FEDERAL COURT OF AUSTRALIA

Harpham v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCA 1473

ORDERS

THE COURT ORDERS THAT:

1.    The application be allowed in part.

2.    The Respondent pay the Applicant contractual damages calculated consistently with the Court’s reasons fixed at a sum agreed between the parties plus interest.

3.    In the event that the parties are unable to agree on the quantum of damages each file and serve short written submissions (limited to three pages) as to the sum to be awarded within 14 days of the date of these orders.

4.    The proceeding otherwise be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

TRACEY J:

1    Mr Darren Harpham, the applicant, was employed as an organiser by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“the CEPU”) from 8 April 2007. His employment was terminated on 21 September 2012.

2    Mr Harpham brings this proceeding against the CEPU for alleged contraventions of ss 44 and 340 of the Fair Work Act 2009 (Cth) (“the Act”). He has applied for compensation, declarations and the imposition of penalties for the alleged contraventions of these provisions. He also seeks an order under s 164 and/or s 164A of the Fair Work (Registered Organisations) Act 2009 (Cth) (“the FWRO Act”) giving directions for performance of certain provisions of the registered rules of the Electrical, Energy and Services Division of the CEPU (“the Rules”).

THE EVIDENCE

3    Mr Harpham filed summaries of evidence for himself, Mr Rodney Burles, former organiser and later State Secretary of the Tasmanian branch of the CEPU, and Mr Dean Mighell, former secretary of the Southern States Branch of the CEPU and later the Secretary of the Victorian Branch of the CEPU.

4    The CEPU filed summaries of evidence for:

    Ms Nicole Wells, former organiser in the Southern States Branch and later the Acting State Secretary;

    Mr Kevin Harkins, former Assistant State Secretary of the Southern States Branch of the Electrical Trades Union and later the Secretary of the Tasmanian Branch; and

    Ms Elizabeth Frankow, former Office Manager of the Tasmanian Branch of the CEPU.

5    Apart from Ms Frankow, each of the witnesses who provided summaries of evidence was called and cross-examined.

6    The CEPU also filed an affidavit of Mr Trevor Gauld, State Secretary, Tasmanian Branch of the CEPU. His affidavit was read but he was not cross-examined.

FACTUAL BACKGROUND

7    For the most part the evidence was uncontroversial. The following account records my findings of fact. Where disputes have arisen relating to material matters I have made findings and explained the reasons for making them.

8    On or about 8 April 2007, Mr Harpham commenced employment with the CEPU in the position of employee organiser of the Southern States Branch. His salary was $86,404.03 per annum.

9    On 8 September 2008, Mr Harpham signed an agreement entitled, “ETU Salary Packaging Agreement”, which was stated to be between Mr Harpham and “Electrical Trades Union of Australia – Southern States Branch (ETU)”. The agreement was stated to form part of Mr Harpham’s contract of employment and set out his remuneration package.

10    According to the agreement, Mr Harpham’s total remuneration was to be $90,724.23 per annum, made up of a salary of $75,124.23 and superannuation benefits amounting to $15,600.

11    Clause 4 of the agreement recorded that:

“4.    The components of your remuneration package may be varied during the agreement period at any time if agreed to in writing between you and ETU. If you are granted an increase in your total remuneration package amount during the agreement period the components of that increase may be provided in the form of salary and wages and / or benefits. However unless the components are agreed in writing between you and ETU, any such increase will be provided solely in the form of salary and wages. Where any such variation or increase is agreed to include benefits the principles set out in clause 5 will apply.”

12    Clause 8.1 of the agreement stated:

“8.    Upon Termination of your employment:

8.1    Your long service leave and other statutory entitlements upon termination will be based upon your total remuneration package amount.”

13    In addition, Mr Harpham was to be paid a “Tas Branch Organiser Rate” of $55.53 per week and was provided with an industry severance scheme contribution benefit of $70.00 per week.

14    The evidence relating to the value of Mr Harpham’s total remuneration package was not consistent. He submitted, and put to the CEPU’s witnesses in cross-examination, that the total value of his package was $90,724.23 plus the sum of the $70 and $55.53 (or $125.53) multiplied by 52 (or $6,527.56). This, said Mr Harpham, produced a total of $96,938.40. The figures do not add up: the sum of $90,724.23 and $6,527.56 is $97,251.79. For reasons that become clear later in these reasons, it is not presently necessary to resolve this inconsistency.

15    In about November or December 2008, the Southern States Branch demerged and became separate Victorian and Tasmanian branches. Upon the demerger Mr Harpham became an employee organiser in the Tasmanian Branch.

16    On 16 February 2009, Mr Harkins, acting as Branch Secretary of the CEPU Tasmanian Branch, wrote to Mr Harpham on Branch letterhead:

“As you know your appointment as an Organiser with the Southern States concluded on 1 December 2008.

You are also aware that from 1 November 2008, the Southern States Branch was effectively dissolved to form the Tasmanian Branch of the CEPU and Victorian Branch of the ETU.

A full review of the Tasmanian branches [sic] financial position and organising needs including staffing will be undertaken within the first half of 2009, with the outcomes of the review then forwarded to State Council for decision.

This will enable us to make definite decisions in relation to how the Branch will move forward after that time.

As a consequence I have made a decision to extend your appointment as an Organiser of the Tasmanian Branch of the CEPU through to 30 June 2009.

You will be notified as early as possible in relation to the outcomes of the review including any impacts that may directly effect [sic] you.”

17    On 13 March 2009 a meeting of the CEPU Tasmanian Branch State Council was held. The minutes of the meeting recorded that Mr Garry Laycock, President, Mr Harkins, Secretary, Mr Ken Batge, Ms Wells and Ms Frankow, Administration Manager, were in attendance. Item 9.4 of the Minutes concerned staffing and employee entitlements and stated:

“Secretary explained current rates of pay & entitlements for employees & made recommendation of new wage rates from 1 July 2009 and increased staffing.

Motion:    That the Council endorses the recommendation of the Secretary in relation to wage rates & entitlements as at 1 July 2009 & staffing levels.

Moved:    K Harkins    Seconded: K Batge    CARRIED”

18    In cross-examination, Mr Harpham said that he was not invited to this meeting and, in re-examination, said that he was aware of other officers of the CEPU, such as Mr Todd Lambert, who were members of the State Council and who were not recorded as being in attendance at the meeting.

19    From 1 July 2009, new rates of pay applied to Mr Harpham, Mr Harkins and Ms Wells.

20    Mr Harpham’s salary was varied from $90,724.23 to $77,752.00 per annum (amounting to a reduction of $12,972.23) and he no longer received the payments of $70,00 and $55.53, to which I referred in [13] above.. Mr Harkins’s salary was reduced by $13,639.14. Ms Wells’s salary was reduced by approximately $4,500-$5,500. Ms Wells gave evidence that she had received a smaller reduction because she had been promoted to the position of Senior Organiser, with effect from 1 July 2009.

21    Prior to the introduction of the new pay rates, a meeting was held between Ms Wells, Mr Harkins, Mr Burles and Mr Harpham. Mr Harpham and Mr Burles claimed that, during the meeting, Mr Harkins told him (Mr Harpham) that he was going to take the pay reduction and if he didn’t like it he could “fuck off and there’s the door”. Mr Harkins denied (albeit somewhat tentatively) making those statements and asserted that, when informing Mr Harkins of the new rates he had told him that there had been a State Council resolution and that the State Council agreed that new rates of pay would apply. The new rates, Mr Harkins said, were based on and tied to the “Aurora Enterprise Agreement”, an agreement which Mr Harkins had recently negotiated with one of Tasmania’s leading employers of CEPU members. It does not, however, appear that he told Mr Harpham that.

22    Ms Wells gave evidence that, in 2009, when she was in the position of Senior Organiser, she had raised performance issues with Mr Harpham. She said that she had told him that he needed to have a plan and strategy for the upcoming round of electrical contracting industry enterprise bargaining agreement negotiations.

23    During 2010, Ms Wells again raised performance issues with Mr Harpham about his Fair Work Commission appearances.

24    On or about 23 November 2010, Mr Harpham’s salary was varied from $77,752.00 to $82,494.00 (plus 11% superannuation).

25    In October 2010 Ms Wells succeeded Mr Harkins as Branch Secretary. On 23 November 2010, she wrote a letter to Mr Harpham, which was counter-signed by him. It read:

“Dear Darren

Re: Rates of Pay

I wish to confirm our discussion on Friday 29 October 2010 in relation to rates of pay and allowances paid to employed Officers of the CEPU Tasmanian Branch.

Your rate of pay and conditions of employment are outlined below. Wage increases will be the percentage increase based on that paid to the power distribution industry (administrative) in the state of Tasmania, as will the timing of any increase. The new rates will be paid from the first pay period after endorsement by the Tasmanian Branch State Council.

The conditions of employment will be as follows:

•    Salary of $82,494 per annum (paid weekly).

•    38 hour week with an RDO per month taken by agreement with the Secretary.

•    5 weeks leave per year (including Christmas shutdown period).

•    Superannuation paid at 11%.

•    Leave loading is paid annually (on your anniversary date) as an extra weeks pay.

•    An overtime meal allowance is paid for each day, Monday to Friday at the rate of $9.90 per day.

•    A fully maintained vehicle (with fuel).

I trust this reflects our discussion.”

26    Ms Wells claimed that, in 2011, she spoke to Mr Harpham about his preparation for the next round of electrical contracting industry enterprise bargaining agreement negotiations. She expressed concern that he was not ready. She gave him instructions to prepare a list of electrical contractors with whom it would be necessary to conclude agreements. Ms Wells considered that the document which Mr Harpham prepared was not satisfactory.

27    On 29 June 2012, Ms Wells had a discussion with Mr Harpham. Ms Wells prepared a minute of the meeting. It recorded the following:

“Nicole advised Darren she had some concerns with his performance and asked him how he thought he was going in the role of organiser in the contracting industry.

Darren said “it [sic] you want to make me redundant then just make me redundant”.

Nicole advised that was not what the meeting was about, it was about getting the issues on the table to discuss them.

Darren advised he had seen a list of performance issues on Nicole’s desk when he was looking for something else and that whilst he agreed with some of them he did not agree with all of them.

Nicole said it was ok that Darren didn’t agree with all of the performance issues on the list but that was as she saw it and there had been difficulties with Darren being able to carry out the role over a long period of time.

Darren advised he was having personal difficulties at home, particularly with his wife, and that he felt his job as an organiser was contributing to his personal difficulties.

Nicole advised she was sorry to hear that was going on in Darren’s life and said she did not wish to make things more difficult for Darren. However, it was a matter of what was best for the Union.

Darren advised he thought it best that he move on from the role. Nicole said they did not want to see him without a job so every attempt would be made to assist in finding him an alternate position.

Nicole advised that they would give Darren a notice period of 6 months until the end of the year, but it was hoped that with everyone working to find alternate work, Darren could take up another position well before that date.”

28    At trial Mr Harpham disputed the accuracy of the fifth and last paragraphs of the minute. He accepted, however, that Ms Wells advised him that she had concerns about his performance and that the meeting was to discuss those issues. He also accepted that he had said he saw the list of performance issues and that, whilst he agreed with some of the issues, he did not agree with all of them.

29    On 17 July 2012, Ms Wells wrote to Mr Harpham confirming the matters discussed during their conversation on 29 June 2012. Her letter read:

“Dear Darren

RE: Finalisation of Employment

I write to you to confirm the content of our meeting which took place at the CEPU office on Friday 29 June 2012 at which Rodney Burles was present.

In that meeting you and I had a discussion relating to your performance and the personal difficulties you were experiencing. Due to these reasons it was mutually agreed by you and I [sic] that your role as an appointed organiser with the CEPU would cease no later than 31 December 2012.

Further during that meeting, I offered you the assistance of the CEPU in helping obtain alternative employment prior to the end of the year. This offer remains in place and I am currently canvassing job opportunities. I understand you are also actively seeking employment and I hope you will soon have certainty of employment outside the CEPU.

If you have any questions relating to the content of this letter, I would be pleased to discuss them with you. Should you require any assistance in relation to your personal matters, please advise [sic] do not hesitate to let me know.”

Mr Harpham did not respond, in writing, to the letter or avail himself of any of the facilities offered to him in the final paragraph. Nor did he, at the time, dispute the account of the meeting given by Ms Wells.

30    Ms Wells and Mr Harpham had a further meeting on 3 September 2012. On 4 September 2012, Ms Wells wrote again to Mr Harpham:

“Dear Mr Harpham

RE: Finalisation of Employment

I write to you to confirm the content of our meeting which took place at the CEPU office on Friday 29 June 2012 and our meeting of 3 September 2012 at which Rodney Burles was present.

In the meeting of 29 June 2012 you and I had a discussion relating to your performance and the personal difficulties you were experiencing. Due to these reasons it was mutually agreed by you and I [sic] that your role as an appointed organiser with the CEPU would cease no later than 31 December 2012 unless an alternative position was identified.

In the meeting of 3 September 2012 you were advised that an alternate position had been identified with a commencement date of 18 September 2012. Both myself [sic] and Rodney attempted to discuss the matter with you as a timely decision was required.

This letter is to advise that should your work performance experience a downturn from this date, we will need to address this directly with you which may include termination of your employment.

Please be advised that any conduct that is detrimental to the CEPU or its officials must be treated by officers of the union as serious misconduct which may result in termination of your employment.”

31    An alternative position was found for Mr Harpham at Tasbuild. His employment with the CEPU ended on 21 September 2012. He commenced his new position on 28 September 2012.

32    Mr Harpham’s employment separation certificate identified the reason for Mr Harpham’s separation as “redundancy”. Upon termination of his employment, he was paid an amount of $8,249.80, which was equivalent to five weeks’ pay. The payment was described as being for “redundancy”. He also received payment for accrued and untaken annual and long service leave and a further week’s pay for annual leave, which Mr Harpham planned to take before he commenced working at Tasbuild. In addition, Mr Harpham received a payment of $11,205 from the Electrical Industry Severance Scheme, “Protect”.

33    Ms Wells claimed that she had made clear to Mr Burles that Mr Harpham’s position was not being made redundant. Mr Burles gave evidence that Ms Wells had instructed him to offer to pay Mr Harpham five weeks’ redundancy pay but that “she was concerned that it wasn’t a genuine redundancy”.

34    Following the end of Mr Harpham’s employment, Mr Michael Anderson was employed as a new organiser. Mr Burles gave evidence that he was instructed by Mr Harkins (who by then had become the Branch President) not to employ Mr Anderson until the new year, so that public holiday payments would not need to be paid to him.

35    On 30 July 2013, Mr Harpham submitted a wage claim complaint to the CEPU. He claimed that he had not received a retirement allowance in accordance with rule 24.5.4 of the CEPU Rules, was underpaid wages under rule 24.1 and had not been paid a redundancy payment as required by the Act.

36    Mr Wells gave evidence that Mr Harpham was not paid the 5.8% retirement allowance under rule 24.5.4 because she believed that he was not entitled to it. Ms Wells claimed that the retirement allowance was only paid to elected organisers. She said that she had not received the allowance when she was an appointed organiser and received it only after becoming an elected organiser in August 2007. Mr Harkins similarly asserted that Mr Harpham was not paid the 5.8% retirement allowance because Mr Harkins believed Mr Harpham was not entitled to it.

37    On 29 October 2013, Mr Gauld sent a letter to Mr Harpham advising that:

“In reviewing your membership recently I note that there appears to be some conflict in regards to your eligibility to CEPU Membership, in particular, compliance with rules 2.1 & 2.4.

Accordingly I advise that you no longer hold any office within the Union and remind you of your obligation to tender your resignation from the Union within two years (on or before 20 September 2014) of ceasing eligibility unless of course you return to employment which satisfies the requirements of rules 2.1 & 2.4.”

38    Mr Harpham resigned his membership shortly after receiving the letter as he considered it a direction to resign from the CEPU.

39    On 21 May 2014, Mr Harpham commenced this proceeding by way of a fast track originating application and fast track statement (both dated 21 May 2014). He alleged that he had been retrenched and was eligible for certain redundancy payments.

40    On 27 June 2014, the CEPU filed its response to Mr Harpham’s statement. It stated, “[t]he applicant’s employment was terminated by reason of redundancy on 21 September 2010”. In a further amended response filed on 29 January 2015, this statement was deleted and was replaced with, “[t]he applicant’s employment was terminated on 21 September 2012 for reasons of poor performance.” In cross-examination, Ms Wells denied giving instructions to the authors of the first response which asserted that Mr Harpham’s employment had been terminated on the grounds of redundancy. No explanation was given as to why the termination of Mr Harpham’s employment was attributed to redundancy in both his separation certificate and in the original fast track statement response filed by the CEPU.

MR HARPHAM’S APPLICATION

41    Mr Harpham’s second further amended fast track statement dated 19 October 2015 contained the following claims:

    A claim that the CEPU failed to pay to Mr Harpham redundancy and pay in lieu of notice in accordance with ss 117 and 119 of the Act.

    A claim that the CEPU “unilaterally reduc[ed] [Mr Harpham’s] salary” and thus took adverse action against him in contravention of s 340(1) of the Act, or, in the alternative, breached his contract of employment.

    A claim that the CEPU failed or refused to pay to Mr Harpham a retirement allowance from 1 July 2009 until the end of his contract of employment and thus took adverse action against him in contravention of s 340(1), or, in the alternative, breached his contract of employment.

42    Mr Harpham sought compensation under s 545 of the Act, or, alternatively, damages for breach of contract. He also sought penalties, interest, and costs. He sought further orders under ss 164 and 164A of the FWRO Act in respect of the CEPU’s alleged failure to comply with the requirements under the Rules to pay Mr Harpham salary in accordance with the determination of the Divisional Council under rule 24.1 and the failure to pay a retirement allowance under rule 24.5.4 of the Rules.

Alleged failure to provide redundancy pay

43    Mr Harpham contended that his employment had ended by reason of redundancy. That being so, he alleged that he was entitled to a redundancy payment in accordance with s 119 of the Act. On this basis, he asserted a breach of provisions of the National Employment Standards (which include ss 117 and 119): see s 44 of the Act.

44    Section 119(1) relevantly provides that:

“An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a)    at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour;”

45    Under s 119(2), the amount of redundancy pay payable to an employee with at least five years’ but less than six years’ continuous service on termination is 10 weeks’ payment calculated at the employee’s base rate of pay for his or her ordinary hours of work.

46    Upon termination of employment, Mr Harpham was paid an amount of $8,249.80 for “redundancy”. This payment was equivalent to five weeks’ pay on the basis of his rate of pay at the time, which was $1,649.96 per week.

47    Mr Harpham asserted that he was entitled to 10 weeks’ pay under the Act and that the payment should have been calculated on the rate as determined by the Divisional Council of the CEPU in the ETU Salary Package Agreement dated 8 September 2008. Accordingly, he contended that he should have been paid 10 weeks’ pay at the rate of $1,744.70 per week, amounting to $17,447.00. Taking into account the payment which was made, Mr Harpham claimed that he was underpaid an amount equal to $9,197.20.

48    The CEPU denied that Mr Harpham had been made redundant. It referred to the evidence of Ms Wells, Mr Harkins and Mr Burles that the CEPU Tasmania Branch continued to require someone to perform the duties of Mr Harpham’s position after September 2012. Mr Anderson had been engaged shortly after Mr Harpham’s departure to carry out the same job. Further, the CEPU contended that Mr Harpham’s termination was on the basis of poor performance. As a result, it denied that Mr Harpham was entitled to a redundancy payment as provided by s 119 of the Act.

49    I do not consider that Mr Harpham’s employment was terminated because the CEPU no longer wished anyone to undertake the duties performed by him. I accept Ms Wells’s evidence that she was dissatisfied with the manner in which Mr Harpham had been performing his duties and, in particular, that he was ill-equipped to undertake pending negotiations with employers. These misgivings had been recorded at the time and there had been no contemporaneous challenge to them by Mr Harpham.

50    This finding is sufficient to dispose of Mr Harpham’s first claim. I would, however, make two further observations.

51    The first is that, whilst concerns about Mr Harpham’s performance as an organiser led to him being advised to seek alternative employment, his alleged poor performance was not the cause of the termination of his employment. He found alternative work and resigned from the CEPU so that he could take up his new position.

52    Mr Harpham also complained that, in denying him a redundancy payment, the CEPU was treating him unfairly because both Mr Harkins and Ms Wells received redundancy payments at the time at which the demerger of the Southern States Branch occurred in 2008. This appears to me to be irrelevant. Even if it be assumed (as may well be correct) that, in 2008, Mr Harkins and Ms Wells received redundancy payments to which they were not entitled, that would not provide any probative basis either for finding that Mr Harpham was, four years later and in different circumstances, entitled to a redundancy payment, or for finding that some unlawful discrimination was made as between Mr Harpham and other employees in respect of redundancy payments.

Alleged failure to make payment in lieu of notice

53    Mr Harpham claimed that he was entitled to five weeks’ pay in lieu of notice, in accordance with s 117 of the Act.

54    Section 117(2) of the Act relevantly provides that:

“The employer must not terminate the employee’s employment unless:

(a)    the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or

(b)    the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.”

55    The term “full rate of pay” is defined in s 18 and includes incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and any other separately identifiable amount.

56    Under s 117(3)(a) the minimum period of notice is four weeks for employees with a period of continuous service of more than five years.

57    Under s 117(3)(b), the period of notice is increased by one week if the employee is over 45 years old and has completed at least two years of continuous service.

58    Mr Harpham was 47 years of age on 21 September 2012. In accordance with s 117, he claimed to be entitled to five weeks’ notice or pay in lieu of notice. Mr Harpham claimed that the notice should be paid on his total remuneration package, being $96,938.40 per annum or $1,864.20 per week: see [9]–[13] above. Mr Harpham claimed that he had not been provided with the requisite notice or payment in lieu of notice. He claimed that he was entitled to $9,321.00.

59    The CEPU disputed Mr Harpham’s claim, contending that six months’ notice of termination had been given during the meeting on 29 June 2012 and that this had been confirmed in writing in Ms Wells’s letter dated 17 July 2012. In the alternative, it argued that the payment of five weeks’ pay, which had been described as for “redundancy”, constituted payment of 5 weeks’ pay in lieu of notice.

60    I accept both of these submissions. On 29 June 2012, Ms Wells told Mr Harpham that his employment would cease “no later than 31 December 2012”. This advice was confirmed at a later meeting on 3 September 2012. The advice was also confirmed in writing to Mr Harpham. He did not, at the time, demur. On the contrary, he sought and obtained alternative employment within the six-month period allowed. He then resigned. He was paid the equivalent of five weeks’ wages.

61    This claim must be rejected.

The reduction in salary – 1 July 2009

62    Mr Harpham claimed that he was entitled to receive a salary in accordance with a determination of the Divisional Council under rule 24.1 of the Rules. That determination, he contended, was the foundation of his 2008 salary packaging agreement. He complained that the reduction which took effect on 1 July 2009 occurred in contravention of both the determination, which he said had been made under the Rules, and his contractual entitlements. The way in which this claim was put by Mr Harpham is apparent from [16] of his written submissions:

“… the CEPU by its Tasmanian State Secretary, Kevin Harkins:

•    because of Mr Harpham’s workplace right to the receipt of the salary referred to in r 24.1 of the Rules and in order to save money for the CEPU by failing to refuse or refusing to comply with the Rules (s 340(1)(a)), or

•    to prevent the exercise of Mr Harpham’s workplace right to the receipt of the salary referred to in r 24.1 of the Rules (s 340(1)(b)),

unilaterally reduced Mr Harpham’s remuneration package …”

63    There were two versions of the Rules in evidence: the 2009 Rules and the 2012 Rules. The provisions identified below were identical in both sets of rules.

64    Rule 24.1 set out the basis for salaries for officers. It said:

“All full-time Officers of this Division, including Divisional Secretary, Assistant Divisional Secretary, Divisional Branch Secretaries, Divisional Assistant Branch Secretaries and Organisers; and Divisional Research/Industrial Officers and Industrial Officers, shall be paid such sum for their services as may be determined by the Divisional Council with the right reserved to all full-time Officers, including Divisional Secretary, Assistant Divisional Secretary, Divisional Branch Secretaries, Divisional Assistant Branch Secretaries, and Organisers; and Divisional Research/Industrial Officer and Industrial Officers, to appeal to a private arbitrator. The private arbitrator to be an Australian Industrial Relations Commissioner if one were willing to act, or an arbitrator appointed by Divisional Council.”

(Emphasis added.)

65    Under rule 12.1 of the Rules, “the Officers of a Divisional Branch shall be … Organisers”.

Adverse action

66    Mr Harpham asserted that the CEPU took adverse action against him, under s 340(1) of the Act, by injuring him in his employment, altering his position to his prejudice and discriminating between him and other employees for reasons including that Mr Harpham had a workplace right, or to prevent the exercise by him of that workplace right. He identified the workplace right as the entitlement to the benefit of a workplace instrument, being the Rules, to receive a salary in accordance with the determination under rule 24.1. He also contended that determinations made under rule 24.1 gave rise to contractual obligations which had been breached by the CEPU when it reduced his salary.

67    The CEPU asserted that the reason for the reduction in Mr Harpham’s salary from 1 July 2009 was because the State Council had made a decision that the new rate was to apply for organisers in the Tasmanian Branch. The reduction had been compelled by economic circumstances. Mr Harkins and Ms Wells denied that the reason his salary was reduced was because he was entitled to the higher rate of $90,724.23. They also denied that it was reduced because he made a complaint about the proposed reduction or because he claimed or proposed to claim an on-going entitlement to the previously-agreed sum. Further, the CEPU contended that both Ms Wells’s and Mr Harkins’s salaries had also been reduced and there was, therefore, no discriminatory treatment of Mr Harpham.

68    Mr Harpham’s claim confronts a number of difficulties. The most important is that, even if s 340(1) otherwise applies, I would not hold that Ms Wells or Mr Harkins (or any of the other members of the State Council involved in making the decision) had decided to reduce Mr Harpham’s salary package “because” he had a workplace right. The evidence of Mr Harkins and Ms Wells satisfied me that they acted in the perceived economic interests of the Branch and not with any proscribed intent: see s 361(1) of the Act. The Branch was in difficult financial circumstances at the time and an overall reduction in staff salaries was required. Mr Harpham was not singled out to bear the burden of austerity. It is somewhat difficult to conceptualise a person refusing or failing to pay another’s salary precisely because the latter is entitled to that salary, or to prevent the exercise of a right thereto.

69    Secondly, there was no evidence that the Divisional Council determined in 2008 (or at any other time) that Mr Harpham should receive a salary of $90,724.23 per annum. To the extent that there was any evidence on the point it came from Mr Mighell who said that, in practice, State Branch Councils were responsible for setting the rates of pay for all non-elected employees within a State Branch. The only debate at Divisional Council level centred on the rates of pay for elected officials. If there never was a determination of the Divisional Council concerning Mr Harpham’s salary, again it is difficult to imagine Mr Harkin or any other person taking action against Mr Harpham because he had the benefit of such a determination and the evidence, as I set out above, was, in any event, to the contrary.

70    The next issue relates to Mr Harpham’s contention that the Rules constituted a “workplace instrument”.

71    Under s 341(1)(a), a person has a “workplace right” if the person “is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body.”

72    Section 12 of the Act defines “workplace instrument” as an instrument made under, or recognised by, a workplace law and concerns the relationship between employers and employees. “Workplace law” is also defined in s 12. The Act, the FWRO Act, the Independent Contractors Act 2006 (Cth), or any other law of the Commonwealth, a State or a Territory that regulates the relationships between employers and employees are prescribed workplace laws.

73    The word “instrument” is not defined in the Act. Neither is it defined in s 46 of the Acts Interpretation Act 1901 (Cth). In Azevedo v Secretary, Department of Primary Industries and Energy (1992) 35 FCR 284 at 299–300 French J relied on the “ordinary English meaning” of the word, that being “a formal legal document whereby a right is created or confirmed, or a fact recorded; a formal writing of any kind, as an agreement, deed, charter or record, drawn up and executed in technical form” (relying on the Shorter Oxford English definition).

74    Section 140 of the FWRO Act requires that a registered organisation (such as the CEPU) have rules which make provision as required by the FWRO Act. Section 141(1) of that Act prescribes a range of matters for which rules must provide. They do not include the regulation of employment arrangements between the organisation and its employees. Section 141(3), however, provides that the rules of an organisation may provide “for any other matter”.

75    Rule 24.1 provides the means by which the remuneration of full-time officers is to be determined. The determination is to be made by the Divisional Council. Any determination is subject to challenge by private arbitration. It is to be noted that the rule does not extend to the prescription of conditions of service. Nonetheless, rules made under the FWRO Act meet the definition of “workplace instrument”. They are a “formal writing” made in order to comply with requirements of Chapter 5 of the FWRO Act. To the extent that Rule 24 deals with the means by which the remuneration of full-time officers of the Division fall to be determined it is a Rule which concerns the relationship between the CEPU (as an employer) and its full-time officers (employees). There is, however, as I have already found, no evidence that Mr Harpham was ever paid pursuant to a determination of the Divisional Council.

76    The CEPU also contended that the reference to “officer” in the Rules refers to a person holding “office” and should be interpreted as meaning an elected officer. Accordingly, so it was contended, rule 24.1 did not confer on Mr Harpham, a non-elected organiser, the right to a salary determined by the Divisional Council. Although it is not necessary for me to express a concluded view about this contention I would observe that rule 24.1 deals with the remuneration of “full-time Officers” of the Division. No discrimination is made between those officers who are elected and those who are not. The CEPU’s preferred construction would require the reading in of a qualification which could have been (but was not) incorporated in the Rules. Nor does any such discrimination appear in the definition of “the Officers of a Divisional Branch” in rule 12.1.

Contractual breach

77    In respect of the alleged breach of contract, the CEPU submitted that the Rules were not contractually binding on it, and that there was no implied term in Mr Harpham’s contract that the CEPU would comply with the Rules. It was asserted that the reference to “statutory entitlements” in clause 8.1 of the 2008 agreement did not concern any entitlement arising under the Rules. The CEPU further argued that any variation to Mr Harpham’s contract of employment had occurred with his consent. This was, it was said, demonstrated by his having “elected” to continue in employment after he had been notified of his reduced salary. The CEPU also argued that subsequent changes to Mr Harpham’s salary—on 23 November 2010 and 1 July 2012—were accepted by Mr Harpham and gave rise, effectively, to renewed consensus as to the terms of his employment, thereby limiting his damages.

78    Insofar as the salary component of Mr Harpham’s remuneration package is concerned nothing turns on whether the Rules were or were not contractually binding on the CEPU. The CEPU did not deny (nor reasonably could it have) that there existed an employment contract as between it and Mr Harpham, pursuant to which he was entitled to a “remuneration package” of $90,724.23. That term could be varied (under clause 4) “if agreed to in writing between [Mr Harpham] and the ETU”.

79    The CEPU appeared to submit, in a heading above paragraphs [133]–[137] of its written submissions, that Mr Harpham had “[c]onsent[ed] to [the new] terms of employment”. It later submitted that he “elected to continue in employment and made no claim until after the termination of his employment.”

80    There was, in 2009, no consensual variation of Mr Harpham’s terms of employment. Mr Harpham was presented with a fait accompli: he was told what his new salary would be, not asked whether he consented to variation of his terms of employment. He protested verbally to no avail.

81    Nothing in the evidence suggested that any “agreement” to the variation was recorded in writing.

82    It may be accepted that the CEPU repudiated Mr Harpham’s contract of employment when it substantially reduced his remuneration package in 2009: see Cantor Fitzgerald International v Callaghan [1999] 2 All ER 411 at 420–1. Moreover, after 1 July 2009, the CEPU breached Mr Harpham’s employment contract by paying him less than the sum that had been contractually agreed in September 2008.

83    The CEPU, dealing evidently with the eventuality that its breach was repudiatory, submitted that Mr Harpham “elected to continue in employment”. I would accept that submission. At the point of repudiatory breach, Mr Harpham could have elected to terminate the contract: see Romero v Farstad Shipping (Indian Pacific) Pty Ltd (2014) 231 FCR 403 at 435–6. He did not, however, do so. He chose to remain in his position as an organiser for over three years. During this period further variations to his remuneration occurred and were not objected to by him. While an immediate decision was not required on 1 July 2009 (cf Rigby v Ferodo Ltd [1988] ICR 29) his protracted on-going employment was consistent only with his having elected to affirm the contract: cf Sargent v ASL Developments Limited (1974) 131 CLR 634 at 656; Khoury v Government Insurance Office of New South Wales (1984) 165 CLR 622 at 633; and Galafassi v Kelly (2014) 87 NSWLR 119 at [88].

84    An election to affirm the contract does not, however, affect Mr Harpham’s right to contractual damages for breach. Nor does the fact that he continued in his employment for at least a time (and I will return to this) gainsay the proposition that the CEPU was in breach of its contractual obligations. The CEPU did not submit that Mr Harpham was estopped from insisting upon the relevant contractual entitlement. Nor did it submit or plead that any provision of the Limitation Act 1974 (Tas) precluded Mr Harpham’s action. On its face it was brought within the relevant period: see s 4. Accordingly, the position seems to me to be similar, if not identical, to that considered in Rigby v Ferodo Ltd [1988] ICR 29, the result in which is accurately captured in the headnote to the report as follows:

“[I]n the absence of the employer seeking to terminate the contract of service it had with the employee, the employer had sought to compel the employee to accept a wage that was less than he was entitled to under the contract; that the employee in continuing to work and receiving a reduced payment under protest had not accepted a variation in the terms of the contract and, therefore, he was entitled to recover the difference between his contractual entitlement and the amount paid by the employer either in damages for breach of the contract or in debt).”

85    In my judgment, the outcome must be the same in this case, at least in respect of the period between 1 July 2009 and 23 November 2010.

86    As I mentioned above at [25], a letter from Ms Wells to Mr Harpham, dated 23 November 2010, set out new terms and conditions of employment. It was signed by Ms Wells on behalf of the CEPU and was counter-signed by Mr Harpham. The variation to the wages paid to Mr Harpham thereafter was, therefore, not unilaterally imposed. It was the consequence of agreement between the contracting parties to vary the terms of the existing employment contract. There is no evidence that Mr Harpham signed under protest or renewed his July 2009 complaint. From 23 November 2010, Mr Harpham’s entitlement to damages for breach of the salary condition of his contract of employment ceased.

87    This leaves the issue of the amount of $55.53 and $70.00 that were paid to Mr Harpham before, but not after, 1 July 2009. Those amounts were not covered, at least expressly, by the agreement of September 2008. Clause 8.1 of the 2008 Agreement did not give rise to any contractual entitlement of present relevance. It only dealt with “statutory entitlements upon termination”. Mr Harpham submitted that the Rules were made pursuant to statutory requirements, and that entitlements given to organisers thereunder were accordingly “statutory entitlements”. I reject that submission. The reference to “statutory entitlements” would not be understood, objectively, by the reasonable bystander as referring to “entitlements”—if they are that—conferred by an organisation’s Rules, even if made for the purposes of compliance with a statute.

88    Mr Harpham is entitled to the difference between his pre-1 July 2009 salary and his post-1 July 2009 salary between 1 July 2009 and 23 November 2010. He is not, however, entitled to the $55.53 and $70.00 payments during that period or thereafter.

Alleged failure to pay the retirement allowance under rule 24.5.4

89    Mr Harpham claimed that he was entitled to a retirement allowance in accordance with rule 24.5.4 of the Rules, which provides:

“From the 1st September, 1997 all full-time officers who have less than 8 years’ service shall receive a retirement allowance equivalent to 5.8% of salary paid on a monthly basis into an approved superannuation scheme from the commencement of their service.”

90    He contended that the CEPU took adverse action against him by injuring him in his employment, altering his position to his prejudice and discriminating between him and other employees for reasons including that he had a workplace right, or to prevent the exercise by him of that workplace right. He identified the workplace right as the entitlement to the benefit of the Rules to receive the retirement allowance. He claimed, in the alternative, that the CEPU had breached his contract of employment by failing to pay the retirement allowance from 1 July 2009 until the end of his employment.

91    Mr Harpham’s claim, in so far as it is based on s 340(1) of the Act, asserted a right to receive a retirement allowance under rule 25.4. That allowance, fixed at 5.8% of salary, was to be paid, by the CEPU, on a monthly basis in to an approved superannuation scheme. The Rule was plainly intended to provide superannuation benefits to full-time officers upon their retirement. Prior to his resignation, Mr Harpham had not complained about the failure to make these payments. This is, perhaps, unsurprising given that, at least since 23 November 2010, the CEPU had been paying the equivalent of 11% of his salary into a superannuation fund.

92    Ms Wells and Mr Harkins both gave evidence that Mr Harpham was not paid the retirement allowance between 1 July 2009 and the termination of his employment in 2012 because he was not, in their view, entitled to any such payment. This was because the allowance was payable to elected officials and because other arrangements were in place to ensure that Mr Harpham received superannuation benefits.

93    I accept this evidence and the denials of the two witnesses that the failure to make the 5.8% payment occurred because Mr Harpham had an entitlement to it or for any other proscribed reason.

94    For the reasons which I have already given in respect of the $55.53 and $70.00 payments, Mr Harpham has not established this aspect of his cause of action in so far as it is based on contract.

95    This claim must also fail.

Orders under ss 164 and 164A of the FWRO Act

96    Mr Harpham also sought orders under ss 164 and 164A of the FWRO Act, which provide:

“164    Directions for performance of rules

Application for order directing performance of rules

(1)    A member of an organisation may apply to the Federal Court for an order under this section in relation to the organisation.

Note:    For the meaning of order under this section, see subsection (9).

(2)    Before making an order under this section, the Court must give any person against whom the order is sought an opportunity of being heard.

(3)    The Court may refuse to deal with an application for an order under this section unless it is satisfied that the applicant has taken all reasonable steps to try to have the matter that is the subject of the application resolved within the organisation.

…

Definition

(9)    In this section:

order under this section means an order giving directions for the performance or observance of any of the rules of an organisation by any person who is under an obligation to perform or observe those rules.

164A    Directions to rectify breach of rule of organisation

Application for order

(1)    A member of an organisation may apply to the Federal Court for an order under subsection (4) in relation to the organisation.

(2)    Before making the order, the Court must give any person against whom the order is sought an opportunity of being heard.

Conditions for making order

(3)    The Court may make an order under subsection (4) in relation to an organisation if the Court is satisfied that:

(a)    a person was under an obligation to perform or observe a rule or rules of the organisation; and

(b)    the person breached the rule or rules; and

(c)    the person acted unreasonably in so breaching the rule or rules.

Nature of order

(4)    Subject to section 164B, the Court may make an order directing one or more persons (who may be, or include, the person who breached the rule or rules) to do specified things that will, in the opinion of the Court, as far as is reasonably practicable, place the organisation in the position in which it would have been if the breach of the rule or rules had not occurred.

(5)    The Court may make the order whether or not, at the time of making the order, the person is a member or officer of the organisation.”

97    Mr Harpham contended that he was entitled to apply for orders under ss 164 and 164A because he was a member of the CEPU at the time the alleged breaches of rules 24.1 and 24.5.4 occurred. Mr Harpham accepted that he was no longer a member at the time he commenced the application to the Court.

98    Mr Harpham sought directions that the CEPU be ordered to back pay the alleged underpayments in remuneration paid to Mr Harpham since 1 July 2009, and that it pay to him the additional 5.8% superannuation payment to which he claimed to be entitled as retirement allowance, from 1 July 2009.

99    The CEPU contended that Mr Harpham had no standing to apply for the orders sought because he was not a member at the time at which he commenced this proceeding. It contended that there was nothing in the FWRO Act to suggest that the word “member” should be construed to include a “past member”.

100    Both ss 164(1) and 164A(1) confer standing on a “member” of an organisation to apply for orders for which those sections provide. They do not provide for former members of an organisation to make such applications. In this respect these sections can be contrasted with others, such as s 174, in which matters relating to “former” members are dealt with.

101    It has been held, in some cases, in which proceedings have been brought under predecessors of ss 164 and 164A, following the purported expulsion of the applicant from a union, that the applicant had standing: see, for example, Australian Workers’ Union v Bowen (No 2) (1948) 77 CLR 601 at 615–616 (Latham CJ). These cases have rested on the proposition that, if the applicant is able to persuade the Court that his or her expulsion was null and void, he or she remained a member and, as a result, retained standing as a “member” to bring the proceeding. The present is not such a case. Mr Harpham resigned his membership of the CEPU upon being advised by Mr Gauld, in October 2013, that he had an obligation, under the Rules, to tender his resignation if he remained ineligible for membership for more than two years after he ceased to be eligible. He chose to resign.

102    Mr Harpham lacks standing to seek orders under either ss 164 or 164A and his claims under these provisions must be dismissed.

DISPOSITION

103    Mr Harpham is entitled to recover the difference between his pre-1 July 2009 salary and his post-1 July 2009 salary between 1 July 2009 and 23 November 2010, plus interest. The parties should make the necessary calculations of the quantum of Mr Harpham’s damages having regard to what I have said at [14] above. In the event that they are unable to agree they will be given the opportunity to make short written submissions about the orders which they submit the Court should make. The additional payments of $55.53 and $70.00 are not recoverable, and so it is only the pre-1 July 2009 salary figure of $90,724.23 (if that be correct) that is relevant.

Associate:

Dated:    8 December 2016