The Public Service Arbitrator (Arbitrator ) has declared that an employer is estopped from offering two employees further contracts at a pay level lower than Level 21 of the employer’s pay scale.

Background

The employees are Senior Medical Practitioners under the WA Health System – Medical Practitioners – AMA Industrial Agreement 2016 (Industrial Agreement). The  pay structure  for Senior Medical Practitioners under the Industrial Agreement has a maximum of  Level 18, while  for a Consultant the maximum is level 24.

In February 2007, practitioners employed by the respondent began to be paid according to a new pay scale (Pay Scale), which set out how practitioners could progress according to caseload and academic milestones.  The employees completed a Masters Degree in Clinical Forensic Medicine and progressed to the top level of the Pay Scale - Level 21.

In April 2016, a senior executive approved contract variations which allowed the employees to progress to  Level 23.

In April 2017, the respondent indicated that the Level 23 contract variation would be rescinded, and all new contracts offered to practitioners would align with the pay scale set out in the Industrial Agreement.

The applicant sought a declaration that the respondent is bound by the Pay Scale. The issue of the employees being classified as Level 23 was raised, but later withdrawn by the applicant.

Contentions

The applicant contended that the respondent was estopped from offering employees a contract at a classification level lower than Level 21, on the basis that it would be unconscionable for the respondent to withdraw the Pay Scale.

The applicant presented evidence that the Pay Scale was approved, administered and used by administrators from 2007-2018. The applicant contended that the Pay  Scale was an incentive to entice doctors to do further study so that the service would be a leading service for the respondent and Western Australia.

The applicant submitted that the employees relied on the representation that the Pay Scale would provide a career pathway. The applicant further submitted that by completing the Masters Degree, the employees suffered detriment in time, cost of study and ongoing fees, and the loss of an opportunity to specialise in another field. Further, the applicant submitted that the employees could not reasonably use the Masters Degree obtained anywhere else in Western Australia.

The respondent contended that there was no evidence that the Pay Scale was approved by an officer with the authority to do so. Further, the respondent contended that the completion of the Masters Degree was within the ordinary professional development of the employees.

Notwithstanding that the employees’ work was good, the respondent contended that it would be unfair for the employees to be paid the same as the Consultants employed by the employer, particularly where the employees did not qualify and were not eligible to be appointed to Consultant level.

Findings

The Arbitrator considered the principles of promissory estoppel as set out by Quinlan CJ and Vaughan JA in Wilson v Arwon Finance Pty Ltd [2020] WASCA 137.

The Arbitrator found that the Pay Scale amounted to a representation by the respondent that the SARC doctors would progress up the pay levels as they achieved academic and/or case load milestones.

The Arbitrator considered that the senior executive who approved the above industrial payment had actual authority to do so. The Arbitrator noted, however, that this actual authority may not be necessary for an estoppel to arise.

By approving and applying the Pay Scale, the Arbitrator concluded that the respondent induced and maintained the assumption that the employees would be paid under the Pay Scale, if they obtained the academic qualification and milestone.   This was supported by the evidence led by the applicant that the existence of the Pay Scale was the reason the employees obtained their Masters Degrees.  

The Arbitrator found that the employees incurred financial, temporal, professional and personal costs in the process of undertaking the onerous Masters Degree, notably because the course required inflexible interstate travel requirements, and that this commitment went beyond what was reasonable for ordinary continuing professional development.

The Arbitrator declared that the respondent was estopped from offering the employees a further contract at a lower pay level than Level 21, as set out in the Pay Scale.  It was  determined that such an order was necessary to prevent unconscionability and was proportionate to the detriment suffered by  the employees.

The decision can be read here.