Construction, Forestry, Mining and Energy Union v McCain Foods (Aust) Pty Ltd

[2014] FWC 1923

[2014] FWC 1923

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union
v
McCain Foods (Aust) Pty Ltd
(C2013/6493)

COMMISSIONER GREGORY MELBOURNE, 24 JUNE 2014

Alleged dispute concerning Boiler/Refrigeration Attendant positions and redeployment/redundancy - application dismissed.

Introduction

[1] McCains Foods (Aust) Pty Ltd (McCains) has a food processing facility at Smithton in north-west Tasmania. The plant was established in 1985 and, until recently, operated separate vegetable and potato processing lines. However, the vegetable processing line has since closed and the Smithton plant is now only involved in processing potatoes as french fries.

[2] The current dispute arises from an upgrade of the boiler system at the plant and a proposal by McCains to reorganise the duties of the nine employees who perform Boiler/Refrigeration Attendant duties in that area. The upgrade means the number of shifts required to be worked in the boiler room is reduced by approximately half. However, McCains wants to keep all nine employees in employment at the plant. Various proposals to reorganise the work have been proposed by the Company, but no agreement reached about how the changes might be implemented. In September 2013 McCains went ahead and decided to notify the employees it intended to reorganise their duties to also include duties in the french fry area of the plant on a rotational basis.

[3] The Construction, Forestry, Mining and Energy Union (the CFMEU) represents the nine employees. Under the terms of the Agreement that covers the parties it submits four positions have been made redundant in the boiler room and therefore four employees are redundant and entitled to redundancy payments. It also believes the proposal to rotate the employees through the French Fry Plant should not be implemented because the employees are not being offered “adequate alternative” duties.

[4] However, McCains believes the employees have not been made redundant under the Agreement as a result of the changes because it is not required to reduce the overall numbers at the plant. It believes it is entitled to reorganise the employee’s duties to include other duties within their existing skills and competence that can be carried out with the provision of additional training, where necessary.

[5] McCains believes its proposal has additional merit because it enables all of the employees to remain in ongoing employment, whereas the position advocated by the CFMEU means four positions will be made redundant and four employees will lose their jobs.

[6] The parties are covered by the McCains Foods (Aust) Pty Ltd Tasmanian Enterprise Union Collective Agreement 2010 1 (the Agreement.) The redundancy provisions in the Agreement are contained in Appendix 3 under the heading “Retrenchment/Redundancy Agreement.” The relevant clauses state:

“1. In the event that the company is required to reduce the size of the work force it will do so, in the first instance, through natural attrition (i.e.; not replacing employees who leave of their own accord and re-deployment). This policy will remain in force and operate in addition to the following.

2. Should the company be required to reduce the work force size through redundancy/retrenchment, the company will firstly identify the number of positions affected. This information, and the need for the reduction, will be advised in writing to the employee and their nominated representative simultaneously. The company will promptly consult with employees and their representatives. Any employee being compulsorily retrenched or compulsorily made redundant will, under this agreement, receive 4 weeks notice of termination.

3. The company will then advertise the number of position(s) affected and call for expressions of interest from employee(s) in the department most affected by the proposed reduction who may wish to volunteer for redundancy.

4. In the event that the number of volunteers exceeds the number of positions to be lost, then selection will be from volunteers on the basis of skills, experience and seniority of the volunteers.

5. In the event that the number of volunteers is less than the number of positions to be lost, then the company will call for volunteers from across the site. Should the number of volunteers exceed the number of positions lost, then selection will be on the basis of skills, experience, suitability of the position left vacant for redeployed persons and seniority.

6. In the event that the number of volunteers is less than the number of positions to be lost, then the company will select employees for redundancy based on seniority, site wide. (Last on, first off).

7. If requested to by the employee representatives, the company is prepared to genuinely consider the prompt involvement of an external agency or resource in the assessment of employees (either volunteers or those selected by the company).

8. If the selection of volunteers (or other circumstances), creates alternative positions into which employees can be re-deployed instead of retrenched, the company will actively encourage re-deployment.

9. Any such re-deployment will be on the basis that the employee's weekly rate, comprising their award wage and over-award payment, will not be reduced as a result of that re-deployment. Any Leading Hand Allowance will however, be absorbed in any future wage rises.

10. A reasonable refusal of re-deployment will not necessarily exclude an employee from a redundancy or retrenchment payment. However, the company is prepared to negotiate any cases that may arise where an employee believes that a proposed re-deployment is, or would be, unreasonable. In the event of a failure to reach agreement on re-deployment the provisions of the dispute settling procedure of the relevant award will be followed.

11. A refusal of re-deployment deemed reasonable under the terms of paragraph 10 of this agreement will be considered as compulsory redundancy.” 2

[7] The matter was heard in Smithton over 3 hearing days. The parties also requested and were provided with the opportunity to make final written submissions at a later date. Nine witnesses gave evidence in support of the application. Three witnesses provided evidence on behalf of McCains. Both parties also made reference to a range of additional documentation. Mr Bill White appeared on behalf of the CFMEU. Ms Emma MacDougal from the Australian Industry Group (AiG) appeared on behalf of McCains.

The Issue to be Determined

[8] The Retrenchment/Redundancy Agreement contained in Appendix 3 of the Agreement that covers the parties has application where “the company is required to reduce the size of the work force”. 3 Two issues arise for determination in response.

[9] Firstly, do the changes in the boiler room mean McCains is required to reduce the size of its workforce? Secondly, can it avoid being “required to reduce the size of its work force” by reorganising the work of the employees in the boiler room in the way it proposes?

[10] Finally, the CFMEU also rely on the evidence of custom and practice at the Smithton plant to submit the Boiler/Refrigeration Attendants are entitled to be made redundant. Is past custom and practice relevant to the determination of this matter?

The Evidence and Submissions

[11] The CFMEU submits the employees have been employed solely as boiler attendants/refrigeration plant operators for an extended period of time and, if redeployed, would no longer able to utilise those skills and training. It also submits in the 30 years the Smithton plant has been in operation no employee has been redeployed against their wishes.

[12] It submits the matter should be determined having regard to three considerations. Firstly, the provisions contained in Appendix 3 of the Agreement. Secondly, with regard to the requirements in s.399 of the Fair Work Act 2009 (Cth) (the Act) and, finally, by recognising the custom and practice in place at the Smithton site over an extended period of time. In this context it acknowledges the Agreement enables McCains to actively encourage employees to take up offers of redeployment when positions become redundant, however, if they are declined it submits the employees should be considered to have been made redundant.

[13] The CFMEU submits the prospect of redundancies as a result of an upgrade of the boilers was first foreshadowed in early 2011, but without any mention of redeployment. However, in late 2012 redeployment to other areas was foreshadowed as a potential outcome of the upgrade. In April 2013 a “Reorganisation of work and training proposal” 4 was given to the employees by the Company. It proposed they be required to take on the extra duty of Fryer Process Controller in the French Fry Plant.

[14] However, the CFMEU submits four Boiler/Refrigeration Attendant positions have been made redundant as a result of the automation of the boiler room, and the proposed redeployment plan would mean the employees are required to work in other areas of the plant without adequate skills to perform the work. It also submits the proposal would mean a decrease in the employee’s wages because of the different rosters that would be worked, and because they would lose the benefit of a shift changeover allowance that currently applies.

[15] It submits:

“The essence of the dispute to be determined is whether it is reasonable for McCain Foods to redeploy the nine employees, with four of their positions redundant, to another area of work outside and less than their current skill sets.” 5

[16] It submits that to attain the skills and competence required to carry out the various functions now proposed by McCains the training involved would likely extend over a 12 month period with refresher training being required as well. 6

[17] The CFMEU rely on the decision in Ulan Coal Mines Limited v Honeysett & Ors 7 in support of their submissions. It referred in particular to the following extract where the Full Bench held:

“It is an essential part of the concept of redeployment under s.389(2)(a) that a redundant employee be placed in another job in the employer’s enterprise as an alternative to termination of employment. Of course the job must be suitable, in the sense that the employee should have the skills and competence required to perform it to the required standard either immediately or with a reasonable period of retraining. Other considerations may be relevant such as the location of the job and the remuneration attaching to it.” 8

[18] The CFMEU also submits custom and practice at the Smithton plant has been to not require or force employees to redeploy into other areas when their existing positions have become redundant. The practice has been, instead, to allow employees to volunteer for redundancy. It submits this custom and practice should continue to be part of the employment arrangements meaning, in the present circumstances, redundancies should have been offered as an option to the employees, first of all, before they are required to consider any redeployment proposals.

[19] The CFMEU also points to a range of factors it submits should be considered in terms of why redeployment is not reasonable in all the circumstances. Firstly, the employees are classified and trained as Boiler/Refrigeration Attendants and have been working in these roles for many years. Secondly, they are being expected to acquire further skills to enable them to perform the additional tasks in the French Fry Plant without any additional compensation being offered. It also submits there is no correlation between the employee’s existing functions, and the functions, status and skills of the positions and roles they would be required to carry out in the French Fry Plant. It submits it is a “lesser position by the significant differential in the pay rates”. 9 In this context it also relies on the decision in Smith v OneSteel & Anor10 (OneSteel) where a proposed redeployment role for an employee whose position had been made redundant was not considered to be an adequate alternative.

[20] The CFMEU submits the decision to automate the boilers means four positions in that area have been made redundant and, in those circumstances, the “preference of the affected employees is to be paid their redundancy entitlement as prescribed by the EBA and be able to follow their trade elsewhere.” 11 It also submits it is unreasonable for McCains to expect the employees to alternate between the different shift patterns and working hours arrangements that variously exist in the boiler/refrigeration room and the French Fry Plant. It also emphasises that the employees would not maintain their existing salary entitlements, particularly because of the loss of a handover allowance currently paid to the Boiler/Refrigeration Attendants, which would not be maintained when they are working in the French Fry Plant. In summary, it submits the proposed redeployment option cannot be considered to be an acceptable alternative to the work they are currently engaged to perform.

[21] It also submits the employees would be placed in “an onerous position” 12 because of the significant difference in the hourly rate they now receive and would retain as part of the reorganisation proposal, compared to the existing rates being paid to the production employees in the French Fry Plant. Accordingly, in its submission the:

“...proper determination of this dispute is for the Fair Work Commission to determine that McCain Foods must not impose involuntary redeployment on the nine CFMEU members.” 13

[22] The CFMEU provided witness evidence from the nine employees now employed in the boiler room operation. They are Gary Eade, David Plaza, Martyn Fraser, Richard Hanson, Philip Stanley, Tim Burke, Paul Murphy, Mark Gale and Doug Stone. Their evidence indicates they are all long standing employees with their service with the Company extending from 11 years to more than 30 years. In some cases their entire employment with McCains has been in the boiler room operation and in a number of cases they have commenced as boiler room attendants and subsequently been cross-trained as refrigeration attendants. However, some of the employees have previously worked in a variety of occupations at the plant, including in the Packing Room, Vegetable Plant and French Fry Plant before taking on their current Boiler/Refrigeration Attendant responsibilities.

[23] The witness statements provided by each of the employees concluded with paragraphs in similar terms stating:

“I do not want to accept redeployment to the production area to a position which is a lower skill base compared to my current position.

If my current position is to become redundant, my preferred option is to be paid a redundancy and follow my trade elsewhere allowing me to maintain my skills.

In all previous occurrence of redundancies at the plant including downsizing in the engineering department, packing room, weighbridge, electrical department and vegetable processing McCain Foods requested volunteers for redeployment

When McCain Foods were unable to fill all positions available no employee has previously been compulsorily redeployed. These employees were instead paid their redundancy entitlement.” 14

[24] Ms Karen Herman was subpoenaed by the CFMEU. She is a process operator at McCains and previously worked for a registered training organisation. She is also a union delegate at the plant. She said McCains now expects production employees to be competent in as many areas as possible. She had significant reservations about the Boiler/Refrigeration Attendants working in the French Fry Plant and would not be happy about having to provide training to someone who was on a higher hourly wage rate. She believed other employees held similar views. She also had concerns about the way that training was to be delivered, given that the employees would not be working for extended periods in the French Fry Plant on a full-time basis, but would instead be rostered between that work and their existing roles. She also indicated it could be difficult for the employees to retain their skills if they were not working in the French Fry Plant over an extended period, given that the work is seasonal and certain tasks are only required to be performed from time to time.

[25] Ms Sandra Cousins, who was also subpoenaed by the CFMEU to appear, previously worked at the Smithton plant as the Human Resources Manager for approximately 17 years. She gave evidence about various situations during her period of employment when the Company had been required to reduce the size of its workforce. She indicated that generally the relevant provisions in the enterprise agreement were applied in each case, although each situation involved different circumstances and different employees. She also stated the employee’s wishes had generally been taken into account and if their preference was to be made redundant this is what occurred. In some circumstances employees had been redeployed into other positions and this had occurred, for example, when the weighbridge operation was contracted out in 2006.

[26] The CFMEU submits in conclusion that positions are redundant when the employer decides it no longer wants a particular job or jobs to be performed by anyone. It submits that in the present circumstances McCains has made a decision that an operational area that previously required nine employees to maintain necessary staffing levels now only requires four or five employees to carry out those roles and responsibilities. In its submission it follows that McCains is now being required to reduce the size of its workforce and in those circumstances it is required to observe the provisions contained in Appendix 3 dealing with retrenchment/redundancy. It submits in that context the employees are obliged to consider any reasonable redeployment options, but if those offers are rejected then the affected employees should be considered to have been made compulsorily redundant. In this context it also referred to the decisions in Healthscope Ltd v Austin & Ors 15, Andrew John Short v FW Hercus Pty Ltd16, Poletti v Ecob (Number 2)17, and Mantra Hospitality (Admin) Pty Ltd18.

[27] The position put by McCains is outlined, in summary, in its submission in the following terms:

“(a) the threshold question for determination by the Commission is whether the decision to reorganise the duties of employees performing boiler/refrigeration duties gives rise to a redundancy;

(b) there has been no redundancy within the meaning of the Agreement, and specifically the Redundancy/Retrenchment Agreement at Appendix 3;

(c) there has been no redundancy within the meaning of the FW Act;

(d) section 389 of the FW Act has no application to the dispute as concepts relating to genuine redundancy only have significance for the purposes of unfair dismissal claims;

(e) McCain has no custom and practice of effecting redundancies other than in accordance with the Agreement;

(f) the proposed duties are within the employees skills, competence and training, and will not result in de-skilling.” 19

[28] Its submissions indicate the boiler upgrade was implemented in February 2013 and the boilers are now fully automated meaning the previous manning level requirements no longer apply. In practice this means McCains only requires one operator and an area leading hand to be rostered at any one time. After consulting with the employees in an endeavour to reach agreement about how these changes would be implemented it finally decided in September 2013, after giving consideration to the operational needs of the plant and its aim to retain valuable and skilled employees in the workforce, to advise the employees it had decided to reorganise their duties to also include duties in the French Fry Plant on a rotational basis.

[29] It submits as a consequence it is not making any roles within the Smithton plant redundant and therefore is not reducing the overall size of the workforce at the plant as a result of the upgrade. It is instead reorganising the existing duties to include other duties and responsibilities which are within the skills, training and competence of the employees involved.

[30] It also submits there has been no redundancy within the meaning of the Redundancy/Retrenchment Agreement in Appendix 3 of the Agreement. It refers, in particular, to clauses 1 and 2 from the Appendix and submits in reviewing those provisions the Commission should consider the general principles that govern the interpretation of industrial instruments. The words should be given their ordinary and natural meaning and in that context clause 1, taken in conjunction with clause 2, limits the application of the Redundancy/Retention Agreement to circumstances where McCains is “required to reduce the size of the workforce”. It submits the implementation of the boiler control system upgrade and the associated reorganisation of those duties does not require it to downsize the workforce at the plant and therefore there have been no positions made redundant within the meaning and contemplation of the Agreement.

[31] McCains also submits there has been no redundancy within the meaning of s.119 of the Act, because the proposed reorganisation at the plant does not mean the employees are being required to change their roles. Those roles are still required to be performed and the duties “remain, in substance, albeit on a rotational basis”. 20 In addition, there will be no change to their pay rates, classification level, or other terms and conditions of employment. It submits:

“These are factors which reflect a continuum in the existing role, albeit on a rotational basis.” 21

[32] It also submits it is not unreasonable to require employees to alternate between shift patterns and it is not precluded from doing so under the terms of the Agreement. In this context it refers to the decision in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Silcar 22, where the Full Bench stated:

“...in the absence of any term of a binding industrial instrument that prevents an employer from making changes to shift arrangements, an employer has a managerial prerogative to alter both the pattern and structure of shifts and the particular shift worked by an employee.” 23

[33] It also relies on the decisions in Jones v Department of Energy and Minerals 24, Foster’s Group Limited v Wing25, and Construction, Forestry, Mining and Energy Union v Penrice Soda Products Pty Ltd26 in support of its submission that where employees are still required to perform a substantial amount of the duties they previously performed then their positions are not necessarily redundant.

[34] McCains submits there is nothing in the Agreement that prevents it from making these changes and there will be no reduction in the employee’s base rate of pay and associated entitlements as a result of what is proposed. It takes issue with the CFMEU’s submissions about what the reductions in earnings will be if the proposed changes are implemented, and submits it is only likely to be a “nominal” amount. It also submits any additional training required in regard to the various roles in the French Fry Plant will be completed within a relatively short period of time and this will provide the employees with additional skills and competencies.

[35] It submits that unless the Commission believes it is proposing something that can be considered to be unjust or unreasonable by way of the reorganisation then the Commission should decline to interfere with its entitlement and ability to manage its business and reorganise its operations in an appropriate way.

[36] However, it also makes an alternative submission in the event the Commission finds that roles in the boiler room have been made redundant. In this context it submits the issues to be determined are:

“(a) Whether the reorganisation constitutes a redundancy enlivening the redundancy payments under the Redundancy/Retrenchment Agreement, in which case McCain submits that any refusal by an Employee is ‘unreasonable’; or

(b) Whether the redundancy pay entitlements prescribed under the National Employment Standards apply. If so:

(i) McCain submits that the reorganisation of duties would constitute a suitable alternative position or a comparable position; and

(ii) If (i) is not accepted, then the most that the Employees would receive by way of redundancy pay is the entitlement prescribed under the National Employment Standards.” 27

[37] In its submission if there is a requirement to determine whether suitable alternative employment has been provided the Commission should be guided by the principles contained in the decision in Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd 28. It also submits the decision in OneSteel can be distinguished on the basis that the employee in that matter resigned after being transferred to an entry-level position involving unskilled duties, meaning he no longer performed any of the functions, duties, or responsibilities involved in his original position.

[38] McCains also submits there is no custom and practice at the Smithton plant of dealing with redundancy or retrenchment other than in accordance with the Agreement. It states the duties proposed to be performed by the employees in the French Fry Plant are within their skills, competence and training and will not result in de-skilling. In addition, several of the employees currently employed in the boiler room operation have some operational experience in other areas of the plant prior to taking on their current roles, although it is acknowledged that this occurred some time ago.

[39] Mr Rodney McLaren is the Plant Manager at the Smithton site. He has been in this position since June 2012 and was previously the French Fry Production Manager for three years and before that Frozen Vegetable Production Manager. He has been employed by McCains for twenty-six years.

[40] He confirmed the automated status of the boiler control system means the manning levels have changed, and can now be operated with four Boiler/Refrigeration Attendants rostered with relief to cover absences. However, he said McCains was not proposing to reduce employee numbers at the plant as a result of these changes. It has “invested significantly” in the skills of the employees involved and wants to retain those employees in the business, while further skilling them at the same time.

[41] He said the changes mean the employees continue to spend approximately 55 percent of their time performing Boiler/Refrigeration Attendant duties, given they would also act as relief operators, with the balance of their time spent in the French Fry Plant. He said the training to be provided was based around an initial two-month timeframe and once an employee was assessed as competent in one area further training would take place. He also said the training requirements for different individuals would vary because they already possessed a varied range of skills, given their previous experience.

[42] He said the current proposal was consistent with the practice of having employees move between duties to enable multi-skilling. It would also enable McCains to deal with an existing shortage of operators in the French Fry Plant which had arisen due to natural attrition. He said the current proposals had been decided upon after a long period of consultation and subsequent consideration of various options. He said redundancy was not one of those options and McCains wanted to retain its existing base of skilled employees.

[43] Mr Brian Neylon is the Human Resources Manager at McCains. He said McCains is committed to maintaining overall staff numbers at the plant, as far as possible, as well as maintaining and upgrading skills, as required. He said the current proposal to reorganise the work of the employees was confirmed in September last year after various options had been considered. The proposal is considered to have strong operational benefits for both the plant and its employees. It also avoids the costs of recruitment and training if replacement employees in the French Fry Plant are required to be recruited externally.

[44] He said the decision would not alter the employees existing terms and conditions of employment, although there would be some changes to their hours of work because of the different roster arrangements that would apply, depending on whether they were working in the boiler refrigeration area or the French Fry Plant. However, they would be provided with appropriate notification of these changes.

[45] Mr Daniel Murray is a Senior Adviser – Workplace Relations at the Australian Industry Group. He is also an accredited safety auditor and holds qualifications in training and assessment. He said he had examined the work carried out by the Boiler/Refrigeration Attendants and the various production processes in the French Fry Plant when he attended the site on 27 November 2013.

[46] He expressed the view that given the employees in the boiler/refrigeration room will continue to perform boiler and refrigeration duties on rotation this did not necessarily mean a reduction in the competencies required, even though these duties would be performed less often. The various tasks of monitoring, receiving fuel, dosing, maintenance and other responsibilities would still be required to be carried out in each case.

[47] He also considered that the positions in the French Fry Plant did not involve unskilled tasks and functions, but instead each of the different areas required various skills and competencies to be held and exercised. In his view the positions in the French Fry Plant are broadly comparable in skill level to those of the Boiler/Refrigeration Attendant.

Consideration

[48] The CFMEU believes the changes stemming from the automation of the boiler room at the Smithton plant mean McCains is reducing the size of the workforce at the plant. Under the terms of the Agreement that covers the parties it submits this means several positions are now redundant and the employees impacted are accordingly entitled to be made redundant and to receive redundancy payments.

[49] It acknowledges the Company’s ability to offer redeployment to other positions, however, it submits the proposal to reorganise the work so that the employees are rostered in both the boiler room and the French Fry Plant is not a reasonable redeployment option. Given this situation it submits the employees are entitled to refuse to take up that option and should instead be considered to have been compulsorily retrenched.

[50] It points to various reasons why the redeployment or reorganisation proposed by McCains is not reasonable including:

● the employees have been employed as Boiler/Refrigeration Attendants over an extended period of time. In some cases this has been the only role they have been engaged in during their employment at the Smithton plant;

● the proposal to roster the employees for fifty percent of their time in the French Fry Plant would lead to their skills being diminished, in circumstances where they wish to continue to work in the Boiler/Refrigeration Attendant roles they have been trained in and are experienced in carrying out;

● there is a related issue in that there are concerns about whether the proposal to roster the employees in two-month blocks through the French Fry Plant would enable the employees to achieve and retain appropriate skills and competencies to carry out the work involved in the various storage, receival, inspection, ADR, packing room, cold store forklifts and fryer areas;

● the loss of earnings that the employees would incur through the changed arrangements mean the proposal is not an adequate alternative;

● the disruption caused to the employees by having to rotate between different roster patterns and shifts again means the proposal to reorganise the current arrangements in the manner proposed is not an adequate alternative;

● the fact the roles in the French Fry Plant involve less qualified positions is evidenced in its submission by the lower pay rates attaching to those positions. However, it is also acknowledged the employees would be required to participate in significant additional training in order to be able to carry out their responsibilities in the new roles. This would occur without any entitlement to receive additional payment for participating in completing this additional training; and

● there would also be further issues associated with the employees working alongside other employees in the French Fry Plant in circumstances where they would be receiving different rates of pay. This situation has the potential to be a source of friction and resentment amongst the employees and again works against the proposal being an acceptable alternative.

[51] McCains submits in the alternative the proposed changes do not mean it is required to reduce the size of its workforce as provided for in clause 1 of Appendix 3. In its submission the employees will continue to work for at least half the time in the boiler room, enabling those shifts to continue to be adequately staffed, and the employee’s skills in those roles maintained. They will also be rostered to work in the French Fry Plant where they will be utilised to fill gaps that have arisen through natural attrition.

[52] McCains submits there is nothing that prevents it from reorganising the work in this way and it will continue to utilise the employee’s skills while also providing them with additional skills and training. It also submits the employees’ rates of pay and other entitlements are being maintained, and in all the circumstances the proposed reorganisation is entirely within its management prerogative to determine and implement.

[53] It also submits, in the alternative, that if the Commission finds the changes do mean it is required to reduce the size of its workforce then it has, in any case, provided reasonable redeployment options that cannot be reasonably refused.

[54] The principles to be applied in interpreting the terms of an industrial instrument are well known and well established and several of the decisions from which they derive were referred to by the parties in their submissions. They include the decision of the High Court in Amcor Ltd v Construction, Forestry, Mining, and Energy Union 29 where Kirby J stated (references omitted):

“However, certified agreements such as this commonly lack the precise drafting of legislation. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail - including possibly because such an endeavour would endanger the accord necessary to consensus and certification by the Commission.

...

The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.’” 30

[55] In Kucks 31, following the passage quoted above Madgwick J continued to state:

“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.” 32

[56] I have applied these principles to the interpretation of the Agreement that covers the parties in the present matter.

[57] As indicated, the application of the Redundancy/Retrenchment provisions in Appendix 3 of the Agreement are predicated in Clause 1 on the following words: “.... in the event that the Company is required to reduce the size of the workforce...” The first question that falls to be determined is whether the reorganisation proposed by McCains means it is required to reduce the size of the workforce at the Smithton plant. McCains submits the changes do not require a reduction in the size of the workforce. The reorganisation instead, in its submission, means the reduced manning requirements in the boiler room enable those employees to be redeployed for approximately half the time to work in a variety of roles in the French Fry Plant. The CFMEU rejects this submission. It submits the Company is being required to reduce the size of the workforce engaged as Boiler/Refrigeration Attendants. It also submits it is not reasonable to redeploy those employees into the French Fry Plant and therefore, again, the Company is being required to reduce the size of its workforce as a consequence of the reduction in numbers of employees required as Boiler/Refrigeration Attendants.

[58] The words in Clause 1 of Appendix 3 simply make reference to a situation where McCains is “required to reduce the size of the workforce.” These words are not qualified in any way by, for example, limiting the reduction in workforce size by reference to a reduction in one part of the plant only, or to a discrete section of it. I have also reviewed each of the other provisions in the Agreement and can find nothing which assists in interpreting the words in Clause 1 of Appendix 3. I am accordingly satisfied, based on their plain and ordinary meaning, that the words should be interpreted as referring to a requirement to reduce the size of the total workforce at the Smithton plant, and not just to a part or discrete section of it. I am further satisfied the changes in the boiler room and the reduction in manning associated with those changes do not, of themselves, mean McCains has been required to reduce its workforce numbers, given the associated reorganisation of work proposed

[59] However, I am also satisfied that this is not the end of the matter. McCains should not be allowed to avoid obligations, which might otherwise arise through a requirement to reduce the size of its workforce, simply because it puts forward a reorganisation or redeployment proposal. In circumstances where it proposes to avoid a reduction in the size of the workforce by reorganising the work, so that reductions in manning in one area of the plant are offset by reorganising those employees to work in another area, it is legitimate to review whether that is appropriate, in all the circumstances, or simply a device to avoid obligations that might otherwise apply. For example, if the Company proposed to reorganise the work of the Boiler/Refrigeration Attendants so that for sixty percent of their rostered shifts they were required to work in entry level, unskilled roles and receive half their previous salary level then there would clearly be a real issue about whether the Company was entitled to reorganise the work in this way.

[60] The parties each made reference to various decisions which they submit are relevant to the consideration of whether McCains is entitled to implement its proposal and, in so doing, avoid reducing the size of the workforce at the Smithton plant.

[61] The CFMEU relies on the decisions in Mantra Hospitality and OneSteel in support of its submission that the alternative roles now being offered to the nine employees cannot be considered to be acceptable alternatives. In Mantra Hospitality Deputy President Sams was required to consider 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,” (he found 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 concluded that the offer did not constitute acceptable alternative employment and referred, initially, to the decision in Australian Chamber of Manufactures v Derole Nominees Pty Ltd 33 in support of the view that the issue is to be considered on an objective basis. He made reference 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.” 34

[62] Deputy Sams also noted these principles were adopted in the decision of Richards SDP in Von Bibra Robina Autovillage 35 when he stated (references omitted):

“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.

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.” 36

[63] Deputy President Sams continued to state:

“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.” 37

[64] The CFMEU also relies on the decision in OneSteel. In that matter the plaintiff resigned following a restructure of his role and the offer of a placement in another position. He submitted the alternative position was so different to his previous role that he had effectively been made redundant and was therefore entitled to be treated as such and compensated accordingly. In that matter the employee 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. After spending a brief period of time in the new role he found the work physically demanding, particularly due to the amount of standing involved. He also discovered his previous role was being carried out by a less qualified employee. He subsequently resigned, but claimed he had been effectively terminated by the actions of his employer, and should 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.

[65] The employer argued in response that the jobs were different, but each required similar levels of skill. This was not accepted by the trial judge who found the employee was effectively starting out as a trainee in a position of significantly diminished seniority. He also found the new role had no real connection with the employee’s demonstrated skill and experience. He concluded that the most significant issue to be determined was, firstly, whether the employee had been made redundant and, if so, whether he had been provided with acceptable alternative employment. He found 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 employee had been offered adequate alternative employment. In this context he considered two issues, in particular. Firstly, the plaintiff’s reaction to the change which he described as feelings of humiliation and stress. His Honour concluded this reaction was, on the one hand, a subjective response that was not relevant to his considerations although, it could also be viewed objectively as evidence of the significance of the change involved. The second issue concerned the employee’s health and the impact of the new role upon him. He 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.

[66] He 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.” 38

[67] 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.” 39

[68] McCains also made reference to a number of decisions, including the decision of a Ryan J in Jones v Department of Energy and Minerals 40 when he stated:

“However, it is within the employer's prerogative to rearrange the organizational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganization of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employee are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organization, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant in the sense in which the word was used in the Adelaide Milk Co-operative case.”  41

[69] It also referred to the decision in Silcar in support of the submission that it is a legitimate exercise of managerial prerogative to alter both the pattern and structure of shifts and the particular shifts worked by an employee, including the introduction of a new shift or a rotating shift roster. In paragraph 13 of that decision the Full Bench stated:

“[13] The opening words of clause 10(b) of the 2004 Agreement suggest that the parties intended to achieve continuity in the operation of shift work for maintenance personnel when the maintenance function was outsourced from BlueScope to Silcar. This draws attention to the prior shift arrangements for maintenance personnel at the Western Port site when the maintenance function was still performed by BlueScope employees. There was no evidence before the Senior Deputy President suggesting that BlueScope was constrained by any agreement or other binding instrument in relation to its capacity to move employees between crews. That is what may be described as the ‘usual’ state of affairs. That is, in the absence of any term of a binding industrial instrument that prevents an employer from making changes to shift arrangements, an employer has a managerial prerogative to alter both the pattern and structure of shifts and the particular shift worked by an employee. It is more likely than not that BlueScope had retained the capacity to move employees to a different crew/shift on the roster.” 42

[70] It also made reference to the Victorian Court of Appeal decision in Foster’s Group Limited v Wing 43 where the Court considered the meaning of redundancy based on a number of a previous authorities and the decision of Habersberger AJA when he stated (references omitted):

“33. A clear guide to the meaning of redundancy is to be found in the judgement of the Full Court of the Supreme Court of South Australia in The Queen v Industrial Relations Commission of South Australia; ex parte Adelaide Milk Supply Co-operative Limited. In that case Bray CJ said that:

“ ...the concept of redundancy in the context we are discussing seems to be simply this, that job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him but because the employer no longer wishes the job the employee has been doing to be done by anyone.”

Bright J expressed a similar view:

“The word ‘redundant’ does not occur in the Act. In its industrial sense it is not defined in the Oxford Dictionary. The application which I have already set out attempts a definition for the purpose of the proposed award. A consideration of the cases leads me to think that the question of the redundancy of an employee is linked to the question of the continued utility of the job which he is performing. In other words it does not relate to the personal competence of the employee in the job which is performing. If I am right in this, then in its widest form the concept of redundancy connotes that an employee becomes redundant whenever (and for whatever reason) his employer no longer desires to have performed the job which that employee was doing.” 44

[71] These authorities make clear that an objective test should be applied to any consideration of whether the employees can be considered to have been made redundant or, alternatively, whether it can be said the changed arrangements represent an acceptable alternative. Evidently, it is not any proposal to provide alternative employment that will be appropriate, and it is not simply a question of whether the employee is capable of carrying out the alternative roles and responsibilities. Consideration must instead be given to whether there is “sufficient comparability” to the original work and in this context factors such as comparable skills, qualifications, experience, remuneration, location, hours of work, status and seniority might all be applicable and relevant.

[72] I have had regard to a number of considerations in coming to a decision in this matter. Firstly, the employees will continue to be employed in their existing roles as Boiler/Refrigeration Attendants for at least fifty percent of the time, and perhaps more depending upon the extent to which relief roles are required to be filled. This is clearly a significant factor in a number of respects. It means the employees will suffer no pay disadvantage during these periods. They will remain in the roles they have indicated they wished to continue to be engaged in. They will be able to maintain their skills and capabilities in carrying out this work. However, for the balance of their time at work they will be rostered to work in the French Fry Plant. This work is carried out at the same plant and at the same location in Smithton. However, there are also a number of differences in the nature of the roles to be performed. Firstly, it is work involved in the production processes in the French Fry Plant, rather than being associated with the Engineering Department. There are obviously different skills involved as well.

[73] This issue was canvassed in different ways. On one hand it is suggested the employees will be required to undertake extensive training over an extended period of time to acquire the skills and abilities to carry out the various roles in the French Fry Plant, and it is unreasonable to expect them to have to participate in this process of upskilling and training. On the other hand the work in the French Fry Plant is perceived to be of lesser skill, as demonstrated by the lower pay rates that apply to that work, and the CFMEU submits it is not appropriate for the employees to be required to have to perform this work. The pay rates suggest the work in the French Fry Plant is viewed as being of lesser seniority than the work of a Boiler/Refrigeration Attendants. However, there are clearly a range of skills associated with the work, as evidenced by the witness evidence and the training required for the employees to take on this work. I am satisfied, for example, it is not a situation that is comparable with that in OneSteel, where the long-standing furnace operator was placed in an unskilled, entry level position.

[74] Clearly, there are different skills involved in the various roles that exist in the French Fry Plant. However, there is nothing to suggest the employees are not capable of being trained in the skills associated with these responsibilities. The evidence also indicates there has been extensive consultation and consequent explanation provided to the employees about what is involved in the work in the French Fry Plant, and how the proposed training would be carried out. As indicated, a comprehensive training program is planned in conjunction with the changes.

[75] However, there are also issues of status and seniority that warrant consideration. Previous authorities have confirmed that an objective assessment should be undertaken and an individual’s feelings or views about being placed in a different role are not the principal consideration. However, it has also been held those views and feelings may be relevant indicators that a particular position or role is, in fact, of different status and standing.

[76] The evidence confirms the nine employees are each long-standing and evidently loyal employees. It confirms their skills and abilities are valued by the Company which, in large part, is why it wants to retain them in employment at the Smithton plant. Each gave evidence about their role as Boiler/Refrigeration Attendants, and about the skills and abilities required in that role. They each gave evidence as well about their desire and intention to continue to work in these roles.

[77] It is clear that each of the employees has over a long period of employment at the Smithton plant been in a position that has a certain seniority and status attached to it. It is also evident that the proposed reorganisation of the work will be viewed as a challenge to that status and seniority. Is clear from the evidence of the employees involved that they feel this way. It is also evident that the changes might be viewed in a similar way by other employees in the plant, particularly as there is no significant past practice of work at the plant being reorganised in this way, apart from the evidence of Ms Sandra Cousins who indicated when the weighbridge operation was contracted out in 2006, one employee who had previously worked in the processing area, returned to that role.

[78] It was also indicated that the employees will be working alongside others in the French Fry Plant who are on a lower pay rate and may resent working alongside other employees in receipt of higher rates of pay. The evidence of Ms Karen Herman, a process operator who is also involved in training other employees, indicated this could be a particular issue when employees were being asked to train others receiving higher hourly rates. These are practical issues that will need to be worked through and dealt with in the event that the reorganisation takes place. However, I do not believe they are sufficient on their own to determine the matter one way or the other.

[79] Evidence was also given about the disruption to the employees that will result from the different shift arrangements that apply in the different areas and the impact this will have on sleeping patterns and life away from work.

[80] The impact upon the employees’ pay rates is also another matter that requires consideration. Extensive submissions were provided by both parties about the potential impact of the changes upon their earnings. It is acknowledged that the employees will retain their existing base rate of pay and other entitlements. However, there is the potential for some reduction in “take-home pay” because of the different shift arrangements, and the shift changeover allowance that applies when the employees are working as Boiler/Refrigeration Attendants. McCain submits the impact will be “nominal,” whereas the CFMEU submit the difference could amount to more than $2000 over a twelve month period. Ultimately, it will depend on what percentage of time the employees are rostered to work as Boiler/Refrigeration Attendants, and how much time they spend working in the French Fry Plant. I have carefully considered the various submissions that have dealt with this issue but have been unable to come to a precise conclusion about what the final impact of the changes over a full twelve month period is likely to be. However, I am satisfied it is not a factor that is sufficient to determine the matter in favour of either party.

[81] Finally, it was indicated at the outset that the Company’s proposal enables all of the employees to remain in ongoing employment, whereas the position advocated by the CFMEU means four positions will be made redundant and four employees will lose their jobs. This is a significant consideration. I have made reference in the decision, as did the parties in their submissions, to the decision of Deputy President Sams in Mantra Hospitality, and, in particular, the extract from the decision that makes reference to the “underlying intention or social and industrial purpose of redundancy benefits.” In summary, DP Sams is emphasising that redundancy entitlements are not intended as some form of “windfall gain,” but exist instead to assist employees confronted with the prospect of being unexpectedly forced out of work.

[82] This is not to say that any of the employees in the present matter are necessarily motivated in this way. Certainly none expressed this view and I have no reason to think otherwise. They each indicated they were instead motivated by a desire to remain in their current roles, whether that be at McCains or elsewhere, and by concerns about what the proposed reorganisation would mean for them. Nevertheless, I am satisfied that on balance an outcome that keeps employees in employment is to be preferred to one that results in those employees being made redundant. It is certainly an outcome to be preferred given the broad objects of the Act.

[83] I am also mindful of the fact that, not surprisingly, the Company’s proposal would provide benefits to it. Both Mr McLaren and Mr Neylon gave evidence about wanting to keep valued and experienced employees employed in the business. Mr Neylon also gave evidence about the cost of recruitment and training if new employees are required to be taken on in circumstances where others are made redundant. The evidence of a number of witnesses also made reference to the decline in production and employment at the Smithton plant over time, with the closure of the vegetable processing plant being the most dramatic of these changes. Clearly, where possible, an outcome which assists in avoiding any further loss of work or jobs in the future is to be preferred.

[84] Again, these have not been determinative considerations in coming to a decision in this matter. However, they do work in favour of an outcome that supports the ongoing viability of the business.

[85] In coming to a decision in this matter I have had particular regard for the fact the employees will remain in their existing roles for more than fifty percent of the time. While accepting the balance of their rosters will involve different roles they are not different in the sense found to exist in the decision in OneSteel. I am also satisfied the employees have the capability with appropriate training and support to take on these roles, and that any sense of affront to their status and seniority can be sensibly worked through and dealt with by all concerned. I am satisfied in conclusion that the changes do not mean McCains is required to reduce the size of its workforce. The application is accordingly dismissed.

COMMISSIONER

Appearances:

Mr B White appeared on behalf of the Construction, Forestry, Mining and Energy Union.

Ms E MacDougal of The Australian Industry Group appeared on behalf of McCains.

Hearing details:

2014.

Smithton:

26, 27, 28 February.

Burnie:

12 March.

Final written submissions:

Final written submissions of the Applicant filed by email on 27 March 2014.

Final written submissions of the Respondent filed by email on 28 March 2014.

 1   AE889451

 2   Ibid at Appendix 3

 3   Ibid

 4   Exhibit CFMEU2 at para 24 and attachment M

 5   Ibid at para 10

 6   Ibid at para 34

 7   [2010] FWAFB 7578

 8   Ibid at [34]

 9   Exhibit CFMEU2 at para 49

 10 (2013) NSWDC 18

 11   Exhibit CFMEU2 at para 52

 12   Ibid at para 56

 13   Ibid at para 57 (unnumbered, page 7)

 14   Exhibit CFMEU7 at para 8-11

 15   [2011] FWA 5599

 16 [1993] FCA 51

 17 [1989] FCA 492

 18   [2013] FWC 1063

 19   Exhibit MC2 at para 5

 20   Ibid at para 28

 21   Ibid at para 30

 22   [2011] FWAFB 2555

 23   Ibid at [13]

 24 (1995) 60 IR 304

 25 [2005] VSCA 322

 26   [2013] FWC 9194

 27   Exhibit MC2 at para 33

 28 (1988) 27 IR 226

 29 (2005) 222 CLR 441

 30   Ibid at [94]-[96]

 31 (1996) 66 IR 182

 32   Ibid

 33 (1990) 140 IR 123

 34   Ibid at page 128

 35   [2007] AIRC 397

 36   Ibid at [26]-[27]

 37   [2013] FWC 1063 at [31]-[32]

 38 [2013] NSWDC 18 at [64]-[65]

 39   Ibid at [70]

 40 (1995) 60 IR 304

 41   Ibid

 42   [2011] FWAFB 2555 at [13]

 43 (2005) 140 IR 224 94; [2005] VSCA 322

 44   Ibid at [33]

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