CONTRACTUAL BENEFIT CLAIM

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2021 WAIRC 00566

DELIVERED : Friday, 5 November 2021

FILE NO. : B 167 OF 2019

Applicant

AND

Roman Catholic Bishop of Bunbury

Respondent

CatchWords : Benefit under a contract – Contractual benefit claim – Terms of contract – Policies implied into terms of contract – Industrial or enterprise agreement implied into terms of contract

Legislation : Industrial Relations Act 1979 (WA)

Result : Application dismissed

Representation:

Applicant : Mr A Doyle

Respondent : Mr I Curlewis (of counsel)

Case(s) referred to in reasons:

Ansett Transport Industries (Operations) Pty Ltd & Others v Australian Federation of Air Pilots & Others (1989) 95 ALR 211

Belo Fisheries v Froggett (1983) 63 WAIG 2394

Matthews v Cool or Cosy Pty Ltd [2004] WASCA 114; (2004) 84 WAIG 2152

Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307

Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193

Simons v Business Computers International Pty Ltd (1985) 65 WAIG 2039

Waroona Contracting v Usher (1984) 64 WAIG 1500

Yousif v Commonwealth Bank of Australian (2010) 193 IR 212; [2010] FCAFC 8

Reasons for Decision

1            Mr Doyle seeks an order from the Commission that his former employer Mandurah Catholic College (College) pay him $345,000 being the equivalent of three years’ salary. Mr Doyle asserts that after five years of employment his contract was prematurely terminated because of the abolition of his position in the College’s structure.  Mr Doyle contends that he was employed under a fixed term contract for eight years and seeks payment of the balance of the contract.

2            The College opposes Mr Doyle’s application and contends that Mr Doyle’s employment was subject to two renewal periods subject to a review in the preceding year of each renewal period.  The College asserts that Mr Doyle’s contract was not renewed for the third period and was not prematurely terminated.  The College contends that the abolition of the position to which Mr Doyle was appointed was permitted under the terms of his contract of employment.

Background and Facts

3            Mr Doyle commenced work at the College from 1 January 2014 as the Head of Music.  The College invited Mr Doyle to become a member of staff by letter dated 19 September 2013 (Letter A). Letter A set out the offer of employment being Head of Music, full time and ongoing, with an employment period of 1 January 2014 and the salary rate. 

4            On 26 September 2013, prior to his commencement with the College, Mr Doyle signed a letter of acceptance (Letter B).  This letter referred to Letter A and indicated Mr Doyle’s agreement to comply with all Catholic Education Commission of Western Australia Policy Statements and College Policy statements.

5            On 11 February 2014, Mr Doyle received a second letter from the College (Letter C) which enclosed Letter A and Letter B.  Set out in the text of Letter C is the following:

Your contract for this position is for an 8 year term.  It is broken into three parts of:

Initial period 2 years  1 January, 2014 to 31 December, 2015

Renewal Period 3 Years 1 January, 2016 to 31 December, 2018

Renewal Period 3 Years 1 January, 2019 to 31 December, 2021

Your position will be reviewed during the year prior to the next renewal period commencing.

6            Annexed to Letter C were three pages titled ‘THE SCHEDULE’.  Each Schedule detailed the three different periods referred to in Letter C. The first for a period of appointment from 1 January 2014 until 31 December 2015 signed by Mr Doyle on 19 February 2014 and by K Fraser on 11 February 2014; the second schedule is for a period of appointment 1 January 2016 until 31 December 2018 signed my Mr Doyle on 19 February 2014 and by Andrew Watson on 26 August 2016; and the third schedule for a period of appointment 1 January 2019 until 31 December 2021 signed only by Mr Doyle on 19 February 2014.

7            In 2018 the College commenced a process to restructure the middle and senior management roles in the school.

8            Mr Doyle commenced a period of sick leave in 2018 at the end of Term 1 and remained on sick leave until the end of the year.

9            The College Principal gave evidence that in June 2018 he attempted to arrange a meeting with Mr Doyle to discuss Mr Doyle’s leave and return to duties. The meeting did not occur because Mr Doyle’s representative was not able to attend.  Mr Doyle’s evidence differs in that he says he was able to attend the meeting and because he was ill requested the attendance of a union advocate.  Mr Doyle says the College refused his request for a union advocate to attend and cancelled the meeting. The emails submitted into evidence reflect that Mr Doyle advised the Principal that he was unwell and requested the attendance of union representation.  The Principal responded advising that the meeting was cancelled because Mr Doyle was unwell. In addition, the Principal advised Mr Doyle that a union representative was permitted to attend and set out his views on the role of the union advocate.  Following the school holidays the meeting was rescheduled for September.

10         On 13 September 2018 a meeting was held between the Principal and Mr Doyle at which Mr Doyle was advised of the proposed restructure and the consequential abolition of the position of Head of Music position on 31 December 2018.  Mr Doyle was informed that a new Director of the Arts position would be advertised on the following weekend.  Mr Doyle’s union representative attended the meeting.

11         Mr Doyle applied for the Director of Arts position but was unsuccessful.  On 21 November 2018 the Principal met with Mr Doyle to discuss the situation for Mr Doyle.  The Principal advised Mr Doyle that he was able to continue at the College as a teacher.  The Principal offered to maintain Mr Doyle’s pay rate at that of the Head of Music for 2019 after which the pay rate would reduce to that of a teacher.  Mr Doyle was also offered an alternative of a mutual separation arrangement comprised of six weeks pay in lieu of notice and an ex gratia payment of 16 weeks.  Following the meeting the Principal set out the proposals in a letter to Mr Doyle.

12         Mr Doyle did not respond to the letter.

13         Mr Doyle requested leave without pay from 1 January 2019 to 31 December 2019.  This request was granted.  In a letter of 6 December 2018 the Principal advised Mr Doyle that he did not agree with Mr Doyle’s views of the process of the organisational restructure, observed that Mr Doyle had not provided any information concerning his medical condition that precluded him participating in discussions and that he had the benefit of support from his union.  The Principal advised that the mutual separation payment was no longer available.  In addition the Principal advised Mr Doyle that he had not changed his view concerning the 2014 Contract of Employment.  The Principal informed him that the offer to maintain his salary at the Head of Music rate for 2019 was no longer available and set out the arrangements on his return to duty in 2020 following the period of leave without pay as follows: ‘return to work in 2020 to a full-time ongoing Teacher position at Step 10 salary only’. Mr Doyle commenced a period of leave without pay.

14         Mr Doyle wrote to the College through his lawyers on 5 February 2019 asserting that ‘in the Letter of Offer to our client, dated 11 February 2014, the following is stated “Your contract for the position is for an 8-year term”.’  Mr Doyle asserted that the College terminated the employment contract on grounds not permitted under the contract and sought damages as a result of the breach.  The damages sought is equal to the loss of earnings that Mr Doyle would have earned had the contract not been prematurely terminated.

The Questions to be Determined

15         The first question to be determined is whether the employment contract ought to be construed as a fixed term contract for a duration of eight years or a contract for fixed terms of lesser periods.

16         The second question to be determined is whether the terms of the contract of employment permitted the College to abolish the position held by Mr Doyle.

What are the Principles that Apply?

17         The jurisdiction to enquire into and deal with an industrial matter is conferred by s 23(1) of the Industrial Relations Act 1979 (WA) (IR Act) to hear and determine a claim.  Section 29(1)(b)(ii) of the IR Act provides standing to an employee to bring a claim concerning entitlements under a contract of employment:  Matthews v Cool or Cosy Pty Ltd [2004] WASCA 114; (2004) 84 WAIG 2152.

18         The Full Bench in Simons v Business Computers International Pty Ltd (1985) 65 WAIG 2039 found that the jurisdiction of the Commission in matters pursuant to s 29(1)(b)(ii) is judicial:

The jurisdiction of the Commission which is founded by proceedings brought under section 29(b)(ii) of the Act is judicial.  It is not arbitral or legislative.  The Commission’s jurisdiction is thus limited to the ascertainment of existing rights by a determination of whether or not an employee has been denied a benefit not being a benefit under an award or an order, to which the employee is entitled under a contract of service

19         An applicant making an application pursuant to s 29(1)(b)(ii) must, therefore, establish that their claim is for a benefit to which he/she is entitled under his/her contract of employment. The Commission must determine the terms of the contract of employment and decide whether the claim constitutes a benefit which has been denied under this contract having regard to the obligations on the Commission to act according to equity, good conscience, and the substantial merits of the case (Belo Fisheries v Froggett (1983) 63 WAIG 2394; Waroona Contracting v Usher (1984) 64 WAIG 1500; Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307).

20         The meaning of ‘entitled’ in the context of the section must mean entitled as a matter of legal right, because it refers to benefits under the contract Perth Finishing College Pty Ltd v Watts, 2313.

21         To establish that there is a claim for a benefit under the contract the terms of the contract must be considered.

Application

22         In this matter Mr Doyle must first establish that that the terms of his contract provided for a fixed term of eight years for his claim to be successful.

23         The terms of Mr Doyle’s contract of employment are found by reference to the letter of offer dated 19 September 2013, the letter of his acceptance of that offer dated 26 September 2013, the letter dated 11 February 2014 which enclosed the contractual document and the three pages headed ‘THE SCHEDULE’ for the periods 1 January 2014 to 31 December 2015, 1 January 2016 until 31 December 2018, and 1 January 2019 until 31 December 2021.

24         Mr Doyle contends that the three documents titled ‘THE SCHEDULE’ are subsidiary and subordinate to the Confirmation of Contract letter dated 14 February 2014.

25         I find that the annexures entitled ‘THE SCHEDULE’ give effect to the references to the ‘initial period’ and the two ‘renewal period(s)’ in the letter dated 11 February 2014.

26         The letter dated 11 February 2014 both states that the ‘position is for an 8-year term’ and that there are three renewal periods with an initial period of two years and two renewal periods of three years.  It also states that Mr Doyle’s position will be reviewed during the year prior to the next renewal period commencing.  To ascertain the terms of the contract the contents of Letter C and the meaning of ‘renewal period’ and the consequences of the inclusion of ‘renewal periods’ must be considered.

27         The Macquarie Dictionary defines ‘renew’ as ‘to make effective for an additional period’, ‘to make new, or as if new, again’, ‘to begin again’ and ‘to become new, or as if new, again’.

28         I find that Mr Doyle’s contract provides for an initial period and two renewal periods creating three discrete periods which begin again or are made new.  The practical effect of the renewal, when the meaning of this word is considered, is that each of the renewal periods are fixed terms. The second fixed term period concluded on 31 December 2018.  Alternately, if the second period was extended by agreement or an extension was authorized by the terms of the contract of employment, on 31 December 2019.  The third period if renewed would conclude on 31 December 2021.

Was the Second Fixed Term Extended?

29         Mr Doyle asserts that his contract was renewed and continued for the renewal period 1 January 2019 to 31 December 2021.  Mr Doyle submits that the review due in 2018 was not conducted and this omission effectively results in the renewal for the third period.  In his submissions Mr Doyle states that ‘a new Contract was signed by both parties in agreement of continuance of the term (due to the successful review in 2016), amendment of Position Title, and amendment of the third term review (to occur in 2019 – during the third term)’.  During 2019 Mr Doyle was on leave without pay and a review was not conducted.

30         The College contends that the renewal period was varied, with the agreement of Mr Doyle, by extending the second renewal period to conclude at the end of 2019.  This resulted from the approval of the request from Mr Doyle for leave without pay for the period 1 January 2019 to 31 December 2019.  The College contends that Mr Doyle’s refusal to accept the offer made to return to the College from 1 January 2020 in the position of Teacher brought the employment contract to an end at the conclusion of the second renewal period being 31 December 2019.

31         The College contends that the Catholic Education Commission of Western Australia policy ‘Appointment of Staff in Catholic Schools’ applied to the terms and conditions of Mr Doyle’s appointment.  The College submits the following clauses in this policy provide authority for their contentions that the contract was not reviewed and renewed at the conclusion of the second period:

5.5.4 The tenure of the middle leadership position shall be at the discretion of the Principal but shall be no less than one year and no longer than eight years, at which time the position is to be advertised. Reviews shall occur at regular intervals of at least three years.

5.5.5 Continuation of the contract is dependent upon a successful review of performance in relation to defined responsibilities.

5.5.6 The position shall be advertised in the final year of tenure. The incumbent may apply. However, should the incumbent be unsuccessful in obtaining a similar position in the current or any other Catholic school, he/she shall have security of employment as a teacher in the current school.

32         A letter from the Principal to Mr Doyle dated 21 November 2018 states that he agreed the performance appraisal scheduled for 2018 be postponed until 2019 for various reasons.  The letter further states that ‘Accordingly, while not expressly stated in the contract, I confirm I am willing to acknowledge this as an extension of your current term to 31 December 2019’.  The letter set out two options of either taking up a teaching position in 2019 or a mutual separation package to consider. 

33         On 6 December 2018, by email, Mr Doyle sought approval for leave without pay for the period 1 January 2019 to 31 December 2019.  The Principal responded in writing to Mr Doyle on the same day advising him, inter alia, that his leave without pay was granted and that his current contract term expires on 31 December 2019.

34         The College asserts that the second fixed term was extended by one year.  A review was required to renew that contract beyond that time.  The omission of the necessary review had the effect of the contract not being renewed.  Therefore, the contract expired on 31 December 2019.

35         Mr Doyle contends that the second renewal period concluded on 31 December 2018 and that the third renewal period did not expire until 31 December 2021.  Therefore, on early termination of his contract the College is obliged to pay compensation equivalent to three years.

36         The central issue to determine is whether the terms of the employment contract incorporated the provisions from the external sources of the terms of the enterprise agreement and/or the policies.

Principles of Incorporation of External Sources into The Terms of a Contract

37         An employment contract may incorporate terms contained within sources external to the contract through express or implied reference to the other source.  An express reference may be found in a bridging term in the contract which identifies the external source document and indicates the effect the external source document has on the contract.

38         To ascertain whether a contract incorporates an external document it is necessary to consider the language of the bridging term. In Ansett Transport Industries (Operations) Pty Ltd & Others v Australian Federation of Air Pilots & Others (1989) 95 ALR 211, 256 the Supreme Court of Victoria considered the expression ‘Employment will be in the terms and under the conditions of the Airlines Pilot Agreement 1963’ and found that the reference to the Agreement in the contract of employment had the effect of incorporating the terms of the Agreement into the contract. In Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193, [24] the Full Court considered the expression ‘you agree to abide by all company policies and practises currently in place’ and found that the company policies were incorporated into the contract of employment.

39         Yousif v Commonwealth Bank of Australian (2010) 193 IR 212; [2010] FCAFC 8, [89],  [96] the Full Court considered the expression ‘you are required to comply with all Bank policies and procedures’ and the effect of the statement in the Manual that it ‘is not in any way incorporated as part of any … agreement entered into by the Bank, nor does it form any part of any employee’s contract of employment’ and found that the language did not have the effect of incorporating the terms of the Agreement into the contract.

Extension of Second Renewal Period and Non-Renewal of Third Period

40         Letter A refers to the policy statements:

As a member of staff you are required to comply with all Catholic Education Commission of Western Australia Policy Statements (which are located at www.ceo.wa.edu.au) and College Policy statements.  It is also a condition of your employment that you actively contribute to the maintenance of the Catholic ethos of the College through a manner of life and stated beliefs which are in keeping with the teachings of the Catholic Church

41         Letter B contains the statement ‘I agree to comply with all Catholic Education Commission of Western Australia Policy statements and College Policy statements’.

42         The language of Letter C is in part similar to that in Yousif, however the express statement that the policies do not form part of the employee’s contract of employment which appeared in the written terms in Yousif is absent from the written contract and policies in this matter. The language of Letter B is an express agreement to comply, similar to the words used in Riverwood. I find that the Catholic Education Commission of Western Australia Policy statements and College Policy statements are incorporated into the contract of employment.

43         The policy states at clause 5.5.4: ‘The tenure of the middle leadership position shall be at the discretion of the Principal but shall be no less than one year and no longer than eight years, at which time the position is to be advertised.  Reviews shall occur at regular intervals of at least three years’ and at 5.5.5 ‘Continuation of the contract is dependent upon a successful review of performance in relation to defined responsibilities’.

44         I find that the Appointment policy was incorporated into the terms of the contract.

45         A review was not conducted in 2018 nor in 2019. The review was not conducted because Mr Doyle was on a period of sick leave or leave without pay during the relevant periods and in these circumstances it was not possible to conduct a review.  In the absence of a review being conducted the third renewal schedule was not signed by a representative or delegate of the College.  The Appointment Policy is clear that a continuation of a contract of employment is dependent on a successful review of performance.  In the absence of the successful review of performance or an agreement that the contract be renewed without the need for a review indicated by the signature of an authorized representative or delegate of the College the contract cannot be said to have continued or have been renewed.

46         I find that the contract was not renewed for the third renewal period.

Was the Abolition of the Head of Music Position a Breach of Contract?

47         Mr Doyle contends that his contract of employment was prematurely and unilaterally terminated by the College when it implemented a change in organisational structure and abolished his position.  Mr Doyle asserts this was a breach of his contract because the terms of his contract did not provide the necessary authority to the College to terminate the contract earlier than the eight years for reasons other than for poor performance and/or misconduct.  Mr Doyle maintains his contract was repudiated and he seeks payment or compensation of the equivalent of the Head of Music for three years being the balance of that period.

48         Mr Doyle contends that the decision of the College to restructure its organisation and abolish the position of Head of Music created the circumstances in which it was not possible to conduct a review in 2018 and renew the contract for the third period.  Mr Doyle claims this is a breach of the contract and he ought be compensated for the breach.

49         Mr Doyle says the Enterprise Bargaining Agreement (EBA) supports the contract, but the contract sits above the EBA.

50         The College maintains that the terms of Mr Doyle’s contract incorporated the terms of the Western Australian Catholic Schools (Enterprise Bargaining) Agreement No. AG 33 of 2012 (the EBA).  This provided the authority for the College to make changes to the organisational structure including those that had the consequence of abolishing the position and bringing the entitlement to the salary associated with the position to an end.  The College asserts that Mr Doyle’s refusal to return to the College to take up a position of teacher at a reduced salary rate is a repudiation of his contract and the College is not obliged to pay him.

51         The question to be determined is whether the terms of the EBA are incorporated into the terms of the contract employment.  If the answer to this question is in the affirmative, the issue to be determined is whether the EBA permitted the College to abolish Mr Doyle’s position.

Application

52         In this matter, Mr Doyle’s contract references the external document, the EBA, by stating ‘you are invited to be a member of staff at Mandurah Catholic College under the terms and conditions of the Western Australian Catholic Schools (Enterprise Bargaining) Agreement No. AG 33 of 2012.  A copy of this agreement can be located on www….’.  The bridging term is similar to that in Ansett and I find that the terms of the EBA were incorporated into Mr Doyle’s contract.

53         Clause 23 of the EBA provides for the College to notify employees when it has decided to introduce changes such as organisation structures, restructuring of jobs and the elimination or diminution of job tenure and obliges the College to discuss the changes with affected employees and to provide information to employees and the Union.  This provision evidences an authority for the College to introduce change including the elimination, or abolition, of jobs.

54         Clause 35 of the EBA sets out the obligations of the College in circumstances where a position is abolished, and an employee becomes redundant.  The clause sets out the entitlements of employees where their position is abolished or made redundant.  The provisions of this clause placed an obligation of the College to provide Mr Doyle with notice of six working weeks of the position of Head of Music being abolished.  The relevant clause, clause 25, notes that the notice will usually take effect from the close of the school business at the end of the school term.  In circumstances where an employee is not provided with the required notice the employee is entitled to payment of the difference between the notice given and that required to be given.

55         The Principal notified Mr Doyle of the abolition of the position of Head of Music on 13 September 2018 at a meeting between the Principal, Mr Doyle and a union representative.  I find that Mr Doyle was notified in accordance with provisions of the EBA and his contract of employment (because the contract incorporates the terms of the EBA).

56         On 21 November 2018 Mr Doyle was offered two options: Placement in a teacher position with his salary maintained at the Head of Music rate for 2019 or a mutual separation package.  Mr Doyle did not respond to the proposals and applied for leave without pay for 2019.  Mr Doyle submits he ought be paid for 2019 because the contract continued.  The contract between Mr Doyle and the College was a bargain whereby the College paid Mr Doyle for the services Mr Doyle provided.  When on leave without pay Mr Doyle was not providing the College with his services.  As such the College is not obliged to pay Mr Doyle.

Conclusion

57         I find that Mr Doyle has not discharged the onus upon him to establish a benefit to which he is entitled under his contract of employment and for the reasons set out above I will dismiss the application.