Fair Work Act 2009
s.604 - Appeal of decisions

Appeal against decision [2015] FWC 8330 of Senior Deputy President O'Callaghan at Adelaide on 8 December 2015 in matter number U2015/12036.

[1] Mr Philip Moyle has lodged a notice of appeal in which he seeks permission to appeal and appeals a decision of Senior Deputy President O’Callaghan issued on 8 December 2015 1 (Decision). In the Decision the Senior Deputy President dismissed Mr Moyle’s application for an unfair dismissal remedy against MSS Security Pty Ltd (MSS) lodged pursuant to s.394 of the Fair Work Act 2009 (FW Act) on the basis that Mr Moyle had not in fact been dismissed.

[2] The events which formed the basis of Mr Moyle’s contention that he had been dismissed are as follows. Mr Moyle had previously been employed by ISS Security as a security guard at Lyell McEwin Hospital in Adelaide. In 2013 ISS Security lost its contract to provide security services to the hospital, and MSS won the contract from SA Health to provide security services to all its metropolitan hospitals (including Lyell McEwin Hospital). In July 2013 Mr Moyle successfully applied for a position with MSS. He signed a contract of employment with MSS on 2 July 2013. We will discuss the relevant provisions of this contract later in this decision. On Mr Moyle’s own evidence, after he signed the contract he was taken into a separate room along with other staff members and told by a manager: “you will be performing duties as team leaders”. Thereafter he worked for MSS as a Team Leader at Lyell McEwin Hospital, and was classified and paid as a Level 5 Security Officer under the Security Services Industry Award 2010 2 (Award). Mr Moyle’s evidence was that he was required to supervise from 6 to 10 other MSS staff members and that he had a high level of responsibility and minimal supervision.

[3] On 28 August 2015 Mr Moyle was advised by MSS Management that he would be transferred to a different worksite, and two alternative healthcare worksites were nominated. The evidence was that the reason for the transfer was that MSS’s client, SA Health, had requested that MSS’s security staff be rotated around various healthcare locations. Mr Moyle was further advised that at either location he would be classified and paid as a Level 3 Security Officer under the Award. This meant that he would not perform team leader duties and would involve approximately a 4.7% or $1 per hour reduction in ordinary pay. Mr Moyle sought advice from his union, United Voice, about this situation, and on 18 September 2015 United Voice sent MSS a letter disputing the transfer, which it characterised as a demotion. However this was to no avail, and Mr Moyle was transferred to one of the alternative worksites which he had selected on or about 9 September 2015. He has been paid at Level 3 since 4 October 2015, and has lost his former supervisory duties. He was also, upon being transferred, moved from night shift to day shift resulting in a loss of the night shift loading, but this was as a result of Mr Moyle’s preference to work day shift.

[4] Mr Moyle’s unfair dismissal application was lodged on his behalf by United Voice on 29 September 2015. The application alleged that Mr Moyle had been demoted, and that this constituted a dismissal. This was contested by MSS, and this issue was the subject of the Decision.

[5] Section 386 of the FW Act defines when a person has been “dismissed” as follows:

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

[6] In the Decision the Senior Deputy President determined that the circumstances which were alleged to constitute Mr Moyle’s dismissal fell within the s.386(2)(c) exception to the general definition of “dismissed” in s.386(1). In reaching that conclusion the Senior Deputy President proceeded upon the following construction of s.386(2)(c):

“[17] The plain words of s.386(2)(c) must be construed such that a demotion in employment can only constitute dismissal for the purposes of Division 3 of Part 3-2 of the FW Act if the employee does not remain employed by that employer and the demotion involves either a significant reduction in the employee’s remuneration or duties. This section of the FW Act does not provide that a reduction in either duties or remuneration is sufficient, of itself, to constitute a dismissal. A mandatory requirement is that the employee no longer remains employed. That approach is consistent with the approach in the Full Bench decision in Barkla v G4S Custodial Services Pty Ltd 3.”

[7] The Senior Deputy President went on to find that Mr Moyle’s reduction in remuneration could not be regarded as significant for the purpose of s.386(2)(c)(i) 4, nor could the reduction in his duties properly be described as significant5, and concluded as follows:

“[32] The use of the unfair dismissal jurisdiction to determine, at this stage, a dispute over the allocation of duties to Mr Moyle appears inherently inconsistent with the plain words of s.386(2)(c). Where an employee remains as such and the capacity exists for resolution of a disagreement over the duties allocated to that employee, the concept of repudiation of the employment contract appears inherently difficult to invoke.

[33] Mr Moyle may have remained employed with MSS reluctantly, but there is nothing unique or extraordinary about that. The plain provisions of s.386(2)(c) indicate that he has not been dismissed at the present time.”

[8] It was submitted on behalf of Mr Moyle before us that the construction of s.386(2)(c) upon which the Senior Deputy President proceeded was erroneous. The Senior Deputy President interpreted s.386(2)(c) as requiring that there be both a significant reduction in the applicant’s remuneration or duties and that the applicant no longer be employed by the relevant employer in order for a demotion to constitute a dismissal. This was incorrect, it was submitted, because s.386(2)(c) was an exclusion from the general definition of “dismissed” in which the party invoking the operation of the exclusion (that is, the employer) had to demonstrate that there had in fact been no significant reduction in the applicant’s remuneration or duties and that the applicant remained employed by the relevant employer.

[9] We accept Mr Moyle’s submission to this effect. Section 386(1) sets out a general definition of what constitutes a dismissal. Section 386(2) then sets out three sets of circumstances which, even if they fall within the general definition, are deemed not to be dismissals. These are, in effect, exceptions to s.386(1). The third of these exceptions, in s.386(2)(c), relates to demotions in employment. In order to fall within this exception - that is, for a demotion that otherwise constitutes a dismissal under s.386(1) to be deemed not to be a dismissal, both limbs of the exception must be satisfied, as Mr Moyle submitted. The construction adopted by the Senior Deputy President was, with respect, in error because it inverted the exception by making it necessary for an applicant to negative both limbs of the exception in order for the demotion to be a dismissal. This would have the perverse result that a demotion in employment could never constitute a dismissal, even where it is plain that the existing contract of employment has been terminated and replaced by a new and inferior contract, because the employee will necessarily have remained in employment with the employer and thus could not negative s.386(2)(c)(ii).

[10] The Full Bench decision in Barkla v G4S Custodial Services Pty Ltd 6 does not support the construction adopted by the Senior Deputy President. That decision was concerned with what constituted a termination at the initiative of the employer for the purposes of s.386(1)(a), not with the construction of the exception in s.386(2)(c).

[11] The approach taken by the Senior Deputy President to s.386(2)(c) involved an appealable error of law. We consider that it would be in the public interest to grant permission to appeal because the identified error is one that relates to a provision of general application to unfair dismissal cases. Permission to appeal will therefore be granted in accordance with s.400(1) and s.604(2) of the FW Act.

[12] However it does not follow from this that the overall conclusion reached by the Senior Deputy President, namely that Mr Moyle was not dismissed, was incorrect. Whether or not the exception in s.386(2)(c), properly construed, was applicable, it remained necessary for Mr Moyle to demonstrate at the outset that he had been “dismissed” within the meaning of s.386(1).

[13] An action taken by an employer to change the remuneration and duties of an employee could not constitute a dismissal under s.386(1) where the change was one authorised by the contract of employment. In this case, we consider it clear that MSS’s transfer of Mr Moyle was authorised by Mr Moyle’s contract of employment.

[14] Mr Moyle signed a “Letter of Appointment – Full-Time” (Letter) issued by MSS which contained an “…offer of employment as a Full-time Security Officer...” on 2 July 2013. The Letter stated:

“This letter and the attached ‘Standard Conditions of Employment’ form your contract of employment. You are also required to comply with the Security Officers Standing Instructions. Signing this contract of employment indicates that you have received, read and understood the contents of the Security Officers Standing Instructions and your obligation to comply with these Standing Orders.”

[15] Under the heading “Duties” the Letter stated:

“Your duties are outlined in the attached Security Officers’ Standing Instructions, Site Operating Procedures (SOPs) and as directed by Senior Security Officers and Management.

Your reporting line will be dependent on the site(s) at which you work.”

[16] Under the heading “Terms of Employment” the Letter said, among other things:

“As a Security officer with the Company you agree to perform you[r] duties at any site at which the Company has a contract to provide security services…”

[17] Immediately above Mr Moyle’s signature at the end of the Letter were the following words:

“I hereby accept my appointment and will abide by the terms and conditions of employment outlined in this letter. I will also abide by: Security Officers’ Standing Instructions with which I have been issued; Site Operating Procedure; and by lawful directions, both written and verbal, from the Company and its management.”

[18] The “Standard Conditions of Employment” document which was attached to the Letter and also signed by Mr Moyle on 2 July 2015 contained the following provision:

“11. Position, Duties and Accountabilities

The title of your position and its major duties and accountabilities will be as contained in the Security Officer Standing Instructions. Subject to consultation with you, the Company reserves the right to vary these duties at any time.”

[19] Neither the Letter nor the Standard Conditions of Employment document otherwise specified Mr Moyle’s position or job location. They certainly contained no provision identifying his role as that of Team Leader. Nor do they specify that he was entitled to any particular rate of pay. In this respect, the Letter said only this:

“Whilst it does not form part of your contract of employment, some conditions of employment are covered by the Security Services Industry Award 2010 and/or any applicable industrial instrument dependent on the site at which you work.”

[20] Paragraph 7.5.2 of the Security Officers’ Standing Instructions provided:

“a. Section 7.5.2 Transfer, Location and Classification

b. As an employee of MSS Security, you are employed as a condition of employment to perform a wide range of duties at any site at which MSS Security has a contract to provide services. The business for MSS Security depends on the hold and performance of such contracts.

c. Your rate of pay and conditions as an employee shall be those applying to the duties you perform from time to time and may change according to your new assignments.

d. Section 1.14 Work as Directed.

e. Provided they are qualified and trained to perform the required duties, employees will accept any work assignment offered to satisfy MSS contractual obligations. They must be prepared to work at any MSS or client’s premises, sites, or place of duty as may be directed by MSS management.” 

[21] Notwithstanding that paragraph 15 of the Standard Conditions of Employment document provided that it and the Letter constituted the entire agreement between MSS and Mr Moyle, it is apparent that the contract of employment obliged Mr Moyle to comply with the Security Officers’ Standing Instructions, and that paragraph 11 of the Standard Conditions of Employment document incorporated by reference at least paragraph 7.5.2 of those instructions. In summary, we consider that under the contract of employment MSS was entitled to require Mr Moyle to work in a security guard role at any site at which it held a security services contract (subject we think to an implied requirement of reasonableness as to the distance of the transfer), that he could be required to perform any security guard duties for which he was qualified and trained, and that he would be paid for that role and the required duties in accordance with the Award or any other applicable industrial instrument.

[22] Mr Moyle submitted that the conduct of MSS, immediately after he had signed the Letter and the Standard Conditions of Employment document, to take him into a separate room and advise him that he would be employed as a Team Leader at Lyell McEwin Hospital and paid at Level 5 under the Award constituted a variation to the contract of employment which MSS subsequently repudiated in 2015 by transferring Mr Moyle to a position with lesser duties and a lower rate of pay. We disagree. We consider that after Mr Moyle signed the Letter and the Standard Conditions of Employment document on 2 July 2013, MSS, in a manner consistent with the relevant provisions of the contract which it had entered into with Mr Moyle as we have described them, unilaterally advised him as to his first assignment under that contract including the duties to be performed and the rate of pay. There was nothing in the evidence that suggested that there were any of the elements of offer, acceptance or bargaining in the provision of this advice. The transfer, different duties and lower rate of pay under the Award about which Mr Moyle was advised on 28 August 2015 constituted a further assignment of work consistent with the terms of the contract.

[23] We do not consider that there was any repudiation of Mr Moyle’s contract of employment by MSS, and that it continued to operate in accordance with its terms after Mr Moyle’s transfer took effect. Therefore, there was no termination at the initiative of the employer under s.386(1)(a) and no dismissal.

[24] That being the case, it is not necessary for consideration to be given to whether the exclusion in s.386(2)(c) applied. We note that the Senior Deputy President, notwithstanding the construction of s.386(2)(c) which he adopted, made findings that amounted to satisfaction of both limbs of the exception. In particular, he found in relation to s.386(2)(c)(i), as earlier set out, that he did not regard the reduction in Mr Moyle’s remuneration or duties as significant. We would not be inclined to agree; a $1 per hour reduction in wages for an award-dependent and low-paid worker such as Mr Moyle may well have been significant in the context of his personal circumstances, and a reduction from a supervisory to a non-supervisory role may have had a significant effect on the day-to-day duties required to be performed. However it is not necessary for us to state a final conclusion about this.

[25] We consider that the Senior Deputy President was correct in concluding that Mr Moyle had not been dismissed by MSS and therefore that his unfair dismissal remedy application had to be dismissed. We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is dismissed.

VICE PRESIDENT

Appearances:

S. Blewett from United Voice for P. Moyle.

R. Jansen for MSS Security Pty Ltd.

Hearing details:

2016.

Sydney:

20 January.

 1   [2015] FWC 8330

 2   MA000016

 3   [2011] FWAFB 3769

 4   Decision at [22]

 5   Decision at [26]

 6   [2011] FWAFB 3769

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