"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Knorr-Bremse Australia Pty Limited
[2024] FWC 1683
•28 JUNE 2024
| [2024] FWC 1683 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
Knorr-Bremse Australia Pty Limited
(C2024/2719)
| COMMISSIONER WILSON | MELBOURNE, 28 JUNE 2024 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]
This decision deals with an application by the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) alleging a dispute arising under an enterprise agreement in relation to redundancies at the Derrimut site of the Respondent, Knorr-Bremse Australia Pty Ltd. The application is made pursuant to s.739 of the Fair Work Act 2009 (the Act) and relates to work performed under the Knorr-Bremse Australia Pty Ltd Enterprise Bargaining Agreement 2021 (the Agreement), the nominal expiry date of which is 21 December 2026.
The application was made on 1 May 2024, with a conciliation conference held by me on 15 May 2024 which did not resolve the matter.
The AMWU seeks assistance with an alleged dispute which it says has arisen about the application of Clause 10.5 of the Agreement, dealing with selection of employees for redundancy at the Derrimut site. The AMWU argues the Clause, in combination with the Agreement’s Dispute Resolution Procedure, authorises the Commission to determine firstly whether certain jobs are still required to be performed and if so, whether the Respondent has complied with Clause 10.5. Secondly, the union argues the Commission is authorised to determine whether nominated employees have been properly selected for redundancy. For its part, the Respondent argues that the relevant Clause only authorises the Commission to assist the parties with respect to a disagreement about the selection of employees for retrenchment.
The AMWU considers this to be incorrect, and sees the dispute to be broader, going to the issue of whether there should be redundancies at all.
As the conciliation conference did not resolve the dispute, the matter was programmed for determination by me, which, with the consent of the parties, has been determined by me on the papers.
BACKGROUND
In March 2020, the Respondent was faced with two of its key contracts at its Derrimut site coming to an end. It undertook a staffing review during March and April and says that it considered measures which might be taken to minimise the impact of the completion of the contracts. Its review concluded that there were eight surplus roles which were required to be made redundant at Derrimut.
The eight employees and their representatives were notified on 17 April of the need for the redundancies, and that each had been selected for redundancy, subject to conduct of the relevant consultation processes.
This notification was the subject of an urgent application to the Fair Work Commission, which was dealt with by Deputy President Clancy on 19 April 2024. In the earlier proceedings, Deputy President Clancy suggested that the Commission may be the appropriate ‘mutually agreed party’, for the purposes of Clause 10.5.
The application now before the Commission is in relation to only five of the eight employees selected for redundancy (referred to as the Affected Employees).
RELEVANT PROVISIONS OF THE AGREEMENT
Clause 6.1 deals with matters of consultation about changes with significant effects;
“6.1 Consultation Regarding Introduction of Change
The Company is to notify employees affected and their representatives (if any), when a definite decision has been made to introduce major changes in production, program, organisation, structure or technology that are likely to have a significant effect on employees.
Significant effects include:
·Termination of employment
·Major changes in the composition of the workforce
·Operation or size of the employer's workforce or in the skills required
·The elimination or diminution of job opportunities
·Promotion opportunities
·Job tenure
·The alteration of the regular roster or ordinary hours of work
·The need for retraining
·Transfer of employees to other work or locations; and or
·The restructuring of jobs
Where the Award makes provision for alteration of any of these matters, an alteration is deemed not to have significant effect.
The Company is to discuss the proposed change(s) with the employees affected and their representatives (if any), in regards to the above significant changes, and the effects the changes are likely to have on employees. The Company is to advise on the measures to avert or mitigate the adverse effects of such changes on employees. The Company must invite the employee or employees affected to give their views about the impact of the proposed change, including in relation to their family or caring responsibilities, and give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
The discussions must commence as early as practicable after a definite decision has been made by the Company to make such change(s).
For the purposes of such discussion, the Company must provide in writing to the employees concerned and their representatives (if any), all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees. The Company is not required to disclose confidential information of which would be contrary to the employer's interests.
Where the Company proposes to change an employee's regular roster or ordinary hours of work, the Company must consult with the employee or employees affected and their representatives (if any) about the proposed change.”
Clause 10 deals with matters associated with redundancy. Much of the Clause is not directly relevant to the matters requiring determination in this decision. However, of relevance are the following;
The definition of redundancy, within Clause 10.1;
“'Redundancy' shall mean, and shall be deemed to exist where
• the employer has ceased, or intends to cease to carry on the business or
• the employer has ceased, or intends to cease, to carry on the business within a reasonable distance of the place at which the employees were contracted to work; or
• the requirements of the business for employees to carry out work have ceased or diminished or are expected to cease or diminish; or
• the requirements of the business for employees to carry out work within a reasonable distance of the place at which they were contracted to work, have ceased or diminished or are expected to cease or diminish”
10.5 (Selection of Employees for Redundancy);
“The Company reserves its right to determine the selection of employees for redundancy.
However, the Company acknowledges that length of service will be a major factor to be considered in the selection for redundancy, other factors being equal.
Employee representatives will be notified of employees being retrenched prior to them being retrenched and if there is a disagreement over who is to be retrenched the assistance of a mutually agreed third party will be obtained.”
Clause 22 is the Dispute Resolution Procedure which is in the following terms;
“22. DISPUTE RESOLUTION PROCEDURE
22.1 Summary
The mechanism and procedures for resolving industrial disputes about any matter arising under the terms of this Agreement or in relation to the National Employment Standards, will include, but not be limited to, the following:
i. The employee/s concerned will first meet and confer with their immediate supervisor. The employee/s may appoint another person to act on their behalf including but not limited to a shop steward or delegate of their union.
ii. If the matter is not resolved at such a meeting the parties will arrange further discussions involving more senior management as appropriate. The employee may invite a union official of the employee's choice to be involved in the discussions. The employer may also invite into the discussions an officer of the employer organisation to which the employer belongs.
iii If the matter remains unresolved. the employer may refer it to a more senior level of management. Group HR Manager or to a more senior national officer within the employer organisation. The employee may invite a more senior union official or other employee representative of the employee's choice to be involved in the discussions.
In the event there is no agreement to refer the matter to a more senior level or it is agreed that such a reference would not resolve the matter, the parties shall jointly or individually refer the matter to the Fair Work Commission for assistance in resolving the matter. The Fair Work Commission is empowered to settle all disputes arising under this Agreement by conciliation and, if necessary, arbitration
22.2 Facilitation of the Procedure
The following is to be implemented:
i. The party with the grievance must notify the other party at the earliest opportunity of the problem:
ii. Throughout all stages of the procedure all relevant facts must be clearly identified and recorded.
iii. Sensible time limits must be allowed for completion of the various stages of discussion, however. the parties must cooperate to ensure that the disputes resolution procedures are carried out as quickly as possible.
22.3 Resolution
While the parties are attempting to resolve the matter. the parties will continue to work in accordance with this Agreement and their Contract of Employment unless the employee has a reasonable concern about an imminent risk to his or her health and safely Subject to relevant provisions of the Model WHS Act and the OHS Act. as applicable, even if the employee has a reasonable concern about an imminent risk to his or her health or safety, the employee must not unreasonably fail to comply with a direction by the Company to perform other available work, whether at the same enterprise or another enterprise. that is safe and appropriate for the employee to perform.”
CONSIDERATION
The Agreement has coverage throughout Australia and in particular at five named sites, one of which is the Respondent’s Derrimut site, and covers the work of employees who are covered by the Manufacturing and Associated Industries and Occupations Award 2020 and the Clerks - Private Sector Award 2020, the terms of which are incorporated within the Agreement (Clauses 3 and 4.1).
The application, as originally made, put forward that the dispute was in relation to Clause 10.5, the relevant part of which provides “Employee representatives will be notified of employees being retrenched prior to them being retrenched and if there is a disagreement over who is to be retrenched the assistance of a mutually agreed third party will be obtained.” The application form did not refer to it being a dispute arising under the Dispute Resolution Procedure (Clause 22).
Prior to the conciliation conducted by me on 15 May 2020, the Respondent provided submissions objecting to the dispute being dealt with by the Commission;
“3. Clause 10.5 of the Enterprise Agreement provides that the Respondent reserves its right to determine the selection of employees for redundancy. Where there is disagreement as to the employees selected for retrenchment "the assistance of a mutually agreed third party will be obtained".
4. The conference on 15 May 2024 is for the purpose of the parties obtaining the assistance of a mutually agreed third party in satisfaction of clause 10.5.
5. For the avoidance of doubt, clause 10.5 only empowers the Commission to assist the parties with respect of the disagreement as to the selection of employees for retrenchment. It does not empower the Commission to exercise any other powers, including with respect to arbitration should there be no agreement reached as to the selection of employees for retrenchment. If no agreement is reached, the Respondent reserves its rights under Clause 10.5 of the Enterprise Agreement to determine the selection of employees for redundancy.”[1]
In its written submissions for the determination of the dispute, the AMWU raised that the dispute had been brought to the Fair Work Commissioner pursuant to Clause 22, the Dispute Resolution Procedure, which it submitted had been complied with, as well as it being the case that the underlying dispute itself is one which could be settled by determination of the Commission. Consistent with this proposition, the AMWU put forward two questions for determination by the Commission as follows;
“1. With respect to the jobs performed by the employees above and considering the completion of the HCMT Contracts and the commencement of the Contract for HVAC Equipment Related to VicRail’s X’Trapolis Train Fleet and the new Contract for Door Mechanisms connected with the Next Generation Trams Project, (together, New Contracts), are each of the listed employees’ jobs above still required to be performed at the workplace?
- If yes, has the Respondent breached clause 10.5 of the Agreement by selecting these employees for redundancy?
2. If question 1 is answered ‘NO’, has the Respondent erred in selecting the above employees by not applying a selection process consistent with paragraph 2 of clause 10.5 of the Agreement?”[2]
In support of its position in relation to these matters, the AMWU argued that the Dispute Resolution Procedure provides a mechanism for resolving industrial disputes;[3]
“11. The DRP provides a mechanism for resolving industrial disputes about any matter arising under the terms of this agreement. The current dispute relating to the selection of retrenched employees, is clearly covered by the DRP and falls within the meaning of ‘industrial disputes about any matter arising under the terms of the Agreement’ (emphasis added).
12. While each step in a DRP needs to be complied with prior to escalating to the next step and ultimately if the matter remains unresolved, prior to referring the matter to the Commission, the provisions in a Dispute Resolution Procedure should not be interpreted in a narrow or pedantic way, but rather with an emphasis on practicality and industrial reality…”
and
“14. The Agreement mandates 2 discussions between the parties per clause 22.1(i) & (ii) prior to the dispute being referred to the Commission. At clause 22.1(iii) it enables the Respondent to refer the unresolved matter to more senior levels of management, Group HR Manager or to a more senior national officer within the Respondents organisation. If the Respondent does not wish to take approach, the Agreement then enables the parties to agree to refer, jointly or individually, the matter to the Commission for resolution.”
The AMWU also put forward a chronology associated with progression of the dispute. It noted that each of the Affected Employees were directed to participate in a presentation conducted by two of the Respondent’s managers, Mr Paul O’Brien, the Group HR Manager, and Mr David Dupen, the National Operations Manager, who informed those attending that, due to business operations, the Respondent was required to consider redundancies. At the conclusion of the meeting, employees were provided with a letter setting out the matter referred to in the meeting.
Each of the employees were then called to a meeting with Mr O’Brien and Mr Dupen between 17 April 2024, for the purposes of confirming that their roles been selected for redundancy and to provide them with details of their entitlements. Also on 17 April 2024, notification about the proposed redundancies was provided to the AMWU organiser, Mr Daniel Wessley. The notification to Mr Wessley invited discussions with Mr O’Brien. The union then argues that, even after it raised concerns with Mr O’Brien and Mr Dupen, relating to the need to escalate the dispute to a different forum in line with the requirements of the Dispute Resolution Procedure, each continued to present themselves in correspondence and verbally as the appropriate person to discuss the matter further. Neither sought to refer the matter elsewhere. The union then argues in its submissions;
“20. From the onset of the administration of redundancies, it is evident that Mr O’Brien and Mr Dupen were the responsible persons of the Respondent for all matters concerned with the Dispute. The evidence indicates that any further discussions to be had regarding the selected employees were to be arranged with Mr O’Brien. Likewise, if there were any further questions, Mr O’Brien was the appropriate person to address this to.
21. Noting the above authorities, the industrial reality once the Respondent decided to notify the Affected Employees of retrenchment was that Mr O’Brien and Mr Dupen were the appropriate persons to raise and discuss the Dispute with pursuant to the DRP provisions of the Agreement. Given Mr O’Brien’s and Mr Dupen’s role and responsibility to deliver the outcome of the operational change to the Affected Employees and to be the proper persons to receive and discuss any questions, queries or concerns with, it is practical and makes common sense for such a dispute under the DRP to be raised and discussed with either Mr O’Brien and Mr Dupen. Anything in the contrary would be inconsistent with the above authorities, which outlines that a practical and common-sense approach must be applied to the context and industrial reality at the workplace. In these circumstances, if the Respondent alleges that Mr O’Brien and Mr Dupen were not in fact the correct individuals of the Resodnent for the purposes of discussions under the DRP, that will in fact be taking a pedantic and narrow approach to the DRP provisions, an approach which is inconsistent with the authorities on this matter.
22. The parties have discussed the Dispute on a number of occasions between the dates of 18 April 2024 and 30 April 2024. These discussions have occurred by way of in-person meetings, email correspondence and telephone discussions. ‘The flexible and practical implementation of Dispute Resolution Procedures may mean that a “discussion” is not necessarily required to be a face-to-face meeting, but could be by other forms of communication such as a phone call, exchange of emails or text messages’
23. All discussions have been in relation to attempting to resolve the Dispute. It is also the case these discussions were also used to ensure the consultation provisions of the Agreement were met. The discussions simultaneously were in connection with consultation and the Dispute. It was simply the case that as a consequence of discussing matters with the Affected Employees, the Dispute would be discussed to some length which included whether or not the roles of the Affected Employees are still required at the workplace and whether or not the Affected Employees were selected consistently with the Agreement.”[4] (footnote omitted)
The AMWU argues in conclusion that it would have been very clear to the Respondent’s managers that opposing views were being put forward by the union and employees about the nature of the redundancy and that such amounted to a dispute requiring resolution.
The union accepts that the Commission will not have jurisdiction to make a determination or arbitrator dispute if a Dispute Resolution Procedure in an agreement does not provide it with the ability to do so. Notwithstanding this concession, the union argues that in this case there is authorisation for progression of the dispute under the Dispute Resolution Procedure;
“The DRP at clause 22.1 of the Agreement rightfully sets out the scope of which a dispute can be dealt with by the Commission. It relevantly states: ‘The mechanism and procedures for resolving industrial disputes about any matter arising under the terms of this Agreement or in relation to the National Employment Standards, will include but not be limited to the following’. With emphasis, this part includes ‘disputes about any matter arising under the terms of this Agreement’. The Dispute is a matter arising under clause 10.5 of the Agreement.”[5]
With respect to Clause 10.5, the AMWU argues that the term is clear in what it means, referring to obligations that the Respondent must meet prior to selecting employees for retrenchment. It binds the Respondent to administer a selection process that gives regard to length of service as being a major factor in considering who is to be selected for redundancy;
“The purpose of this part is to ensure the length of service of employees is given more consideration than other factors and if it is not given the required level of consideration, then this part of clause 10.5 will be in breach by the Respondent. The Dispute raised by the Applicant is in regard to concerns that the Respondent has not given ‘length of service’ enough consideration to meet the requirements of clause 10.5. The question proposed for determination as to whether the Respondent erred in selecting the Affected Employees by not applying a selection process consistent with paragraph 2 of clause 10.5 of the Agreement is therefore directly aimed at ensuring whether the Respondent has failed to apply the required level of consideration for ‘length of service’ an obligation placed on the Respondent under clause 10.5 of the Agreement. This question is therefore within the realm of clause 10.5 and one that the Commission has jurisdiction to deal with.”[6]
With reference to the provision within Clause 10.5 to a mutually agreed third party providing “assistance”;
“The term ‘assistance’ can be interpreted to contemplate determination by arbitration. The definition of ‘assistance’ includes ‘help’ or ‘act of helping’ , an act of helping in this situation can extend to and include the Commission exercising its powers to resolve the Dispute. An act of helping is not confined or limited in any way which would render the Commission as being incapable of arbitration. However, if the ordinary meaning of ‘assistance’ is disputed between the parties, as the relevant authorities direct, construction will turn on the language of the agreement having regard to its context and purpose. The word ‘assistance’ should be interpreted not only with the title of clause 10.5 however also with the industrial context the dispute is raised in.”[7] (footnotes omitted)
The AMWU also argues that a finding that Clause 10.5 renders the Commission incapable of providing assistance to the extent of arbitration would be to rid Clause 10.5 of its true industrial purpose, as well as it being inconsistent with the legislative context under which the Agreement was made.[8] It further argues that the questions proposed by it go to the heart of the industrial purpose of Clause 10.5, to ensure fairness and protection against unfair and unlawful treatment. Further, the AMWU submitted that there are two parts to the dispute, firstly whether the affected employee’s jobs are still required to be performed and if so whether that amounts to a breach of Clause 10.5; secondly, if the job is no longer required to be performed by the Respondent, have the Affected Employees been selected in accordance with the provisions of Clause 10.5 and especially the requirement to consider length of service.[9] In finality the union argues;
“43. The proposed questions for arbitration from the Applicant fit within the scope of the DRP. The DRP requires that it be ‘any matter’ arising from clause 10.5, the proposed questions in conjunction with the Dispute is clearly a matter which falls within clause 10.5 and therefore applicable to resolution by arbitration of the Commission as it is later put in clause 22.1 of the Agreement.
44. The Commission should find it has jurisdiction in this matter and should programme the matter for hearing over the substantive issue. If the Commission finds that it does not have jurisdiction over one of the questions posed by the Applicant however it does over another, the Commission should programme the dispute in connection with the question to which the Commission has jurisdiction.”[10]
For its part, the Respondent argues that the Dispute Resolution Procedure in Clause 22 has not been enlivened and the Commission does not have jurisdiction to determine the questions under s.739 of the Act or at all. Further, and in any event, the Commission does not have power to arbitrate the questions under Clause 10.5 of the Agreement and to do so would be in breach of s.739(5) of the Act.[11]
In its submissions, the Respondent submits that the matters discussed between the parties in the period from 17 April to 15 May 2024 were discussions consistent with its obligations under the Redundancy clause, rather than steps associated with the Dispute Resolution Procedure. Such discussions as were held regarding the provisional selection of the Affected Employees for retrenchment, and the measures taken to avert or mitigate the effect of those redundancies, were clearly in the context of consultation as required under Clause 6.1 of the Agreement. The Respondent submits that at no stage did the AMWU seek to invoke or raise the dispute settlement procedure in Clause 22 concerning the proposed redundancies.[12] Further, the Respondent argues;
“d. to the extent there was disagreement between the parties, those matters were dealt with or sought to be dealt with by way of:
i. notification to the Commission in matter C2024/2448[13] to deal with a concern on the part of the Applicant that the Respondent was intending to retrench employees on 19 April 2024. Such concern was misplaced, and the dispute resolved at that point in time on that basis; and
ii. application to the Commission in this proceeding for the Commission to
act as a mutually agreed third party to provide assistance with
disagreements as to who had been selected for retrenchment under
clause 10.5 of the Agreement”[14]
In respect of Clause 22, the Dispute Resolution Procedure, the Respondent both argues that the provisions of that clause have not been enlivened or complied with in such a manner as to permit the Commission to deal with the questions.
In respect of enlivenment, and with reference to the requirements of s.186(6) of the Act, requiring enterprise agreements to include a term that provides for the settlement of disputes, the Respondent argues that Clause 10.5 sits separately to Clause 22. Clause 10.5 provides a procedure for dealing with another particular type of dispute, namely disagreement as to the selection of particular employees for retrenchment. The term in Clause 22, while compliant with s.186(6), is of a different nature. It follows that the dispute presently before the Commission is preferable to Clause 10.5 and not to Clause 22.[15]
In respect of compliance with Clause 22, the Respondent submits that where a party has not complied with the relevant Dispute Resolution Procedure within an enterprise agreement, the Commission does not have jurisdiction to deal with the alleged dispute under that Clause;
“12. The prerequisite requirements of the dispute resolution process under clause 22 of the Agreement have not been satisfied. The parties have engaged in discussions which relate to the consultation requirements under clause 6.1 of the Agreement only. On this basis, the Respondent does not accept that the Applicant has complied with even the first step required under clause 22.1(i) of the Agreement.
13. The Applicant did not at any point raise that the parties were in dispute as to the genuineness of the redundancies or the process applied during the selection process. Further, at no point was it clear to the Respondent that there were opposing views in respect of these matters which were required to be resolved. To the contrary, the Respondent consulted with the Applicant as required under clause 6.1, answered all requests for information received by the Applicant (which the Respondent understood were raised as part of the consultation process), and had heard nothing further in respect of these matters.
14. Further, in contemplation of the requirement under clause 10.5, the parties reached mutual agreement to seek the assistance of the Commission as to the employees selected for retrenchment under clause 10.5 of the Agreement. It would not have been necessary for the parties to seek mutual agreement under clause 10.5 if the matter was being progressed as a dispute under clause 22. Such a recharacterisation of events is simply unsupported by the evidence.
15. Further, for the reasons which follow, to the extent the Applicant seeks to have the Commission exercise powers of arbitration in respect of the Questions, relying as it does on the agreement between the parties under clause 10.5, such a course would be in breach of clause 739(5) as being inconsistent with a fair work instrument applying to the parties, in this case the very terms of clause 10.5 itself.”[16]
Returning to Clause 10.5, the Respondent argues that there is no power of arbitration within that term, with the term merely providing that the parties are to obtain the “assistance” of a mutually agreed third party if there is a disagreement over who was to be retrenched. It argues that;
“The term "assistance" used in context does not reference or even contemplate determination by way of arbitration. So much is evident when regard is had to the clause as a whole, and the overarching sentence in clause 10.5 that "the Company reserves its right to determine the selection of employees for redundancy". It is unclear on what basis the assistance of a mutually agreed third party (who is not necessarily even the Commission) could be sought to "determine" the dispute as to the selection of employees, when that power clearly rests with the Respondent under the Agreement.”[17]
In finality, the Respondent argues that, in this case “the assistance of the Commission, as a mutually agreed third party, was sought and provided to the parties under clause 10.5 at the conference convened on 15 May 2024”[18], and;
“25. The Respondent put forward in good faith to the Applicant material supporting its decisions as to who ought be selected for retrenchment. The Applicant was provided an opportunity at the conference to put matters as to why the selection of employees for retrenchment should be reconsidered. Those matters have been the subject of consideration by the Respondent.”[19]
As to the meaning of the word “assistance”, as it is used in Clause 10.5, both parties relied upon the dictionary meaning of the word as well as how that meaning may inform determination of the Commission’s role in this dispute. The AMWU argued that “assistance” “can be interpreted to contemplate determination by arbitration. The definition of ‘assistance’ includes ‘help’ or ‘act of helping’, an act of helping in this situation can extend to and include the Commission exercising its powers to resolve the Dispute”.[20] The Respondent submitted;
“… the online Macquarie Dictionary definition of ‘assist’ relevantly includes "to give aid or help". In contrast, the online Macquarie Dictionary definition of ‘arbitrate’ includes "to decide as arbiter or arbitrator; determine". There is a fundamental contrast between the meanings of ‘assist’ and ‘arbitrate’. It is clear on a plain language reading of the clause that assistance is a far more limited method of dispute resolution than the power to make a final determination through arbitration.”[21]
In dealing with a dispute such as this, the Commission is not undertaking an exercise of judicial power but is instead exercising a power of private arbitration, with that power deriving from the parties’ agreement to submit their differences for decision by a third party. The resultant arbitrator’s award is not binding of its own force, but instead its effect depends on the law which operates with respect to it.[22] It is accepted that while not exercising judicial power, the Commission “may legitimately form and act upon opinions about legal rights and obligations as a step in the exercise of its own functions and powers”.[23]
The Full Bench in Health Services Union v DPG Services Pty Ltd summarised the correct approach to the construction of enterprise agreements:
“[13] The principles of interpretation of enterprise agreements are well established.[24] The task of construing an industrial instrument begins with a consideration of the ordinary meaning of the words, read in context, and taking into account the evident purpose of the provisions or expressions being construed. Relevant context will include other provisions of the industrial instrument, read as a whole, and the disputed provision’s place and arrangement in the instrument. The statutory framework under which the industrial instrument is made, or in which it operates may also provide relevant context, as might an antecedent instrument or instruments from which a particular provision has been derived. Regard may be had to relevant context and surrounding circumstances to determine whether there is any ambiguity in a provision of an industrial instrument. The language of an industrial instrument is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. Context is not itself an end, and a consideration of the language contained in the text of the relevant parts of the instrument remains the starting point and the end point in the task of construction. Nevertheless, a purposive approach to interpretation, not a narrow or pedantic approach, is appropriate.”[25]
The provisions of the agreement which are relevant to determination of this matter are set out above.
Importantly there is an obligation arising under Clause 6.1, (consultation regarding introduction of change) for the Respondent to notify affected employees and their representatives of major changes, as defined within the clause, including matters that would result in termination of employment, major changes in the composition of the workforce and the elimination or diminution of job opportunities. The agreement sets out a particular procedure for dealing with redundancies.
The dispute now before the Commission centres around the provisions of Clause 10.5, which essentially provides four separate rights and obligations; the Respondent has reserved the right to determine the selection of employees for redundancy; that right though is tempered by the Respondent acknowledging that length of service will be a major factor to be considered in selecting employees for redundancy, but other factors being equal; there is right for employee representatives to be notified of employees to be retrenched before that occurs; and finally there is, in the event of a disagreement over who was to be retrenched, the right for “the assistance of a mutually agreed third party” to be obtained.
The first question for consideration in relation to the provisions of Clause 22 is whether the dispute, as characterised, has a nexus or sufficient nexus to the provisions of the Agreement itself..[26] Ordinarily, without the first paragraph in Clause 10.5, reserving rights to the Respondent and the final part of the third paragraph of Clause 10.5, dealing with disagreement about redundancy selections, there likely would be sufficient nexus between the dispute now before the Commission and the provisions of Clause 22.
In this case though, Clause 10.5 substantially modifies what may be brought to the Commission through disputes under Clause 22.
First, the statement that the Respondent “reserves its right to determine the selection of employees for redundancy” must be accorded the ordinary natural meaning of the words within the first paragraph. A right to determine the selection of employees for redundancy must surely be construed as giving the employer the right of selection and not, in finality the Fair Work Commission, through the means of arbitration. Whereas Clause 22 enables a dispute to be raised about “any matter arising under the terms of this Agreement”, that term is not coupled with anything which would have the effect of overriding anything within the Agreement that is inconsistent with the general provision.
It is for the parties to decide on the scope of their dispute resolution term when making their enterprise agreement, as s.186(6) only requires a term to be included that requires or allows the Commission or another person independent of the parties “to settle disputes”.
Second, the final part of Clause 10.5’s third paragraph provides that “if there is a disagreement over who is to be retrenched the assistance of a mutually agreed third party will be obtained”. It does not say that, in the event of disagreement, “the matter will be dealt with in accordance with the dispute resolution clause”.
While I accept the submissions made by both parties as to the dictionary meaning of the word “assistance”, despite them referring to different sources, I do not take the view that there is a substantial difference in the dictionary meanings put forward. The meaning of the word “assistance” does not dispose of the question of what disputes may be raised under Clause 10.5. Plainly, a “disagreement” can equate with a “dispute”, however Clause 10.5 then does not say that disagreements can be raised with a mutually agreed third party for the purposes of conciliation and if necessary, arbitration. Instead, the term only goes so far as to provide that assistance will be provided by mutually agreed third party.
In determining the proper construction of Clause 10.5, I also take account of the fact that the agreement specifically states, in one other place, that disputes of a particular type are to be dealt with in accordance with Clause 22. Clause 13.1 provides that, a dispute which arises about the operation or application of the terms of an award within the context of determination of an employee’s rights in relation to superannuation, “shall be resolved through the Dispute Resolution Procedure in this Agreement”. I draw from this provision that the parties were sufficiently concerned as to make it clear how a dispute of the type within Clause 13.1 should be dealt with.
The provision in the final part of the third paragraph of Clause 10.5 is not dissimilar. It contemplates that there may well be disagreement of a particular type, (that is, who is to be retrenched), and then specifies directly how the dispute of that type should be dealt with, that is through the assistance of a mutually agreed third party. The difference between Clause 10.5 and 13.1 of course is that the latter unambiguously positions disputes about award coverage for the purposes of superannuation as being one which must be dealt with in accordance with Clause 22 of the Agreement. Clause 10 does not do this.
It is of course notable that Clause 10.5 as well as Clause 22.1 both refer to “assistance” being given to overcome disputes.
In the case of Clause 10.5, assistance is to be rendered by a “mutually agreed third party”. In the case of Clause 22.1, the subject of which is the referral of unresolved disputes to the Fair Work Commission, the purpose of referring matters to the Commission is “for assistance in resolving the matter”, which may be through conciliation and if necessary arbitration.
These are starkly different rights, albeit both rights of assistance.
In the case of the assistance to be provided by the Fair Work Commission, it may be conciliation and “if necessary, arbitration”. The nature of arbitration is such that, through the combination of the Agreement and s.739, the parties have agreed they will submit themselves to a binding determination made by the Commission. Of course, the arbitrator’s award is not binding of its own force but instead its effect depends on the law which operates with respect to it.
The assistance provided under Clause 10.5 goes nowhere near as far, with there being no explicit capability for the “mutually agreed third party” to assist by means of arbitration. There is no capacity for enforcement, save perhaps in respect of breach of contract if there was an agreed settlement that one party walked away from.
The final part of Clause 10.5, at least in relation to the single matter of “disagreement over who is to be retrenched” must therefore be construed as a closed provision, enabling disputes about selection for redundancy to be agitated, debated and ultimately mediated by the mutually agreed third party, but not arbitrated (unless the parties agreed when starting the mutually agreed third party process that the matter could be arbitrated).
In case it may be taken that I construe Clause 10.5 as operating entirely separate from Clause 22, then for the purposes of clarity I do not suggest that. It appears to me, from the construction of the Agreement as a whole, that matters of non-compliance with the generality of the redundancy clause, that is the entirety of Clause 10 save for the exceptions within clause 10.5 to which I have referred, is capable of being “industrial disputes about any matters arising under the terms of this agreement”. For practical purposes associated with this dispute, that likely extends to disputes about whether a particular position, declared redundant, meets the definition of the term “redundancy” as set out within Clause 10.1.
Having formed the construction set out above, there is no dispute validly before me about the selection of the Affected Employees for redundancy.
To the extent that the Applicant’s case puts forward that the positions held by the Affected Employees are not genuinely redundant, I agree with the submissions made by the Respondent that there has been no articulation of a dispute by the AMWU on that subject through the steps required by Clause 22.
The evidence before the Commission is that there has been some considerable degree of discussion between the AMWU and the Respondent about matters of redundancy, however there is no evidence that the steps referred to in Clause 22.1, being antecedent steps to the referral of a dispute to the Fair Work Commission, have been complied with. The Applicant’s witness evidence on the subject from its organiser, Mr Wessley asserts that on 18 April 2024, he raised with Mr O’Brien and Mr Dupen that the jobs of the Affected Employees were still required to be performed, but that the Respondent did not agree and maintained its position with the discussion on that date then turning to matters of selection criteria.[27] A further meeting held on 30 April 2024 appears to have followed the same path, with both parties maintaining their position in my resolution being reached.[28]
Mr Wessley also refers to correspondence from the AMWU’s Industrial Officer, Mr Bonello, who appeared in these proceedings, who enquired of Mr O’Brien “for completeness purposes”, a request for further particulars regarding the completion of the two contracts said by the respondent to be ending. Mr Bonello’s email, sent on 22 April 2024, sought the completion date of the Respondent’s contracts, which it said had precipitated the redundancies and the steps it had taken to obtain further work and whether there were any contracts to replace the two which had ended.[29]
Mr Bonello’s enquiries were comprehensively answered by Mr O’Brien in an email dated 30 April 2024 and sent at 6 PM.
It cannot be reasonably taken from this exchange of correspondence that a live issue remained about the genuineness of the redundancies as at the date of Mr O’Brien’s response. If anything, the correspondence should be taken as the union having raised a question, which was then comprehensively answered by the Respondent, leaving, on that date at least, no apprehension of the lingering dispute about the genuineness of the redundancies.
If, after 30 April 2024, there had in fact been an unresolved dispute about the character of the redundancies, it could have been expected that in the time between the date of Mr O’Brien’s correspondence and the date on which the application which is the subject of these proceedings was lodged, that is, 1 May 2024 at 4:29 PM, that the AMWU formally put the Respondent on notice that it disputed whether the notified redundancies conformed with the definition of “redundancy” in Clause 10.1 of the Agreement. However, that did not occur and instead the union commenced the action now before the Commission. with the application making no reference either to the dispute being raised under Clause 22 or to it being in connection with whether the redundancies were genuine or not.
Accordingly, I am not satisfied that there is a dispute before the Commission dealing with the subject of whether the redundancies were genuine or not.
On the basis of the foregoing reasoning, I answer the two questions for determination posed by the AMWU as follows;
The primary part of the first question asks whether each of the listed employees’ jobs are still required to be performed at the workplace (given the ending of the two contracts) – Not answered. The question is not a dispute arising under Clause 10.5 and, to the extent the question asserts a dispute arising under Clause 22, no such dispute is validly before me.
The second part of the first question asks whether the Respondent has breached clause 10.5 of the agreement by selecting the employees for redundancy – For the reasons set out above, this is not a dispute within the Commission’s jurisdiction to answer.
The second question asks whether the Respondent erred in selecting the employees by not applying a selection process consistent with paragraph 2 of Clause 10.5 of the agreement – For the reasons set out above this is not a dispute within the Commission’s jurisdiction to answer.
The dispute is determined accordingly.
COMMISSIONER
Final written submissions:
Applicant – 31 May 2024
Respondent – 5 June 2024
[1] Respondent’s Summary of Position, 15 May 2024.
[2] AMWU Outline of Submissions in Reply, 31 May 2024, [29].
[3] Ibid.
[4] AMWU Outline of Submissions in Reply, 31 May 2024.
[5] AMWU Outline of Submissions in Reply, 31 May 2024, [31].
[6] AMWU Outline of Submissions in Reply, 31 May 2024, [36].
[7] Ibid; with reference to the definition of “assistance” in the Concise Oxford Dictionary Sixth Edition edited by J.B.Sykes, and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union v Berri Pty Limited 2017 at [114]
[8] Ibid, [41].
[9] Ibid, [42].
[10] Ibid.
[11] Respondent’s Response Submissions, 5 June 2024, [3].
[12] Ibid, [5].
[13] The earlier matter dealt with by Deputy President Clancy.
[14] Respondent’s Response Submissions, 5 June 2024, [5].
[15] Ibid, [7] – [8].
[16] Ibid.
[17] Ibid, [20].
[18] Ibid, [24].
[19] Ibid.
[20] AMWU Outline of Submissions in Reply, 31 May 2024, [38].
[21] Respondent’s Response Submissions, 5 June 2024, [21]
[22] Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; (2001) 203 CLR 645 [30] – [32]; cited in Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82, [25].
[23] Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd [2012] FCAFC 87 [21], cited in Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2016] FWCFB 2019, [52].
[24] See for example James Cook University v Ridd [2020] FCAFC 123, 298 IR 50 at [65] and the authorities referred to therein; WorkPac Pty Ltd v Skene [2018] FCAFC 131 264 FCR 536 at [197]; Australian Workers’ Union v Orica Australia Pty Ltd[2022] FWCFB 90 at [18] and the authorities referred to therein.
[25] Health Services Union v DPG Services Pty Ltd[2023] FWCFB 81.
[26] Seven Network (Operations) Ltd v Community and Public Sector Union (2003) 122 IR 98; Print PR933766
[27] Witness Statement of Daniel Wessley, 31 May 2024, [4].
[28] Ibid, [7].
[29] Ibid, Attachment DW – 3.
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