Industrial Law jurisdiction of the Federal Magistrates Court of Australia

A paper by Ingmar Taylor, Barrister, prepared for a
Combined Community Legal Centres’ Group Seminar
held on 20 November 2006

A new jurisdiction

1. On 27 March bttm2006 the Federal Government’s Work Choices legislation² came into effect, amending the Workplace Relations Act 1996 (‘the Act’).

2. One aspect of the comprehensive amendments was to confer on the Federal Magistrates Court of Australia a new workplace relations jurisdiction.

The nature of the new jurisdiction

3. Prior to the Work Choices amendments the Federal Court of Australia was the only Court with jurisdiction to hear proceedings commenced under the Workplace Relations Act 1996, with the exception of underpayment claims, where it shared jurisdiction with State courts. Now the Federal Magistrates Court has concurrent jurisdiction with the Federal Court in respect of most matters that can be commenced under the Workplace Relations Act.

4. The jurisdiction of the Federal Magistrates Court is stated at s847(4) of the Act to be:

5. In brief the primary areas of jurisdiction conferred on the Federal Magistrates Court by the Act³ are in respect of:

6. Pursuant to sections 848 and 849 the Federal Magistrates Court can give an interpretation of an award or a certified agreement. Further, pursuant to s16 of the Federal Magistrates Act 1999 the Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.

7. The Federal Magistrates Court also has jurisdiction in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Magistrates Court is invoked: s 18 of the Federal Magistrates Act 1999. Accordingly, employees will be able to bring breach of contract claims (eg claiming payment in lieu of notice on termination) that are associated with claims of underpayment under industrial instruments or arising from the termination of their employment. Similarly, employers seeking to enforce orders of the Australian Industrial Relations Commission to prevent industrial action could also claim tortious damages.

8. At the time of preparing this paper, seven months after the Court obtained this new jurisdiction, there appears to have been just one judgement handed down in respect of applications made under the Act (that decision considered whether the Court had jurisdiction to hear an application made after 27 March 2006 in respect of an alleged unlawful termination said to have occurred in January 2006: Karabetsos v Connor Anderson International Pty Ltd [2006] FMCA 1437, Driver FM). As at the end of July 2006 there had been less than 15 applications made across Australia pursuant to the Act not counting matters remitted from the Federal Court. However after a slow start it is likely that there will be an increase in the number of applications as practitioners learn about the jurisdiction, and more particularly as, post 27 March 2006, unlawful termination claims complete the process of conciliation and come on for hearing and determination¹⁰.

Applications to the Federal Magistrates Court

9. Applications made pursuant to the Workplace Relations Act in the Federal Magistrates Court are commenced by an application setting out the orders sought with an affidavit: see Federal Magistrates Court Rules 2001, Part 4. The application form, along with other forms are available from the Court’s informative website.

10. However applications in respect of unlawful dismissal under s643(1)(a) are not initially commenced in the Federal Magistrates Court, as described in later in this paper.

Procedure in the Court

11. The Court operates a panel system, such that employment matters will be usually heard by particular Federal Magistrates in each State.

12. Nine new Magistrates have been appointed since July 2006, in part to deal with the new workplace relations jurisdiction. Some of the new Magistrates have a workplace relations background, including John O'Sullivan (who was immediately before his appointment the Workplace Relations Minister’s senior advisor), Phillip Burchardt and Toni Lucev (who were barristers with industrial law practices).

13. The Court operates a docket system, whereby matters are allocated to a Federal Magistrate who both manages the interlocutory steps and presides at the hearing.

14. The Federal Magistrates Court, consistent with the objects set out in s3 of the Federal Magistrates Act 1999, hears and determines matters as informally as possible in the exercise of judicial power, using streamlined procedures.

15. Pursuant to that Act the Court has a statutory duty to proceed without undue formality and to avoid protracted proceedings¹¹. In particular, it has a number of procedures and approaches designed to deal with the fact that it has a large number of unrepresented litigants. For example, in a directions hearing a Federal Magistrate might type orders while on the bench, and hand them down to the parties before they leave.

16. Formal pleadings are not required¹² and there is a power to set time limits for evidence and the length of both written and oral submissions¹³. Discovery and interrogatories are only permitted if the Court considers they are appropriate in the interests in the administration of justice¹⁴. The Court will deliver judgments ex tempore where practicable and aims to hand down all reserved decisions within 3 months of the hearing.

17. Alternative dispute resolution is strongly encouraged. For example it is likely that most if not all unlawful termination claims will be referred to mediation conducted by Registrars of the Court, as usually occurs in respect of claims made under Human Rights and Equal Opportunity Commission Act 1986.

Unlawful termination of employment

18. The type of jurisdiction under the Act most likely to occupy Federal Magistrates is hearing and determining claims for unlawful termination of employment, pursuant to Part 12, Division 4, Subdivision C. In respect of such matters the Federal Magistrates Court has concurrent jurisdiction with the Federal Court.

19. Every employee who has had their employment terminated can bring an unlawful termination application. The various restrictions that apply to unfair dismissal claims which are heard in the AIRC, such as the requirement for the employer to have at least 100 employees, or for the employer to be a constitutional corporation, do not apply to unlawful dismissal claims; nor do the exclusions in s638 apply, so, for example, a casual employee engaged for a short period can bring an unlawful termination claim. Given the significant restrictions which now prevent the majority of employees from being able to bring unfair dismissal claims it can be expected that there will be an increase in the number of unlawful termination claims (previously they amounted to around 0.5% of all federal dismissal claims).

20. For an unlawful termination claim to succeed the dismissed employee needs to satisfy the Court on the balance of probabilities that the employment was terminated for a prohibited reason or for reasons that included a prohibited reason¹⁵.

22. Noting that the prohibited reasons include matters such as race, colour, sex, sexual preference, age, physical or mental disability and the like, the jurisdiction has a close similarity to the Federal Magistrates Court jurisdiction in relation to unlawful discrimination under the Human Rights and Equal Opportunity Commission Act 1986 which it has held since its inception. This jurisdiction is to hear and determine complaints ofdiscrimination under the Racial Discrimination Act 1975, the Sex Discrimination Act 1984 the Disability Discrimination Act 1992 and the Age Discrimination Act 2004. Pursuant to that legislation the Federal Magistrates Court has since its inception heard and determined claims for compensation for unlawful discrimination alleged to have occurred in respect of a termination of employment. That experience will no doubt assist the Court in hearing unlawful discrimination claims.

Procedural Steps for bringing an unlawful dismissal claim

23. An applicant has 21 days from the date of dismissal to lodge a claim for unlawful dismissal, although there is discretion to allow a claim out of time: s647.

24. An applicant commences a claim for unlawful dismissal by completing a standard form and lodging it with the Australian Industrial Relations Commission (note, not with the Federal Magistrates Court). The form, along with other useful materials can be found at the website of the Australian Industrial Relations Commission: www.airc.gov.au.

25. The applicant must pay a filing fee of about $51 (an amount that is indexed annually) unless that fee is waived by making application to the Registrar on the grounds that its payment would cause serious hardship. (Fees are subject to change. Click here to see information on current fees)

26. After lodgement, the AIRC Registry acknowledges receipt of the application and sends a copy of the application to the employer named in the application. The Registry also sends to the employer a blank Notice of Employer’s Appearance which the employer is required to complete and lodge within 7 days. The form provides for an employer to object on one or more jurisdictional grounds, or on the ground that the claim was commenced out of time, by ticking a relevant box. If such an objection is taken the employer must then also complete a further form titled Motion to Dismiss the Application for Want of Jurisdiction, which must be filed and forwarded to the applicant.

27. Upon a motion to dismiss for want of jurisdiction being filed, the Commission has no discretion other than to deal with that motion prior to taking any further steps: s 645(2). The Commission can determine the question and either dismiss the application or refuse the motion for dismissal without a hearing¹⁶. The Commission will usually list the matter for determination of the jurisdictional issue at what is known as a “callover”. They are usually listed within two or three weeks of the employer’s form being filed.

28. Matters in the “callover” list are listed for hearing of the relevant issue. Parties have to come prepared to run their case on the procedural issue on that day. It is advisable to have forwarded to the Commission a few days earlier a short outline of the point being taken and where appropriate, a short statement of evidence.

29. It is to be noted that unless the parties can agree on facts, the party bearing the onus is required to prove its case in the normal manner. Statements from the bar table will be insufficient where they are contested: see for example, Lagan v Can Print Pty Limited (2000) 102 IR 149.

30. Matters which are not required to be placed in the callover list, or survive following a hearing at a callover, are then set down for conciliation by the AIRC.

31. Parties should come to the conciliation prepared to provide a fairly detailed summary of their respective positions and prepared to enter into discussions in an attempt to resolve the matter.

32. A conciliation hearing is held entirely off the record. No sworn evidence is presented. Conciliations usually proceed on the basis of short oral submissions only. It is not uncommon for the conciliation to be dominated by monetary negotiations, rather than an examination of the merits of the matter.

33. Upon the conciliation failing the Commission member issues a notice of failed conciliation, which must indicate to the parties the Commission’s assessment of the merits of the application¹⁷. Such a statement can have relevance in a later claim for costs¹⁸, and can also have a practical effect on any later settlement negotiations. This raises obvious difficulties for practitioners, since they must somehow convince the member of the merits of their application without calling evidence and usually on the basis of short submissions only.

34. In respect of unfair dismissal claims (but not unlawful termination claims) where the Commission member conciliating the matter forms the view that there are “no reasonable prospects of success” the Commission member must invite the applicant to provide further information and then if the Commission member remains of the view that the claim has “no reasonable prospects of success” the Commission must issue a certificate to that effect which has the effect of dismissing the application: s 650(3)-(5). This is an added reason why applicants claiming unfair dismissal should be prepared at the conciliation hearing to put forward submissions that establish at least a prima facie case.

35. Upon a certificate of unsuccessful conciliation being issued the applicant must complete an AIRC form, being a Notice of Election within 7 days or the matter will go no further: s 651 (however if election is to pursue an unlawful termination claim the applicant has 28 days to file the Notice of Election¹⁹). It is very important to understand that if this form is not completed within 7 days (or 28 days for unlawful termination) then the claim will automatically be discontinued²⁰ with no right of appeal²¹ (although if the claim is a claim of unlawful termination the Commission does have a discretion for the matter to proceed out of time²²).

36. Where the applicant elects for the matter to be heard as an unlawful termination the applicant must then commence proceedings in the Federal Court or Federal Magistrates Court pursuant to s663. There is a further (third!) time limit – the application under s663 must be made within 14 days of the lodgement of the Notice of Election or within such further period as the Court allows: s663(6). A further filing fee of about $51 (indexed annually) is payable – a considerable discount on the filing fees that otherwise apply to commence proceedings.

37. The application can be either to the Federal Court or the Federal Magistrates Court.

38. If the application is to the Federal Court then pursuant to Order 48, Rule 4, the application must:

39. If the application is to the Federal Magistrates Court then the usual application form can be filed, or Federal Court Forms 5 and 5A can be used, with the court name changed to that of the Federal Magistrates Court.

40. It is anticipated that when the Federal Magistrates Court Rules are next amended they will prescribe that the procedure required by Order 48 Federal Court Rules 1979 (and accompanying Form 5A) is to be used to commence unlawful termination of employment proceedings filed in the Federal Magistrates Court. Pending such an amendment to the Rules the Federal Magistrates Court will accept applications on either Form 5 and Form 5A or the general form of application prescribed in the Federal Magistrates Court Rules.

Approach to hearing unlawful termination applications

41. As noted, to date the Federal Magistrates Court has not, to my knowledge, determined an unlawful termination claim. However such claims have been brought and determined for some time in the Federal Court under virtually identical provisions, and the following summary is based on that body of case law.

42. Where an unlawful termination claim is made “it is not necessary for the employee to prove that the termination was for a proscribed reason”: s 664(a). However, it is a defence in the proceedings if the employer proves that the termination was for a reason or reasons that do not include a proscribed reason: s664(b).

43. Section 664 is similar but not identical to a reverse onus of proof. The same provision, then s170CQ, was described by Moore J in Laz v Downer Group Ltd (2000) 108 IR 244 at [26] in these terms:

44. A further defence is contained within s659 itself. It is not unlawful to terminate employment for one of the proscribed reasons where that reason “is based on the inherent requirements of the particular position concerned”: s 659(3). As to what is meant by the expressions “inherent requirements” and “particular position” see the High Court in Qantas Airways v Christie (1998) 193 CLR 280 where a requirement that a pilot be able to fly to a reasonable number of the airline’s overseas destinations was held to be an inherent requirement of the position (the case involved a pilot who was required to retire on turning 60yrs because many countries excluded aircraft flown by a pilot over 60yrs).

Remedies for Unlawful Termination

45. Where the Court is satisfied that an employer unlawfully terminated an employee (that is contravened s 659) the Court can make one or more of the following orders pursuant to s665:

46. The Court, like the Commission, is restricted in the amount of compensation it can order. It cannot order more than 6 months compensation for any employee²³ and for non-award employees it cannot order more than $47,450²⁴ for the 2006/2007 financial year (the sum increases on 1 July each, indexed to the cost of living). The Court cannot order any amount for shock, distress or humiliation or any analogous hurt²⁵.

Freedom of Association

47. Under Part 16, Freedom of Association, claims can be brought for civil penalty, compensation and other remedies which could include (where the claim arises from a termination of employment) reinstatement²⁶.

48. There is no time limit to commence such an action (and hence it is a remedy in respect of a termination that can be considered outside the 21 day time limit that applies for unlawful termination and unfair dismissal claims).

49. An employer cannot “for a prohibited reason” or for reasons that include a “prohibited reason” do various things, including dismiss an employee or alter the position of an employee to the employee’s prejudice²⁷.

50. Conduct is for a prohibited reason, pursuant to s793, if it is carried out because the employee concerned:

51. Note however that if the ‘prohibited reason’ to be relied upon is that the employee is “entitled to the benefit of an industrial instrument, an order of an industrial body or the Australian Fair Pay and Conditions Standard”, then the employer only contravenes the Freedom of Association provisions if that was the “sole or dominant reason” for the conduct²⁸.

52. There is a reverse onus of proof. Pursuant to s809, it is presumed that the conduct was carried out for the prohibited reason alleged unless the employer proves otherwise.

53. Proceedings can be taken not just against the employer. Pursuant to s728, a claim can also be brought against any person “involved in” the contravention of a civil remedy provision. This is something that might be considered where the employer is a corporate body with no obvious assets.

Costs

54. The Court cannot usually award costs in respect of proceedings brought pursuant to the Workplace Relations Act 1996.

55. Section 824 re-enacts the old s347, but with a new sub-section (2) which expands the circumstances in which costs can be obtained:

56. In respect of unlawful termination matters the Federal Magistrates Court’s capacity to order costs is governed instead by s666, which is in much the same terms:

57. Note, when determining unfair dismissal proceedings the Commission has an added power to award costs where the Commission finds a party acted unreasonably in failing to agree to terms of settlement that could lead to the discontinuance of the application²⁹. This ‘failing to settle reasonably’ costs provision is not available for unlawful termination claims heard in the Federal Court or Federal Magistrates Court.

58. Where the Federal Magistrates Court does award costs it will do so pursuant to Part 21 of the FMC rules. Unless the court otherwise orders, the appropriate scale for a party-party costs order (other than bankruptcy) is the event-based scale in Schedule 1 of the FMC Rules.

59. The court has a general discretion to depart from the fixed event-based scale, although it generally has not departed from that scale in its human rights jurisdiction which may suggest it will not usually depart from that scale for workplace relations matters either. Sometimes the court may order that a specific amount of costs be paid. In these situations, the federal magistrate may assess the costs by using the costs rules of the Federal Court, or another method for determining the amount of costs.

60. Taxation of costs in the Federal Magistrates Court is only possible when costs are fixed according to the Federal Court scales. There is no provision for taxation of costs if they are fixed according to Schedule 1. Federal magistrates determine disputes about the calculation of costs under Schedule 1.

61. While not entirely without controversy, on current authority where a proceeding has been brought under the Workplace Relations Act and additional claims have been made in the Court’s accrued or associated jurisdiction, costs cannot be awarded for any part of the proceeding (other than in the circumstances contemplated by s824)³⁰. There is a possible exception where it can be said that the associated claims did not arise out of the same legal controversy.

62. There is first instance authority for the proposition that costs can however be awarded for any “separate federal claim” brought at the same time as a claim under the Workplace Relations Act but which is not a matter arising under that Act³¹.

Federal Government Scheme to fund unlawful termination advice

63. The Federal Government has introduced an Unlawful Termination Assistance Scheme pursuant to which employees can seek up to $4000 to obtain advice on the merit of their unlawful termination claim.

66. The Law Council made a submission to the Government seeking changes to the scheme when it was in draft form, including removing the provision that prevents a lawyer who gives advice pursuant to the scheme from being able to go on and represent the employee. No changes to the scheme are anticipated in the short term.

Federal Court or Federal Magistrates Court?

67. As noted, in respect of most applications an applicant has a choice to file in either the Federal Court or the Federal Magistrates Court. So which Court should you choose?

68. Monetary factors are one relevant consideration. Federal Court filing fees are roughly double the fees charged by the Federal Magistrates Court (except for unlawful termination claims, where the filing fees are the same low amount).

69. Proceedings in the Federal Court are usually more costly, although that is in part a reflection of the fact that the matters heard in the Federal Court are usually more complex.

70. As noted above, costs are usually not awarded for matters commenced under the Workplace Relations Act, and that is the case regardless of which Court one commences in. If that were not the case then the lower fixed costs that are usually ordered in the Federal Magistrates Court are a relevant factor (although, as noted above, the Federal Magistrates Court has a discretion to order costs be in accordance with the Federal Court procedure and taxed).

71. Cases are dealt with more informally in the Federal Magistrates Court. Cases normally come on for hearing more quickly in the Federal Magistrates Court.

72. The Federal Court has the power to transfer a matter to the Federal Magistrates Court under s32AB(1) of the Federal Court of Australia Act 1976, including by its own motion³². Such an order would usually be made at an early stage of the proceeding (perhaps on the second directions hearing) after the parties have been given an opportunity to be heard as to why the matter would not be transferred to the Federal Magistrates Court. There is no right of appeal from such an order.

73. The matters to be considered by the Court when considering whether to make such an order are set out in s32AB(6) and Order 82 rules 6(1) and 7: see WAAL v Minister for Immigration and Multicultural Affairs [2002] FCA 136. They include:

74. Currently many aspects of the Workplace Relations Act are new and proceedings commenced in respect of those areas are likely to raise ‘questions of general importance’, such that they would not be transferred to the Federal Magistrates Court. However, as time goes on one might expect more cases to be transferred to the Federal Magistrates Court.

75. The unlawful termination jurisdiction however is not a new jurisdiction, and so one might expect that straight-forward unlawful termination claims will be transferred to the Federal Magistrates Court: see for example Sheikholeslami v University of New South Wales (2006) 152 IR 313.

76. As a rule of thumb, the types of matters filed in the Federal Court that are likely to be transferred are those which will take less than 2 days to be heard, turn primarily on their facts and raise no new questions of law.

77. There are no cost consequences for commencing in one jurisdiction and being transferred to the other (other than the party’s own costs of appearing in the ‘wrong’ jurisdiction).

78. The Federal Magistrates Court has a complementary power to transfer a matter to the Federal Court under s39(2) of the Federal Magistrates Act 1999 on its own initiative or on application by a party. The matters to be considered are set out in s39(3) and in Federal Magistrate Court Rule 8.02(4): see Blanco v Minister for Immigration [2005] FMCA 136. They are almost identical to the factors the Federal Court considers in respect of a potential transfer to the Federal Magistrates Court (set out above).

Disclaimer: This paper is intended to provide a general overview of the law in this area. In any particular situation there will almost certainly be matters, including matters of law, not dealt with in this paper that will be relevant. Such matters may well result in a legal position that is different to the general position described in this paper. Further, the law in this area is expected to change or develop over time. Accordingly this paper should not be relied upon as providing advice applicable to any particular situation.

Footnotes

1. This paper is closely based on a paper presented to the New South Wales State Legal Conference on 29 August 2006

2. Workplace Relations Amendment (WorkChoices) Act 2005 (Cth) contained 7 Schedules, each containing amendments to the Workplace Relations Act 1996 (Cth). Schedule 1, titled ‘Main Amendments’ was proclaimed to take effect on 27 March 2006. Some more minor amendments came into effect on 14 December 2005: see s2 of the Amendment Act.

3. While the word ‘Court’ is defined in s4 of the Act to mean the Federal Court of Australia only, proceedings in respect of matters under various particular Parts of the Act can be commenced in ‘the Court’ as defined for the purpose of that Part, namely the Federal Court and the Federal Magistrates Court: see for example Parts 8, 9, 10, 11, 15 and 16.

4. See section 365

5. See section 496(12)

6. See section 599(4)

7. See section 682

8. See section 717

9. See sections 724-725

10. In Karabetsos v Connor Anderson International Pty Ltd [2006] FMCA 1437 the Court determined that it has jurisdiction re dismissals that occurred before 27 March 2006. However it is expected that in respect of dismissals that occurred before that date practitioners have preferred to file the application in the Federal Court of Australia (which had jurisdiction to hear such claims before 27 March 2006).

11. Section 42

12. Section 50

13. Sections 51, 55 and 56

14. Section 45

15. See section 659

16. See section 645(7); See also s648 as to the matters the Commission is required to take into account in deciding whether to hold a hearing and the process to be adopted where the Commission determines not to have a hearing.

17. See s 650(2)(b)

18. This is particularly the case for unfair dismissal claims where costs can be awarded for failing to discontinue matters, or failing to accept a settlement: s658(2). However it may also be relevant to a claim for costs in an unlawful termination claim where they are sought on the ground that the claim was commenced without reasonable cause: s666.

19. See section 651(6)(b)(i)

20. See section 651(7) and (8)

21. See section 651(10)

22. See section 651(9)

23. Section 665(3)

24. Section 665(4)

25. Section 665(2)

26. See section 807(1)

27. See section 792

28. See section 792

29. Section 658(2)

30. Maritime Union Of Australia And Others v Geraldton Port Authority And Others (No 2)(2000) 94 IR 404

31. Seven Network (Operations) Ltd v Media Entertainment And Arts Alliance (2004)134 IR 19

32. Section 32AB

Industrial Law

Industrial Law and the Federal Magistrates Court