Broadlex Services Pty Ltd v United Workers' Union

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FEDERAL COURT OF AUSTRALIA

Broadlex Services Pty Ltd v United Workers’ Union [2020] FCA 867

Appeal from: United Voice v Broadlex Services Pty Ltd (unreported, Local Court of New South Wales, Atkinson LCM, 17 June 2019)
File number: NSD 1113 of 2019
Judge: KATZMANN J
Date of judgment: 22 June 2020
Catchwords:

INDUSTRIAL LAW — appeal from Local Court of NSW — meaning of “employment is terminated” in s 119(1) of Fair Work Act2009 (Cth) — where no dispute that contract of employment had been terminated by employer because employer no longer required job done by employee to be done by anyone, whether employee, who had been working for employer full-time and who, against her will, accepted part-time employment at about 40% of her former wage, entitled to redundancy pay — whether “employment” refers to contract of employment or employment relationship

CONTRACTS — effect of termination of contract of employment on employment relationship

STATUTORY INTERPRETATION — meaning of “employment is terminated” in s 119(1) of Fair Work Act 2009 (Cth)

Legislation:

Acts Interpretation Act 1901 (Cth) ss 13, 15AA

Fair Work Act 2009 (Cth) ss 12, 22(5), 44, 61(2), 117–123, 170CA–170CB, 170CD(1B), 385–386, 565, 570, 772, 789(1), Pt 3-2, Pt 6-4 Div 3

Industrial Relations Act 1988 (Cth) ss 170CA, 170CB, Pt VIA Div 3

Workplace Relations Act 1996 (Cth) ss 170CB, 170CD(1B), 170CM

Explanatory Memorandum, Fair Work Bill 2008 (Cth)  
Cases cited:

AlphapharmPty Ltd v H Lundbeck A/S (2014) 254 CLR 247

Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435

Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99

Byrne v Australian Airlines Ltd (1995) 185 CLR 410

Carr v The State of Western Australia (2007) 232 CLR 138

CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384

Department of Justice v Lunn (2006) 158 IR 410

Fair Work Ombudsman v FL Press Pty Ltd [2015] FCCA 1578

Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9

Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555

Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200

Network Ten Pty Ltd v Seven Network (Operations) Ltd [2014] NSWSC 692

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

R v Bowen; Ex parte Amalgamated Metal Workers and Shipwrights’ Union (1980) 144 CLR 462

Saeid Khayam v Navitas English PIL t/a Navitas English [2017] FWCFB 5162; 273 IR 44

Scott Harrison v FLSmidth Pty Ltd t/a FLSmidth Pty Limited [2018] FWC 6695

Stanley International College Pty Ltd t/a Stanley College [2018] FWC 4843

SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362

Termination, Change and Redundancy Case (1984) 8 IR 34

Termination, Change and Redundancy Case (1984) 9 IR 115

Thiess v Collector of Customs (2014) 250 CLR 664

Turner v The Australasian Coal and Shale Employees’ Federation (1984) 6 FCR 177

Visscher v Giudice

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Details
Case
[2020] FCA 867
Decision Date

CaseChat Overview and Summary

The appeal in Broadlex Services Pty Ltd v United Workers' Union was heard by the Federal Court of Australia. The central issue was the interpretation of the phrase “employment is terminated” in section 119(1) of the Fair Work Act 2009 (Cth), in the context of an employer reducing an employee's hours and salary against her will. The appellant, Broadlex Services Pty Ltd, sought to appeal a decision by the Local Court of New South Wales, which had found in favour of the respondent, United Workers' Union, and awarded the employee, Ms Brizitka Vrtkovski, redundancy pay. The court had held that Broadlex's unilateral reduction of Ms Vrtkovski's working hours from full-time to part-time, accompanied by a significant reduction in her salary, amounted to a termination of her employment contract and relationship, triggering her entitlement to redundancy pay under section 119(1).

The legal issues before the Federal Court involved the interpretation of "employment is terminated" in section 119(1) of the Fair Work Act, the effect of termination of a contract of employment on the employment relationship, and the statutory interpretation of the term "employment is terminated." Specifically, the court needed to determine whether the phrase referred to the contract of employment or the employment relationship, and whether the employee's acceptance of reduced working hours and salary constituted a termination of the employment relationship. The court was also required to consider whether the reduction of Ms Vrtkovski's employment from full-time to part-time, without her consent and for reasons unrelated to the normal turnover of labour, amounted to a termination of her employment and triggered her entitlement to redundancy pay.

The Federal Court found in favour of the Union, affirming the Local Court's interpretation of "employment is terminated" as encompassing both the contract and the relationship. The court held that by repudiating the employment contract, Broadlex terminated the employment relationship. Ms Vrtkovski's acceptance of reduced working hours and salary, without her consent, constituted her acceptance of the repudiation, bringing the employment contract to an end. The court concluded that this interpretation was consistent with the operation of the unfair dismissal provisions in Part 3-2 of the Fair Work Act. The court further determined that since Broadlex no longer required the full-time job to be done by anyone, Ms Vrtkovski was entitled to redundancy pay under section 119(1).

The Federal Court dismissed Broadlex's appeal, upholding the Local Court's decision and ordering that Broadlex pay the Union the previously awarded redundancy pay of $5,194.98, with interest of $502.56, and a civil penalty of $1,500. The court made no order as to costs, finding that neither party had applied for costs and that the conditions for an award of costs were not met.

Orders

Orders of the court

1. The appeal be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The central question raised by this appeal is what is meant by the phrase “employment is terminated” in the chapeau to the subsection.Background The appellant, Broadlex Services Pty Ltd, supplies cleaning services to the electricity distributor, Ausgrid. On 1 May 2014 Broadlex entered into a contract of employment with Brizitka Vrtkovski. Ms Vrtkovski was employed as a full-time cleaner at an Energy Australia/Ausgrid site in Wallsend, a suburb of Newcastle. In July 2017 Broadlex negotiated a new contract with Ausgrid in which the cleaning hours it had provided were reduced. On 15 August 2017 Ms Vrtkovski was informed by Broadlex that “due to consideration of work flow an operational requirement has been identified to reduce [her] status from full time to part time” and that her work hours would alter on and from 12 September 2017. The effect of the decision was to reduce Ms Vrtkovski’s working hours from 38 hours a week to 20 hours a week and her salary by about 40% to $16,790.80. Ms Vrtkovski was invited to sign a form of consent to this change, which was described as a “transfer from full time to part time” with a change in hourly rates. Unsurprisingly, she refused. Nevertheless, she began working the reduced hours on 12 September 2017 because she considered she had no choice. Ms Vrtkovski’s union, United Voice (now the United Workers’ Union), issued proceedings in the Local Court seeking a declaration that Broadlex contravened s 44 of the FW Act, by failing to pay Ms Vrtkovski redundancy pay in accordance with s 119, and orders for compensation and penalties. Section 44 provides that an employer must not contravene a provision of the National Employment Standards. Civil penalties may be imposed on those who do. Section 119 is such a provision. The National Employment Standards are minimum standards that apply to the employment of employees which cannot be displaced: s 61(2). The magistrate upheld the Union’s claims, awarded Ms Vrtkovski $5,194.98 in redundancy pay, with interest fixed at $502.56, and ordered Broadlex to pay the Union a civil penalty of $1,500. At trial, the parties apparently agreed that the duties and tasks Ms Vrtkovski performed on a part-time basis were the same as those she had performed on a full-time basis, and it was common ground that her accrued service benefits were maintained after she began working part-time. Broadlex nevertheless accepted that, in reducing Ms Vrtkovski’s employment status from full-time to part-time, it had repudiated her employment contract and the magistrate found that Ms Vrtkovski had accepted the repudiation by refusing to sign the consent form or agreeing to the variation in terms. Consequently, her Honour held that the contract of employment was terminated and, when the employee started work on a part-time basis, she did so under a new contract of employment. Her Honour went on to find that Ms Vrtkovski’s employment was terminated at the initiative of Broadlex because it no longer required the full-time job to be done by anyone, that there was no evidence that the termination was due to the ordinary and customary turnover of labour, and that Ms Vrtkovski was entitled to redundancy pay.The appeal

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In the result, in a case such as the present, where, for reasons unrelated to the ordinary and customary turnover of labour, the employer repudiates the employee’s contract of employment because it no longer required the job the employee was doing to be done by anyone and the employee accepts the repudiation by agreeing to work significantly fewer hours with a consequential reduction in her remuneration, the employee is entitled to be paid redundancy pay. By repudiating the contract the employer terminates the employment relationship. By accepting the repudiation the employee brings the employment contract to an end. Reading s 119(1) in this way is entirely harmonious with the operation of the unfair dismissal provisions in Pt 3‑2 of the FW Act.Conclusion For all these reasons I am satisfied that Ms Vrtkovski’s employment was terminated when Broadlex repudiated her contract of employment as a full-time cleaner. Since it is common ground that the reason for the termination was that Broadlex no longer required that job to be done by anyone, she was entitled to redundancy pay in accordance with s 119(1). It follows that the appeal must be dismissed. Section 570 of the FW Act limits the Court’s power to award costs. Neither party applied for costs. And I am not satisfied that the conditions for an award are met in this case. I will therefore make no award as to costs.

Ratio Decidendi

Legal Principle Established

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