WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES’ COURT

PARTIES DANIEL THOMAS KILLIAN

CLAIMANT

-v-

Alcoa of Australia Limited

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD Wednesday, 3 August 2005, Wednesday, 26 October 2005, Wednesday, 1 February 2006, Thursday, 16 February 2006, Wednesday, 22 February 2006

DELIVERED Wednesday, 22 February 2006

CLAIM NO. M 45 OF 2005

CITATION NO. 2006 WAIRC 04145

Catchwords Extended sick leave; Total and Permanent Disablement

Cases referred to in decision

John James Reynolds v Swift & Moore Pty Ltd 74 WAIG 861

Australian Workers Union, Western Australian Branch, Industrial Union of Workers v Argyle Diamond Mines Pty Ltd 74 WAIG 3044

Byrne & Frew v Australian Airlines Ltd (1975) 131 ALR 472

Legislation  Workplace Relations Act 1996.

Alcoa World Alumina Australia, WA Operations – AWU Agreement 2003

Workers’ Compensation and Rehabilitation Act 1981

Result Breach not found

Representation 

Claimant Mr R W Clohessy appeared as agent.

Respondent Mr R Collinson (of Counsel) instructed by Hedan & Co, Industrial Relations and Management.

Reasons for Decision

Background

1. The Claimant was born on 25 January 1950.  From 5 May 1980 until 20 May 2004, the Respondent employed him.  In the latter stages of his employment with the Respondent his work conditions and entitlements were governed by the Alcoa World Alumina Australia, WA Operations – AWU Agreement 2003 (the Agreement) certified by the Australian Industrial Relations Commission on 2 July 2003.  Prior to the termination of his employment he worked for the Respondent at its Western Australian operations in the classification Job Grade 11 as referred to in clause 9 of the Agreement.  The Claimant was at the material times a member of the Australian Workers’ Union. 
2. On 16 April 2003 the Claimant’s General Practitioner, Dr Moira Somers, issued a First Medical Certificate pursuant to the Workers’ Compensation and Rehabilitation Act 1981 certifying the Claimant to be unfit for work on account of his exposure to chemicals within his work environment.  On 23 April 2003 the Claimant made his claim for worker’s compensation payments.  In his claim he alleged that he had been subject to long term exposure to fumes and chemical substances.
3. Mr Killian reported to his general practitioner that he had become progressively unwell since 1998 because of his exposure to chemicals in the workplace.  He reported lethargy, fatigue, headaches, clouded mental function, sleep disturbance, poor memory, poor concentration, lack of motivation, myalgia, arthralgia, sore throats, nausea and balance disturbance with vertigo.  The symptoms worsened with exposure and reduced with avoidance.  As a result of his circumstances of ill health he became depressed for which he was treated with antidepressant medication.  In addition to the symptoms arising from his exposure to chemicals the Claimant continued to experience neck and back pain from a separate work related injury sustained whilst working for the Respondent.
4. The Claimant remained unfit for work for an extended period.  He utilised his sick leave entitlement until the same ran out in about July 2003, at which time he utilised the extended sick leave entitlements provided for in Appendix 2 of the Agreement.  It suffices to say for my purposes that the Claimant applied for and was granted extended paid sick leave.  The period of extended paid sick leave was to be limited to a maximum of 104 weeks and was subject to discontinuance in certain circumstances as provided for in Clause 4 of Appendix 2.  I set out that provision.

4. Discontinuance of Extended Paid Sick Leave

Where medical evidence is obtained by the company appointed medical practitioner that confirms that the sick or injured employee is unable to return to his/her pre-injury duties on a permanent basis and no alternative positions are available for permanent employment within the company then a period of notice of not less than 6 weeks will be provided to the employee re the discontinuance of the extended paid sick leave.  A claim for Ill Health or Total and Permanent Disablement will be discussed with the sick or injured employee upon confirmation that the individual is unable to return to his/her pre injury duties on a permanent basis.

Failure on the part of the sick or injured employee to meet the terms and conditions of this policy, including the participation in rehabilitation, will result in the immediate discontinuance of the extended paid sick leave.

Where discontinuance of extended paid sick leave is instigated and subsequently this action is contested a formal process of appeal can be instigated at the request of the sick or injured employee with his or her immediate supervisor.  The supervisor on receipt of the appeal will convene a review team consisting of the employee, his/her nominated representative the Line Manager (or his/her nominated representative), a representative of the HR group and the company’s appointed health professional.

In cases of personal injury or illness where the issue of the discontinuance of extended paid sick leave remains unresolved after the review team has met, the matter will be referred by the WA Ops HR Manager for consideration.

5. Whilst on sick leave the Claimant participated in rehabilitation programmes.  Initially his general practitioner envisaged a return to work on a graduated return to work programme being completed in November of 2003 (see exhibit 7).  Later she revised the time frame for completion to be May 2004 (see exhibits 8, 9 and 10).  Eventually March 2004 was accepted as being the target month for completion of the programme.
6. In or about June 2003 the Respondent referred the Claimant to “Coachroad” for the provision of rehabilitation services on behalf of the Respondent.  On 11 June 2003 Jessie Lamond from Coachroad met with the Claimant and his independent external rehabilitation providers, namely, Lynne and Ron Kington (trading as Work Dynamics) in order to create a strategy for rehabilitation.  It suffices to say that the approach taken by all parties was co-operative and that the intended actions with respect to rehabilitation were agreed.  Furthermore medical practitioners were consulted prior to the implementation of any course of action aimed at rehabilitation in order to ensure that the proposed programme in each instance was both appropriate and feasible.  From June 2003 until February 2004 a number of meetings were held concerning the Claimant’s progress in rehabilitation.  The meetings were chaired by Ms Lamond.  The Claimant attended each of those meetings, as did Ron Kington.  Other interested persons attended some of the meetings including John Saunders, the Claimant’s union representative.
7. The Claimant commenced a graduated return to work programme on 4 August 2003.  The programme, which required him to perform administrative duties at the Respondent’s Residue Operations area, had been designed by Mr Kington in consultation with the Claimant’s general practitioner.  The programme envisaged an incremental increase in working hours culminating in a full time return to work by about the end of March 2004.  The Claimant, however, was unable to meet the objective. His best effort resulted in him working a total of 29.5 hours worked in one particular week.
8. In view of the Claimant’s lack of progress, Ms Lamond, on 10 March 2004, sent a draft report to the Respondent recommending a cessation of the Claimant’s rehabilitation.  Following receipt of the draft report it was made available to Mr Saunders who discussed its contents with Mr Nairn, the Respondent’s then Human Resources Officer.  Mr Saunders then spoke to the Claimant concerning the draft report and the likely outcomes.  Mr Saunders told the Claimant that a possible outcome was the cessation of paid extended sick leave and the termination of his employment.  I accept that such discussion took place well before the meeting to take place on 25 March 2004.  There can be no doubt that the Claimant was advised prior to 25 March 2004 that the employer had reached the view that the end of the line had been reached with respect to rehabilitation and that, given that a return to full-time work was not possible, termination might well result.  The Claimant well knew by the time that he attended the meeting that that outcome would facilitate an application for a total and permanent disability benefit.  The draft report was formalised and signed on 23 March 2004.  On 25 March 2004 the meeting was held to discuss the Claimant’s rehabilitation during which the report prepared by Ms Lamond was presented and discussed.  Those present at the meeting included the Respondent’s representatives, the Claimant and his representatives including Mr Kington.  As a consequence of the matters discussed it was agreed that no further rehabilitation intervention was possible.  Consequently Mr Kington and Ms Lamond excused themselves from the meeting.  Following their departure the Claimant was given a letter of termination indicating that his services were to be terminated as of 20 May 2004.  A claim for total and permanent disablement was then discussed.  The closure report to the Claimant’s general practitioner prepared by Mr Kington on 25 March 2004 reflects what transpired at that meeting.  It is appropriate that I set out the relevant parts of his report.

A meeting was held today, at the Kwinana Refinery Residue Facility, to review Mr Killian’s progress on his rehabilitation programme.  This meeting marked the end of the current programme, which had a goal of Mr Killian returning to full time hours.  The focus of the meeting was the consideration of a Rehabilitation Progress Report by Ms Jessie Lamond.  The conclusion of the report was that Mr Killian’s rehabilitation should cease, as it was considered that he was unable to demonstrate his capacity to consistently work full time in an office environment.  It was also recognised, as we had previously discussed, that a return to the Refinery environment is not anticipated to be a viable option.

Mr Killian raised a few issues, in relation to some of the content of the report, which was openly discussed at the meeting.  He did, however, agree with the general thrust of the report, that is, that during the programme, he was not able to demonstrate a reliable capacity to attend for full-time hours and undertake productive work duties.  Thus, the programme did not provide a platform for the consideration of Mr Killian’s return to any available position within Alcoa.

At the conclusion of this discussion, it was agreed that no further rehabilitation intervention was possible and Ms Lamond and I excused ourselves from the meeting.  I understand the meeting went on to discuss future arrangements for Mr Killian.

Mr Killian later provided me with a copy of a letter from the Refinery Manager, Mr Tom Adams, indicating Mr Killian’s employment would be terminated as of 20 May 2004.  I understand this will provide him with time to discuss the level of his entitlements, in relation to his separation from Alcoa.

9. The Claimant accepted the conclusion reached by Ms Lamond that he had not been able to demonstrate that he had a reliable capacity to attend for full time hours and undertake productive work duties.  His acceptance of the proposition is evidenced by a number of indicators including the fact that he failed to challenge the same as he was entitled to do. Perhaps more importantly his acceptance of Ms Lamond’ s conclusion is demonstrated by the fact that on 26 April 2004 he made an application to the Trustees of the Alcoa Superannuation Board for the provision of a Total and Permanent Disablement benefit.  The Claimant’s application was supported by his general medical practitioner who in her report dated 26 April 2004 concluded:

I have taken a comprehensive history, examined Mr Killian and performed standard and specialised medical tests and, as well I have referred him to independent specialists for opinion.  In addition he has had reasonable attempts at rehabilitation and has been unable to continue in sustainable employment.

As a result of that process I have come to the conclusion that Mr Killian is totally and permanently disabled and he is unable to work in his trade at Alcoa or at any other site and he will find great difficulty establishing himself in any form of sustainable employment outside Alcoa.

There I conclude that he fulfils the Alcoa definition of Total and Permanent Disablement and that he is unlikely ever to engage or work for reward in any occupation or work for which he is reasonably suited by his education, training or experience.

10. The Claimant’s application for a Total and Permanent Disablement benefit was rejected.  On 17 December 2004 the Claimant lodged a complaint with the Superannuation Complaints Tribunal (the Tribunal) complaining that the decision of the Trustees was unfair or unreasonable and that his claim had not been treated on its merits given that he satisfied the “Fund TPD definition”.  On 21 December 2005 the Tribunal determined to set aside the decision of the Trustees.  I set out the relevant parts of the Tribunal’s determination:

In accordance with the requirements of ss37(3), (4) and (5) of the Complaints Act, the Tribunal determines to set aside the decision under review and remit the matter to the Trustee to reconsider the Complainant’s application after obtaining relevant reports regarding the Complainant’s cognitive impairments and the effect of the Complainant’s neck and back conditions.  These reports must consider the Complainant’s ability to undertake full-time work for which he is qualified as well as the likely permanence of these conditions on his work capacity.  If at the end of that process the Complainant is dissatisfied with the Trustee’s decision he may again approach the Tribunal.

11. I am informed that the Trustees are due to deliver their reconsidered decision in March of this year.

The Claim

12. The Claimant alleges that on or about 23 March 2004 the Respondent purported to terminate the Claimant’s contract of employment with effect from 20 May 2004.  He asserts that the termination was null and void and of no effect because:

• The Claimant was, at termination, on extended paid sick leave.
• Clause 4 of Appendix 2 of the Agreement provided the only circumstances in which the Claimant could be terminated whilst on extended paid sick leave.
• The Claimant was participating in rehabilitation at the time and there was no basis upon which the Respondent could determine that the Claimant could not return to his pre-injury duties on a permanent basis.
• The Respondent did not have the required medical evidence under clause 4 of Appendix 2 to effect termination.
• The Respondent had failed to first agree on a Total and Permanent Disablement benefit to the Claimant which on a proper construction of clause 4 of Appendix 2 of the Agreement it was required to do before proceeding to termination of the Claimant’s employment.

13. The Claimant asserts that the Respondent wrongfully, and in breach of clause 4(iii) of the Agreement and clause 2 of Appendix 2 thereto, ceased making payments with respect to extended sick leave entitlements and did not discharge its duty to continue to make such payments.
14. The Claimant contends that given that he continues to be incapacitated, he is entitled to be paid sick leave for a maximum period of 104 weeks.  He therefore seeks to recover sixty weeks unpaid sick leave for the period 21 May 2004 until 20 July 2005 at the rate of $1,286.31 per week, totalling $77,178.60.  Interest is sought thereon.  Finally the imposition of penalties is sought for the alleged breaches of the Agreement.  The Claimant also sought the payment of superannuation contributions for the relevant period however he abandoned the same during the course of submissions.

The Response

15. The Respondent says that the purpose behind the payment of extended paid sick leave as stated in Appendix 2 is to provide protection for employees against the effects of medium and long-term sickness or injury which may prevent them from earning and/or maintaining their normal level of income.  The policy aims to create financial security so as to assist injured or ill employees to focus on rehabilitation and an early return to work.  The policy complements other entitlements.  The policy is aimed at conferring a benefit if there is a clear prospect of a return to work through rehabilitation.
16. The Respondent asserts that the terms and conditions of the entitlements are contained in the administrative guide in Appendix 2 which can be distilled as follows:

a)        Continued employment;

b)       An ability to return to pre-accident employment or suitable employment in the future; and

c)        Participation in rehabilitation in satisfaction of b) above.

17. Extended paid sick leave is not open ended and is limited to a maximum of 104 weeks subject to compliance with the aforementioned terms and conditions.  The benefit may be discontinued if:

a)        an employee ceases to claim extended paid sick leave;

b)       medical evidence is obtained by the Respondent’s appointed medical practitioner that confirms that the sick or injured employee is unable to return to his/her pre-injury duties on a permanent basis and no alternative positions are available for permanent employment with the Respondent; or

c)        there is a failure on the part of the sick or injured employee to meet the terms and conditions of the policy, including participation in rehabilitation.

18. If extended paid sick leave is discontinued because medical advice confirms an inability to return to pre-injury duties on a permanent basis and no alternative positions are available, then the Respondent must provide six week’s notice of the discontinuance and proceed to discuss a claim for Ill Health or Total and Permanent Disablement benefit available under the applicable superannuation scheme.
19. The Respondent says that the Claimant ceased to be entitled to extended paid sick leave because:

1)       He failed to make an application for extended paid sick leave for the claimed period.

2)       There was evidence from the Claimant’s treating general practitioner to the effect that the Claimant was unable to return to his pre-injury duties and the Respondent’s rehabilitation provider’s opinion was that no alternative positions were available.

3)       The rehabilitation of the Claimant had objectively failed notwithstanding it being fair, transparent and reasonable with a clearly stated and agreed goal which was unable to be met.

20. The Respondent argues that the lack of continued employment during the relevant period precludes the claim. Employment is a precondition to entitlement.  In that regard it is submitted that this Court is without jurisdiction to determine the matter because the Claimant was not, for the period of the claim, an employee of the Respondent.  The Claimant’s employment is a necessary requirement to enliven the Court’s jurisdiction.
21. Furthermore the Respondent says that any contention of unfair dismissal, which is denied in any event, is irrelevant.  Whilst there may be avenues open to the Claimant arising from his claimed incapacity they do not and cannot arise from the Agreement.
22. This claim is inconsistent with the Agreement.  The Claimant fails to meet the conditions necessary for extended paid sick leave under the Agreement.  It follows that the Respondent denies any breach of the Agreement as alleged or at all.

Conclusion

23. This claim is predicated on the Claimant’s view that his employment was unlawfully terminated and therefore that the purported termination was null and void and of no effect.  Accordingly he argues that he was at all material times an “employee” entitled to bring this claim.  The Respondent contests such assertion and says that the Claimant was not, for the period claimed, an employee bound by the Agreement.  The Respondent says that the Claimant’s termination was lawful in any event.
24. The Claimant relies on two decisions of the Western Australian Industrial Relations Commission to advance his argument.  Those decisions are John James Reynolds v Swift & Moore Pty Ltd 74 WAIG 861 (Swift) and Australian Workers Union, Western Australian Branch, Industrial Union of Workers v Argyle Diamond Mines Pty Ltd 74 WAIG 3044 (Argyle).  Each of those matters dealt with claims alleging unfair dismissal.  In Swift the termination occurred whilst the employee was receiving payment of accrued sick leave entitlements.  The Full Bench held in that matter that the employer had no right to interfere with the employee’s entitlement so as to deprive the employee of his sick leave entitlement.  In Argyle, Commissioner Gregor (as he then was) said at page 3048:

When a person is absent and they are not on sick leave, or sick leave is exhausted and that person is being paid an entitlement which falls due to them by virtue of their membership of the Argyle Diamond Mine Sickness and Accident Scheme, they are not on sick leave.  Before Clause g) of the insurance certificate was amended, the right to payment was coterminous with termination of the employment.  That would not be allowable in the case of termination if an employee was on genuine sick leave under an award and there was still sick leave available to them.  The doctrine in the Multicom Case (supra) would prohibit that.  The amended clause recognises that if there is a disability admitted and the person is dismissed, the income will not be reduced.  What a medical certificate does is authorise payment of entitlements where payments under the policy are not coterminous with the end of the employment contract.

25. The Respondent argues that Swift is distinguishable because the entitlement received was an accrued entitlement, whereas the Claimant in this matter had exhausted his accrued entitlement to paid sick leave.  Indeed the Claimant’s position in this matter is more akin to the employee’s position in the Argyle matter.  The Respondent points out that the High Court of Australia in Byrne & Frew v Australian Airlines Ltd (1975) 131 ALR 472 held that a breach of a clause in an award that provides that an employee not be unfairly dismissed did not render the termination of employment invalid.  A distinction was drawn between a contract of employment (which may be kept on foot if breached) and the employment relationship, which terminates on dismissal.  The fact that a claim may be for breach of contract (or an award or agreement) does not render the termination of employment, even if in breach of its terms, a nullity.
26. In this matter it appears that clause 3 of the Agreement refers to employment and not to a contract of employment.  Once the Claimant’s termination took effect there was no employment.  That is a matter of fact.  Appendix 2 of the Agreement makes no reference to termination of employment and does not prohibit or restrict the Respondent from otherwise lawfully terminating the employment of the Claimant, and it seems on the face of it that the Respondent was entitled to terminate the Claimant’s employment as it did.  The authorities cited by the Claimant in support of his claim are distinguishable both legally and factually. The Claimant in this matter exhausted all his sick leave entitlements before the termination of his employment occurred.  It follows that the termination of his employment did not have the effect of defeating his entitlements. The payment of extended sick leave was entirely contingent upon the Claimant’s continued progress in rehabilitation and was determinable if rehabilitation did or could not succeed.  I proceed therefore on the basis that the termination that occurred was not unlawful.  In those circumstances the Claimant was not for the material period an employee.  Given that his Claim is entirely predicated upon employment his Claim cannot succeed.
27. Even if the Claimant could be said to be entitled to claim extended sick leave benefits, it is the case that he did not make any application for such benefits for the claimed period in accordance with clause 3 of Appendix 2 of the Agreement.  The payment of such benefits is contingent upon an application being made.  Given that no application has been made with respect to the claimed period, any entitlement to such benefit cannot arise.
28. Furthermore it is quite apparent that the discontinuance of payments to the Claimant of extended sick leave benefits as from 20 May 2004 was achieved in accordance with clause 4 of Appendix 2 of the Agreement because he could not meet the terms and conditions of the policy with respect to his participation in rehabilitation.  In that regard it was the case that by March 2004 attempts at rehabilitation had objectively failed.  The rehabilitation programme was fair, transparent and reasonable with a clearly stated and agreed goal, which the Claimant was unable to meet.  Notwithstanding his endeavour, the Claimant was not able to achieve rehabilitation within the agreed time frame.  He was therefore unable to return to his pre-injury duties and the Respondent’s rehabilitation provider had determined that no alternative positions were available.  The Claimant agreed with the rehabilitation outcome as is evidenced by Mr Kington’s closure report and his subsequent application for Total and Permanent Disability benefit.  It appears that all concerned, including the Claimant and his general medical practitioner, had reached the view by about March 2004 that the Claimant had reached the end of the line with respect to rehabilitation.  The reality was that he could not work on a full-time basis and hence his application for Total and Permanent Disability benefit.  The medical evidence available to the Respondent was indicative of the same.  In the circumstances the Respondent was quite entitled to discontinue payment of extended sick leave.  Initially the Claimant took no issue with what had occurred because, it would appear, he agreed with the course of action taken which facilitated his application for a Total and Permanent Disability benefit.  It was only after the Trustees on 11 August 2004 rejected his claim for a Total and Permanent Disability benefit that this claim was made.
29. I find that the Respondent has not failed to comply with the Agreement.

G Cicchini

Industrial Magistrate