“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v Simplot Australia Pty Ltd

[2013] FWC 2867

[2013] FWC 2867

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)
v
Simplot Australia Pty Ltd
(C2012/6652)

COMMISSIONER GREGORY MELBOURNE, 21 AUGUST 2013

Alleged dispute concerning Redundancies.

Introduction

[1] This matter concerns an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the Applicant) to deal with a dispute in accordance with section 739 of the Fair Work Act 2009 (Cth) (the Act). The Respondent is Simplot Australia Pty Ltd (the Respondent). The parties are covered by the AMWU and Simplot Australia Pty Limited National Collective Agreement 2011-2014 1 (the Agreement), which applies at five sites operated by the Respondent, including a site at Devonport in Tasmania. The dispute concerns employees working in the micro-lab at the Devonport site. Mr T. McCauley from the AMWU appeared on behalf the Applicant. Mr L. Gheller appeared on in behalf of the Respondent.

The Issue to be Decided

[2] In January 2013 four employees working in the micro-lab at the Respondent’s Devonport plant were informed it had been decided only two employees, at any one time, were now going to be required to carry out the functions in the micro-lab. As a consequence the employees were told they would each be required to rotate between the micro-lab and production positions in the packing room. The Applicant accordingly submits as a consequence of the Respondent’s decision two employees have been made redundant because their job is not required to be performed by anyone. In its submission the Respondent cannot avoid that conclusion by pointing to the other option offered to the employees because it is not an acceptable alternative in circumstances where the employees have over time and through the attainment of skills and qualifications achieved positions of enhanced seniority and responsibility.

[3] A further issue then arises in the context of sub clause 17.8(a) of the Agreement. It states:

“Where an alternative position exists within the Company at its remaining premises within the employee’s normal field of work and either offering similar conditions of employment or offering materially different conditions of employment, in appropriate circumstances an employee may be offered to transfer to that position.” 2

[4] The Applicant submits the provisions of this sub clause enable a redundant employee to be offered an alternative position but, in its words, “.... that’s the most that Simplot can do”. 3 In its submission it is then up to the employee who has been made redundant to decide either to “...accept that new position or to accept the redundancy”.4

[5] It also submits the Respondent failed to appropriately notify the Applicant pursuant to sub clause 13.2(b) of the Agreement when considering the micro-lab restructure.

[6] The Respondent has a different view. It submits, firstly, that no decision has been made to terminate or make any employee redundant. There has, instead, being a change to existing operations requiring some redeployment of employees in a manner consistent with the provisions contained in the Agreement. In this context it points to various provisions in the Agreement that emphasise the commitment of the parties to secure long term employment arrangements. In these circumstances it submits clause 17 “... is not triggered and doesn’t come into play”. 5 In any case it has a different view about the meaning and intent of sub clause 17.8(a).

[7] The issues to be determined accordingly are –

• whether the Respondent’s proposal to change existing arrangements involving the four employees working in the micro-lab mean that two of those employees have been made redundant and, if so –



• what is the meaning and intent of sub clause 17.8(a) in the Agreement in terms of the offer of “alternative employment.”

The Submissions and Evidence

[8] Ms Sue Creed is employed as a Laboratory Technician in the micro-lab. She commenced employment with Simplot in 1986 in a casual position and has worked as a Quality Control Technician and Raw Material Assessor. She was subsequently trained as a relief technician in the micro-lab. In 1997 she completed an Advanced Certificate of Food Technology over a period of 5 years and has also completed a Microbiology Training Course at the Launceston campus of the Tasmanian University. In August 2007 she said she accepted a full-time position in the micro-lab and has been employed in that role since that time.

[9] Her role and responsibilities in the micro-lab are to collect samples and plate out the product produced in both the Devonport and Ulverstone plants on a daily basis. This includes preparation, plating and accounting of microbiological samples to send out for external testing. It also involves assessing and analysing all imported raw materials prior to use within the plants and this includes preparation, plating and accounting of microbiological samples with the results and outcomes being inputted into the computer system.

[10] She said in the first part of 2012 employees in the micro-lab were advised the Respondent wanted to implement some cost saving efficiencies to the operation. They were subsequently advised a reduced amount of testing would, in turn, reduce the required number of employees from four to two. She said the employees indicated in response they believed the excess positions were redundant and two employees should be given the opportunity of voluntary redundancy in accordance with clause 17 of the Agreement. A series of meetings subsequently took place to work through these issues.

[11] In December 2012 the employees were given a letter indicating the Respondent had made a decision that all four employees would be required to rotate between the micro-lab and various production positions. However, she said the positions offered in the production areas require the exercise of limited skills when compared with the technical testing work performed in the micro-lab. She also said employees presented a revised proposal for two employees to be employed in ongoing work in the micro-lab with the other two to be given voluntary redundancy. She did not agree to being required to transfer to alternate work in lower skilled roles and was seeking redundancy in accordance with clause 17 of the Agreement. She did acknowledge in cross-examination that she had worked in the production area previously, including carrying out inspection work, and most permanent employees apart from the forklift drivers and those in the micro-lab did do inspection work at times. She also indicated she was prepared to do other work, and had made suggestions about other options, but did not believe it was appropriate to be asked to carry out inspection work.

[12] Ms Susanne Linger has been employed with the Respondent since 1984 and has worked as a Laboratory Technician in the micro-lab since 1991. She has also completed an Advanced Certificate of Food Technology and a Microbiological Training Course at the Launceston campus of the Tasmanian University. Her role and responsibilities in the micro-lab were similar to those detailed in the evidence of Ms Creed. She wished to continue in her current role in preference to being redeployed on a rotational basis in the micro-lab and production areas.

[13] Ms Megan Harris is also employed as a Laboratory Technician in the micro-lab and has worked in that role in a part-time position since returning from a period of maternity leave in January 2012. She wished to continue in that role because she was successful in securing that position, when advertised, and has since consistently met and exceeded management expectation. She also said she wanted to continue in this role in preference to the proposal of being redeployed on a rotational basis.

[14] Ms Marion Butler has been employed at the Devonport site since 1983 and has worked as a Laboratory Technician in the micro-lab since 1997. She has also completed similar training to the other employees and has similar roles and responsibilities. Given the reduction in roles in the micro-lab she was also seeking redundancy in accordance with the provisions in clause 17 of the Agreement. She also indicated in cross-examination she was prepared to be flexible, but not to the extent of getting involved in inspection work, even though other employees with additional skills were prepared to assist in that work at times, when required.

[15] Against the background of this evidence the Applicant submits that effectively two positions are no longer required to be performed by anyone and the alternative positions offered to employees in the production area require the exercise of limited skill when compared with the technical work currently being performed in the micro-lab and, as such, do not constitute suitable alternative employment for those employees. In its submission the Respondent is attempting to avoid its obligations in circumstances involving “genuine redundancy”.

[16] The Applicant relied on two decisions, in particular, in support of its submissions. Firstly, the decision of Deputy President Sams in Mantra Hospitality (Admin) Pty Ltd 6, handed down on 22 February 2013 and, secondly, the decision of Elkaim SC DCJ in Smith v OneSteel Limited and Anor7(OneSteel), handed down on 15 March 2013.

[17] In terms of the decision of Deputy President Sams the Applicant noted, firstly, that proposed wage reductions were relevant in that matter to the Deputy President’s finding that an alternative employment proposal was not “acceptable employment,” but this situation did not apply in the present matter. However, it also emphasised a number of other indicia identified by the Deputy President from decisions he in turn relied upon, which may indicate proposed alternative employment is either acceptable or not acceptable.

[18] It also submitted the decision of Elkaim SC DCJ in OneSteel is:

“...similarly relevant to any judgement about whether the alternative rotation proposal by Simplot would be “acceptable” and whether refusing that proposal is unreasonable on the part of the four affected employees.” 8

In its submission the circumstances in that matter are analogous to the situation faced by the affected employees in the present matter (references omitted):

“The affected employee in Smith v Onesteel had his pay rate maintained, but was transferred to a position of lower skill “…from a longstanding position, in which he had accumulated experience and being placed, without choice, in a job that he did not like, did not want, and felt was beneath the status that his long service in the company had given him.”

The reduction in seniority, together with the fact that the “alternative” position had no real “connection with the employee’s demonstrated skill and experience” led Elkaim SC DCJ to the view that the alternative employment was not acceptable under the relevant award.” 9

[19] It also submitted the decision dealt with the same argument made by the Respondent in the present matter; that there is no redundancy because there is no termination of employment. It referred, in response, to the following extracts from the OneSteel decision:

“40 The defendant submitted that the termination referred to in the definition of redundancy could only be a termination by the employer. The plaintiff made two points in response:

…..

(b) The cessation of the plaintiff's position in the forge was, for purposes of the Award, a termination of his employment.

…..

42 I do think, however, that the plaintiff's second point is correct. In order to explain my reasons it is first of all necessary to look at the first of the general exclusions in the redundancy provisions (the second exclusion is not relevant). The first exclusion is as follows:

"Nothing in this clause shall be read as:

requiring the employer to extend a redundancy benefit to an employee where the employer offers the employee acceptable alternative employment (including alternative employment with rate retention arrangements as elsewhere provided for under this award) giving rise to an entitlement to a voluntary redundancy benefit in the absence of a formal offer by the employer"

43 The use of the word "alternative" in my view gives rise to a meaning of a different employment. An employment which is alternative to another employment is necessarily separate to it. When I put this interpretation to defendant's counsel he responded by submitting that the meaning of employment in the definition of redundancy was different to that in the exclusion. He said I should take a broad approach to the interpretation of the Award in line with the comments of Madgwick J in Kucks v CSR Ltd (1996) 66 IR 182 at 184. I have no difficulty with his Honour's approach but I do find it difficult to attribute different meanings to the same word within the same section of the Award.

44 In addition, I think my interpretation is consistent with the principles applied by Madgwick J in that the intent of the redundancy provisions is that if the employee is no longer required to do the job he has been doing then, in order to avoid the payments, he must be offered alternative (different) employment.

45 I am therefore of the view that, subject to the exclusion, Mr Smith was made redundant within the meaning of "redundancy" in the Award and that this occurred when he was assigned to the finishing line.” 10

[20] The Applicant submits the arguments of the Respondent in this matter should also be “similarly disposed of” as the two employees have been made redundant because their jobs are no longer required to be performed by anyone in circumstances where they have not been offered acceptable alternative employment. It also emphasises in its submission that the test of acceptability in terms of any alternative employment proposal is an objective one as Elkaim SC DCJ again held citing, in particular, the decision of Richards SDP in Von Bibra Robina Autovillage Pty Ltd 11 when he held:

“...the test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed”. 12

[21] The Applicant also made reference to the principles it submits are relevant to the interpretation of enterprise agreements and referred, in particular, to the decision of a Full Bench of Fair Work Australia in Cape Australia Holdings Pty Ltd T/A Total Corrosion Control Pty Ltd v Construction, Forestry, Mining and Energy Union 13 (Cape Australia Holdings) when it stated (references omitted):

“[7] As to the general approach to the construction of enterprise agreements the observations of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo) are apposite:

‘[53] The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘....ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).’

[8] While his Honour’s observations were made in the context of interpreting an award the same principles apply to the interpretation of enterprise agreements. For example, similar observations were made by their Honours Gummow, Hayne and Heydon JJ in Amcor v CFMEU:

‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.’

[9] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo, at paragraph [57]:

‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned - see eg GeoA Bond and Co. Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’’” 14

[22] The Respondent does not take issue with the Applicant in terms of the approach to be taken to the interpretation of an Agreement and it made reference, in particular, to the extract from the decision in City of Wanneroo cited by the Applicant. However, it points to a number of provisions in the Agreement in opposing the Respondent’s submission that the current circumstances justify the two employees being made redundant. Those provisions include from clause 8, “Aims and Objectives of the Agreement,” sub clauses 8.1 and 8.3 which state respectively:

“8.1 The Company and the Union(s) recognise that this Agreement represents an opportunity to make Simplot Australia Pty Limited the best manufacturer and marketer of high quality branded commodity vegetables and composite food products providing convenience and ease of preparation for consumers, and a variable, productive and enduring enterprise offering secure employment and worthwhile careers for its employees.

...

8.3...The parties agree that the achievement of such working relations and commitments require:

....

(b) the willingness of employees to accept total flexibility of jobs and duties across the company subject to individual skills or abilities to perform particular tasks, to eliminate demarcation problems”. 15

[23] It also made reference to sub clauses 15.1 and 16.1 which state, in part:

“15.1 Weekly Employment

(a) .... The terms of employment focus on the long-term security of employment for the employee......

...

16 Contractors and Labour Hire Companies

16.1 The parties covered by this Agreement are committed to a permanent weekly workforce consisting of full-time and part-time employees. The Company, accordingly, wherever possible in accordance with the commitment of all parties, agrees to maximise permanent employment.” 16

In its submission these statements of intent establish the context in which other provisions in the Agreement must be considered.

[24] The Respondent also acknowledges that it did not comply with the obligations in sub clause 13.2(b) when discussions about the restructure of work in the micro-lab commenced, but submits there has been extensive consultation since that time, and nothing turns on that technical failure.

[25] In its submission the restructured arrangements that have been proposed are intended:

“(a) to restructure the employee’s job so that they are part laboratory and part production;

(b) to be satisfied that the employees hold the competencies to enable them to perform all the duties required; and

(c) most importantly, to commit that the employees will retain their wage rates at F4 level, even though both the laboratory work and the production work would justify lower rates.” 17

[26] It also submits it can find no precedent to support the Applicant’s submissions that employees be made redundant in circumstances where the employer has ongoing work within the scope of their skills and abilities and with unchanged rates of pay and conditions of employment.

[27] It also referred to the decision of Deputy President Sams and his comments at para 31 in the following terms:

“Let me say from the outset that I have no truck with an employee who is faced with redundancy and is offered comparable alternative employment, but refuses it because he/she would rather take a redundancy payout. In my opinion, that is not the underlying intention or social and industrial purpose of redundancy benefits. Nor do I think it was the intention of the legislature when enacting s 120 of the Act. It goes without saying, that in many cases, the existence of generous redundancy payouts, coupled with voluntary redundancy, actually serves as a disincentive to the preservation of jobs.” 18

[28] It submitted the current proposal involved duties, skill sets, qualifications, experience and terms and conditions of employment that are:

“... all clearly within the realms of suitable alternative employment.” 19

In its submission the concept of suitable alternative employment was only relevant where an employee’s employment has been terminated. That had not occurred in the present situation, nor should it be implied to have occurred by virtue of the proposed action to restructure the work in the micro-lab.

[29] The Respondent also sought to distinguish the decision in OneSteel on the basis it related to a claim for redundancy entitlements after the employee had resigned. It also involved, in its submission:

“...a demotion to a completely different department where he would effectively be a trainee. No such considerations apply in this matter.” 20

[30] In the present matter the employees would instead continue to spend at least half their time involved in work in the micro-lab. This percentage was, in fact, likely to be higher given the periods of time that would be spent filling in for other employees who were on various forms of leave and away from work. The work in the production area also involved roles and responsibilities which required competencies held by the employees involved.

[31] Ms Jessica Snow is employed by the Respondent as an Employee Relations Adviser and commenced in this role in May 2011. She said the consultation process regarding the micro-lab operation began in August 2012 with individual meetings with each impacted employee. It was explained in those discussions the nature of the revamped operation meant the workload could be expected to be carried out by the equivalent of two full-time employees. The employees were initially asked whether they would consider being redeployed into a different position within the plant or, as an alternative, a rotation of duties could be considered whereby two employees would work in the micro-lab and two would work in production positions and rotate through those roles. She said employees were also offered the opportunity to indicate any other options that might be appropriate for consideration.

[32] She said the employees subsequently advised that redeployment was not preferred and the rotation proposal was considered to be a fairer approach. The employees then provided a draft rotation schedule for consideration, however, it became apparent the different preferences of each employee could not be aligned with Company requirements. A series of discussions then continued with Union representatives regarding the acceptability of tasks outside of the micro-lab being performed by the employees involved. The status quo was maintained following the dispute notification.

[33] Ms Snow confirmed the employees perform the tasks described by them in their witness statements. She also said one employee has obtained the certificate two competency, whilst the other three have not, however, three continue to be remunerated at level 5, with the other classified at level 4. She also said a number of other employees have completed the advanced certificate of food technology but neither this qualification, nor any other formal qualification, was required to perform the laboratory work and it had no impact within the food competency framework.

[34] Ms Snow said the proposed rotation schedule was intended to enable the impacted employees to maintain their laboratory skills and competencies, as well as learning new competencies when performing other tasks. These enhanced competencies would be recognised in the food competency framework and provided the opportunity for the employees to obtain the certificate 2 competency. She also said the non laboratory duties on the rotation schedule will include the clerical position currently being performed by one employee, and other short-term assignments, as well as the inspection duties. She also acknowledged in cross-examination that the inspection work is often carried out by casual employees, particularly during the process season, but the majority of permanent employees who held inspection and sort competencies can be called on and required to perform these duties at times.

[35] She said it was anticipated that the proportion of laboratory work to be performed would be at a minimum level of fifty per cent, but was likely to increase beyond this figure when employees take leave, or participate in activities that take them away from the micro-lab. It was also intended the employees maintain their current levels of pay, irrespective of the competency level of the duties performed, and they would not suffer any loss of remuneration.

Consideration

[36] This is a somewhat unusual application in terms of the outcome sought. The Applicant seeks to have two employees declared redundant in circumstances where the Respondent submits it has acceptable ongoing work for them that involves performing work in their current roles for at least fifty per cent of the time. The circumstances are also different from those involved in the decisions referred to by the parties in support of their respective submissions, although this is not to say those decisions are not relevant to the determination of this matter.

[37] Clause 17.1 of the Agreement includes a definition of “Redundancy”. It states:

“Redundancy refers to a declaration by the Company that a permanent award-covered employee’s contract of employment is to be terminated, not on account of any personal act or default of the employee, but because, as a result of Company restructuring, the job of the employee is no longer required to be done, by anyone.” 21

[38] In the present matter the Respondent has not made a declaration of the kind referred to in that definition. It is, however, proposing to restructure the micro-lab operation in the way described in this decision. The Applicant accordingly submits that despite the fact the employer has not declared the employees to be redundant its actions have effectively resulted in that outcome. The Respondent rejects this view and submits the work has been restructured in a manner consistent with the commitments in the Agreement to maintain ongoing employment opportunities.

[39] Both parties are of the view that the determination of this issue turns on whether the proposed operational changes do in fact mean the two jobs are redundant, or whether the Respondent has provided an acceptable alternative. There is then a secondary set of considerations in the event the employees’ jobs are held to have been made redundant by the Respondent’s actions. It concerns the meaning and intent of sub clauses 17.8(a) and (b) and what rights and entitlements exist when an alternative to redundancy is offered by the employer.

[40] The Applicant relied on the decisions in Mantra Hospitality and OneSteel in support of its submissions that the alternative roles offered to the employees were so different to their current roles that they could not be considered to be acceptable alternatives and the employees should be declared to be redundant.

[41] In the matter of Mantra Hospitality Deputy President Sams was considering whether an offer of work as a Room Attendant at a rate of $17 per hour represented either “acceptable alternative employment” or “comparable alternative employment” (Deputy President Sams found there to be no distinction between these terms) in circumstances where the employee had been previously employed at a rate of $21 per hour as a Housekeeping Supervisor. Deputy President Sams held that the offer did not constitute acceptable alternative employment and referred, firstly, to the decision in Australian Chamber of Manufactures v Derole Nominees Pty Ltd 22 (Derole Nominees) to confirm the matter is to be determined on an objective basis. He referred to the following passage from the Full Bench decision in that matter:

“What constitutes “acceptable alternative employment” is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification ‘acceptable’ is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 23

[42] Deputy President Sams also noted that these principles were adopted in the decision of Richards SDP in Von Bibra Robina Autovillage when the Senior Deputy President stated (references omitted):

“[26] In contrast, the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.

[27]In the current circumstances, the objective test demonstrates that the alternative employment is too far removed from the former position in terms of remuneration arrangements and key functions and skills to be considered to be acceptable alternative employment in the sense contemplated by the Full Bench in Re:Derole.” 24

[43] Deputy President Sams also made the following statements about the respective issues associated with redundancy and potential offers of alternative employment that confront many employees:

“Let me say from the outset that I have no truck with an employee who is faced with redundancy and is offered comparable alternative employment, but refuses it because he/she would rather take a redundancy payout. In my opinion, that is not the underlying intention or social and industrial purpose of redundancy benefits. Nor do I think it was the intention of the legislature when enacting s 120 of the Act. It goes without saying, that in many cases, the existence of generous redundancy payouts, coupled with voluntary redundancy, actually serves as a disincentive to the preservation of jobs.

On the other hand, the prospect of a forced redundancy is invariably a pernicious one, particularly for an employee of many years of unblemished and hard working service. It is often a time of great distress, uncertainty and confusion. This is even more so in the case of an employee with limited English skills and few re-employment prospects.” 25

[44] It should be noted that Senior Deputy President Richards made reference to a range of additional matters in his consideration of the circumstances of the employee in the matter of Von Bibra Robina Autovillage, who was employed in the position of Used-Car Assistant Manager, which essentially involved an operations/wholesale sales role, and the alternative position he was offered which involved retail sales to the general public. Senior Deputy President Richards noted a number of changes were made to the employee’s remuneration structure. He was no longer provided with a vehicle. A different commission structure applied. The primary function now involved retail sales to the general public. He concluded:

“It is therefore with some justification that the employee contended that he was less certain of his future and his earnings capacity in a retail sales environment than a wholesale sales environment.” 26

[45] He also stated that whilst a subjective view might lead to the conclusion the employee could make the most of the new role being offered to him this was not sufficient. He continued to indicate (references omitted):

“[26]In contrast, the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.

[27]In the current circumstances, the objective test demonstrates that the alternative employment is too far removed from the former position in terms of remuneration arrangements and key functions and skills to be considered to be acceptable alternative employment in the sense contemplated by the Full Bench in Re:Derole.

[28]Critically, in the Commission’s view, the transfer to a retail sales position from a wholesale sales position which is removed from the buying public itself demonstrates that the alternative work is not acceptable on the objective test. That is, the alternate employment has insufficient connection with the employee’s demonstrated skill set and experience. The employee has grounds, therefore, to consider his employment in retail sales, places him in more precarious circumstances overall than if his former duties were still available.” 27

[46] He concluded:

“[35] Given these considerations, I am not of the view that the employer should be provided relief from the obligation to make payment for redundancy pay in respect of Mr Tim Van Riet.” 28

[47] The Applicant also placed reliance on the decision in OneSteel and clearly there are circumstances in that matter that align with those in the present matter. The plaintiff in OneSteel resigned following a restructure of his role and the offer of a placement in another position, but subsequently argued the alternative position was so different to his former role that he had effectively been made redundant and was therefore entitled to be treated as such and compensated accordingly. Whilst the employees in the present matter have not resigned from their employment they also submit the proposed changes to their roles and responsibilities are so different in character that they should also be considered to have been made redundant.

[48] The plaintiff in OneSteel commenced employment in 1978 as a labourer and over time moved to the position of furnace operator. In October 2010 he was told he was to be transferred to a “railway finishing line” position, largely involving relatively unskilled work. After spending a brief period of time in the new role he found the work physically demanding due to the amount of standing involved. He also discovered his previous role was now being carried out by a less qualified operator. He subsequently resigned from his employment, but claimed he had effectively been terminated as a furnace operator by the actions of his employer, and should therefore be treated as having been made redundant. He also submitted the employer could not rely on the exemption from redundancy based on an offer of adequate alternative employment, although it was acknowledged there had been no changes to his level of remuneration, the plant at which he was located, or his hours of work.

[49] The employer argued in response that whilst the jobs were different, each required similar levels of skill. This was not accepted by the trial judge who found the plaintiff was starting out as “a trainee” 29 in the new role and it accordingly reflected a significant change in seniority. He also found the new role had no real "connection with the employee's demonstrated skill and experience," 30 a situation “exemplified by the plaintiff needing to be retrained in the new work.”31

[50] His Honour concluded that the most significant issue to be determined was, firstly, whether the plaintiff had been made redundant and, if so, whether he had been provided with acceptable alternative employment. He found that the employee had been made redundant, in large part because of an acknowledgement by the employer that it no longer required the employee’s job to be done by anyone. He then turned to consider whether the plaintiff had been offered adequate alternative employment. In this context he considered two aspects required some initial consideration. Firstly, the plaintiff’s reaction to the change, which he described as feelings of humiliation and stress. He concluded that this reaction was, on the one hand, a subjective response that was not relevant to his considerations although, conversely, it could also be viewed objectively as evidence of the significance of the change in status between the two jobs. The second issue concerned the employee’s health and the impact of the new role upon him. The judge found this was relevant because it indicated no real analysis had been carried out in regard to the employee’s suitability for the new role and whether it could be considered to be “acceptable.” After some conjecture he concluded, “...the authorities probably support the defendant's submission that the personal capacity of the employee is not relevant.” 32 The more appropriate approach was instead that formulated in Von Bibra Robina Autovillage:

“The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.” 33

[51] However, His Honour concluded:

“Notwithstanding my disregarding the plaintiff's health condition, I am nevertheless satisfied that the job of finishing line attendant was not acceptable alternative employment.

Comparing the two positions there are obviously some similarities, including the pay scale, the place of work and the required hours. More importantly, however, I think the two positions are very different: The change in employment involved a significant change in status derived from being a 20 year plus furnace operator becoming a trainee finishing line attendant. Further, as already found, the two jobs in question are different. They may have both been related to steel but they had no production connection, they required different skills and were conducted in separate divisions of the plant.” 34

He continued to indicate:

“In relation to the defendant's alleged bona fide efforts to secure an alternative position I do not accept that the efforts were in fact bona fide. This is indicated by the total absence of any attempt on the defendant's part to ascertain if the plaintiff was physically able to do the alternative job, by the absence of a proper consultative process and by the direction to work in the finishing line.” 35

[52] I am satisfied that the authorities referred to make clear that an objective test should be applied to the question of whether the employees can be considered to have been made redundant, or whether it can be said the changed arrangements represent an acceptable alternative. Clearly, it is also not any offer of other employment that will suffice; it must be an offer that meets the relevant standard. It is not just a question of whether the employee is capable of carrying out the alternative role and responsibilities, but whether it bears “sufficient comparability” to the original work. In this context factors such as comparable skill sets, qualifications, experience, remuneration, location, hours of work, status and seniority, might all be applicable and relevant.

[53] The Respondent also made reference to other provisions in the Agreement, which it submits are relevant to the determination of the matter. Similar provisions are often found in industrial Agreements and expressed in the context of “Aims and Objectives” or “Statements of Intent”. In the present matter they include reference in sub clause 8.1 to:

“...offering secure employment”. 36

As well as in 8.3 to:

“...the willingness of employees to accept total flexibility of jobs and duties across the company”. 37

In sub clause 15.1(a) there is also reference to:

“The terms of employment focus on the long-term security of employment for the employee”. 38

[54] The Applicant submits these broad statements of intent should be read subject to the more specific provisions in the Agreement going to the particular entitlements and obligations attracting to the employer and employees, and these submissions are acknowledged and accepted. Nevertheless, the sub clauses referred to do indicate that the creation of ongoing job opportunities is intended to have a priority with the option of redundancy only being an outcome when the option of ongoing employment is not reasonably available. Without intending any criticism of any individual involved in the present matter it is an often inevitable and perhaps unfortunate conclusion, as highlighted by Deputy President Sams in the matter of Mantra Hospitality, that generous and uncapped redundancy entitlements can clearly work to make ongoing employment a “second best” option for many long serving employees and, perhaps more concerningly, impact on the desire of those employees to see the employer be successful and able to provide ongoing employment opportunities.

[55] There is no dispute in the present matter that the number of employees required in the micro–lab, because of the changes in testing arrangements, is being reduced from four to two. It is accordingly proposed the four employees will rotate through the micro-lab and other production positions. This means on the one hand they will continue to spend at least fifty per cent of their working time in their current roles, and likely more than this given that one employee is already involved in a replacement role elsewhere and other leave entitlements of employees working in the micro-lab will need to be covered and filled.

[56] There was much consideration in the proceedings about what the work in the production area will involve and whether it represents work involving both diminished skill and status. I have no doubt, based on the employee’s evidence that they, like the plaintiff in OneSteel, consider they have over a long period of employment attained positions that have certain status and seniority. Those are entirely understandable reactions and views from loyal and long-standing employees. However, on their own they are clearly subjective views and on that basis alone not necessarily influential. Clearly, the employees have participated in additional external training with at least three of them completing advanced certificate courses during the 1990s at the Tasmanian University, although the evidence of Ms Snow was that this was not necessarily required to perform the work in the micro-lab. It was also indicated in the evidence and submissions that some work in the production area involved “limited skills,” particularly in regard to some of the inspection work that might be involved. However, the evidence of Ms Snow was that the work in the production area would actually enable the employees to maintain their existing skills and competencies, whilst also creating the ability to obtain further recognition within the competency framework. It was also evident that various employees from a range of different areas can be required to get involved in inspection work, when necessary. It was also clear that the option of being rotated through different roles was not rejected outright by the employees; their objection was instead essentially raised when that process involved time spent in inspection work.

[57] Other factors are also relevant. There was no suggestion that the employees were going to incur any reduction in pay or existing conditions and entitlements. The roles continued to be located at the Devonport plant. There was no suggestion that the employees would be physically, or for any other reason, incapable of performing the work involved in the production area. In this context the circumstances can be clearly distinguished from the situation in Von Bibra Robina Autovillage, where the employee’s remuneration arrangements, amongst other things, were put on a different footing, and the employee in OneSteel, who was placed in an entirely different unskilled role in circumstances where he had spent 20 years in his previous furnace operator role. The evidence also indicated it was physically difficult for him to perform in the proposed new role.

[58] I am also satisfied that as far as reasonably possible the objective should be, as the Agreement states, to endeavour to keep employees in secure long-term employment, and for redundancy and redundancy entitlements to only have application when jobs are being lost or removed without acceptable alternatives being available. I am satisfied that a significant influencing factor in terms of the determination of this matter must be the fact that the employees will continue to be employed in their existing roles, and carrying out their existing responsibilities, for at least fifty per cent of the time and most likely more than this. In these circumstances I am not satisfied it is possible on an objective assessment to conclude that the alternative being offered to the employees can be said to not bear sufficient comparability to their original work or to be unreasonably removed from their original duties, skill set, qualifications, experience and terms and conditions of employment. Given this conclusion I am not satisfied that it is appropriate to make a determination that what is being proposed by the Respondent is sufficient to justify the employees being declared to have been made redundant. The application is accordingly dismissed.

COMMISSIONER

Appearances:

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

Mr L Gheller appeared on behalf of the Respondent.

Hearing details:

2013.

Launceston:

2 May.

 1   AE887944.

 2   Ibid at cl.17.8(a).

 3   Transcript at PN20.

 4   Ibid.

 5   Ibid at PN1045.

 6   [2013] FWC 1063.

 7 [2013] NSWDC 18.

 8   Exhibit AMWU2 at para 23.

 9   Ibid at para 23 - 24.

 10 [2013] NSWDC 18 as quoted in Exhibit AMWU2 at para 25.

 11   [2007] AIRC 397.

 12 Ibid at [26].

 13   [2012] FWAFB 3994.

 14   Ibid at paragraphs [7] - [9].

 15   AE887944 at cl.8.

 16   Ibid at cl. 15 and 16.

 17   Exhibit S1 at para 9.

 18   [2013] FWC 1063 at [31].

 19   Exhibit S1 at para 16.

 20   Ibid at para 18.

 21   AE887944 at cl.17.1.

 22 [1990] AIRC 980.

 23   Ibid at [11] as quoted in [2013] FWC 1063 at [36].

 24   [2007] AIRC 397 at [26] - [27].

 25   [2013] FWC 1063 at [31] and [32].

 26   [2007] AIRC 397 at [22].

 27   Ibid at [26] - [28].

 28 Ibid at [35].

 29 [2013] NSWDC 18 at [29].

 30   [2007] AIRC 397 as quoted in [2013] NSWDC 18 at [30].

 31 [2013] NSWDC 18 at [30].

 32 Ibid at [63].

 33   [2007] AIRC 397 at [26].

 34 [2013] NSWDC 18 at [64]-[65].

 35 Ibid at [70].

 36   AE887944 at cl.8.1.

 37   Ibid at cl.8.3(b).

 38   Ibid at cl.15.1.

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