melbourne [2010] FWA 4540 I considered the issue where an applicant was paid by the Transport Accident Commission.
“I think it is clear that the terms paid or unpaid for the purpose of this Section clearly refer to a payment by or on behalf of the employer. Otherwise if an employee came to work for one day following hiring and was then off work due to illness for 12 months and was in receipt of some form of social security benefits during that period they could be described as being on paid not unpaid leave and would be entitled to unfair dismissal protection. I do not think that the legislation can be read in this manner. The explanatory memorandum (paragraph 105 of the Explanatory Memorandum Fair Work Bill 2008) says that unpaid carers leave and unpaid parental leave are examples of unpaid leave for the purpose of Section 22. Clearly the Act regards unpaid carers leave and unpaid parental leave as being periods when the employee is not paid by the employer even if they are in receipt of payments from elsewhere. I cannot see how unpaid sick leave is different from unpaid parental leave in this context. The employer in this case is not making any payments to the employee either directly or indirectly. The payments in this case come directly from the Transport Accident Commission. If the payments came from the employer it would be a different matter.” ([2010] FWA 4540 at Paragraph 10)
[16] The Full Bench in Workpac Pty Ltd v Babach ((2012) FWAFB 3206) approved my earlier decision but found that absence on workers’ compensation was not an unpaid authorised absence within the meaning of s.22(2)(b).
“[37] Contrary to the appellant’s submission, the fact that WorkPac chose to insure against such liabilities, and hence the payments were actually made by WorkPac’s insurer, is irrelevant. The fact that the payments were made pursuant to a legal obligation upon the employer is the critical consideration. The nature of the payment does not change because the employer has entered into an indemnity arrangement with a third party. We note that our conclusion in this regard is consistent with the decision of Commissioner Roe in Webster v Toni and Guy Port Melbourne Pty Ltd. In that case the Commissioner concluded that an employee’s period of absence due to a motorcycle accident was a period of ‘unpaid leave or unpaid authorised absence’ within the meaning of s.22(2)(b). This was found to be so despite the fact that the employee was receiving payments from the Transport Accident Commission during the relevant period.
[38] There is an important distinction between the present case and the facts in Webster. The payments to Webster were not made pursuant to any legal obligation upon his employer, rather the payments were made pursuant to a separate ‘no fault’ statutory transport accident scheme. As the Commissioner observed in Webster:
“I think it is clear that the terms paid or unpaid for the purpose of this section refer to a payment by or on behalf of the employer ... The employer in this case is not making any payments to the employee either directly or indirectly. The payments in this case come directly from the Transport Accident Commission. If the payments came from the employer it would be a different matter.”
[39] In the context of workers’ compensation obligations it is important to appreciate that many employers choose to self insure. In such instances the payment of compensation and, where relevant, accident pay would be made by the employer directly. If the appellant’s contention were accepted then an absence on workers’ compensation would be an ‘unpaid authorised absence’ if the worker’s employer was insured, but such an absence would not be regarded as ‘unpaid’ if the worker’s employer was self insured. Such an arbitrary outcome also tells against the construction advanced by the appellant.”((2012) FWAFB 3206 at paragraphs 37-39. References removed)
[17] It is necessary to consider if the finding of the Full Bench that “the fact that the payments were made pursuant to a legal obligation upon the employer is the critical consideration” means that the payment pursuant to income protection insurance, the premium for which is paid by the employer, results in the period of absence for which the employee receives payment as a result of the insurance being regarded as a period of paid authorised absence.
[18] In the circumstances of this case there is a legal obligation upon the Respondent to pay superannuation on behalf of the Applicant. However, the legal requirement to pay superannuation does not include any obligation to pay income protection insurance.
[19] In the circumstances of this case the common law contract of employment provides (Attachment to the Statement of the Applicant) that the Applicant has a right to choose her superannuation fund. The contract provides that if, and only if, the Applicant chooses the Standard & Poor’s Superannuation Fund then the company will pay insurance in that fund which will provide for temporary disability cover of up to 75% of gross salary for up two years.
[20] There is no legal obligation on the Respondent pursuant to an employment related law or instrument to make the payments the Applicant is receiving. In particular there is no obligation under an Award or collective agreement for payments to be made to the Applicant for the periods of absence due to illness in this case. The circumstances are clearly distinguishable from a situation such as workers compensation payments. I am satisfied that the fact that payments were made pursuant to income protection insurance under such a common law contract does not, in the circumstances of this case, make the absence a paid absence or a period of paid leave.
[21] The Full Bench also emphasised the relationship between work and the absence in the case of workers compensation. Such a link is not present in the case of unpaid authorised absence due to illness.
“[64] The objects of Part 3-2 speak of a legislative framework which balances the needs of business and employees. Counting an absence on workers’ compensation towards the minimum period of employment is consistent with that object. It must be remembered that the worker’s injury is work related and the relevant Act imposes a liability upon the employer for that injury.” ((2012) FWAFB 3206 at paragraph 64)
[22] The Respondent argues that if the period of unpaid authorised absence was to count towards the minimum employment period then this would defeat the purpose of the legislation which they say is to allow the employer fair opportunity to assess the suitability of the employee. I do not regard this as a strong argument for the following reasons advanced by the Full Bench in Workpac.
“[59] The final point we wish to deal with concerns the appellant’s contention that the Commissioner failed to interpret s.384 of the Act in a way which would best achieve the purpose and objects of the Act. In this context, the appellant and the intervenors’ rely on the Explanatory Memorandum to the Fair Work Bill 2008 which, relevantly, states:
“Paragraph 382(a) provides that a person must have completed a minimum employment period with his or her employer. A requirement that an employee serve a minimum period before having access to an unfair dismissal remedy enables an employer to have a period of time to assess the capacity and conduct of a new employee without being subject to an unfair dismissal claim if they dismiss the employee during this period.”
[60] It was submitted that if a period on workers’ compensation was counted toward the minimum employment period it would defeat the rationale of allowing the employer the specified period of 26 weeks in which it could assess the capacity and conduct of a new employee.
[61] A number of things may be said about this contention. The first is that the Explanatory Memorandum is an aid to construction, it does not control the construction of a statutory provision. The language of the provisions themselves and their context are surer guides to Parliament’s intention.
[62] The second observation we would make is that counting a period on workers’ compensation towards the minimum employment period would not necessarily deny the employer the ability to assess the capacity and conduct of a new employee. It would depend on the extent of the employee’s incapacity and the length of the absence. In many instances injured employees return to work on modified duties, indeed the relevant legislation encourages them to do so, thereby allowing the employer to assess their performance. In any event, as we have already noted, there are other instances where the Act counts an unpaid authorised absence towards the minimum employment period. An employee’s absence on jury service or while engaged in an eligible community service activity both count towards the minimum employment period, yet both do not allow the employer to assess the capacity and conduct of the employee.”
[23] I consider that the period when the Applicant was absent due to illness during which she was not entitled to paid leave must be regarded as a period of unpaid leave or unpaid authorised absence. There is no legal obligation such as under an Award or collective agreement or other employment related legislation which required payments to be made to the Applicant. The payments made due to income protection insurance were not pursuant to any such obligation.
[24] For these reasons I find that the Applicant did not have the minimum 6 month period of continuous service and hence does not have access to unfair dismissal protection. The jurisdictional objection of the Respondent is upheld and the application for an unfair dismissal remedy is dismissed. I order accordingly.
COMMISSIONER
Appearances:
Ms C Fenner appeared on behalf of the Applicant.
Mr J Tracey appeared on behalf of the Respondent
Hearing details:
2012
Melbourne
November 12
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