[2013] FWC 9804

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Peter Mihajlovic
v
Lifeline Macarthur
(U2013/2607)

VICE PRESIDENT HATCHER

SYDNEY, 16 DECEMBER 2013

Jurisdictional objection - Whether application lodged out of time.

[1] Mr Mihajlovic was previously employed by Lifeline Macarthur (LLM). During that employment, on 5 June 2013, LLM sent him a letter (dismissal notice) which included the following:

“This letter confirms that the role of Chief Executive Officer will cease to exist as at the close of business on 5 September 2013. This means that your employment in that role will come to an end on that date as a result of redundancy.

Unfortunately we cannot identify any redeployment opportunities within LLM.

Whilst your role will cease to exist on 5 September 2013, you are not required to work out the entirety of your three (3) month notice period and your last working day in this position will be Friday 7 June 2013. On 7 June 2013 you will receive:

● a Certificate of Service;

● payment for the balance of your notice period required to bring your Employment Contract to an end;
● 7 weeks’ severance payment; and
● your accrued but untaken statutory entitlements.”

[2] Mr Mihajlovic filed an application for an unfair dismissal remedy on 5 August 2013 under s.394(1) of the Fair Work Act 2009 (the Act). On 6 September 2013, LLM filed its response to Mr Mihajlovic’s application. In that response, it specified a number of jurisdictional objections. One of those objections was that the date of Mr Mihajlovic’s termination was 7 June 2013, that the application was lodged outside the 21-day time limit prescribed by s.394(2)(a), and that there were no exceptional circumstances justifying the grant of an extension of time under s.394(2)(b). This decision is concerned only with that jurisdictional objection.

[3] Section 394, in which the time period in which unfair dismissal remedy applications must be filed is identified, provides:

(1) A person who has been dismissed may apply to the FWC for an order under Division 4 granting a remedy.

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

(3) The FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.

[4] “Dismissal”, as used in s.394(2)(a), refers to the termination of the employment relationship (where no issue of resignation is involved). 1 The date of the termination of the employment relationship is not necessarily co-terminous with the date of the termination of the employment contract.2

[5] The initial question which must be answered in respect of LLM’s jurisdictional objection is whether Mr Mihajlovic’s application was actually lodged after the prescribed 21-day time period. This requires identification of the date upon which Mr Mihajlovic’s termination of employment took effect. The dismissal was brought about by the dismissal notice of 5 June 2013, so the answer to this question depends on the proper interpretation of the dismissal notice.

[6] Because a notice of termination of employment usually involves the exercise (or purported exercise) of rights under the contract of employment, the terms of the contract of employment relevant to termination may be a significant contextual consideration in the interpretation of such a notice. The termination provision in Mr Mihajlovic’s contract of employment (which was constituted by a letter from LLM addressed to him and dated 7 November 2008 and countersigned by him on 12 November 2008) provided inter alia:

“Three (3) months’ notice in writing is required of termination by either party or through the payment /forfeiture of three (3) months wages in lieu.

The employer has the right of immediate dismissal without prior notice or the payment of a notice period in case of misconduct.”

[7] I consider that, where misconduct was not involved, the above provision of the contract permitted termination in two ways: firstly, by the provision of three months’ notice, and, secondly, summarily upon the payment of three months’ wages in lieu of notice. Under the first option, it would have been permissible for LLM to not require Mr Mihajlovic to attend for work during the three month period and simply to pay him his wages for that period. 3 There is no reason why, in that scenario, the salary could not have been paid in advance as a lump sum.

[8] The date of termination of employment would be different depending upon which of these two contractual options LLM was exercising in the dismissal notice. Under the first option, the employment would terminate upon the expiry of the three months’ notice period - that is, on 5 September 2013. Under the second, it would terminate forthwith. This is consistent with the approach taken by the Industrial Relations Court of Australia (Wilcox CJ) in Siagian v Sanel Pty Ltd 4. In that case, where the identification of the date of the applicant’s dismissal was critical to the competence of his application, the Court said5:

“Counsel's second argument is that, because of the payment in lieu of notice, the termination did not occur on 29 March but at the date of expiration of the period for which payment was made, 15 April. If this argument is correct, s.170EE orders are available.

This argument also raises a complex problem. The problem arises because of the ambiguity inherent in the words "payment in lieu of notice". The ambiguity was pointed out by Waite J, in Leech v Preston Borough Council [1985] ICR 192 at 196:

"... it is clear from the authorities cited to us, ... all of which are confirmed by the experience of our lay members, that the expression 'payment in lieu of notice' is regularly used throughout industry in one or other of two quite different senses. The first, which is the grammatically correct one, is when it is used to describe the payment to an employee whom it is proposed to dismiss summarily of a lump sum representing compensation for the wages or salary which he would have received if he had been given the notice to which he is entitled by law. The second, which is the colloquial and grammatically inaccurate one, is when the term is used as a convenient shorthand way of telling an employee that he is being given the full period of notice to which he is entitled by law but is at the same time excused any duty (and refused any right) that he would otherwise have under his employment contract to attend at the workplace during the notice period."

Although Waite J did not spell out the result that flowed from each meaning, it is clear from other decisions that, in the first case, the employee's employment terminates upon the date of payment of the lump sum. In the second case, the employment extends until the expiration of the period for which the payment was made.

The question whether a payment in lieu of notice immediately terminates the employment is always one of fact. In Leech at 196-197 Waite J said that the proper inference as to the sense in which the expression is used may turn upon "very subtle indications or nuances of wording which will have to be weighed carefully according to their context". The difficulty, of course, is that the parties will normally not have made the position clear. They will probably not have averted to the distinction made by Waite J. The Court will be left to put its own interpretation on their actions.”

[9] In Siagian there was no letter of termination 6, so that the employer’s intention as to the date of termination of employment had to be inferred from what occurred. The Court described what occurred in that case as follows7:

“... there is no doubt that Mr Bryant, on behalf of the respondent, effectively terminated the employer-employee relationship on 29 March. His actions in delivering the cheque, with a statement of earnings on termination, repossessing Mr Siagian's key and escorting him from the premises admit of no ambiguity.”

[10] The Court went on to say:

“I see nothing in the present case to suggest that Sanel intended that its employment relationship with Mr Siagian should continue until 15 April. The statement of account given by Mr Bryant to Mr Siagian was headed "Statement of Earnings on Termination". His key was taken from him. Mr Bryant had no thought that Mr Siagian might be called back to work before the expiration of the period of notice. Mr Bryant supplied a separation certificate on 31 March, an action that would have been premature if the employment had not then terminated.”

[11] Here, however, LLM issued Mr Mihajlovic with a termination letter which made its intention quite clear. The relevant part of the dismissal notice has earlier been set out. I consider that the terms of the dismissal notice make it plain that LLM intended by that notice that Mr Mihajlovic’s employment would terminate on 5 September 2013, and that it was exercising the first of the two termination options available under the contract of employment which I have earlier described. The letter unambiguously stated that:

(a) Mr Mihajlovic’s role would cease to exist on 5 September 2013;

(b) his employment would come to an end “on that date” (5 September 2013);

(c) he was not required to work out the entirety of his three month notice period, so that his last working day would be 7 June 2013;

(d) on 7 June 2013 he would receive, among other things, “payment for the balance of your notice period required to bring your Employment Contract to an end”.

[12] In fact, as it turned out, Mr Mihajlovic was not paid the three months’ pay for the notice period until 28 June 2013. This is not consistent with an intention to terminate without notice on the basis of a payment in lieu of notice on 7 June 2013.

[13] I have taken into account that LLM issued an Employment Separation Certificate dated 1 July 2013 which identified the “Date employment ceased” as being “07/06/2013”. However, its conduct in doing so, some weeks after the issue of the dismissal notice on 5 June 2013, could not change the effect of that earlier notice. A notice of termination of employment, once sent, cannot unilaterally be withdrawn. 8 It follows that neither can it unilaterally be varied in a way which changes its effect. The notice takes effect in accordance with its terms, properly construed.

[14] Therefore I conclude that Mr Mihajlovic’s dismissal took effect on 5 September 2013, and not on 7 June 2013 as contended by LLM. Accordingly, to the extent that LLM’s out-of-time objection rested on that contention, it must be rejected. The question of whether an extension of time should be granted under s.394(3) does not therefore arise.

[15] Mr Mihajlovic’s application was lodged on 5 August 2013, a month before the date which I have identified as that upon which the dismissal took effect. I note from the file that on 8 August 2013 the Commission’s Registry sent Mr Mihajlovic a letter to the following effect (underlining added):

“We refer to the above application for unfair dismissal remedy.


As discussed and confirmed during our telephone conversation of 7 August, 2013, your application indicates that you may still be an employee and ceasing your employment on 5 December, 2013.

The Fair Work Act 2009, as at 1 January 2013, provides that an application for unfair dismissal remedy must be made “within 21 days after the dismissal took effect”. As you have confirmed your application was lodged before your dismissal took effect, your application appears to have been made prematurely and may be invalid. You may wish to consider a new application within 21 days of the dismissal taking effect.

You are required to contact the Fair Work Commission on (02) 8374 6666 to advise whether you wish to proceed with your application. If the Fair Work Commission does not receive confirmation within 14 days that you do wish to proceed with your application, the file may be dismissed. The enclosed Notice of Discontinuance should be signed and returned to this office within 14 days if you do not wish to proceed.”

[16] The contention in the above letter that Mr Mihajlovic’s application was made prematurely and might be invalid has not been raised as a jurisdictional objection by LLM. I consider that the Registry’s letter raises two legal questions:

(1) Does s. 394(2)(a) establish a time limitation before which applications may not be filed in addition to a time limitation after which applications may not be filed?

(2) If the answer to question (1) is “yes”, is an application lodged prematurely invalid, or may it be regularised under s.586 or any other applicable provision of the Act?

[17] Although the potential of this “prematurity” issue arising was identified in the hearing on the jurisdictional objection which occurred on 25 October 2013, the parties have not yet made submissions about it. I consider that the parties should have the opportunity to make such submissions in the light of these reasons for decision. I direct that the parties file written submissions on the two questions I have identified above on or before 5.00 pm on 23 December 2013. I will then consider what the next step in the disposition of this matter should be.

VICE PRESIDENT

Appearances:

P. Mihajlovic on his own behalf

A. Perigo of counsel with M. Doyle, solicitor, for Lifeline Macarthur

Hearing details:

Sydney.

2013:

25 October.