"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v SPC Ardmona Operations Limited

No judgment structure available for this case.

[2011] FWA 4405

FAIR WORK AUSTRALIA

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
SPC Ardmona Operations Limited
(C2011/31)

Food, beverages and tobacco manufacturing industry
VICE PRESIDENT WATSON	SYDNEY, 19 JULY 2011

Dispute concerning conversion of a seasonal employee to permanent employment- whether reasonable to refuse to convert seasonal employee to permanent employment under term of enterprise agreement.

Introduction

[1] This decision concerns an application by the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) pursuant to s 739 of the Fair Work Act 2009 (the Act) for a dispute resolution procedure to be conducted in accordance with the SPC Ardmona Operations Shepparton/Mooroopna General Union Collective Enterprise Agreement 2009 (the Agreement).

[2] The dispute concerns the employment of Ms Genna Nash. Ms Nash is a seasonal employee of SPC Ardmona Operations Limited (SPCA) and works at the Mooroopna site in Victoria. The AMWU contend that Ms Nash’s employment should be converted from seasonal to permanent employment in reliance on a clause in the Agreement which provides for a conditional conversion in certain circumstances.

[3] At the hearing of the matter on 24 June 2011 Ms E McGrath appeared for the AMWU and Mr T Dalton represented SPCA. Evidence was given by Ms Nash, the AMWU’s Organiser, Mr Hefford and SPCA’s Manufacturing Manager Mr Enders.

Background

[4] SPCA is a food production company primarily involved in the canning of fruit and the processing of fruit into other products such as fruit juice. It has operational sites at Shepparton, Mooroopna and Kyabram. Due to the nature of the business there is a significant seasonal aspect of labour requirements and employment opportunities.

[5] Both permanent and seasonal employee numbers have declined in recent years. The approximate numbers of employees since 2007 is as follows:

Year	Permanent	Seasonal
07/08	312	3105
08/09	285	1670
09/10	283	1564
10/11	274	1301

[6] Ms Nash commenced employment with SPCA on a seasonal basis in 2000 initially for 3-4 months each year. Since 2003 her employment has been for more extended periods and she has been re-employed on a seasonal basis each year since that time. The actual dates of her employment since 2003 are as follows:

Start Date	Termination Date	Gap in Employment
10/09/03	3/06/04	4 months, 22 days
25/10/04	13/05/05	4 months, 6 days
19/10/05	18/01/06	6 days
24/01/06	18/05/06	5 months, 22 days
30/10/06	8/06/07	22 days
30/08/07	1/11/07	22 days
23/11/07	29/04/08	9 days
8/05/08	5/08/08	1 month, 17 days
22/09/08	24/07/09	1 month, 28 days
21/09/09	30/10/09	10 days
9/11/09	21/05/10	10 days
1/06/10	6/08/10	11 days
17/08/10	1/10/10	2 months, 5 days
6/12/10	24/12/10	11 days
4/01/11	24/06/11	Unknown*

* The data provided by SPCA concludes on week commencing 27/06/11.

[7] Over the period of employment Ms Nash worked in a variety of roles. Since 2007 these have included work in the following areas - refurbish, capper trials, 1 Kilo production, recapping trials, can cleaning, 2-Kilo production, and 1-Kilo labelling. Some of the roles are no longer performed at the Mooroopna site.

[8] There have been various other structural changes in the SPCA’s operations over that period including the transfer of 27 permanent employees from the Kyabram site consequent upon the loss of a major contract in January 2009.

[9] The number of seasonal employees engaged at the Mooroopna site at any one time fluctuates significantly. At the peak of the season it could be up to 265 employees. At the hearing of the matter I asked the SPCA whether it could provide information as to the number of seasonal employees engaged during each of Ms Nash’s gaps in employment since 2007. It provided a table that indicated that the number of seasonal employees employed during the relevant periods. That material can be relevantly summarised as follows:

Period	Seasonal Employees
2/11/07 - 22/11/07	26 (no information for part of period)
30/4/08 - 7/5/08	39-66
6/8/08 - 21/9/08	17-27
25/7/09 - 20/9/09	4-56
31/10/09 - 8/11/09	3-39
22/5/10 - 31/5/10	43
7/8/10 - 16/8/10	7-14
2/10/10 - 5/12/10	30-54 (no information for part of period)
25/12/10 - 3/1/11	39 (no information for part of period)
27/6/11-	24

[10] During each of these periods seasonal employees were engaged in the areas of the operations in which Ms Nash worked. In only three of these weeks the numbers of seasonal employees engaged fell to single digit numbers. SPCA submits that it has operated under a principle of not replacing a seasonal employee doing a particular job with another seasonal employee. The principle is said to be for the purpose of maintaining fairness. Clause S7.2.3 is said to have been included into the agreement to avoid conflict between seasonal employees arising from the allocation of work in accordance with this principle. Clause S7.2.3 provides that two days notice of a stand down will be given when work is reduced and that SPCA has the absolute discretion as to who to stand down.

[11] The AMWU submits that no such issue would arise if Ms Nash was converted to full-time status. It further submits that the data provided by SPCA indicates that on each occasion that Ms Nash was not offered employment with the company there was meaningful work that she could have performed and that work was performed by other seasonal employees.

[12] Schedule 7.9 of the Agreement provides for the conversion of seasonal employees to permanent employment. The clause is set out below:

“S7.9 SEASONAL/TEMPORARY EMPLOYMENT TO PERMANENT EMPLOYMENT

S7.9.1 An employee employed under the provisions of this stream, who has been engaged by a SPCA for a sequence of periods of employment under this agreement during a period of twelve months shall thereafter have the right to elect to have his or her contract of employment converted to full-time employment or part-time employment if the employment is to continue beyond the conversion process.

S7.9.2 SPCA shall give the employee notice in writing of the provisions of this clause within four weeks of the employee having attained such period of twelve months. The employee retains his or her right of election under this clause if the employer fails to comply with this paragraph.

S7.9.3 Any such employee who does not within four weeks of receiving written notice elect to convert his or her contract of employment to a full-time employment or a part-time employment will be deemed to have elected against any such conversion.

S7.9.4 Any employee who has a right to elect under clause (S7.9.1), upon receiving notice under clause S7.9.2 or after the expiry of the time for giving such notice, may give four weeks notice in writing to the employer that he or she seeks to elect to convert his or her contract of employment to full-time or part-time employment, and within four weeks of receiving such notice the employer shall consent to or refuse the election but shall not unreasonably so refuse. Any dispute about a refusal of an election to convert a contract of employment shall be dealt with as far as practicable with expedition through the Grievance process at S2.4 of this agreement.

S7.9.5 Once an employee has elected to become and been converted to a full-time employee or a part-time employee, the employee may only revert to casual employment by written agreement with SPCA.

S7.9.6 If a casual employee has elected to have his or her contract of employment converted to full-time or part-time employment in accordance with clause S7.8(d), SPCA and employee in accordance with this subparagraph, and subject to clause S7.8(d), shall discuss and agree upon:

(i) Which form of employment the employee will convert to, that is, full-time or part-time;

and

(ii) if it is agreed that the employee will become a part-time employee, the number of hours and the pattern of hours that will be worked

Provided that an employee who has worked on a full-time basis throughout the period of casual employment has the right to elect to convert his or her contract of employment to fulltime employment and an employee who has worked on a part-time basis during the period of seasonal/temporary employment has the right to elect to convert his or her contract of employment to part-time employment, on the basis of the same number of hours and times of work as previously worked, unless other arrangements are agreed upon between the employer and employee.

Following such agreement being reached, the employee shall convert to full-time or part-time employment.

Where, in accordance with clause 7.8(d) an employer refuses an election to convert, the reasons for doing so shall be fully stated to and discussed with the employee concerned and a genuine attempt made to reach agreement.

Any dispute about the arrangements to apply to an employee converting from casual employment to full-time or part-time employment shall be dealt with as far as practicable with expedition through the dispute settlement procedure S2.4 of this agreement

S7.9.6(sic) An employee must not be engaged and re-engaged to avoid any obligation under this agreement.”

[13] Despite the terms of clause S7.9.2 SPCA did not provide a notice to Ms Nash upon the attainment of the qualifying period of service. It is not apparent on the evidence why this did not occur.

[14] On the 29 September 2010, Ms Nash wrote to SPCA to request conversion to full-time employment in accordance with clause S7.9.1 of the Agreement. By letter dated 20 October 2010 SPCA advised Ms Nash that her application for permanent employment had been refused. The reasons given for the refusal were as follows:

“With the loss of a major contract on the Kyabram site, SPCA has a responsibility to continue the employment of some twenty seven permanent employees from that site by transferring them to either Shepparton or Mooroopna sites, and;

As further substantial advances in technology are to be applied on the Shepparton site this season and at Mooroopna shortly thereafter, the requirement for seasonal employees will decrease, and;

This year, at Mooroopna, you have worked a number of separate jobs that have been short term in nature and some instances are unlikely to continue for as long as they have due to production changes, further reducing SPCA’s requirement for labour.”

[15] Ms Nash sought to raise the matter before the Site Council, a consultative body which has four management and five employee representatives. Two of the employee representatives are also union representatives. The Site Council met on 18 January 2011 specifically to discuss Ms Nash’s application. The AMWU Organiser Jason Hefford attended the meeting and advanced the case on behalf of Ms Nash. The minutes of the meeting record a consideration of the reasonableness of SPCA’s refusal to convert Ms Nash’s employment status, conclusions and recommendations as follows.

“Considerations by Site Council

17. It was considered that the issue in question was the interpretation of the term “unreasonably refuse” (S7.9.4) and to do this, the Council needed to consider if the reasons given by SPCA were ‘reasonable’. To determine this, the Council needed to consider the scope of the word ‘reasonable’.

18. It had been submitted the incorporation of Kyabram employees in to SPCA’s consideration of the request was unreasonable and that the scope of the consideration should be restricted to the matters of the EBA in questions. This proposal was not accepted by the Site Council. It was agreed that what is ‘reasonable’ needed to extend beyond the EBA and consider business matters that are relevant to the matter under consideration. It was considered that for the company to ensure ongoing employment to Kyabram permanent employees, including the need to transfer employees to Mooroopna and Shepparton (as has happened previously) was a reasonable consideration.

19. With regards to future expectations at the Shepparton and Mooroopna site, it was considered that the basis used for the company in stating the labour requirements would reduce was grounded in fact and realistic expectation rather than aspiration or long term objectives. Since the time of the reply in October, some of these expectations have come to fruition with reduced production budgets and increases in nil production periods. It was therefore considered that the incorporation of labour expectations for 2011 was reasonable and well founded.

20. It was considered that, given the realistic expectations for labour requirements, the company held an obligation to ensure the availability of work for its current permanent workforce and that to appoint new permanent employees under the current circumstances could, in itself, be an unreasonable action for the company to take.

21. With regards to the number of hours worked, it was noted that the hours fell under that of a full time employee, albeit only by a small margin. It was discussed that any h ours less than full time would, in fact be part time and there was some question as to whether the application or ‘full time’ work instead of ‘part time work was procedurally correct under S7.9. The Site Council was not required to make any recommendation on this aspect, however it was considered that the fact that the hours worked was less than full time added to the reasonableness of refusal by the company.

Conclusions

22. The determination of what is ‘reasonable’ needs to be considered in a total business context and should not be interpreted narrowly.

23. Based on the interpretation of what is reasonable by the Site Council and for the reasons stated above, the Council considers that none of the reasons stated by the company for the rejection of the application for permanency are unreasonable.

24. The Site Council considers that SPCA has complied with S7.9.4 of the EBA in refusing the application for conversion.

Recommendations

25. The Site Council unanimously recommends the Application by Genna Nash for conversion of her seasonal employment to permanent employment in accordance with s7.9.1 of the EBA be refused.” 1

[16] The issue for determination is whether SPCA was reasonable in refusing to convert Ms Nash to permanent employment.

Was the refusal reasonable?

[17] The AMWU submits that Ms Nash has far exceeded the eligibility criteria for conversion and her employment patterns have shown an ever increasing regularity of engagement. It submits that the quality of her work has been good, evidenced by her repeated engagements and team leader appraisals. It further submits that the reasons given by the employer for refusing to convert Ms Nash’s employment status are not sound and that Ms Nash is suffering a relative loss of entitlements as a seasonal employee as she is entitled to approximately $50 per week less in wages, no public holiday payments and can be stood down with two days notice. It submits that these differentials are the real reasons for the refusal.

[18] SPCA contends that it took a broad view of the circumstances, that it noted the number of different occasions Ms Nash was employed in recent years, the ongoing need to transfer permanent employees to and from other locations, technological and production changes that will lead to permanent employees moving to other shifts and an overall reduction in labour requirements for the business, certain jobs performed by Ms Nash were unlikely to continue due to changes in production requirements and that Ms Nash’s employment was unlikely to continue beyond the conversion process due to production requirements.

[19] In my view it is important to consider the purpose of clause S7.9.1 of the Agreement. The clause confers rights on seasonal employees. It is in line with similar clauses in some awards and agreements, including this Agreement, regarding casual employees. The concept involved is that employees with less secure and regular employment than full-time and part-time employees who serve a qualifying period of employment can elect to convert the status of their employment to full-time or part-time status subject to the consent of the employer. The wording of the clause connotes more than a right to request a conversion. It is phrased as an election of the employee which must be actioned unless the employer has reasonable grounds to refuse the request.

[20] In my view, seasonal employees engaged under this Agreement have a legitimate expectation of conversion unless there are unusual circumstances which render that course inappropriate, and hence the employer’s refusal reasonable. The clause is the product of the Agreement of the employer and employees in the operation and must be applied on its terms regardless of views of the employer about the consequences of its application.

[21] It is clear that the natural consequence of the operation of the clause is that conversions will result in a change in the mix of what the Agreement describes as permanent employees (full-time and part-time) and seasonal employees. The same is true for the operation of the clause regarding casual employees. The underlying concept is that employees with less secure employment after a qualifying period of service in that capacity can improve their status unless the business cannot sustain that outcome or there is some other reasonable reason to refuse an election to convert. In my view it is not open to SPCA, having agreed to the creation of the right, to interpret and apply the clause in a way that fundamentally undermines that right and the purpose of the clause.

[22] The employer has advanced three reasons for refusing to approve the election to convert. It is necessary to subject those stated reasons to objective analysis.

[23] The first reason concerns the loss of the Ocean Spray contract in January 2009, which accounted for 25% of work at the site. The change also resulted in the reduction of 27 positions at the Kyabram site and their relocation to other sites. However that change has now occurred although permanent relocation of the employees did not occur until late 2010. Throughout that period SPCA has continued to engage large numbers of seasonal employees and Ms Nash was employed continuously since December 2010 apart from the Christmas period. For most of the first six months of 2011 more than 50 seasonal employees have been engaged. In each of the periods during which Ms Nash did not work in 2010 there were at least 30 seasonal employees engaged, apart from two non-production periods in August. Ms Nash has been employed by SPCA for many years and has been trained in a variety of roles. Even though some of those roles are no longer carried out at Mooroopna, she has been trained in other roles. SPCA has not advanced any reason why this could not occur again if her employment status was changed.

[24] In my view the notion of a downturn in business affecting the ability to convert a seasonal employee only has substance if it is demonstrated that there is likely to be insufficient work for the resultant number of permanent employees. The ongoing use of seasonal employees in some numbers undermines SPCA’s reliance on this reason. I note the conclusions and recommendation of the Site Committee in relation to the business reasons for the refusal in particular. This is a significant factor and adds credibility to SPCA’s refusal. However the stated reasons need to be objectively analysed and be found to be sufficient to justify the conclusion that an extra permanent employee is not consistent with operational requirements. In my view something more must be established than the change would disturb management’s desired labour mix. Adverse operational or other consequences must be demonstrated. SPCA has not done so.

[25] The next stated reason concerns the decreasing need for seasonal employees as a result of technological advances. SPCA has established the validity of this circumstance. There is no doubt that there has been a decline in labour requirements and that this is expected to continue. There will be additional non-production periods and shift changes for permanent employees to deal with changing labour requirements. However in order to qualify as a reasonable reason for refusing an election for conversion it must be demonstrated that the impact of the reduction means that the existing level of permanent employees is at or close to the maximum sustainable number. SPCA has not demonstrated this.

[26] The final reason concerns the number of jobs performed by Ms Nash over the past year and the suggestion that in some instances these are unlikely to continue. SPCA has not explained how Ms Nash, with her extensive experience in the operation could not be trained in the new technology along with other employees in the event that no work is available consistent with her current skills. Without such an explanation I am unable to find that this reason is soundly based or reasonable.

[27] In all of the circumstances I am not satisfied that the refusal of SPCA to convert Ms Nash’s employment status is reasonable. It appears to me that the declining business circumstances and labour requirements has led SPCA to the view that it does not wish to increase the number of permanent employees. However it has failed to demonstrate how the engagement of another permanent employee is unsustainable or would lead to other adverse consequences. SPCA’s approach to its notification obligations under the relevant clause of its Agreement has been off-hand. It has considered the election made by Ms Nash in more detail but its reasons for refusing to apply the conversion both individually and collectively have not been demonstrated to withstand objective scrutiny. SPCA has failed to establish that it could not adequately manage its labour with one additional seasonal employee or that an increase in the number of permanent employees would lead to harmful business consequences.

Conclusions

[28] For the reasons above I find that SPCA has not established that its reasons for refusing to convert Ms Nash’s employment to permanent status are reasonable. It follows that Ms Nash’s election should not have been refused. I determine the dispute accordingly.

VICE PRESIDENT WATSON

Appearances:

E. McGrath for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

T. Dalton with P. Bertolus for SPC Ardmona Operations Limited

Hearing details:

2011.

Melbourne

June, 24

1 Attachment E2 to Exhibit D2

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