Australasian Meat Industry Employees Union v Central Queensland Meat Export Co (Aust) Pty Ltd
[1999] FCA 775
•30 JULY 1999
FEDERAL COURT OF AUSTRALIA
Australasian Meat Industry Employees Union v Central Queensland Meat Export Co (Aust) Pty Ltd [1999] FCA 775
INDUSTRIAL LAW - interpretation of awards and agreements - matters arising under particular awards or provisions - employment - termination - Meat Processing (The Angliss Group) Award 1991 - distinction between employment and engagement - whether “regular daily employee” entitled to payment in lieu of notice on closure of abattoir when notice given but there will be no work available during the period of the notice
Workplace Relations Act 1996 (Cth), s 422
Industrial Relations Act 1990 (Qld), ss 248, 249 and 250Meat Processing (The Angliss Group) Award 1981
Hawkins v The Queensland Meat Export Co Pty Ltd trading as Smorgon Meat Group (Industrial Relations Court of Australia, unreported, 31 July 1996) cited
The Queensland Meat Export Co Pty Ltd trading as Smorgon Meat Group v Hawkins (Industrial Relations Court of Australia, Wilcox CJ, Spender and Moore JJ, unreported, 6 December 1996) cited
Fryar v System Services Pty Ltd (1996) 137 ALR 321 cited
Termination, Change and Redundancy Case (No 1) (1984) 8 IR 34 cited
Termination, Change and Redundancy Case (No 2) (1984) 295 CAR 673 cited
Matthews v Coles Myer Ltd (1993) 47 IR 229 cited
Victorian Meatworks and By-Products Agreement-Award 1978 Case (1980) 244 CAR 217 citedAUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION v THE CENTRAL QUEENSLAND MEAT EXPORT COMPANY (AUST) PTY LIMITED (ACN 057 829 213)
DRUMMOND J
30 JULY 1999
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 170 OF 1998
ON APPEAL FROM AN INDUSTRIAL MAGISTRATE
BETWEEN:
AUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION
AppellantAND:
THE CENTRAL QUEENSLAND MEAT EXPORT COMPANY (AUST) PTY LIMITED (ACN 057 829 213)
Respondent
JUDGE:
DRUMMOND J
DATE OF ORDER:
30 JULY 1999
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The appeal be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 170 OF 1998
ON APPEAL FROM AN INDUSTRIAL MAGISTRATE
BETWEEN:
AUSTRALASIAN MEAT INDUSTRY EMPLOYEES UNION
AppellantAND:
THE CENTRAL QUEENSLAND MEAT EXPORT COMPANY (AUST) PTY LIMITED (ACN 057 829 213)
Respondent
JUDGE:
DRUMMOND J
DATE:
30 JULY 1999
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This is an appeal under s 422 the Workplace Relations Act 1996 (Cth) from the decision of an Industrial Magistrate dismissing the complaint of the appellant-union against the respondent that the latter breached cl 8B(a)(i)(4) of the Meat Processing (The Angliss Group) Award 1981 by failing to pay its employee, Mr Burrows, the sum of $2,152 in lieu of notice when it terminated his engagement by it without notice on 26 April 1995.
The facts out of which the complaint arose are not contentious. Mr Burrows was engaged as a slaughterman in a particular classification of employment under the Award by the respondent in late 1992, when it purchased the Lakes Creek meatworks at which Mr Burrows was then working. As a result of the purchase, the respondent assumed liability for Mr Burrows’ entitlements in respect of long service and otherwise which had then accrued to him as a worker at the meatworks since 1963.
On or about 25 November 1994 Mr Burrows received the circular signed by the respondent’s plant manager and issued to all its employees advising that it was anticipated that the Lakes Creek works would continue to operate up to Christmas, with a proposed shutdown from 22 December; the circular further advised that the respondent was “looking to recommence 1995 on Monday, 9th January”, a starting date that was, however, “subject to the season and Brisbane Office”. What the circular foreshadowed was the usual Christmas shutdown: Mr Burrows then had no reason to believe that the respondent would not re-open the meatworks in early 1995, when seasonal conditions permitted, and no reason to believe that his long term engagement would not continue during the period of the shutdown and that he could expect to resume his usual employment when the works re-opened in the new year.
The works did not, however, re-open on 9 January 1995. By a series of public notices given during January and February, the respondent advised its employees at the works that lack of sufficient cattle numbers was continuing to prevent re-opening, but that a recommencement date would be notified in the near future. This kind of postponement of the re-opening would appear not to be in any way out of the ordinary.
However, on 3 March 1995, the respondent sent a circular letter to its employees at the works, including Mr Burrows, headed “Rockhampton Meatworks - The Future”. It was signed by the respondent’s General Manager - Operations. It stated:
“At present the plant is closed because there are not enough cattle available …
You will also know that Smorgon Consolidated Industries is gradually selling all of its business assets … The Company hopes to sell the Rockhampton Plant as a going concern and we are currently talking to three possible buyers.
The Company is losing money every day by keeping some staff on at the plant and having it in a condition ready to open …
We assure you that we are trying to finalise a sale as soon as possible … It is our hope that the Rockhampton meatworks will continue to be a major employer in the area for many years.”
Then, on 26 April 1995, the respondent sent a letter signed by its Manager, Employee Relations, to Mr Burrows that is of critical importance to the case. Similar letters were sent to its other Lakes Creek meatworks employees. The letter is in these terms:
“This letter serves to advise you that a decision has been made to sell the land, plant and equipment which comprises the Rockhampton Meatworks of the Smorgon Meat Group.
The employer which engaged you in employment in 1994 will not re-engage you as a regular daily employee in 1995.
The Australasian Meat Industry Employees Union has recently suggested that in a case such as this, notice of termination under the award is required.
The Company does not agree with this view, but in all the circumstances hereby gives to you 5 weeks notice of your impending severance which will occur on 31st May, 1995.
You will be paid a severance payment in accord with the award and at the end of the notice period you should attend the pay office at the meatworks to collect your payments (where applicable).”
The wording of the second paragraph is important. The Award draws a careful distinction between the engagement of certain employees and their employment, a matter to which I will return.
On or about 2 June 1995, ie, just over five weeks after his receipt of the letter of 26 April, Mr Burrows attended at the works and collected his termination pay; he was paid a severance benefit under cl 8C of the Award, as well as his accrued long service and sick leave entitlements, by a cheque dated 24 April 1995. He was paid these entitlements up to the date of the Christmas shutdown already referred to, 22 December 1994. No question arises in respect of these payments since even though Mr Burrows’ engagement continued for a time after 22 December, he was never called in for work at the meatworks thereafter. Under the Award, the continuance of an employee’s engagement preserves his continuity of service, one of the qualifying criteria for these entitlements; but their quantum is affected only by actual employment within the engagement.
The Industrial Magistrate observed that, upon receipt of the letter of 26 April 1995, Mr Burrows had no expectation of any employment with, and thus of income from, the company thereafter. But he rejected the union’s argument that, given this, the letter was a de facto termination without notice and that Mr Burrows was therefore entitled to payment in lieu of notice. The Magistrate referred to the Award provisions distinguishing between engagement and employment and providing for the termination of each; he held, in effect, that the Award was a code governing the parties’ rights in respect of those matters and concluded:
“… the letter of 26th April, 1995 brought about a termination of the employer/employee relationship between the employee and the Company. It also gave notice of termination of the employees ‘engagement’. There was no obligation on the employer under the Award to provide ‘employment’. The employment of a regular daily employee, such as Mr Burrows, terminated at the end of each day or shift. The employee is compensated for the vagaries of the Award by receipt of a 10% bonus when working.
The employer adopted an artifice, a stratagem to avoid incurring a liability to make payment in lieu of notice. It seems the Award entitled it to do so”
It is difficult to see why the Magistrate considered that the respondent had avoided liability to make payment to Mr Burrows by adopting what he termed the artifice of giving notice, when that appears only to have been done at the insistence of the union. Nor is it clear what the Magistrate meant by the first sentence of this passage in view of his recognition of the distinction between termination of engagement and termination of employment and in view of his further recognition in the fourth sentence of the fact that, as provided for by cl 7(a), Mr Burrow’s employment was on a daily basis only and had last been terminated long before the letter was sent. But nothing of any present relevance I think turns on what the Magistrate here said.
The Award contains the following provisions:
“7 - REGULAR DAILY EMPLOYEES
(a) A Regular Daily Employee shall be employed by the day or shift, and, without prejudice to the provisions of this award as to payment for award holidays, sick leave and annual leave and Seasonal Allowance, his employment shall terminate at the end of each day or shift on which he is employed.
(b) Notwithstanding the termination of his employment at the end of each day or shift, the engagement of a Regular Daily Employee shall continue and he shall remain a Regular Daily [Employee] until his engagement as such is terminated as herein prescribed. Such engagement may be terminated by notice on either side as from the end of the ordinary working hours on the day on which it is given, whether the employee is employed on that day or not, or at any later time specified by the notice. An employee who terminates his engagement as from a time prior to the end of the ordinary working hours on any day or shift without having given the prescribed notice shall not be entitled to payment in respect of any time actually worked on that day or shift. Such engagement shall be deemed to be terminated if the employment of the employee is summarily terminated in accordance with subclause (c) of this clause.
(c) Nothing in this award shall affect any common-law right of an employer to terminate summarily the employment of any employee …
…
8 - CASUAL EMPLOYEES
(a) A casual employee shall be employed by the day or shift, and his employment shall terminate at the end of each day or shift. An employee who terminates his engagement as from a time prior to the end of the ordinary working hours on any day or shift shall not be entitled to payment in respect of any time actually worked on that day or shift.
(b) Nothing in this award shall affect any common-law right of an employer to terminate summarily the employment of any employee, and in such cases the wages shall be payable up to the time of dismissal only.
…
8B - INTRODUCTION OF CHANGE
[8B inserted by V018 from 06Mar90]
(a) Notwithstanding the provisions of subclause 7(c) of this award, where the employer intends to introduce changes to machinery, procedures or other relevant matters likely to affect the employment of employees, such employees whose engagement may be terminated as a result of such changes shall be entitled to notice of termination as follows.
Termination of employment
(i) Notice of termination by employer
(1)In order to terminate the engagement of an employee the employer shall give to the employee the following notice:
Period of continuous service Period of notice
1 year or less 1 week
1 year and up to the
completion of 3 years 2 weeks3 years and up to the
completion of 5 years 3 weeks5 years and over 4 weeks
(2)In addition to the notice in subparagraph 8B(a)(i)(1) hereof employees over 45 years of age at the time of the giving of the notice with not less that (sic) two years continuous service, shall be entitled to an additional week’s notice.
(3)Such notice may be given at any time during the week but, if given any time within the employee’s rostered working hours, shall apply from the rostered finishing time for the day except where payment is made either partially or totally in lieu of notice, in which case time is calculated from the time of the notice.
(4)Payment in lieu of the notice prescribed in subparagraph 8B(a)(i)(1) and/or 8B(a)(i)(2) hereof, shall be made if the appropriate notice period is not given. Provided that the engagement may be terminated by part of the period of notice specified and part payment in lieu thereof.
(5)In calculating any payment in lieu of notice the employee shall, on the day of ceasing engagement, be paid his or her classification rate for the period of such notice. A further payment shall be made to the employee at the end of the period of notice (which has been paid for in lieu) based on what the employee would have received in respect of ordinary pay had the engagement not been terminated, less the initial payment made.
(6)The period of notice in this clause shall not apply in the case of dismissal for conduct that justifies instant dismissal, including malingering, inefficiency, neglect of duty or misconduct or in the case of casual employees, or employees engaged for a specified period of time or for a specific task or tasks.
(7)For the purposes of this clause, continuity of service shall be calculated in the manner prescribed by subclauses 23(l), (m), (n) and (o) of this award.
(8)The service of an employee with the employer means the period during which an employee has served his or her employer under an unbroken contract of engagement; provided that a contract of engagement shall be deemed not to have been broken by reason only of an interruption or determination thereof, if the interruption or determination has been made by the employer by reason of slackness of trade (including unavailability of stock for slaughter) if the employee is re-engaged by the employer within eight months of such interruption or determination.
Time off during notice period
(ii)Where the employer has given notice of termination to an employee, an employee shall be allowed up to one day’s time off without loss of pay for the purpose of seeking other employment. The time off shall be taken at times that are convenient to the employee after consultation with the employer.
Statement of employment
(iii)The employer shall, upon receipt of a request from an employee whose engagement has been terminated, provide to the employee a written statement specifying the period of his or her employment and the classification of or the type of work performed by the employee.
Summary dismissal
(iv)Nothwithstanding (sic) the provisions of subparagraph 8B(a)(i)(1) hereof, the employer shall have the right to dismiss any employee without notice for conduct that justifies instant dismissal including malingering, inefficiency, neglect of duty or misconduct and in such case, the wages shall be paid up to the time of dismissal only.
Unfair dismissal
(v)Termination of engagement by an employer shall not be harsh, injust (sic) or unreasonable.
…
Disputes settlement procedures - unfair dismissals
(vi)…
Employer’s duty to notify
(b)(i) Where the employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer shall notify the employees who may be affected by the proposed changes and both the federal secretary and branch secretary of the union.
(ii)Significant effects include termination of engagement, major changes in the composition, operation or size of the employer’s workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure, the alteration of hours of work, the need for retraining or transfer of employees to other work or locations and the restructuring of jobs. …
Employer’s duty to discuss change
(c)(i) The employer shall discuss with the employees affected and the union, inter alia, the introduction of the changes referred to in subclause 8B(b) hereof, the effects the changes are likely to have on employees, measures to avert or mitigate the adverse effects of such changes on employees, and shall give prompt consideration to matters raised by the employees and/or the union in relation to the changes.
…
8C - REDUNDANCY
[8C inserted by V018 from 06Mar90]
Discussions before termination
(a)(i) Where the employer has made a definite decision that the employer no longer wishes the job the regular daily employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of engagement, the employer shall hold discussions with the employees directly affected and with the union.
…
Severance pay
(c) In addition to the period of notice prescribed for ordinary termination in subclause 8B(a), and subject to further order of the Commission, a regular daily employee whose engagement is terminated for reasons set out in paragraph 8C(a)(i) hereof shall be entitled to the following amount of severance pay in respect of a continuous period of service.
Period of continuous service Severance pay
1 year or less Nil
1 year and up to the completion
of 2 years 4 weeks pay2 years and up to the completion
of 3 years 6 weeks pay3 years and up to the completion
of 4 years 7 weeks pay4 years and over 8 weeks pay
…
Notice to Commonwealth Employment Service
(g) Where a decision has been made to terminate employees in the circumstances outlined in paragraph 8C(a)(i) hereof, the employer shall notify the Commonwealth Employment Service thereof as soon as possible giving relevant information including the number and categories of the employees likely to be affected and the period over which the terminations are intended to be carried out.
…
Permanent close-downs of abattoirs, boning rooms and/or prepacking areas, rooms or factories
(n) Where the employer has made a definite decision to permanently close down an abattoir, boning room and/or prepacking area, room or factory, including the sale of assets, business or premises, employees of such enterprise shall be entitled to all of the provisions of this clause.
In circumstances where an abattoir, boning room and/or prepacking area, room or factory is closed and not reopened within a period of eight consecutive calendar months from the date of closure, it shall be deemed to be permanently closed down and the provisions of this clause shall apply.
…”
It is to be noted that while cl 7(a) provides for the termination of a regular daily employee’s employment at the end of each day or shift on which he is employed, cl 7(b) provides for the termination of such an employee’s engagement, no matter how long that may have continued, by a notice which the employer and the employee are each entitled to give, that takes effect “from the end of the ordinary working hours on the day on which it is given, whether the employee is employed on that day or not, or at any later time specified by the notice”. It is only in the special class of circumstances covered by cl 8B, viz, where the employer intends to introduce employment-affecting changes to its operations, that that clause restricts the general right of the employer conferred by cl 7(b) to terminate an employee’s engagement by as little as a period of notice of less than a day, a matter dealt with by Madgwick J at first instance in Hawkins v The Queensland Meat Export Co Pty Ltd trading as Smorgon Meat Group (Industrial Relations Court of Australia, unreported, 31 July 1996) at p 8.
Of this distinction between engagement and employment, the Full Court in Hawkins, on appeal, (Industrial Relations Court of Australia, Wilcox CJ, Spender and Moore JJ, unreported, 6 December 1996), said, at 4 and 5:
“The Award is framed so as to accommodate the exigencies of meat processing … It is plain that the Award draws a distinction between employment and engagement. Employment terminates at the end of each day: see cl 7(a). This is to be contrasted with engagement which endures until such time as notice is given in accordance with cl 7(b). The purpose of this distinction is, in our opinion, to enable an employer to retain a workforce of meatworkers who are engaged by the employer. However, they are engaged without an obligation to pay wages during any period in which the workforce cannot be employed in the sense of being used to perform work. The benefit of such a system is twofold. It enables the employer to maintain a committed workforce while providing some flexibility in its utilisation. It provides employees with a measure of certainty about future employment and future income. When engaged by an employer they would have an expectation of future employment and income though subject to the vagaries of the weather and the availability of stock and the like, which influence the times at which work is actually done at meatworks.”
Importantly, the Full Court there held that cl 8B of the Award was not limited in its application to operational changes of a comparatively minor type that might lead to the termination of the engagement of one or a limited number of employees, but applied also to any change that might affect all the persons employed, “including the permanent closure of the meatworks”. (The decision to this effect in Hawkins at first instance, affirmed on appeal, was given long after Mr Burrow’s received the letter of 26 April 1995. This may explain the respondent’s attitude to the appropriateness of giving notice set out in this letter.)
There are, I think, a number of indications in cl 8B that it was not intended to apply to plant closures, only to changes in the ongoing operation of a meatworks likely to reduce the employer’s demand for labour there: see cl 8B(a)(i)(5) (providing for the quantification of the payment in lieu of notice of termination of engagement by reference to the operations of the meatworks subsequent to the particular termination made without notice) and cl 8B(a)(ii) (conferring on a worker the right to a day’s paid leave of absence from his employment, while the period of the notice of termination of engagement is running). The reference in cl 8B(a)(i)(3) to the giving of notice of termination of engagement “at any time during the week” perhaps also assumes the continuing operation of the meatworks, rather than its closure. However, none of these indications is, in my opinion, decisive that cl 8B is confined in its operation to employment-affecting changes at a meatworks less draconic than total closure. That cl 8B applies to plant closures as well as to less draconic operational changes that reduce but do not completely extinguish the employer’s need for labour at its plant is supported by the consideration that the justification for giving an employee notice of retrenchment or payment in lieu when he is retrenched because of changes the employer makes to its ongoing operations, instead of leaving him exposed to summary termination under cl 7(b), is equally applicable to an employee retrenched because of a plant closure. Even if the decision in Hawkins does not technically bind me, I have no hesitation therefore in following it.
The right to payment in lieu of notice of termination of engagement contained in cl 8B(a)(i)(4) arises by the express terms of the provision only “if the appropriate notice period is not given”. It follows that if it is permissible for the employer to give, and it does give, the notice provided for by cl 8B(a)(i)(1) and (2), then the right to payment in lieu of notice cannot arise.
It was submitted, however, that because the respondent had determined on the permanent closure of the plant before it gave Mr Burrows the letter of 26 April 1995, it was not, on the true construction of the clause, open to the respondent to give notice of termination of engagement, so that that letter could not take effect as a notice of termination within cl 8B(a). Various reasons for this proposition were advanced.
First, it was said that Mr Burrow’s situation cannot properly be distinguished from that in Hawkins, otherwise the “notice” benefit intended to be conferred on employees by cl 8B would be illusory. Second, it was said that if the notice can be given, rather than pay in lieu, in circumstances in which the employee gets no or no real benefit from notice, then that would involve giving cl 8B an interpretation contrary to the two Termination, Change and Redundancy test cases in the Australian Industrial Commission in 1984 and to the introduction of the TCR provisions into this (and other meat industry) Awards. Both submissions clearly enough assume that cl 8B is intended to confer a monetary benefit on employees facing redundancy that is additional to redundancy severance pay provided for by cl 8C.
Third, it was said that because the letter was sent after the respondent had decided on permanent closure, it was not a notice of intention to terminate Mr Burrow’s engagement at the end of the five weeks’ period of notice then given, but rather a repudiation at common law of the then-existing contractual relationship between the respondent and Mr Burrows. But if cl 8B, properly construed, entitled the respondent to give notice of termination of engagement even where it had already decided on permanent closure, so that there was no prospect of Mr Burrows being offered work at the meatworks during the period of that notice, the letter could not involve any repudiatory breach of that contractual relationship.
As to the union’s first point, the Industrial Relations Court in Hawkins was concerned with a claim by a worker engaged by the present respondent under this Award at its Ross River meatworks. Like Mr Burrows, Hawkins last worked, ie, was last employed by the respondent, before the December 1994 seasonal shutdown, although her engagement, for a time, continued after that. The Hawkins case, however, differs significantly from Mr Burrows’ case, in so far as Hawkins was not given any notice prior to termination of her engagement, only a letter dated 1 March 1995 which advised her of the definite decision by the present respondent to close the Ross River works permanently and that she would not “be re-engaged at the meatworks”. The Court held that this letter constituted a peremptory termination of Hawkins’ engagement with the consequence that she was entitled, under cl 8B of the Award, to four weeks’ pay in lieu of that period of notice of termination of her engagement to which she was entitled.
Further, I accept the respondent’s submissions that, even where the employer has determined upon permanent closure of the meatworks before notice of termination of engagement is given, so that the worker will have no prospect of work and the associated income during the period of notice given to him, such a notice is capable of conferring possible, though limited, benefits upon the employee who receives it which he would not obtain if not given notice. On termination, an employee such as Mr Burrows is entitled, by cl 19(c) of the Award, to payment of “all outstanding sick leave credits accrued by him under this clause at his award classification rate” and, pursuant to cll 23(g)(i) and (j)(i) and (ii), he is entitled to payment in respect of accrued and pro rata annual leave “at his award classification rate”. Moreover, pursuant to cl 52A of the Award and ss 248(1), 249(1) and 250 the Industrial Relations Act 1990 (Qld), on termination he is entitled to be paid for accrued long service leave at the rate payable under the Award for ordinary time worked. In each case, it is the rate payable under the Award as at the date of termination that fixes the quantum of these payments. Where termination is by notice given under cl 8B(a)(i)(1) and (2), the worker’s engagement continues until expiry of the period of notice; where payment is made under cl 8B(a)(i)(4) in lieu of giving the worker notice of termination, the engagement ends when the payment is made. (Such payment is not in the nature of damages for breach of contract by dismissal without notice, but a lawful method available to the employer of bringing a worker’s engagement to an end by force of the express provisions of the clause.) If termination is effected by notice and a variation has been made to the Award which only takes effect during the period of notice of termination, an employee who receives that notice will therefore obtain a benefit in the form of computation of these various termination payments at a rate higher than that at which they would have been computed, if he had been terminated without notice.
The union conceded that, in theory, notice gave an employee the possibility of this kind of benefit denied to an employee terminated under cl 8B without notice (though that benefit would be substantially less, in money terms, than the amount of the payment in lieu of notice provided for by cl 8B(a)(i)(4) and (5)). But the union submitted that it would be rare in practice for an employee given notice in fact to receive the benefit of any such variation to his wage rate. It was pointed out that, under cl 8B, the requisite period of notice of termination can be as little as one week and at the most, only five weeks, periods that do not allow much opportunity for the occurrence of such Award variations. It was also said that an employer could be expected to have forewarning of the coming into effect of a variation and so could organise terminations to limit its exposure to increased termination payments to employees.
But the possibility that this kind of limited benefit may accrue to an employee who is given notice of termination under cl 8B rather than being terminated without notice in a redundancy situation is sufficient, in my opinion, to prevent it being said that notice of termination can serve no useful purpose in a case like the present where it is given only after the employer has permanently closed a plant.
More importantly, however, the assumption underlying the first two of the union’s submissions, viz, that cl 8B was intended to confer on an employee like Mr Burrows the entitlement to a payment of money, is, in my opinion, erroneous.
As a general rule, there is a clear difference between notice of termination or payment in lieu, on the one hand, and a severance payment, on the other, in the context of a worker’s redundancy.
In Fryar v System Services Pty Ltd (1996) 137 ALR 321, von Doussa J, at 331, in comments of general application, said:
“There is a distinction between the nature and purpose of a period of notice or payment in lieu, and a severance payment. The distinction is reflected in Arts 11 and 12 of the Termination of Employment Convention. While the two are often treated together to arrive at a global redundancy package, the separate nature and purpose of the two entitlements remains …
A period of notice is to give an employee the opportunity to adjust to the change in circumstances which is to occur and to seek other employment … The period may be worked out [ie, by the employee] … and it often is, as it is recognised that the employee’s prospects of obtaining other employment may be better if the search is undertaken while the employee remains in employment …
A severance payment, however, is intended to provide a payment as compensation for the loss of non-transferable credits and entitlements that have been built up through length of service such as sick leave and long service leave, and for inconvenience and hardship imposed by the termination of employment through no fault of the employee …”
These comments reflect the approach taken by the Full Bench of the Australian Conciliation and Arbitration Commission in the first Termination, Change and Redundancy Case (1984) 8 IR 34 in explaining why the Commission was prepared to adopt, as a general standard, extended notice of termination related to length of service (at 48 - 51) and a special entitlement to severance pay on redundancy (at 69 - 76). In Matthews v Coles Myer Ltd (1993) 47 IR 229, an unfair dismissal case that was resolved by the application of the principles adopted in the two TCR cases, the Industrial Commission of South Australia said, at 232:
“… essentially the requirement is that an employee be given notice of termination of employment and payment in lieu thereof is at best an option which the employer may exercise should the contract of employment so permit. Thus, prima facie, an employee who has been given notice will work out the notice period receiving the benefits of his or her remuneration package in the consideration for fulfilling the duties for which he or she was engaged. In doing so the employee, inter alia, is afforded the significant advantage, well recognised by industrial tribunals of seeking new employment from existing employment rather than unemployment …”
In the ordinary case, an employee with an award or contractual right to notice of termination or payment in lieu of notice has the opportunity, provided by the receipt of the notice, to adjust to the imminent loss of his employment by seeking other employment while nevertheless continuing to earn income during the dying days of his existing employment. As a general rule, an employee will only earn income by performing work for his employer: see Halsbury’s Laws of Australia, title “Employment”, par 165-365. If denied the opportunity provided by notice by having his employment terminated without notice, such an employee is entitled to a payment related to the income he would have received during the period of notice which he was not given.
The difficulty for Mr Burrows is that, unlike the ordinary employee, he was retained by the respondent on the basis that he would continue to be in a relationship with it of ongoing engagement, even though it was mutually contemplated that there would be periods during that relationship when, because of seasonal and other factors peculiar to the meat industry, he would not have any opportunity to earn income by being in actual employment by the respondent. It is this special feature of the meat industry that resulted in the form of accommodation of the conflicting interests of employers and workers that is found in the distinction made in the Award between employment and engagement. As the Full Court in the Hawkins case said at 4:
“The purpose of this distinction is, in our opinion, to enable an employer to retain a workforce of meatworkers who are engaged by the employer. However, they are engaged without an obligation to pay wages during any period in which the workforce cannot be employed in the sense of being used to perform work.”
It is this same feature of the meat industry - the uncertainty of work being available at any further time - that initially stood in the way of the introduction in favour of employees like Mr Burrows of any form of redundancy scheme and which remains the explanation for the denial of the extension of the TCR general standard of the right to extended notice of termination to such workers.
Madgwick J, at first instance in Hawkins, considered at length the history of cl 8B from which the following points emerge:
(1)The Termination, Change and Redundancy cases No 1 ((1984) 8 IR 34) and No 2 ((1984) 295 CAR 673) established as a matter of general Australian industrial standards:
(a)The then current Award standard of one week’s notice of termination for ordinary employees should be replaced by a scale providing for from one to five weeks’ notice, depending on length of service and age.
(b)This change should not extend to “casual, seasonal or daily- or hourly-hire employees”.
(c)Employers should be required to pay severance pay on redundancy arising from any cause to compensate employees for non-transferable credits, such as accrued long service leave and for the hardship imposed on the employee by the loss of long-term employment.
(d)Redundancy severance payments should be a benefit additional to the extended period of notice of termination referred to in point (1)(a) above.
(2)These benefits (extended notice of termination of ordinary employment and severance payments on redundancy) did not initially apply to process workers in the meat industry such as Mr Burrows. However, on application made in 1989 by Mr Burrows’ union to the Australian Industrial Relations Commission, a variation was made by Deputy President Riordan to the Meat Industry Award, which flowed on to the Award of present concern, to give to such employees the rights to:
(a) severance pay on redundancy - see cl 8C(c) of this Award;
(b)the extended notice of termination provided for by the TCR cases, but only in the case of redundancy and not where the employer terminated an employee’s retainer in the ordinary course of operations (compare cl 7(a) and (b) included in the original Award and cl 8B inserted as a result of the 1989 variations). The union failed to obtain a general right to extended notice on termination in line with the TCR general standard.
(3)In explaining in the 1989 case why he was not prepared to agree to the union’s proposal to incorporate in the provisions of the Meat Industry Award the general standard of extended termination notice provided for by the TCR cases for quasi-permanent employees like Mr Burrows, Deputy President Riordan discussed at length conditions in the meat industry and the practical difficulties which he said could “arise in the normal course of events which affect the prospect of giving extended notice [of termination] to employees who are employed under Part III of this Award”. He said:
“There are very significant practical problems, however, associated with giving extended notice of termination to employees in this industry … These include the uncertainty in those cases where retrenchment is on account of the unavailability of stock which can be, and frequently is, affected by a number of diverse matters including climatic conditions and the methods by which stock is purchased …
The evidence in this case illustrates the fact that several meatworks have closed down over recent years in various states as part of the process of rationalisation of the meat processing industry. It would appear that in some cases the closures may have been brought about by market forces and in other cases by economic factors created by the irregular availability of stock …
Uncertainty of employment security is an unfortunate and regrettable feature of some sections of this industry. It is, however, an unavoidable feature which must be recognised. Some employees, on the other hand, appear to enjoy a measure of security of employment in that they can reasonably expect to be offered employment over the whole of the year. But even in plants which operate throughout the whole of the year there can be variations in the number of employees required from one day to the next.
In such circumstances, the giving of extended notice of termination for all employees at all establishments raises particular difficulties.”
(4)In the course of discussing these difficulties, the Deputy President referred to the Victorian Meatworks and By-Products Agreement-Award 1978 Case (whose correct citation is (1980) 244 CAR 217). It appears from the reasons of the Full Bench of the Commission in that case that, at that time in 1979, when quasi-permanent employees in the meat industry like Mr Burrows had no right to severance pay or extended notice of termination on redundancy, the union, for the first time, persuaded the Commission sitting at first instance to include in the Award a redundancy scheme. It had argued for one based on severance pay: but the Commission adopted a scheme based on differential notice of termination according to length of service, which ranged up to a maximum of eight weeks. The Commission’s determination was set aside on appeal because of what were described as the practical difficulties of making the order workable, given that seasonal and economic uncertainties in the industry frequently required the closure of meatworks at very short notice.
It can be seen from this that an important consideration that caused Deputy President Riordan to reject the union’s claim for a general right to extended notice of termination for quasi-permanent employees like Mr Burrows was the fact that it was uncertain, in relation to any particular plant, that work would be available during the period of notice.
It may on first reading seem odd that the Deputy President should place such emphasis on the uncertainty of the availability of future work as a reason for denying process workers the general TCR standard of extended notice of termination. It appears that, in adopting this approach, the Deputy President may have made the assumption that a meat industry process worker would have the right to paid work throughout the period of notice, just as an ordinary employee can expect to perform work and derive income from that work during a termination notice period. The Deputy President does not appear to have adverted here to the distinction embedded in this Award from the outset between engagement and employment, a distinction made, as the Full Court in Hawkins explained, because of the very fact that although an employee may have worked as a process worker in the meat industry for many years, he can never have any expectation that his employer will make work available to him and thus give him the opportunity of earning income at any particular time in the future. Although this Award was only made in 1981, as Madgwick J points out in Hawkins, it was this same uncertainty that led to the development in meat industry awards long before that of the distinction between a worker’s engagement and his employment.
But the Deputy President was not dealing with a problem of interpretation: his task was to decide whether to vary the existing Award and create new rights. In particular, he was being asked to extend to the meat processing industry the TCR standard of extended notice of termination or pay in lieu. It is therefore understandable that he would consider the consequences of importing into this Award a standard that generally operates to confer on employees not only the opportunity provided by notice to adjust to a pending job loss, but an entitlement to income earned by working out the notice period.
(5)In a brief comment, the Deputy President in the 1989 case concluded that extended notice of termination was, however, appropriate in a redundancy situation. He did not give any reasons for his decision to include cl 8B in the Award other than to say “there is no good reason why” such a provision should not be available in redundancy situations. However, he did give a direction in consequence of this conclusion that:
“… a clause consistent with the standard clause laid down as a result of the TCR Case with those modifications essential for its proper application to piece workers in the meat industry will be awarded. These modifications will include the basis on which payment is to be made having regard to the variations in earnings which occur as a result of employee flexibility as well as variations in the employer’s output. The provision for payment of long service leave would be a useful guide in this regard.
The proposed clause will not, of course, apply in respect of annual shut downs. The AMIEU did not include these situations in its claim. The clause will be applicable to permanent closedowns, as defined.”
Again, it seems clear enough from this that the Deputy President assumed that, even in a redundancy situation where extended notice of termination was to be given under the Award variation he then granted, work and thus income would be available to employees given such notice. Again, and no doubt because of the nature of the jurisdiction he was exercising, he appears to have ignored the fact that the Award was framed on the express basis that a worker like Mr Burrows could never have any expectation of work and thus income being available to him at any particular future time, including during the period of notice of termination.
Central to the relationship between an employer and a process worker in the meat industry is the distinction between engagement and employment reflected in cl 7 of the Award. This distinction is based on the fact that a worker can have no expectation of work and thus income being available to him at any particular future time. Against this background, there is, in my opinion, no justification for assuming that, when notice of termination is given under cl 8B in a redundancy situation, a process worker suddenly becomes, for the first time, entitled to expect his employer to provide him with work and thus the opportunity to earn income during the period of the notice. The object of cl 8B, in providing for extended notice of termination or payment in lieu of notice in case of redundancy, is not to give meat workers like Mr Burrows the opportunity available to ordinary workers to earn income during the period of notice, but only such opportunity as notice might confer to make the adjustment necessitated by impending unemployment, coupled with the opportunity to perform such work, if any, as might be available during the period of the notice and to thereby obtain some income during that period.
A distinction is drawn in the Award between engagement and employment, based on the absence of a worker having any expectation of being offered work at any future time. Given this, the fact that the Deputy President who granted the Award variation that inserted cl 8B in the Award may have made a contrary assumption in the context of considering a claim for an Award variation cannot provide a foundation for interpreting cl 8B in such a way as to permit an employer to give notice of termination in redundancy situations under cl 8B only where the employer was in a position to offer paid work to the employees in question during the period of their notice and, if not in that position, to terminate only by making a payment in lieu of notice quantified in accordance with pars (4) and (5) of subparagraph (i) of the clause.
I can therefore see no reason to depart from the ordinary meaning of the words of cl 8B in arriving at its proper interpretation. The clause, in my opinion, confers on the worker a right to extended notice in case of redundancy, with the worker becoming entitled to the right to payment in lieu of notice only if the prescribed notice is not given. Clause 8B(a)(i)(4) and (5) cannot be read as conferring an election on the worker facing termination in a redundancy situation to insist on payment in lieu of notice (although it is open to the employer to terminate either by notice or payment).
The union did not attempt to argue that because the worker’s entitlement to remuneration depends on work being done, there is implied in the Award an obligation on the employer to provide some measure of work to the employee. Cf Halsbury’s Laws of Australia, title “Employment”, para 165-380. It would be difficult to put such an argument in the face of acceptance by the Full Court in Hawkins of the absence of any obligation on the respondent to pay wages to employees like Mr Burrows during any period when work was not available. Mr Burrows’ entitlement, provided for by cl 7(g) of the Award, to a loading of 10% included in his ordinary wage rate in compensation for the peculiar nature of his retainer by the respondent which admitted of there being periods during that relationship when Mr Burrows would have no opportunity to earn income, also tells against the implication of such a term.
A number of the arguments advanced by the union, in my opinion, are not ones to which the Court can give effect. Rather are they arguments that might be said to show the justice of making a variation to the Award provisions to confer on employees like Mr Burrows a right to a monetary payment additional to the severance pay prescribed by cl 8C where termination of engagement is due to a plant closure.
The respondent was entitled to terminate Mr Burrow’s engagement by the notice given in the letter of 26 April 1995, without any obligation either to provide work to Mr Burrows during the period of the notice or to make any payment to him under cl 8B(a)(i)(4). It is common ground that the five weeks’ notice of termination of his engagement given to Mr Burrows in this letter was the period of notice applicable to him under cl 8B, if it was then open to the respondent to terminate his engagement by this notice. It follows that the giving of that notice cannot comprise a repudiatory breach of the contractual relationship that then existed between the respondent and Mr Burrows.
The appeal is dismissed.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. Associate:
Dated: 30 July 1999
Counsel for the Applicant: W Haylen QC Solicitor for the Applicant: Nall Payne Counsel for the Respondent: J Murdoch Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 21 June 1999 Date of Judgment: 30 July 1999
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