Dooley and Secretary, Attorney-General's Department
[2022] AATA 3027
•15 September 2022
Dooley and Secretary, Attorney-General's Department [2022] AATA 3027 (15 September 2022)
Division: GENERAL DIVISION
File Number: 2021/5561
Re:Gerard Anthony Dooley
APPLICANT
AndSecretary, Attorney-General's Department
RESPONDENT
Decision
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:15 September 2022
Place:Sydney
The decision under review is set aside and remitted to the Secretary for recalculation of Mr Dooley’s redundancy entitlement in accordance with paragraph 57 of these reasons.
..................................[sgd].................................
Emeritus Professor P A Fairall, Senior Member
Catchwords
Redundancy payment – employee termination by insolvency – governing instrument – enterprise agreement – separate agreements governing rates of redundancy pay – so-called Grand Chapel Agreement - whether consistent with existing enterprise agreement – governing instrument found to be enterprise agreement, subject to Grand Chapel Agreement – decision under review set aside and remitted
Legislation
Fair Entitlements Guarantee Act 2012 (Cth)
Fair Work Act 2009 (Cth)
Cases
Hill, in the matter of Ovato Limited (Administrators Appointed) [2022] FCA 903
In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
15 September 2022
INTRODUCTION
The Fair Entitlements Guarantee Act 2012 (Cth) (the FEG Act) provides financial assistance in the form of a monetary advance to eligible employees who have lost their employment because of the insolvency or bankruptcy of their employer, and who are owed employee entitlements which are not able to be paid by their employer or from other sources. Mr Dooley is such a person.
Mr Dooley was employed by Ovato Print Pty Ltd (Ovato Print),[1] a company in the Ovato Group (Ovato), one of two major integrated printing and distribution businesses in Australia and New Zealand.[2] Ovato Print was one of the four Ovato companies[3] wound up on 29 December 2020, pursuant to a creditors and members’ scheme of arrangement approved by the Supreme Court of New South Wales on 21 December 2020.[4] The scheme anticipated that the liquidation of Ovato Print would leave insufficient funds to cover employee entitlements, because assets were to be transferred to other companies in Ovato as part of the scheme.
[1] Ovato Print was previously called PMP Print Pty Ltd (PMP Print), and changed its name on 6 February 2019, having merged with the printing businesses of IPMG in 2017: T10, 397. Public source information suggests that PMP merged with the Hannan family company IPMG in 2017, which was then rebranded Ovato, and the Hannans became the largest shareholder: Print 21, ‘Hannans to up stake in Ovato’ (Web page) 22 May 2019 <
[2] Ovato provides services including the printing of catalogues for well-known national businesses, the printing of promotional materials, custom product packaging and direct marketing: Hill, in the matter of Ovato Limited (Administrators Appointed) [2022] FCA 903, per Stewart J at [2].
[3] The scheme foreshadowed the winding up of Ovato Print; Hannanprint NSW Pty Ltd; Hannanprint Victoria PtyLtd; and Inprint Pty Ltd: In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882, at [1].
[4] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882.
Mr Dooley was stood down on 9 December 2020, and his employment was terminated on 29 December 2020, when Ovato Print went into liquidation.[5] He then made a claim for unpaid entitlements under the FEG Act.
[5] T1.1, 15.
On 20 April 2021, a delegate of the Secretary determined that Mr Dooley was eligible for an advance of $89,297.04 (before tax).[6] A net amount of $83,153.04 was credited to his account. A breakdown of his entitlements was provided.[7] Mr Dooley objected to this assessment. By letter dated 20 July 2021, the Respondent affirmed the previous determination.[8]
[6] T1.1, 9.
[7] T1.1, 12.
[8] T1.2, 26: see also Review Investigation and Recommendation Report, dated 20 July 2021: T24, 501.
Mr Dooley’s application for review was heard by the Tribunal on 27 June 2022. He gave evidence and called one witness, an employee of Ovato Print, who gave evidence on the basis that his identity would be concealed. He is referred to by the acronym A1.
Mr Dooley was employed by PMP Print (as it was then called) under a contract of employment dated 7 October 2004.[9] His employment was to commence on 25 October 2004, and end on 11 April 2005. During this period, either party could terminate the contract with one week’s notice. Under the heading Renewal of contract, the letter stated that if the company wished to offer Mr Dooley a new contract, then it would do so within seven days of the end of the contract. If the company did not notify him that it wished to offer a new contract, then his employment was to cease on 11 April 2005.[10] In evidence, Mr Dooley said that at the expiration of the period specified in his original contract, his employment was simply continued. He did not sign any new contract of employment.[11]
[9] T3, 45.
[10] T3,46.
[11] Transcript dated 27 June 2022, 6.
The Respondent accepts that, even in the absence of a formal contract of employment, the Tribunal should find that there was, at the time of his termination, a valid if informal (i.e., unwritten) contract of employment between Mr Dooley and Ovato Print, and that it was subject to the operative enterprise agreement as modified from time to time.
The Dispositional Issue
The Respondent accepts that Mr Dooley made a valid claim, and that he is entitled to receive an advance in respect of redundancy, payment in lieu of notice, annual leave and long service leave. The amount of Mr Dooley’s advance is not disputed, except in relation to the amount of his redundancy pay entitlement. The dispositional issue involves the applicable governing instrument for the purposes of the FEG Act.
The Respondent contends that the Ovato Enterprise Agreement 2020 (the 2020 EA) is the relevant governing instrument.[12] It was approved by the Fair Work Commission (FWC) on 6 November 2020.[13] The 2020 EA provides redundancy entitlements of 2 weeks per year of service, as opposed to 4 weeks per year of service under the enterprise agreement it replaced (the PMP Print, Distribution and Digital Enterprise Agreement 2018 (the 2018 EA)). In Mr Dooley’s case, the reduction constitutes a significant loss, for he has eligible service of some 16 years.
[12] T8, 307; as did the delegate, see T1.1, 14.
[13] T8, 307.
Mr Dooley accepts that the 2018 EA was no longer in force when his employment was terminated on 29 December 2020, having been replaced by the 2020 EA. However, he points to an agreement (the so-called ‘Grand Chapel agreement’ (GCA)[14]) made on 21 March 2019 between his employer and representatives of the Australian Manufacturer’s Workers Union (AMWU) to ‘freeze’ redundancy entitlements for the workforce of which he was a member at the levels provided for under the 2018 EA. This agreement is discussed more fully in the next section.
[14] A ‘Chapel’ is the term used to refer to a meeting of trade unionists, especially in the print industries; Peter Arfanis, Records of the Herald Chapel (Web Page) 15 August 2017 <>
Mr Dooley’s claim is founded not on the 2018 EA per se, but on the GCA which, he says, ‘adopts’ the 2018 EA redundancy provisions by ‘freezing’ or ‘grandfathering’ them. He contends emphatically that the GCA is separate from the 2018 EA and was not spent when it expired. He contends that his employment is governed by two instruments: the GCA (for most of his employment), and the 2020 EA (from the date of his redeployment from Moorebank to Warwick Farm).
The Grand Chapel Agreement (GCA)
The background to the GCA lies in the measures taken by Ovato to reduce costs and streamline the business. On 14 August 2017, management wrote to staff regarding planned steps to update the existing 2015 enterprise agreement.[15] Management provided specific assurances for Moorebank employees (where Mr Dooley worked) that the general PMP terms would continue to apply, as well as the Moorebank site terms. Also, a definition of ‘Company’ was included to make it clear that the reference to ‘Company’ meant the relevant employer for the site.[16] The 2018 EA[17] was approved by the FWC on 12 March 2019, with a nominal expiry date of 30 June 2020. It came into effect on 19 March 2019.[18]
[15] T11.3, 441-442; The PMP Print, Distribution and Digital Enterprise Agreement 2015: T4, 49-143.
[16] T11.3, 441.
[17] T5,144-284.
[18] T5,144-145.
Like the previous 2015 EA (and for that matter, the later 2020 EA) the 2018 EA included a ‘Grand Chapel Charter’ (clause 14) relating to meetings, negotiations and communications between employees and union representatives.[19] There were extensive provisions for consultation between union representatives and management. For example, clause 14(c) expressly provides for ‘the right of the Father/Mother of the Chapel to negotiate with management, together with other Chapel delegates, on behalf of all members or a section of members’;[20] while clause 14(k) states that ‘Union Delegates will have the right to have the Company set out in writing any agreements and/or arrangements affecting conditions negotiated at the site upon written request’.[21]
[19] T5, 159: The Grand Chapel Charter was carried over from the 2015 EA: T4, 59.
[20] 2018 EA: T5, 159; 2020 EA: T8, 316.
[21] T5, 160; T8, 317.
In early 2019, PMP employees working at Moorebank were invited to move to Warwick Farm. It intended to close the printing operation at Moorebank and focus on Warwick Farm, where new printing equipment was to be installed.
On 21 March 2019, (two days after the 2018 EA came into effect) a Grand Chapel meeting was held between representatives of the AMWU and company management. Mr Adrian O’Connor, CEO, Print and Residential Distribution[22], and Ms Lorraine Cassin, National Secretary, of the AMWU, were key participants.[23] Mr O’Connor and Ms Cassin subsequently co-signed a memorandum headed ’Grand Chapel Update’.[24] This (undated) memorandum (on letterhead displaying Ovato and AMWU logos) states that at the meeting held on Thursday 21 March, ‘the Company has agreed to “grandfather/freeze” redundancy entitlements for redeployed employees as at the date of transfer’. The issue of forced redeployment was deferred until after the call for voluntary redundancies.
[22] O’Connor held a significant shareholding in the business as a member of the Hannah Family which held a controlling interest in the Ovato Group.
[23] There is no list of delegates or participants in the materials before the Tribunal, but it is accepted that other parties may have been present. A1, a witness at the Tribunal hearing said he thought that Kevin Slaven, the Ovato CEO, was also present: Transcript dated 27 June 2022, 26-27.
[24] T1.3, 36.
Eight months later, on 26 November 2019, Mr O’Connor wrote to Ms Belinda Griggs, Regional Secretary of the NSW Print Division of the AMWU, as follows:
‘Dear Belinda,
NSW Site Consolidation: Grandfathering redundancy
As agreed at the Grand Chapel held on Thursday 21 March 2019, all Moorebank employees transferring to Warwick Farm as part of the NSW Site Consolidation will have their redundancy entitlement grandfathered/frozen as at the date of transfer.’[25]
[25] T1.4, 37.
During 2019 and 2020, Ovato undertook various measures to improve its financial position, including site consolidations, negotiations with creditors and employees, and equity-raising. Ovato was a major employer with some 1,187 employees across 10 sites in Australia and New Zealand.[26]
[26] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882 per Black J at [2]-[3].
On 29 July 2020, Mr Kevin Slaven,[27] CEO of Ovato, provided an update to the workforce regarding plans to ’resize the business to quickly match the changes in the way our clients are behaving’.[28] He indicated that this would involve a reduction in the workforce and that the ‘current redundancy requirements’ attached to the 2018 EA were ‘no longer appropriate or affordable’.[29]
[27] Mr Slaven was appointed CEO of Ovato in 2017 and left in June 2021: Sheree Young, James Hannan takes on CEO role at Ovato after Kevin Slaven’s departure, 7 June 2021 < ST15, 548.
[29] Ibid.
Mr Slaven informed the workforce that the company had applied to the FWC to terminate the 2018 EA. He indicated that if the FWC terminated the 2018 EA then it would no longer operate. He indicated that base entitlements would be governed by the relevant industry award,[30] which attracted lower wages, and that the company intended to negotiate a new Enterprise Bargaining Agreement (EBA) with the AMWU. Importantly, he flagged that if the 2018 EA were terminated, redundancy entitlements would reduce to the scale set out in the Fair Work Act 2009 (Cth) (FWA), which were lower than the 2018 EA. He stated: ’This will mean that employees who are retrenched after termination of the Agreement will receive a smaller payout when compared with payouts made under the Agreement’.[31] He expressed regret but said that the priority was to keep the business operating and to protect the jobs for most employees. In the update he stated: ‘We simply cannot achieve that without changing the redundancy scale’.[32] He noted that negotiations with the AMWU indicated that there was no agreement on redundancy entitlements and no prospect of an agreement.
[30] PMP Print, Distribution, and Digital Enterprise Agreement 2018; T5, 144-284.
[31] ST15, 549.
[32] Ibid.
On 31 July 2020, Mr Slaven provided a follow up newsletter entitled Dispelling Myths Q & A, addressing media coverage about the company’s application to terminate the EA.[33] The newsletter sought to clarify certain issues, such as the capacity of the company to pay for redundancies. The newsletter refers to the FEG Scheme.[34] This was described as ’not a quick process’ and not in the interests of staff who wanted stable employment. He also said:
‘If the current expired EA is terminated, there would be several existing conditions that the company would not be seeking to change. This means that we can still negotiate a new EA with an understanding that certain existing conditions will remain. The company has begun to pull a list together of what it believes these could be. In the meantime, I want to make it clear that there would be no change to current hourly rates of pay.’[35]
[33] ST16, 552-556.
[34] ST16, 554-555.
[35] ST16, 555-556.
The new enterprise agreement was lodged with the FWC on 22 October 2020. As noted above, the 2020 EA was approved by the Commission on 6 November 2020 with an operational date of 13 November 2020.[36] The EA covered the six companies forming part of the Ovato Group, including Ovato Print, Mr Dooley’s employer. The AMWU and the Communication, Plumbing and Electrical Union (CPEU) were parties to the agreement. As foreshadowed by Mr Slaven, redundancy payments provided by the 2020 EA were significantly less favourable than those provided under the 2018 EA.
[36] T8, 307.
The Creditors and Members’ Scheme of Arrangement
On 21 December 2020, the Supreme Court approved a corporate restructure. Under the proposed members and creditors scheme of arrangement, assets and liabilities were to be transferred from four printing companies, including Ovato Print,[37] to other corporate entities within Ovato. In return, creditors received 50% of the value of their unsecured claims. This was conditional upon a successful capital infusion of $30 million by means of a share issue, and the subsequent winding up of the printing companies.
[37] The other three printing companies were Hannanprint NSW Pty Ltd; Hannanprint Victoria Pty Limited; and Inprint Pty Ltd; In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882, at [1].
In approving the various interlocking schemes, Black J noted that:
‘[T]he proposed restructure of the Ovato Group appears to come at a substantial public cost, since liabilities of redundant employees in remaining companies would be left to be met by the Fair Entitlements Guarantee Act 2012 (Cth).’[38]
[38] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882 per Black J at [4].
Black J also considered whether the scheme should not be approved by reason of public policy, given the burden placed on the FEG scheme;
‘It does not seem to me that the Court should refuse to approve the schemes on public policy grounds. In reaching that result, I bear in mind that the evidence suggests that the relevant companies would at least have been placed in administration, and potentially in liquidation, absent the restructuring and the schemes, potentially leading to the loss of more employees’ jobs and a larger claim under the Fair Entitlements Guarantee Act, so this is not a case where the transactions create a claim which would not otherwise have arisen or increase the amount of that claim.’[39]
[39] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882 per Black J at [51].
While the approval of the scheme would lead inevitably to claims under the FEG scheme, Black J considered that the risk involved in not approving the scheme could place an even greater burden upon the Commonwealth.[40]
[40] Ibid [49]-[51].
With respect to the new enterprise agreement, Black J, noted:
‘Mr Clarkson, the Company Secretary and General Counsel of the Ovato Group, then noted that the Ovato Group would have a new enterprise agreement and would not have “the same cash drain as it had suffered in the past” and Mr Slaven stated that “he is entering the new year with great hope for the future of Ovato and that it will be well capitalised”.’ [41]
[41] Ibid [13].
As previously noted, on 21 December 2020, the scheme was approved and on 29 December 2020, Ovato Print was wound up. Mr Dooley was stood down from his employment on 9 December 2020, and his employment was terminated on 29 December 2020.[42] As anticipated by Black J in approving the scheme, Ovato Print had insufficient funds to pay his entitlements. There is no reference in the judgment of Black J to the GCA entered into on 21 March 2019.
[42] T1.1, 15.
LEGISLATIVE FRAMEWORK
A payment to a claimant under the FEG Act is referred to as an ‘advance’. Eligibility for an advance is governed by Part 2 of the FEG Act. Part 3 of the FEG Act governs the calculation of an advance. Subsection 16(1) specifies that the amount of the advance is the total of the amount worked out under Division 2 of Part 3 for each of the person’s employment entitlements for the employment.
In relation to redundancy pay entitlements, section 23 provides:
Basic amount for redundancy pay entitlement
The basic amount for a person’s redundancy pay entitlement for his or her employment by an employer is so much of the entitlement as:
(a) is not a cost of the winding up or bankruptcy of the employer; and
(b) does not exceed the total of:
(i) 4 weeks’ pay (at the rate relevant to working out that entitlement) for each full year of the person’s service with the employer for which the employer was required to pay redundancy pay by the governing instrument for that employment; and
(ii) if that instrument requires payment of redundancy pay for a proportion of a year (less than a full year) of the person’s service with the employer—that proportion of 4 weeks’ pay (at the rate relevant to working out that entitlement).
Note: Sections 25 and 26 may affect the basic amount.
The term ‘redundancy pay entitlement’ is defined in subsection 6(5):
Redundancy pay entitlement
(5) The person’s redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment.
The term ‘governing instrument’ is defined in section 5:
governing instrument for employment means any of the following that governs the employment:
(a) a written law of the Commonwealth, a State or a Territory;
(b) an award, determination or order that is made or recorded in writing;
(c) a written instrument;
(d) an agreement (whether a contract or not).
The Governing Instrument
On 20 July 2021, the review delegate affirmed the original determination on the basis that the 2020 EA was the relevant governing instrument. The delegate rejected the argument put by Mr Dooley that the GCA was the operative governing instrument. It could not be regarded as such because it did not govern all aspects of his employment but only set out how specific entitlements would be ‘grandfathered’ by reference to the then current 2018 agreement.[43] In any event, the GCA had been superseded by the 2020 EA (which made no reference to the GCA), and reading in entitlements which were not provided for in the EA itself was ’inconsistent with the principles of Enterprise Agreement interpretation’. Even if the GCA was the governing instrument, it was clearly superseded by the terms of the 2020 EA.
[43] T1.2, 28.
The contentions of the parties before the Tribunal with respect to the dispositional issue have been set out above. Mr Dooley contends that the GCA is the ‘governing instrument’ for that period up until he was transferred to Warwick Farm. He asserts that under the agreement, his employer promised to ‘freeze/grandfather’ redundancy entitlements at the levels provided for under the 2018 EA.
I emphasise that Mr Dooley does not rely on the 2018 EA per se as the relevant governing instrument for his pre-Warwick Farm employment. He relies upon the GCA as the governing instrument in relation to redundancy payments. It ‘adopts’ the 2018 EA redundancy provisions by ‘freezing’ or ‘grandfathering’ them. He says that the purpose of the GCA was to link redundancy entitlements to the 2018 EA scale, so that even if the 2018 EA ceased to operate or was replaced, the scales contained therein were preserved for the purposes of the FEG Act. It is therefore immaterial that the 2018 EA was no longer in force when his employment was terminated on 29 December 2020.
Mr Dooley does not claim to be a party to the GCA, but he says that it was made for the benefit of the redeployed workforce, of which he was a member, and Ovato is bound by its terms. His argument is simply that the company is bound by the promise made by its CEO.
On 12 August 2021, Mr Dooley set out his claim in a written statement.[44] He states that his entitlements should be calculated over two distinct periods, the first relating to the 15 years he was at Moorebank, and the second relating to the period of his employment at Warwick Farm (14 months). He states that the first period is governed by the GCA, and the second should be calculated according to the 2020 EA. For the first period, he claims:
a) 5 weeks’ notice
b) 4 weeks per year of service uncapped
c) Shift loadings (30% loading for nightshift)
d) Accrued annual leave plus shift loadinge) Accrued long service leave
[44] T1.9, 41.
In a further written submission dated 28 March 2022, Mr Dooley adds:
‘It makes no sense to have an agreement which safeguards entitlements against future EBA changes to then allow the next EBA to terminate that same agreement. This was the whole purpose of the agreement in the first place. The purpose of the agreement was to protect the redundancy entitlements for those staff that agreed to transfer over from the Moorebank site to the Warwick Farm site.’[45]
[45] Applicant’s Reply to Respondent’s Statement of Facts, Issues and Contentions (SOFIC), dated 28 March 2022, 2 at para [6].
In the same document he rejected the suggestion that there was insufficient evidence of the GCA, noting the minutes filed by the Respondent in these proceedings which states:
‘The Grand Chapel appreciated the update then we moved onto NSW specific issues. To help deal with concerns around staff waiting for answers about their future and to assist them with their decisions, The Chapel requested staff be provided a note from Lorraine Cassin and Adrian O’Connor covering the following;
1There will be no change to hourly rates for staff moving from MK to a like role at WF. (Agreed)
2Any MK staff that move to WF will have their redundancy calculation at the time of transfer grandfathered. This was designed to deal with staff who had worked on night shift for many years at MK and changed shift when moving to WF which would reduce value of redundancy (Agreed)
3The company only take volunteers for the first phase of redundancies when Press F closes, i.e. no forced redundancies for phase 1 provided there are enough volunteers. (Not agreed – we would need to consider the volunteers and potential skills lost before confirming)
4If WF staff are asked to move temporarily to MK to backfill positions, the company commit to not forcing redundancies on these staff within the scope of this restructure. (Agreed)
5The company will provide staff with detail on phase 2 by June 30, 2019. This will include: what position and shift they will have and if no position is available, an understanding of when the redundancy is likely to take place. (Information agreed, date it can be made available to be confirmed).
Next steps are for the AMWU to draft the above for comment and review before we share more widely. Please therefore keep this confidential until this has occurred.’[46]
[46] T18.2, 483.
CONSIDERATION
There seems little doubt that the whole purpose of the scheme of arrangement and the 2020 EA was to improve the financial position of the scheme companies and Ovato as a whole, by a reduction of debt and employee entitlements, making Ovato financially viable or, at the least, a more attractive proposition for potential buyers of the group entities, whether sold together or in separate bits. The scheme was intended to save a large corporate enterprise that was in danger of collapse. Unfortunately, the measures taken in 2020-21 were not sufficient, and on 21 July 2022, Ovato Limited (the group holding company) was placed into voluntary administration.[47] It is an unfortunate outcome for a major ASX listed company, especially for those employees who might lose their jobs or were previously made redundant.
[47] See Hill, in the matter of Ovato Limited (Administrators Appointed) [2022] FCA 903, per Stewart J, at [3].
The corporate restructure had the specific purpose of excising parts of the business and placing accumulated liabilities such as employee entitlements onto the taxpayer via the FEG Act. The Supreme Court’s rationale in approving the scheme is that it was the lesser of two evils.
Understandably, Mr Dooley has scant regard to these considerations. When the 2020 EA was introduced, he had worked for Ovato Print for 15 years, and on its face the new EA drastically reduced his redundancy entitlements. While a substantial majority of employees across the group approved the new EA, no doubt motivated by self-interest and the hope that jobs and especially their jobs would be saved, the impact upon those who were retrenched was severe, especially for long serving employees.
The Respondent contends that the 2020 EA applies to Mr Dooley’s employment by reason of the provisions of the FWA, and that the GCA is impliedly revoked due to an inconsistency of the respective redundancy provisions (4 weeks under the 2018 EA; 2 weeks under the 2020 EA).
When he was retrenched, Mr Dooley was employed at Warwick Farm and clause 2.2(e) expressly applies the agreement to employees at this site location.[48] By reason of section 52 of the FWA, the 2020 EA applies to Mr Dooley. Indeed, he did not suggest that he stood outside or apart from the prevailing enterprise agreement.
[48] T8, 311.
Clause 22 of the 2020 EA sets out provisions relating to redundancy. Clause 22.3 provides that ‘an Employee who is redundant will be paid an amount equal to two weeks’ pay for each completed year of employment to a maximum of 52 weeks’ pay (Severance Payment)’.[49] Clause 22.3 compares unfavourably (from the employee’s perspective) with the equivalent provision in the 2018 EA (clause 22.8). Importantly, clause 22.8 provides for 4 weeks per year of service uncapped and shift loadings paid on the base rate.[50]
[49] T8, 322.
[50] T5, 167-8.
I also note that under the 2020 EA, clause 22.7 provides for additional benefits if a redundant employee’s dismissal is effective before or on 31 December 2021.[51]
[51] T8, 322.
The question for the Tribunal is whether the 2020 EA, properly interpreted, is inconsistent with the GCA agreement, or, putting it differently, to what extent can the GCA be honoured without breaching the relevant provisions of the 2020 EA? There is nothing in the FWA that prevents an employer from promising more favourable terms than the prevailing enterprise agreement under certain prescribed circumstances.
Under the 2020 EA, the 52-week cap is unambiguous and provides an upper limit for Mr Dooley’s FEG claim.
But what about the rate of accrual, i.e., the rate at which redundancy pay accumulates? The 2020 EA specified an accrual rate of redundancy pay (2 weeks per year of service, up to a maximum entitlement of 52 weeks) but there is nothing in the EA that defines the accrual rate as an upper limit. The formulation in clause 22.3 that an employee made redundant ‘will be paid’ two weeks for each year of service, although cast in obligatory rather than permissive language, is not in my view sufficient to exclude a higher amount being paid if the employer has expressly agreed to do so. The EA does not contain words such as, for example, ‘Despite any promise or undertaking to the contrary, the redundancy entitlement is a maximum of 2 weeks per year of service’. There is no reference in the EA to the specific exclusion of the GCA, or to the exclusion of any other representation or promise. It is therefore open for the Tribunal to find that the accrual rate was modified by the GCA so as to allow accumulation of redundancy pay up to the 2020 EA cap.
I note that under subsection 5(d) of the FEG Act, the definition of ‘governing instrument’ includes an agreement, whether a contract or not.[52] The Respondent concedes that the GCA may have been capable of satisfying the statutory definition of a ‘governing instrument’ in the FEG Act, but contends that it did not ‘govern’ Mr Dooley’s employment, and was in any event, extinguished when the 2020 EA came into effect.[53]
[52] Fair Entitlements Guarantee Act 2012 (Cth) s 5, see paragraph (d) of the term ‘governing instrument’.
[53] Respondent’s Statement of Issues (RSOI), dated 13 October 2021 at para [6-7.2],
The Respondent argues that any agreement made between management and the AMWU was not made in relation to Mr Dooley specifically and that he is not entitled to the benefit of any promise made by Mr O’Connor on behalf of Ovato Print. The Respondent contends that the relevant governing instrument for Mr Dooley’s FEG claim is simply the 2020 EA.
There is however force in Mr Dooley’s argument that Ovato Print is bound by its agreement with the AMWU in respect of those employees it was seeking to redeploy; namely, that if after their redeployment the company was wound up and their employment terminated, the redundancy component of their entitlement would be ’frozen’ or ‘grandfathered’ at the 2018 EA levels. These notions (’freeze’, ’grandfather’) carry considerable force. They were unequivocally intended to insulate those to whom the promise was made from the very consequence that subsequently occurred.
In principle, a promise may be withdrawn before acceptance, and an agreement may be varied by mutual consent. The pamphlets distributed to the workforce indicate that the company wished to reduce redundancy entitlements. However, the statements attributed to Mr Slaven were made outside the Grand Chapel process, and lack the force of the original GCA. Mr Slaven was addressing the entire workforce and not just the class of redeployed workers. He did not at any point in these communications explicitly refer to or seek to revoke the GCA.
The whole of commerce depends upon vigorous enforcement of the requirement that a person (including a corporation) should be bound by a promise; especially where the person for whose benefit the promise was made has acted to their detriment, and in reliance on it. Mr Dooley did not seek work elsewhere or withdraw his labour. He did move to the Warwick Farm site. He was comforted by the promise that his entitlements would be frozen or grandfathered if he redeployed to a different site, which given the nature of the Sydney conurbation, is not a trivial matter.
Counsel for the Respondent argues that although such considerations may be relevant in equity or contract law, they do not apply to the question of identifying the governing instrument and its terms.[54]
[54] Transcript dated 27 June 2022, 53.
The Tribunal is required to do justice between the parties and to arrive at the correct decision and, if two decisions are open on the law, the preferable decision. It is not free to follow its heart when its head must lead. Yet, the essential nature of justice is informed by fairness no less than by hard reason. The Respondent asks the Tribunal to find that the GCA is of no assistance to Mr Dooley and has no legal significance in these proceedings. But it is by no means clear to the Tribunal that this is so.
I make the following findings in light of the evidence presented to the Tribunal.
(a)I am satisfied that on 21 March 2019, the employer ‘agreed’ to grandfather/freeze redundancy entitlements at the levels prescribed by the 2018 EA then in force. This agreement was explicitly made for the benefit of those employees who were redeployed from Moorebank to Warwick Farm and then made redundant.
(b)I am satisfied that the GCA was not revoked by the company prior to the winding up, either expressly or by the advent of the 2020 EA.
With regard to the identification of the governing instrument and its relevant terms, I find that:
(a)The governing instrument for the entire period of Mr Dooley’s employment is the 2020 EA, subject to (d) below;
(b)A redundancy cap of 52 weeks applies to all employees governed by the 2020 EA, including Mr Dooley;
(c)From the date of Mr Dooley’s redeployment to Warwick Farm, the applicable rate of accrual is 2 weeks for each completed year of service, as provided for under the 2020 EA;
(d)For service prior to the date of redeployment to Warwick Farm, the rate of redundancy pay is the sum of 2 weeks per year of service (as provided for by the 2020 EA) plus 2 weeks per year of service (as provided for by the GCA), up to the 52 week cap.
In approving the scheme of arrangement, Black J. anticipated that a heavy burden would fall on the FEG scheme. These findings will not alleviate that load. I am however certain that a reasonable taxpayer would not complain about shouldering such a burden, if fully acquainted with the explicit promise made to the workforce of which Mr Dooley was a part. I also recognise that this decision will give Mr Dooley less than he claims but more than the Respondent concedes.
CONCLUSION
The decision under review is set aside and remitted to the Secretary for recalculation of Mr Dooley’s redundancy entitlement in accordance with paragraph 57 of these reasons.
I certify that the preceding 59(fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member
.................................[sgd]...................................
Associate
Dated: 15 September 2022
Date of hearing: 27 June 2022 Applicant: In person Counsel for the Respondent: Mr C Parkin Solicitors for the Respondent: Mr S Reeves
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