Home - Making sense of how award provisions interact with an employment contract

UpdatesApr 07, 2021

Making sense of how award provisions interact with an employment contract

When an employee is covered by an award or enterprise agreement, some of the provisions in that instrument might affect the meaning of provisions in a written contract applying to that employee.

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When an employee is covered by an award or enterprise agreement, some of the provisions in that instrument might affect the meaning of provisions in a written contract applying to that employee.

In LWB Disability Services South Limited t/as Life Without Barriers v Smith (2021), a disability support worker was employed in a full-time position under an employment letter that specified the location of employment. The letter also stipulated the award that provided further employment conditions. The award contained a provision that permitted the transfer of employees involuntarily after consultation with the union.

Following an investigation into bullying complaints lodged against the employee, the employer purported to relocate the employee to a different location. The employee claimed the employer’s refusal to permit him to return to work at the locations specified in his employment contract was a repudiation of his employment contract, which he purported to accept, i.e. the employer had constructively dismissed him.

This claim required a Court to accept that the identification of the location in the contract was an express condition and an essential term of the employment contract. If the identification of a particular place of work is an essential condition, then, absent the employee’s consent, the employer is obliged to employ the employee in that location. Failure to do so would be a “fundamental breach of contract” amounting to repudiation. This is regardless of the fact that the transfer might be reasonable or justified.

In this case, the contract referred to an award that contained a provision permitting the transfer of employees involuntarily after consultation with the union.

The Court ruled that in interpreting the provision nominating the employee’s work location you had regard to what a reasonable person would consider was intended by this stipulation. However, you would attribute to that reasonable person “background knowledge”, including the fact that the employee was also covered by an award permitting the involuntary transfer.

With that background knowledge, by simply nominating or specifying a particular place of work in the contract, the parties should not have been taken to have intended to deprive the employer of an ability to relocate the employee. The reference in the contract to a specific location could not reasonably be construed as involving a promise, let alone one amounting to an essential term or condition of the employment contract.

 

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