Can a demotion be considered a dismissal?

In the recent case of Buttigieg v Shoalhaven City Council [2010] NSWIRCComm 43, the Full Bench of the NSW IRC refused an appeal against a decision of Connor C which had determined that while in certain circumstances a demotion for disciplinary reasons could constitute a dismissal, in the case of Mr Buttigieg in his role as a Supply Team Leader, his demotion to a lesser role for authorising a fraudulent invoice was not inconsistent with an award clause allowing demotion for disciplinary purposes.

The facts were that Mr Norman Buttigieg was employed by Shoalhaven City Council in July 2007 as a Supply Team Leader in the Finance and Corporate Services Group. He apparently worked without blemish until he was involved at some time in 2009 when he was subject to disciplinary action following allegations he had negligently authorized fraudulent invoices, and as such, had been negligent in the performance of his work.

It appears that Mr Buttigieg was not involved in the fraudulent invoices presented for payment to Council but it is understood that Council did suffer financial loss due in part to the alleged failure of Mr Buttigieg to adequately and correctly conduct work in the authorization of invoices for payment.

Pursuant to Clause 31, Disciplinary Procedures of the Local Government (State) Award, Council demoted Mr Buttigieg to the position of storekeeper at its Ulladulla store and preserved his higher rate of pay for three weeks after the effective date of his demotion, this being one week more than required by Clause 31.

Although the action in disciplining Mr Buttigieg was taken consistent with the Award, Mr Buttigieg argued before Connor C that the demotion was such as to constitute an unfair dismissal. Council challenged the application of Mr Buttigieg on two grounds – the first that his application was out of date and the second that he had not been dismissed in the first place.

Connor C referred to a number of cases including his own unreported decision in Mann v Side Cafes Pty Ltd [Matter IRC 413 of 1996] as authority for the view that in certain circumstances, a demotion may constitute a dismissal. However, Connor concluded that Mr Buttigieg’s contract with Council needed to be read in conjunction with the provisions of the Award, including Clause 31 which allowed his demotion. If Mr Buttigieg had been a member of the Union, his case could have been progressed under S.130 but as this was not a remedy available to Mr Buttigieg in this case and Connor dismissed the Part 6 application for reinstatement to his former position as falling beyond his jurisdiction.

On appeal, the Full Bench was asked to decide if Connor C had failed to consider, on a proper construction of the Award, whether or not there was an implied limitation on the discretion to demote beyond which the reduction in grading ceased to be a demotion and became more characterized as a termination of employment.

However, the Full Bench decided that because proceedings before Connor C were conducted without the benefit of evidence being put forward by the parties on the facts of the matter or the history of the Award, they had no other option but to refuse leave to appeal.  They concluded by leaving the question of whether a demotion could constitute a dismissal for a more detailed consideration if a suitable case was argued before them.

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