"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Shepparton Partners Collective Operations Pty Ltd
[2022] FWC 84
•20 JANUARY 2022
| [2022] FWC 84 |
| 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
Shepparton Partners Collective Operations Pty Ltd
(C2021/3689)
| COMMISSIONER O'NEILL | MELBOURNE, 20 JANUARY 2022 |
Section 739 – Application to deal with a dispute – dispute determined
The AMWU made an application for the Commission to deal with a dispute with Shepparton Partners Collective Operations Pty Ltd (SPC) concerning changes it implemented, including restructuring leadership positions. The AMWU contends that SPC has not complied with the redundancy provisions in the SPC Operations Shepparton (Food Preservers) Enterprise Agreement 2020 (the Agreement) in respect of Mr Trevor Dunlop.
The dispute was unable to be resolved through several conciliation conferences, and the matter was dealt with at a hearing on 26 November 2021. I granted the Respondent permission to be legally represented.
Prior to the hearing, the parties had substantially agreed, on the form of the questions to be determined by arbitration. After expressing some concerns as to the form proposed, I sought the parties’ views as to whether the appropriate questions were:
Question 1: Should the Respondent in order to meet its obligations under cl 2.5 of the SPC Operations Shepparton (Food Preservers) Enterprise Agreement 2020 have accepted Mr Trevor Dunlop’s request for a voluntary redundancy during the reorganisation process that took place at the Shepparton plant between April and June 2021?
Question 2: If the answer to Question 1 is yes, should the Respondent now accept Mr Dunlop’s request, and if so, on what terms?
Neither party objected to the reformulation of the questions to be arbitrated.
Relevant provisions in the Agreement
The dispute settlement process is clause S2.1. The parties agree that the relevant steps in the process have been followed and that the Commission is empowered to arbitrate this dispute.
The Agreement deals with redundancy in clause S2.5 which provides:
“S2 .5 REDUNDANCY
S2.5.1 Purpose
Any redundancy situation will be handled in the most sensitive and fair manner possible.
Redundancy occurs when the Company no longer requires the work to be carried out by its employees.
Prior to the implementation of the Redundancy procedure the opportunities for alternative employment within the Company will be reviewed. If such opportunities exist then by mutual agreement an employee may be redeployed preserving their current pay and classification level. If SPC decides within 3 months of the redeployment that the alternative position is not suitable then the Redundancy shall apply.
In the event of redundancies the following conditions will apply.
S2.5.2 Notice period
PERIOD OF SERVICE PERIOD OF NOTICE 1 year or less 1 week 1 year and up to the completion of 3 years 2 weeks 3 years and up to the completion of 5 years 3 weeks 5 years and over 4 weeks
(i) In addition to the notice above, employees over 45 years of age at the time of the giving of the notice with not less than two years continuous service, shall be entitled to an additional week’s notice.
(ii) Employees leaving of their own accord before the end of the notice period will be paid up until the time they leave and entitlements will be calculated to that date.
(iii) The Company will allow an average of one day off per week during the period of notice (as specified above) for the specific purpose of seeking and securing another job.
S2.5.3 Financial assistance
Normally the Company would expect people to remain during their notice. However, effort would be made to release anyone who elects to leave early to gain alternative employment or because of very special personal circumstances.
Employees who have completed one year’s continuous service will receive the following severance payments:-
SERVICE SEVERANCE PAYMENT Less than 1 year Nil More than 1 year 2 Weeks for each completed 6 months of service
S2.5.3.1 Long service leave
The Company will pay out LSL. Accruals on a pro rata basis irrespective of length of service.
S2.5.3.2 Sick leave
The Company will pay out up to a maximum of 20 days of unused sick leave in accordance with the provisions of this agreement upon redundancy.
S2.5.3.3 Annual leave loading
The Company will pay the appropriate Annual Leave Loading on Annual Leave entitlements.
S2.5.3.4 Cap
No employee employed prior to 1st July 2012 shall, under this Agreement receive severance payments in excess of a maximum 104 weeks payment excepting for Employees who had an entitlement to greater than 104 weeks as at 1st July, 2001 who will retain that entitlement for the life of this agreement.
No employee who commenced permanent employment after 1st July 2012 shall under this Agreement receive severance payment in excess of a maximum 52 weeks payment.
For retrenched employees, the age loading will apply to the base rate of pay as follows:-
AGE LOADING 50 up to 56 years 10% loading 56 up to 60 years 15% loading 60+ 20% loading
S2.5.4 Redundancy process
S2.5.4.1 Step 1
Should SPC decide redundancy is necessary and redeployment as per S2.9 above is not possible, it will call for volunteers from the Department or Section or Operating Division concerned or Company wide.
SPC reserves the right to determine the area from within the affected department or section from where volunteers will be accepted. SPC may refuse to accept volunteers on the basis that their skills are required and this will be validated by the development of a matrix of skills required that is agreed between the parties.
S2.5.4.2 Step 2
If there are not sufficient volunteers as a result of the process detailed at step 1, SPC will select the people it intends to retrench based on the matrix of skills from the area determined at step 1 or shall redefine the department or sections concerned as per Step 1.
Redundancies will in every case be genuine and will not be used as a device to substitute one category of employee for another. No employee whose role is declared redundant will be replaced in their duties.
S2.5.4.3 Grievances
Should there be any dispute on the application of this clause the parties will notify each other of the existence of a dispute and attempt to resolve the matter. If after a period of three weeks has elapsed from the notification of a dispute and the dispute has not been resolved, the provisions of S2.2.3 and onwards in the dispute settlement process of this agreement shall apply.”
In response to my question, the AMWU submitted that the reference to S2.9 in the clause is an error; that it refers to a clause number in an earlier agreement and is meant to refer to S2.5.1 in the Agreement.[1]
Factual context
Mr Dunlop has been employed on a permanent basis in various roles with SPC since 4 October 1999. His current role is Receivals Clerk at the National Distribution Centre.
Around April 2021, the Respondent reviewed its operations at Shepparton focusing particularly on on-site leadership structure and technology. As part of this review, SPC decided to replace 67 Team Leader positions (S9) and Production Supervisor positions with 22 Production Leader positions. The new Production Leader positions were to be salaried positions employed under common-law contracts.
SPC informed the AMWU of its plans, and Mr Hefford, the Assistant National Secretary Food and Confectionary Membership Area had several discussions and meetings with Mr Tanti, General Manager People & Culture for SPC and delegates over the ensuing weeks. Mr Hefford raised the issue of a skills matrix and put forward the skills matrix that had been used in an earlier redundancy process around 2010.
On 28 April, management announced the proposed changes to the structure to all affected employees (S9 and Production Supervisors). Mr Dunlop was also informed of the proposed changes by letter in April 2021.[2] The announcement was followed by one-on-one consultation with all affected team leader and production supervisor employees between 28 April and 4 May 2021.
On or about 28 April, Mr Dunlop met with Mr LeCompte, National Logistics and Inventory Manager and other managers to discuss the proposed changes. Mr LeCompte’s responsibilities include the National Distribution Centre, where Mr Dunlop works. Mr Dunlop was told that his role would be made a staff role, and that he could either be made redundant or placed into a new role.
A further meeting took place on 30 April with Mr Dunlop, Mr LeCompte and the Human Resources Manager, Ms Finger. According to Mr Dunlop, he was asked what he thought of the restructure and whether he knew what he would like to do. He said that he wasn’t sure and was still thinking about it. Mr Dunlop says that Mr LeCompte asked him if he was going to retire at the end of December, to which he said he wasn’t sure. He spoke about how he had originally hoped to retire in December 2020. Mr Dunlop says that he had openly discussed his retirement plans at the factory, including that he intended to travel around Australia, so if he was asked whether he wanted to retire, his answer was always yes. However, uncertainty surrounding COVID-19 had upset his original hope to retire at the end of 2020.
Mr LeCompte has a different account of the discussion and denies asking Mr Dunlop if he was retiring. Mr LeCompte says that he told Mr Dunlop that his S9 role could be converted to a staff role and that redundancies were on offer. Mr Dunlop said words to the effect “I don’t want it. I am retiring at the end of the year and I am in transition to retirement. I’d rather stay on and train someone up before I leave.”[3]
Mr LeCompte’s account accords with Ms Finger’s recollection, and with handwritten notes she took the same day which included:
“would like to stay in current position until December when he retires, does not want a change in salary, says no point putting him in PL role as he will be leaving in 8 months, I don’t want to lose my entitlements (super, pay), I will be retiring at the end of December (31 Dec 21).”[4]
On 6 May 2021, offers for the new Production Leader roles were made, along with redeployments to an S8 role and two additional salaried roles.
Also on 6 May, Mr Dunlop met with Mr Tanti and Mr LeCompte. Again, there are different accounts as to what transpired. Mr Dunlop says that he was told he would be left in his current position with no change to his pay rate or classification. He says that he wasn’t offered any paperwork, and that Mr Tanti asked him to confirm his retirement in writing, to which he responded, “not yet as it’s too uncertain.” Mr Dunlop says that he then asked about the availability of a redundancy package, to which Mr Tanti and Mr LeCompte looked at each other and said nothing.
However, Mr Tanti says that he offered Mr Dunlop a role doing the same duties in a salaried position under a common law contract or, alternatively, a redundancy. Soon after that Mr Dunlop said words to the effect “don’t bother changing anything as I’m planning to retire at the end of the year”. Mr Tanti said that the company was happy to maintain his remuneration and duties until he retired at the end of the year. Mr Tanti says that prior to this meeting he did not know of Mr Dunlop’s intentions, but he learnt afterwards that Mr LeCompte and Ms Finger were. Mr Tanti says that he physically showed Mr Dunlop an envelope (the pack) and said words to the effect that it contained a letter and redundancy calculations, and that redundancy was still possible. Mr Dunlop responded with “don’t bother I’m going to retire.” Holding up the letter, Mr Tanti then said: “so you don’t want this?” to which Mr Dunlop replied “no.” From this exchange, Mr Tanti understood that Mr Dunlop wished to continue in his role until he retired in December 2021. At some point, Mr Tanti recalls asking if he would confirm his intentions in writing, however Mr Dunlop never did so.
Mr LeCompte’s account is consistent with Mr Tanti’s evidence.
Mr Dunlop and Mr Hefford gave evidence that after an AMWU union meeting, Mr Dunlop approached Mr Hefford for advice, who said that if Mr Dunlop was interested in being made redundant, he should make his position clear in writing and that this would help get over the miscommunication.
On 12 May, Mr Dunlop then sent an email to the Respondent: “Please advise about my request for a redundancy package as I do not want to be redeployed.”[5] Mr Hefford, who was copied into the email, forwarded it to Ms Finger and Mr Tanti on the same day. Mr Tanti responded to Mr Hefford with:
“Jason, on two separate occasions with Trevor, we were directed, by him not to bother with redeployment or reclassification of his job, as he was retiring at the end of the year. He was very specific and nominated an end date of December 31.
I was in his second meeting with Christian, and asked what he wanted me to do with an envelope I had for him where he said “don’t bother I’m going to retire anyway at the end of the year” so we didn’t. We have been very transparent in group sessions and with individuals about our process (in short offer>redeployment>voluntary redundancy). These are scripted so messages are consistent.
It’s too late in my view for Trevor to change his mind on this for what appears to be a ‘late grab for cash’ and deny payment to those in the business who will be facing genuine redundancy, access to funds. We will of course consider an application for voluntary redundancy, when these are called for.
We are very pleased with the number of offers that have been accepted and today will be processing expressions of interest in a redundancy payment from S9 affected staff, making efforts to redeploy only those who seek it.”[6]
Mr Tanti says that his email to Mr Hefford including the reference to a ‘late grab for cash’ was simply expressing his frustration that Mr Dunlop was now seeking a redundancy package, given that he had been offered and rejected one in May.
Ms Finger’s response to Mr Dunlop’s email was:
“Thanks for your email. To be clear, and as agreed your role is not being reclassified. Your position will continue to be classified at an S9 until your retirement which you have indicated to be December 31, 2021. Having said that, we will be calling for voluntary redundancies over the next few days, there will be a limited number of opportunities available, you can apply for voluntary redundancy at that time, and it will be considered as agreed in the EBA.”[7]
Mr Dunlop says that Ms Finger’s response was inaccurate as he had never been asked to agree to not be reclassified and he had not indicated he would retire on 31 December 2021. When asked to confirm his retirement in writing he had specifically declined to do so, as he had made no definite decision.
Mr Tanti’s evidence, in cross-examination, confirmed that he knew by this point (12 May) that Mr Dunlop wanted a redundancy.[8] However, Mr Dunlop’s name was not simply added to the other S9 employees because of his earlier indication he was seeking to retire.[9]
From SPC’s perspective, by this date the first round of the process had been completed, the outcomes finalised, and the next step was to call for voluntary redundancies. Thirty employees had been made redundant in this first round.
Two days later, on 14 May 2021, SPC commenced a second round of redundancies. All permanent employees across the site were invited to apply for voluntary redundancy by 19 May 2021. The email included: “As per clause S2.5.4.2 of the Agreement, SPC may refuse to accept volunteers on the basis that their skills are required and this will be validated by the development of a matrix of skills required that is agreed between the parties.”[10]
Thirty-three applications were received, including Mr Dunlop’s. He was the only S9 employee to apply, as the others had either been redeployed to other roles or offered a redundancy. Eleven employees were offered a redundancy in the second round.
Management met on 9 June to consider the applications for voluntary redundancy. They had with them a skills matrix that had been agreed with the AMWU some years earlier in 2011.[11] This was the matrix Mr Hefford had put forward. The skills matrix involved weighted scoring against the following performance measures: safety awareness; quality of work; volume of work; punctuality; attendance; flexibility; job knowledge; length of service; initiative; comprehension; learning ability and performance coaching & counselling.
Ms Finger’s evidence was that during the meeting management initially used the skills matrix, however those present considered that ‘all applicants were pretty much on the same level’.[12] Accordingly, using the skills matrix would be too difficult because the applicants were too similar, for example attendance and punctuality were similar. However, in cross-examination Ms Finger acknowledged that there was no detailed information on these (or any) performance measures in respect of each applicant in front of them.[13] The skills matrix was not completed.
Ms Finger’s evidence was that the applicants’ names were projected on a board, and there was a discussion about each employee as to whether their skills were required and their role would be replaced. If the skills were required and the role had to be replaced, then their application was rejected.[14]
The only documentary record of the discussions that was in evidence was Exhibit RF-6 to Ms Finger’s witness statement. This was a spreadsheet that an SPC employee was typing into during the meeting.[15] One worksheet contains the details of 17 employees each with an entry of ‘N’ in the column headed ‘replacement’ and ‘Y’ under the column headed ‘accept’. Eleven of the 17 named employees had an entry of ‘Applied for voluntary redundancy’ in the column headed ‘status’. Under the column headed ‘notes’, other entries included ‘could bring someone from another shift to complete’, ‘could replace with casual’. No explanation was provided about these comments that, on their face, suggest that other roles filled by employees who had their applications for redundancy accepted would be needed but replaced by casual employees or by someone else taking on extra duties.
The second worksheet has the details of 23 employees with an entry of ‘Y’ in the column headed ‘replacement’. It does not contain any detailed information about skills held by the applicants and the company’s requirements.
Mr Dunlop does not appear in either of these worksheets. His details are the sole entry on the third worksheet. This worksheet does not have the same column headings as the other two. Instead, it records his name, contact details, his role as Receivals Officer and under the column headed ‘Outcome’ it records: “same role, retire at 31 December 2021.” No explanation was provided about why the worksheet containing Mr Dunlop’s details is separate to, and differs from, the information recorded in the other two worksheets. On its face, it suggests that management’s belief that he would retire on 31 December 2021, was considered. It includes no information about his skills.
Mr LeCompte’s evidence was that he commented on whether NDC roles, including Mr Dunlop’s, were required, and said that “Trevor Dunlop’s [and another’s] roles would have to be replaced as their skills were required.”[16]
Mr Tanti said that it was difficult to distinguish the employees based on their skills, so the discussion included whether the employee’s skills would be required in the future. His evidence was that Mr Dunlop’s application was declined because the role was ongoing and that he “also took into account that Mr Dunlop indicated to me he was going to retire at the end of 2021” and was also mindful that some staff were not well equipped financially or otherwise to leave the company.[17]
Mr Dunlop was told on 11 June that he wasn’t being offered a redundancy. He was very hurt and disappointed by the decision.
SPC’s Board had approved 42 redundancies.[18] In total, 41 employees were made redundant: 30 in round 1 and 11 in round 2.
Submissions of AMWU and SPC
The AMWU submits, and SPC disputes, that the redundancy process undertaken by SPC was not consistent with the requirements in clause S2.5.4 of the Agreement, in 3 respects:
(a) Whether the Respondent complied with the requirement to handle Mr Dunlop’s application for redundancy in the most sensitive and fair manner possible;
(b) Whether the Respondent complied with the requirement to call for volunteers in round 1 and 2; and
(c) Whether the Respondent complied with the requirement to develop a matrix of skills that is agreed between the parties.
In relation to the first question, the AMWU submits that in circumstances where SPC was told several times that Mr Dunlop sought a voluntary redundancy (his email 12 May, his application for a voluntary redundancy, and that he did not give written notice of any intention to retire despite a request to do so), SPC’s “stubborn conviction” that Mr Dunlop would retire was unfair and insensitive, and demonstrated by the reference of Mr Dunlop making a ‘late grab for cash’. This belief is submitted to have ‘infected’ the decision in round 1 and round 2. Further, that the Respondent did not comply with this requirement given that all the other S9 staff were either redeployed or made redundant.
SPC contends that this provision in the Agreement is aspirational and not enforceable, but that in any event there was no failure to comply. Mr Dunlop’s ‘musings’ on retirement were not misrepresented and there is probative evidence including Ms Finger’s contemporaneous notes that Mr Dunlop had, in fact, advised that he was going to retire in December 2021. There was no unfairness or insensitivity in acting on this advice, SPC simply did what Mr Dunlop had asked of it – to retain his current position until he retired. Further, Mr Dunlop was not treated inconsistently with the other S9 staff, as he was offered ongoing work as well as the option of a redundancy.
In response the AMWU says that the Respondent’s submission misses the point – the question to be considered is whether the clause was complied with, not whether it created an enforceable right.
The second question is whether the Respondent complied with the requirement to call for volunteers in round 1 and 2. The AMWU submits that on 12 May 2021, the Respondent knew that Mr Dunlop had requested a redundancy, and at which time there was no bar to adding Mr Dunlop to the group of S9 employees who had been offered redundancy. It submits that the only factor identified was his purported retirement, with no mention of his skills being required. It contends that the Respondent did not comply with clause S2.5.4.1 of the Agreement which provides that SPC may refuse to accept volunteers on the basis that their skills are required, in either round 1 or round 2. The AMWU further submitted that the financial position of Mr Dunlop was an invalid factor to take into consideration.
SPC submits that there was no requirement in round 1 to call for volunteers, and in any event, Mr Dunlop was offered one. In relation to round 2, it points out that SPC did call for volunteers.
The third contention of the AMWU is that the Respondent failed to comply with the requirement to develop a matrix of skills that is agreed between the parties. The AMWU submits that the skills matrix was ignored and not completed, with the failure to complete the matrix by scoring applicants being a breach of its obligations. Further, that it is impossible for all employees to score the same across all the criteria in the matrix. It contends that the company is only entitled to refuse volunteers on the basis of their skills being required, as validated by the agreed skills matrix.[19]
SPC submits that the use of the word “may” in S2.5.4.1 where it provides “SPC may refuse to accept volunteers on the basis that their skills are required ….” indicates that the provision is discretionary in nature, and not mandatory. Nonetheless regard was had to the skills matrix agreed with the AMWU in 2011, but it was not determinative. SPC contends that the clause did not prevent SPC from taking into account other considerations, including:
· Mr Dunlop’s declaration that he intended to retire in December 2021;
· Whether his role would still be required; and
· Mr Dunlop’s financial position, relative to other employees.
SPC submitted that in considering such matters it did not act ‘unjustly or unreasonably’, and the Commission should not intervene. The submission contends that the test is:
“It seems to us that the proper test to be applied and which has been applied for many years by the Commission is for the Commission to examine all the facts and not to interfere with the right of an employer to manage his own business unless he is seeking from the employees something which is unjust or unreasonable.”[20]
The AMWU submits that the answer to Question 1 is: ‘no’, and the answer to Question 2 is $136,452.30. This sum represents the AMWU’s calculation of Mr Dunlop’s redundancy and notice entitlement as at 28 May 2021.
SPC submits that the answer to Question 1 is: ‘yes’. However, it submits that if the Commission finds otherwise, the amount of compensation to Mr Dunlop should be reduced by the sum of his earnings since 24 June 2021 (the date when voluntary redundancies were effected), otherwise he would be unjustly enriched by his earnings since that time. If the Respondent had complied with the Agreement, the result may have been no different, and if Mr Dunlop had been made redundant at that time, it would have occurred around 24 June 2021.
In response the AMWU asserts that any redundancy payment should not be discounted in the way proposed, as to do so would unjustly enrich the Respondent by providing it with the benefit of Mr Dunlop’s performance of work from 24 June to the date he would be made redundant. Further, the AMWU notes that not all persons who were made redundant ended their employment on 24 June; at least two other S9 classified employees who were selected for redundancy in round 1 continued working (and being paid) as at 22 November 2021.
Consideration
(a) Findings of fact
Much, but not all, the factual context in this case is uncontested. There is, for example, considerable disagreement as to what was said at the 30 April and 6 May meetings. Regardless of what did, in fact, take place at those events, the following is clear (and I find):
(a)In around April 2021, the Respondent decided to restructure its leadership including by removing all of the S9 Team Leader positions, including Mr Dunlop’s.
(b) Mr Dunlop, like the other S9 employees, was offered either a redundancy or redeployment to another role.
(c)Management believed (whether reasonably or not) that Mr Dunlop intended to retire at the end of December 2021 and did not want either a redundancy or redeployment. Rather, he wanted to continue in his role until he retired. Mr Dunlop never confirmed his intention to retire in writing.
(d)On 6 May 2021, the S9 classified employees other than Mr Dunlop, were advised whether they would be appointed to the new Production Leader roles or would be redeployed, or would be made redundant.
(e)On 12 May 2021, Mr Dunlop’s email to the Respondent clearly conveyed (possibly for the first time) that he wanted to be made redundant and did not want to be redeployed.
(f)At this date, which was before the commencement of round 2, the Respondent knew that Mr Dunlop wanted a redundancy, but he was not given one because of his earlier indication he was seeking to retire.[21]
(g) On 14 May 2021, SPC invited all employees to apply for voluntary redundancy.
(h)Thirty-three applications were received, and 11 were accepted. Mr Dunlop was the only S9 employee to apply, as the others had either been redeployed or offered a redundancy.
(i)In considering the applications, management referred to, but did not complete, either the skills matrix agreed with the AMWU in the 2010 redundancies, or any other skills matrix. Priority was given to applicants whose roles would not be replaced.
(j)In round 2 Mr Dunlop was not offered a redundancy on the basis that his role would need to be replaced and that his skills were required. Management also took into account what it understood to be Mr Dunlop’s earlier intention to retire at the end of 2021 and were also mindful that some staff were not well equipped financially or otherwise to leave the company.
In circumstances where the above matters were not significantly contested, and are sufficient to enable me to determine the dispute, where there is conflicting evidence I have not found it necessary to determine which account is accurate. I specifically make no findings to the effect that any of the SPC management team, including Mr Tanti, Mr LeCompte and Ms Finger, were motivated by, or acted, maliciously or with ill-intent towards Mr Dunlop.
For completeness, I also note that there were minor discrepancies in the evidence for example about the precise number of voluntary redundancies available at different points in time, however nothing turns on these discrepancies, and I do not consider it necessary to resolve them.
(b) Did the Respondent comply with the Agreement?
The principles applicable to the interpretation of an enterprise agreement are well articulated in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited (Berri)[22]. I have applied them in this case, without repeating them.
The application of these principles in relation to matters of ambiguity was considered by the Full Bench in United Firefighters Union of Australia v Emergency Services Telecommunications Authority T/A ESTA[23] which said:
“[35] As stipulated in Berri, the starting point for interpreting an enterprise agreement is to have regard to the ordinary meaning of the words used. Further, the text must be interpreted in the context of the agreement as a whole. Principles 7 and 10 elicited in Berri emphasise that ambiguity in a provision within an enterprise agreement must be identified before one is to have regard to evidence of the surrounding circumstances.
However, principle 8 makes it clear that, in determining whether ambiguity exists, one may have regard to evidence of the surrounding circumstances. That is, such evidence can be used to identify and resolve any ambiguity.”
The starting point is the plain and ordinary meaning of the words in the Agreement.
Clause S2.5 of the Agreement starts with its stated Purpose. The first sentence is: “Any redundancy situation will be handled in the most sensitive and fair manner possible.” The use of the obligatory language (“will”) favours a conclusion that it is more than a mere aspiration. Whether or not this sentence creates an enforceable obligation, contravention of which risks the imposition of a pecuniary penalty, at the very least it is a strong and clear expression of commitment by SPC to deal with redundancy situations in a sensitive and fair manner. It provides a prism through which to view SPC’s actions in a redundancy situation.
Where redundancies are necessary and redeployment is not possible, the redundancy process in S2.5.4 involves 2 steps. The first step is to call for volunteers. At the company’s election, volunteers can be called from either across the company or in one or more Sections or Operating Divisions. SPC also has the right to refuse to accept volunteers on the basis that their skills are required. This assessment will be validated by the development of a matrix of skills required that is agreed between the parties.
It does not appear to me in relation to round 1, that SPC followed the first step of the process. There was no call for volunteers. Rather, it identified particular positions across the site that it wished to abolish and undertook a process in respect of the affected employees (including Mr Dunlop), to offer them either redeployment or a redundancy. The Respondent baldly submitted that there was no requirement to call for volunteers.[24] Whilst the Respondent’s process may be understandable to some extent at a practical level, that does not make it consistent with its obligations under the Agreement. If it had done so, it may have avoided the subsequent conflict about whether Mr Dunlop did, or did not, wish to be made redundant. If following a call for volunteers, Mr Dunlop had not applied (because he intended to retire), the potential for any disagreement as to his intentions would likely not have arisen.
In relation to round 2, the company did call for volunteers and in doing so, elected to invite applications from across the site, rather than a more limited process. It did so in circumstances where it had a limited budget and maximum number of redundancies set by the Board.
Clause S2.5.4.1 provides that SPC may refuse to accept volunteers on the basis that their skills are required and this will be validated by the development of a matrix of skills required that is agreed between the parties. Plainly that does not require SPC to refuse to accept a volunteer on the basis that their skills are required. Such an approach is consistent with the fact that a redundancy arises where a position is no longer required by the employer.
I accept the Respondent’s submission that SPC’s capacity to refuse applications for voluntary redundancy is discretionary. However, I do not agree that SPC was able to take into account Mr Dunlop’s intention to retire (or not), or what they believed his financial position to be, relative to others. The extent of the discretion available to SPC is not unlimited, and must for example, not include considerations that are unjust or unreasonable.
In this case, I am satisfied that Mr Dunlop’s position was considered by the Respondent to be redundant, along with the other S9 positions, as part of its leadership restructure. That is why SPC offered Mr Dunlop a redundancy in round 1. I do not consider it was open to SPC, in round 2 to reject his application on the basis that it did so. It was not reasonable to take into account Mr Dunlop’s intention to retire, where from 12 May 2021, it knew he sought one. Nor was it a reasonable consideration to take into account management’s beliefs about his financial position relative to others. It was also not reasonable to reject his application on the basis that his role would be replaced, when in offering him a redundancy in round 1, it had done so on the basis that his role would be removed. In doing so, it applied a different standard and considerations to those applied in round 1.
In relation to the third issue, I consider that the skills matrix that management had present at the meeting on 9 June to discuss the redundancy applications met the requirements of clause S2.5.4, in that it was agreed between the parties. The clause does not, in my view, mandate the filling out of the skills matrix in assessing applications. Completing such a matrix is a useful approach, ensuring both greater rigour to the assessment, as well as a way to demonstrate to others who may question the outcome, of the rigour of the assessment applied. However, it is not a requirement of the clause. I form this view in part as the clause speaks of the development of an agreed skills matrix in order to validate what skills are required, rather than the completion (or application, implementation or other similar language) of an agreed skills matrix.
Nonetheless, the evidence does not support a conclusion that there was any rigorous assessment of the applications for voluntary redundancy against the skills required by SPC. Whilst the skills matrix was present, it was not completed, SPC management did not have evidence or data against any of the skills, even readily quantifiable criteria such as absenteeism or attendance. They had a general discussion and found there was not really anything to distinguish any of the applicants on the basis of skills required. Instead, they focused on other criteria, prioritising whether the roles were required. In my view, the Agreement requires much more than a cursory reference to the skills matrix. Assessment or validation against the skills matrix must be the predominant, if not sole, criterion to refuse volunteers. In my view, that did not occur.
Considered against the commitment to handle redundancies in the most sensitive and fair manner possible, I conclude that the lack of demonstrable rigour in assessing the skills of applicants against those required by SPC, together with the failure to follow Step 1 in round 1, or to add Mr Dunlop to the list before commencing round 2, and that SPC took into account invalid considerations, namely his intention to retire and relative financial position, was unreasonable and contrary to the Agreement.
Whilst invited to address the effect, if any, of s.739(5) on the matter, neither party made any submission to the effect that it precluded me from determining the resolution on the basis sought by the AMWU. On the evidence I am satisfied that my decision is not inconsistent with the Agreement, being the fair work instrument that applies. Principally, this is because SPC had decided to abolish and not replace all S9 roles, including Mr Dunlop’s following its review of leadership structures that led to the first round.
Conclusion
For the above reasons I determine the dispute as follows:
Question 1: Should the Respondent in order to meet its obligations under cl2.5 of the SPC Operations Shepparton (Food Preservers) Enterprise Agreement 2020 have accepted Mr Trevor Dunlop’s request for a voluntary redundancy during the reorganisation process that took place at the Shepparton plant between April and June 2021?
Answer: Yes.
Question 2: If the answer to Question 1 is yes, should the Respondent now accept Mr Dunlop’s request, and if so, on what terms?
Answer: Yes, on the basis that Mr Dunlop is paid the amount due to him under the Agreement as at the date of this decision, without any deduction in respect of the wages earned to date.
COMMISSIONER
Appearances:
R Wainwright for the Applicant.
M Curran for the Respondent.
Hearing details:
2021.
Melbourne (by video).
November 26.
[1] Transcript PN940-941.
[2] Exhibit RT-1 to Witness Statement of Robert Tanti.
[3] Witness Statement of Christian LeCompte at [6].
[4] Exhibit RF-7 to Witness Statement of Rebecca Finger.
[5] Exhibit RF-8 to Witness Statement of Rebecca Finger.
[6] Exhibit JH-5 to Witness Statement of Jason Hefford.
[7] Exhibit TD-3 to Witness Statement of Trevor Dunlop.
[8] Transcript PN718.
[9] Evidence of Mr Tanti, Transcript PN834-836.
[10] Exhibit RF-3 to Witness Statement of Rebecca Finger.
[11] Exhibit RF-5 to Witness Statement of Rebecca Finger.
[12] Witness Statement of Rebecca Finger at [23].
[13] Transcript PN590-593.
[14] Witness Statement Rebecca Finger at [26].
[15] Witness Statement of Rebecca Finger at [25] and Exhibit RF-6.
[16] Witness Statement of Christian LeCompte at [15]-[16].
[17] Witness Statement Robert Tanti at [26]-[30].
[18] Transcript PN811.
[19] Transcript PN886-894.
[20] Australian Federated Union of Locomotive Enginemen v State Rail Authority of New South Wales (1984) 295 CAR 188 (‘XPT Case’), 191.
[21] Evidence of Mr Tanti, Transcript PN833-836.
[22] [2017] FWCFB 3005 at [114].
[23] [2017] FWCFB 4537.
[24] Respondent submissions at [18].
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