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

[2015] FWC 4186

[2015] FWC 4186

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
Simplot Australia Pty Ltd
(C2014/1312)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 10 JULY 2015

s.739 Application to deal with a dispute.

Introduction

[1] This decision arises from an application for the Fair Work Commission (the Commission) to deal with a dispute in accordance with the dispute settlement procedure in an agreement lodged pursuant to s.739 of the Fair Work Act 2009 (the Act) and in respect of which, I have previously made a jurisdictional decision.

[2] That decision [2014] FWC 8538 was handed down on 8 December 2014 following two days of hearing and written submissions.

[3] The application had been lodged by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) (the AMWU) on 21 July 2014 and had been the subject of conciliation proceedings before me which had failed to resolve the dispute.

[4] The dispute arose from the redundancies implemented by Simplot Australia Pty Ltd (Simplot) at its Bathurst New South Wales food processing plane in late 2013.

[5] The relevant enterprise agreement is the AMWU and Simplot Australia Pty Limited National Collective Agreement 2011 – 2014 [AE887944] (the Agreement). That Agreement has been succeeded by the AMWU, CEPU and Simplot Australia Pty Ltd National Collective Agreement 2014 – 2017 [AE412434].

[6] In summary, the dispute is whether Mr Rohan Gleeson is entitled to redundancy pay or not given the facts of the case, especially given that he took another job whilst seeking redundancy pay.

The Jurisdictional Decision

[7] In that decision I set out in full the relevant clauses of the agreement. I do not propose to repeat them in the interests of brevity. However, it is necessary to note some key aspects:

● Clause 17 Redundancy provides for a minimum of four weeks’ notice and a severance payment of four weeks plus four weeks per completed years’ service or pro-rata thereof. Annual leave loading and pro-rata long service leave shall be paid out.

● Clause 17.8 Transfers and Reclassification was of importance in this case and provided:

“17.8 Transfers and Reclassification

a) 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 and employee may be offered to transfer to that positions.

b) Where an employee elects to transfer into the alternative position, the option of retrenchment will remain open for a period of three months from the date of election, provided that the Company will be deemed to have met all commitments in respect of notification under Clause 17.2.

c) Should an employee accept a transfer into a position offering a reduced all-purpose rate of pay, a period of three months will be provided in which the employee’s wage will be adjusted to the level of the new position. Adjustment will take the form of roughly equivalent wage reductions in each of the three months involved.

d) Employees who transfer onto a different shift cycle will be paid in accordance with the new shift roster upon commencement.”

● Clause 46 Dispute Resolution provided for arbitration, ultimately, by the Commission of “issues in dispute regarding the application of this Agreement, matters pertaining between the employee and the Company; and matters pertaining between the Unions covered by this Agreement and the Company.

[8] Importantly, the Agreement itself did not deal with the voluntary redundancy process that the Company initiated as the first step in its restructure.

[9] The jurisdictional issue to be determined was whether the Commission had power to deal with the dispute given that Mr Gleeson ceased employment and had accepted another job. Simplot argued, relying on s.51 and s.52 of the Act, that Mr Gleeson no longer had the benefit of the agreement.

[10] The parties’ full evidentiary case was not put on in the jurisdictional hearing. However, I did make some findings as to the facts which I believe are still applicable.

“[24] On 24 October 2013 Simplot announced that there would be a reduction of employees at the Bathurst site to take place in stages from mid-2014 to early 2015. Employees were invited to submit an expression of interest form. Options including volunteering for redundancy or redeployment. The final decision rested with Simplot.

[25] Mr Gleeson ultimately chose voluntary redundancy on 14 March 2014. Discussions then took place and he was offered a new Team Leader tole. He commenced that role on 9 June 2014. However, Mr Gleeson advised Simplot on 16 June 2014 that he had accepted a job with Nestle. Mr Tenci tried to persuade Mr Gleeson to stay. Simplot says that he was offered his old position back until the end of October 2014 at which time he would be retrenched and the redundancy payment made. Mr Gleeson was on leave from 10 to 28 July. During this time the dispute was notified to the Commission (21 July) and Mr Gleeson started with Nestle. He did not return to work on 28 July. A letter was sent to Mr Gleeson on 1 August. It stated:

“We understand that you have commenced employment with Nestle and will not be returning to your role with Simplot Australia. Accordingly, as a result of this we consider that your employment with Simplot Australia has terminated at your own initiative.” . . .

[28] Mr Tenci confirms that he offered Mr Gleeson that if he remained in the maintenance department until the end of October he would receive redundancy pay. Mr Gleeson made no contact to advise him whether he had accepted that offer or to explain why he hadn’t returned to work. The only advice about accepting the Nestle offer was at the 25 July, FWC conference.”

[11] The AMWU argued that Mr Gleeson took no action to terminate his employment. In any event, he was employed by Simplot at the time the matter was notified to the Commission.

[12] The following is Mr Gleeson’s version:

“[37] Mr Gleeson (Exhibit S4) concedes that he accepted the role of Team Leader but says he did so on the basis that he could take redundancy within the next three months if he decided to. At paragraph 10 he states: “I was then told by Simplot that I had to stay until the end of October 2014, or I would not be paid my redundancy.” Exhibit S1 is Mr Gleeson’s letter of 20 June in which he formally applies for voluntary redundancy and seeks “an early departure from the company as I have gained employment within the local area.”

[13] At paragraph [43] I set out the following chronology summary:

“[43] The following chronology emerges from the evidence:

● 24 October 2013 - Simplot seeks expressions of interest for voluntary redundancy/redeployment.

● 14 March 2014 - Mr Gleeson chooses voluntary redundancy but discussions then take place designed to keep him with Simplot.

● 9 June - Mr Gleeson commences a new Team Leader role.

● Between 16 and 20 June - Mr Gleeson accepts the Nestle job and tells Simplot. Further discussions take place.

● 20 June - Mr Gleeson applies for redundancy and seeks payment relying on clause 17.8 of the Agreement.

● 10 July - Mr Gleeson commences approved leave.

● 14 July - Mr Gleeson starts work at Nestle.

● 21 July - AMWU application to FWC lodged.

● 25 July - FWC telephone conference.

● 28 July - Mr Gleeson is due to return form leave but does not.

● 31 July - further FWC telephone conference.

● 1 August - Simplot sends letter which says he ‘has terminated at your own initiative.”

[14] My finding as to the termination was as follows:

“[44] A dispute remains as to where the discussions between Simplot and Mr Gleeson ended up. In my view, they were not concluded. Certainly, there was no clear agreement or instruction by Simplot before the 1 August letter. Mr Tenci says that the payment of redundancy to Mr Gleeson was dependent on him remaining at Simplot till October. Mr Gleeson says that he was entitled to redundancy because of the application of clause 17.8 of the Agreement and the expectations he was given by Simplot staff.”

and

“[45] I find that Mr Gleeson was terminated by Simplot’s 1 August letter. The above chronology shows that until that act by Simplot he remained in employment. He was on approved leave from 10 July. At the Commission’s proceedings on 25 and 31 July Simplot treated him as still employed whilst various options were discussed to resolve the dispute. The fact that he commenced a job with Nestle was not necessarily inconsistent with his employment with Simplot. It may have proved to be the case ultimately but this was not clear when he commenced the job. Mr Gleeson continued to offer for work with Simplot. The fact that this was at times which were not practical, nor ultimately acceptable to Simplot, is beside the point. Even Mr Tenci conceded, in cross examination, that Mr Gleeson had not “frustrated his contract” until 31 July (see PN363 - PN366).”

[15] It was, and is, common ground that the dispute settlement clause in the Agreement provides for arbitration and therefore s.738 and s.739 provide the Commission with jurisdiction to arbitrate the dispute if the Agreement applies to Mr Gleeson in accordance with s.51 and s.52.

[16] Based on the authorities that I quoted I decided that the Agreement did so apply. Mr Gleeson had activated the dispute settlement procedure by his email to Simplot on 20 June 2014 or at the latest by the notification to the Commission on 21 July, well before his termination on 1 August 2014.

[17] I directed the parties to confer with a view to settlement of the merits of the dispute.

After the Jurisdictional Decision

[18] The discussions between the parties on the merits of the claim were not successful.

[19] I convened a telephone conference on 6 February 2015. It was apparent that the matter would need to be set down for hearing.

[20] Accordingly, directions for the filing of submissions and witness statements were issued and the matter set down for hearing on 29 and 30 April in Bathurst.

Overview of the Case

[21] The AMWU was represented by Ms L. Saunders and Simplot by Ms J. Ansell and Ms S. King.

[22] The AMWU relied on:

● Written submissions of 5 March 2015;

● Written submissions in reply of 22 April 2015;

● Witness statement (Exhibit S1) and oral evidence of Rohan Gleeson;

● Witness statement (Exhibit S2) and oral evidence of Andrew Brennan, another AMWU member.

[23] Simplot relied on:

● Written submissions of 13 April 2015;

● Witness statement (Exhibit A1) and oral evidence of Silvio Tenci, General Manager, NSW Region, Simplot;

● Witness statement and oral evidence of Ivan England, Plant Manager, Bathurst, Simplot.

Both of these witness statements had a number of attachments

[24] The witnesses were the subject of extensive cross-examination.

[25] Following the hearing further written submissions on some jurisdictional issues which arose at the hearing were made as follows:

AMWU 20 May 2015

Simplot 9 June 2015

[26] In an exchange of emails, which concluded on 10 June 2015, the parties agreed that $70,835.30 was the amount that Mr Gleeson would be entitled to as a redundancy payment if I found in his favour. This was based on 12.65 years of service which gave $5,187.50 for four weeks’ severance payment and $65,621.90 for four weeks’ pay per year of service, as per the Agreement.

[27] There was no doubt that Simplot had undertaken a major restructure. Twenty fitters were reduced to five. Nor was there any doubt that Simplot had complied with its obligation to consult. It had undertaken a voluntary redundancy exercise that it was not obliged to do under the Agreement. Given my jurisdiction decision, the question to be answered is whether Mr Gleeson was entitled to the redundancy payment in the rather unusual circumstances of the case. If the answer is yes, what orders can and should be made?

The AMWU’s Case

[28] The major aspects of the AMWU’s case were as follows:

● Although Simplot did consult, its consultation was defective because it reneged on commitments given and/or did not make full disclosure.

● Mr Gleeson was offered voluntary redundancy and should have departed in June 2014.

● Alternatively, clause 17.8 of the Agreement maintained the option of redundancy for Mr Gleeson once he accepted the team leader role.

● Simplot made clear commitments in October 2014 that it would exhaust voluntary redundancies first and that redundant workers who found alternative employment would be able to leave before their scheduled departure date and keep their redundancy pay (See Exhibit S1).

● On 14 March 2014 Mr Gleeson applied for voluntary redundancy. His expression of interest form was changed to reflect this (Exhibit S1, Attachment I). He thought it had been agreed to by Mr England but he never received a formal written acknowledgement. There was a text message exchange. Instead, discussions took place in which Mr Tenci and Mr England tried to convince him to stay. The AMWU denies this means that he was not made redundant. Indeed, the text message supports a view they at least acquiesced in it.

● Mr Gleeson applied for the Team Leader role on 21 May and was accepted for the Team Leader role on 2 June, on the understanding that he could still access the redundancy pay-out as provided for in clause 17.8. He never actually started work in the role.

● On 16 June Mr Gleeson informed Simplot that he had another job and wished to leave early. This was confirmed in an email of 20 June (Exhibit S1, Attachment I). Simplot’s response was that the redundancy payment was only available if he remained till October. Their termination of Mr Gleeson, I found, was their response to this impasse.

● The AMWU submits that Simplot’s conduct towards Mr Gleeson amounted to a declaration that he would be made redundant. Mr Tenci and Mr England, trying to convince him to stay, accepted that if he decided otherwise he was volunteering for redundancy and did not formally advise him that his role would be maintained.

● The AMWU submits that clause 17 applies because Mr Gleeson had been offered redundancy. He should have been able to leave on 20 June and keep the payment. His acceptance of the Team Leader role on 2 June meant that he kept his redundancy option open for three months as a result of clause 17.8.

● Andrew Brennan, another fitter, gave evidence that he, like Mr Gleeson, had been told he had to stay until October because of “business needs”. He referred to a number of other employees who were allowed to leave early and they were able to keep their redundancy pay (Exhibit S2).

● The AMWU submits that Simplot’s condition that the redundancy pay was dependent on Mr Gleeson staying until 31 October 2014 was only advised to him on 17 June 2014, at the earliest (Exhibit S2, [48]).

● Simplot did not implement its undertaking to accommodate employees who were offered redundancies but then found another job. Further, it did not apply clause 17.8 which allowed Mr Gleeson to still take the redundancy pay within three months of accepting the Team Leader role. His election date, 2 June 2014, is the relevant date to enliven the clause. His termination on 1 August 2014, ended attempts to resolve the matter by agreement.

● Simplot provided no good business or “skills requirement” reasons for its requirement that Mr Gleeson stay until October. On the other hand, Mr Gleeson’s evidence about his family circumstances is compelling (Exhibit S1, [44] and [50]). He also testified that there were plenty of people left with the skills to do his job (Exhibit S1, [51]).

● The AMWU seeks an order that Simplot pay Mr Gleeson the amounts he should have received under clause 17.2 of the Agreement had his employment terminated on 20 June 2014 as a result of redundancy. This order, it submits, is within the Commission’s broad power to arbitrate pursuant to the dispute settlement clause and s.595(3) of the Act.

● The AMWU submits that the Commission is not constrained as to the orders it may make in arbitrating this matter. In resolving the dispute it may take into account what is fair in the context of the objects of the Act.

Simplot’s Case

[29] The major aspects of Simplot’s case were as follows:

● Simplot agrees that, on 24 October 2013 it was made clear to employees that the 110 positions to be made redundant would be selected, initially, through voluntary redundancy. All employees were required to fill in an Expression of Interest Form.

● Simplot told employees that they would try to accommodate them, but made it clear that the ultimate decision about redundancies remained with Simplot, based on its “operational needs”. Mr England summarised what was said on 24 October 2013 to employees (Exhibit A2, [13] – [15]).

● Mr Gleeson was identified as someone that Simplot wanted to keep. There is no doubt that Mr Tenci made extensive efforts to get Mr Gleeson to stay culminating in the verbal advice to him, on 2 June, that he had the Team Leader role. Simplot agrees that he never actually started working in the role.

● Following Mr Gleeson’s advice on 16 June that he wanted to go, Simplot told him, on 18 June, that the redundancy was dependant on him staying until the end of October. Simplot did not deny him voluntary redundancy but it required him to stay until October.

● Simplot submits that Mr Gleeson’s email of 20 June is a concession that agreement with Simplot was necessary and that the voluntary redundancy was at the sole discretion of Simplot.

● When Mr Gleeson commenced his job with Nestle, it was contrary to his obligations to Simplot.

● Simplot suffered disruption to its operations as a result of Mr Gleeson’s failure to return to work (Exhibit A1, [83] – [85]).

● Simplot submits that Mr Gleeson was not made redundant, in accordance with clause 17 of the Agreement. His substantive role of fitter remained to be performed by someone.

● Simplot submits that clause 17.8 was never enlivened. Even though Mr Gleeson was selected for the Team Leader position, he was never offered a “transfer” from his substantive position to the Team Leader role. Further, the fact that he never actually commenced the Team Leader job also means that he was not transferred.

● Neither Mr Gleeson’s fitter role nor the Team Leader role was marked for redundancy. Despite Mr Gleeson’s changes of mind, Simplot worked to accommodate his preferences as much as it could, consistent with its operational needs. In addition, it always made clear that the selection of employees for voluntary redundancy was ultimately at its discretion.

● Consistent with its overall approach, Simplot paid voluntary redundancy to other fitters who stayed until late October.

● Mr England confirms the sequence of his discussions with Mr Gleeson (See Exhibit A2, [35] – [45]). When advised by Mr Gleeson in a text message on 24 March that he wished to be made redundant, Mr England responded: “No problem, thanks for the consideration”. This position was then overtaken, he says, by the transfer discussions that Mr Tenci had with Mr Gleeson.

● Mr England’s evidence was that Mr Gleeson did not take up the Team Leader duties because he was needed for a period in his fitter role. The transition was delayed but was otherwise on track (Exhibit A1, [57] – [60]).

● Mr Tenci’s evidence (Exhibit A1) was that Simplot complied at all times with its consultation obligations. He stressed that Simplot, through its voluntary redundancy program, tried to accommodate employee preferences consistent with the needs of the business ([24]) and on the basis that the ultimate decision was Simplot’s ([31] and [32]). Following Mr Gleeson’s decision to elect for voluntary redundancy in March 2014, Mr Tenci did all he could to keep him (See [53] – [56]). He concedes that he should have given Mr Gleeson a letter, during a meeting in late March, confirming that he was to stay. He did not do so because he still wanted to persuade him to stay voluntarily ([57]). He says that the reason Mr Gleeson did not start the team Leader work was because “there was a lot going on with the restructure”. It was after Mr Gleeson told him that he had been offered the job at Nestle that the requirement that he say until the end of October was made a condition of the redundancy pay ([73]).

● Simplot opposes the making of orders in the terms sought by the AMWU on the grounds of lack of entitlement of Mr Gleeson, pursuant to the Agreement, and on jurisdictional grounds, including that such an order would amount to enforcement proceedings.

● In its written submission of 9 June 2015, Simplot addressed the question raised during the hearing, as to whether I could or should make an order for some other amount than that claimed by the AMWU as the redundancy entitlement as follows:

• The Commission has power to arbitrate pursuant to s.595 and the dispute settlement procedure. There are no terms of the dispute settlement clause which limit the Commission’s power.



• The Commission cannot make a decision inconsistent with the Act but it can take into account matters, such as in cases under s.120 of the Act, because they are not inconsistent with the Act or the Agreement.



• Simplot reiterated its primary submission that Mr Gleeson was not redundant but, in the alternative, submits that the amount of the redundancy pay can be reduced only.



• Simplot submits that the Commission has no power to order any additional over-agreement payment.



• Mr Gleeson had acceptable employment which meant that the redundancy payment should be reduced.

The Commission’s Approach to the Construction of Agreements

[30] The 2014 Full Bench decision in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) FWCFB 7447 (Golden Cockerel) sets out the Commission’s approach to the interpretation of agreements. I set out below the relevant passages which refer to the relevant authorities:

“General Approach

19. The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 (Wanneroo):

“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). ” (Wanneroo)

20. To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 (Kucks) that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

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

21. Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. See: Swire Cold Storage Pty Ltd v TWU [2008] AIRCFB 397 at [29] and AMWU v Silcar Pty Ltd[2011] FWAFB 2555 at [11] For example, similar observations were made in Amcor Limited v CFMEU.(2005) 222 CLR 241 (Amcor):

“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.” (Amcor) at 253 per Gummow, Hayne and Heydon JJ

22. The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

“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 GeorgeA 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.” (2006) 153 IR 426 at 440

Use of extrinsic material as an aide to interpretation

23. As is often the case in disputes that involve the construction of an enterprise agreement, parties will seek to place reliance of a variety of extrinsic material as an aide to interpreting the provisions of an agreement in issue. The use to which extrinsic material of the surrounding circumstances may be put to assist in the interpretation of an instrument is set out in the judgement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337(Codelfa). In Codelfa his Honour said:

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.” (Codelfa) at 352

[31] The Full Bench then dealt in some detail with subsequent cases which took varying approaches to the determination of an ambiguity. It went on to conclude as follows:

“30. Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument. In this context we would make the observation that the law in relation to the interpretation of commercial contracts (Codelfa; Metcash and Stratton) has now aligned with the approach to the construction of awards and enterprise agreements as espoused by Burchett J in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 and confirmed by French J, as he then was, in Wanneroo.

Application of the Acts Interpretation Act 1901 to enterprise agreements approved under the Act

31. Both at first instance and before us the Appellant maintained that the Agreement must be interpreted in accordance with the Acts Interpretation Act 1901 (AI Act). (AB268-AB271 and Transcript PN271-PN280) That proposition is made on the basis that an enterprise agreement is an agreement that is made by the Commission pursuant to a power conferred by the Act to make the agreement. (See Section 46 of the AI Act) To make good the proposition the Appellant at first instance relied on the following passage from the judgement of French J in Wanneroo:

“The interpretation of legislative instruments is dealt with in the Legislative Instruments Act 2003 (Cth). Awards and agreements made under the Act are declared, by s 7(1) of the Legislative Instruments Act, not to be legislative instruments – see Item 18 in the table set out in s 7(1). This leaves such awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) which provides, inter alia:

‘(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:

(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and

(b) expressions used in any instrument so made have the same meaning as in the enabling legislation; and

(c) any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.

An award is an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act for the purposes of its interpretation.” (2006) 153 IR 426 at 438 [52]

32. The decision in Wanneroo does not support the proposition contended by the Appellant. In Wanneroo Justice French was concerned with the construction of an award under the Workplace Relations Act 1996 (WR Act) and not an enterprise agreement made under the Act. Relevantly, the award in question was an instrument that was not a legislative instrument but was an instrument made by the Australian Industrial Relations Commission pursuant to a power under the WR Act to make the instrument. Consequently French J concluded that the award was “an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act (AI Act) for the purposes of its interpretation.”

[32] The Full Bench, having dealt with s.172 of the Act, which contains the requirement for an agreement to be made about permitted matters (pertaining to the relationship between the employer and the employer’s employees) summarised its conclusions as follows:

“Summary

41. From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

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

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

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

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

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

[33] I have applied the principles summarised above in this decision.

Jurisdiction of the Commission

[34] As I have already noted, there was no dispute that the Commission had the power to arbitrate this dispute arising from a combination of the Dispute Resolution clause 46, and ss.738, 739 and 595 of the Act.

[35] Clause 46 is drafted in broad terms and deals with disputes about the Agreement and matters pertaining between an employee and Simplot. A dispute about an entitlement to redundancy pay pursuant to clause 17 is clearly such a dispute.

[36] The nature of the Commission’s power to determine a dispute by arbitration derives from the terms of the dispute settlement clause. However, in the exercise of that power it has a broad power, pursuant to s.595, to settle the dispute by making orders that it considers appropriate.

[37] The task for the Commission is to make a finding as to how the relevant clauses in the Agreement are to be applied in the future. It is not a declaration about past rights or past compliance with the agreement by the employer. That would be a matter to be considered by a competent court. In doing so, the Commission must properly characterise the dispute. See Maritime Union of Australia v Australian Plant Services Pty Ltd (PR908236).

[38] In upholding my decision in a dispute between the CFMEU and Lend Lease, a recent Full Bench decision, Lend Lease Project Management and Construction (Australia) Pty Limited v Construction, Forestry, Mining and Energy Union ([2015] FWCFB 1889) has confirmed the broad discretion given to the Commission to arbitrate pursuant to a dispute settlement clause:

“[22] No relevant limitation on the scope of the Commission’s power to arbitrate a dispute under clause 19 may be identified in the terms of clause 19 itself. It is not necessary to explore the outer limits of what might constitute a “dispute” for the purpose of clause 19, since there was no issue that the dispute concerning Mr Genovese’s return to work was one to which clause 19 applied. We consider that an unrestricted power to arbitrate a dispute involves the conferral on the decision-maker of a broad discretion. Lend Lease accepted in its submissions that the power exercised by the Deputy President was discretionary in nature and that (leaving aside for present purposes Lend Lease’s jurisdictional ground of appeal based on alleged inconsistency with State OHS laws), it was necessary for it to demonstrate error of the type identified in House v The King (1936) 55 CLR 499 at 504-5.”

[39] In this context, I am satisfied that there would be power for me to make an order, if I am otherwise satisfied that there was an entitlement to redundancy pay, for an amount which is less than the full amount claimed by the AMWU, that is, less than $70,835.30. Ultimately, both parties, in their written submissions, agreed that this was an option.

[40] Section 120 of the Act provides for a variation of redundancy which is entitled to be paid because of s.119.

[41] Section 120 provides:

“120 Variation of redundancy pay for other employment or incapacity to pay

(1) This section applies if:

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and
(b) the employer:
(i) obtains other acceptable employment for the employee; or
(ii) cannot pay the amount.

(2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.

(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.”

[42] Of course, s.120 does not directly apply in this case because the redundancy entitlement arises under the Agreement rather that the National Employment Standards. However, by analogy, there is a discretion in my taking into account factors such as the actions of the parties, whether alternative employment was obtained, capacity to pay etc., in exercising my discretion as to how the dispute should be settled. I accept that there would be no power, as Simplot submitted, to award a greater payment.

Conclusion

[43] In my jurisdictional decision I came to a number of conclusions which are set out at [10] – [14] above. It is clear now that the following amendments/clarifications are required:

● Mr Gleeson got the offer from Nestle on 16 June (Transcript PN317 – PN319);

● In the meeting of 24 March, Mr Gleeson was not given a letter confirming his status, unlike other employees;

● In the text message exchange of 24 March Mr Gleeson finally advises Mr England that he wishes to take redundancy. Mr England responds, no problem. I am satisfied that Mr Gleeson was entitled to assume that Simplot had agreed;

● Mr Gleeson elected to take up the Team Leader role on 2 June but he did not actually start work in it (Transcript PN261 – PN268).

[44] Having conducted two sets of hearings with respect to this dispute, including cross-examination of the parties’ witnesses twice, my conclusion is that they were both truthful. Simplot tried to accommodate employees in a difficult situation whilst keeping the plant running. Mr Gleeson was entitled to believe that he had been offered voluntary redundancy and make provision for his family at a time of great personal stress.

[45] The parties agreed that this was a significant restructure. Simplot’s duty to consult pursuant to clause 13 was enlivened and clause 17 came into play. Simplot, to its credit, consulted with the AMWU, and entered into a voluntary redundancy process. The Agreement does not, itself, provide for voluntary redundancies. However, once that process had been agreed, the practical application of the Agreement means that it has to be properly and fully carried out. The question to be determined is, therefore, whether Mr Gleeson was entitled to redundancy pay as a result of the voluntary redundancy process, agreed by Simplot and the AMWU, pursuant to the Agreement.

[46] I am satisfied that Simplot committed to accommodate employees preferences where practicable. This meant that volunteers would be allowed to go early and still keep their redundancy pay, if they found another job. I accept that this was subject to Simplot’s ultimate discretion to keep the plant operating.

[47] I also accept that the expression of interest forms did not mean an automatic entitlement to redundancy pay (Tenci, Transcript PN595 – PN596).

[48] Mr Tenci, on behalf of Simplot tried to persuade Mr Gleeson that he had a future at Simplot. He concedes that he was encouraged to apply for the team Leader role (PN613).

[49] Considering all the evidence, I am satisfied that Mr Gleeson was made redundant because:

● On 4 March 2014 he had changed his mind to elect for voluntary redundancy;

● At or arising from his meeting with Simplot on 24 March 2014 he was not given a letter confirming that his position would not be made redundant, unlike other employees;

● At the latest, the text message response from Mr England, on that day, indicates acceptance of the voluntary redundancy. (See also Gleeson, Transcript PN289 – PN296);

● Mr Gleeson was then encouraged by Simplot to take up the Team Leader role. It is clear that this arose from the restricting not simply as a “promotion on the merits” as Simplot asserted. (Tenci, PN1000 – PN1003)

● I am satisfied that the Team Leader transfer comes within clause 17.8 of the Agreement. Mr Gleeson elected to transfer on 2 June 2014, in accordance with sub-clause (b). The fact that he did not actually commence the duties was not his fault and does not mean that the clause does not apply. It is his election to take the position that triggers the clause.

[50] Clause 17.8(b) provides that retrenchment will remain open to the employee for three months after the date of election. Mr Gleeson could have accessed redundancy pay until early September.

[51] It is conceded by Simplot that its condition that Mr Gleeson could get redundancy pay, only if he stayed until late October, was only clearly imposed on 16 June, when he told Mr Tenci and Mr England that he had another job with Nestle. (Tenci, Transcript PN638 – PN643; PN1308 – PN1323)

[52] In summary, I am satisfied that Mr Gleeson had an entitlement to redundancy pay as prescribed by clause 17.3(a) of the Agreement. The agreed total amount is $70,835.30.

[53] In all the circumstances of the case, I believe it is appropriate to discount this amount. The factors that I have taken into account are:

● The entitlement rests on an agreement to undertake voluntary redundancies which, on balance and in difficult circumstances, Simplot tried to implement;

● Mr Tenci and Mr England acted, in a bona fide way, to take account of Mr Gleeson’s preferences and personal circumstances;

● There was genuine miscommunication and misunderstanding between Mr Gleeson and Simplot;

● Mr Gleeson did find alternative employment.

[54] I find that a payment of $50,000 to Mr Gleeson is appropriate in the circumstances.

[55] An order to this effect will issue with this decision.

DEPUTY PRESIDENT

Appearances:

L. Saunders for the AMWU;

J. Ansell of AI Group with S. King for Simplot Australia Pty Ltd.

Hearing details:

2015

Sydney:

February 6 (telephone conference).

Bathurst:

May 29, 30.

Final written submissions

2015

AMWU:

May 20.

Simplot:

June 9.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR568584>