Sec 386 of the Fair Work Act provides inter alia that a person has been dismissed if the person’s employment has been terminated on the employer’s initiative. What is the situation when an employer terminated the employment of a person who through no fault of the employer or the employee is no longer able to perform the inherent requirements of the job? Is that a termination at the initiative of the employer?
Here is the answer.
“Mr Gibian says it is well established that, for the purposes of Part 3-2 of the Act, the concept of “dismissal” is constituted by the termination of the employment relationship rather than the contract of employment. 23 Mr Gibian cites a number of cases in support of that proposition. One of those cases is Siagian v Sanel Pty Ltd (1994) 54 IR 185 (Siagian v Sanel).
Mr Rauf says Mr Gibian’s reliance on this case for the proposition advanced is misplaced. He says that the case was focused on the question of whether a distinction could be made such that termination of employment was confined only to the situation where there had been a termination of an employee’s contract. 24
Siagian v Sanel was a case before Wilcox CJ in the Industrial Relations Court of Australia in 1994 during the currency of the Industrial Relations Act 1988 about when termination took effect, a matter the Commission is often called upon to determine in applications for extension of time in unfair dismissal applications. In this case the question required an answer because the unfair dismissal law had changed and it was necessary to establish whether the dismissal was before the commencement of the new law. It was determined that the termination took effect on the day the employee was told he was dismissed and handed his payment in lieu of notice notwithstanding a finding that the contract of employment was ended 2 days later when the employee accepted the repudiation of the contract by the employer. 25
Mr Rauf says while Siagian v Sanel stands for the principle that the employment relationship may be ended but the contract of employment remain on foot the converse is not the case. He says “an act which terminates the contract of employment does not leave open the employment relationship”. 26
He contends that Mr Toohey’s contract of employment is frustrated so it follows that the employment relationship is ended, other than at the initiative of the employer.
I have found that Mr Toohey’s contract of employment was not frustrated so this does not arise. However I must say that I don’t agree that Mr Gibian’s reference to Siagian v Sanel was misplaced. The case clearly stands for the principle that the legislation (in that case the Industrial Relations Act 1988) is concerned with the termination of the employment relationship. In relation to the Act I agree that the concept of “dismissal” is constituted by the termination of the employment relationship rather than the contract of employment.
Was the employment relationship ended at the initiative of the employer?
This is not the first matter in which the employment of an employee of SCS has ceased as a result of the employee being charged with a criminal offence resulting in them becoming a “disqualified person” within the meaning of the Child Protection Act.
I note that the Child Protection Act has created a new set of considerations as it operates in respect of persons against whom charges have been laid, not only those who have been convicted of certain offences. As I understand it, this represents a departure from the previous legislation.
In the matter of Mahony v Dr Daniel J White (Executive Direction of Schools of the Catholic Education Office Sydney) T/A Catholic Education Office Sydney  FWC 1593 Commissioner McKenna, when considering a somewhat similar set of facts to the present matter, rejected the SCS’s argument that pursuant to section 386(1) of the Act Mr Mahony’s employment had not been terminated on the employer’s initiative but rather had come to an end by virtue of the operation of the doctrine of frustration.
In that matter (also an application pursuant to s. 394 of the Act) Mr Mahony had been working as a teacher and a REC since 1986. On 23 September 2012 he was charged with a number of offences under the Crimes Act, with further charges laid on 28 May 2013. Mr Mahony was suspended with pay shortly after the first charges were laid. After the exchange of numerous further pieces of correspondence and a meeting on 13 December 2013 at which he was informed he would be dismissed unless he agreed to apply for leave without pay, Mr Mahony was advised by SCS that his employment was terminated effective 20 December 2013. At that stage the criminal charges against Mr Mahony had not been resolved and his criminal trial was scheduled for May 2014.
It was not contentious that Mr Mahony’s employment had involved ‘child-related work’ for the purposes of s 6 of the Child Protection Act and that he had become a disqualified person for the purposes of that Act following its commencement.
Commissioner McKenna considered that provided Mr Mahoney was not engaged in child-related work, there was nothing to prevent SCS from continuing to employ him after 15 June 2013.
Accordingly the Commissioner rejected the SCS’s jurisdictional objection.
The Commissioner’s decision was the subject of an appeal by SCS to a full bench of the Commission (Dr Daniel White, Executive Director of Catholic Schools and legal representative of the Catholic Education Office Sydney v Gerald Mahony  FWCFB 4952 (Mahony)). The appeal was however not run on the basis of frustration, but rather on the basis that Mr Mahony’s continued employment would have been inconsistent with the Child Protection Act and thus illegal.
The Full Bench held that in the circumstances, it could not be fairly said that Mr Mahony’s employment was terminated on the employer’s initiative. The requirement in
s. 386(1)(a) of the Act was therefore not met and Mr Mahony’s application was dismissed.
Subsequent to this decision a five member full bench of the Commission considered another similar set of circumstances in O’Connell v Catholic Education Office, Archdiocese of Sydney T/A Catholic Education Office, Sydney  FWCFB 1752. The Full Bench convened pursuant to s. 615 of the Act to determine the Respondent’s jurisdictional objection, being that Mr O’Connell was not terminated at the initiative of the employer.
The Applicant in that matter, Mr Paul O’Connell, had commenced employment as a teacher at Marist Brothers Penshurst from May 1979 and was employed by the Catholic Education Office until 20 February 2015.
Following an investigation which commenced in December 2014, Mr O’Connell was charged with indecent assault of a person under the age of 16 years, pursuant to s. 61M(2) of the Crimes Act on 17 February 2015.
As a result he attended a meeting with the Catholic Education Office on 20 February 2015 at which he was advised his employment was terminated. At that meeting Mr O’Connell had indicated he intended to plead not guilty to the charge and suggested a range of options short of termination of his employment including being assigned alternative duties, suspension (with or without pay) or leave (with or without pay).
Mr O’Connell’s dismissal was confirmed by way of a letter dated 24 February 2015.
In response to Mr O’Connell’s application to the Commission, SCS raised a jurisdictional objection on the basis that Mr O’Connell’s employment was not terminated at the initiative of the employer.
Before the Full Bench of the Commission, SCS argued that the operation of the Child Protection Act meant that in the circumstances it had no choice but to terminate the Mr O’Connell’s employment. The Full Bench rejected that argument. It found that the Child Protection Act did not require the termination of an employee in the circumstance of Mr O’Connell. The Full Bench held that s. 9 of the Child Protection Act did not, on its proper construction, prevent an employer continuing to employ a person provided that the person was not employed in child related work. SCS’s jurisdictional objection was therefore dismissed.
The Full Federal Court dealt with applications for judicial review of both of these the decisions. 27 Both Mr Mahoney’s and Mr O’Connell’s employment had ceased as a result of being charged with a criminal offence resulting in them becoming a “disqualified person” within the meaning of the Child Protection Act.
The Full Federal Court found that both Mr Mahoney’s and Mr O’Connell’s employment with their employer had been terminated on the employer’s initiative.
Mr Gibian on behalf of Mr Toohey submits that the outcome now contended for by SCS is directly inconsistent with the outcome of these proceedings.
He submits that it is not open to the Commission to determine Mr Toohey’s application in a manner that is directly inconsistent with the outcome of Full Federal Court proceedings.
Mr Rauf on behalf of SCS submits that Mr Gibian incorrectly summarises the Respondent’s submissions by stating that “frustration of contract is said to arise from the operation of the Child Protection (Working with Children) Act 2012 NSW”. 28
He says that the contention that SCS’s position is inconsistent with the Full Federal Court decision proceeds from this incorrect summary. He says that when the SCS position is correctly stated, that is, frustration arises from Mr Toohey losing his Clearance, there is no inconsistency. 29
I have addressed Mr Rauf’s submissions in relation to frustration and found that the contract was not frustrated so it is not necessary for me to deal with this submission. But it is necessary for me to deal with the relevance of the Full Court decision to my consideration of whether Mr Toohey was dismissed. It seems to me that the factual circumstances of Mr Mahoney and Mr O’Connell in relation to the loss of their Clearances and subsequent cessation of employment are very similar to Mr Toohey.
As Mr Gibian submits, both decisions concern the application of the unfair dismissal provisions of the Act in circumstances in which an employee had become a disqualified person for the purposes of the Child Protection Act. This is Mr Toohey’s circumstance. Mr Gibian submitted that the Full Federal Court found in both cases that there was a termination on the employer’s initiative for the purposes of s.386(1)(a) of the Act. I agree with this submission.
I have considered Ms Comensoli’s evidence regarding the decision, the letter of 26 May 2016 inviting Mr Toohey to a meeting to “present to the employer a reason or reasons why SCS should not act to terminate your employment forthwith” and the options presented by Mr Toohey to SCS of redeployment, suspension with or without pay, leave with or without pay that were not agreed by SCS.
In all the circumstances I believe that it is clear that SCS made the decision to end the employment relationship. In all the circumstances I consider that Mr Toohey’s termination was on the employer’s initiative for the purposes of s.386(1)(a) of the Act.
Having found that the contract of employment was not frustrated and Mr Toohey was dismissed in terms of ss.385 and 386 of the Act it remains for me to consider whether Mr Toohey’s dismissal by was harsh, unjust or unreasonable, that is, unfair.”
Toohey v Dr Dan White, Executive Director of Catholic Schools and legal representative of the Catholic Education Office, Sydney (2017) FWC 4722 delivered 26 September 2017 per Booth DP