Alan Paull & Ors v Linfox Australia Pty Ltd T/A Linfox

[2017] FWC 5751

[2017] FWC 5751 [Note: An appeal pursuant to s.604 (C2017/6488) was lodged against this decision - refer to Full Bench decision dated 16 March 2018 [[2018] FWCFB 1563] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Alan Paull & Ors
v
Linfox Australia Pty Ltd T/A Linfox
(C2016/5976 and Ors)

COMMISSIONER GREGORY MELBOURNE, 3 NOVEMBER 2017

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)], Application to deal with a dispute regarding custom and practice.

Introduction

[1] This decision deals with thirty-four separate applications made under s.739 of the Fair Work Act 2009 (Cth) (“the Act”). Each are in identical terms, and all of the Applicants are employed by Linfox Australia Pty Ltd t/as Linfox (“Linfox”) at its Regional Distribution Centre in Truganina in Victoria. All of the Applicants, with the exception of one, were previously employed by Westgate Logistics Pty Ltd (“Westgate Logistics”) prior to it being acquired by Linfox in 2007.

[2] The dispute relates to Clause 5 – “Custom and Practice” of the Linfox and Transport Workers’ Union Road Transport and Distribution Centres Agreement 2014 (“the 2014 Agreement”), 1 and a proposal by Linfox to have all employees in the Distribution Centre perform the task of order picking, as required. Under the heading “What is the dispute about?” the applications state:

“1. There has been a long standing custom and practice in operation at Linfox’s RDC, well known and understood by both management and the workforce that certain employees perform particular roles e.g. forklift operator.

2. The following workers believe that there is a custom and practice that they perform certain roles in the Distribution centre. (The names of each individual Applicant then follow.)

3. Linfox is attempting to shift these workers into other, less senior roles e.g. order picking which has a lower skill level as reflected by its lower classification.

4. It should be noted that Linfox is not attempting to reduce their wages.” 2

[3] A similar application was dealt with previously by the Commission in a decision handed down on 1 June 2016 in [2016] FWC 3039. 3

[4] The applications were dealt with in conference on 26 October last year but were not able to be resolved. The Applicants subsequently requested they be set down for arbitration. Ms Glenys Jardine of Counsel was given permission to appear on behalf of the Applicants under section 596(2)(b) of the Act on the basis that it would be unfair not to, as they would otherwise be unable to represent themselves effectively. Mr Darren Jones appeared on behalf of Linfox. It was also agreed the matters should be joined and dealt with together.

The Issue to be Determined

[5] Clause 5 of the 2014 Agreement states:

“5. CUSTOM AND PRACTICE

5.1 This Agreement is not intended to, nor shall it, alter a custom and practice applicable to the parties.

5.2 It is the intention of the parties to this Agreement to, during the Term, attempt to reduce to writing any custom and practice applicable to Linfox and the Employees.

5.3 The parties will review and where agreed create a local agreement arising from the custom and practice in accordance with Clause 34.

5.4 Any dispute about the operation of this clause is to be dealt with in accordance with the disputes procedure in the Agreement.” 4

[6] Linfox now seeks to have all employees in the Distribution Centre, including the thirty-four Applicants, participate in its so-called “Pick Plus One” program, which requires all employees, when directed, to carry out the task of order picking during normal working hours.

[7] It is understood this could require the Applicants to carry out order picking for up to three days per week in circumstances where they are now, in the main, performing certain specific roles only, such as forklift driver, clerk, inventory clerk, loader or team leader.

[8] The Applicants accordingly maintain that a custom and practice has been established over an extended period whereby they are only required to perform certain specific roles. Clause 5 of the 2014 Agreement, in turn, provides that it is not intended to alter an existing custom and practice that applies to the parties.

[9] Therefore, the Commission is, firstly, required to determine whether a “custom and practice” exists, as in Clause 5 of the 2014 Agreement, in regard to the thirty-four Applicants. If the Commission finds such a custom and practice does exist then it is also required to determine what Clause 5 intends and requires. In particular, does it preclude Linfox from being able to direct the Applicants to carry out the task of order picking?

The Evidence and Submissions

The Applicants’ submissions

[10] The Applicants’ submissions refer, firstly, to the Commission’s decision in June last year in the matter of National Union of Workers v Linfox Australia Pty Ltd[2016] FWC 3039. It also concerned a dispute about whether Linfox had the right to require all employees in the Distribution Centre to perform the task of order picking. They refer to paragraph 75 of the decision, in particular, which states:

“[75] In conclusion, I am satisfied, firstly, that I am bound to follow the approach adopted by the Full Bench in regard to the application of Clause 5 in the 2014 Agreement, given it was dealing with matters closely aligned to those in the present application. Secondly, I am not satisfied the NUW has sought to deal with its claim of “custom and practice” on the basis of the principles established by the decision in Con-Stan, as the Full Bench decision requires. Thirdly, I am not satisfied, for the reasons indicated, that the Westgate contracts preclude Linfox from implementing the changes it now proposes. The application is accordingly dismissed.” 5

[11] The Applicants’ therefore submit that:

“The question before the Commission which remained unresolved is: Does a custom and practice exist (in relation to picking) that has not been reduced to writing, having regard to the principles in Constan? (Decision paragraph 73)” 6

[12] They next refer to the following propositions from the decision of the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Australia) Ltd (1986) 160 CLR 226 (“Con-Stan”). The High Court indicated in its decision that previous cases had established these propositions in terms of the circumstances in which trade, custom or usage may form the basis for the implication of terms into a contract

“ The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;

•  There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract. The custom must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well is reasonable, and it must have quite as much certainty as the written contract itself;

•  A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement; and

•  A person may be bound by a custom notwithstanding the fact that he or she had no knowledge of it.” 7

[13] They continue to submit, “The question is: does the evidence of the Applicants show that by custom and practice, picking does not form part of the ordinary duties of the Applicants in their employment at Linfox?” 8

[14] The Applicants continue to submit that the following conclusions can be drawn from the evidence provided in the proceedings.

•  All of the Applicants, with the exception of one, were previously employed by Westgate Logistics before that business was acquired by Linfox.

•  None of the Applicants have ever been required to pick as part of their ordinary duties while employed by Linfox, and “there is a custom and practice that these employees do not pick as part of their ordinary duties.” 9

•  The Applicants’ regard order picking as a “demeaning task,” 10 and emphasise that it has been used as a form of “punishment”11 for alleged wrongdoing in the workplace. Their existing classification levels also mean that they have progressed in their employment to a point where they are no longer required to perform this function.

•  They reject the proposition that their current roles already involve some manual handling and therefore they can also be required to take on the task of order picking, given it also involves manual handling.

•  The Applicants have never received any documentation from Linfox which expressly states that their duties include order picking. The employment contracts entered into when first employed by Westgate Logistics instead provide confirmation of their current roles and responsibilities.

•  A limited number of the Applicants have carried out order picking as part of their training, or when doing additional voluntary overtime, however, this has only occurred in these short-term, or special circumstances. In addition, the training has generally been limited in nature only.

•  Linfox cannot compel the Applicants to carry out order picking as part of their ordinary duties. A custom and practice has instead been established, as the evidence demonstrates, that means the Applicants are only required to carry out certain roles in the Distribution Centre.

[15] The Applicants are also concerned about the medical examinations Linfox is now requiring them to undertake. They are concerned that if they are not able to satisfy these examinations, even though they are now able to carry out their existing duties, this could result in their employment being terminated.

[16] The Applicants also submit that the only evidence relied upon by Linfox is that of Mr Milburn, who has not worked in the Distribution Centre since 2015, and is not familiar with the current work practices and work arrangements.

[17] The Applicants now seek that the claimed custom and practice in regard to their work arrangements be reduced to writing, in accordance with Clause 5 of the 2014 Agreement, and for it to be reflected in a local agreement in accordance with Clause 34.

The Applicants’ evidence

Mr Melvyn Bailey

[18] Mr Melvyn Bailey is employed as a Clerk at the Distribution Centre. He works on the day shift, however, the Applicants are variously employed on both the day and afternoon shifts. There are around 150 pickers on the day shift, together with 46 forklift drivers, 20 loaders, and 22 clerks/checkers. There are around 60 pickers on the afternoon shift, together with 25 forklift drivers, 10 loaders, and 14 clerks/checkers.

[19] In May of this year, each of the Applicants completed a spreadsheet based on the understanding that the information obtained was to be used in the current proceedings. The following results were obtained:

•  All of the Applicants, except for Ms Catherine Taylor, were previously employed with Westgate Logistics prior to that business being acquired by Linfox.

•  None of the Applicants have performed order picking as part of their ordinary duties while working for Linfox.

•  None of the Applicants have ever received written confirmation from Linfox stating their duties include order picking.

•  None of the Applicants have ever expected or been expected to pick when performing their ordinary duties.

•  Six of the Applicants have picked for a short time as a form of “punishment” when under investigation or as a consequence of an alleged wrongdoing.

•  Three of the Applicants have picked for a short time as part of their training.

•  Two of the Applicants have picked for a short time during a shift transfer, and another three have picked for a short time as a result of a misunderstanding.

•  Four of the Applicants have picked for a short time when doing additional voluntary overtime at the weekends.

•  Four of the employees have undergone the medical examinations, but have not yet been provided with the results.

[20] Linfox claims that it has made the decision to require the Applicants to perform order picking for up to three days per week because it will improve occupational health & safety standards in the Distribution Centre. However, it has already won a number of different health and safety awards, which indicate that the Distribution Centre already has an excellent health and safety record. The Applicants accordingly do not accept this justification for the proposed changes.

[21] The Applicants are satisfied in their existing roles and consider the requirement to carry out order picking to be demeaning, given their current status and experience. They are also concerned that if they do not successfully complete the required medical examinations this might result in their employment being terminated.

[22] Mr Bailey was also asked in his examination in chief to describe the various tasks detailed in Exhibit BM8 to the witness statement of Mr Brendan Milburn. He said he had not been involved in training in order picking, and understood this was the case with the majority of Applicants. In addition, he has not been trained on the Vocollect system, which is required to be able to carry out order picking. However, he did acknowledge the employees have done theoretical training as part of the regular chain of responsibility training carried out each year.

[23] Mr Bailey also acknowledged in cross-examination that he signed a contract of employment in June 2004, when first employed by Westgate Logistics, which indicated his terms and conditions of employment were governed by both the Transport Workers Distribution Facilities Award 1996 and the Westgate Logistics Enterprise Agreement. However, his letter of offer indicated he was employed as a Level 2 Clerk, and he has been working in that role for the past 13 years. He also acknowledged that the contract of employment he signed contained a term stating, “With fluctuations in operation requirements, you may be required to work at another business site or in an alternative warehousing and distribution position. If this occurs, you will be given reasonable notice.” 12

[24] Mr Bailey also acknowledged that he had performed picking work when working as a casual employee, and when doing additional weekend overtime work. However, he had not done this work at any time during his normal Monday to Friday day shift roster. He also acknowledged that the position descriptions provided to employees indicated that order picking was one of the required accountabilities, but they were also provided at the same time with a letter of offer, which designated a particular position or function, such as forklift driver or clerk.

[25] Mr Bailey also acknowledged that sixteen of the thirty-four Applicants indicated on the spreadsheet that they had ‘picked’ at some time during their employment, but this had principally occurred as a result of a “punishment” imposed, or for some other specific reason. He also acknowledged that many of the employees had done training in order picking, but this was part of the regular chain of responsibility training, and was theoretical in nature only, being based on a video presentation and a series of related questions. In addition, it was carried out in the training room, and did not involve any actual order picking in the Distribution Centre.

[26] Mr Bailey also acknowledged, after viewing video footage of him working in the Distribution Centre that he did perform manual handling work when stacking and unstacking pallets. However this was very different from carrying out order picking on a regular basis. The work of stacking and unstacking a single pallet, or taking a pallet to a single slot, was also very different from order picking, which could involve cartons being picked from many different locations in completing a single order. It was obviously very different as well from the work of a forklift driver which, apart from anything else, requires the driver to have a forklift license.

Ms Catherine Taylor

[27] Ms Taylor first worked for Linfox as a casual employee in October 2009 and then became a permanent employee in January 2011. The letter of offer provided to her at that time indicated her position was Warehouse Distribution Worker Grade 1A. She was promoted to the position of Receivals Clerk in 2012 when the Truganina Distribution Centre commenced operation. Since that time she has been asked to help out with order picking on one occasion about two years ago, and did so for 20 minutes. However, she also indicated in her examination in chief that she had picked for around six months after becoming a permanent employee. She was also involved in other work at the same time, including recoup and office work. She was also asked to undergo a medical examination last year but, to date, has not been provided with the results. She otherwise agreed with the content of Mr Bailey’s witness statement.

[28] Ms Taylor also agreed in cross-examination that she had completed a number of training modules as part of the chain of responsibility training, which included the picking module and being trained in voice picking.

Linfox’s submissions

[29] Linfox submits the Applicants’ materials make clear that the focus of the dispute and the question to be determined is about – “Whether the Disputed Task does not form part of the duties of the Applicants and as such is incorporated as a term into the 2014 Agreement through the operation of clause 5 as a “custom and practice”?” 13

[30] It submits, in response:

•  The so-called “disputed task” of order picking is within the scope of the Applicants’ duties.

•  Even if order picking is not one of the duties already performed by the Applicants, the employment contracts they have entered into, and the scope of the existing 2014 Agreement, contemplate that they can be directed to perform this task.

•  The argument put by the Applicants about the existence of a custom and practice is misconceived. They have failed to establish a custom and practice exists whereby order picking is not part of their ordinary duties. However, even if it is found such a custom and practice exists they have not established that it should continue, or that Linfox is prevented from discontinuing it.

[31] Linfox continues to submit that it expects all employees at the Distribution Centre to be prepared to perform each of the requisite tasks and duties contained within their specific classification designations, if directed to do so.

[32] The thirty-four Applicants are part of a total workforce at the Distribution Centre of approximately 321 directly employed Linfox employees, together with an additional 140 labour hire employees. 161 of the directly employed Linfox employees were previously employed by Westgate Logistics, and transferred across to Linfox in September 2007 when it acquired that business. All of the Applicants, with the exception of one, were previously employed by Westgate Logistics.

[33] Linfox next refers to Clause 22.1(b) contained in Part B of the 2014 Agreement entitled “Commitment and Obligations” which provides:

“22.1 Every Employee must at all times:

(a) perform his/her duties with due care and diligence;

(b) comply with reasonable and lawful instructions of management;

(c) not engage in inappropriate behaviour; and

(d) comply with Linfox policies, procedures and rules in operation at the time.” 14

[34] It continues to submit that this sub-clause makes clear that all employees are required to perform the tasks and duties encompassed within a particular classification level, and an instruction to perform these tasks and duties is accordingly reasonable and lawful. A failure by any employee to follow any such direction is also a fundamental breach of their contract of service.

[35] It also makes reference to the employment contracts signed by the employees when first employed. It submits they act to incorporate the relevant Award, and the associated classification designations in the Award. The employees are accordingly required to perform the tasks and duties set out at the relevant classification level, and it is not open to them to pick the particular tasks and duties they do or do not want to perform. It notes, in particular, that one of the skills and duties set out at the Distribution Facility Employee Level 3 classification is as follows:

“(d) Sound working knowledge of all distribution facility duties performed at levels below this grade, exercises discretion within scope of this grade.” 15

[36] The employment contracts signed by the employees when originally employed by Westgate Logistics also include the following:

“DUTIES

Your duties were previously outlined during your interview, however duties and responsibilities of employees are regularly assessed by WL and may change from time to time.” 16

[37] The following words also appear:

“With fluctuations in operational requirements you may be required to work at another business site or in an alternative warehousing distribution position. If this occurs she will be given reasonable notice. 17

[38] Linfox continues to submit that these provisions make clear the employees “are expected to and must be competent to perform all traditional warehouse tasks/duties contained within their classification designations.” 18 It also submits the employment contract signed by Catherine Taylor when she was first employed by Linfox contains similar wording in the following terms under the heading “APPOINTMENT AND POSITION:”19

“Linfox may at its discretion and either on a temporary or permanent basis change your work location, duties, title, classification, grade, rates of pay, hours of work or reporting relationships.” 20

[39] It continues to submit that each of the Applicants have performed various tasks and duties during their employment, including order picking. They have also received training in order picking as well as other tasks and duties. In addition, fifteen of the Applicants have admitted to doing order picking, and the position descriptions attached to at least five of their employment contracts lists order picking as a key accountability.

[40] Linfox also rejects the Applicants’ submissions concerning the existence of a “custom and practice.” It submits, firstly, that this has not been made out in accordance with what is required by the relevant authorities. In this context it refers to the Full Bench decision in Transport Workers’ Union of Australia v Linfox Pty Ltd[2016] FWCFB 443 and submits that the Full Bench concluded that the requirement for establishing a custom and practice under the 2014 Agreement was to be determined in accordance with the proposition identified by the High Court in the decision in Con-Stan. 21It referred to the following extracts from the decision of the Full Bench at [27] and [28]:

“[27] … the High Court of Australia provided four propositions to consider when determining whether a “custom and practice” exists:

• The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;

•  There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract. The custom must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself;

•  A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement; and

•  A person may be bound by a custom notwithstanding the fact that he or she had no knowledge of it.

[28] This approach has been taken in various other decisions of this Commission and is well-understood as the correct approach for the Full Bench to rely on in determining whether the procedures provided for in the APMs are a “custom and practice” in the relevant industrial context.” 22

[41] In response to the first of the above propositions identified in the decision in Con-Stan Linfox submits:

•  The classification descriptors for the grades in the 2014 Agreement each assume the employees will undertake a range of functions.

•  The Applicants’ employment contracts all include express terms stating their duties and responsibilities may change from time to time.

•  At least five of the Applicants have signed position descriptions confirming their key accountabilities include order picking.

•  The evidence of at least fifteen of the Applicants’ is that they have performed order picking at some time in the past.

•  The Applicants’ training records indicate they have previously been provided with instruction and training in the task of order picking.

•  Of the total number of approximately 320 employees employed directly by Linfox in the Distribution Centre, 278 perform the task of order picking and only 34 do not. In addition, 161 of the total number were previously employed by Westgate Logistics before it was acquired by Linfox in 2007. 127 of those employees perform all tasks and duties assigned to them, including order picking, and only 34 do not. 23

[42] Linfox submits, in conclusion, that the evidence does not demonstrate that a custom and practice has been established in terms of the first of the propositions identified by the decision of the High Court in Con-Stan, and therefore there is no justification for a term to be implied into the Applicants’ employment contracts to the effect that order picking is not part of their ordinary duties.

[43] It also submits that each of the Applicants has taken part in training in order picking and there has been no complaint or dispute about that requirement. In addition, all of the Applicants have admitted to having picked at some stage, even if this has occurred during periods of additional weekend overtime, or as a consequence of “punishment,” or some other special circumstance. The evidence also indicates that of the fourteen Applicants who nominated in the spreadsheet that they have never picked, eight have in fact carried out order picking at some stage, as borne out by the additional documentation Linfox was ordered to produce.

[44] It also submits that the second proposition in Con-Stan cannot be satisfied because the Applicants are not able to demonstrate that the fact that they are only required to perform a single function is so well known and acquiesced that everyone entering into a contract of employment at the Distribution Centre can reasonably be presumed to have imported that term into their contract. It continues to submit that if this were the case it would mean that each employee at the Distribution Centre would have an implied term in their contract that they are not required to perform the task of order picking.

[45] It also submits that the third proposition in Con-Stan “is similarly fatal to the Applicants claim.” 24 It points to the fact that the Commission in the decision in National Union of Workers v Linfox Australia Pty Ltd [2016] FWC 3039 has previously found that changes in the employees’ duties are contemplated by the express terms contained in their employment contracts, which make clear that their duties are regularly assessed and may be changed from time to time. This extends to them being directed to carry out the task of order picking. It also submits that the classification structure, incorporated by reference to the Award, makes clear that at each classification level an employee can be required to perform all of the duties encompassed within the lower classification levels.

[46] Linfox submits, in conclusion, that the Applicants have failed at first instance to establish that a custom and practice exists in regard to their employment arrangements as required by the decision in Con-Stan. Therefore, clause 5 of the 2014 Agreement is not relevant, and there is no further requirement for the Commission to give any further consideration to that clause.

[47] It continues to submit, in the alternative, that even if it is found that a custom and practice exists, this does not prevent it from being changed. In addition, clause 5 only provides for a custom and practice to be reduced to writing and set out in a local matters agreement, if the parties agree. In its submission the clause is simply a machinery provision that is intended to facilitate local agreements in circumstances where the parties agree to that outcome.

Mr Brenden Milburn

[48] Mr Milburn is now employed by Linfox as a Project Manager and has been in that position since January 2015. However, he has worked for Linfox since 1999, and previously held managerial positions with both Westgate Logistics and Linfox in the Distribution Centre.

[49] Mr Milburn provided a list in his witness statement of the typical tasks and duties performed by employees in the Distribution Centre at the various classification levels. This included what he described as “Picking – Manual Handling & PT – Manually picking stock and placing it onto an allocated delivery unit. Once complete, stretch wraps stock to pallet and place an allocated dispatch lane.” 25

[50] He also indicated that 127 of the 161 former Westgate Logistics employees, still working for Linfox, are performing all of the tasks and duties assigned to them by management, including order picking. 26

[51] Mr Milburn also indicated in his examination in chief that all of the Applicants at some stage reported either directly or indirectly to him in the various managerial roles he has held in the Distribution Centre. He also indicated that he had given directions to all of the Applicants during this time to perform the task of order picking, with the exception of only two employees. He also indicated that the document attached to his witness statement in BM8 was a spreadsheet he compiled, based on his recollection, that detailed the tasks and duties performed by the Applicants during their employment in the Distribution Centre.

[52] He also acknowledged in cross-examination that he had not worked at the Distribution Centre for more than two years, and was not able to provide evidence about its operations since that time. His evidence was instead based on his previous experience when he worked in the Distribution Centre in a range of different managerial positions.

[53] Mr Milburn also acknowledged in cross-examination that order picking did involve manual handling, but also involved other skills as well. He also acknowledged that it now utilised the voice picking mechanism, which delivers instructions to individual pickers. It was introduced in 2012 and replaced the previous system based on label picking. 27 He also took issue with the evidence of some Applicants about how often they had picked, and disagreed with several who indicated they had not carried out order picking at all.

[54] He also provided the following response to a question about the expectation of the employees in the Distribution Centre:

“They’re Linfox employees. You label people with a title, there is a variety of functions and tasks that are performed in a warehouse on a daily basis, on a shift basis. The expectation is that employees will perform tasks allocated to them on a daily basis. There may be forklift driving, there may be clerical work, there may be picking or a combination of all. It’s about what we need to do every day to service our customer.” 28

[55] However, he reiterated that he had not worked in the Distribution Centre since 2015, and was not aware of the current expectations of the employees in terms of their daily tasks. He also denied that picking was a “menial job,” 29 and indicated instead that it “is the most fundamental job, it’s the most important job we have in our warehouse. If we didn’t have the picking function, no one else would have a job.”30 However, he also understood that the employees have allocated tasks which they perform every day. He also acknowledged that the chain of responsibility training was essentially “all classroom training.”31

Consideration

[56] The circumstances involved in the present dispute have by now accumulated an amount of history. Linfox has wanted for some time to have all of the employees in the Distribution Centre prepared and available to carry out the task of order picking. The reasons why are not entirely clear but appear to be based on a desire to share the task of order picking among all employees in order to distribute the workload, and reduce the health and safety issues associated with a more limited number of employees performing this work all of the time. Linfox also submits that order picking is a fundamental role in the operation of the Distribution Centre, and when demand requires all employees must be prepared to take on this role. However, it is also noted that the rationale for why Linfox wants to make these changes is not necessarily germaine to the issues to be considered in determining the matter.

[57] Each of the thirty-four Applicants have resisted the attempts by Linfox to require them to take on the task of order picking, and have lodged dispute notifications on more than one occasion claiming Linfox is in breach of its obligations under the 2014 Agreement in seeking to have them perform this work. The “status quo” obligation in the dispute resolution procedure in the Agreement has meant, in turn, that Linfox has been prevented from directing the employees to perform the so-called “disputed task” of order picking until the dispute is resolved.

[58] The Applicants’ reluctance to be required to take on the task of order picking is, on the one hand, understandable. This is not to demean the work of order picking. It is obviously a critical function and Linfox maintains that the operation of the Distribution Centre will be enhanced if all employees are available to perform this task, when required. However, the Applicants are all long-standing employees, with all but one having been employed prior to 2007 when Linfox acquired the business of Westgate Logistics.

[59] The evidence also makes clear that they have each been accustomed to performing specific tasks over that extended period of time. In addition, the contracts of employment they entered into when first employed make reference to them performing a particular role, i.e. forklift driver, inventory clerk etc.

[60] The evidence also indicates that the Applicants consider that their experience and long-standing entitles them to a certain status in the hierarchy that exists in the Distribution Centre, even if this only exists in an informal sense. As indicated, it is not surprising that they feel somewhat disappointed and let down, given their long service, by the prospect of now being required to perform tasks typically performed by employees engaged at other classification levels.

[61] The evidence also highlights another understandable concern that the Applicants have. As indicated, they are long-standing employees. It follows that they are mostly older employees. The evidence makes clear that the task of order picking generally involves a greater degree of manual handling than the work the Applicants are most often now performing.

[62] Linfox now wants the Applicants to undergo a medical examination before they are cleared to take on any additional tasks, such as order picking. It wants to make sure they are physically able to perform this work before being directed to do so. This is obviously a sensible precautionary measure. However, the Applicants are understandably concerned about what the consequences might be in terms of their ongoing employment if any of them are unable to satisfy the requirements of these examinations.

[63] However, these concerns are arguably again of limited relevance in the context of the issues the Commission is now required to consider in the determination of this matter.

[64] I have already referred to the fact that the Commission previously dealt with a similar application in a decision handed down on 1 June 2016. It was also required to consider at that time whether Clause 5 in the 2014 Agreement prevented Linfox from being able to direct the thirty-four employees to carry out what Linfox describes as “the disputed task” because of the existence of a custom and practice.

[65] The Applicant in that matter argued that the propositions established by the High Court in Con-Stan, in terms of determining whether a custom and practice exists and should therefore be implied into their employment arrangements, were not relevant because of the existence of Clause 5 in the Agreement. In its submission, they were only relevant when an Agreement is silent as to custom and practice, and consideration was being given to whether a claimed custom and practice should be recognised. However, the Commission rejected these submissions, based on the decision of the Full Bench in Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2016] FWCFB 443. It found instead that the Full Bench had confirmed in that decision that the propositions identified by the High Court in Con-Stan must continue to be relied upon to determine whether a custom and practice existed, despite the existence of Clause 5.

[66] In the decision handed down in June last year the Commission concluded by indicating at paragraphs [73] – [75]:

“[73] As a consequence of this interpretation by the Full Bench of Clause 5 in the 2014 Agreement I am satisfied it is not appropriate to deal further with the present application. I am satisfied instead that if the NUW wants to progress the matter it needs to do so, firstly, by establishing that a custom and practice exists that has not been reduced to writing, having regard to the principles contained in Con-Stan.

[74] If it is able to establish such a custom and practice exists then the parties to the 2014 Agreement are to review that situation and, where agreed, create a local agreement in accordance with Clause 34. Presumably, in the absence of any such agreement the parties could have resort to the Settlement of Disputes Procedure in Clause 33 of the Agreement to deal with that impasse.

Conclusion

In conclusion, I am satisfied, firstly, that I am bound to follow the approach adopted by the Full Bench in regard to the application of Clause 5 in the 2014 Agreement, given it was dealing with matters closely aligned to those in the present application. Secondly, I am not satisfied the NUW has sought to deal with its claim of “custom and practice” on the basis of the principles established by the decision in Con-Stan, as the Full Bench decision requires. Thirdly, I am not satisfied, for the reasons indicated, that the Westgate contracts preclude Linfox from implementing the changes it now proposes. The application is accordingly dismissed.” 32

[67] The Applicants in the present matter now claim that there is still a question that remains to be resolved, being whether a custom and practice exists in regard to the duties they are required to perform, based on the application of the propositions established by the decision of the High Court in Con-Stan. I now turn to deal with the matter based on the acknowledgement by all parties that it is to be determined by reference to those propositions.

“The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;”

[68] I am satisfied, firstly, that the evidence does establish that each of the thirty-four Applicants has predominantly been involved in performing a particular task or function, such as inventory clerk or forklift driver, during most of the time they have been employed, both by Westgate Logistics and then Linfox. This is despite the terms of their employment contracts, which make clear they can be directed to perform other tasks, as required. While the evidence of Mr Milburn, in particular, indicates that many of the Applicants have performed other tasks from time to time including order picking. I am satisfied that the main expectation of both the Applicants and Linfox was they would perform a particular task, and they have done so over an extended period of time.

[69] The evidence also establishes that the overwhelming majority of the remaining former Westgate Logistics employees, who continue to be employed at the Distribution Centre, have been prepared or have agreed to perform a variety of different tasks. This is including order picking when directed. Therefore, if a custom and practice can be said to exist it is clearly not one that applies to the entire workforce at the Distribution Centre or, indeed, to all of those employees who were previously employed by Westgate Logistics. It is instead limited to only the thirty-four Applicants.

[70] The evidence also establishes that most, if not all, of the Applicants have done some order picking at some time. Some sought to downplay the extent to which this has occurred, and some denied they had done any order picking at all.

[71] The evidence of Mr Milburn, on the other hand, was different. However, the records produced by Linfox appear to confirm that the overwhelming majority of the Applicants have carried out order picking at some time. In some cases this has occurred primarily when additional overtime work has been performed, or when imposed as a “punishment” for some transgression in the workplace. In other cases it was carried out in response to particular work demands in the Distribution Centre. However, while accepting that the evidence does establish that most, if not all, of the Applicants have carried out order picking at some time, it is again acknowledged that the evidence makes clear that they have primarily performed a single function during most of their employment.

[72] The evidence also establishes that the Applicants have received some training in the task of order picking, although Mr Milburn acknowledges that where this has occurred as part of the regular chain of responsibility training it has been primarily theoretical in nature, and involving classroom instruction rather than hands-on training in the workplace.

[73] However, in terms of the first of the propositions in Con Stan I am not satisfied, in conclusion, that the evidence establishes that a custom and practice exists in the Distribution Centre whereby all, or even the majority of employees are only performing a single task or role. This instead appears to be a situation that only applies to the thirty-four Applicants, who represent a relatively small minority of the total number of employees working in the Distribution Centre.

“There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that to the contract. The custom must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well is reasonable, and it must have quite as much certainty as the written contract itself.”

[74] As indicated already the thirty-four Applicants, who now seek to establish that a custom and practice exists, only represent around ten percent of the total number of employees in the Distribution Centre directly employed by Linfox. This again makes it difficult to conclude that a custom and practice exists, given the second of the propositions identified in the decision in Con-Stan.

[75] The relatively small number of employees involved means that it is not possible to conclude that the evidence establishes that the custom and practice sought to be identified is so well-known and understood that all of the employees at the Distribution Centre can be said to have that term implied into their employment contracts. The evidence instead indicates that the overwhelming majority of employees, including a majority of those previously employed by Westgate Logistics, have accepted the requirement to carry out a range of tasks, as directed.

[76] Obviously, the thirty-four Applicants do not accept this requirement. However, in these circumstances it is not possible to conclude that the custom and practice sought to be relied on is so well-known and acquiesced, and applies uniformly, to the extent that it has “as much certainty as the written contract itself.” As the second proposition in Con-Stan requires.

“A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement;”

[77] The Applicants rely, in part, in support of their applications on the fact they were originally employed under the terms of an employment contract which states that each has a specific role, such as clerk or forklift driver. Therefore they submit that they cannot now be directed to perform other work. They also submit that it was agreed at the time Linfox acquired the Westgate Logistics business that those existing employment contracts would continue to apply, and they therefore have ongoing application.

[78] However, those contracts also contain the following terms under the heading “Duties”:

“Your duties were previously outlined during your interview, however duties and responsibilities of employees are regularly assessed by WL and may change from time to time point.

…

With fluctuations in operational requirements you may be required to work at another business site or in an alternative warehousing and distribution position. If this occurs you will be given reasonable notice.”

[79] The Applicants’ employment contracts therefore contain an express term that indicates that their duties and responsibilities may change from time to time, and they may be required to work in an alternative warehousing and distribution position. They now seek to have a term implied into their employment contracts, based on an alleged custom and practice, which would be contrary to these express terms.

[80] I am satisfied, in response, that the third proposition identified by the decision in Con-Stan means that it is not possible for a term to be implied in the manner now sought by the Applicants because of the existence of these express terms.

“A person may be bound by a custom notwithstanding the fact that he or she had no knowledge of it.”

[81] This final proposition from the decision in Con-Stan does not appear to be of relevance to the determination of this matter.

Conclusion

[82] I have already indicated that in determining whether a custom and practice exists that can be implied into the Applicants’ employment contracts, and reduced to writing in accordance with the 2014 Agreement, the decision of the Full Bench in Transport Workers’ Union vLinfox Australia Pty Ltd[2016] FWCFB 443 makes clear that any such application must be determined having regard to the propositions identified by the High Court in Con-Stan. That decision was concerned with a commercial dispute about the application of various insurance policies. However, the High Court identified in its decision a series of propositions that are to be applied in determining whether a custom and practice may be implied into the terms of a contract.

[83] I have had regard to the evidence and the submissions that have been provided by the parties that I consider relevant to the determination of the matter in the light of the propositions identified in Con-Stan. I am not satisfied, in conclusion, that in all the circumstances the existence of a custom and practice as claimed by the Applicants can be found to exist, given the propositions in Con-Stan. The conclusions set out above in regard to the second and third of those propositions are of particular relevance in terms of this decision. Having concluded that a “custom and practice” does not exist in terms of clause 5 of the 2014 Agreement there is no requirement to give any further consideration to the requirements of that clause. The applications are accordingly dismissed.

COMMISSIONER

Appearances:

G Jardine of Counsel for the Applicants.

D Jones for the Respondent.

Hearing Details:

2017.

Melbourne:

July 19 and August 15.

 1   AE406887.

 2   Form F10 – Application for the Commission to deal with a dispute in accordance with a dispute settlement procedure, signed 3 October 2016, at [2.1].

 3   National Union of Workers v Linfox Australia Pty Ltd [2016] FWC 3039.

 4   Linfox and Transport Workers’ Union Road Transport and Distribution Centres Agreement 2014 at [5].

 5   National Union of Workers v Linfox Australia Pty Ltd [2016] FWC 3039 at [75].

 6 Applicants’ submissions, dated 5 June 2017, at [2].

 7 Applicants’ submissions, dated 5 June 2017, at [3].

 8 Applicants’ submissions, dated 5 June 2017, at [6].

 9 Applicants’ submissions, dated 5 June 2017, at [13].

 10 Applicants’ submissions, dated 5 June 2017, at [8].

 11 Applicants’ submissions, dated 5 June 2017, at [8].

 12   Transcript at PN 294.

 13 Respondent’s submissions, dated 20 June 2017, at [6].

 14   Linfox and Transport Workers Union Road Transport and Distribution Centres Agreement 2014.

 15   Road Transport and Distribution Award 2010.

 16 Respondent’s submissions, dated 20 June 2017, at [28].

 17 Ibid at [30].

 18 Ibid at [35].

 19 Ibid at [36].

 20   Ibid.

 21   Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Australia) Ltd (1986) 160 CLR 226.

 22   Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2016] FWCFB 443 at [27]-[28].

 23 See Respondent’s submissions, dated 20 June 2017, at [47].

 24 Respondent’s submissions, dated 20 June 2017, at [50].

 25 Exhibit LF1 at [10].

 26   Transcript at PN 2132

 27   Transcript at PN 1555.

 28   Transcript at PN 1753.

 29   Transcript at PN 1815.

 30   Transcript at PN 1920.

 31   Transcript at PN1846.

 32   National Union of Workers v Linfox Australia Pty Ltd [2016] FWC 3039 at [73]-[75].

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