BYRNE & FREW Vs AUSTRALIAN AIRLINES LIMITED

INTRODUCTION

In this case, Byrne & Frew, hereafter referred to as the appellants, were formerly employed as baggage handlers by the respondent at Sydney Airport. Their dismissal from the position was based on accusations of pilfering. In response, the appellants pursued legal avenues, asserting that their termination violated clause 11(a) of the Transit Workers (Airlines) Award 1988. This specific clause outlined that an employer’s termination of employment should not be considered harsh, unjust, or unreasonable. The appellants individually sought damages on two grounds: for the violation of statutory duty and the breach of the employment contract. Their legal argument revolved around the contention that the termination deviated from the established standards of fairness, justness, and reasonableness as delineated in the pertinent employment award.

FACTS OF THE CASE

1. The baggage handlers at Sydney Airport, referred to as appellants and employed by the respondent, were discharged for stealing. They contended that the termination violated clause 11(a) of the Transit Workers (Airlines) Award 1988, which prohibits harsh, unjust, or unreasonable termination.
2. Seeking damages for breach of statutory duty and contract, each appellant faced an unfavourable ruling by the trial court, which deemed the terminations not harsh, unjust, or unreasonable.
3. The Full Court of the Federal Court, however, reached a different conclusion on appeal. They held that the stipulation against harsh, unjust, or unreasonable termination imposed an obligation on the respondent to provide procedural fairness. Despite this, damages for breach of contract and statutory duty were denied.
4. In the subsequent appeal to the High Court, the appellants argued that clause 11(a) became a contractual term, either by force of the award, as an implied term, or as a reflection of an industry “crystallized custom.”
5. As an alternative claim, the appellants asserted that the alleged terminations were illegal and void, breaching clause 11(a). They argued for the right to treat this as a repudiation of their contracts and sought damages.

ISSUES RAISED

1. Whether clause 11(a) is inherently understood as a term within their employment contract?
2. Can award terms be implied in the employment contract? if so, did the Airline breach the contract so Byrne could sue for damages?

CONTENTIONS OF APPELLANT

The primary arguments put forth by the appellants, who are the baggage handlers, included:

1. The assertion that the clause outlined in the award was implicitly incorporated into their employment contracts as a fundamental term. The appellant contended that the employer violated this term by terminating their employment without conducting a proper investigation or adhering to principles of natural justice.
2. Arguing that the clause in the award imposed a statutory duty on the employer, obliging them not to terminate employment in a harsh, unjust, or unreasonable manner. The appellants claimed that the employer breached this duty by dismissing them based on insufficient evidence.

CONTENTIONS OF REPONDENT

On the other hand, the respondents, who are the employers, presented the following main contentions:

1. Disputing the implicit inclusion of the clause from the award into the employment contracts. The respondent argued that such inclusion was unnecessary for the reasonable or effective operation of the contract and was not so inherently obvious that it should be considered a given.
2. Contending that the clause in the award did not establish a statutory duty on the part of the employer. Instead, it was asserted that the clause merely granted discretionary power to the Industrial Relations Commission to address instances of unfair dismissals.

JUDGEMENT

The High Court of Australia, citied its judgment, where Brennan CJ, Dawson, and Toohey JJ, affirmed that in an industrial regulatory system where certain aspects of an employment relationship are determined by an award, the inclusion of those matters in the employment contract is unnecessary. The contract can provide additional benefits but cannot undermine the terms and conditions set by the award, which operates with statutory force to ensure compliance with those terms. There is no need, from the perspective of both the employer and the employee, to transform statutory rights and obligations into contractual ones.

Furthermore, McHugh and Gummow JJ expanded on the notion of business efficacy. They argued that clause 11(a) should be implied as a term based on the circumstances of the case and to give effect to an apparent underlying intention of the parties concerning efficacy. This concept was referenced to the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. The Privy Council outlined five conditions that must be met for a court to imply a term in a contract not expressly stated by the parties. These conditions include the requirement that the term must be “reasonable and equitable,” necessary for the “business efficacy” of the contract, obvious to the extent that “it goes without saying,” capable of clear expression, and not contradictory to any express terms.

ANALYSIS

In the ongoing appeal, the appellants based their argument on the concept of necessity. They contended that employment contracts constituted a well-established “class” of contracts, a point conceded by the respondent. Both parties agreed that various legal aspects were incorporated into the employment relationship, including the employer’s entitlement to terminate employment at will with reasonable notice and to dismiss summarily for misconduct.

The appellants then asserted that the presence of the Award, specifically clause 11(a), necessitated a redefinition of this aspect of the relationship by explicitly incorporating the provisions of clause 11(a). However, it was argued that such a step was not essential. The employee’s contract of employment does not lose its effectiveness if its existing provisions continue to operate concurrently, as a contractual matter, with the regulatory framework established by the Award, deriving authority from statute.

CONCLUSION

In conclusion, the High Court of Australia rejected the appellants’ assertions, affirming that the clause in the industry award did not become a contractual term through implication, incorporation, or custom. Additionally, the Court determined that the clause did not establish a statutory duty for the employer, and the termination of employment was deemed neither illegal nor void.

This case highlights the challenges associated with implying terms into employment contracts, particularly when these terms originate from external sources like awards or statutes. It underscores the limitations of statutory safeguards for employees against unfair dismissal and underscores the necessity for clear and consistent evidence to substantiate claims of contractual or duty breaches. Importantly, the case suggests that the contracts of employment were functional and effective even before the introduction of provisions like clause 11(a) into awards. It distinguishes itself from situations where such provisions are deemed necessary to prevent the contract from losing substance, being significantly undermined, or experiencing a substantial devaluation in a crucial aspect.

REFERENCES

1. Legal database – View: Cases: Byrne v. Australian Airlines Ltd – (11 October 1995) (ato.gov.au)
2. https://www8.austlii.edu.au/au/journals/MacarthurLawRw/1997/9.pdf

This Article is written by Soumya Saisa Das student at Amity Law School, Noida (ALSN); Intern at Legal Vidhiya.

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