[2018] FWC 4337

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)-New South Wales Branch
v
GH Varley Pty Limited
(C2018/804)

COMMISSIONER SAUNDERS

NEWCASTLE, 24 JULY 2018

Application to deal with a dispute in accordance with a dispute procedure in an enterprise agreement – interpretation of enterprise agreement – redundancy entitlements.

[1] The AMWU and GH Varley Pty Limited (Varley) are in dispute about whether four members of the AMWU are entitled to redundancy pay (Dispute) following Varley’s loss of its contract to maintain the Mills section of the Eraring Power Station (Eraring Mills Contract).

[2] On 16 February 2018, the AMWU filed an application, pursuant to s 739 of the Fair Work Act 2009 (Cth) (Act), for the Fair Work Commission (Commission) to deal with the Dispute in accordance with the dispute settlement procedure in the G H Varley Power Services Site Enterprise Agreement 2016 - 2018 (Agreement).

[3] There is no question that the Dispute relates to “matters arising under” the Agreement, with the result that it falls within the scope of disputes which may be dealt with in accordance with the dispute resolution procedure set out in clause 11 of the Agreement. That procedure empowers the Commission to arbitrate a dispute if it cannot be resolved at an earlier step in the process, as was the case with the present Dispute.

[4] Mr Donald Mitchell, Mr Shane Casey, Mr Benjamin Zikman and Mr Joshua Beverley (Affected Employees) are the four former employees of Varley who claim they are entitled to redundancy pay. There is no dispute that the employment of each of the Affected Employees with Varley came to an end after the AMWU filed its s 739 application in the Commission on 16 February 2018, but there are disputes concerning whether their employment was terminated at Varley’s initiative and whether they have any entitlement to redundancy pay under the Agreement.

[5] The parties agreed on the questions for determination by the Commission in the arbitration of the Dispute. These are:

(a) Are the positions of the Affected Employees “redundant” following the ending of Varley’s Mills contract with the operator of the Eraring Power Station? (Question One)

(b) If the answer to question 1 is “yes”, does the redundancy(ies) give rise to an entitlement to severance pay under the Agreement? (Question Two)

(c) If the answer to question 2 is “yes” in respect to all or some of the Affected Employees, do the attempts by Varley to redeploy or otherwise direct those Affected Employees to perform other work allow Varley to reduce (including reduce to zero) its obligations to pay redundancy pay and notice under the Agreement? (Question Three)

[1] I heard this matter in Newcastle on 13, 14 and 15 June 2018. Mr Cory Wright, Assistant Secretary of the NSW Branch of the AMWU, Mr Mark Cross, Organiser of the AMWU, and the Affected Employees gave evidence in support of the AMWU’s application. Varley adduced evidence in support of its case from Mr Daniel Tydd, General Manager – Varley Services, Ms Jan Dobbie, HR Manager – Varley Group, Mr Wayne Moy, Tomago Production Manager, and Mr Warren Davies, Site Manager.

Relevant background facts

[2] There is no dispute between the parties, and I am satisfied that:

● Varley is a manufacturing and service-orientated engineering company. It services multiple sectors, including defence and aerospace, marine services, specialised vehicles, electric vehicles, rail services, power services and telescopic towers;

● Varley operates through a single corporate vehicle, 1 but had, until about April 2018, the following business units:

○ Defence and Aerospace;

○ Specialised Vehicles;

○ Varley Services, which includes its power services division (including at the Eraring Power Station);

○ Varley Rail;

○ Varley Electric Vehicles;

○ TTE (Telescopic Towers);

○ Varley USA; and

○ Varley Indonesia

● In about April 2018, there was a restructure of Varley’s business units. As a result, Varley only has three predominant business units, one of which is Varley Services;

● Varley, together with another entity it recently acquired (RGM), have permanent workshops at the following locations in Australia:

○ Queensland: Brisbane, Mackay, Townsville

○ New South Wales: Tomago, Carrington, Gosford, Sydney

○ Victoria: Melbourne, Ballarat;

○ South Australia: Adelaide;

○ Western Australia: Perth; and

○ Northern Territory: Katherine, Darwin

● Varley’s Defence and Aerospace and Specialised Vehicle business units operate from its Tomago site;

● Varley’s Services and Rail business units operate from its Carrington site;

● Varley’s Services business unit operates under two different types of customer contracts. First, contracts where Varley’s work obligations are structured in such a way as to effectively necessitate having a permanent presence on site. Secondly, contracts where Varley services the client’s site(s) on an as-required basis;

● The only location where Varley’s Services business unit currently maintains a permanent presence is at the Eraring Power Station. Previously Varley’s Services business unit had a permanent presence at the Vales Point Power Station, but it no longer has that contract;

● Varley’s Services business unit has an “as-required” type contract with a number of different customers, including the operators of various power stations. Varley’s employees who work on these “as-required” contracts are based at Varley’s sites in Carrington or Tomago, or they move from site to site as required to service the contracts;

● Varley started providing services to the Eraring Power Station in about 1995. That work included maintenance and project work. One of the contracts Varley had with the Eraring Power Station was to refurbish 12 pulverised fuel mills. Varley first entered into the Eraring Mills Contract in 2006. 2 The initial contract was for a period of 24 months, with two 24 month extensions. The initial contract ended in 2012, at which time Varley won another 24 month contract, with two 24 month extensions to service the pulverised fuel mills at the Eraring Power Station. That contract was due to expire on 30 June 2018, but it was subject to a right on the part of the operator of the Eraring Power Station, Origin Energy, to terminate the contract “for convenience” at any time;

● Origin Energy exercised its right to terminate the Eraring Mills Contract “for convenience” with effect on 2 March 2018. Prior to the termination of the Eraring Mills Contract, six permanent and two casual employees of Varley performed work at the Eraring Power Station for the purpose of servicing the Eraring Mills Contract. The Affected Employees were four of those eight employees. In addition to the eight Varley employees who usually worked on the Eraring Mills Contract at the Eraring Power Station, other employees of Varley were brought in from time to time to undertake work on the Eraring Mills Contract;

● In addition to the Eraring Mills Contract, Varley has for some time had a contract to undertake work in the Valves section of the Eraring Power Station. Varley continues to service that contract by having employees based at the Eraring Power Station;

● As a result of the loss of the Eraring Mills Contract, there was no work available for the Affected Employees at the Eraring Power Station. Varley offered Mr Mitchell, Mr Zikman and Mr Casey a job at Varley’s operation in Tomago, which is about 45km by road from the Eraring Power Station. Mr Mitchell, Mr Zikman and Mr Casey rejected those offers. Varley offered Mr Beverley a job at Varley’s operation in Carrington, which is about 39km from the Eraring Power Station. Mr Beverley rejected that offer;

● The Agreement covers all employees of Varley “who are involved in the maintenance, repair, refurbishment, rehabilitation or life extension, including construction associated with such work, performed at Power Stations and other industrial facilities”; 3

● The Agreement covered and applied to the Affected Employees when they worked for Varley at the Eraring Power Station and when they undertook any site work, from time to time, at locations other than the Eraring Power Station for Varley’s Services business unit;

● If Mr Mitchell, Mr Zikman and/or Mr Casey had accepted the jobs offered to them at Varley’s operation in Tomago, the Agreement would no longer have covered or applied to them and the GH Varley Tomago Enterprise Agreement 2014-2017 (Tomago Agreement) would have covered and applied to them when they worked for Varley in those jobs at the Tomago site; and

● If Mr Beverley had accepted the job offered to him at Varley’s operation in Carrington, the Agreement would no longer have covered or applied to him and the GH Varley Pty Ltd Carrington Enterprise Agreement (Carrington Agreement) would have covered and applied to him when he worked for Varley in that job at the Carrington site.

Relevant provisions of the Agreement

[3] The resolution of this Dispute turns on the proper construction of clauses 15.5.1 and 20 of the Agreement. Clauses 15.5, 20 and Appendix 1(c) are as follows:

“Part 4 – Disciplinary Action and Termination of Employment

…

15.5 Redundancy

15.5.1 Factors leading to redundancy

From time to time the Company will experience an unexpected and significant downturn. At these times all available options will be considered prior to making any positions redundant. The factors considered will include, but not limited to:

● The likely duration of the downturn / anticipated time of increased workloads;

● The rate of natural attrition of employees;

● The potential for redeployment within or outside the Company for a short time or permanently;

● The potential for employees to take annual leave or long service leave.

Where the above considerations do not alleviate the situation, the Company will formally advise the union and the affected workers as soon as practical so that any other alternatives can be considered in accordance with Clause 10. The Company will make its decisions based on its known requirements.

15.5.2 Re-employment following redundancy

Should employment be offered to a previously retrenched permanent employee of the Company within six months of the person being made redundant he/she may recommence. If the person accepts the offer of employment in a permanent position, continuity of service between the two employment periods will not be considered to have been broken, for the purpose of calculating long service leave and sick leave unless the person has either taken the leave that had accrued or been paid out on termination. This is to ensure that the principle of ‘no double dipping’ is applied.

…

Part 5 – Minimum Wages and Related Matters

…

20. Redundancy pay

During the period of this Agreement the Company will pay permanent Employees Redundancy pay at the levels set out in Appendix 1.

…

APPENDIX 1: RATES AND ALLOWANCES

…

C. Severance pay

Period of Continuous Service	Severance Pay	Pay in Lieu of Notice
Nil up to 6 months	Nil	1 week
6 months up to 1 year	1 week	1 week
1 – 2 years	4 weeks	2 weeks
2 – 3 years	6 weeks	2 weeks
3 – 4 years	7 weeks	3 weeks
4 – 5 years	8 weeks	3 weeks
5 – 6 years	10 weeks	4 weeks
6 – 7 years	11 weeks	4 weeks
7 – 8 years	13 weeks	4 weeks
8 – 9 years	14 weeks	4 weeks
9 + years	16 weeks	4 weeks
20 + years	17 weeks	4 weeks
25 + years	18 weeks	4 weeks

Plus one extra week of Notice for any person over the age of 45 years who has worked with the Company for at least 2 years on a continuous basis.”

[4] Other clauses of the Agreement provide context to, and assist in the construction of, clauses 15.5.1 and 20, including clauses 1, 2, 8, 10, 13, 15.5.2, 16, 24, 25, 26, 31, 39, Appendix 1, Appendix 2, and Appendix 3, many of which are considered in detail below.

Principles of construction of an enterprise agreement

[5] The principles relevant to the task of construing an enterprise agreement were summarised in AMWU v Berri Pty Ltd 4 (Berri); I apply those principles to the construction of the Agreement required to resolve the Dispute. The Berri principles are as follows:

“1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision’s place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which

it operates.

2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

3. The common intention of the parties is sought to be identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the ‘parties’ to enterprise agreements made pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are ‘covered by’ such agreements. Relevantly s.172(2)(a) provides that an employer may make an enterprise agreement ‘with the employees who are employed at the time the agreement is made and who will be covered by the agreement’. Section 182(1) provides that an agreement is ‘made’ if the employees to be covered by the agreement ‘have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement’. This is so because an enterprise agreement is ‘made’ when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

9. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post-agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

[6] In relation to the interpretation of the Agreement, Varley made a number of submissions about what it perceives to be the unfairness of the industrial outcome for which the AMWU contends in these proceedings, namely, payment of redundancy pay to the Affected Employees in circumstances where Varley had alternative work available for them at different locations. In support of those submissions Varley relies on the following observation made by the Full Bench in CFMEU & Ors v Spotless Facility Services Pty Ltd (Spotless): 5

“[15] Spotless submits that the objects of the FW Act and of Part 2.4 favour a construction of industrial instruments that will operate fairly to both sides and foster a co-operative workplace environment. We accept that this is so…”

[7] In order to better understand this observation made by the Full Bench in Spotless, it is necessary to consider the basis on which is was made. The Full Bench in Spotless included as a footnote to the first sentence of paragraph [15] the following part of Justice Kirby’s reasons for judgment in Amcor v CFMEU (Amcor): 6

“[103] The principal object of the Act is “to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia”. That object favours a construction, if available, of industrial agreements that will operate fairly to both sides and foster a co-operative workplace environment. As Callinan J notes in his reasons, one of the purposes of an industrial instrument is to promote harmony in the workplace.” [emphasis added]

[8] In the following paragraph in Amcor, Justice Kirby went on to make the observation that:

“[104] With this background in mind, a concession by the primary judge in a given case that the result reached by him was potentially “contrary to commonsense”, and even “unfair”, would suggest that such a result was not that intended by the Act, nor by the Agreement certified under it, for the purpose of bringing to fruition the Act’s objective in the Amcor workplace. In such a situation it is proper for this Court to scrutinise the instrument to examine whether there is a misconstruction on the part of the primary judge that has caused the result to miscarry. In this case there has been such a misconstruction. The meaning attributed to “redundant” by the judges of the Federal Court does not accord with the meaning of the word as it is repeatedly used in the Agreement. The positions did not cease to exist. They were therefore not “redundant”.”

[9] The following parts of Justice Kirby’s reasons for judgment in Amcor are also relevant to this issue:

“[69] Much play was made in argument in this Court by Amcor concerning the suggested unfairness of the industrial outcome for which the Union argued. To impose on Amcor an obligation to pay its former employees severance payments under cl 55.1.1 of the Agreement, when they had not lost a day’s employment, when they had been re-engaged by a company associated with Amcor, when this had occurred with their inferred agreement, when some of them, at least, were not pressing to enforce the claim against Amcor and when all that had really happened was an internal rearrangement of the corporate structure of the employer companies, was suggested to be such a horrible industrial outcome that it could not have been what the Agreement provided.

[70] Reflections of these submissions are recorded in the reasons of the primary judge in the present case, and are referred to in the reasons of Callinan J. However, in describing the outcome (which he later upheld) as a possible “affront to commonsense”, the primary judge was merely stating what he described as “one view”. There was, however, another view, as his Honour ultimately explained. As the Federal Court has demonstrated in earlier decisions, it is undesirable to adopt a purely result-oriented approach to the interpretation of such industrial agreements. Ultimately, a court’s duty under the Constitution is to give effect to the meaning of each such document as expressed in its words…

[77] As the judges of the Federal Court correctly pointed out, before them the issue was, and was only, the meaning and application of the Agreement, specifically cl 55.1.1. That issue required the identification of the legal rights of the parties under the Agreement. Such rights would not be determined by judges blind-folded to the industrial context. Yet in the end their duty, as in all tasks involving a judicial construction of a text having legal force, was to give effect to that text. The judges of the Federal Court, in my view, were correct in adopting that approach…”

[10] In Amcor, Justice Callinan referred to the often quoted judgment of Justice Madgwick in Kucks v CSR Ltd on the approach to be taken to the interpretation of an industrial instrument, 7 including that “meanings which avoid inconvenience or injustice may reasonably be strained for”.8 Justice Callinan then made the following observations:

“[131] An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties. In this connexion it is not without significance that the primary judge adopted a construction which he thought to be not only arguably absurd, but also potentially unjust to the appellant.” [emphasis added]

[11] A similar approach is taken to the construction of commercial contracts, as observed by Justice Tracey in Transport Workers' Union of Australia v Linfox Australia Pty Ltd: 9

“[34] Guidance as to the construction of industrial instruments may also be obtained by reference to principles which courts apply to the construction of commercial contracts. Commercial contracts should, as Kirby J held in Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd [2000] HCA 20; (2000) 170 ALR 579 at 584 “be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction.” An interpretation which accords with business common sense will be preferred to one which does not: see Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 at 437.”

[12] There are, of course, agreements, including both enterprise agreements and commercial contracts, which give rise to what might be perceived to be unfair outcomes. Often such outcomes are the product of one party to the bargain having leverage or superior bargaining power. For example, hard bargaining in a commercial or industrial relations context may result in one party agreeing to pay the other side a much higher price for the supply of their goods, services or labour than had been the case under a prior agreement. Such an outcome may be able to be achieved because the purchaser of the goods, services or labour may, for commercial reasons, need to secure the deal in a short period of time. Assuming there are no grounds to set aside the agreement on the basis of duress or one of the other recognised categories by which the law excuses parties from performance of a contract, 10 the parties will be held to their bargain. It would be inappropriate and erroneous in such circumstances to seek to use one or more principles of interpretation to construe clear language in the agreement so as to arrive at what might be perceived to be a fair or just outcome.

[13] Drawing together the principles referred to in the cases set out above, I am of the opinion that considerations of fairness and the like should be approached in the following way in determining the proper construction of an enterprise agreement made under the Act:

● The task of interpreting an enterprise agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the enterprise agreement produced by parties; 11

● Interpreting an enterprise agreement requires ascertainment of the meaning that an objective outsider would attribute to the agreement in the circumstances; 12

● In the event that a potential interpretation of an enterprise agreement would be “contrary to commonsense” or “unfair”, the agreement should be scrutinised to examine whether there has been a misconstruction; 13 and

● If more than one meaning could be attributed to the language of an enterprise agreement by an objective outsider and hence, an ambiguity arises, a construction that will operate fairly to both sides and foster a co-operative workplace environment should be preferred if it is reasonably available on the text of an enterprise agreement. 14

Construction of the Agreement

Ambiguity

[14] In my view, clauses 15.5.1 and 20 of the Agreement are ambiguous in at least the following respects:

(a) The meaning of redundancy in clauses 15.5.1 and 20. The term redundancy, redundant or any derivative thereof is not defined in the Agreement. Redundancy may mean a person’s position becoming redundant. Alternatively, it may mean an employee being retrenched or dismissed from his or her employment on the ground, or as a result, of the redundancy of their position. 15 Further, should the word redundancy be interpreted in the same way in clauses 15.5.1 and 20 of the Agreement, noting the presumption that a word used in one provision of a statute has the same meaning when it is used in another provision of the same statute applies with less force in the context of an enterprise agreement?16

(b) Related to (a) above, what is the trigger for the obligation to make redundancy payments under clause 20? The clause requires Varley to “pay permanent Employees Redundancy pay at the levels set out in Appendix 1”, but does not expressly state the circumstances in which such redundancy payments must be made. One possible construction is that redundancy payments must be made once a position is made redundant. Another available construction is that clause 20 does not impose an obligation on Varley to make redundancy payments unless it terminates the employment of an employee on the ground, or as a result, of the redundancy of their position (i.e. the employee is retrenched); and

(c) The meaning of “positions” in the second sentence of clause 15.5.1. In particular, does “position” mean “job” or is it a wider concept? 17 If it is a wider concept, what are the elements or defining characteristics of an employee’s “position”?

[1] Because the Agreement is ambiguous in that it is susceptible of more than one meaning, evidence of the surrounding circumstances is admissible to potentially aid the interpretation of the Agreement. 18

Evidence of surrounding circumstances

[2] Varley submits that the following evidence of surrounding circumstances assists in the task of construing the Agreement: 19

(a) The Agreement was made at a time when the Eraring Power Station was the only site at which Varley maintained a permanent presence, and the Agreement was negotiated for and voted on by a group of employees, the majority of whom were performing work on an “as-needed” basis moving from site to site;

(b) Before and at the time of the negotiations for the Agreement, Varley was utilising clause 16.1 of the prior enterprise agreement (GH Varley Pty Limited Power Services Site Enterprise Agreement 2013-2016 (2013 Agreement)) to appoint employees to particular roles or classifications for the purpose of a site or job only. Against this background, the clause was retained (as clause 16.2) in the Agreement;

(c) In around December 2015, Varley concluded a contract for work at the Vales Point Power Station where Varley had, up until the conclusion of that contract, a permanent presence, including employees working under the 2013 Agreement. The 2013 Agreement contained clauses similar to clauses 15.5.1, 20 and Appendix 1 to the Agreement. Varley employees who had serviced the permanent presence at the Vales Point Power Station were deployed to other work when the contract finished, and were not made redundant or paid severance pay;

(d) Two of the four Affected Employees were bargaining representatives for the Agreement and Varley employees were live to the fact that the Eraring Mills Contract would roll into its last two-year phase; that is, there was an awareness that the Eraring Mills Contract could or would conclude during the nominal term of the Agreement;

(e) Against the background of (c) and (d) above, the “trigger” for redundancy pay under the Agreement was not discussed during bargaining for the Agreement, despite extensive discussions during bargaining regarding the term of the Agreement dealing with the quantum of redundancy pay; and

(f) There was discussion, and a “meeting of minds” between the AMWU and Varley that redundancies were to be a last resort for employees to whom the Agreement applied.

[1] I reject Varley’s argument that any of the surrounding circumstances referred to in the previous paragraph assist in the task of interpreting the provisions of the Agreement which are relevant to the Dispute, for the following reasons:

(a) As to subparagraph [21(a)] above, the 2013 Agreement and the Agreement give Varley the right to require employees to whom the enterprise agreement applies to undertake work, from time to time, away from their usual place of work. 20 That right was, no doubt, being relied on by Varley when it was moving employees from site to site undertaking work covered by the 2013 Agreement during negotiations for the Agreement. The fact that was happening does not assist in interpreting the Agreement to determine whether it permits Varley to move employees to a new workplace on a permanent or ongoing basis or to a workplace undertaking work which is not covered by the Agreement;

(b) As to subparagraph [21(b)] above, the evidence demonstrates that Varley was utilising clause 16.1 of the 2013 Agreement to change the classification of employees covered by the 2013 Agreement to different classifications covered by the 2013 Agreement for “anywhere from a couple of weeks to 2 to 3 months, depending on the outage”. 21 The fact that this was happening does not assist in interpreting the Agreement to determine whether it permits Varley to change the classification of an employee covered by the Agreement to a classification not covered by the Agreement, or to make any change in classification for an indefinite period;

(c) As to subparagraph [21(c)] above, no evidence was adduced as to the terms of any contracts of employment for the Varley employees who were redeployed from the Vales Point Power Station when Varley’s contract at that location came to an end, nor was any evidence adduced as to whether those employees agreed to be redeployed or as to the location(s) or terms of any such redeployments. Absent evidence of at least those matters, it would not be possible to use the fact of such redeployments in the past to construe the terms of the Agreement; and

(d) As to subparagraphs [21(d), (e) and (f)] above, the fact that the Eraring Mills Contract was due to expire during the term of the Agreement was very likely part of the reason for the AMWU bargaining for higher redundancy payments in the Agreement compared to the 2013 Agreement. Even if there was a “meeting of minds” between the AMWU and Varley during bargaining that redundancies were to be a last resort for employees to whom the Agreement would apply, that would not assist in the task of interpreting the relevant provisions of the Agreement. The only differences between the redundancy provisions of the 2013 Agreement and the Agreement were (i) the higher quantum of redundancy payments in the Agreement compared to the 2013 Agreement and (ii) the replacement of the term “severance pay” in clause 20 of the 2013 Agreement with the term “redundancy pay” in clause 20 of the Agreement. That is consistent with there being no discussion during bargaining of the “trigger” for redundancy. Further, having an objective that redundancies were to be a last resort for employees is consistent with the requirements under clause 15.5.1 to “consider” all available options and, where such “considerations do not alleviate the situation”, to consult with “the union and affected workers as soon as practical so that any other alternatives can be considered”. A “meeting of minds” that redundancies were to be a last resort for employees could not, on the language used in clause 15.5.1, alter an obligation to “consider” all available options, including the potential for redeployment, to a right on Varley’s part to unilaterally redeploy employees “within or outside the Company for a short term or permanently”. My reasons as to why such a construction is not reasonably available on the text of the Agreement are further enunciated in paragraphs [36] to [37] below.

Post Agreement conduct

[1] Citing the authority of Berri, Varley submits that the position adopted by the AMWU in 2018 in relation to Varley’s offers of redeployment to the Affected Employees is relevant to the interpretation of the Agreement.

[2] In doing so, Varley relies upon the following evidence:

● Mr Cross’s statement during a meeting on 16 January 2018 with Mr Tydd, Ms Dobbie and several AMWU members as follows: 22

“We don’t see those positions as being substantially similar and no less favourable than their existing jobs. We also think that the employees will be disadvantaged, given that they have accrued their entitlements at a higher rate of pay than their current roles.”

● Mr Wright’s recollection of a telephone conversation he had with Mr Cross in late January 2018 as follows; 23

Mr Cross: “Varley won’t offer redundancy. They’re trying to force people to redeploy to Carrington and Tomago.”

Mr Wright: “That’s not a reasonable redeployment option.”

● A letter sent by Mr Steve Murphy, AMWU State Secretary, to Mr Tydd dated 5 February 2018, which contains, inter alia, the following statement: 24

“Absent Varley securing an appropriate redeployment option for the affected employees, they would be entitled to be paid in accordance with Table C of Appendix 1 of the Power Agreement following the termination of their employment on the basis of redundancy…Unless Varley is able to obtain acceptable alternative employment for these employees before 1 March 2018 on some other basis, they will be entitled to be paid in accordance with the scales set out at Table C of Appendix 1 when their employment with Varley ends on the basis of redundancy when Varley ceases to provide labour in the Mills at the Eraring Power Station.”

[3] Varley contends that this evidence shows there has been a “meeting of the minds, a consensus” between the parties to the Agreement to the effect that employees covered by the Agreement are not entitled to redundancy pay under the Agreement if Varley obtains acceptable alternative employment for them.

[4] I reject this argument for two reasons. First, although the AMWU is described in clause 3 of the Agreement as a “person covered” by the Agreement, the AMWU is not a “party” to the Agreement. 25 The Agreement was made by Varley and its employees who were covered by the Agreement at the time it was made.26 The AMWU was a bargaining representative for at least some employees during bargaining for the Agreement. However, any subjective understanding the AMWU had, at a particular point in time, in relation to particular provisions of the Agreement cannot automatically be attributed to all employees covered by the Agreement.27 The evidence does not reveal whether each employee covered by the Agreement, or even just the Affected Employees, had the same subjective understanding of the Agreement as the AMWU may have had. It follows that the expression of any views by the AMWU to Varley in 2018 in relation to the effect of particular provisions of the Agreement is insufficient to establish a “common understanding – a settled interpretation accepted by the parties”.28

[5] Secondly, the first two bullet points in paragraph [24] above refer to communications in which views were expressed about the redeployments proposed by Varley. No reference is made in those communications to the Agreement or any provision of it. The persons expressing those views may well have been explaining what they believed to be a preferred outcome to the Dispute, as distinct from their interpretation of the Agreement. The third bullet point refers to Mr Murphy’s letter to Varley. Although the letter refers to the Agreement, it does not refer to any particular provision within the Agreement in support of the differing contentions that any offer of redeployment must be “appropriate”, “reasonable or appropriate”, or “acceptable alternative employment”. In those circumstances, the letter does not establish a “common understanding – a settled interpretation accepted by the parties”. 29

Construction of clause 15.5.1

[6] The first issue of construction concerns the definition of “redundant” in clause 15.5.1.

[7] Clause 15.5.1 directs attention to whether the “position” is redundant. This makes clear that “redundant” in clause 15.5.1 means the position is redundant (in the sense of no longer being required), not the employee. Such a construction of the word “redundant” leaves work for the bullet point “factors” in clause 15.5.1 to do. In particular, before a position is made redundant, all available options must be considered, including the bullet point “factors” in clause 15.5.1. One of those “factors” is the “potential for redeployment within or outside the Company for a short time or permanently”. Another “factor” is the “rate of natural attrition of employees”. It may be possible in particular circumstances for Varley to be able to reach an agreement with one or more employees to redeploy them to other roles or for an employee to retire, so as to avoid making a particular position redundant. 30 Bringing that hypothetical situation back to the circumstances of the present Dispute, it may have been possible for Varley to reach an agreement with one or more employees working in the Valves section of the Eraring Power Station to redeploy those employees to its operation at Tomago, Carrington or elsewhere. Alternatively, one or more Varley employees working in the Valves section of the Eraring Power Station may have been close to retirement. Such redeployment(s) or cases of natural attrition may have avoided the need to make the position(s) of one or more of the employees working in the Mills section of the Eraring Power Station redundant, because those employees could have gone upstairs to the Valves section and continued in their position.

[8] Given that “redundant” in clause 15.5.1 means the position is no longer required, the meaning of the term “position” is central to the overall construction of clause 15.5.1. The AMWU submits that the word “position” within clause 15.5.1 should be treated as a synonym for the word “job”. A “job” involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organisation, to a particular employee”. 31

[9] Varley submits that the term “position” in clause 15.5.1 is broader than a “job” and also includes the following features: 32

(a) The nature of the work attached to the position;

(b) The title that is associated with the position;

(d) The reporting lines associated with the position, including the number and seniority of the persons reporting to that position and the seniority of the superiors to whom that position reports; and

(e) The level of autonomy associated with the position.

[1] I reject the AMWU’s submission that the word “position” within clause 15.5.1 should be treated as a synonym for the word “job”. The terms “job” and “position” are both used within the Agreement. The term “job” is used to describe specific jobs or projects that Varley is engaged to undertake and on which its employees are directed to work in accordance with the terms of the Agreement, 33 whereas the term “position” is used to describe situations where Varley engages workers to perform work.34 In my view, this use of the word “position” within the Agreement compels a conclusion that the word “position” in clause 15.5.1 of the Agreement should be given the meaning contended for by Varley in paragraph [31] above.

[2] Having ascertained the meaning of “redundant” and “position” within clause 15.5.1 of the Agreement, the rest of the clause must be construed. There is no dispute about the construction of the phrase “unexpected and significant downturn”, nor is there a dispute that Varley experienced such a downturn as a result of losing the Eraring Mills Contract. However, there is a dispute about what is meant by the requirement in clause 15.5.1 to consider all available options prior to making any positions redundant, including consideration of at least the following factors:

● The likely duration of the downturn / anticipated time of increased workloads;

● The rate of natural attrition of employees;

● The potential for redeployment within or outside the Company for a short time or permanently; and

● The potential for employees to take annual leave or long service leave.

[3] According to the Macquarie Dictionary, “consider” means “to pay attention to; regard”. It follows that once the factors set out in the previous paragraph (and all other options) have been paid attention to, they will either alleviate “the situation” (arising from the “unexpected and significant downturn”) or they will not. If they do not, then Varley must formally advise the AMWU and the affected workers as soon as practical so that any other alternatives to the redundancy of positions can be considered in accordance with clause 10 of the Agreement.

[4] Clause 10 of the Agreement sets out the consultation requirements where there is major workplace change, which includes major changes in the composition, operation or size of the employer’s workforce. In considering alternatives that may arise during this consultation process, Varley has the right to make “the decision they believe is most appropriate”. 35 Such decisions must be “based on its [Varley’s] known requirements”.36

[5] Varley submits that the statement that “all available options will be considered prior to making any positions redundant” in clause 15.5.1 suggests that redundancy of a position under the Agreement is or should be an event of last resort, 37 and accords it the right to redeploy employees “within or outside the Company for a short time or permanently”.

[6] I do not accept that clause 15.5.1 accords Varley the right to unilaterally redeploy employees “within or outside the Company for a short time or permanently”. Such a construction is not reasonably available on the text of the Agreement. The requirement under clause 15.5.1 is to “consider … the potential for redeployment”. Further, if Varley had the right to unilaterally redeploy employees “within or outside the Company for a short time or permanently”, it could impose significant changes on an employee against their will. For example, such a right would permit Varley to unilaterally redeploy a Supervisor based at the Eraring Power Station to an unskilled role with a third party in Western Australia. It would be possible for the makers of an enterprise agreement to confer such a right on an employer, but clear language would be required to do so. The Agreement does not use any language – let alone clear language – to suggest that Varley has a right to unilaterally redeploy an employee “within or outside the Company for a short time or permanently”.

Construction of clause 20

[7] The next issue of construction concerns the meaning of “redundancy” in clause 20 of the Agreement. Clause 20 of the Agreement provides:

“During the period of this Agreement the Company will pay permanent Employees Redundancy pay at the levels set out in Appendix 1.”

[8] Table C of Appendix 1 sets out a scale of “Severance Pay” and “Pay in Lieu of Notice” determined by length of service. It is not in dispute that the expression “Severance Pay” in Table C of Appendix 1 should be understood as being synonymous with “redundancy pay” in clause 20 of the Agreement.

[9] The AMWU’s argument in relation to the construction of clause 20 is that an entitlement to “redundancy pay” arises when an employee is terminated on the basis of redundancy. Giving the word “redundancy” such a construction accords with one of the two senses in which it is often understood. 38

[10] On Varley’s construction of clause 20 of the Agreement, the entitlement to “redundancy pay” is only enlivened once the parties have considered – and have been unable to identify – any other available option to an employee’s employment being terminated due to redundancy. In oral submissions, Varley placed significant emphasis on the word “considered” in clause 15.5.1 of the Agreement, and the evidence it adduced relevant to the negotiation of the Agreement. However, as stated above, the plain meaning of clause 15.5.1 obliges Varley and affected employees to pay attention to all available options for the purpose of alleviating the effects of the downturn so as to retain positions that are vulnerable to redundancy. It does not give Varley the unfettered right to redeploy affected employees, nor does the Agreement require the parties to have been unable to identify other available options before an entitlement to redundancy pay can arise.

[11] In my opinion, the AMWU’s argument in relation to the construction of clause 20 (see paragraph [40] above) is the only industrially sensible way of interpreting clause 20 of the Agreement. 39 Such a construction results in the word “redundant” in clause 15.5.1 (position redundancy) being given a different meaning from the word “redundancy” in clause 20 (termination of employment on the ground of redundancy)40 and, in effect, would give the word “redundancy” in clause 20 the same meaning as the word “retrenched” in clause 15.5.2. In SDA v Woolworths Limited,41 Justice Gray explained some of the reasons why the makers of enterprise agreements use loose language and, as a result, the presumption that a word used in one provision of a statute has the same meaning when it is used in another provision of the same statute applies with less force in the context of an enterprise agreement. The Agreement is poorly drafted; it is replete with slightly different expressions, very few of which are defined. Accordingly, I give little weight to any presumption that a word used in one provision of the Agreement has the same meaning when used in another provision.

[12] For the reasons I have given, clause 20 of the Agreement gives rise to an entitlement to redundancy pay in circumstances where an employee’s employment is terminated at Varley’s initiative on the ground, or as a result, of the redundancy of their position.

Construction of other relevant clauses

Clause 16 of the Agreement

[13] Clause 16 of the Agreement deals with classifications. It provides:

“16. Classifications

16. Descriptions are contained in Appendix 2.

16.2 Alteration of Classification

The Company reserves the right to promote or demote Employees to or from Leading Hands Senior Leading Hand / Quality Assurance Officers / Supervisor or other specific classifications for a stipulated period of time. Such changes will be based on the work available from time to time and will be subject to review.

Alteration to a different classification can only be made with the approval of the Divisional Manager.

Promotion to the new classification will be automatic upon acceptance by the Employee.

An Employee will be given seven (7) calendar days’ notice of any reclassification from their current classification.”

[14] Appendix 2 of the Agreement is entitled “Position Classification & Descriptions”. In Appendix 2, descriptions are provided for a range of particular classifications.

[15] Varley contends that clause 16 of the Agreement gives it the right to unilaterally promote or demote employees covered by the Agreement to or from any classification, whether or not the classification to which an employee is being promoted or demoted is covered by the Agreement. I do not accept that argument. Were it correct, it would, for example, permit Varley to unilaterally demote a Supervisor covered by the Agreement and paid $44.832/hour (from 1 October 2017) to the classification of a Trades Assistant covered by the Carrington Agreement and paid $27.27/hour (from 12 June 2017 to 31 March 2018) or some other classification not covered by an enterprise agreement. Such an outcome would be “contrary to commonsense”; the Agreement should therefore be scrutinised to examine whether there has been a misconstruction.

[16] Clause 16.2 of the Agreement permits the promotion or demotion to or from “other specific classifications”. The expression “specific classifications” is not defined. However, it forms part of clause 16, which deals with “classifications”. Clause 16.1 refers to “descriptions”, which are contained in Appendix 2. It is plain from both the subject matter of clause 16 and the content of Appendix 2 that the “descriptions” to which reference is made in clause 16.1 are the descriptions of the classifications set out in Appendix 2. The same classifications, together with the rates of pay for each classification, are set out in Appendix 1 to the Agreement. Appendix 1 is the only part of the Agreement which records rates of pay for employees covered by the Agreement. The context to which I have referred supports a conclusion that the “other specific classifications” to or from which a promotion or demotion may be effected by Varley pursuant to clause 16.2 of the Agreement are those set out in Appendix 2 of the Agreement.

[17] The purpose of clause 16.2 is to give Varley the flexibility to change the classifications of employees covered by the Agreement “for a stipulated period of time”, in light of the “work available from time to time”. 42 This flexibility recognises the fact that Varley’s power services43 division operates in a competitive, price driven market44 in which contracts are won and lost and teams of employees of different sizes and compositions are required to service different contracts. It follows that the purpose of clause 16.2 of the Agreement is consistent with the expression “specific classifications” in that clause being construed to mean the classifications set out in Appendix 2 of the Agreement.

[18] Varley’s right to change an employee’s classification under clause 16.2 is only for a “stipulated period of time”. A period of time will be “stipulated” if it is arranged expressly or specified. 45

[19] For the reasons I have given, I am of the opinion that, properly construed, clause 16.2 of the Agreement confers on Varley the right to promote and demote to or from the “specific classifications” set out in Appendix 2 to the Agreement, but not other classifications, for a period of time which is arranged expressly or specified. I accept that if an employee’s classification is changed in accordance with clause 16.2 of the Agreement, then Varley is entitled to pay the employee the pay rate set out Appendix 1 of the Agreement which corresponds to the new classification set out in Appendix 2 of the Agreement.

Construction of provisions in the Agreement dealing with work at different locations

[20] The coverage of the Agreement includes work performed at “Power Stations and other industrial facilities”. 46 The Agreement envisages employees to whom it applies potentially being required, from time to time, to undertake work away from their usual place of work at either a remote site or a non-remote site.47 A remote site is one which is “such a distance from the employee’s usual place of residence that it is impractical for the employee to return home upon completion of each work shift”.48 It is clear from the headings to clauses 25 and 26 of the Agreement, together with requirement in clause 26.10 for any “other conditions related to working in a remote site to be negotiated via clause 25.2”, that clauses 25 and 26 only deal with payment and arrangements relating to work at remote sites. Clause 31 of the Agreement governs arrangements relating to work required to be undertaken by employees at non-remote sites.

[21] Neither Varley’s operations at Tomago nor Carrington would be a remote site for any of the Affected Employees, because it would not be impractical for any of the Affected Employees to return home upon completion of a work shift at Tomago or Carrington. Accordingly, clauses 25 and 26 of the Agreement have no bearing on the outcome of this Dispute.

[22] Clause 31 of the Agreement applies where an employee is “required to report to a place of work other than their usual place of work”. 49 The other place of work must be a temporary placement for the employee. Were that not the case, the other place of work would become the employee’s usual place of work. Accordingly, clause 31 envisages circumstances where an employee may be required, from time to time, to work at a place of work other than their usual place of work, but it does not confer on Varley the right to unilaterally change an employee’s usual place of work on a permanent or ongoing basis.

[23] Clause 31.3 of the Agreement permits Varley employees who are covered by another enterprise agreement or arrangement to accept or decline an offer to work under the Agreement. It does not say anything about Varley employees to whom the Agreement applies working under other enterprise agreements or arrangements.

[24] Whether an employee covered by the Agreement is working away from their usual place of work at a remote site or a non-remote site, the terms of the Agreement govern the allowances and other arrangements that apply in connection with work at such places. 50 That is, the Agreement continues to apply to employees working at such places. The corollary of that proposition is that the Agreement does not envisage circumstances in which an employee may be required by Varley to work at a place where the Agreement does not apply. Varley accepts that if the Affected Employees took up the roles offered to them at either Tomago or Carrington following the loss of the Eraring Mills Contract, the Agreement would not apply to them in those roles at those workplaces and, instead, the Tomago Agreement or the Carrington Agreement would apply to them in those jobs at those workplaces.

[25] For the reasons I have given, the Agreement did not confer on Varley the right to:

(a) change the Affected Employees’ place of work on a permanent or ongoing basis from the Eraring Power Station to Varley’s premises in either Tomago or Carrington; or

(b) unilaterally require any of the Affected Employees to work at Varley’s premises in Tomago or Carrington in the roles offered to them at those workplaces.

No acceptable alternative employment clause in the Agreement

[1] The national employment standards enable an employer to apply to the Commission to have the amount of redundancy pay which would otherwise be payable to an employee under s 119 of the Act reduced to a specified amount (which may be nil) if the employer obtains other acceptable employment for the employee. 51 Many enterprise agreements contain provisions to the same or similar effect. However, the Agreement does not contain any such provisions. Instead, the Agreement contains redundancy pay entitlements that are more beneficial to employees than the national employment standards, both in terms of the quantity of redundancy payments and the requirement that redundancy entitlements be paid even if the employer obtains other acceptable employment for an employee.52

[2] The alternative roles offered by Varley to each of the Affected Employees may well meet the description of “other acceptable employment”. Notwithstanding this, the absence of any mechanism in the Agreement for the Commission to reduce the redundancy pay payable to employees under the Agreement on account of Varley obtaining other acceptable employment for the employee means that the question of whether the alternative roles were “acceptable employment” does not arise in these proceedings.

[3] It follows that if the answer to Question One and Question Two is yes, then the answer to Question Three must be no.

Principles relevant to determining Questions One and Two

[4] Based on the above construction of the Agreement, in order to determine Question One, I must make findings as to whether each of the Affected Employees’ positions were redundant under clause 15.5.1. In order to determine Question Two, I must make findings as to whether Varley terminated the employment of each of the Affected Employees on the ground, or as a result, of the redundancy of their position.

[5] In order to make findings as to whether each of the Affected Employees’ positions were redundant, I must first determine what the positions of each of the Affected Employees were during their employment with Varley.

The positions of the Affected Employees

[6] It is necessary to examine an employee’s contract of employment, together with any applicable industrial instruments, to obtain an understanding of the employee’s position. 53 If a contract of employment contains provisions inconsistent with an enterprise agreement or award, the provisions in the industrial instrument will prevail.54

[7] The location of an employee’s employment may be an element of their “position” for the purpose of testing a redundancy situation if performance of work at a particular location is a term of the particular employment. 55

[8] A contract of employment cannot be silent on the place of work. There must be an express or implied agreement on the point. 56 A contractual term dealing with an employee’s place of work may or may not give the employer a unilateral right to change the employee’s place of work.57 In the absence of an express term permitting the employer to change an employee’s place of work, it is a matter for the employer to make out the requirements for the implication of such a term in the contract.58 Alternatively, an enterprise agreement or other industrial instrument may confer on an employer a unilateral right to require an employee to work at particular locations.

Changes to a position

[9] As to changes to the location of an employee’s employment, the Full Bench in DL Employment expressed some reservations in relation to the necessity of analysing a claim for redundancy pay involving a change in location of an employee’s employment “in terms of whether the employer’s conduct is repudiatory of the contract of employment. Once a ‘job’ for the purpose of the analysis is identified as having a particular location, it is difficult to understand why (apart from any de minimis change of location) the abolition of employment at that location would not compel the conclusion that the employee’s job is no longer required to be performed by anyone”. 59 Notwithstanding those reservations, the Full Bench in DL Employment went on to consider whether the employer’s direction for employees to transfer to a new work location constituted a repudiation of the employees’ contracts of employment.

[10] I share the reservations expressed by the Full Bench in DL Employment. In my view, the question of whether there has been a repudiation of a contract of employment is different from whether a job or position has been made redundant, even though the contract may, in part, define or determine elements of the job or position. In any event, I will follow the approach taken by the Full Bench in DL Employment and examine the issue through the prism of changes to any location element of the Affected Employees’ positions and, in the alternative, repudiation of the Affected Employees’ contracts of employment.

[11] As to changes more generally to an employee’s position, whether such changes warrant a finding that the position has been made redundant involves “an evaluative assessment of fact and degree”. 60 The approach to be taken to this type of question was articulated in the following way by the New South Wales Court of Appeal in UGL Rail Services Pty Limited v Janik:61

“… the starting point for analysis must be the language of the relevant statute, award or contract of employment. Subject to this qualification, Vickery J's analysis in my view accurately summarises the principles stated in the cases. The key concept is that the job performed by the claimant ceases to exist, or the duties have so changed that for all practical purposes the role no longer exists.

This concept cannot be applied in the manner of a mathematical formula. A difficult judgment may have to be exercised, for example where the nominal position remains in place but the duties of that position are substantially altered: see Commonwealth Bank of Australia v Financial Services Union at [27]. Similarly, if the name of the position has been changed, but many of the duties and responsibilities attached to the previous position are retained, there may be no redundancy. But the fact that the duties attached to a position have changed or some responsibilities have been transferred to other positions does not establish that the position, or the occupant of the position, has been made redundant. Ordinarily, it is necessary for the employee claiming to have been made redundant to show that the changes in the duties and responsibilities of a position are so substantial that for practical purposes the position no longer exists. That may come about in a particular case where a position appears to continue (whether under the name or a different name), but the duties and responsibilities of the position are so substantially altered that it is largely stripped of its functions.”

Did Varley terminate its employment relationship with each of the Affected Employees?

[12] In order to make findings as to whether Varley terminated the employment of each of the Affected Employees on the ground, or as a result, of the redundancy of their position, I must determine how the employment relationships ended.

[13] As to whether the terminations were at Varley’s initiative, in circumstances where the employment relationship is not left voluntarily by the employee, the focus of the inquiry is whether an action on the part of the employer was the principal contributing factor which results, directly or consequentially, in the termination of the employment. 62

Application of principles relevant to determining Questions One and Two

[14] Based on the above analysis of the relevant principles, I make the following findings in relation to each of the Affected Employees.

Mr Casey

[15] Mr Casey worked at the Eraring Power Station from the early 1990s until the cessation of his employment with Varley in 2018. During that time he worked mostly in the Mills section of the Eraring Power Station.

[16] In the period from his commencement at the Eraring Power Station in the early 1990s to the commencement of his employment with Varley in April 2006, Mr Casey was employed by a number of different companies providing maintenance services at the Eraring Power Station. Mr Casey’s employer immediately before Varley was Tenix.

[17] Tenix’s contract at the Eraring Power Station came to an end in April 2006, at which time Varley entered into a contract to provide maintenance services in the Mills section of the Eraring Power Station. At that time, Varley was already providing maintenance services to the Valves section of the Eraring Power Station. Tenix offered Mr Casey the opportunity to work for it in South Australia or at other power stations in New South Wales, including Bayswater and Liddell. Mr Casey was not interested in taking up any of these opportunities because he had a young family and wanted to continue working at the Eraring Power Station.

[18] Shortly before Varley commenced providing maintenance services in the Mills section of the Eraring Power Station in April 2006, Mr Casey spoke to his Leading Hand at Tenix, who suggested Mr Casey speak to Varley’s Manager/Foreman at the Eraring Power Station, Mr Peter Speechley.

[19] Mr Casey gave evidence that he spoke to Mr Speechley in about April 2007, but I find that Mr Casey’s recollection is mistaken and that he spoke to Mr Speechley and commenced employment with Varley in April 2006, not 2007. I make that finding because (a) the starting docket provided to Mr Casey at the commencement of his employment with Varley is a contemporaneous record and it records, in two separate places, the year as 2006 and (b) Mr Tydd gave evidence that Varley first entered into the Eraring Mills Contract about 12 years ago, which would put the commencement date of that contract as 2006. 63 Mr Casey spoke to Mr Speechley in the Valves section of the Eraring Power Station for about 20 minutes in April 2006. At the end of the conversation Mr Casey gave evidence in his first witness statement, which I accept, that Mr Speechley said to him words to the effect “Can you start on Monday?”, to which Mr Casey said “Yes”. No other details of this conversation were given in either of Mr Casey’s witness statements.

[20] During his oral evidence, Mr Casey initially said that the only bit of his conversation with Mr Speechley which he could really remember was the part set out in the previous paragraph. 64 However, when Mr Casey was asked about the basis of his understanding that he was employed by Varley as a full-time power worker at the Eraring Power Station, he gave evidence that Mr Speechley said to him during their initial discussion:65

“We need people with experience on the Mills. You’ve been working on the Mills before with previous companies. Can you start with us because we need people… with Mills experience and we’ve just got the contract and we don’t have anyone with Mills experience.”

[21] I accept that Mr Speechley, who is retired and no longer works for Varley, said words to this effect to Mr Casey. I found Mr Casey to be a witness of credit. I accept that Mr Casey was doing his best to recall a conversation with Mr Speechley about 12 years ago. Given that Varley had just secured the Eraring Mills Contract and needed employees to work on that contract, it is not surprising that Mr Speechley would make such a statement to Mr Casey.

[22] Varley submits that I should give little weight to Mr Casey’s evidence of his discussions with Mr Speechley because they are hearsay. I do not accept that argument. At the time he spoke to Mr Casey, Mr Speechley was a managerial employee of Varley and he had some responsibility for Varley’s business servicing the Eraring Mills Contract. As discussed below, Mr Speechley was the “supervisor” who signed Mr Casey’s starting docket with Varley. It follows that when Mr Speechley made the representations to Mr Casey concerning the offer of employment with Varley, it is reasonably open to find, and I do find, that Mr Speechley’s representations related to a matter within the scope of his employment or authority. Accordingly, Mr Speechley’s representations to Mr Casey, which are contrary to Varley’s interests in these proceedings, are taken to be admissions by Varley within the meaning of s 87(1) of the Evidence Act 1995 (Cth) (Evidence Act). The hearsay rule does not apply to evidence of an admission. 66

[23] Tenix paid out Mr Casey’s entitlements, together with redundancy pay, and he was then employed by Varley. Mr Casey’s work in the Mills section of the Eraring Power Station continued with Varley as it had previously with Tenix; he was just wearing a different shirt and was paid more by Varley that he had been with Tenix.

[24] Mr Casey was not provided with a formal written contract of employment by Varley. However, he was provided with a starting docket on a Varley letterhead, which he and Mr Speechley signed, in the following terms: 67

“Starting Docket – Permanent

Employee’s Name: Shane Casey Employee No. 1976

Address: [intentionally omitted] Postcode:

Dept: Power Services – Eraring Mills Starting Date: 26-4-06

Below outlines the terms on which you are engaged as a permanent employee with Varley.

Classification:

You will be employed as: □ Production Worker

□ Tradesman □ Trades Assistant

√ Rigger □ …………………..

Your will be employed to perform work on hire to other persons or companies.

Remuneration:

Your remuneration will be Ordinary Time $22.71. Time and a half $34.06.

Double Time $45.42 per hour all inclusive.

You will accumulate annual leave and other leave provisions as per the EBA.

Hours of Work:

The number and pattern of hours which you will work will depend on the company’s work requirements.

Termination:

You are under a probationary employment period for the first six months, whereby either party can terminate on notice.

After the initial six months termination is as per the EBA and Award requirements.

[Mr Casey’s signature] [Mr Speechley’s signature]

Employee Signature Supervisor Signature”

[25] Ms Dobbie gave evidence, which I accept, that her understanding of the purpose of the starting docket was for internal payroll purposes. However, Ms Dobbie’s subjective understanding of the purpose for which the starting docket was prepared or created is not relevant to the question of whether the starting docket, or any part of it, comprised part of the contract between Varley and Mr Casey. The actual terms of a contract are those which the parties objectively intend to include in it. 68 The legal rights and obligations of the parties turn on what their words and conduct would be reasonably understood to convey, not on actual beliefs or intentions.69 Signing a document ordinarily conveys that the signatory accepts its content.70

[26] There are a number of features of the starting docket which indicate that Mr Casey and Varley objectively intended for it to form part of their contract of employment. First, the starting docket expressly states that it “outlines the terms on which you are engaged as a permanent employee with Varley”. Secondly, the starting docket records important elements of Mr Casey’s employment with Varley, namely, his starting date, his classification, his remuneration, his hours of work, and how his employment may be terminated. Thirdly, the starting docket is signed by both Mr Casey and Mr Speechley (on behalf of Varley).

[27] In my view, the contract of employment entered into between Mr Casey and Varley in 2006 was partly written and partly oral. The written part of the contract was the starting docket and the oral part was the conversation between Mr Casey and Mr Speechley, as set out in paragraphs [75] and [76] above. There is no suggestion that the original contract of employment made between Mr Casey and Varley was varied or replaced at any time during his employment with Varley.

[28] I find there was an express term of the contract of employment between Mr Casey and Varley that his place of employment would be the Eraring Power Station. I make that finding in light of (a) the conversation between Mr Casey and Mr Speechley, in which Mr Speechley told Mr Casey that Varley had just won the Eraring Mills Contract, Varley needed people with Mills experience, which Mr Casey had, and Mr Speechley asked Mr Casey if he could start work on Monday, (b) the fact that the conversation between Mr Casey and Mr Speechley took place at the Eraring Power Station in a context in which Mr Casey had been working there since the early 1990s, and (c) the starting docket records Mr Casey’s “department” as “Power Services – Eraring Mills”. Although this part of the starting docket appears above the line on the starting docket which states that “below outlines the terms on which you are engaged”, it provides relevant context to the making of the employment contract.

[29] There was no express term of the employment contract permitting Varley to require Mr Casey to work at places other than the Eraring Power Station. Varley contends there was an implied term to the following effect in the contract of employment made between it and Mr Casey:

“Mr Casey was employed to work for Varley at its sites in the Newcastle region and for short term jobs outside the Newcastle region.”

[30] The principles by which courts imply terms in informal contracts such as the one between Mr Casey and Varley were stated by the High Court in Byrne v Australian Airlines Ltd, 71 quoting Hawkins v Clayton,72 in these terms:

“[W]here it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.”

[31] In my view, the term for which Varley contends does not meet these requirements. The term would no doubt be desirable from Varley’s point of view, because it would give Varley flexibility to service different contracts across the range of industries in which it operates around the Newcastle region. However, such an implied term is not necessary for the reasonable or effective operation of the employment contract between Mr Casey and Varley, particularly in circumstances where Varley had won the Eraring Mills Contract at the time it employed Mr Casey and that contract required Varley to have numerous employees working in the Mills section of the Eraring Power Station at all times for a period of 24 months, with the possibility of extensions to the term of the contract. The term also cannot be implied into the employment contract between Mr Casey and Varley by custom or trade usage or by a past course of dealing between the parties.

[32] In support of its argument that it had a contractual right to require Mr Casey to work at places of work other than the Eraring Power Station, Varley relies on the statement in the starting docket which provides: “You will be engaged to perform work on hire to other persons or companies.” I do not accept that argument. In my view, this statement in the starting docket is equally consistent with Mr Casey performing work (a) on the Eraring Mills Contract, during which time Mr Casey was effectively “on hire to other persons or companies”, namely the operator of the Eraring Power Station, or (b) on other contracts Varley had from time to time with different customers, in which case Mr Casey would be effectively “on hire to” those customers. Because the statement is equally consistent with both scenarios, it does not confer on Varley the right to move Mr Casey between different places of work, nor does it support the implication of the term for which Varley contends.

[33] Although Mr Casey was classified as a “rigger” in the starting docket he signed in April 2006, Mr Casey was not qualified as a rigger; he does not have any trade qualifications, but has on the job experience working with tradesmen. 73 Mr Casey was classified as a Maintenance Employee PS-5 under the Agreement.74 He maintained, cleaned and refurbished the pulverising mills at the Eraring Power Station, which involved undertaking tasks such as cleaning bogeys, changing wedge bars, and undoing bolts on mills.75

[34] Mr Casey continued working in the Mills section of the Eraring Power Station from the commencement of his employment with Varley in April 2006 until Varley lost the Eraring Mills Contract on 2 March 2018. During that period of time Mr Casey only worked away from the Eraring Power Station on two occasions. On the first occasion, Mr Casey volunteered to work for Varley undertaking maintenance work for about three weeks at a Visy paper mill in Tumut in about 2015. The second occasion was when Mr Casey volunteered to work a Saturday for Varley at the Bayswater Power Station in about 2012.

Was Mr Casey’s position made redundant?

[35] In light of my findings that there was an express term of the contract of employment between Mr Casey and Varley that his place of employment would be the Eraring Power Station and there was neither an implied term of the contract of employment nor a term in the Agreement which gave Varley the right to transfer or move Mr Casey away from the Eraring Power Station on a permanent or ongoing basis, 76 the location of Mr Casey’s employment at the Eraring Power Station was an element of his “position” for the purpose of testing a redundancy situation.77

[36] Following the loss of the Eraring Mills Contract, Varley initially offered and later directed Mr Casey to undertake work, on an ongoing basis, at its Tomago premises, which are about 45km (by road) from the Eraring Power Station and about 64km from Mr Casey’s home. It took Mr Casey about 25 to 30 minutes to travel from his home to the Eraring Power Station. It would have taken Mr Casey at least about 52 minutes to drive from his home to Varley’s premises in Tomago. The proposed change in location did not constitute a de minimis change. Accordingly, Varley’s loss of the Eraring Mills Contract and the absence of any other work for Mr Casey with Varley at the Eraring Power Station (or anywhere very close to it) compels the conclusion that Mr Casey’s position was redundant, in that it was no longer required to be performed by anyone. 78 Alternatively, if the question is approached by considering whether there was a repudiation of Mr Casey’s employment contract, the answer is the same. That is, Varley’s conduct in informing Mr Casey that there was no further work available for him at the Eraring Power Station and offering or directing Mr Casey to undertake work at Tomago on an ongoing basis was a breach which went to the root of Mr Casey’s employment contract.79 Mr Casey accepted Varley’s repudiation when he and/or the AMWU (acting on behalf of Mr Casey) informed Varley that Mr Casey was not willing to work at Tomago and he did not attend for work for Varley.

[37] My findings in the previous paragraph are sufficient to determine the question of whether Mr Casey’s position was made redundant. There are, however, two additional reasons for reaching the same conclusion. First, it is apparent from the evidence to which I will refer in paragraphs [94] to [102] below that the position which Mr Casey was initially offered and later directed to take up at Tomago was a vacant and different position from that which Mr Casey occupied prior to 2 March 2018. Secondly, even if the location of Mr Casey’s employment with Varley was not an element of his “position”, the changes sought to be imposed by Varley on Mr Casey’s position following the loss of the Eraring Mills Contract were so substantial that for practical purposes his position no longer existed. I address this argument in paragraphs [103] to [105] below.

[38] On 11 January 2018, Varley was informed, after weeks of speculation, that Origin Energy was terminating the Eraring Mills Contract with effect on 2 March 2018. Downer was awarded a contract to undertake maintenance in, inter alia, the Mills section of the Eraring Power Station from 3 March 2018.

[7] In May 2014, Mr Beverley was employed by Varley on a permanent basis, having successfully completed a Certificate VII in Pressure Welding.

[8] It is not disputed that the contract of employment signed by Mr Beverely and Mr Tydd (on behalf of Varley) on 2 May 2014 is the entire agreement entered into between Mr Beverley and Varley (Beverley Contract). 132

[9] The relevant clauses of the Beverley Contract provide:

“1. Position

1.1 Position title Maintenance Specialist PS-2.

1.2 Position reports to Wayne Roberts, Welding Supervisor.

1.3 Your start date will be 28 April 2014.

1.4 Your employment will be permanent full-time.

1.5 The duties of this position are set out in the Enterprise Agreement, a copy of the classifications section is attached to this agreement. You will be required to perform these duties, and any other duties the Employer may assign to you, having regard to your skills, training and experience.

1.6 You will be required to perform your duties at Tomago, or elsewhere as reasonably directed by the Employer.

…

3. Work Hours

Your ordinary hours of work will be 38 hours per week, plus any reasonable additional hours that are necessary to fulfil your duties or as otherwise required by the Employer.

The arrangement of ordinary hours is determined in accordance with Power Services Enterprise.

4. Remuneration

The hourly wage rate covering this classification is $37.81 in accordance with Power Services Enterprise Agreement.”

[10] From the commencement of his permanent employment with Varley in May 2014 until Varley lost the Eraring Mills Contract on 2 March 2018, Mr Beverley worked partly in the Mills section of the Eraring Power Station and partly elsewhere. In the Mills section of the Eraring Power Station, Mr Beverley performed duties including stripping ribbon conveyors, doing modifications on the mills, seal air pipe modification, hand rail modification, welding spokes and general fabrication duties. 133 Outside of the Mills section of the Eraring Power Station, Mr Beverley mainly performed specialised welding duties (including TIG welding and pressure pump welding).

[11] Mr Beverley gave evidence that during his employment with Varley he worked outside of the Mills section of the Eraring Power Station at the following locations:

(a) In the Valves section of the Eraring Power Station. Mr Beverley gave evidence that the proportion of time he spent working in the Mills section of the Eraring Power Station was approximately 95 percent (in comparison to the time he spent working in the Valves section); 134

(b) Varley’s Tomago site. Mr Beverley gave evidence that he worked frequently at Tomago in 2014, 135 however he hardly worked there in more recent years;136

(c) Varley’s Carrington site. Mr Beverley gave evidence that he worked at Varley’s Carrington site for approximately two or three weeks on a structure before installing it somewhere near Kooragang Island over approximately four or five days; 137

(d) Loy Yang Power Station in Victoria. Mr Beverley gave evidence he worked at the Loy Yang Power Station on three occasions for approximately four weeks; 138

(e) AGL Power Station in South Australia; 139

(f) Vales Point Power Station; 140

(g) a sugar mill in Northern New South Wales;

(h) Tallawarra in New South Wales; and

(i) a gas fired power station in Wollongong, New South Wales.

[1] I accept Mr Beverley’s evidence about the different locations at which he undertook work as a Varley employee outside of the Mills section of the Eraring Power Station as summarised above. I found Mr Beverley to be a witness of credit. I accept that Mr Beverley was doing his best to recall the various locations he had worked over the past four years.

Was Mr Beverley’s position made redundant?

[2] There is no express term of the Beverley Contract that Mr Beverley’s place of employment would be the Eraring Power Station. In fact, clause 1.6 of the Beverley Contract permits Varley to require Mr Beverley to perform his “duties at Tomago, or elsewhere as reasonably directed by the Employer”. Because performance of work at a particular location is not a term of the Beverley Contract, location of employment is not an element of Mr Beverley’s position relevant to determining whether his position was made redundant. 141 Further, I am satisfied that Varley’s initial offer and later direction for Mr Beverley to work at Carrington was within the scope of Varley’s right under clause 1.6 of the Beverley Contract to “reasonably direct” Mr Beverley to work at Tomago or elsewhere. Varley’s premises at Carrington are about 19km away from its premises at Tomago and its Carrington premises are closer to Mr Beverley’s home than its Tomago premises.142

[3] Notwithstanding the fact that Varley had a contractual right to require Mr Beverley to work at its Carrington premises, there are two reasons for concluding that Mr Beverley’s position was redundant. First, it is apparent from the evidence to which I will refer in paragraphs [192] to [201] below that the position which Mr Beverley was initially offered and later directed to take up at Carrington was a vacant and different position from that which Mr Beverley occupied prior to 2 March 2018. Secondly, the changes sought to be imposed by Varley on Mr Beverley’s position following the loss of the Eraring Mills Contract were so substantial that for practical purposes his position no longer existed. I address this argument in paragraphs [202] to [205] below.

[4] On 11 January 2018, Varley was informed, after weeks of speculation, that Origin Energy was terminating the Eraring Mills Contract with effect on 2 March 2018. Downer was awarded a contract to undertake maintenance in, inter alia, the Mills section of the Eraring Power Station from 3 March 2018.

[5] On 16 January 2018, Ms Dobbie and Mr Tydd met with Mr Casey, Mr Zikman, Mr Beverley and Mr Cross of the AMWU to discuss Varley’s loss of the Eraring Mills Contract. Ms Dobbie prepared “talking points” for this meeting. I accept that Ms Dobbie said words to the effect of those set out in the “talking points” at the meeting on 16 January 2018. The “talking points” state:

“1. All Permanent employees will be offered redeployment to another role - we will NOT be offering redundancies as we have the capacity to absorb all 7 (jobs genuinely available and ‘reasonably’ comparable in the circumstances).

2. Terms & Conditions of jobs WILL BE different in accordance with other Enterprise Agreements. Offer will be via formal contract.

3. Tomago T&C’s, rates of pay etc: 4-day week (Mon-Thurs for majority); about to introduce shifts in a number of areas (project timeline demands / capacity in sheds with existing equipment etc). Rate is now $37.32 per hour for tradesperson.

4. Carrington T&C’s, rates of pay etc: Accrue time for Flexible Day Off (average 1 per month) so shorter days but across Monday to Friday. Opportunities for varied projects (shipping, outages, on site etc). Current rate for tradesperson is $36.07 plus $1 per hour all – purpose allowance for each hour worked (not paid on leave). Opportunities to gain additional qualifications (rail, shipping etc).

5. Permanent employees to advise their preference by lunchtime Thursday 18^th January.

6. Formal offers will then be made for sign off and returned within 7 days (i.e. likely to be Monday 29^th January or thereabouts).

7. Anyone applying and expecting to move across to Downer is asked to advise us. This is because we are working through recruitment to fill the actual vacancies and don’t want to bump someone else out if we cannot fill internally. Also because of referee reports and pay out of accrued leave / cash flow etc.

8. Outages versus transfer - Valves section will not have room for anyone to transfer. Some very short-term work may be available / undertaken prior to redeployment.” [emphasis added]

[6] By letter dated 23 January 2018 to the Affected Employees, Varley continued the consultation process that commenced at the meeting on 16 January 2018. That letter included the following relevant information for the Affected Employees:

“…As you are aware, Varley Group has now been advised that the Mills contract will be terminated ahead of time. This is due to Downer having won the site consolidated maintenance contract. Our Mills work will cease at close of business 2^nd March 2018.

Please be assured that while the situation clearly has an impact on you and on the work that we do, it does not automatically lead to the termination of your employment with Varley. In fact, Varley is actively recruiting for permanent positions at other sites (Tomago and Carrington) at this time. We believe that your skills and experience will continue to be of value to us and we hereby offer you redeployment options. You are asked to give serious consideration to the options we are putting forward to you.

In addition to our own vacancies, we are working closely with Downer with the aim of having them offer immediate employment to some of our team. Of course, we cannot require Downer to do so.

To allow us to organise labour for key projects you are asked to consider the following information and advise any of the following of your preference:…

Carrington Enterprise Agreement

Available: Boiler maker to commence on Thales Project…

Tomago Enterprise Agreement

Available: Boiler maker (several), Vehicle Fitter (several)…

The positions at both Carrington and Tomago are PERMANENT positions.

You are asked to provide a response to indicate your preference from the options provided, and/or to advise us if you have applied to Downer to work with them on the Mills contract…” [emphasis added]

[7] On 31 January 2018, Varley became aware that Downer would not entertain the idea of any employees of Varley transferring to Downer for the purpose of undertaking work on the Mills section of the Eraring Power Station from 3 March 2018.

[8] In an email sent to Mr Tydd and Mr Moy on 7 February 2018, Ms Dobbie referred to Varley’s commitment “to slotting in Eraring Mills permanent employees to other roles”. 143

[9] By letter dated 14 February 2018, Varley communicated with Mr Beverley about his “redeployment to Tomago”. That letter included the following information:

“As you are aware, the Varley Mills contract will cease on 2 March 2018. Varley has undertaken consultation with you and with the AMWU. We have previously advised you of the redeployment options available to you upon the cessation of the current contract. In addition, Varley has made every effort to assist those who wish to take up employment with Downer, the incoming contractor.

To ensure you have confidence about your future and to allow Varley to plan, schedule and resource the current workload, we are making a final request to you for a decision in relation to redeployment.

Varley has carefully reviewed the terms and conditions related to your engagement with the Company. Under these, we believe it is lawful and reasonable to direct you to undertake work at another worksite.

… We have previously assured you that we would have an offer of suitable redeployment for you. You have not provided to us your preference of site for this redeployment.

Following an assessment of your qualifications, skills and experience, and in view of your residential address, you are hereby offered redeployment Carrington. Full details of your redeployment are set out in the attached updated Employment Agreement. This offer is made under the provisions of clause 15.5.1 (Dot point 3) of the Enterprise Agreement.

Please read, complete and return the signed documentation by Monday, 19 February 2018.

Alternatively, if you are taking up an offer of employment with Downer, you are asked to advise of the so that Varley know you will not be accepting this role at Carrington.

If you are declining the offer of redeployment, you’re asked to tender your resignation in accordance with the requirements outlined in the Enterprise Agreement…” [emphasis added]

[10] Varley communicated with Mr Beverley again about his “redeployment” by letter dated 1 March 2018, which also enclosed a letter from Mr Tydd dated 28 February 2018. The letter dated 28 February 2018 provided (in part):

“As you are aware, Varley’s Mills contract and are in is due to cease on 2 March 2018 with your last day required at that site being Friday, 2 March 2018. You have previously been provided with information and on 14 February 2018, instructions, regarding your redeployment after this date.

To date you have not confirmed to Varley your intention to continue in your role following the redeployment. Accordingly, I am writing to you to confirm your work arrangements on and from Monday, 5 March 2018.

You are expected to present ready for duty at 8:00 am on Monday 5 March and report to Tomago Reception from where you will be provided with a site induction prior to commencing duties. This means that you will be dressed in appropriate working with your tools of trade on hand.

… In addition to the arrangements and terms and conditions associated with redeployment which have been communicated to you previously, please note that the following will also apply:

1. Cash offset for accrued leave. For all annual leave accrued by you prior to the date of redeployment, Varley Group will pay you a one–off amount that represents the difference between what you would have been paid had you taken this leave whilst working at the Eraring site, and the rate at which you would be entitled to be paid for the leave if taken once deployed to the Tomago site. This has been calculated as follows.

The rate of pay under the current Enterprise Agreement minus the rate of pay under the new Enterprise Agreement. This hourly difference will be paid to you for all hours accrued as at 2 March 2018 (Annual Leave, Personal Leave and Long Service Leave). In your case, this amounts to approximately $114.65 (The final balance will be confirmed after timesheets for this week have been processed).

The above terms and conditions are provided to assist you with your transition into your redeployed role. Varley Group maintains it is lawful and reasonable to direct you to undertake work at sites other than the Eraring site…” [emphasis added]

[1] The 1 March 2018 letter acknowledges that Mr Beverley’s “redeployment” is “currently the subject of a dispute notified by the AMWU to the Fair Work Commission, and that the AMWU act on your behalf in relation to that matter” and confirms that Mr Beverley’s “attendance for duty at 8:00 am on Monday morning at your assigned site will be without prejudice to the matters in dispute between the parties”.

[2] On 4 April 2018, Varley wrote to Mr Beverley in relation to the cessation of his employment with Varley. Varley’s letter dated 4 April 2018 provides (in part):

“Since mid–January 2018 we have taken a number of steps to ensure that we were in regular communication with you about the loss of the Mills Contract at Eraring.

During that process you did not provide us with any response in terms of accepting redeployment or otherwise.

Varley has, on a number of occasions, attempted to contact you to ascertain whether you intended to present for work in your redeployed role. Varley has also reiterated on numerous occasions and via its representative, that it has not terminated your employment (whether on the basis of redundancy or otherwise).

Notwithstanding this, you have now not been in attendance at work since 5 March 2018.

As indicated in our previous correspondence, we understand your actions to mean you have elected to leave our employment. Correspondence from the AMWU dated 16 and 22 March 2018, appears to confirm that you do not intend to return to your employment with Varley.

Accordingly, in our view, your status from 5 March 2018 is that of having abandoned your employment.

Notwithstanding the terms of the G H Varley Power Services Site Enterprise Agreement 2016 – 2018 entitles Varley to withhold from any final payments, an amount equivalent to notice not provided by you, in the circumstances Varley will on this occasion (and on a without prejudice basis) waive that right. Accordingly, we will make the final payment to you in the pay run next week. This will comprise:

● Accrued annual leave of …

● RDO Accrual of …” [emphasis added]

[3] This chain of communications from Varley to Mr Beverley demonstrates a change in position, or a re-characterisation of events, by Varley, as described in paragraph [102] above. The reality was that Varley directed Mr Beverley to take up a new position. This warrants a finding that Mr Beverley’s position was redundant.

[4] I accept Mr Tydd’s evidence that the work Mr Beverley would have undertaken at the Carrington site for Varley would have been similar to that which Mr Beverley undertook at the Eraring Power Station. 144 Varley’s work at Carrington involves repairs, inspections, assembly and disassembly of components, working to prints/drawings and working to standards/specifications. Varley had a right under clause 1.5 of the Beverley Contract to require Mr Beverley to perform the duties of his position of Maintenance Specialist PS-2 in Appendix 2 of the Agreement, together with “any other duties”, having regard to his skills, training and experience. I also accept that the work Mr Beverley would have undertaken at the Carrington site for Varley would have required Mr Beverley to use his existing skills, including his skills in pressure welding. The position description that would have been applicable to Mr Beverley under the Carrington Agreement states that he would be involved in “trade work including but not limited to… Pressure Welding.”145 As to Mr Beverley’s evidence that he would have been deskilled in TIG welding if he accepted the role in Carrington,146 I am not satisfied on the evidence that this would have been the case. Mr Beverley conceded that he had little knowledge of the work he would have been required to undertake in the job offered to him at the Carrington site.

[5] I accept Mr Tydd’s evidence that the role available for Mr Beverley at Carrington did not have a lesser status, did not involve a change in level of seniority, and did involve any significant change in autonomy associated with how the work was performed. 147 I also accept Mr Tydd’s evidence as to the similarities and improvements between work at the Eraring Power Station and Varley’s Carrington premises,148 save for as set out in the following paragraph.

[6] The differences between the position occupied by Mr Beverley and what was offered to him at Carrington included the following:

(a) a decrease in Mr Beverley’s hourly rate of pay from $41.429/hour to $37.07/hour. Although Varley offered to address the impact of this decrease in pay insofar as it related to his accrued annual leave, the difference in pay rates would have resulted in Mr Beverley earning considerably less on a weekly basis. A decrease in pay rates is not determinative of whether a position has been abolished or largely stripped of its functions and responsibilities, but “the fact that the remuneration attached to the position is reduced may be a reason to closely examine whether the position has in truth been retained”; 149

(b) a change in coverage of industrial instruments from the Agreement to the Carrington Agreement, although it should be noted that the terms and conditions of the Agreement are, in many respects, similar to those of the Carrington Agreement; and

(c) a change in position or classification from Maintenance Specialist PS-2 to Tradesperson. It was an express term of the Beverley Contract that Mr Beverley’s position title would be “Maintenance Specialist PS-2”. 150 Although Varley had the right under the Beverley Contract to unilaterally change Mr Beverley’s duties and location of work, it did not have a contractual right to unilaterally change his position title from that of “Maintenance Specialist PS-2”. Further, I do not accept that Varley had a right under clause 16.2 of the Agreement to unilaterally change Mr Beverley’s classification in the way proposed. For the reasons set out in paragraphs [44] to [50] above, clause 16.2 of the Agreement confers on Varley the right to promote and demote employees to or from the “specific classifications” set out in Appendix 2 to the Agreement, but not other classifications, for a period of time which is arranged expressly or specified. The Tradesperson classification proposed by Varley for Mr Beverley at the Carrington site was not one of the “specific classifications” set out in Appendix 2 to the Agreement; it was a classification covered by the Carrington Agreement.151 In addition, the initial offer and later direction for Mr Beverley to take up the Tradesperson position at Carrington was not for a period of time which was arranged expressly or specified.

[1] Having regard to and weighing the matters referred to in paragraphs [202] to [204] above, my evaluative assessment is that the changes proposed to Mr Beverley’s position were so substantial that for practical purposes his position no longer existed. Varley no longer required the position Mr Beverley had been working in to be undertaken by anyone. Mr Beverley was offered, and rejected, a new position.

Did Varley terminate its employment relationship with Mr Beverley on the ground, or as a result, of the redundancy of his position?

[2] I reject the contention that Mr Beverley voluntarily left, or abandoned, his employment with Varley. Mr Beverley wanted to continue working in the position he worked since 2 May 2014. The principal contributing factor which resulted in Mr Beverley’s employment with Varley coming to an end was the decision by Varley to initially offer and later direct Mr Beverley to work at Varley’s operation in Carrington in a position with a different classification, hourly rate of pay, and enterprise agreement applying to him.

[3] Mr Beverley was not willing to work for Varley at Carrington. As a result, he did not give detailed consideration to, or accept, the offer or direction to work at Carrington; his decision in that regard was communicated to Varley by Mr Beverley and/or the AMWU (acting on behalf of Mr Beverley). I accept that Mr Beverley’s unwillingness to work for Varley at Carrington was part of the reason why his employment with Varley came to an end, but it was not the principal contributing factor. For these reasons, I am satisfied that Varley terminated its employment relationship with Mr Beverley on the ground, or as a result, of the redundancy of his position.

Conclusion

[4] For the reasons I have given, I answer the questions posed by the parties for determination in relation to each of the Affected Employees as follows:

● Question One – Yes

● Question Two – Yes

● Question Three – No

COMMISSIONER

Appearances:

S Howe, Legal Officer,for AMWU

L Cruden together with K O’Brien of Ai Group for Varley

Hearing details:

2018.

Newcastle:

13, 14 and 15 June.

1 GH Varley Pty Ltd

2 Ex R6 at [19]

3 Clause 2 of the Agreement

4 [2017] FWCFB 3005

5 [2015] FWCFB 1162

6 (2005) 222 CLR 241 at 273 [103]

7 (1996) 66 IR 182

8 Ibid at 184

9 [2014] FCA 829

10 See, for example, Khayam v Navitas[2017] FWCFB 5162 at [75(5)(a)]

11 Berri at [114(2)]

12 Berri at [114(9)]; ASU v Commonwealth of Australia[2018] FWCFB 1170 at [19]

13 Amcor at [104]

14 Amcor at [103] & [131]; Spotless at [15]

15 NTEU v La Trobe University [2015] FCAFC 142 at [17]

16 SDA v Woolworths Limited [2006] FCA 616 at [26]

17 Bampton v Viterra Limited [2015] SASCFC 87 (Bampton) at [211]-[213]

18 Berri at [114(10)]

19 Varley’s written submissions at [5.37], [5.47]

20 See paragraphs [51] to [56] below

21 Ex R6 at [164]

22 Ex A1 at [8]

23 Ex A2 at [36]

24 Ex A2; attachment CW-7

25 Berri at [86]

26 Ibid

27 Berri at [88]

28 Berri at [106]-[107]

29 Berri at [106]-[107]

30 NTEU v La Trobe University [2015] FCAFC 142 at [89]

31 Jones v Department of Energy and Minerals (1995) 60 IR 304 at 308; Dibb v Commissioner of Taxation (2004) 136 FCR 388 at [41]

32 Gamboni v Bendigo and Adelaide Bank Ltd [2013] VSCA 92 at [88]

33 See, for example, cl 1, 10, 24.3, 25.3, 26 and 43.

34 See clauses 13.5.2 and 15.5.2

35 Clause 10 (final sentence of first subparagraph) of the Agreement

36 Clause 15.5.1 (final sentence) of the Agreement

37 Outline of Submissions of G. H. Varley Australia Pty Ltd at [5.46]

38 NTEU v La Trobe University [2015] FCAFC 142 at [17]

39 Commonwealth Bank of Australia v FSU [2002] FCAFC 193 at [29]

40 See, for example, Farstad Shipping (Indian Pacific) Pty Ltd v MUA[2017] FWCFB 3317 at [28]

41 [2006] FCA 616 at [26]

42 Final sentence of the first subparagraph of clause 16.2 of the Agreement

43 See references to “power services” in clauses 24 and 25.3, Appendix 3 and the title of the Agreement

44 See clause 1 of the Agreement

45 “Stipulate” is defined to mean, amongst other things, “to arrange expressly or specify in terms of agreement” (Macquarie Dictionary)

46 Clause 2 of the Agreement

47 Clauses 1, 2, 8, 13 (permanent employees, unlike temporary employees, are not engaged for a specific time or project), 24, 25, 26, 31, 39 and Appendix 3 of the Agreement

48 Clause 26.4 of the Agreement

49 Clauses 31 and 31.2 of the Agreement

50 Clauses 25, 26 and 31 of the Agreement

51 Section 120 of the Act

52 DL EmploymentPty Ltdv Australian Manufacturing Workers’ Union [2014] FWCFB 7946 (DL Employment) at [76]-[80]

53 Ibid at [41]-[42]

54 Ibid at [42]

55 Ibid at [41], applying Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-9

56 Jones v Associated Tunnell Co Ltd [1981] IRLR 477 at 480; Neil and Chin, The Modern Contract of Employment,Second Edition, 2017 at [4.90]

57 Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-50

58 Australian Colliery Staff Association v Queensland Mines Rescue Service (1999) 88 IR 78 at 92

59 DL Employment at [72]

60 Bampton at [217]

61 [2014] NSWCA 436 at [131]-[132]

62 Khayam v Navitas English Pty Ltd t/a Navitas English[2017] FWCFB 5162 at [75(2)]

63 Ex R6 at [19]

64 PN562; PN570

65 PN590

66 Section 81(1) of the Evidence Act

67 Ex A9

68 Council of the City of Sydney v Goldspar Australia Pty Ltd [2006] FCA 372 at [164]

69 Equuscorp Pty Ltd v Glegallan Investments Pty Ltd [2004] HCA 55 at [34]

70 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [45]

71 (1995) 185 CLR 410 at 422

72 (1988) 164 CLR 539 at 573

73 PN642-3

74 Ex A16

75 PN630-639

76 See paragraph [56]

77 DL Employment at [41], applying Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-9

78 Ibid at [72]

79 Ibid at [73]-[74]

80 Ex R9; attachment WJM-1

81 Ex R6 at [139]

82 Ibid at [141]

83 Ibid at [144]-[147]

84 Ibid at [138]-[147]

85 UGL Rail Services Pty Limited v Janik [2014] NSWCA 436 at [151]; Bampton at [220]

86 Ex R7 at 68

87 Clause 27 of the Agreement

88 Ex A4 at [15]

89 PN301-313

90 Section 81(1) of the Evidence Act

91 Ex A6

92 Commissioner of Taxation v Sara Lee Household & Body Care (Aust) Pty Ltd (2000) 74 ALJR 1094 at [22], referred to in Concut Pty Ltd v Worrell (2000) 103 IR 160 at [19].

93 An agreement for a variation of a contract of employment may be made orally, see, eg, Nikolich v Goldman Sachs JBWere Services Pty Ltd [2006] FCA 784 at [209]

94 See Ex A14

95 See Whitlock v Brew (1968) 118 CLR 445 at 460-462

96 Ex A4 at [19]

97 See paragraph [56]

98 DL Employment at [41], applying Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-9

99 Ibid at [72]

100 Ibid at [73]-[74]

101 Ex R9; attachment WJM-1

102 Ex R6 at [139]

103 Ibid at [144]-[147]

104 Ibid at [138]-[147]

105 UGL Rail Services Pty Limited v Janik [2014] NSWCA 436 at [151]; Bampton at [220]

106 Ex R7 at 54

107 Clause 27 of the Agreement

108 PN455-459

109 Ex A12 at [7]

110 Ibid

111 Section 64(3) of the Evidence Act

112 Ex A14

113 Ex A15

114 Ex R6 at [37]

115 PN1505

116 Ex A12 at [11]

117 Ibid at [23]

118 Ibid at [12] – [13], [27]; PN 1241

119 See paragraph [56]

120 DL Employment at [41], applying Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-9

121 Ibid at [72]

122 Ibid at [73]-[74]

123 Ex R9; attachment WJM-1

124 Ex R6 at [147]

125 Ibid at [138]-[147]

126 Ibid at [139]

127 Ex A12 at [23]

128 UGL Rail Services Pty Limited v Janik [2014] NSWCA 436 at [151]; Bampton at [220]

129 Ex R7 at 61

130 Clause 27 of the Agreement

131 Appendix 1 to the Agreement, Tradesman PS3 from 1 October 2017, pay rate = $40.03

132 Ex A10; attachment JB-1

133 Ibid at [16]

134 PN908

135 Ex A10 at [17]

136 PN916

137 PN931-948

138 PN951-955

139 PN956

140 PN957

141 DL Employment at [41], applying Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 (1989) 31 IR 35 at 48-9

142 Ex R1

143 Ex R9; attachment WJM-1

144 Ex R6 at [139]

145 Ex R3

146 PN984

147 Ex R6 at [144]-[147]

148 Ibid at [138]-[147]

149 UGL Rail Services Pty Limited v Janik [2014] NSWCA 436 at [151]; Bampton at [220]

150 Clause 1.1 of the Beverley Contract

151 Appendix A1 to the Carrington Agreement – classification “Trade 1”

Printed by authority of the Commonwealth Government Printer

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU)-New South Wales Branch v GH Varley Pty Limited