Australasian Meat Industry Employees Union, the v Teys Australia Pty Ltd

[2016] FWC 2477

[2016] FWC 2477

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute
Australasian Meat Industry Employees Union, The
v
Teys Australia Pty Ltd
(C2015/5846)
Meat Industry
DEPUTY PRESIDENT ASBURY	BRISBANE, 19 APRIL 2016

Application for the Fair Work Commission to deal with a dispute – remuneration document

incorporated into Agreement – alleged underpayments..

1. Background

[1]        On 27 August 2015, the Australasian Meat Industry Employees Union (AMIEU)

applied under s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the

Commission) to deal with a dispute pursuant to a dispute resolution procedure in the Teys

Bros (Beenleigh) Pty Ltd/AMIEU Production Departments Enterprise Agreement 2010 (the

2010 Agreement).

[2]        The 2010 Agreement reached its nominal expiry date on 31 December 2012. The

AMIEU and Teys have been involved in litigation in the Commission and the Federal Court

since 2013 in relation to the 2010 Agreement; an attempt by Teys in 2013 to obtain approval

of a replacement agreement; and related matters.

[3]        On 25 February 2016, Teys applied for approval of the Teys Beenleigh Production

Employees Agreement (the 2016 Agreement). That application is currently being considered

by the Commission and is caught up in the present dispute and related litigation. A

conference of the parties has been conducted and various issues relating to whether the 2016

Agreement passes the BOOT have been discussed.

[4]        The present dispute relates to a document setting out an incentive based system for

production employees at Teys’ Beenleigh operations – the Remuneration Document. The

AMIEU contends that the Remuneration Document is a term of the 2010 Agreement and Teys

contends that it is not validly a term of the Agreement and that the Company is not required to

make payments to the relevant employees subject to the terms of the Remuneration

Document.
[2016] FWC 2477

[5]        This dispute was listed for Conference before the Commission on 9 September 2015.

The Commission adjourned the proceedings in relation to the dispute pending a hearing in the

Federal Court in relation to the status of the Remuneration Document. The Commission

resumed the proceedings in relation to this dispute in March 2016 when Justice Bromberg

decided that the Remuneration Document formed part of the 2010 Agreement and was

binding. Although litigation about this matter may be on-going, neither Teys nor the AMIEU

have opposed the Commission continuing to deal with the present dispute.

2. The present dispute

[6]        The present dispute has arisen because of a series of unfortunate and unusual

circumstances relating to litigation in the Commission and the Federal Court. It is necessary

to set these out some of these circumstances. In doing so I do not intend to apportion blame

to Teys or the AMIEU for the situation that has resulted from these circumstances. At all

times both parties have sought to exercise rights which they genuinely believed they had.

[7]        On 27 September 2013, I decided to approve the 2013 Agreement and that it would

operate from 4 October 2013 (the approval Decision). As previously noted, the approval

Decision was overturned by a Full Bench of the Commission in a Decision issued on 4 march

2014 and the approval was quashed by an Order issued on 25 March 2014. In the period

between the approval and the Order quashing it, Teys ceased paying employees in accordance

with the Remuneration Document.

[8]        Teys challenged the Decision of the Full Bench of the Commission in the Federal

Court. In a judgement issued on 12 February 2015, the Full Court of the Federal Court

dismissed Teys’ challenge to the Full Bench Decision and declared that the 2013 Agreement

was taken to not have been approved by me on 27 September 2013 and did not commence

operation on 4 October 2013. The Full Court further declared that the 2010 Agreement did not

cease to operate on that date.

[9]        There were also further proceedings before a Full Bench of the Commission and the

Federal Court in relation to a second decision in which I again approved the 2013 Agreement

and where that Decision was also overturned. As a result, the 2013 Agreement has never

been validly approved and has had no effect. The 2010 Agreement continued to cover and

apply to Teys and the relevant employees at all times. However, while Teys and the AMIEU

were contesting these matters, there was a period of uncertainty from 4 October 2013 to 30

August 2015, in which Teys did not pay employees in accordance with the 2010 Agreement

and the Remuneration Document.

[10]      In order to calculate precisely the amount of back pay owed to employees under the

Remuneration Document it would be necessary to retrospectively establish a range of highly

variable conditions that applied on each day during the period when the payments were not

made. For the reasons set out below, I am of the view that this is an impossible task.

[11]      The incentive payments under the Remuneration Document are based on a number of

components including input weight of bodies and the numbers of employees in base teams,

the constitution of which are set on a daily basis. To pay employees in accordance with the

2010 Agreement and the Remuneration Document, Teys is required to keep records and
[2016] FWC 2477

information in a certain form. In the period of uncertainty following the approval Decision

(which was later quashed), while Teys kept records, those records are not in a form that would

enable Teys to easily reconstruct the incentive payment system under the Remuneration

Document. Further, matters such as waiting time and the numbers of employees in base

teams will be difficult if not impossible to calculate retrospectively.

[12]      It is also the case that Teys has made settlement offers to employees with respect to

back pay that may be owed under the 2010 Agreement. A significant number of employees

have accepted those offers and have signed deeds of settlement to that effect. Further, a

significant majority of the employees who have not resolved their back pay disputes have

been paid bonus payments in the period for which they claim payments under the

Remuneration Document. When Teys has paid bonuses to employees in the disputed period,

it has done so on the basis that the payment is intended to offset any amounts which may be

found to be owed under the 2010 Agreement. Teys has confirmed this in writing to the

employees concerned.

[13]      Teys has also commissioned KordaMentha, a corporate advisory firm that provides

forensic accounting services, to conduct an audit in an attempt to establish any outstanding

entitlements of employees to back pay arising under the 2010 Agreement. The audit

methodology used by KordaMentha was not accepted by the AMIEU as a result of issues

such as the calculation of base team sizes. The resolution of these issues will involve

significant time effort and will further delay the resolution of back pay claims and continue

the current uncertainty at the workplace.

[14]      In recent months Teys and the AMIEU have participated in constructive discussions in

the Commission to attempt to resolve the issues in dispute. Those discussions have not

resulted in agreement about the substantive matter of the amount of entitlements that

employees may have to back pay arising under the 2010 Agreement. However, the parties

accept that it is in the best interests of the AMIEU, its members, employees of Teys and the

Company that the matters in dispute are resolved without further litigation and the

expenditure of time, effort and money that litigation entails.

3.    Resolution of the matters in dispute

[15]      The Dispute Avoidance Procedure set out in clause 2.1.14 of the 2010 Agreement

provides that a dispute or claim arising concerning any aspect of the terms and conditions of

employment or engagement under the Agreement, and which is unable to be resolved at the

workplace level, may be referred to the Commission for conciliation and, if necessary,

arbitration. I am satisfied that the dispute cannot be resolved by conciliation. I am also

satisfied that it is necessary to arbitrate the dispute. I have reached this conclusion for the

following reasons.

[16]      The dispute is complex. I am satisfied that there are employees with back pay claims

who have not settled those claims and who have an entitlement to back pay. So much is

accepted by Teys. After considering the material put before the Commission by the AMIEU

and Teys in relation to back pay for employees under the 2010 Agreement, I am of the view

that quantifying the amounts that employees are owed will be virtually impossible.
[2016] FWC 2477

[17]      This is because the payments which are claimed arise from an incentive scheme that is

subject to a wide range of variables. The exercise which would be required to be undertaken

to calculate back pay would involve attempting to recreate circumstances as they were at a

point where the 2010 Agreement had apparently ceased to operate.

[18]      As previously noted, the 2013 Agreement was quashed with the effect that it never

validly came into operation. At the point the entitlements to back pay arose, the 2013

Agreement was for all intents and purposes in effect and the 2010 Agreement had for all

intents and purposes ceased to operate. There was also confusion arising from the operative

date of the Order quashing the approval of the 2013 Agreement. The implications of this

situation became apparent when the matters were before the Full Court of the Federal Court in

November 2014 but their full impact could not be appreciated until the Court released its

Judgement in February 2015.

[19]      In short, there was a period of uncertainty. Regardless of the rights and wrongs of the

circumstances that have developed, and the reasons for the uncertainty, to go back and

recreate the incentive scheme under the 2010 Agreement for the disputed period would be like

unscrambling an egg. Any further litigation in the Commission or the Court will require the

parties to undertake an impossible task.

[20]      If the task is not impossible, the time and effort which will be required from both Teys

and the AMIEU and the complexity of the litigation that they will have to engage in to get an

outcome, will likely result in a further significant delay to employees accessing any back pay

to which they are entitled. For some employees, the outcome will be uncertain and it may be

that they are not entitled to any back pay. Such an exercise will also result in costs for the

parties which will exceed those associated with complying with this Order.

[21]       Teys may be entitled to offset other amounts paid to employees in the period before

the matter is finalised so that the amount of back pay is reduced or completely absorbed into

those amounts. Any delay in employees receiving back pay is a cost to them because of the

lost opportunity to use the money for their immediate needs. In short, a bird in the hand is

worth two in the bush.

[22]       Delay and uncertainty, including uncertainty arising from the fact that the 2016

Agreement is awaiting consideration by the Commission and the 2010 Agreement has

expired, is detrimental to all parties, and particularly to employees. It is time for the

disputation and litigation to end and for all parties to move forward.

[23]      Accordingly, I have decided to issue an Order that Teys pay employees amounts of

back pay, which I have determined, based on the competing views of the parties about the

amount of back pay that is owed. While not consenting to the Order, neither party disputes

the power of the Commission to issue it. It provides a quick, efficient and fair outcome for all

employees with outstanding claims and is a practical solution to the almost insurmountable

problems that Teys and the AMIEU will face if the matter is required to be pursued in the

Courts.

[2016] FWC 2477

4. Conclusion

[24]      The amounts I have determined will be paid to employees according to their

classification and will be limited to those employees who have not previously accepted

settlement offers made by Teys. These amounts are payable in resolution of the disputed

underpayments for the period from 4 October 2013 to the approval and commencement of the

2016 Agreement, which will be listed for e-Hearing, and which will be approved subject to

any objections being notified prior to that Hearing.

[25]      These amounts are to be paid to the employees listed in the Schedules that will be

appended to the Order, within 21 days. Those employees whose employment has terminated

and were not employed for the entire disputed period are to receive a pro-rata payment on the

basis of the number of full weeks that the employee was employed in a relevant classification

during the disputed period, divided by the total number of weeks in the period of 4 October

2013 to 30 August 2015.

DEPUTY PRESIDENT

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