Beach v Training and Employment Recognition Council (First Respondent) & Australian Country Choice (Second Respondent) [2009] QIRC 51 (2009) 191 QGIG 342

[Extract from Queensland Government Industrial Gazette, dated 24 July, 2009, Vol. 191, No. 11, pages 342-348] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Vocational Education, Training and Employment Act 2000 - s. 230 - appeal to industrial commission against council s. 240 - payment of an additional amount Gavin Beach AND Training and Employment Recognition Council (First Respondent) and Australian Country Choice (Second Respondent) (AT/2008/4) COMMISSIONER FISHER 16 July 2009 Appeal against decision of Training and Employment Recognition Council - Employer cancelled training contract other than in accordance with VETE Act - Compensation awarded - Whether additional penalty should be imposed - Submissions from parties considered - Absence of precedents - Nature and extent of conduct and circumstances - Whether breach deliberate - Business characteristics - Previous contraventions - Contrition - Co-operation - Deterrence - Quantum of penalty - Legislation - Determined just and appropriate penalty - Ordered employer pay trainee monetary value of twenty-five penalty units. DECISION On 28 May 2009 the Commission as constituted released a decision in this matter (2009) 191 QGIG 94. The Commission determined that Australian Country Choice (ACC) had purported to terminate the training contract of Gavin Beach other than in a way provided for by the Vocational Education, Training and Employment Act 2000 (VETE Act). ACC terminated Mr Beach's employment and then sought to cancel his training contract. After being advised by the delegate of the Training and Employment Recognition Council (the Council) that this process was in error ACC reinstated Mr Beach to the payroll but refused to provide him with training as required under his training contract. Because of the finding about ACC's actions and a finding that the resumption of training was inappropriate the Commission, pursuant to s. 237 of the VETE Act, awarded Mr Beach three weeks' compensation offset against the wages he had received after being reinstated to ACC's payroll. Section 240 of the VETE Act provides that if the Commission is satisfied that the employer had purported to terminate the contract other than in a way provided for by the Act the Commission may, in addition to an award of compensation under s. 237, order the employer to pay the trainee an amount of not more that the monetary value of 135 penalty units. Given an order of compensation had been made under s. 237 of the VETE Act the Commission considered whether a payment of an additional amount under s. 240 should also be ordered. In the Commission's view the conduct of ACC in only partially remedying its breach should not be tolerated. Before making any final decision about whether any penalty should be imposed and the quantum of any such penalty the Commission invited the parties to make submissions on the matter. Written submissions were received from all parties. As both the submissions of the Appellant and ACC responded to the submissions made by the Council these latter submissions shall be outlined first. Only the salient points are summarised below, however, the submissions in their entirety have been considered in reaching this decision. Submissions of the Council The Council submitted that despite there being few other cases where the Commission has awarded compensation or a penalty this matter was one which called for the imposition of a penalty for two reasons. Firstly, ACC were advised of the legislative provisions one week after Mr Beach's dismissal - a short period of time when it could have, but chose not to, reinstate Mr Beach and resume his training. Secondly, throughout the investigation by the Council ACC were adamant that Mr Beach was not to return to work and training. The Council submitted this attitude should not be tolerated and further, that "ACC's actions were a fundamental breach of the whole purpose of the training contract". While it could not provide any reliable statistical data the Council said that other employers have behaved in a similar manner to ACC and supported its case by reference to earlier decisions of the Commission in Malana Tamara Bryden v Training Recognition Council (2001) 166 QGIG 305; and The Australian Workers' Union of Employees, Queensland v Training and Employment Recognition Council and Another (2005) 178 QGIG 428. Although a penalty was not awarded in either of these cases, in light of its long experience with these matters the Council submitted there is clearly a need to establish a deterrent to other employers taking similar action. On the question of quantum the Council noted that the maximum penalty provided by the VETE Act was 135 penalty units and that the maximum penalty that can be imposed where an employer fails to follow a training plan is 60 penalty units. In effect what had occurred in this case was that ACC had failed to deliver a training plan and consequently the Council submitted that 60 penalty units should be considered the maximum that should be applied here. The Council further submitted that in this context a penalty in the order of 40 to 50 penalty units may be appropriate. In the Council's view the maximum penalty should be reserved for a recalcitrant employer when the employee is blameless. As the Council acknowledged neither of these factors was present in this case. -- 1 of 6 -- 2 Finally, the Council noted that the VETE Act requires the monetary value of any penalty to be paid directly to the employee. Given the circumstances of this case where the Commission held that Mr Beach had also been in the wrong with his behaviour the Council submitted that the penalty imposed should be offset against the wages already paid to Mr Beach by ACC after his dismissal (8 weeks and 2 days) that are in excess of the three weeks' compensation already awarded by the Commission. Submissions on behalf of the Appellant The Appellant, on behalf of Mr Beach, in submitting that a penalty ought to be awarded agreed with the submissions of the Council set out above that ACC's behaviour in refusing to comply with its obligations under the training contract should not be tolerated and was a fundamental breach of the whole purpose of the training contract. In its submissions on quantum the Appellant argued that this case can be distinguished from decisions under s. 80 of the VETE Act. In particular reference was made to the situation here where ACC, after being informed by the Council that its actions were in breach of the Act, made a conscious decision not to remedy that breach and train Mr Beach but to continue with it. The Appellant noted that "It was this conscious and intransigent decision to refuse to train the Appellant which formed the substantive basis for both the TERC and the Commission's decisions not to order reinstatement but to cancel the training contract". Because the contravention was conscious, ongoing and a deliberate attempt to have the Council cancel the training contract the penalty should be greater than that provided by s. 80 of the VETE Act. Further, the actions of ACC made it clear that they wanted the traineeship cancelled regardless of their obligations under the Act. The Appellant rejected any notion that the penalty should be mitigated by the partial compliance of ACC in reinstating Mr Beach to the payroll and argued the Commission should only be concerned with the intent and outcome of the actions of ACC, i.e. the deliberate purport to cancel the training contract in a way other than provided by the VETE Act. The Appellant also rejected any submission to reduce the penalty because of any conduct on the part of Mr Beach. As the Commission did not find that Mr Beach had engaged in any misconduct warranting termination of the training contract Mr Beach should not be responsible for ACC's actions. The submission by the Council that any penalty should be offset against the amount already paid to Mr Beach was firmly opposed by the Appellant which argued that the purpose of a penalty is punitive, not compensatory, and designed to provide both specific and general deterrence to the party that committed the conduct and to the greater community. If a penalty was allowed to be offset in the way suggested by the Council then it is not meeting its purpose of specific and general deterrence. For all of these reasons the Appellant submitted that a penalty of 135 penalty units should be imposed. Submissions of ACC ACC submitted that its actions covered two distinct "decision" phases, firstly, the termination of Mr Beach's employment contrary to the provisions of the VETE Act due to ignorance of those provisions and secondly, once its error had been pointed out it reinstated Mr Beach to the payroll. Although ACC acknowledged that it did not resume his training it argued that it had substantially complied with its obligations. ACC advanced a number of reasons why a penalty should not be imposed largely going to the conduct of Mr Beach and which were identified in the original decision of the Commission. In the alternative if the Commission found that it should express some displeasure about its conduct then ACC said that in view of the reasons given about Mr Beach's conduct any penalty should be limited to a nominal amount. Further, the maximum penalty of 135 penalty units was reserved for the most serious of transgressions and in this regard ACC noted that s. 80 of the Industrial Relations Act 1999 (IR Act) specified the same amount of penalty units for a sanction where an employer had dismissed an employee for an invalid reason. ACC submitted that the penalty provision of s. 80 of the VETE Act should be used as a guide to the possible maximum after application of the relevant circumstances and mitigating factors outlined above. ACC had, in the result, not provided the training as required by the training contract. However, as the Commission also found that it was unlikely that the training contract would have been completed because Mr Beach declined to continue in the QA role indefinitely, reinstating Mr Beach would not have made any difference. ACC also supported the submissions of the Council that any penalty imposed should be set off against payments already made by ACC to Mr Beach as a consequence of his reinstatement to the payroll. Conclusion A difficulty with this matter is the absence of precedents to guide the Commission about the whether a penalty should apply and any appropriate quantum for breaches of the VETE Act. -- 2 of 6 -- 3 The Federal Court of Australia has in a number of decisions set out a non-exhaustive list of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty and if it does the amount of that penalty. These have been usefully gathered together in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 and adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 and by Graham J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 when considering penalties in respect of breaches of awards in the federal jurisdiction. These factors are: • The nature and extent of the conduct which led to the breaches; • The circumstances in which that conduct took place; • The nature and extent of any loss or damage sustained as a result of the breaches; • Whether there had been similar previous conduct by the respondent; • Whether the breaches were properly distinct or arose out of the one course of conduct; • The size of the business enterprise involved; • Whether or not the breaches were deliberate; • Whether senior management was involved in the breaches; • Whether the party committing the breach had exhibited contrition; • Whether the party committing the breach had taken corrective action; • Whether the party committing the breach had cooperated with the enforcement authorities; • The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and • The need for specific and general deterrence. In the last-mentioned decision after referring to the list of considerations Buchanan J issued the cautionary note that checklists can be useful provided "they do not become transformed into a rigid catalogue of matters for attention" at [91]. Although the above factors have been distilled from cases not dealing with training contracts they nonetheless provide general guidance in the present matter. It is not intended to apply the factors rigidly; not all of them are relevant and in relation to some there is no evidence. There may also be others that do not appear in the list or need to be framed a little differently to accommodate the particular circumstances of a training contract appeal. Nature and extent of the conduct and circumstances in which conduct occurred In its original decision the Commission found that ACC had purported to cancel the training contract other than in a way allowed under the VETE Act because it had terminated Mr Beach's employment before the training contract was cancelled. The VETE Act sets out a number of ways a training contract can be cancelled and the way adopted by ACC was not in conformity with any of them. The actions of ACC in purporting to cancel the training contract contravened both the VETE Act and the IR Act. The contravention of the IR Act was remedied by reinstating Mr Beach to the payroll but the breach of the VETE Act was not remedied. ACC refused to have Mr Beach return to the workplace so that his training could continue while the amended application for cancellation on the grounds of misconduct was investigated. Whether breach was deliberate The initial contravention was done in error and resulted from a misunderstanding of the law. However, the contravention continued after the Council delegate had explained the effect of the interplay of relevant state and federal law. The decision not to resume training was conscious and deliberate and made after ACC was advised by the Council delegate of their breach. That the decision was deliberate is confirmed by ACC's submission on penalty where reference is made to the "conscious decision" to refuse to allow Mr Beach to return to work and provide him with the training required under the training contract. A training contract places a legal obligation on an employer to provide employment-based training to a trainee and a reciprocal obligation on the trainee to undertake the training. Both work and training are essential to the fulfilment of the contract. The Commission accepts the submission of the Council and endorsed by the Appellant that ACC's actions were a fundamental breach of the whole purpose of the training contract. As submitted by the Appellant the intractable decision not to resume training formed the basis of the decisions of the Council and the Commission not to order reinstatement but to cancel the training contract. The Appellant also submitted that the decision of ACC not to resume training Mr Beach was taken in order that the Council would cancel the training contract. On appeal the Commission did not make such an explicit finding and I decline to make such a finding now, however, the position adopted by ACC certainly made it difficult for the Council to make any other decision. Consequences Rather than considering the nature and extent of any loss or damage it is better to have regard to the consequences of the breach as this more properly encompasses the effect of the breach. The consequence of the contravention is that Mr -- 3 of 6 -- 4 Beach was unable to be trained, consistent with his training contract. Mr Beach advised his decision not to continue in the QA back-up role to the Council during the investigation of the application for cancellation. The Commission found that this decision in circumstances where the QA back-up role was integral to his training, meant it was unlikely that his training contract would be completed. While this mitigates ACC's actions to some extent the Commission noted that the Council advised there was no evidence before it that Mr Beach was given or refused any direction to permanently stay in the QA back-up role. Further, the Commission found that no-one from ACC management had advised Mr Beach that his decision to step down permanently from the QA role would impact on either his position at ACC or his traineeship. While it may be true that the consequences of the breach may not have been pointed out to ACC by the Council in precise terms that a penalty may apply, ACC was aware that the purported cancellation was being challenged by Mr Beach with assistance from the Appellant. The material before the Commission reveals that ACC had also sought legal advice. In these circumstances the Commission considers that ACC, a company of some size and resources and able to take legal advice, was aware or ought to have been aware that its decision to not fully remedy its breach may have adverse consequences. Business characteristics The Commission was not provided with any information about the size of ACC. It is however a business of some size as it operates a food processing facility, properties and feed lot operations. Mr Milzewski, General Manager Human Resources of the ACC Group, was the person responsible for terminating Mr Beach's employment before seeking to cancel the training contract and liaised with the Council after the application for cancellation was made. Before terminating Mr Beach's employment Mr Milzewski consulted with other senior managers of ACC. It is not clear on the materials who decided not to have Mr Beach return to the workplace and resume training, however, it was Mr Milzewski who advised of this decision. Given the decision to terminate was taken at a senior level it is reasonable to infer that the decision not to fully reinstate was also made at senior levels. Similar previous conduct The Commission was not apprised of any previous contraventions by ACC and the Council acknowledged there was no evidence to show that it was the practice of ACC to deal with trainees in a cavalier fashion. Contrition Mr Milzewski gave evidence that he apologised on being advised by Ms Schofield of their error in terminating Mr Beach in advance of seeking the cancellation of his training contract. Beyond that, ACC has not shown any contrition for its actions. In its original decision the Commission at various times referred to ACC "adopting an intractable view"; being "adamant" that Mr Beach not return to the workplace; and their "resolve" about this not diminishing and being reinforced in evidence and submissions. ACC have said in its submissions on penalty that its decision in not returning Mr Beach to the workplace and resuming training was conscious and vindicated by the Commission's findings about the conduct of Mr Beach. This overstates the Commission's findings because the Commission made clear that Mr Beach did not engage in any conduct which warranted the cancellation of his training contract. Further, the Commission also said "there is much of ACC's position that can be cavilled with" and it "may have difficulty with ACC's reasons" for refusing to have Mr Beach return to the workplace. Cooperation ACC did not agree to the proposal of the Council to reinstate Mr Beach such that he could resume training. Various discussions were held between ACC and the Council and although ACC provided certain documentation to the Council during the investigation it did not supply all materials. Additional evidence, not available to the Council, was presented by ACC to the Commission at the hearing. The Commission considers that although generally cooperative ACC could have done more to assist the Council during its investigation process. Deterrence Although the Council has advised that other employers have engaged in actions similar to ACC there is no statistical data available and in addition there have been few cases before the Commission where a penalty of any type has been imposed, least of all one of the type being considered here. This leads me to conclude that breaches of the type which occurred here are not widespread. While there should be specific deterrence to ACC the need for general deterrence is less evident. -- 4 of 6 -- 5 Determination of whether penalty should be imposed The Commission considers this is a case where a penalty ought to be awarded. The finding has been made that ACC purported to cancel the training contract other than in a way under the VETE Act and ACC remained intransigent in the face of advice that its actions were in contravention of the Act. Accordingly, its continuing contravention was as a result of a conscious decision. Quantum of penalty None of the parties took the Commission to s. 181B of the Penalties and Sentences Act 1992 which deals with fines for corporations under a penalty provision. Section 181B(1) provides that: "This section applies to a provision prescribing a maximum fine for an offence only if the provision does not expressly prescribe a maximum fine for a body corporate different from the maximum fine for an individual.". Section 240 of the VETE Act does not expressly provide a maximum fine for a body corporate and hence pursuant to s. 181B(2) and (3) of the Penalties and Sentences Act 1992 the maximum fine specified is taken only to be that for an individual and for a body corporate a maximum fine may be increased five-fold from that of an individual. Section 181B(3) vests a discretion in the court imposing the fine. In the circumstances of this case where s. 181B(3) has not been specifically argued the Commission has decided not to exercise that discretion. When determining a penalty the Commission must have regard to the maximum penalty prescribed: s. 9(2)(b) Penalties and Sentences Act 1992. However, the Commission believes it is useful to have regard to the other maximum penalties established by the Legislature in the VETE Act and IR Act for relevant breaches in order to provide some guidance about the severity of the breach in question. Vocational Education, Training and Employment Act 2000 s. 240 Payment of an additional amount - maximum penalty 135 penalty units s. 80 Employer to comply with training plan - maximum penalty 60 penalty units Industrial Relations Act 1999 s. 80 Sanctions for invalid reason - unfair dismissal - maximum penalty 135 penalty units s. 139 Termination of employment before apprenticeship or traineeship completed or cancelled - maximum penalty 40 penalty units The Commission accepts the submissions of ACC that a maximum penalty should be reserved for the severest of cases. The breach here does not fall into that category as ACC remedied the breach of the IR Act by reinstating Mr Beach to the payroll and continued to pay him until the decision of the Council was made. The breach which remained was the purported cancellation of the training contract in a way other than allowed by the VETE Act, the effect of which was the refusal to deliver training. The submissions of the Council and ACC are that this refusal is an offence under s. 80 of the VETE Act and that the maximum penalty specified for a contravention of that section should be used to set the maximum penalty. This submission was rejected by the Appellant which argued that this was a separate breach which should be dealt with by a separate penalty. Further, the deliberate decision not to resume training made the actions of ACC more than that of a mere failure to deliver a training plan as is required by s. 80. In my view while I need to have regard to the maximum penalty provided by s. 240 the penalty set for a breach of s. 80 helps to put the breach in context. It also assists in setting the level of penalty to be imposed in this case because it is the failure to deliver training which remained in issue. This failure occurred because ACC refused to allow Mr Beach to return to the workplace in light of their belief that there had been an irretrievable breakdown in trust and confidence in Mr Beach. The failure to deliver training was nonetheless intentional and continued after advice by the Council. The delivery of training is integral to a training contract and without it the purpose of the training contract is fundamentally destroyed. Because of this the actions by ACC should be seen as serious in the context of a conscious decision not to deliver training. -- 5 of 6 -- 6 Contrary to the submissions by the Appellant the Commission's original decision did not also contemplate a penalty being ordered pursuant to s. 139 of the IR Act. No such penalty was sought and neither is it a consequential order to an order made under s. 237 of the VETE Act. Reference to the penalty specified in s. 139 of the IR Act was included to show how the Legislature regarded the severity of such a breach - a breach which had occurred in this case (although later remedied). Both the Council and ACC have sought that any penalty be offset against the wages already paid to Mr Beach as a consequence of his dismissal that are in excess of three week's compensation awarded by the Commission. The reasons advanced for that proposition are that the Commission also found that Mr Beach was in the wrong with his behaviour and should not be seen to be rewarded. Further, as the penalty is payable directly to the employee and not into consolidated revenue payments already made should offset the penalty to be paid to the employee. In my view the Appellant is correct in its submission that to offset a penalty against wages paid undermines the purpose of the penalty which is designed to be punitive and not compensatory. However, various mitigating factors exist and are required to be taken into consideration. These are the cooperation given by ACC to the Council during the investigation and that no previous similar conduct has been engaged in by ACC. Mr Beach's decision not to continue in the QA back-up role, an integral component of his employment and traineeship, shows that ACC is not totally blameworthy. This decision was known to ACC managers at the time of the application for cancellation and although not relied on by ACC to cancel the training contract or by the Council in its decision to cancel the training contract it was the key factor in the Council's decision to cancel the registration of the training contract. It was also a reason the Commission denied the appeal in respect of the cancellation of the registration of the training contract. The Commission is aware that at no time did Mr Beach decline to be trained. His decision was to not continue to perform the QA back-up role but the provision of training without the performance of QA duties would have meant that his training contract would not have been able to be completed. Both QA work and training were required under the training contract. The view that the provision of training may well have proved futile in the absence of performing QA work does not absolve ACC from its decision not to resume training when requested by the Council as the application to cancel the training contract was still under investigation. However, it does act as a mitigating factor in the quantum of the penalty to be imposed. Ultimately the Commission must decide on a penalty which is just and appropriate in all of the circumstances and which takes into account the various findings made by the Commission in light of the factors set out above. In particular it recognises the deliberate nature of the breach and the lack of contrition on the part of ACC. The quantum of the penalty should also specifically deter ACC from acting in a similar manner again and to a lesser extent provide general deterrence to other employers which may seek to act in the way that ACC did. With all of this in mind, had Mr Beach not made the decision not to continue with the QA back-up role the Commission would have decided, pursuant to s. 240 of the VETE Act, to order ACC to pay Mr Beach the monetary amount of 50 penalty units. However, the Commission has decided to reduce the penalty by half given Mr Beach's decision not to fulfil a fundamental term of his training contract. The monetary value of 25 penalty units ($2,500) is to be paid to Mr Beach within 22 days of the date of release of this decision. Order accordingly. G.K. FISHER, Commissioner. Hearing Details: 2009 Submissions by all parties - 12 June Released: 16 July 2009 Appearances: Mr C. Newman and with him Mr M. Journeaux, The Australasian Meat Industry Employees' Union on behalf of the Appellant. Mr R. McColm and with him Ms Y. Schofield on behalf of the Training and Employment Recognition Council. Mr J. Franken, Livingstones Australia and with him Mr P. Milzewski on behalf of Australian Country Choice. Government Printer, Queensland The State of Queensland 2009 -- 6 of 6 --