CITATION : 2012 WAIRC 00062 CORAM : COMMISSIONER S J KENNER HEARD : THURSDAY, 17 NOVEMBER 2011, MONDAY, 3 OCTOBER 2011, WRITTEN SUBMISSIONS 17 NOVEMBER, 21 NOVEMBER & 22 NOVEMBER 2011 DELIVERED : THURSDAY, 9 FEBRUARY 2012 FILE NO. : B 153 OF 2011 BETWEEN : FRANK MORETTI Applicant AND H J HEINZ CO AUSTRALIA LTD Respondent Catchwords : Industrial law (WA) - Contractual benefits claim - Interpretation of terms of contract - Principles applied - Application dismissed. Legislation : Industrial Relations Act 1979 s 29(1)(b)(ii); Insurance Act 1973 (Cth) Result : Application dismissed Representation: Counsel: Applicant : Mr P Mullally as agent Respondent : Ms S Beard Case(s) referred to in reasons: Malik v Bank of Credit and Commercial International SA (INLIQ) (1997) 26 ICR 462; Riverwood International Australia Pty Ltd v McCormick (2000-01) 177 ALR 193; Woods v VM Car Services (Petersborough) Ltd (1981)) 10 ICR 666; Case(s) also cited: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Goldman Sachs JB Were Services Pty Ltd v Nikolich (2007) FCAFC 120 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Reasons for Decision 1 Mr Moretti started work at H J Heinz and Co Australia Ltd in September 1983. He was the Field Sales Manager for the Western Australian operations of the business. On 19 August 2011 he was dismissed from his employment in circumstances that are controversial. The dismissal of Mr Moretti is being challenged elsewhere. 2 As part of his terms of employment, Mr Moretti says he was entitled to a salary continuance scheme if he became incapacitated for work by reason of sickness or injury. On the day prior to his dismissal, Mr Moretti visited his doctor and was diagnosed with a stress condition. He forwarded a medical certificate to Heinz. He claims to be entitled to salary continuance under his former contract of employment because he remains incapacitated, despite no longer being an employee of the company. 92 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 267 3 Heinz say that Mr Moretti is not entitled to salary continuance on several grounds. First it contends that in accordance with its policies, which apply to salary continuance, this benefit is at the discretion of the company. Further, salary continuance does not apply to a person who ceases to be an employee. Finally, the benefit is able to be cancelled if the employee is in breach of his contract of employment, which Heinz says was the case in this matter. 4 To deal with Mr Moretti’s claim, several issues need to be considered. The first is what were Mr Moretti’s terms and conditions of employment and did they include an entitlement to salary continuance that was subject to the policies of Heinz? Second, if a salary continuance benefit extended to Mr Moretti, what were the conditions attaching to it? Thirdly, in the circumstances of Mr Moretti’s absence from work, and subsequent dismissal, were those conditions met? Terms and conditions of employment 5 It is common ground that Mr Moretti signed a written contract of employment with Heinz dated 4 September 2000. This seemingly reflected changes to his position and terms and conditions which had taken effect by this time. The relevant part of the letter commences at cl 20 as follows: “20. Change of Terms Should any of the above conditions require review whilst you are in your current position, this should be undertaken through discussion and agreement between your manager and you. 21. All Previous Agreements Superseded This contract and the documents specified later in this clause constitute the entire agreement between you and Heinz Wattie’s Australasia and supersede all previous representations, negotiations, commitments and communications, either written or oral, between the parties. The documents are: (a) Your job description as altered from time to time; (b) To the extent that it is applicable to your employment, relevant legislation, the Heinz Wattie's Australasia Employee Work Rules, Manuals and Policies / Heinz Wattie's Australasia grievance and dispute procedures together with any amendments or revisions thereto. 22. Jurisdiction This agreement is made under the applicable Australian federal and respective state laws. 23. Acceptance Please review the above and sign the enclosed duplicate copy of this letter in acknowledgement of your receipt and agreement to the terms contained herein. For the conditions of the contract to become effective a signed copy of the contract must be returned to me within two weeks of the date of issuance. If a signed copy of the contract is not received within two weeks of the issuance date then the contract offer will be withdrawn and any subsequent agreement / acceptance will not be applied retrospectively. Attached are additional terms and conditions applicable to your position at the date of commencement, they include details in respect of: Company Vehicle Salary Continuance/Income Protection Redundancy … Salary Continuance / Income Protection In cases of extended absence due to illness, salary continuance insurance is provided which will maintain your base salary at 100% for the first 90 days and 80% thereafter while you remain unfit for work for a further period of up to two years, as detailed in the H J Heinz welfare policy.” 6 Heinz contended that as at the time of Mr Moretti’s dismissal, the terms of Heinz’ policy for salary continuance (as amended on 9 August 2011) was that contained in the book of documents as exhibit A1 at pp 81-85. A copy of this policy document was provided to Mr Moretti’s agent by Heinz and was tendered by Mr Moretti in support of his claim. Exhibit A1 also contains, at pp 66 – 70 what was said by Heinz to be the relevant salary continuance policy in effect at the time Mr Moretti signed the contract in September 2000. As mentioned later in these reasons, Mr Moretti, however, disputed that on a proper interpretation of his contract, the policies applied to his entitlement to salary continuance. 7 Mr Moretti challenged Heinz’ capacity to be a “self-insurer” for the purposes of salary continuance, as specified in its policy. He says that Heinz has led no evidence that it is an “insurer” for the purposes of the Insurance Act 1973 (Cth). Mr Moretti says in effect what the company offered him, was a modified sick leave scheme. In support of this contention, Mr Moretti called evidence from Mr Pugh, a financial planner. He gave evidence about the general features of income protection and salary continuance schemes, about which he has some knowledge. 8 Despite this contention and the evidence in this respect, I am not persuaded that the scheme operated by Heinz is unlawful. The Insurance Act 1973 (Cth) regulates the provision of insurance business by general insurers as bodies corporate for the benefit of policy holders. The authority to conduct such a business is regulated by the Australian Prudential Regulatory Authority. Heinz, from the material before the Commission, is not in the insurance business as a general insurer. It is, at least as set out in 268 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 92 W.A.I.G. Mr Moretti’s claim, in the business of the manufacture and distribution of food products. There would appear to be nothing in the Insurance Act 1973 (Cth) to preclude an employer from directly providing its employees a benefit, in the nature of salary continuance, to cover absences due to illness or injury. 9 Mr Moretti accepts that it is cl 23 of the contract document signed in September 2000 that governs the benefits he now claims. What he says, however, is that the clause itself confers the benefit of salary continuance in the terms set out. It is contended the policies of Heinz cannot alter or impair this entitlement for a range of reasons. First, Mr Moretti says that he did not agree to any changes in the policy since 2000, and there was no evidence that he did so. Second, provisions of the policy conflict with the terms of cl 23 itself, such that to apply the policy in the manner contended by Heinz, would fundamentally alter the nature of the benefit conferred on Mr Moretti by his agreement, to effectively render it worthless to him in the present circumstances: Riverwood International Australia Pty Ltd v McCormick (2000-01) 177 ALR 193. Third, to enable Heinz to now deny liability under Mr Moretti’s contract, would constitute a breach of the implied term of trust and confidence in the employment relationship between himself and the company: Woods v VM Car Services (Petersborough) Ltd (1981)) 10 ICR 666; Malik v Bank of Credit and Commercial International SA (INLIQ) (1997) 26 ICR 462. 10 Each of those contentions needs to be evaluated in light of the documentary and oral evidence before the Commission. 11 It is undoubted that contracts of employment may contain terms obtained from other documents that are expressly incorporated into the contract itself. As to the general principles in this regard, the learned authors in Macken’s Law of Employment Seventh Edition observe as follows at par 4.490: “[4.490] The contract of employment may include contractual terms contained in other documents and may explicitly refer to these other documents as forming part of the employment contract.302 The contract of employment could incorporate by express reference the terms and conditions set out in modern awards, national employment standards or industrial agreements or instruments, see [6.260]. Contracts of employment quite commonly refer to company manuals, handbooks, codes, workrules containing company “policies and procedures”, 303 “instructions and memoranda”.304 But not every manual 305 or employer's code of practice (even if expressly mentioned) forms part of the terms of the contract of employment. 306 These may operate as guidelines not intended to have contractual force. Other documents may also be incorporated into the contract without express reference in the letter of offer or contractual document. The question is - What did the parties intend? A sheet of paper attached to an employment offer with details of pay, leave etc suggests that the parties intend it to form part of the contract; similarly, a document given to the employee with the letter of offer which includes details of common employee entitlements suggests that the parties intend it to form part of the contract.307 The test of whether a document imposes contractual obligations is the intention of the parties, based on whether a reasonable person would conclude that the person making the promise intended to be contractually bound by the statement: It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe ... That, normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.308 ” 12 In the case of policies and procedures manuals and the like, it is also often the case that they are expressed as “subject to variation from time to time” or words to this effect. This was the subject of consideration in Riverwood, where both Mansfield and North JJ, at pars 111, 150 and 152, doubted, without deciding the point, whether it would be open to an employer to unilaterally vary a company policy or procedure so as to have contractual effect, without first obtaining the agreement of the employee. 13 It is clear by cl 21 of Mr Moretti’s contract, that a number of documents were specifically incorporated. These included the Heinz “Employee Work Rules, Manuals and Policies”…“together with any amendments or revisions thereto”. By the combined effect of cl 23 and the Appendix to the contract, the benefit of salary continuance is set out, again, with the qualifier “as detailed in the HJ Heinz welfare policy”. Given that the terms of the contract are to be construed as a whole, it is reasonable to conclude that the “Heinz welfare policy” referred to in the Appendix, is one of the policies referred to in cl 21(b) of the contract. 14 In terms of the policy documents contained in exhibit A1, in the bundle of documents tendered by Mr Moretti, as noted above, two sets of documents are in evidence. Whilst it was not entirely clear, it seems that the policy in effect relating to salary continuance, as at the time Mr Moretti signed the contract in September 2000, appears at pp 66 – 70 of exhibit A1. A covering email from Ms Beard, Heinz’s Employee Relations Manager to Mr Moretti’s agent Mr Mullally, of 6 October 2011, at p 65 of exhibit A1, sets this out. The email also refers to Mr Moretti’s contract being “updated” on 10 September 2011. 15 It was further said in Ms Beard’s email, that notices of changes to policies were advised to employees via the company’s intranet. As against that evidence, Mr Moretti testified that since the signing of his contract in September 2000, there has been no discussion between him and Heinz about changes to his terms and conditions of employment. Mr Moretti was taken to a letter of 19 August 2011 from Ms Beard to Mr Mullally. The letter was at p 15 of exhibit A1. It refers to Mr Moretti’s summary dismissal and in relation to salary continuance, it says “… in any event, [it] is at the discretion of the HR Director, and expressly contingent on the employee not breaching of one or more of the conditions of the Company Policies, Procedures or guidelines).” Mr Moretti testified that the first time he was aware of these conditions, was on receipt of this letter. Conditions attaching to salary continuance 16 On the basis of the evidence adduced in this matter, I am satisfied that the terms and conditions of Mr Moretti’s employment as at September 2000, were those set out in the letter of appointment of 4 September 2000. By cl 21 of that letter, specific policies of Heinz were expressly incorporated into Mr Moretti’s contract. The salary continuance / income protection 92 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 269 provision, in the contract appendix, is to be read with the relevant policy, the “HJ Heinz welfare policy”. As I have already observed above, this can only be sensibly read as a reference to the policies referred to in cl 21(b) of the contract, which formed part of the agreement which Mr Moretti signed. I cannot accept, from the construction of the terms of the letter that Mr Moretti’s entitlement to salary continuance under cl 23, is to be considered as severed from the policies expressly said to govern its application. 17 The policy documents in relation to salary continuance were tendered by Mr Moretti. As noted, there was some controversy as to whether the policy documents at pp 66-70 and pp 81-85 of exhibit A1 had been established by Heinz as the relevant policies at the material times. 18 It is trite to observe however, that in an application such as the present, it is for Mr Moretti to establish his claim on the balance of probabilities. Having concluded that Mr Moretti’s entitlement to salary continuance was, by his contract of employment, subject to the policies of Heinz, it is for him to establish his claim, consistent with the policies. This is so as the Commission is not persuaded that Mr Moretti’s contractual entitlement to salary continuance is confined only to what the appendix to Mr Moretti’s letter of appointment says. It must also be read subject to and consistent with the Heinz policies which are expressly referred to. 19 Therefore, to approach the matter most favourably to Mr Moretti, given the onus is on him, I must accept the content of exhibit A1, and the salary continuance policies tendered by him. To not do so, means his claim must fail at the first hurdle, in that he has not established the terms and conditions from which he seeks to now derive a benefit. 20 On Mr Moretti’s case, he says he did not agree to any changes to his terms and conditions of employment after 15 September 2000. Thus, his contention is that it is only the contract he then signed which still binds him and Heinz. In exhibit A1, at p 65, Ms Beard on behalf of Heinz, in an email to Mr Moretti’s agent, enclosed a copy of the salary continuance policy said to be in effect at the time. Whilst the effective date of the policy is not on the document itself, it does say it replaces an existing policy dated 20 January 1998. This is consistent with it being in effect as at 4 September 2000, the date of Mr Moretti’s appointment letter. 21 Whilst Mr Moretti argued that the effect of cl 21 of the 4 September 2000 letter meant such a policy should be regarded as superseded and of no effect, I do not consider this to be the correct interpretation of this clause. What cl 21 does in my view, is to override any prior representations or commitments made to Mr Moretti, that are not in the form of the formal policies of Heinz specifically referred to in the letter. Further, I am also not persuaded that cl 20 of the contract, dealing with consultation and agreement on the “above” conditions, has application. By its terms, it does not extend to amendments to policy based benefits, which, by the terms of cl 21(b) may be altered over time. 22 A consideration of the policy at exhibit A1 pp 66-70 makes it plain that the benefit of salary continuance applies to salaried employees of Heinz who are absent from work through personal sickness or injury. It is also clearly intended to replace what would otherwise be contractual entitlements of staff to sick leave. The benefits under the policy are considerably more generous. Such policies, of course, cannot have the effect of overriding any statutory entitlements to sick leave an employee may have. 23 From a consideration of the policy wording as a whole, adopting the ordinary and natural meaning of the language used, it was in my opinion, not intended to apply after termination of an employee’s employment. This is clear by the first dot point under the heading “5. Cessation of Salary Continuance” on p 67 of exhibit A1. The other parts of the policy are replete with references to “employee” and “employees”, meaning current employees of Heinz. The policy also refers to the requirement for employees to exhaust existing sick leave entitlements, prior to being eligible to access the extended salary continuance benefit. Sick leave entitlements do not survive termination of employment. Further, there is a section dealing with an emphasis on rehabilitation, at p 67 of exhibit A1, to the effect that “the focus of this policy is to provide a level of income and employment security, with a view to an early recovery and return to work.” This further reinforces the interpretation of the policy as extending benefits only to staff who remain employed by Heinz. 24 I therefore cannot see any entitlement arising in favour of Mr Moretti under this policy. 25 Assuming for present purposes it was the policy document at pp 81-85 of exhibit A1, in effect on 9 August 2011, that governed Mr Moretti’s benefit (even though he denies it was) I am also not persuaded that this policy confers a benefit on Mr Moretti either. The tenor of the most recent policy for salary continuance is similar to the earlier policy. It too is replete with references to “employee” and “employees” and further provides it is available to “permanent employees in active employment.” It also requires the exhaustion of existing sick leave prior to accessing benefits. The policy also is said to be “at the discretion of the HR Director”. The benefits of the policy have no cash value, on termination of employment, and nor does salary continuance under the policy form part of an employee’s remuneration or benefits. Also, “service with the company” is regarded as continuous when an employee is absent under the policy. 26 All of these provisions of this policy strongly point to it not surviving termination of employment. 27 Whilst Heinz asserted, in submissions from the bar table, that Mr Moretti had committed acts of misconduct, disentitling him to the benefits of the policy in any event, I am not persuaded this was so, at least for the purposes of these proceedings. Mr Moretti denied this in his evidence. With the onus being on Heinz to establish it, it led no evidence to support such a contention. Conclusion 28 For the forgoing reasons, the Commission is not persuaded that Mr Moretti has established his claim for a contractual benefit to salary continuance. The application is dismissed. 270 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 92 W.A.I.G. 2012 WAIRC 00063 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES FRANK MORETTI APPLICANT -v- H J HEINZ CO AUSTRALIA LTD RESPONDENT CORAM COMMISSIONER S J KENNER DATE THURSDAY, 9 FEBRUARY 2012 FILE NO/S B 153 OF 2011 CITATION NO. 2012 WAIRC 00063 Result Application dismissed Representation Applicant Mr P Mullally as agent Respondent Ms S Beard Order HAVING HEARD Mr P Mullally as agent for the applicant and Ms S Beard on behalf of the respondent the Commission, pursuant to the powers conferred on it under the Industrial Relations Act, 1979 hereby orders – THAT the application be and is hereby dismissed. (Sgd.) S J KENNER, [L.S.] Commissioner. 2011 WAIRC 00935 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES PATRICIA MARGARET MORRIS APPLICANT -v- MR HANH NGUYEN RESPONDENT CORAM COMMISSIONER J L HARRISON DATE THURSDAY, 6 OCTOBER 2011 FILE NO/S B 15 OF 2011 CITATION NO. 2011 WAIRC 00935 Result Direction issued Representation Applicant No appearance Respondent Mr P Brunner (of counsel) Direction WHEREAS this is an application pursuant to s 29(1)(b)(ii) of the Industrial Relations Act 1979; and WHEREAS the matter is set down for hearing on 11 October 2011; and WHEREAS on 3 October 2011 the respondent lodged an application for discovery of documents with respect to the hearing; and WHEREAS on 6 October 2011 the Commission convened a conference to deal with the respondent’s application for discovery; and 92 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 271 WHEREAS on 6 October 2011 the applicant did not attend the conference nor did she advise the Commission beforehand as to any reason why she was unable to attend the conference; and WHEREAS given the matter is listed for hearing on 11 October 2011 the Commission formed the view that the conference should proceed in the absence of the applicant; and WHEREAS at the conference the respondent stated that the lack of discovery of some of the applicant’s documents has caused difficulty in obtaining instructions from his client and to prepare for the hearing; and WHEREAS the respondent is seeking discovery of the following documents by the applicant: • the letter purporting to be under the respondent’s signature that the applicant tabled at the conciliation conference at the Commission on 12 May 2011; • the contract that the applicant prepared and provided to Global Doctor which is referred to in the applicant’s emails of 24, 25 and 26 September 2010 to Nadia Chernokhaeva; and • the applicant’s Vietnam Visa; and WHEREAS after hearing from the respondent’s representative and given the Commission’s powers under s 32 of the Act and in order to ensure the hearing proceeds on 11 October 2011 the Commission has formed the view that a direction should issue in relation to this matter; NOW HAVING HEARD Mr P Brunner of counsel on behalf of the respondent and there being no appearance on behalf of the applicant, the Commission, pursuant to the powers conferred on it under the Industrial Relations Act 1979, hereby directs: 1. THAT the respondent file and serve a list of witnesses and any documents it will be relying on at the hearing by no later than 4.00 pm Friday 7 October 2011. 2. THAT the applicant is to file and serve the following documents: (a) the letter purporting to be under the respondent’s signature that the applicant tabled at the conciliation conference at the Commission on 12 May 2011; (b) the contract that the applicant prepared and provided to Global Doctor which is referred to in the applicant’s emails of 24, 25 and 26 September 2010 to Nadia Chernokhaeva; and (c) the applicant’s Vietnam Visa by no later than 4.00 pm on Friday 7 October 2011. 3. THAT if either party fails to comply with these directions the hearing set down for 10.30 am on Tuesday 11 October 2011 will be vacated. (Sgd.) J L HARRISON, [L.S.] Commissioner. 2012 WAIRC 00109 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES LENARD NAGY APPLICANT -v- SARAH ALLEN RESPONDENT CORAM COMMISSIONER S M MAYMAN DATE TUESDAY, 28 FEBRUARY 2012 FILE NO/S U 202 OF 2011 CITATION NO. 2012 WAIRC 00109 Result Application discontinued Representation Applicant Mr J Nagy Respondent Ms S Allen 272 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 92 W.A.I.G. Order WHEREAS this is an application pursuant to section 29(1)(b)(i) of the Industrial Relations Act 1979; AND WHEREAS on 13 January 2012 the Commission convened a conference for the purpose of conciliating between the parties; AND WHEREAS at the conclusion of the conference agreement was reached between the parties; AND WHEREAS on 14 February 2012 the applicant advised the Commission to file the Notice of Discontinuance in respect of the application; NOW THEREFORE, the Commission, pursuant to the powers conferred on it under the Industrial Relations Act 1979, hereby orders: THAT this application be, and is hereby discontinued. (Sgd.) S M MAYMAN, [L.S.] Commissioner. 2012 WAIRC 00098 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES JOYCE NAIDOO APPLICANT -v- NEIL GUARD, EXECUTIVE DIRECTOR GOVERNMENT OF WESTERN AUSTRALIA, DRUG & ALCOHOL OFFICE RESPONDENT CORAM COMMISSIONER S M MAYMAN DATE MONDAY, 27 FEBRUARY 2012 FILE NO/S U 161 OF 2011 CITATION NO. 2012 WAIRC 00098 Result Application discontinued Representation Applicant No appearance Respondent No appearance Order WHEREAS this is an application pursuant to section 29(1)(b)(i) of the Industrial Relations Act 1979; AND WHEREAS on 1 February 2011 the applicant filed a Notice of Discontinuance in respect of the application; NOW THEREFORE, the Commission, pursuant to the powers conferred on it under the Industrial Relations Act 1979, hereby orders: THAT this application be, and is hereby discontinued. (Sgd.) S M MAYMAN, [L.S.] Commissioner. 92 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 273 2012 WAIRC 00152 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION