“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU)-Food and Confectionery Division Victoria Region v Fonterra Brands..

[2013] FWC 1057

[2013] FWC 1057

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)-Food and Confectionery Division Victoria Region
v
Fonterra Brands (Australia) Pty Ltd
(C2012/757)

Food, beverages and tobacco manufacturing industry
COMMISSIONER GREGORY	MELBOURNE, 31 MAY 2013

Alleged dispute in relation to staffing, classification of an employee, pay rates and casual conversation of long term casuals.

Introduction

[1] This matter concerns an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the Applicant) pursuant to s.739 of the Fair Work Act 2009 (the Act). The Respondent is Fonterra Brands (Australia) Pty Ltd (the Respondent) and the dispute arises in the context of the Fonterra (Echuca) Agreement 2009 1 (the Agreement). Mr T. Hale from the AMWU appeared on behalf of the Applicant. Mr S. Whitty from the Australian Industry Group (AIG) appeared on behalf of the Respondent.

The Issue to be Determined

[2] The catalyst for this dispute are the circumstances involving two employees, Ms Brenda Williams and Ms Michelle Walker, who have both been employed in casual and what are described by the Respondent as “limited duration fixed term contract” roles. Ms Williams was first employed in April 2009 and Ms Walker in January 2011. Both have recently applied for full-time positions advertised by the Respondent, but neither was successful. Both had also expressed an interest previously in other full-time vacancies, without success.

[3] Various provisions in the Agreement and the Food Preservers’ Award 2000 2(the Award), incorporated into the Agreement, are relevant to the determination of the issues in dispute. The relevant clauses from the Agreement and the Award are set out in the paragraphs that follow.

[4] Casual employment is referred to in Clause 35.1 of the Agreement in regard to “Production Employees”. It states:

“Current practices concerning the employment of casuals will continue and casual employment shall not be used to displace full-time employment.” 3

[5] The Agreement also states in Clause 36 “Casual & Fixed Term Employment – Maintenance Employees:”

“36.1 Full-Time permanent Fonterra employment shall be the normal basis of engagement for metal and electrical trades and maintenance employees at the Echuca site.

36.2 Subject to Clause 36.3 the maximum continuous period for which a casual employee will be engaged shall be 12 weeks.

36.3 If a casual employee is to be engaged beyond 12 weeks or a fixed term employee is to be engaged, the agreement from the relevant union will be required.

36.4 Subject to the terms of sub clause 36.3 the parties recognise that casual employment beyond 12 weeks or fixed term employment can be used to cover long term employee absences from the workplace and short-term modification and project work.

36.5 Union agreement as required under sub clause 36.3 will not be unreasonably withheld.

36.6 Casual employees shall receive the casual loading prescribed in the Metals Award, and calculated on the applicable Agreement classification hourly rate.” 4

[6] Clause 48 of the Agreement “Full Time Employment”deals with the priority to apply in filling vacant full-time positions. It states:

“The current arrangements for filling of vacancies shall apply i.e. Subject to meeting the relevant selection criteria and satisfactory performance levels, career paths will be supported by using the following order of preference: full-time employees, current casual list employees, then other external applicants.” 5

[7] Clause 3.1 of the Agreement deals with the relationship between the Agreement and the parent Award. It states:

“Subject to clause 3.2, all the provisions of the following Awards, as they stood on 16th March 2006 are hereby incorporated into this Agreement:

3.1.1 Metal, Engineering and Associated Industries Award 1998 Parts I, II, IV & V (“the Metals Award”).

3.1.2 The Food Preservers Award 2000 (“The Food Award”).” 6

[8] Clause 3.3 of the Agreement also states:

“Where there is any inconsistency between an express provision of this Agreement and a provision in the Awards (including Appendix 5), the express provisions of this Agreement shall prevail to the extent of any inconsistency.” 7

[9] Various provisions of the Award were also referred to by the parties.

[10] Clause 4 “Definitions”relevantly contains the following provisions:

“4.13 Season means the period from which a seasonally grown item is made available to a processing plant to the end of such item being available to it and shall include a lead period where required by the employer for the purpose of training of employees for the processing of such seasonally grown items.

4.14 Seasonal work (or comparable words) means work directly associated with or forming part of the preparation and/or the initial continuous processing of seasonally grown items but does not include:

• work in relation to non-seasonally grown items at a plant where seasonally grown items are being prepared or processed; or



• work on products stored by whatever method and not processed in conjunction with the harvesting period, except for apples, pears and beetroot.

4.15 South Australia and Berrivale Orchards Ltd and all other persons bound by this award except the Australian Industry Group and its members:

4.15.1 Season means the period from which a seasonally grown item is made available to a processing plant to the end of such item being available to it and shall include a lead period where required by the employer for the purpose of commissioning and decommissioning of plant and equipment and of training of employees for the processing of such seasonally grown items.

4.15.2 Seasonal work (or comparable words) means work directly associated with or forming part of the preparation and/or the initial continuous processing of seasonally grown items but does not include:

• work in relation to non-seasonally grown items at a plant where seasonally grown items are being prepared or processed; or



• work on products stored by whatever method and not processed in conjunction with the harvesting period except for apples, pears and beetroot;

provided that the word continuous appearing in this definition shall not connote a particular system of work. Provided further that where a majority of employees at an enterprise agree existing full-time permanent employees may be engaged upon seasonal work and seasonal employees engaged to replace those full-time permanent weekly employees for the period for which the seasonal work continues.” 8

[11] Clause 13, “Employment Categories” indicates an employer may only employ persons on work covered by the Award under one of the following employment categories. It then goes on to refer to “full-time employment”, “seasonal employment”, “casual employment”, “part-time employment” and “short-term employment.” This latter provision states:

“13.5 Short-term employment

13.5.1On a short-term basis provided that the term shall be for no more than twelve months and no less than three months. The employer shall notify the employees concerned of the term of the employment at the time of engagement. Short-term employment shall not be used to engage and re-engage on a continuing basis workers who could otherwise be provided with weekly employment. Short-term employees shall be entitled to pro rata weekly employment entitlements including pro rata annual leave together with annual leave loading.

13.5.2This clause 13.5 does not apply to the Australian Industry Group and its members.” 9

[12] Clause 13 also deals with what is a commonly known as “casual conversion.” These provisions are contained in sub clause 13.3.6 “Casual employment to permanent employment”(casualconversion) which states:

“13.3.6(a) A casual employee, other than an irregular casual employee as defined in clause 13.3.6(i)(i), who has been engaged by a particular employer for a sequence of periods of employment under this Award during a period of nine months shall thereafter have the right to elect to have his or her contract of employment converted to full-time employment or part-time employment if the employment is to continue beyond the conversion process.

13.3.6(b) The employer of such an employee shall give the employee notice in writing of the provisions of this clause within four weeks of the employee having attained such period of nine months.

The employee retains his or her right of election under this clause if the employer fails to comply with this paragraph.

13.3.6(c) Any such casual employee who does not within four weeks of receiving written notice elect to convert his or her contract of employment to a full-time employment or a part-time employment will be deemed to have elected against any such conversion.

13.3.6(d) Any casual employee who has a right to elect under clause 13.3.6(a), upon receiving notice under clause 13.3.6(b) or after the expiry of the time for giving such notice, may give four weeks notice in writing to the employer that he or she seeks to elect to convert his or her contract of employment to full-time or part-time employment, and within four weeks of receiving such notice the employer shall consent to or refuse the election but shall not unreasonably so refuse. Any dispute about a refusal of an election to convert a contract of employment shall be dealt with as far as practicable with expedition through the dispute settlement procedure.

13.3.6(e) Once a casual employee has elected to become and been converted to a full-time employee or a part-time employee, the employee may only revert to casual employment by written agreement with the employer.

13.3.6(f) If a casual employee has elected to have his or her contract of employment converted to full-time or part-time employment in accordance with clause 13.3.6(d), the employer and employee in accordance with this subparagraph, and subject to clause 13.3.6(d), shall discuss and agree upon:

13.3.6(f)(i) which form of employment the employee will convert to, that is, full-time or part-time; and

13.3.6(f)(ii) if it is agreed that the employee will become a part-time employee, the number of hours and the pattern of hours that will be worked, as set out in clause 13.4.

Provided that an employee who has worked on a full-time basis throughout the period of casual employment has the right to elect to convert his or her contract of employment to full-time employment and an employee who has worked on a part-time basis during the period of casual employment has the right to elect to convert his or her contract of employment to part-time employment, on the basis of the same number of hours and times of work as previously worked, unless other arrangements are agreed upon between the employer and employee.

Following such agreement being reached, the employee shall convert to full-time or part-time employment.

Where, in accordance with clause 13.3.6(d) an employer refuses an election to convert, the reasons for doing so shall be fully stated to and discussed with the employee concerned and a genuine attempt made to reach agreement.

Any dispute about the arrangements to apply to an employee converting from casual employment to full-time or part-time employment shall be dealt with as far as practicable with expedition through the dispute settlement procedure.

13.3.6(g) Subject to clause 10 of the Award, by agreement between the employer and the majority of the employees in the relevant workplace, or section of it, or with the casual employee concerned, the employer may apply clause 13.3.6(a) as if the reference to nine months is a reference to 12 months, but only in respect of a currently engaged individual employee or group of employees. Any such agreement shall be recorded in the time and wages records. Any such agreement reached with an individual employee may only be reached within the two months prior to the period of nine months referred to in clause 13.3.6(a).

13.3.6(h) An employee must not be engaged and re-engaged to avoid any obligation under this Award.

13.3.6(i)(i) An "irregular casual employee" is one who has been engaged to perform work on an occasional or non-systematic or irregular basis.

13.3.6(i)(ii) The provisions of clause 13.3.6 do not apply to irregular casual employees.

13.3.6(j) Clause 13.3.6 shall come into force on and from 1 July 2005.” 10

[13] The following issues are accordingly required to be considered and determined against the background of these Agreement and Award provisions, and the circumstances involving Ms Williams and Ms Walker:

● What do the casual conversion provisions require of the Respondent and its employees? For example, the Applicant submits that the Commission should:

“…determine that the employees concerned should have been advised of their rights in accordance with the incorporated terms of the Award and having elected to convert should have been converted to permanent employment.” 11

● What does Clause 48 in the Agreement “Full-Time Employment” intend and how does it interact with the casual conversion provisions?

● Is the Respondent entitled to engage employees on the so-called “limited duration fixed term contracts” and, if so, what is the impact of those arrangements on the obligations arising from the casual conversion provisions?

The Submissions and Evidence

[14] Brenda Williams and Michelle Walker were both first engaged by the Respondent as casual employees and both have subsequently been engaged on the so-called “limited duration fixed term” contracts for periods of time. Brenda Williams was first engaged as a casual packer operator on 30 March 2009. She has since been engaged as a production operator on two occasions on fixed term arrangements, the first being from 18 April 2011 until 17 July 2011. At the conclusion of that engagement she received a further offer of casual employment and reverted to that role the following day. The fixed term engagements were based on a weekly, rather than an hourly rate of pay, and did not attract a casual loading. She received pro rata entitlements of a full-time employee and at the end of the engagement received a payment in respect of the leave entitlements accrued in that period.

[15] Ms Williams said she had never been offered the opportunity to convert from casual to full-time employment, nor had she been given notice of her entitlement to elect to convert. In the time she worked for the Respondent there had also been four occasions when permanent jobs had been advertised. She had made a verbal expression of interest on each occasion, but had not been successful.

[16] Michelle Walker said she commenced as a casual employee on 9 January 2011 and had since been employed on both a casual and fixed term basis for a combined period of 57 weeks. She worked in a fixed term position from 9 July 2012 until 30 September 2012 and accrued leave entitlements which were also paid out at the end of that engagement. She had also applied for three permanent positions but had been unsuccessful on each occasion. She indicated she understood from those she worked with she was considered to have “a good work ethic and a good attitude towards my work” 12. She had never been warned or told she needed to improve her work performance. During her time as a casual employee she regularly worked in excess of 36 hours a week and on some occasions significantly more than that. In one week she had, in fact, grossed in excess of $4000.

[17] Mr Gwynne Healy has been employed by the Respondent and its predecessors since 1994 and been a Union Shop Steward since 2010. He is currently employed in the role of Team Coordinator and is required to organise the engagement of casual and permanent employees on the line he is coordinating. He indicated he has worked with Brenda Williams previously and did not have any problem with her work performance. He had also been involved in meetings with HR seeking to have Ms Williams converted to a permanent position, however, on each occasion the Company had refused. He also stated:

“Recently the Company has not been abiding by the Agreement in relation to only having employees on no more than three contracts. They have also been extending contracts rather than renewing them. This has meant that workers are not made permanent as quickly as they had been in the past. Sometimes casuals are being put on as permanents after only short periods of casual employment with the Company.” 13

[18] In cross-examination Mr Healy indicated he had not worked with Brenda Williams for at least two years. The Respondent also indicated in its concluding submissions it had no knowledge of what Mr Healy was referring to in regard to employees being engaged on “no more than three contracts,” 14 and did not believe it was in breach of any Agreement provisions in this regard.

[19] The Applicant submits the Respondent is not complying with the intent of the casual conversion provisions in the Award, which are incorporated into the Agreement. The intent of the clause was to prevent the abuse of casuals by stopping them from being treated as “permanent casuals”, and denied the entitlements of full-time employees. The Respondent was obliged under the terms of those provisions to offer full time work to casuals and, in not doing so, employees have been disadvantaged. It also submitted it was never the intention that employees who move between casual and fixed term engagements would lose the right to be offered conversion from casual to full-time employment. In addition, whilst the Union had conceded in the past that seasonal employment arrangements were not to be taken into account in assessing an entitlement to conversion, it had never made that concession in regard to any “limited duration fixed term” employment arrangements. In any case it took issue with the legitimacy of those arrangements.

[20] It also submits the Respondent cannot seek to rely on the fact employees had not made an election in circumstances where it had not given the required notice in the first place, although it was not suggesting casual employees should be put into permanent roles they were not capable of carrying out.

[21] The Applicant continued to indicate:

“What we say the requirement is for the employer under that is that where there is a number of applicants or a position to be filled in a permanent position the first place that the employer looks to fill the position is from those people who can fulfil the requirements of the position that are currently employed as a full time permanent employees (sic). So that there's a career path opportunity there: if I'm working on a packer and I want to work on a filler, therefore, I can apply and providing I can fulfil the selection criteria to work on my filler, then I get the job in preference to a casual or an external employee - or an external applicant.

The next place that they look is within their current employees. Now, during this period of time there were, I think, from memory, 17 casuals converted to fill positions with the factory. Those selections were made on the basis of the employer's belief as to who would be the best person to fill the job. That isn't the obligation that's contained in that clause; the obligation that's contained in that clause is a selection process that says, ‘Permanents first; casuals second; external third.’

It doesn't say anything whatsoever about the best person to perform and that if there's two forklift drivers going for the forklift driving job then the employer can select who they believe is the best forklift driver. That isn't what the wording says. The wording says that there's a regime to establish selection processes across different categories of employees and potential employees.

So that of those 17 positions, it wasn't for the employer to say, ‘Brenda Williams and Michelle Walker, the two best people to fill those spots,’ given they had an obligation under the award incorporated into the agreement, it was whether Brenda Williams and Michelle Walker couldn't do any of those jobs. So that they weren't - didn't have skill levels or experience sufficient to be able to perform them at all.

Some of the evidence that will be adduced in relation to the filling of casual positions - filling of permanent positions from casuals - and there are restrictions on the work that casuals can perform. So casuals don't get to work in the higher skilled jobs.

The decision of the company, we say, can't have been made based on the employees not having the ability to perform the job, but the decision was made on the employer making a selection based on who they believed would be the best person to fill the job. The requirements of either of the clauses don't go to saying that the employer has a right to do that.” 15

[22] The Applicant also relied upon the decision of Vice President Watson in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) v SPC Ardmona Operations Limited 16(SPC Ardmona case). That matter dealt particularly with seasonal employees who had a right to convert and when the refusal of an election could be considered to be “reasonable”. The Applicant particularly referred to that part of the decision which followed under the heading “Was the refusal reasonable?”17

[23] The Respondent acknowledged at the outset it may not have complied with the requirement in clause 13.3.7 to provide details to casual employees about the number of hours likely to be worked when Ms Williams and Ms Walker were first employed. However, the information had not been requested at the time and, in any case, the requirement is often difficult to comply with as casual hours are difficult to predict.

[24] The Respondent submits it was not required to provide notification of the right to elect to the two employees because much of their employment involved engagement on full-time contracts of limited duration. In this context it relies on an excerpt from transcript in December 2004 when the Food Preservers Award 2000 was varied to include the casual conversion clause. 18 In its submission the transcript and, in particular, the evidence of Ms Dowell indicates fixed term or seasonal engagements would not contribute to time served for the purpose of giving rise to the right of casual conversion. In its submission the nature of those limited term arrangements confirms they are not ongoing employment engagements and, accordingly, are not to be considered in determining the nine-month qualifying period.

[25] It also submits there is nothing to prevent an employee being engaged on a full-time basis where the parties agree the engagement will be limited in duration by the terms of that contract.

[26] In regard to the requirement for election, the Respondent submits the two employees have not, to date, provided any election to convert to full or part-time employment as required by clause 13.3.6 of the Award. They have verbally expressed an interest in full time positions in the past when these have been advertised internally, however, in its submission there is a significant difference between a verbal expression of interest and compliance with the notice of election to convert provisions in the Award. In the Respondent’s submission a verbal expression of interest does not operate as a formal election to convert under the terms of the casual conversion clause. It also acknowledged it is unfortunate the casual conversion obligations are often observed in the breach, but the entitlement of employees remains safeguarded. Regardless of whether notice is provided by an employer this does not remove an employee’s right of election and the employees in the present matter could still have acted.

[27] The Respondent also points to Clause 48 “Full-Time Employment” in the Agreement. In its submission any obligation which exists under the casual conversion clause is subject to that clause, in particular, because the Agreement provides where there is any inconsistency between it and the Award “the express provisions of this Agreement shall prevail to the extent of any inconsistency” 19. It relies, in particular, on the evidence of Mr van Tubbergh in support of its submission that the Respondent has not acted unreasonably, given the position it was in at the time and the individual circumstances of the two employees.

[28] The Respondent also submits if the two employees did have a right to be notified and to elect to convert there are other employees in a similar situation. They may have higher selection matrix scores. In addition, it would not be unreasonable to refuse an election given the current business downturn and the resultant oversupply of labour. There was no evidence the Respondent had unreasonably refused an election and the Applicant had not established this had occurred. In addition, casual employment remained an important option, particularly to cover unexpected eventualities such as unplanned absences, machinery breakdowns and disruption in the supply of materials. Any consideration about whether it was unreasonable to convert casual employees must take into account whether ongoing work is available, together with the skills, experience and past work performance of other employees also expressing an interest in those positions.

[29] Mr Paul van Tubbergh is the Production Manager at the Respondent’s facility in Echuca and has been in that position since April 2010. He indicated fixed term engagements are used to cover long-term absences and to replace employees seconded to specific projects, as well as to cover unusual or one-off requirements. Casual arrangements on the other hand were utilised for unplanned absences or unforeseen short-term workload spikes. It was also likely only a limited number of casuals would be required in the near future because of reduced volume levels, which meant a spare crew of permanent employees was now available to cover short term absences.

[30] The notices calling for expressions of interest to fill the 13 full-time vacancies were posted on notice boards in December 2011. Mr van Tubbergh was responsible for appointing the 10 production employees to be engaged, and used a selection process involving a selection matrix, interviews and rankings provided by the team coordinators. Ms Williams and Ms Walker both expressed a verbal interest in these vacancies to their Shift Manager, who then sent notification to him. He then compiled a spreadsheet record in order to organise the relevant interviews and other discussions. He was not aware of any requests that had come from casual employees in writing electing to convert to a permanent role.

[31] In terms of the process that was then gone through he stated:

“The focus is not dissimilar to processes that we have used in previous appointments of casuals to permanent employees. The process obviously followed the clause 48.1 in the EBA agreement where expressions of interest, when they were invited - they were also invited from permanents who wish to move from their current position to a new one and obviously that took precedence given to those individuals who had the necessary skills and performance - they filled the criteria. Thereafter we looked at casuals and we tried to be as objective as we can and based the process on several sources of information and input. There was an interview conducted by two shift managers with each of the applicants. There was also a review of the casual review performance which were completed by the team coordinators on - after each employment stint of a casual. We looked at - those were divided into two areas, performance and skills exhibited. We obviously took account of the comments that were made. We looked at length of service as one of the criteria but that to a lesser extent. We also, during the interview, and from the feedback we got back from ... looked at other relevant experience, for example, if somebody had done a cheese making qualification and had worked in a cheese plant before that experience would be relevant to us despite the fact it may not be directly applicable. We looked at supervisor - the supervisor input and then used a ranking for that and came out with a score which then ranked people a most desirable to appoint to, you know, at a level of which, you know, 1 to 20 - 19 in this case, where they were ranked. I need to make a point too that if you were ranked at number 15 or 18, didn't mean that you were completely unable to fulfil the job, it clearly meant there were people who were better suited, based on the criteria that we had, than the individuals that sat below them.” 20

He indicated in conclusion that Ms Walker and Ms Williams had been considered as part of this process but had not been successful because other employees had achieved better reviews and in some cases had skills that were better suited to the vacant positions.

[32] In cross-examination he indicated he became aware of the obligation to advise employees of their right to elect in March 2012 when it was raised with him as an issue. He had not previously advised any casual employee of their right to elect. However, he did not consider this obligation applied to employees on fixed term engagements because the limited duration fixed term contract arrangements utilised by the Respondent from time to time were not casual engagements and, in any case, in the current circumstances there were no positions available given current production volumes. However, he did acknowledge that if the employees had been utilised on a casual basis over a period of nine months in succession then the Respondent would be bound by the particular Award provisions that applied in those circumstances.

Consideration

[33] As indicated at the outset, there are several issues to be considered and determined in all the circumstances of this matter. They require consideration of the relevant Agreement and incorporated Award provisions, which don’t always sit easily one with the other. A related question concerns which Award conditions are incorporated into the Agreement. Existing custom and practice has also been referred to and needs to be considered.

[34] The relevant authorities in regard to how industrial agreements should be read and interpreted are well known and well established. The decision of Madgwick J. in Kucks v CSR Limited 21 has been referred to often in this context. It dealt with the interpretation of an award provision. Madgwick J. stated:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.” 22

[35] Whilst made in the context of an award the approach in that decision has also been adopted in relation to the construction of industrial agreements. In City of Wanneroo v Holmes 23 French J. also observed that in interpreting industrial instruments “fractured and illogical prose may be met by a generous and liberal approach to interpretation”24 and the starting point should be a consideration of the natural and ordinary meaning of the words used. I have adopted the approach suggested by these authorities in considering the terms of the Agreement and the incorporated Award provisions that are relevant in the determination of this matter.

[36] As indicated at the outset there are essentially three issues to be determined in order to provide a broad resolution of the matters in dispute are. They are:

● What does casual conversion require of the employer and the employees?

● What does Clause 48 Full-Time Employment intend and how does it interact with the casual conversion requirements?

● Is the employer entitled to engage employees on the so-called “limited duration fixed term contracts” and, if so, what is their impact upon the obligations associated with casual conversion?

Casual conversion

[37] It was agreed by the parties that the “casual conversion” provisions contained in the Award are incorporated into the Agreement by the operation of Clause 3.1. There are no comparable provisions in the Agreement and this agreed position can be understood. However, that appears to represent the extent of any agreement between the parties as to how the relevant provisions should apply.

[38] The obligations and requirements associated with the clause can be summarised on the following basis.

● They do not apply to “irregular casual employees” as defined in 13.3.6(i), being those employees working on an occasional or non-systemic basis.

● An employee who has been engaged for a sequence of periods of employment during a period of nine months shall have the right to elect to have his/her contract of employment converted to full or part-time. Several things can be said about this provision. Firstly, it does not require a consistent pattern of work during the entire nine-month period, but simply a sequence of engagements during that period. These can obviously fluctuate in terms of the numbers of hours worked from time to time and may involve some periods when no work is performed, however, the intent is that an ongoing relationship can be demonstrated over that nine-month period.

● The right to elect, once the nine-month qualifying period has been attained, is a mandatory entitlement given the inclusion of the word “shall.” However, it does not mean the employee has a right to be placed in a full or part-time position; it is instead simply a right to elect to convert. Once that election is made other provisions of the sub-clause come into play.

● Sub-clause 13.3.6(b) also imposes a mandatory requirement upon the employer. It “shall” give an employee written notice in writing of the employee’s right to elect within four weeks of the employee reaching the nine-month qualifying period. By its own acknowledgement this obligation has been observed in the breach by the Respondent. The evidence of Mr van Tubbergh was that he could not recall any employee being provided with that notice in writing. However, the Respondent also takes issue with what service counts as part of the qualifying period. In its submissions time spent on a limited duration fixed term contract is not casual employment and should not count as service in this context. This issue is dealt with at a later point in this decision. The Respondent also notes that a failure by it to notify does not remove a casual employee’s entitlement because sub-clause 13.3.6(d) provides an employee may proceed with an election in any case four weeks after the nine month point has been reached. That is acknowledged, however, an employee who has not been notified, as required, might remain unaware of his/her right to elect and so not act on that entitlement. The requirements of the employer to notify was clearly intended to ensure an employee would not be deprived in this way.

● Sub-clauses (d) and (f) then deal with what shall occur if an election is made. The employer has four weeks to respond. It shall not unreasonably refuse. It shall discuss the request with the employee. If refused, the reasons shall be fully stated and discussed with the employee and a genuine attempt made to reach agreement. Any dispute is to be dealt with through the dispute resolution process.

[39] As indicated, by its own acknowledgement the Respondent’s obligation to notify has been observed in the breach. No evidence was provided to indicate how many employees had reached the nine month qualifying point and should have been notified. There is also a related dispute about what service counts as part of the qualifying period. Regardless, the parties have entered into an Agreement that incorporates a casual conversion clause. The notification requirements of that clause are clear and should be complied with by the Respondent so that eligible employees are not denied the right to be made aware of their entitlement to elect to convert to a full or part-time position when that right of election arises.

Clause 48

[40] The second issue to be considered concerns the intent of Clause 48 of the Agreement and, in particular, how it interacts with the casual conversion clause. The wording of the clause indicates it confirms the arrangements that apply at the Echuca site in regard to filling full-time vacancies. Subject to meeting the relevant selection criteria, and evidence of satisfactory performance levels, the following order of preference is to be applied. Existing full-time applicants are given first preference; existing casual list employees are next preferred and then, if a vacancy has still not been filled, “other external applicants” are to be considered.

[41] The clause at one level appears clear in its intent. It provides a straightforward priority list, provided selection criteria and satisfactory performance levels are met. It means, for example, in my view that if an existing full-time employee satisfies those criteria they must be appointed to the vacant position, regardless of the capacities of any other current casual list employee or other external candidate. Similarly, if a current casual list employee has satisfied the relevant criteria they must be appointed ahead of any other external applicant. I am satisfied that there is no other way the provisions in the clause can be applied.

[42] However, the clause also needs to be considered in conjunction with the obligations imposed by the casual conversion provisions in the Award. In this context Clause 3.3 of the Agreement is relevant. It states:

“Where there is any inconsistency between an express provision of this Agreement and a provision in the Awards (including Appendix 5), the express provisions of this Agreement shall prevail to the extent of any inconsistency.” 25

[43] The two clauses have different but related objectives. Clause 48 is about promoting “career paths.” It impliedly attaches greater importance to full-time roles and gives “full timers” preference when vacancies arise elsewhere. The casual conversion provisions also impliedly recognise the higher value attaching to full or part-time work as opposed to casual employment, and provide that casuals should be able to elect to convert, with any such election not being unreasonably refused. There are going to be occasions when casual conversion becomes an option because the employer has decided to create a new permanent position, or because an existing permanent employee has resigned. However, I am satisfied in these situations the casual conversion provisions must be read subject to Clause 48. In other words Clause 48 takes precedence. Accordingly, when the employer is considering an election by a casual employee to convert to a vacant full or part-time position the employer would first be required to consider whether any existing full-time employee had made application. If they had and met the relevant selection criteria and appropriate performance levels they would have priority ahead of any current casual list employee, including one that had already made an election to convert. I am satisfied it would not be unreasonable for the employer to refuse an election in those circumstances.

[44] However, this is not to downplay the significance or intent of the casual conversion provisions, or to confine their operation. Whilst Clause 48 may take precedence in the circumstances I have described above, there will be other situations when casual conversion should be given effect. They will generally involve situations where a casual employee has been employed “for a sequence of periods of employment .... during a period of nine months” 26. In those circumstances an election to convert can be made and the employer should not unreasonably refuse. This does not require, as a precondition, that there be an existing vacant full-time position. It instead requires the employer to consider, consistent with the preference accorded to full or part-time work, whether that casual employee can be converted in response to his/her election. This view is reinforced by the provisions in clause 35.1 of the Agreement which indicate:

“... casual employment shall not be used to displace full time employment.” 27

[45] However, I am not satisfied the Respondent has viewed the casual conversion obligations in this way and in a manner that is consistent with the view that full or part-time work is preferred to casual engagements. It appears instead to have adopted the view that it is only obliged to consider conversion when a vacant full or part-time position already exists.

[46] In coming to this conclusion I have also noted the decision of the Full Bench in the so-called casual employment “test case” of Re Metal, Engineering and Associated Industries Award, 1998 – Part One 28 where the Full Bench was considering a Union application to vary a range of casual provisions in the Metals Award. At para 115 the Full Bench held:

“We consider that a compelling case has been established for some measure to be introduced in the Award to discourage the trend toward the use of permanent casuals. We have determined in favour of a process requiring election rather than one of setting a maximum limit to engagements. Such process should create room for the individual employee’s perception of the best option to operate. It will also promote employee and employer understanding of whatever mutual problems may exist in accommodating an election.” 29

[47] Vice President Watson also made reference to the obligations imposed upon an employer to provide full or part-time work opportunities, where possible, instead of casual work in the matter of SPC Ardmona, referred to earlier. In that matter the Vice President was considering the respective obligations of the parties arising from a clause which provided for the conversion of seasonal employees to permanent employment. He stated at paragraph 19:

“In my view it is important to consider the purpose of clause S7.9.1 of the Agreement. The clause confers rights on seasonal employees. It is in line with similar clauses in some awards and agreements, including this Agreement, regarding casual employees. The concept involved is that employees with less secure and regular employment than full-time and part-time employees who serve a qualifying period of employment can elect to convert the status of their employment to full-time or part-time status subject to the consent of the employer. The wording of the clause connotes more than a right to request a conversion. It is phrased as an election of the employee which must be actioned unless the employer has reasonable grounds to refuse the request.

In my view, seasonal employees engaged under this Agreement have a legitimate expectation of conversion unless there are unusual circumstances which render that course inappropriate, and hence the employer’s refusal reasonable. The clause is the product of the Agreement of the employer and employees in the operation and must be applied on its terms regardless of views of the employer about the consequences of its application.

It is clear that the natural consequence of the operation of the clause is that conversions will result in a change in the mix of what the Agreement describes as permanent employees (full-time and part-time) and seasonal employees. The same is true for the operation of the clause regarding casual employees. The underlying concept is that employees with less secure employment after a qualifying period of service in that capacity can improve their status unless the business cannot sustain that outcome or there is some other reasonable reason to refuse an election to convert. In my view it is not open to SPCA, having agreed to the creation of the right, to interpret and apply the clause in a way that fundamentally undermines that right and the purpose of the clause.” 30

[48] I am satisfied the Respondent must also in a similar way be prepared to accept that casual employees who serve the requisite qualifying period have a right to request a conversion to full or part-time work and that a positive obligation then falls on it to act on that election unless there are reasonable grounds to refuse.

Limited duration fixed term contracts

[49] The final issue for determination concerns the use of fixed term contracts by the Respondent. These involve the employee being engaged as a full or part time employee, but for a set period of time only. The Applicant submits the Respondent is not entitled under the Agreement or the incorporated Award provisions to engage employees in this way. In the alternative, it submits they should not be a means or have the effect of undermining the casual conversion provisions in circumstances where an employee is moving between casual engagements and fixed term contracts.

[50] There is nothing in the Agreement or the Award that expressly states employees cannot be engaged in this way. I am also satisfied in the normal course an employee can be engaged as a full-time employee, but only for a specific duration. There will be a host of reasons why such an arrangement might exist, but it will generally occur because the employer requires a particular task or role to be carried out within a limited time frame. However, the issue is not so straightforward in the present matter given the relevant provisions in the Agreement and the incorporated Award. The first point to note is that the Agreement does not specifically provide for fixed term arrangements, at least not for Production Employees. It does exist as an option for Maintenance Employees pursuant to Clause 36, but, for specific purposes only and subject to a requirement the Union be notified.

[51] Clause 13, “Employment Categories” in the Award provides an employer may only employ persons for work covered by this Award “under one of the following employment categories” 31. It then goes on to refer to full-time, seasonal, casual, part-time and short-term employment. However, clause 13.5.2 indicates the short term employment option does not apply to the AIG and its members. The Applicant submits there is nothing in the Agreement that is inconsistent with clause 13 and it is therefore incorporated into the Agreement and applicable to the parties. Further, as the Respondent is represented by the Australian Industry Group, and presumably a member of that organisation, it is therefore precluded from utilising the short-term employment provision.

[52] I am satisfied the Agreement does not otherwise include an Employment Categories or Terms of Engagement clause. As already indicated there are casual employment clauses (Clauses 35 and 36) and a Full-Time Employment clause (Clause 48), but these deal with particular local issues rather than being a comprehensive terms of engagement clause. I am accordingly satisfied the Award clause is incorporated into the agreement and deals comprehensively with the manner in which employees are engaged i.e. “an employer may only employ persons on work covered by this award under one of the following employment categories” 32. As indicated, “Short-term employment” is one of those categories, but that option is not available to the AIG or its members. Accordingly, if the Respondent is a member of the AIG then is it is not, in my view, able to engage employees on these short term contracts.

[53] If on the other hand the Respondent was not restricted in this way then one further issue arises for consideration. The evidence indicated the Respondent engages employees on both fixed term contracts and casual engagements, and it is not uncommon for employees to alternate between the two. For example, the evidence of Ms Williams indicated she was working as a casual but was then offered a fixed term contract for a period of time. The day after that fixed term concluded she was offered casual work again and returned to work that day as a casual employee. The Respondent submits these periods of fixed term engagement do not count as part of the 90 day casual conversion period.

[54] It relies in support on a statement on transcript in December 2004 from Ms Jennifer Dowell who was then Federal Secretary of the Food and Confectionery Division of the AMWU, when giving evidence at the time the casual conversions were introduced into the Award. Ms Dowell indicates, firstly:

“ .... If there is a conversion clause in the award for casual employees, that it would actually have no impact on the employment of seasonal employees, so it won’t apply to them. And I don’t think that that is really clear in what is written in the statement, although that was the intent of it.”

[55] She continued

“ ....for those factories who operate who don’t work strictly in accordance with the seasonal provisions of the award, there are short-term employment provisions for those factories where it is driven by demand rather than the seasonality of the product .... And that the same basis would apply to those people that – the conversion provisions that are attached to casual employment would not apply to those short-term employees.” 33

[56] The rationale appears to be that where an engagement is a “one off,” or intended to cover seasonal requirements only, casual conversion was not contemplated or intended. It was only to be available as an option where casual work was ongoing, as demonstrated by the periods of engagement during the qualifying period, and reasonable therefore to create the ability to convert that ongoing casual engagement into either full or part-time work.

[57] The Applicant in its submissions seeks to limit the statement by Ms Dowell to seasonal work only, but it does not appear to be confined in this way, given she specifically refers to both seasonal and short-term work arrangements. I am satisfied there is nothing in the Agreement or the incorporated Award provisions that states a fixed term contract or short term engagement, however described, is required to be included as part of the 90 day casual qualifying period. However, I am also satisfied it was not anticipated that employees would be alternating between casual engagements and fixed term contracts. It is also likely that in doing so employees would be unaware their continuity of service was being disrupted in terms of the 90 day casual conversion qualifying period.

[58] The interaction of the current provisions in the Agreement and the Award are probably not operating in a way that either the Applicant or the Respondent would want or intend and best reviewed when the existing Agreement is renegotiated in the interests of putting in place arrangements that are in the best interests of both the business and its employees. However, I can only deal with the provisions in place at the time this matter was before me. I have come to the following conclusions.

1. The Respondent has not been complying with the requirements of Clause 13.3.6 “Casual employment to permanent employment” in the Award. This applies, in particular, to the requirement for the employer to give notice in writing about the provisions of the clause within four weeks of the employee completing “a sequence of periods of employment under this award during a period of nine months.” That obligation was obviously created to make employees aware of the entitlement to make an election to convert, in circumstances where they might otherwise not be aware of it. As indicated, the Respondent should ensure this obligation is complied with so that employees are not disadvantaged in this way.

2. Clause 48 in the Agreement deals with the priority to be applied when filling full-time vacancies. It may be relevant in the context of Clause 13.3.6 if a casual employee makes an election to convert at the time a full-time vacancy exists and is advertised internally. However, Clause 13.3.6 should not always be read subject to Clause 48. The Agreement contains an acknowledgement by the parties of the preference for full or part-time employment over casual engagements. In circumstances where a casual has completed the required qualifying period, and made an election to convert, conversion to full or part-time employment should occur unless it is reasonable for the employer to refuse that election. It is not necessary at this point to consider what might be “reasonable” in any particular situation. This will depend upon the particular circumstances involved at the time an election is made.

3. I am not satisfied the Respondent is entitled to engage its production employees on fixed term contracts. The Agreement does provide for fixed term engagements but specifically limits this option to maintenance employees in particular circumstances only and subject to various notification requirements. Employee engagement is primarily dealt with in Clause 13 of the Award “Employment Categories”. It sets out a range of options and does appear to intend to “cover the field” in terms of how employees can be engaged. “Short-term employment” is one of those options, but is not available to members of the AIG. If this applies in this case then, in my view, the Respondent is precluded from engaging employees on short term or fixed term contracts. Given this finding any further consideration about the impact and interaction between fixed term engagements and casual employment is perhaps unnecessary. However, there is nothing in the Agreement that states a fixed term contract arrangement is to be included as part of the 90 day casual qualifying period, although at the same time it was unlikely to have been anticipated in the context of those provisions that employees would be alternating between casual and fixed term engagements. It is also unlikely employees in that situation would be aware that their accrual of service was being interrupted in terms of the 90 day casual conversion qualifying period.

[59] In coming to these broad conclusions I have not dealt specifically with the circumstances of the two employees, Ms Williams and Ms Walker, which led to this application being made. Whilst they have both worked over extended periods of time and been engaged on both casual and fixed term arrangements the evidence in the proceedings indicates current business conditions mean there are limited casual opportunities available at present and both are now being engaged on only one or two casual shifts each week.

[60] It is difficult in all the circumstances of this matter to turn back the clock. It is likely the two employees should have been provided with appropriate notice of the entitlement to elect to convert at some point. If an election was properly made they could have been converted to full or part-time positions. The evidence indicates they were also considered in the selection process when 10 full-time production employees were engaged in early 2012. However, the evidence of the Production Manager indicated those vacancies were filled in accordance with the priority stated in Clause 48. Some casual list employees were successful in obtaining full-time positions but others were not following the outcome of the selection process. It is not possible now to “second guess” that process and to conclude that Ms Williams or Miss Walker should have been successful candidates. I am also not satisfied that in responding to those internally advertised vacancies the two employees can be said to have strictly made an election to convert in accordance with the casual conversion provisions. In any case they were just two of a number of casual list employees who made similar applications and were part of the selection process.

[61] Regardless of what has occurred in the past the evidence indicates that the opportunities now available are limited given current business conditions. However, having considered the evidence and submissions I am satisfied the respondent should now review its current practices and arrangements given all the circumstances and in light of the conclusions I have reached. If it is now required to provide the requisite notice to Ms Williams and Ms Walker it should do so. If an election to convert is then made it should be dealt with in accordance with clause 13.3.6. The evidence indicates the two employees have given dedicated service in the past, including in the case of Ms Walker a period when she worked excessive hours during a particularly busy time. Given these circumstances the Respondent should also consider what other options might be available to Ms Williams and Ms Walker including the possibility, at least, of the ongoing provision of any available casual work opportunities. I also indicate in conclusion that I am prepared to provide any further assistance that might be requested by the parties in dealing with this matter.

COMMISSIONER

Appearances:

T. Hale on behalf of the “Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

S. Whitty of the Australian Industry Group on behalf of the Respondent.

Hearing details:

2012.

Echuca:

26 November.

 1   AE877333

 2   AP781106

 3   Fonterra (Echuca) Enterprise Agreement 2009 at cl.35.1

 4   Ibid at cl.36

 5   Ibid at cl.48.1

 6   Ibid at cl.3.1

 7   Ibid at cl.3.3

 8   Food Preservers Award 2000 at cl.4

 9   Ibid at cl.13

 10   Ibid

 11   Exhibit H1 at para 10

 12   Transcript at PN187

 13   Exhibit H2 at para 5

 14   Transcript at PN378

 15   Transcript at PN38–43

 16   [2011] FWA 4405

 17   Ibid at [17]-[27]

 18   Transcript of Proceedings, Application under s.113 of the Act by AMWU to vary the Food Preservers Award 2000 re casuals, (AIRC, C2004/2090, Commissioner Cargill, 15 December 2004) at PN282-284

 19   Fonterra (Echuca) Enterprise Agreement 2009 at cl.3.3

 20   Transcript at PN246

 21 (1996) 66 IR 182

 22   Ibid at page 184

 23 [1989] FCA 369

 24   Ibid at [47]

 25   Fonterra (Echuca) Enterprise Agreement 2009 at cl.3.3

 26   Food Preservers Award 2000 at cl.13.3.6(a)

 27   Fonterra (Echuca) Enterprise Agreement 2009 at cl.35.1

 28   Re Metal, Engineering and Associated Industries Award (2000) 110 IR 247

 29   Ibid at [115]

 30   [2011] FWA 4405 at [19]-[21]

 31   Food Preservers Award 2000 at cl.13

 32   Ibid

 33   Transcript of Proceedings, Application under s.113 of the Act by AMWU to vary the Food Preservers Award 2000 re casuals, (AIRC, C2004/2090, Commissioner Cargill, 15 December 2004) at PN282-284

Printed by authority of the Commonwealth Government Printer

<Price code C, AE877333  PR534115>