Alan Champion v IGA Distribution Pty Ltd
[2012] FWA 4794
•19 JUNE 2012
Note: An appeal pursuant to s.604 (C2012/4487) was lodged against this decision - refer to Full Bench decision dated 11 December 2012 [[2012] FWAFB 9782] for result of appeal.
[2012] FWA 4794 |
|
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Alan Champion
v
IGA Distribution Pty Ltd
(C2012/2816)
Storage services | |
COMMISSIONER LEE | MELBOURNE, 19 JUNE 2012 |
Alleged dispute in relation to disciplinary procedures.
[1] On 24 February 2012, Mr Alan Champion, represented by the Shop, Distributive and Allied Employees Association (SDA), made application to Fair Work Australia under section 739 of the Fair Work Act 2009 (the Act) to deal with a dispute with IGA Distribution Pty Ltd (IGA).
[2] Mr. Champion is employed as a storeworker for IGA at their Distribution Centre in Laverton, Victoria. Mr. Champion has worked for IGA for approximately 8 years.
[3] A first written warning has been issued to Mr. Champion by IGA. The warning relates to the performance of Mr. Champion and an alleged failure to achieve the necessary level of “Engineered Standards”. The warning was issued on 6 February 2012.
[4] The SDA, on behalf of Mr. Champion, claim that IGA was not entitled to issue the warning under the terms of the relevant agreement, The IGA Distribution Vic. Pty. Ltd and The Shop, Distributive and Allied Employees Association Enterprise Agreement 2010 (the Agreement). IGA rejects this and claims that they are entitled to issue the warning under the terms of the Agreement.
[5] After failing to resolve the dispute at the workplace level, the SDA notified the dispute to Fair Work Australia. A conference was held before me on 27 March 2012, however this failed to settle the dispute. At the conclusion of the conference, it was agreed between the parties that Fair Work Australia would determine the matter as a private arbitration under the terms of the dispute resolution procedure contained in the Agreement (clause 37).
[6] The question to be determined by Fair Work Australia in order to resolve the dispute is as follows:
“Was the company entitled, under the terms of the IGA Distribution Vic. Pty Ltd and Shop Distributive and Allied Employees Association Enterprise Agreement 2010 to issue a written warning to Mr Champion?”
[7] The parties agreed that witness evidence would not be required, and agreed that the matter would be determined on the basis of written submissions.
Powers of the tribunal to arbitrate the matter
[8] This is an application for Fair Work Australia to deal with a dispute in accordance with a dispute settlement procedure.
[9] Section 738 of the Act provides as follows:
“738 Application of this Division
This Division applies if:
(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or
(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or
(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or
(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.”
[10] Section 739(4) of the Actexpressly provides that Fair Work Australia has the power to deal with a dispute by private arbitration if the parties have agreed to allow it to do so:
“739 Disputes dealt with by FWA
(1) This section applies if a term referred to in section 738 requires or allows FWA to deal with a dispute.
…
(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.
Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).
…”
[11] In dealing with the dispute, Fair Work Australia must not make a decision that is inconsistent with the Act, or the Agreement, as prescribed by s739(5) of the Act.
[12] Clause 37 of the Agreement, “Disputes Procedures”, sets out the process for dealing with disputes:
“37. Dispute Procedures
(a) Should any matter arise which gives cause for concern to an employee he/she shall raise such matter with his immediate supervisor.
(b) If the matter remains unresolved it shall be referred to the nominated workplace representative (who may be the site union delegate) who shall consult with the appropriate member of management.
(c) Failing settlement at this level between the company and the nominated representative on the job, the nominated representative shall refer the dispute within 24 hours to the Company HR Manager. All efforts shall be made by the company and the nominated employee representative (who may be a union official) to settle the matter.
(d) Such discussions will seek to resolve the issue within seven days. If the dispute cannot be resolved after this time either party may notify the dispute to Fair Work Australia for conciliation and if necessary arbitration. Employees shall be entitled to representation during the processes before Fair Work Australia.
(e) During the discussions, work will proceed normally.
(f) At any time after discussions have been exhausted either party shall have the right to notify the dispute to Fair Work Australia.
(h) The above procedures shall not apply to Occupational Health and Safety issues. Such issues shall be addressed under the provisions of the Occupational Health and Safety Act 1985, as amended.”
[13] Mr Champion performs duties in the Groceries Warehouse at the IGA distribution centre in Laverton and is covered by the Agreement.
[14] It has been agreed by the parties that Fair Work Australia will arbitrate the dispute in accordance with section 739 of the Act. IGA in their written submissions stated that “the respondent submits that the Tribunal has the power to arbitrate the dispute that has been notified to the Tribunal by the applicant”. 1
[15] The SDA did not directly deal with the issue of jurisdiction in their written submissions but, in any case, do not submit that Fair Work Australia is without the necessary jurisdiction to determine the matter. Further, the SDA agreed at the conference on 27 March 2012, that Fair Work Australia should determine the matter by private arbitration.
[16] It is clear that Fair Work Australia has the power to determine the answers to the question as posed through private arbitration in accordance with clause 37(d) of the Agreement and the decision will be binding on the parties in accordance with that term.
The law to be applied:
[17] IGA has referred me to a number of authorities that it says should apply to the construction of terms in an agreement. 2 In particular, IGA refers to the principles expounded in the decision of Kucks v CSR Limited.3 IGA further submit that four additional principles should be applied as follows:
“(a) a strict literal interpretation is to be avoided. Clauses must be viewed broadly and in context (Australasian Meat Industry Employees Union (WA Branch) v Woolworths Limited (2007) 164 FCR 420 at [21] per Siopis J);
(b) the Enterprise Agreement must be construed in relation to the matrix of facts that existed at the time the Enterprise Agreement was made (Finance Sector Union of Australia v Commonwealth Bank of Australia (2001) 106 IR 172);
(c) where a clause in the Enterprise Agreement is the product of a history, regard can be had to that history (Short v F W Hercus Pty Ltd (1993) 40 FCR 51l at 518); and
(d) whether the clause in question accords with business common sense is a relevant consideration (Australasian Meat Industry Employees Union (WA Branch) v Woolworths Limited (2007) 164 FCR 420 at [19]-[21] per Siopis J, Van Efferen v CMA Corporation Ltd [2009] FCA 597 at [37]).” 4
[18] The SDA has not referred me to any particular authorities to consider in this matter. In their reply submissions, the SDA refute IGAs submission that Fair Work Australia is to follow certain decisions in relation to this dispute. The SDA submitted that “[t]his dispute centres around the issue of whether or not a written warning can be given by the company. That question is a simple one and it is not necessary to quote numerous decisions about how to interpret an industrial instrument to validate the company’s submission”. 5
[19] The principles that apply to the interpretation of industrial instruments are well established. In a recent decision dealing with a dispute over the interpretation of the provisions of an enterprise agreement, I set out the relevant principles to be applied. 6 Those principles remain relevant in this matter.
[20] The main principles governing the construction of industrial agreements are well set out and discussed in the 2008 decision of Vice President Lawler in Watson & Ors v ACT Department of Disability Housing and Community Services. 7
[21] The consideration of the relevant principles was summarised by His Honour as follows:
“In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”[Footnotes removed] 8
[22] Also relevant is the decision of the High Court of Australia in Project Blue Sky Inc & Others v Australian Broadcasting Authority 9, where it was stated that:
“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole.”” [Footnotes removed] 10
[23] A further High Court of Australia decision in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue 11 stated that:
“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of the legislation is the surest guide to the legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.”[Footnotes removed]. 12
[24] These principles are consistent with those submitted by IGA as the appropriate principles to be applied in the construction of an enterprise agreement.
[25] I will apply these principles as relevant to my consideration and determination of this dispute.
Approach to the submissions:
[26] As discussed above, it was agreed between the parties at the conference held on 27 March 2012 that as witness evidence would not be required, the matter would be determined on the papers through a written submissions process. On 29 March 2012, I issued Statement and Directions which reflected this agreement and set out a timeline for written submissions. Neither party objected to the process outlined in that document.
[27] Notwithstanding this agreement, IGA stated in their written submissions that;
“The Respondent notes that the Directions state (at [5]) that the matter will be determined on the papers as the parties have agreed that witness evidence will not be required. On that basis, the Respondent has made a number of assertions and statements in these submissions which are not substantiated by evidence which has been led before the Tribunal. Further, given the nature of the matter, the Respondent has only briefly addressed certain matters in these submissions. If required, the Respondent is in a position to lead evidence before the Tribunal to support all assertions and statements made in these submissions, or to provide further details in relation to the matters raised in these submissions.” 13
[28] The SDA, in their reply submissions, took issue with the claims and assertions made throughout the IGA submission, “...without any evidence or without any cross examination. Where such claims or assertions are made they must be excluded from the submission of the company and disregarded by FWA”. 14 The SDA also state that they are able to lead evidence before FWA if need be to substantiate or clarify any points in its submission.
[29] I agree with the SDA that where claims and assertions are made by either party in written submissions without supporting evidence or cross examination, they should be disregarded by Fair Work Australia. Accordingly, I have taken that approach when dealing with the submissions and reaching my conclusions in this matter.
Background to the dispute:
[30] As discussed above, Mr. Champion is employed to perform duties in the Groceries Warehouse at the IGA distribution centre in Laverton. Mr. Champion’s duties involve picking and packing stock. Mr. Champion travels around the warehouse and collects boxes of groceries and places them on a pallet that is pulled along on a motorised machine. Mr. Champion wraps the boxes in plastic when he finishes collecting his order and the pallet is then loaded into a truck for delivery to a store. Most employees, including Mr. Champion, are rotated to less physical work from time to time including forklift duties. Mr. Champion is a licensed fork lift driver. Mr. Champion has been employed by IGA for approximately 8 years in the same role.
[31] IGA has implemented a system known as the “Dallas” system at Laverton. According to IGA, the “Dallas” system includes what are colloquially known as “Engineered Standards”. The “Engineered Standards” are a system through which IGA identifies the time that is required for an employee to complete the assembly of an order. SDA explained that ‘[t]he standards are set to give employees the necessary time to do the work, all things being equal. The standard that is to be achieved is 100%”. 15 The “Engineered Standards” are dealt with in the Agreement at clause 39.
[32] Mr. Champion has been issued with a first written warning. The first written warning (the warning) is headed “Disciplinary Interview Record-First Written Warning” and is Attachment A to the SDA submissions. At the bottom of the first page under the heading, “Reason for Disciplinary Interview” the warning states, “Alan [Champion] has been issued a First Warning based on his regular and consistent performance in relation to the expected engineered standard.” Warnings are dealt with in the Agreement at clause 38 - “Warnings Procedure”.
[33] In the body of the warning, there is a reference to Associated Technique Reviews (ATR’s). The warning states that “[o]ver the preceding 6 months, Alan has received additional support from his Supervisor, Shane Beech, who has conducted Associated Technique Reviews (ATR’s) and weekly support sessions to discuss any concerns or issues that Alan may have regarding his ability to meet performance standards.” There is then a list of seven items described as feedback provided to Alan in the ATR’s. ATR’s are dealt with in the Agreement at clause 39(c).
The Terms of the Agreement
[34] The “Engineered Standards” and the ATR’s are dealt with in the Agreement at clause 39. Clause 39 provides as follows:
“39. ENGINEERED STANDARDS
(a) The parties recognise that the introduction of Engineered Standards has, and will continue to result in significant productivity increases. The parties also recognise that the Engineered Standards as a system of work will require continuing commitment by both parties to ensure the system operates in such a manner so as to be fair and reasonable to all concerned.
(b) The 'Agreed Standards' need to be well maintained so as to reflect work methods in use at the time. Methods and procedures may change frequently and facilities for updating need to be on hand to maintain the consistency of the Standards.
(i) Consequently a joint Engineered Standards Consultative Committee will be responsible for maintaining the Standards and to consider and resolve problems brought to its attention by employees regarding the operation of the Standards. The members of the joint Consultative Committee will be trained in the formulation and understanding of the basic application of the Standards. The training will include input by qualified Industrial Engineers.
The Committee must establish clear time lines and identify the person responsible to resolve the problem(s).
If the problem(s) cannot be resolved in the time allocated the issue will be referred the nominated representative and senior management of the Company for resolution.
(ii) If, into the future, there are reasonable grounds to believe that the basis of a particular standard has changed or is no longer appropriate or fair and reasonable, those trained members of the Committee will conduct a preliminary investigation as soon as possible and will adjust the Standard if necessary to ensure it is appropriate and fair and reasonable. If agreement is not reached on the appropriate remedial action the employee nominated representative and the Company's State Distribution Manager will discuss the matter in an attempt to resolve the issue. If unable to agree, the issue will be dealt with pursuant to the agreed Grievance Procedure.
(c) 100% of the agreed standard will be the target for all storeworkers.
The consistent achievement of this target will be measured over the normal weekly work period.
All storeworkers will be required to participate in an Associate Technique Review (ATR) as reasonably required. The objective of the ATR is for both the Company and the Storeworker to explore opportunities to improve the likelihood for achievement of the target and to ensure the use of the preferred method of work.
The ATR shall not be a substitute or another device for issuing warnings or the like.
Initially, a trained and competent Leading Hand should conduct the ATR. Further ATR's may be conducted by a Supervisor or Management.
Remedial action recommended by the ATR should be followed through and its success reviewed.
All storeworkers must participate fully and cooperatively in the process of ATR's.
Any reasonable directions to a Storeworker to adopt the preferred methods of work must be carried out.
(d)
- (i) Each Storeworker shall perform their duties diligently in accordance with the preferred method and conduct themselves in a manner consistent with the principle of 'a fair days work for a fair days pay’.
(ii) Engineered work standards shall be adopted for each defined function in the Distribution Centre. However, insofar as the consistent achievement of 'the target' is concerned, its inclusion within an assessment of a storeworkers performance shall be indicative only i.e.
(a) No Storeworker shall be terminated merely for not achieving work standards or not achieving the target in an area where standards are established and implemented.
(b) No Storeworker shall be subject to unnecessary ATR's if he/she is diligent and conscientious in his/her work performance and has completed any reasonable retraining requirements.
(c) The employer shall be fair and reasonable when expecting each Storeworker to achieve the target in an area where standards have been established and implemented.
(e) No Storeworker shall be disadvantaged in his/her employment status or grade if he/she is diligent and conscientious in his/her work performance but is not able to achieve the work standards or the target in an area where standards have been established and implemented.
(f) alleged misconduct and/or unsatisfactory work performance will be investigated and dealt with in accordance with the agreed disciplinary procedure.”
[35] The Agreement deals with warnings in a separate clause, clause 38. Clause 38 provides as follows:
“38. WARNINGS PROCEDURE
The parties agree to implement the following Warnings Procedure:-
(a) Warnings
Where an employee's attendance, punctuality of attendance or work performance is not to the satisfaction of the company, the employee shall be entitled to two separate warnings.
(b) Such warnings shall be given formally and shall be in writing. A copy of the warning report shall be given to the nominated representative.
(c) The nominated representative (if requested) of the shift in question shall be present at the time of warning.
(d) If following the aforesaid warnings the employee's attendance, punctuality of attendance or work performance remains not to the satisfaction of the Company, the employment may be terminated forthwith.
(e) Warnings will be removed from the record when a period of nine months has elapsed since the last warning was given.”
The Dispute and Submissions of the Parties:
[36] The SDA assert that the warning that has been issued to Mr. Champion cannot be issued under the terms of the Agreement. It is conceded by the SDA that a written warning can be issued under the terms of Clause 38. However the SDA argue that the warning can only be issued in circumstances where one of the three events referred to in paragraph (a) exist (i.e. attendance, punctuality of attendance or work performance is not to the satisfaction of the company).
[37] There has been no complaint by the IGA about the first two of these events. As to the third, relating to work performance not to the satisfaction of the company, the SDA submit that the written warning does not accord with this provision. The SDA submit that “[t]he warning is therefore not able to be issued by IGA and is invalid.” 16
[38] The basis of this assertion is in the following paragraph and it is useful to reproduce that submission in full. The SDA states as follows;
“Mr. Champion’s written warning is for ‘consistently failing to meet the engineered standards as outlined in his Enterprise Agreement’ . This reason Mr. Champion submits is unrelated to “work performance not to the satisfaction of the company” which is one of the provisions of clause 38(a) that allow for the issuing of written warnings. The company is confusing the expectation to meet the Engineered Standards with whether or not an employee’s work performance is to the satisfaction of the company.” 17(emphasis added)
[39] In their submissions in reply, the SDA accuse the company of “subterfuge” in trying to hide the fact that the warning was for failing to meet the “Engineered Standards” on the basis that it was actually for unsatisfactory work performance. 18 This contention is the first key element of the SDA position as to how the Agreement is to be constructed.
[40] The second key element of the SDA position relates to the 100% target for the “Engineered Standard” and whether or not it is compulsory, under the terms of the Agreement, for an individual employee to achieve the target.
[41] In making this claim, the SDA refer to clause 39(d)(i) which states:
“Each Storeworker shall perform their duties diligently in accordance with the preferred method and conduct themselves in a manner consistent with the principle of a fair days work for a fair days pay.”
[42] On this basis, the SDA claim that if Mr. Champion is performing his duties diligently, then the company must be satisfied with that and is not able to give a warning for consistently failing to meet the “Engineered Standards”. Further, as the “Engineered Standards” are a target only, the company is wrong to demand that 100% be achieved. The SDA submitted a letter from Mr. Trewin, Dry Grocery Warehouse Manager - Victoria, 19 in support of their position that IGA itself recognises that the “Engineered Standards” is not mandatory or compulsory for each employee to achieve.
[43] Further and related to this element, the SDA submit that the company has not acted in a fair, reasonable and appropriate way in accordance with the Agreement. 20
[44] The fourth element of the SDA position is associated with the use of the ATR’s. The SDA refer to clause 39(c) of the Agreement which states:
“The objective of the ATR is for both the Company and the Storeworker to explore opportunities to improve the likelihood for achievement of the target and to ensure the use of the preferred method of work.
The ATR shall not be a substitute or another device for issuing warnings or the like.
Initially, a trained and competent Leading Hand should conduct the ATR. Further ATR’s may be conducted by a Supervisor or Management”
[45] As the ATR’s were conducted by Mr Champion’s supervisor, Mr. Beech and not by a “trained and competent Leading Hand”, the SDA submit that the ATR’s referred to in the warning were in breach of the terms of clause 39(c) and therefore, IGA cannot use the outcomes of the ATR’s to justify the need for a written warning.
[46] It is also said by the SDA that the language of clause 39(c) lends support to the proposition that the 100% is a target only and not mandatory. The SDA reject the assertions of IGA that due to the change in the classification structure in 2007, the classification of Leading Hand was deleted and should have been removed from clause 39(c) of the Agreement. The SDA reject the IGA submission that as a consequence of this Mr. Beech could carry out the ATR’s legitimately. 21
[47] IGA asserts that, despite the summary statement on the first page of the warning, which is based on Mr. Champion’s performance in relation to the expected “Engineered Standard”, the warning is not a written warning merely for Mr Champion not meeting the “Engineered Standards”. IGA submits that the warning was in fact issued to Mr Champion for a number of matters. 22 These matters are listed as;
- failure to demonstrate improvements in performance following a number of ATR’s and weekly support sessions;
- failure to take on board recommendations that were made during ATR’s and weekly support sessions to assist in meeting performance standards;
- ongoing failure to show urgency when performing his work;
- ongoing failure to acknowledge accountability for performance; and
- ongoing refusal to acknowledge that IGA requires employees to strive to achieve 100% of the “Engineered Standard. 23
[48] This submission is later referred to by the company as its proper characterisation of the warning. 24
[49] IGA asserts that clause 39 of the Agreement does not and was never intended to, render the “Engineered Standards” and processes of IGA surrounding the “Engineered Standards” (such as an ATR) irrelevant to the management of employees by IGA.
[50] IGA reject the assertion that clause 39(d)(ii)(a) of the Agreement specifically prevents the company from issuing a warning in relation to the “Engineered Standards” as the clause only applies to the termination of an employee’s employment and the clause does not purport to prevent the company from terminating the employment of an employee for reasons which include the employee not achieving 100% of the “Engineered Standards”. 25
[51] It is noted by IGA that the reference to disciplinary procedure in clause 39(d)(ii)(f) of the Agreement is a reference to clause 38, “Warnings Procedure” of the Agreement. The SDA appear to concur with this point in their submissions in reply where they state that “[t]he company goes on to say that under the Engineered Standards Clause 39 of the Agreement that “unsatisfactory work performance will be investigated and dealt with in accordance with the agreed disciplinary procedure”. This is true however if such an investigation took place for Mr. Champion that lead to this written warning then why wasn’t the the warning issued for unsatisfactory work performance as the company is entitled to do under clause 38(a)?” 26
[52] IGA submit that there is nothing in the Agreement which expressly prevents IGA from issuing an employee with a warning for poor performance in connection with the employee failing to achieve the ”Engineered Standards”. They further submit that the Agreement, “...specifically considers circumstances where poor performance may be evidenced by an employee failing to achieve the Engineered Standard.” 27 Support for this proposition is said to lie in the fact that 39(d)(ii)(f) reads, “alleged misconduct and/or unsatisfactory work performance will be investigated and dealt with in accordance with the agreed disciplinary procedure.”28
[53] IGA also submit that, if their proper characterisation of the warning is not accepted and the warning is considered to be a warning merely for Mr Champion failing to achieve the “Engineered Standards”, that there is nothing in the Agreement which would prevent the company from issuing the applicant with such a warning. 29
Consideration:
[54] At the outset, it needs to be clear, that the determination I have made in this matter is done so through an examination of the construction of the relevant terms of the Agreement. The key consideration is whether or not there is a capacity to issue the warning to Mr. Champion under the terms of the Agreement.
[55] I further note that while both parties make reference to purported intentions that support their particular construction of the Agreement, no evidence of a mutual intention has been referred to or provided. Thus the answer to the question posed entirely turns on what the terms of the relevant clauses of the Agreement mean.
[56] The first aspect that needs to be dealt with is whether or not the target of 100% of the “Engineered Standard” is a mandatory requirement for employees to meet. A great deal of the submissions by both parties dealt with this matter. The SDA stress that the “Engineered Standards” are not mandatory or compulsory and are only a target. In fact, the word target is explicitly used in clause 39 of the Agreement. In the SDA reply submission the union states that “[t]he word target has always meant something to strive for, not a mandatory or compulsory requirement.” 30
[57] IGA appear to concur on this point and use the word “strive” on numerous occasions. IGA state that the company has the right to require that employees “strive to achieve 100% of the engineered standard”. Thus it seems common ground that reaching the 100% target is not mandatory but something that should be strived for. I agree that the ordinary and usual meaning of the word target is consistent with the notion of a goal that one would strive for, but not necessarily reach.
[58] Against this background, the question is, has the company breached the terms of the Agreement by issuing the warning in the terms that it has, to Mr. Champion? In determining this, one needs to consider what the Company is entitled to warn Mr. Champion about under the terms of the Agreement. Clause 38 allows for warnings to be to employees in circumstances where “...work performance is not to the satisfaction of the company.” This is a broad and general power and in the absence of any terms within the Agreement to specifically constrain it, provides a clear and unambiguous right for IGA to warn an employee for not only poor work performance but for any performance that is not to their satisfaction.
[59] In considering whether or not the general power to issue warnings is so constrained in this case, it is necessary to determine the basis for the company issuing the warning. On one reading, the warning was issued to Mr. Champion for, “... regular and consistent performance in relation to the expected engineered standard.’ This much is clear, based on the text in the box on the front page of the warning. That text does not refer to the 100% target and the need to meet it.
[60] However, one should consider the terms of the warning as a whole. On the second page of the warning, it states, “Alan has consistently not achieved the company’s expectations of 100% over the past 12 months”. Importantly, on the third page, it is stated, “The company has reiterated many times the expectations of all employees that they must achieve 100% on all functions in their capacity as store men”. To say that employees must achieve 100% on all functions is at odds with the common ground between the parties that the Agreement requires employees to “strive” to meet the target. It follows that any action to apply the standard as mandatory provision that must be met is in breach of clause 39(c) of the Agreement. As the 100% is to be “strived for”, it follows that to the extent that a warning issued to an employee was for not meeting the 100% as a mandatory requirement, and was issued only for that reason, it would act as a constraint on the right of IGA to issue a warning in that circumstance. It follows that such a warning would be invalid.
[61] As noted above, IGA submits that the warning should be properly characterised in a manner that includes, “the applicants on-going refusal to acknowledge that the Respondent requires employees to strive to achieve 100% of the Engineered Standard” However, even if the warning is properly characterised as a warning for not striving to achieve 100% of the agreed target, is IGA restricted by other elements of the Agreement from issuing a warning for these reasons? It is important in the overall context of the Agreement that clause 39d(ii)(a) provides explicitly that “No storeworker shall be terminated (emphasis added) merelyfor not achieving work standards or not achieving the target in an area where standards are established and implemented”. Thus there is a specific constraint on the right of the employer to terminate for these reasons which would operate to constrain any general power to dismiss arising from other components of the Agreement. However, there is no such specific provision limiting the right to issuing a warning for the same reasons. It follows that there is no barrier to the company issuing a warning solely for not striving to meet the 100% target.
[62] Against this background, consideration is required as to what in fact is the proper characterisation of the particular warning issued to Mr. Champion. As described above, the warning issued makes reference to the company’s expectation that employees must achieve 100%. Based on the reasoning above, if the warning dealt with nothing more than the failure to meet the 100% standard, it would be invalid. However, it is necessary to consider the warning document as a whole. It would be narrow and pedantic to focus only on the aspects of the warning that dealt with the 100% standard.
[63] According to the submissions of IGA, the warning was issued to Mr Champion for a number of matters, and not merely for not meeting the engineered standards. 31 These matters were listed in paragraph [47] above and include, in summary, failure to demonstrate improvements in performance and take on board recommendations following ATR’s and weekly support sessions; failure to show urgency in performing work and failure to acknowledge accountability for his level of performance. It is self evident on a reading of the warning that it does indeed deal with all of these matters and I agree with IGA that the written warning was not a written warning merely (emphasis added) for not achieving the “Engineered Standard”.
[64] Essentially there are a range of things that Mr. Champion has been asked to do and are referred to in the warning document that could be described as performance management related. These include;
- reducing fatigue by parking closer to pick bays;
- rehandleling boxes less once allocated to a pallet;
- reduceing walking around pallets;
- removing tugger when fully wrapping pallet;
- improving OH&S, more bending of knees;
- increasing urgency in his work;
- double handling of boxes.
[65] There is also a reference to being “...aware of starting times, meal break times, return to work times, begin day and signing on to new assignments” and “avoid unnecessary conversation”. Issuing a warning for such matters certainly fits comfortably within the broad right of the employer conferred by clause 38.
[66] However, I disagree with IGA’s contention that the warning deals with the Mr Champion’s on-going refusal to acknowledge that the company requires employees to strive to achieve 100% of the engineered standard. The warning is clear that the company’s expectation is that employees must achieve 100%. I cannot see any mention of the word “strive” in the warning. Mr. Champion asserts it is a target and he is correct in doing so. I agree with the SDA that this contention of the company is an attempt to re-characterise the warning on this point. However this does not render the warning invalid in its entirety.
[67] A final consideration is the extent to which the fourth paragraph of clause 39(c) operates to limit the operation of clause 38. That paragraph reads as follows:
“The ATR shall not be a substitute or another device for issuing warnings or the like”.
[68] This is a specific constraint limiting the general power of the company to issue warnings and at its broadest could be read to mean that ATR’s are not to have any relationship to the issuing of a warning. This raises a further question, does the fact that the terms of the warning deal with ATR’s render the warning invalid? It is clear from a reading of the warning that the majority of the feedback and recommendations to Mr. Champion are derived from the ATR process. Therefore, if the fourth paragraph of clause 39(c) was to be read in isolation it acts as a specific constraint on the general power to issue a warning and would render the particular warning issued to Mr. Champion invalid.
[69] However, the language of the clause needs to be considered as a whole. 32 Virtually all of clause 39(c) deals with ATR’s. Its terms require all storeworkers to participate in ATR’s as reasonably required and the term indicates that the objective of the ATR is for the company to explore both opportunities to improve the likelihood for achievement of the target and to ensure the use of the preferred method of work (emphasis added). Further, the clause provides that “[r]emedial action recommended by the ATR should be followed through and its success reviewed”, and provides that “[a]ll storeworkers must participate fully and co-operatively in the process of ATR’s” and further states that“[a]ny reasonable directions to a storeworker to adopt the preferred methods of work must be carried out”.
[70] When one considers clause 39(c) as a whole and in context, it suggests that ATR’s can be relied on by the company in managing performance, including issuing warnings for not adopting the preferred method of work. This links with the further provision within the same clause, 39(d)(ii)(f) that states, “alleged misconduct and/or unsatisfactory work performance will be investigated and dealt with in accordance with the agreed disciplinary procedure.” As it is common ground between the parties that the disciplinary procedure is in fact the warnings procedure found within clause 38, there is a clear authority, within the terms of the “Engineered Standards” clause to utilise clause 38, the warning procedure to deal with unsatisfactory work performance. To suggest otherwise, one would have to consider that the words “work performance” had no relationship to the ATR process. There is no basis to make such a finding and it would not be reasonable to do so.
[71] A final consideration is the assertion by the SDA that Mr. Beech was not entitled to carry out the ATR’s that applied to Mr. Champion as they are initially, under the terms of paragraph 5 of clause 38(c) to be carried out by a “trained and competent Leading Hand”. The company submits that due to changes to the classification structure in 2007 that there is no longer a “Leading Hand”. However, the fact remains that the term was not deleted from the Agreement, so a consideration is required as to what “Leading Hand” means within the context of the Agreement.
[72] The classification structure is found in clause 6 of the Agreement. Clause 6 details a four level classification structure, including “Trainee Storeworker Grade”, “Storeworker Grade I”, “Storeworker Grade II” and “Storeworker Grade III”. There is no reference to “Leading Hand” within the classification structure at any point. The SDA say that the leading hand classification is effectively contained within “Storeworker Grade III” and the “Storeworker Grade III” employees are now known as 2IC’s and have taken over the role of the previous leading hand. I do not have sufficient information before me to conclude in favour of either the company’s or unions submissions on this point. However, even if I were to accept the SDA position on this point, the further question that arises is whether or not that would render the warning given to Mr. Champion invalid.
[73] I have concluded that the warning would not be invalid in these circumstances. As considered above, when the terms of the agreement are considered as a whole, the employer can issue reasonable directions to a storerworker to adopt the preferred methods of work and can deal with unsatisfactory work performance by utilising the warning procedure. It would indeed be narrow and pedantic 33 to find that because an ATR was initially done by a supervisor rather than a ”Storeworker Grade III”, not withstanding that a supervisor is entitled to do subsequent ATR’s, that this rendered the warning invalid.
Conclusion:
[74] The determination of the construction of the Agreement in the context of this dispute had to consider how a number of provisions in the Agreement when viewed as a whole and in their proper context relate to one another.
[75] It is evident that the framers of the document have sought to constrain the use of the “Engineered Standards” as a tool or a means to discipline and ultimately terminate employees. In my view the framers have explicitly sought to constrain the use of the “Engineered Standards” to terminate an employee. However, they have not explicitly sought to do so in respect to the issuing of warnings. I have considered the Agreement as a whole and the extent to which various provisions of the Agreement may be considered to act as a constraint on the right of the employer to issue a warning in this particular circumstance. Having undertaken that consideration I have found that there is no such restriction in the particular circumstances of this case.
[76] The question to be determined was agreed as follows;
“Was the company entitled, under the terms of the IGA Distribution Vic. Pty Ltd and Shop Distributive and Allied Employees Association Enterprise Agreement 2010 to issue a written warning to Mr Champion?”
[77] I determine that the answer to that question is yes.
COMMISSIONER
1 IGA submissions, filed 27 April 2012, [7]
2 Ibid, [8] - [11]
3 (1996) 66 IR 182
4 IGA submissions, filed 27 April 2012, [12]
5 SDA submissions in reply, filed 7 May 2012, p.2
6 Australian Rail, Tram and Bus Industry Union and Australian Federated Union of Locomotive Employees v QR Limited T/A QR National[2012] FWA 3730
7 [2008] AIRC 291, [7]-[15]
8 Watson & Ors v ACT Department of Disability Housing and Community Services[2008] AIRC 291, [15]
9 (1998) 194 CLR 355
10 Project Blue Sky Inc & Others v Australian Broadcasting Authority (1998) 194 CLR 355, 381
11 [2009] HCA 41
12 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41, [47]
13 IGA submissions, filed 27 April 2012, [2]
14 SDA submissions in reply, filed 7 May 2012, p.2
15 SDA submissions, filed 13 April 2012, p.2
16 Ibid, p.4
17 Ibid, p.4
18 SDA submissions in reply, filed 7 May 2012, p.1
19 SDA submissions, filed 13 April 2012, Attachment B
20 SDA submissions in reply, filed 7 May 2012, p.12
21 Ibid, p.15
22 IGA submissions, filed 27 April 2012, [72]
23 Ibid, [72]
24 Ibid, [87]
25 Ibid, [78]
26 SDA submissions in reply, filed 7 May 2012, p.13
27 IGA submissions, filed 27 April 2012, [85]
28 Ibid, [85]
29 Ibid, [88]
30 SDA submissions in reply, filed 7 May 2012, p.2
31 IGA submissions, filed 27 April 2012, [72]
32 Project Blue Sky Inc & Others v Australian Broadcasting Authority (1998) 194 CLR 355
33 Kucks v CSR Limited (1996) IRCA 184
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