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Jurisdiction of international companies with Australian-based employees under the spotlight

11 June 2019

#Workplace Relations & Safety

Edmund Burke

Published by Edmund Burke

Jurisdiction of international companies with Australian-based employees under the spotlight

A Chinese employee’s future is ‘up in the air’ after his airline employer was given leave to appeal a Fair Work unfair dismissal decision which had noted their ‘sinister recall of the employee to Beijing.

The case has raised some jurisdictional questions for international companies operating in Australia.

Capital Airlines Co Limited T/A Beijing Capital Airlines sought to appeal a decision by Commissioner Johns made on 12 March 2019 in which the Commissioner found that the dismissal by the appellant of Xueyang Shan on 4 January 2019 was harsh, unjust and unreasonable.

On 9 April 2018, Mr Shan entered a customs controlled area without authorisation to collect his luggage. He was reported to the Australian Border Force and, on 1 September 2018, the sales manager was issued with a fine of $420 for breaching s.234A (1) of the Customs Act 1901.

He paid the fine and believed that to be the end of the matter. On 23 November 2018, the airline directed Mr Shan to return to its headquarters in Beijing. He refused and was sacked on 4 January 2019.

The airline sought to appeal the original decision on seven grounds but Commissioner John’s view that the airline’s direction to the respondent to return to Beijing had a "more sinister reason" behind it became the key issue at the hearing to grant the appeal.

In his original decision Commissioner Johns had reasoned that the airline’s stated reason for the recall “to avoid further risks to company operations” was not a lawful or reasonable direction.

Commissioner Johns accepted Mr Shan’s submission that the ‘sinister’ purpose behind the memo was to have him return to Beijing where he would lose the protections of Australian law.

Vice President Catanzariti, Senior Deputy President Hamberger and Commissioner Bissett found that Commissioner Johns was wrong to ascribe any ‘sinister’ motive for the recall to Beijing stating that there was “simply no evidentiary basis for any such finding”.

"In particular he misconstrued the nature of the discretion available to the appellant (the airline) contained in the respondent’s (Mr Shan’s) employment contract. That discretion was very wide. It provided, inter alia, that the appellant could relocate the respondent to any other location ‘in accordance with the company’s operational needs."
"Ordering him to return to headquarters in Beijing was, from the employer’s perspective, consistent with its ‘operational needs’. The contract did not require the appellant to identify another position to which he was to be redeployed or to provide any further rationale for its decision to relocate him. There is no basis for the Commissioner to substitute his own assessment of the appellant’s operational needs for that of the appellant itself."

Ultimately the Vice President and Commissioners decided that they were satisfied that Mr Shan’s refusal to return to Beijing was a wilful refusal to comply with a lawful and reasonable direction of his employer and constituted a valid reason for his dismissal.

Their view was that the Commissioner’s failure to make such a finding constituted an appealable error, which fundamentally undermined the decision that Mr Shan had been unfairly dismissed.

The appeal was upheld, Commissioner Johns's decision was quashed and Mr Shan’s matter was remitted to Commissioner Cambridge for rehearing.

Author: Edmund Burke

Contacts:
Brisbane
Rachel Drew, Partner
T: +61 7 3135 0617
E: rachel.drew@holdingredlich.com

Sydney
Stephen Trew, Managing Partner, Sydney
T: +61 2 8083 0439
E: stephen.trew@holdingredlich.com

Michael Selinger, Partner
T: +61 2 8083 0430
E: michael.selinger@holdingredlich.com

Melbourne
Charles Power, Partner
T: +61 3 9321 9942
E: charles.power@holdingredlich.com

Benjamin Marshall, Partner
T: +61 3 9321 9864
E: ben.marshall@holdingredlich.com

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Edmund Burke

Published by Edmund Burke

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