Re Wayne Laurance Savage v Director-General of Social Services [1983] FCA 169 (4 August 1983)

FEDERAL COURT OF AUSTRALIA

Re: WAYNE LAURANCE SAVAGE
And: DIRECTOR-GENERAL OF SOCIAL SERVICES
No. G267 of 1982
Statutes

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.
Lockhart J.
Neaves J.

CATCHWORDS

Statutes - Interpretation - Social Security Act 1947 - Whether unemployment due to engagement in industrial action - Whether contract of employment necessary for participation in industrial action - Whether Tribunal erred in finding that industrial action continued after 11 November 1980.

Social Security Act 1947, s.107

HEARING

SYDNEY
4:8:1983

ORDER

1. The appeal be dismissed.

2. Wayne Laurance Savage pay to the Director-General of Social Services his costs of the appeal.

DECISION

This appeal from a decision of a presidential member of the Administrative Appeals Tribunal (McGregor J.) pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975 concerns questions of construction of s. 107 of the Social Security Act 1947 (formerly the Social Services Act 1947) ("the Act"). Before considering these questions we shall state the material facts.

The appellant, Wayne Laurance Savage, was employed as a fitter by Tooheys Limited at its brewery at Auburn, New South Wales. He was a member of The Amalgamated Metal Workers' and Shipwrights' Union ("AMWSU"). In August 1980 logs of claims were served on Tooheys Limited for a 35 hour working week, higher wages, and improved working conditions in the brewing industry.

In September 1980 a campaign of industrial action commenced in support of the logs of claims involving overtime bans, 24 and 48 hour stoppages, limitations and restrictions on the performance of work and the working of a nine day fortnight. The industrial action occurred at various breweries operated by Tooheys Limited including its brewery at Auburn. Members of the Federated Liquor and Allied Industries Employees' Union of Australia ("FLAIEU") and members of several trade unions referred to in the evidence as the maintenance unions, of which AMWSU is one, were engaged in the industrial action. Hearings took place from time to time before members of the Industrial Commission of New South Wales, the first hearing being on 10 October 1980. On Thursday 6 November 1980 employees at the Auburn brewery were issued with a written direction to report for work on Friday 7 November. Employees who reported for work on the Friday were asked to sign a letter agreeing to work in accordance with the terms of their award and not to participate in any further disruption to normal production. All employees who reported for work on that day refused to sign the letter and were summarily dismissed. Between 8 and 10 November 1980 other employees were asked to sign a letter in similar terms and when they refused they were also summarily dismissed.

On Tuesday 11 November there were mass meetings of employees of Tooheys Limited at the Auburn Brewery. Some hundreds of employees refused to sign the letter and they too were summarily dismissed. The appellant was one of those. The following day, 12 November, the FLAIEU gave notice of a dispute seeking reinstatement of Tooheys Limited's employees and on the same day the matter came before Liddy J., a member of the Industrial Commission of New South Wales, who adjourned the hearing until 13 November. Employees at the Waverley Brewery of Tooheys Limited took part in a 24 hour stoppage from 10:00 p.m. on 13 November as part of the nine day fortnight campaign. On 14 November employees at Tooheys Limited's Hunter Brewery stated that they intended to cease work from 6:00 a.m. on Monday 17 November for 24 hours as part of the campaign for a nine day fortnight. It appears that this stoppage occurred. Work at the Hunter Brewery returned to normal on 18 November.

Notice was posted at that brewery stating that Tooheys Limited had not taken action to dismiss the workers employed there because of proceedings pending before the Full Bench of the Commission. On 20 November a conference proceeded before the Full Bench of the Commission (Beattie J., President, Cahill and Liddy JJ.). It was adjourned to Friday 28 November when a meeting of the brewery employees was to take place. The Commission recommended the discontinuance of all current forms of direct action to enable the reinstatement of all dismissed employees and the resolution of the matters in dispute by negotiation or by the Commission.

On 19 December 1980 all employees of Tooheys Limited who had been dismissed in November were reinstated with all service being considered as continuous. None of the employees were paid by Tooheys Limited during the period 11 November to 19 December 1980.

The appellant lodged a claim for unemployment benefit for the period during which he was unemployed (11 November to 19 December), but the claim was disallowed by the Department of Social Security. The appellant had the matter reviewed by a Social Security Appeals Tribunal which recommended that his claim be granted. When a Social Security Appeals Tribunal's recommendation differs from a departmental decision the practice within the department is to refer the matter to the respondent for decision. This practice was followed in the present case and a delegate of the respondent decided that the appellant's claim should not be allowed and the department's decision was affirmed.

The appellant applied to the Administrative Appeals Tribunal pursuant to s.15A of the Act for review of the decision of the delegate of the respondent. The Tribunal, constituted by McGregor J., heard the application and on 15 December 1982 affirmed the delegate's decision. It is from that decision of the Tribunal that this appeal is brought by the appellant to this Court on a question of law.

Central to the decision of the Administrative Appeals Tribunal is s.107 of the Act which appears in Division 2 of Part VII dealing with unemployment and sickness benefits. Division 2 relates to "Qualifications for Benefits". A person is qualified to receive an unemployment benefit in respect of a period referred to in the section as the "relevant period" if, and only if, he satisfies certain requirements of the section including the requirement that he satisfies the respondent that (1) throughout the relevant period he was unemployed and was capable of undertaking, and was willing to undertake, paid work that, in the opinion of the respondent, was suitable to be undertaken by him; and (2) he had taken, during the relevant period, reasonable steps to obtain such work: sub-s. 107(1).

Sub-sections 107 (4), (5), (7) and (8) should be set out in full:-
"(4) A person is not qualified to receive an unemployment benefit in respect of a period unless -
(a) the person satisfies the Director-General that the person's unemployment during that period was not due to the person being, or having been, engaged in industrial action; and

(b) the Director-General is satisfied -
(i) that the person's unemployment during that period was not due to

another person or other persons being, or having been, engaged in industrial action; or
(ii) if the Director-General is satisfied that the person's unemployment during that period was due to another person or other persons being, or having been, engaged in industrial action - that the first-mentioned person was not, during that period, a member of a trade union of which the other person was a member, or of which any one or more of the other persons was or were a member or members, during that period.
(5) Sub-section (4) does not disqualify a person from receiving unemployment benefit in respect of a period occurring after the cessation of the relevant industrial action.

. . . .
(7) In this section -
"industrial action" means -
(a) the performance of work in a manner different from that in which it is

customarily performed, or the adoption of a practice in relation to work, a result of which is a restriction or limitation on, or a delay in, the performance of the work;
(b) a ban, limitation or restriction on the performance of work or on acceptance of, or offering for, work; or
(c) a failure or refusal by a person to attend for work or a failure or refusal to perform any work at all by a person who attends for work,
but does not include the performance of work in a manner, the adoption of a practice, a ban, limitation or restriction, or a failure or refusal, that is authorized by the employer of the person concerned;
"trade union" includes any organization or association of employees (whether corporate or unincorporate) that exists or is carried on for the purpose, or for purposes that include the purpose, of furthering the interests of its members in relation to their employment;

"unemployment", in relation to a person, includes -
(a) unemployment of the person arising by reason of a person or persons

being, or having been, engaged in industrial action;
(b) unemployment of the person resulting from the termination of his employment; and
(c) the person being, or having been, stood down or suspended from his employment or work.

(8) For the purposes of this section -
(a) conduct is capable of constituting industrial action notwithstanding

that the conduct relates to part only of the duties that persons are required to perform in the course of their employment;
(b) a reference to industrial action shall be read as including a reference to a course of conduct consisting of a series of industrial actions; and
(c) if a trade union is divided into branches (whether or not the branches are themselves trade unions), the persons who are members of the respective branches shall all be deemed to be members of the first-mentioned trade union."

The material findings of the Tribunal were made by McGregor J. in these terms:-
"On all the evidence I am satisfied that the applicant up to 11 November 1980 and thereafter to 19 December 1980 had taken part in industrial action; inasmuch as he, with others, by the various aspects of the campaign in which they were engaged had been guilty of the adoption of a practice or practices in relation to work, a result of which was a restriction, limitation on and delay in the performance of work;
- had taken part or been concerned in bans, limitations and restrictions on the performance or acceptance of or offering for work;
- had before and up to the 11 November 1980 failed or refused to attend for work.
Having regard to s.107(4) of the Act, I am satisfied that the applicant is not qualified to receive any employment benefit for the period 11 November 1980-19 December 1980.
I am not satisfied that the applicant's unemployment was not due to his, during the period 11 November-19 December 1980, being or having been engaged in industrial action.
Further, I am not satisfied that the applicant's unemployment during the period 11 November-19 December 1980 was not due to another person or other persons being or having been engaged in industrial action.
Further, I am satisfied that the period 11 November 1980-19 December 1980 was, in terms of s.107(5), not one occurring after the cessation of relevant industrial action.
The decision dated 26 August 1981 rejecting the applicant's claim for unemployment relief is affirmed."

The first submission of the appellant was that sub-s. 107(4) did not disqualify him from unemployment benefit because his unemployment during the relevant period was due to his having been dismissed on 11 November 1980 from his employment and not to his being, or having been, engaged in industrial action. It was asserted that any industrial action, in the sense defined by sub-s. 107(7), was engaged in before the dismissal of the appellant from his employment on 11 November 1980 and that the dismissal necessarily prevented him from engaging thereafter in industrial action, with the consequence that he was not disqualified from receiving unemployment benefit for the period of his unemployment. The capacity to participate in industrial action was said to be inevitably linked with the existence of a contract of employment so that, upon the appellant's dismissal, he could not engage in industrial action and thus be disqualified from unemployment benefits.

The appellant sought to draw some support for this approach from the definition of "industrial action" in sub-s. 107(7) by asserting that the activity specified therein necessarily assumed the existence of a contract of employment between the employer and the employee claiming unemployment benefit. In our view that definition is not susceptible of so limited a construction. It is sufficient to demonstrate this to refer to that part of paragraph 107(7)(b) as brings within the definition of "industrial action" a ban, limitation or restriction on acceptance of, or offering for, work. This clearly envisages that a person may be disqualified from receiving. unemployment benefit under sub-s. 107(4) notwithstanding that a contract of employment has not yet come into existence. While the definition of "industrial action" clearly encompasses cases where a contract of employment is in existence, the provision does not require as one of the criteria of its operation that such a contract be subsisting. The language is not directed to that circumstance and there is no compelling reason to imply such a requirement.

Under sub-s. 107(4) an applicant for unemployment benefit. is disqualified unless he satisfies the Director-General that there is no sufficient nexus between the period of unemployment and industrial action which is being, or has been, engaged in as to warrant the conclusion that the person's unemployment was not "due to" that industrial action. It is significant that paragraph (b) of the definition of "unemployment" in sub-s. 107(7) clearly demonstrates that the questions posed by sub-s. 107(4) must be addressed notwithstanding that the period of unemployment can be said to have resulted from the termination of a contract of employment.

In one sense it is true to say that the appellant's unemployment during the relevant period was due to his having been dismissed from his employment. But he was dismissed because he refused, as evidenced by his unwillingness to sign the letter presented to him for signature on 11 November, to perform work in accordance with the relevant award and that refusal by him and a like refusal by many fellow employees followed a period of industrial action. The words "due to" suggest some element of causation. But unemployment may be due to industrial action notwithstanding that the relationship of employer and employee is technically terminated. It may also be due to both industrial action and dismissal. The unemployment to which sub-s. 107(4) is directed may include unemployment due to any person who is a member of the same trade union as the claimant for unemployment benefit being, or having been, engaged in industrial action. So long as that other person engages in industrial action the claimant for unemployment benefit is himself disqualified (sub-para. 107(4)(b)(i)) and remains disqualified until that other person ceases the industrial action (sub-s. 107(5)). These considerations serve to diminish the significance of the termination of a contract of employment between the claimant for unemployment benefit and his employer as a cause of his unemployment for the purposes of the Act and emphasise that the Legislature is concerned with unemployment due to industrial action notwithstanding that the employment itself, if any, is technically terminated. It is the evident purpose of the Act that unemployment benefit is not payable to a person whose unemployment is brought about by his or fellow trade union members being, or having been, engaged in industrial action during the period of unemployment.

It is a question of fact depending on the particular circumstances of each case whether unemployment of the claimant for unemployment benefit is due to his or another member of the same trade union being, or having been, engaged in industrial action. The question is answered by broader considerations than the contractual relationship between employer and employee. The industrial context in which that relationship was shaped and severed is also relevant. Section 107 is not to be read in isolation from, but rather against, the background of the industrial scene. That is not to confuse "industrial action" as defined by sub-s. 107(7) with an industrial dispute, although the two may overlap. "Industrial action" as defined in sub-s. 107(7) is directed to narrower activity than is generally found in an industrial dispute.

Industrial disputes are essentially group contests in which at least one side comprises a group of employees or of employers which makes or resists some claim: Metal Trades Employers Association v. Amalgamated Engineering Union [1935] HCA 79; (1935) 54 C.L.R. 387 per Latham C.J. at pp. 403-404. A dispute about the termination of an employee's employment is itself an "industrial matter" under the Industrial Arbitration Act 1940 (N.S.W.): para. (c) of the definition of "industrial matters" in sub-s. 5(1). It is also a matter in respect of which orders or awards may be made including an award directing an employer to reinstate a dismissed employee and to reimburse the dismissed employee for all or part of the wages lost by him by reason of his dismissal: Industrial Arbitration Act, 1940 para. 20(1)(e); sub-s. 20A(1) and sub-s. 25(4).

The mere dismissal of an employee does not, therefore, in the industrial sense mean that the parties are deprived of rights or immune from obligations in relation to each other in the future. There may be a continuing relationship between the employer and the employee as represented by the industrial unions.

Unemployment may be "due to" participation in industrial action notwithstanding that the employment relationship may be technically severed. The dismissal of a group of employees may be only tactical. It is a question of fact in each case whether termination of the employment relationship is permanent or still within the area of negotiation. Termination of a contract of employment is not necessarily inconsistent with an intention by the employer to resume employment. It may be obvious from the particular circumstances that neither side to the dispute intends or can afford a permanent severance of the relationship and that the dismissal of a large segment of the employer's workforce is a demonstration of strength intended to result in a resumption of relations when the dispute is over.

In the present case it is noteworthy that the dismissal on 11 November 1980 of a large number of Tooheys Limited's employees at its Auburn plant was followed the next day by the FLAIEU giving notice of a dispute seeking reinstatement of the employees and that the matter was heard thereafter by the Industrial Commission of New South Wales. By 22 December 1980 all employees of Tooheys Limited who had been dismissed in November were reinstated with all service being considered continuous. The facts of this case, in particular those just mentioned, illustrate the unreality of answering the question whether the appellant's unemployment was due to his or a fellow member of the same trade union being, or having been, engaged in industrial activity solely by reference to the fact of the appellant's dismissal. Plainly the appellant was dismissed because he engaged in industrial action and his dismissal was part of the battle of tactics between Tooheys Limited and the relevant industrial unions.

We reject the first submission of the appellant.

The second submission of the appellant was that the Tribunal erred in finding that industrial action continued between 11 November and 19 December 1980. It was asserted that there was no evidence of any relevant industrial action after 11 November, so that sub-s. 107(5) operated to remove any disqualification of the appellant from unemployment benefit.

We have already set out the relevant findings made by the Tribunal and have outlined earlier the catalogue of relevant events, both before and after 11 November, relating to the contest between Tooheys Limited and the unions concerned. We need not repeat them. The Tribunal obviously considered that the relevant industrial action extended over the whole period 11 November to 19 December. In this respect it is not without significance that, for the purposes of s.107, a reference to industrial action is to be read as including a reference to a course of conduct consisting of a series of industrial actions: para 107(8)(b).

The Tribunal found that, to use the language of para 107(4)(b), "other persons" were engaged in relevant industrial action between 11 November and 19 December 1980. This was a finding of fact. We assume that his Honour's reference to "other persons" in this context was to persons who were members of the same trade union as that to which the appellant belonged, namely AMWSU. It has not been established that there was no evidence to support this finding by his Honour or that the finding was otherwise insupportable.

We would dismiss the appeal with costs.