Dooley and Secretary, Department of Employment and Workplace Relations
[2024] AATA 266
•27 February 2024
Dooley and Secretary, Department of Employment and Workplace Relations [2024] AATA 266 (27 February 2024)
Division:GENERAL DIVISION
File Number: 2021/5561
Re:Gerard Dooley
APPLICANT
AndSecretary, Department of Employment and Workplace Relations
RESPONDENT
DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:27 February 2024
Place:Sydney
The decision of the review officer made on 20 July 2021 is set aside and remitted to the Secretary with a direction that, for the purposes of calculating his redundancy benefit under the Fair Entitlements Guarantee Act 2012 (Cth), Mr Dooley is entitled to the rate specified in the 2018 EA, namely four weeks per year of service, uncapped up until the date of transfer to Warwick Farm.
............[SGD]............................................................
Emeritus Professor P A Fairall, Senior Member
Catchwords
FAIR ENTITLEMENTS GUARANTEE – Redundancy entitlement – Whether agreement is a ‘governing instrument’ – whether agreement is a contract – where employee gave valuable consideration – where contract prevails over enterprise agreement – decision under review set aside
Legislation
Fair Entitlements Guarantee Act 2012 (Cth)
Fair Work Act 2009 (Cth)
Cases
Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; (1954) 92 CLR 424
Carlill v. Carbolic Smokeball Co. [1892] EWCA Civ 1; (1893) 1 QB 256
Clarke v Pacific National Services Pty Ltd [2023] FCA 699
Qube Ports v MUA [2018] FCAFC 72
Rudge v R [2020] NSWSC 1422Secretary, Department of Employment and Workplace Relations v Dooley [2023] FCA 651
Secondary Materials
Stewart’s Guide to Employment Law (The Federation Press, 7th edition, 2021)
Creighton and Stewart’s Labour Law (The Federation Press, 6th edition, 2016)
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
27 February 2024
INTRODUCTION
Ovato Print Pty Ltd (the company) was one of four Ovato companies[1] 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.[2] Mr Dooley was employed by the company for 16 years. He made a claim for unpaid entitlements under the Fair Entitlements Guarantee Act 2012 (Cth) (the FEG Act). This application is concerned with the calculation of his redundancy entitlements.
[1] The Ovato Group (Ovato) was one of two major integrated printing and distribution businesses in Australia and New Zealand. Ovato was a major employer with some 1,187 employees across ten sites.
[2] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882.
The FEG Act provides financial assistance in the form of a monetary advance by the Commonwealth 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.
LEGISLATION
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).
Section 58 of the Fair Work Act 2009 (Cth) (the FWA) states:
Only one enterprise agreement can apply to an employee
(1) Only one enterprise agreement can apply to an employee at a particular time.
General rule--later agreement does not apply until earlier agreement passes its nominal expiry date
(2) If:
(a)an enterprise agreement (the earlier agreement) applies to an employee in relation to particular employment; and
(b)another enterprise agreement (the later agreement) that covers the employee in relation to the same employment comes into operation; and
(c)subsection (3) (which deals with a supported bargaining agreement replacing a single enterprise agreement) does not apply;
then:
(d)if the earlier agreement has not passed its nominal expiry date:
(i) the later agreement cannot apply to the employee in relation to that employment until the earlier agreement passes its nominal expiry date; and
(ii) the earlier agreement ceases to apply to the employee in relation to that employment when the earlier agreement passes its nominal expiry date, and can never so apply again; or
(e)if the earlier agreement has passed its nominal expiry date--the earlier agreement ceases to apply to the employee when the later agreement comes into operation, and can never so apply again.
BACKGROUND
On 20 April 2021, a delegate of the Secretary determined that Mr Dooley was eligible for an advance of $89,297.04 (before tax). A net amount of $83,153.04 was credited to his account. Mr Dooley objected to this assessment which, he claims, is well short of his entitlement.[3] In deciding the matter, the delegate applied clause 22.3 of the Ovato Enterprise Agreement 2020 (the 2020 EA),[4] which provided two weeks’ pay for each year of service, up to a maximum of 52 weeks. Clause 22 of the 2020 EA is headed Redundancy. Clauses 22.3 to 22.7 provide:
[3] T1.5, 38. Mr Dooley claims he is owed $190, 743.
[4] T8, 307, at 322.
22.3An 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).
22.4 The Severance Payment consists of:
(a)a payment in lieu of notice required by the NES; and
(b)a redundancy payment.
22.5Where the Employee's entitlement to redundancy pay and pay in lieu of notice under the NE is greater than the Severance Payment, the Employee will be paid the amount required to be paid under the NES.
22.6Subject to clause 22.7 below, a week's pay for the purposes of the redundancy payment is calculated at the Employee's base rate of pay for ordinary hours worked.
22.7Where a redundant employee's dismissal is effective on or before 31 December 2021:
(a)a week's pay for the purposes of the redundancy payment is calculated at the Employee's base rate of pay for ordinary hours worked together with the shift loading paid to the employee immediately before the employee's dismissal; and
(b)any payment in lieu of accrued annual leave will include either the shift loading or annual leave loading of 17.5%, whichever is greater.
By contrast, the previous enterprise agreement provided four weeks per year of service, uncapped.[5]
[5] The PMP Print, Distribution and Digital Enterprise Agreement (2018 EA).
Mr Dooley objected to the delegate’s decision. He referred to letters signed by the company CEO, Mr Adrian O’Connor, as evidence that his redundancy entitlement was determined by his contract of employment, not the 2020 EA. He stated:
These [letters] did not form a part of the EBA. These were put in place to grandfather our entitlements as of the date of transfer. …[T]his was to ensure that should the EBA change at a future date then the entitlements are grandfathered/frozen as stipulated in the 3 letters I sent to FEGS with Adrian O Connors signature on behalf of THE COMPANY, also as stated in the letters.
These letters did not form part of the EBA… These letters formed part of MY EMPLOYMENT CONTRACT and the only relevance they played with any EBA was that they covered the entitlements of redundancy that were current at the time of transfer from the Moorebank site to the Warwick Farm site.[6]
[6] T16, 472.
On 20 July 2021, the review officer upheld the original determination. The delegate found that the 2020 EA was the governing instrument applicable to Mr Dooley’s entitlements under the FEG Act. Clause 22.3 of the 2020 EA applied, and Mr Dooley was therefore entitled to two weeks' pay for each completed year of service to a maximum of 52 weeks' pay. The delegate stated that it would be ‘inconsistent with the principles of Enterprise Agreement interpretation’ to incorporate entitlements not covered in the enterprise agreement itself.[7]
[7] T1.2, 27-28.
The delegate rejected Mr Dooley’s contention that the governing instrument for his employment was an agreement between his employer and his union, the Australian Manufacturer’s Workers Union (AMWU) - the so-called ‘Grand Chapel agreement’. It could not be the governing instrument because it did not govern all aspects of his employment but only set out how specific entitlements would be ‘grandfathered’ by reference to the 2018 EA.
Mr Dooley applied to the Tribunal for review of this decision. His application was heard on 27 June 2022.
On 15 September 2022, the Tribunal set aside the determination and remitted the matter to the Secretary for recalculation.[8] The Tribunal held, at paragraph 57:
(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 Grand Chapel agreement), up to the 52 week cap.
[8] Dooley v Secretary, Attorney-General’s Department (2022) 176 ALD 63; AATA 3027.
In other words, the Tribunal found that Mr Dooley’s employment was governed by the 2020 EA, subject to an important caveat relating to the rate of accrual up to the 52-week cap. The Tribunal found that the rate of accrual (two weeks' pay for each completed year of employment) was not subject to any maximum stipulation under the 2020 EA. The Tribunal considered that clause 22.3 did not prevent an employer from promising a higher rate of accrual (than two weeks), as it had done under the Grand Chapel agreement referred to by Mr O’Connor in his letter of 26 November 2019.
The Grand Chapel agreement satisfied that description in paragraph (d) of section 5 of the FEG Act, namely, an ‘agreement (whether a contract or not)’. The agreement applied to employees like Mr Dooley, who had been redeployed to Warwick Farm after these assurances had been made. The Secretary appealed the Tribunal’s decision in the Federal Court.
THE FEDERAL COURT DECISION
On 2 June 2023, the Federal Court set aside the decision of the Tribunal and issued an order in the nature of mandamus requiring the Tribunal to hear and determine the Respondent’s application for review according to law.[9] Rares J. stated:
43. Here, the Tribunal found the Grand Chapel agreement, and not the 2020 agreement, was the governing instrument for determining Mr Dooley’s redundancy pay entitlement for his service prior to his redeployment to Warwick Farm under s 23 of the FEG Act…
[9] Secretary, Department of Employment and Workplace Relations v Dooley [2023] FCA 651 (Dooley).
It is, with respect, important to stress that the Tribunal found that the 2020 EA was the governing instrument for the entire period of Mr Dooley’s employment, subject to a modification adding an additional two weeks per year to the accrual rate specified in the 2020 EA for the pre-transfer portion of his employment.
However, Rares J. was of the view that the Tribunal had failed to articulate the findings supporting its conclusion that the Grand Chapel agreement was a governing instrument for the purposes of the FEG Act.[10] His Honour refrained from finding that it could not have been the governing instrument.[11] There was evidence before the Tribunal that might have enabled it to find that the company was bound to honour the promise contained in the Grand Chapel agreement.[12] His Honour was critical of the Tribunal’s failure to identify the elements crucial for the formation of a valid contract, namely, offer, acceptance, consideration, and intention to create legal relations.
[10] Dooley, paras 53, 57, 60 and 61.
[11] Dooley, paras 62.
[12] Dooley, para 58.
Indeed, no such analysis was undertaken by the Tribunal because the Tribunal took the view the Grand Chapel agreement fell under paragraph (d) of the definition of ‘governing instrument’ in the FEG legislation, namely ‘an agreement, whether a contract or not’ (emphasis added).
THE REMITTAL
The remittal came before the Tribunal on 10 November 2023. Mr Dooley was again self-represented. The Respondent was represented by Ms J. Lucas of counsel, instructed by Mr S. Reeves, a solicitor employed by the Australian Government Solicitor’s office.
For the purposes of the remittal, the Tribunal had regard to the record of proceedings together with the transcript of the hearing before the Tribunal on 27 June 2022, as permitted by subsection 44(6) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The parties filed additional material not previously considered by the Tribunal.[13] Neither party objected to the Tribunal being constituted by the same member who heard the original application.
[13] See Supplementary Tender Documents.
MATERIALS BEFORE THE TRIBUNAL
Applicant’s material:
(a)Outline of submissions filed on 29 August 2023
(b)Applicant’s evidence (reproduced in Supplementary T-Documents at ST19 to ST26)
Respondent’s material:
(a)Outline of submissions filed on 14 September 2023
(b)Respondent’s evidence (reproduced in Supplementary T-Documents at ST27 to ST29)
(c)Respondent’s bundle of authorities filed on 6 November 2023
Other:
(a)T-Documents filed on 8 October 2021
(b)Supplementary T-Documents filed on 17 August 2023
(c)Transcript of 2022 Tribunal proceedings
Documents before the Tribunal in the 2022 proceeding:
(a)Hearing book filed on 21 June 2022
(b)Respondent’s list of authorities filed on 23 June 2022
THE ARGUMENTS
Mr Dooley’s fundamental contention is that an agreement was made at the Grand Chapel meeting that took place on 21 March 2019, that the agreement applied in determining his rate of redundancy pay, and that the agreement was incorporated into his contract of employment. He does not accept that he was not a party to the agreement or that he did not provide consideration for the agreement. He has provided evidence of the meeting and his involvement and participation in meetings leading up to the Grand Chapel meeting on 21 March. He relies on various documents signed by the CEO of the company, Mr Adrian O’Connor.
Mr Dooley emphasises that the Grand Chapel agreement does not form part of any enterprise agreement. It was never incorporated into any enterprise agreement. Not being part of any agreement, it is not abrogated by the advent of a new agreement. He expressed his disappointment at the Tribunal’s original decision.[14]
[14] Transcript, 10 November 2023, 72-73.
He contends that in relation to his redundancy entitlements his employment is governed by two instruments: the Grand Chapel agreement until his deployment to Warwick Farm, and the 2020 EA thereafter. The Grand Chapel agreement envisaged that the grandfathering would apply only up to the date of redeployment. After that date, his employment was governed by the 2020 EA.
He contends that any inconsistency between the 2018 EA scale ‘grandfathered’ by the Grand Chapel agreement and the 2020 EA scale is irrelevant, because the company was bound, by reason of its promise to the AMWU, who were known by the company to be acting on behalf of members such as Mr Dooley, to apply the 2018 scale.
Mr Dooley maintained this approach at the rehearing. His entitlement to four weeks uncapped redundancy pay was not based on the 2018 EA, but on a contractual entitlement. This entitlement forms part of his employment contract and arises independently of any enterprise agreement. His contractual entitlements are not subordinate to or negated by the 2020 EA.
The Respondent submitted that the Grand Chapel agreement was not an agreement between Mr Dooley and the company, that it lacked contractual force, and that it was not capable of constituting a governing instrument under section 5 of the FEG Act. Mr Dooley’s right to uncapped redundancy based on a scale of four weeks per year of service was extinguished when the Fair Work Commission (FWC) approved the 2020 EA. In essence, the Respondent contended that the Grand Chapel agreement did not give rise to any enforceable rights on the part of Mr Dooley when it was made between the company and the AMWU, and even if it did (which was denied), those rights did not survive the advent of the 2020 EA. The Respondent submitted that, as a matter of statutory interpretation, a ‘governing instrument’ as defined in paragraph (d) of section 5 of the FEG Act must be legally enforceable in the hands of the employee. The Respondent’s position that the Grand Chapel agreement is not legally enforceable in the hands of Mr Dooley was vigorously advanced in both hearings before the Tribunal.
ASSESSING THE CLAIM AFRESH
Mr Dooley’s claim raises three issues for determination; first, as to the nature and scope of the Grand Chapel agreement purportedly made on 21 March 2019; second, as to whether any such agreement was contractual in nature as between Mr Dooley and the company, and forms part of his contract of employment; and third, whether any such contractual rights survived the approval by the FWC of the 2020 EA.
First issue: The nature and scope of the Grand Chapel agreement
It is important to have regard to the industrial context in which the Grand Chapel meeting occurred. In the five years leading up to the corporate collapse, Ovato undertook various measures to improve its financial position, including negotiations with creditors and employees, equity-raising, and site consolidations. The process of transferring PMP employees from Moorebank to Warwick Farm commenced in 2019. The corporate strategic plan involved closing the printing operation at Moorebank to focus on Warwick Farm, where new printing equipment was being installed. The possibility of redundancies was discussed in company communications.
Between 2005 and 2020 the FWC ratified several enterprise agreements relating to Mr Dooley’s employer.[15] This was increasingly driven by the changing economic landscape and especially during the disruptive COVID-19 pandemic, the need to create efficiencies for the business.
[15] The Tribunal has been provided with copies of the 2005, 2015, 2018 and 2020 EAs. The PMP Print, Distribution, Moorebank Site NSW Enterprise Agreement 2005 was in force until 30 June 2008: ST19, 559. The PMP Print, Distribution and Digital Enterprise Agreement 2015 was varied on 13 October 2017 with a nominal expiry date of 30 June 2018: ST21, 582, 586.
On 14 August 2017, management wrote to staff regarding planned steps to update the existing 2015 EA.[16] 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.[17] On 13 October 2017, the FWC approved a variation to the 2015 EA.[18]
[16] Letter from Janene Jamieson, General Manager Group HR: T11.3, 441-442; The PMP Print, Distribution and Digital Enterprise Agreement 2015: T4, 49-143.
[17] T11.3, 441.
[18] ST21, 582, 586.
The 2018 EA was approved by the FWC on 12 March 2019. It came into effect on 19 March 2019, with a nominal expiry date of 30 June 2020.[19] Clause 22.8 of the 2018 EA is headed Retrenchment Benefit, and provided for four weeks per year of service uncapped.
[19] T5,144-145.
The 2020 EA was approved by the FWC on 6 November 2020. It came into effect on 13 November 2020, with a nominal expiry of 31 December 2022.[20] It covered the six companies forming part of the Ovato Group, including Ovato Print, Mr Dooley’s employer.[21] The AMWU and the Communication, Plumbing and Electrical Union (CPEU) were parties to the agreement.
[20] T8, 307, 310.
[21] T8, 310; T5, 152.
As noted above, clause 22.3 of the 2020 EA provided for a reduced amount of redundancy pay, based on an amount equal to two weeks' pay for each completed year of employment to a maximum of 52 weeks' pay.
The company went into liquidation less than a month later, on 29 December 2020, following a failed equity raising venture.[22]
[22] See Document dated 1 December 2020 entitled Ovato Limited announces Entitlement Offer to raise approximately $40.0m with up to $35.0m conditionally underwritten.
The Grand Chapel meeting
The Grand Chapel meeting took place two days after the 2018 EA came into effect. Unfortunately, the materials before the Tribunal do not include any agenda, attendance lists, or formal minutes, although an informal record of the meeting is available and is discussed below.[23]
[23] T18.2, 483.
Mr Dooley stated in oral evidence that there was a process of consultation with union members prior to the Grand Chapel, during which employees raised specific concerns for discussion at the meeting. He did not attend the meeting. As far as he knew, the meeting was not attended by rank-and-file members but limited to senior executives of the company and the AMWU. He understandably expressed frustration that the Respondent sought information from him about the attendees at this meeting, and that Ovato was unable to provide the minutes.
Mr Dooley called a former colleague as a witness (A1) who claimed to have been at the meeting. The Respondent’s representative informed the Tribunal that a confidentiality order had been made in respect of this witness and that he was referred to in the T docs as ‘A1’.[24] I note that an order was made by the Tribunal under section 35 of the AAT Act on 9 February 2022 prohibiting the publication of the identity of this witness. I therefore directed that he be referred to as A1.
[24] Transcript, 27 June 2022, 24.
According to an email A1 sent to Mr Dooley on 7 October 2021:
Once we knew we were transferring from the Moorebank site to the Warwick Farm site, there was a series of meetings held with the union, the AMWU and the Hannanprint management which included Adrian O’Connor and Kevin Slaven. It was agreed that whatever entitlements that all employees at Moorebank had i.e shift loading and our 4 weeks per year service redundancy package would be grandfathered.
ONLY changes could be made to this once transferred to Warwick Farm with the time served at only at the Warwick Farm site. This was because many people did not want to transfer to the new site with fears off [sic] changes and dishonesty coming into play.
I also asked then FOC, Mark Allen, to clarify this which he did verbally.
A1 was cross-examined by the Respondent’s lawyer:[25]
[25] Transcript, 27 June 2022, 26-27.
[T]here’s a reference to a series of meetings held with the union and the Hannanprint management, were those meetings that you attended?---Some of them.
Some of them you were, they were. Okay?---Yes.
Did you attend any meetings at which there was a decision?---Yes.
What was that meeting?---That was with the four weeks and the grandfathering of the PMP Moorebank site’s agreements.
Where did that meeting take place?‑‑‑That took place in the tea room, upstairs at Moorebank.
Who was present at that meeting?‑‑‑Kevin Slaven, Adrian O’Connor, the FOC Mark Allen, there would have been Mark Rossetto and I’m not 100 per cent, I would think it was Rowan Coles, the operations director.
Was Lorraine Cassin from the AMWU present at that meeting?‑‑‑I’m not sure if it was Lorraine or it was Belinda. But I can’t remember Belinda’s last name. I’m not 100 per cent, but I know one of them was. It would have been Belinda or Lorraine.
Were you a person who was a union delegate?‑‑‑No.
You said you asked the FOC, Mark Allen, to clarify?‑‑‑M’mm.
If you were seeking clarification, do I take it that you had some understanding of what these matters were before you spoke to him?‑‑‑Yes, the only reason I clarified them is because a lot of people, sort of like, they keep chipping in in the meetings and I just wanted clarification that I heard it right. Because I, too, had concerns moving over there. So, yes, it was just I wanted to hear it from him too, from Mark Allen, too, to make sure that I had everything clarified before I, too, moved over to Warwick Farm.
Is it fair to say that one of your concerns in moving to Warwick Farm was that your redundancy wouldn’t have the 30 per cent shift loading on it?‑‑‑Thirty per cent and the four weeks, because I am - I know I’m probably going to deviate from the question, but I’ve got reasons for why. I’ve got reasons for why I asked clarification from previous experiences from a print business in the UK, so that’s why I personally asked Mark Allen.
Did you understand what the entitlements were at Warwick Farm at the time?‑‑‑They were - not 100 per cent that I understood, but I knew that there was a four weeks per year and they got shift loading. Now, I didn’t know exactly what their shift loading was, because they worked different to us. But all I was interested in is what we got, that is it.
Sorry, what you got, what do you mean by that?‑‑‑As in, our entitlements, you know, because we were talking about grandfathering entitlements that Moorebank got, not what Warwick Farm got because they’re on a different deal. But as long as we were grandfathered what we’d earnt, that’s my concern, 100 per cent.
So, if Warwick Farm, at that time, was getting four weeks per year?‑‑‑Yes.
But the shift loading was different?‑‑‑Yes.
Would you agree, what you were concerned about was the shift loading?‑‑‑No, no, not at all.
If you’re concerned about what you got, as opposed to what Warwick Farm got, and they’re getting the same number of weeks per year, why would you be concerned about anything else?--- Because I know that - my belief was that we were going to get changed as soon as we got to Warwick Farm, which in no time at all, our EBA changed to that. Because we knew our EBA was running out and that was why we wanted to make sure that what we had and we’d earnt at Moorebank, was grandfathered, so that when we went to Warwick Farm, if they decided to change it, we didn’t lose everything that we’d already earned.[26]
[26] Transcript, 27 June 2022, 27-28.
Mr Parkin submitted that it was unlikely that A1 attended the Grand Chapel meeting.[27] He suggested that the evidence pointed to the Grand Chapel meeting being attended only by union delegates and senior executives of the company. I accept that Mr Dooley gave evidence as to his understanding, which is that rank and file members did not attend the Grand Chapel meeting. However, A1’s evidence is that he attended a meeting attended by Kevin Slaven, the Ovato CEO, Adrian O’Connor, the company CEO, and other senior executives including the Father of the Chapel Mark Allen. I am not prepared to find that he did not attend the meeting on 21 March 2019.
[27] Transcript, 27 June 2022, 46.
The Tribunal is satisfied that the meeting took place and that the AMWU was represented by Ms Lorraine Cassin, National Secretary, and that the company was represented by Mr O’Connor, CEO, Print and Residential Distribution.
What was decided at the Grand Chapel meeting?
An unattributed file note provides a reasonably detailed summary of the meeting.[28] It is headed Summary of today’s Grand Chapel – 21 March 2019 and provides:
[28] T18.2, 483.
Adrian provided a background on the NSW site consolidation
• When decision was made i.e. Board meeting on Friday 22 February to approve Site Consolidation
• How we consulted with the AMWU and Moorebank and Warwick Farm sites from 26 February
• Trigger was lower forecast volumes and revenue overall for Jan-June 2019
• Specific client changes such as reduced quantities from IKEA and News Local moving to Fairfax
• National footprint very important strategically. Therefore, the option to try and keep 2 NSW sites full by diverting work from other states wasn’t the right thing for the business and our clients.
Adrian provided a summary of Ovato’s first half achievements for FY19
• Print Australia delivered an improved year on year EBITDA result on less revenue.
• Re-signed Super A-Mart for Print and Distribution ($10m)
• Re-signed David Jones ($5m)
• Re-signed long term deal with Metcash for NSW, QLD and WA. ($15m)
oWe were asked why we hadn’t moved the WA work from WAN to Bibra Lake. We advised that it was being considered however it would require a shift change at Bibra Lake due to the Metcash schedule.
• Working closely with Bauer on a contract extension and opportunities for additional business.
• AFL record secured in Victoria for 3 more years
• Travel Brochures such as Intrepid/Peregrine and Tempo Holidays ($1.4m)
• Mindfood Magazine (High praise from client on Ovato Print quality)
• K-Mart and Target print tender due shortly
• Australia Post Catalogue work - trial jobs underway
• Nearing a decision on the Aldi distribution work.
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;
1. There will be no change to hourly rates for staff moving from MK to a like role at WF. (Agreed)
2. Any 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)
3. The 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)
4. If 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)
5. The 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. (Emphasis added)[29]
[29] T18.2, 483.
The author of the note is not identified. Rares J. observed that it appeared to be written by AMWU delegates.[30] However, this is far from clear. The first part is clearly written from the perspective of the company. The second records a request from the ‘Chapel’ for Ms Cassin and Mr O’Connor to provide a joint communique relating to specific matters, including, importantly, the question of protecting redundancy entitlements (underlined).
[30] Secretary, Department of Employment and Workplace Relations v Dooley [2023] FCA 651, para 16.
The Respondent seized upon the second sentence of the underlined passage to suggest that the Grand Chapel agreement, insofar as it related to redundancy entitlements, was only concerned with the preservation of penalty rates for redeployed staff in the base calculation for redundancy entitlements, and that it did not extend to the preservation of four weeks for each year of service, uncapped.
This argument was advanced on behalf of the Respondent by Mr Parkin at the original hearing and by Ms Lucas at the remittal. Mr Parkin argued that there was ‘an ambiguity’ in paragraph 2, which he also described as an ‘infelicity of expression’.[31] He said that it was ‘unfortunate that it’s not clearer about what precisely had been agreed’.[32] Importantly, he did not argue that the words were incapable of carrying the meaning contended for by Mr Dooley, rather there was an ambiguity and that it was a matter for the Tribunal to resolve. On the remittal, Ms Lucas consistently argued that paragraph 2 should be construed in a limited way, and that the ‘grandfathering’ applied only to a very limited cohort, that is, ‘staff who had worked on night shift for many years at Moorebank and changed shift when moving to Warwick Farm’.[33] This echoed the submissions made by Mr Parkin at the first hearing.
[31] Transcript, 27 June 2022, 47.
[32] Transcript, 27 June 2022, 48.
[33] Transcript, 10 November 2023, 39, 41.
I note the subsequent communications signed by the company’s CEO, Mr O’Connor. Mr O’Connor was not just the CEO but a member of the Hannan family, and part owner of the company.[34] Shortly after the Grand Chapel meeting, Mr O’Connor and Ms Cassin co-signed an undated memorandum headed ‘Grand Chapel Update’.[35] This 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’. There is no reference in this document to shift loadings.
[34] See document dated 1 December 2020 entitled Ovato Limited announces Entitlement Offer to raise approximately $40.0m with up to $35.0m conditionally underwritten, at p.3.
[35] T1.3, 36.
On 26 November 2019, Mr O’Connor saw fit to reassure Ms Belinda Griggs, Regional Secretary of the NSW Print Division of the AMWU, about the grandfathering agreement. He wrote:
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.[36]
[36] T1.4, 37.
There is no suggestion that the agreement was confined to issues relating to loadings, although Mr Parkin continued to refer to the meaning in this document as ‘ambiguous’. [37]
[37] Transcript, 27 June 2022, 48.
From an objective viewpoint, the meaning of those words is clear. There is no ambiguity. All transferees would have their redundancy entitlement grandfathered as at the date of transfer. Had it been intended to limit this indulgence to those who had worked hours attracting penalty rates it would have focused accordingly. It is inconceivable that the CEO of the company would have used such broad language if it intended to limit the grandfathering to penalty rates. I also consider that it is significant that this email was written eight months after the Grand Chapel meeting, as the economic circumstances of the Ovato Group were deteriorating, and more than enough time to settle any nuances or limitations arising from the phraseology used in the ‘Grand Chapel update’ document. It appears that Mr O’Connor, the company CEO, did not have any doubt as to what the agreement meant.
Moreover, since the 2018 EA expressly provided in clause 22.8.1 that employees would receive four weeks per year of service uncapped and that shift loadings would be paid on base rates, it is hard to see why the Grand Chapel agreement should focus only on the issue of shift loadings, and to the exclusion of the preservation of the uncapped rate of accrual.
The Respondent points to some other communications as suggesting that the agreement applied only to the preservation of penalty rate entitlements.
On 30 April 2019, a body called the NSW Consultative Committee sent a memorandum to ‘All Staff’ which confirmed some details relating to the looming redundancy program. This document was part of the additional materials provided by the Respondent for the remittal. It was not produced in the first Tribunal hearing. The members of the committee are not identified.[38]
[38] ST28.1, 740.
1. Management has confirmed that hourly wage rates for like roles will not be altered as part of this NSW site consolidation project.
2. HR has posted redeployment opportunities within the Ovato Group on Site notice boards.
3. The committee has agreed to review requests for early redundancy within a 2-week window prior to an agreed redundancy termination date if employment has been secured elsewhere. If an employee commences employment elsewhere before this 2 week window then they will forgo their redundancy package and a resignation will be accepted instead.
4. The first phase of redundancies will be communicated in May 2019.
5. All NSW employees will be advised by 30 June 2019 if they will be made redundant or transferring over to WF with proposed shift patterns.
6. The ultimate aim is to mitigate the number of redundancies during the NSW consolidation. Roles that can be offered that are as similar as possible with current shift patterns will be, but this will not be the case for everyone unfortunately.
7. For employees at Moorebank site, management agree to freezing or grandfathering redundancy terms based on employees’ current shift patterns; i.e. for prior service up to NSW Site consolidation. Any new service (at Warwick Farm) will be calculated on the actual shift pattern in place at the time of redundancy.
8. Warwick Farm site tours were held in the first week of April for Pressroom and Logistics staff. Management will arrange for additional site tours for other departments in May and June.
9. Management has confirmed that redundancies will be selected from both NSW site Moorebank and Warwick Farm. Management confirms that simply working at Moorebank does not mean you will be made redundant. (Emphasis added)
The reference to ‘shift patterns’ in item 7 is not incompatible with Mr Dooley’s claim that the Grand Chapel agreement was intended to preserve the four-week rate of accrual on an uncapped basis, up to the date of transfer to Warwick Farm.
Communications from the Ovato CEO
The Respondent also relies upon communications in 2020 from the Ovato CEO, Mr Kevin Slaven, as the financial circumstances of the company deteriorated. The Respondent argues that these are relevant to the construction of the Grand Chapel agreement.[39]
[39] 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 <>
On 29 July 2020, Mr Slaven provided an update to the workforce regarding plans to ‘resize the business to quickly match the changes in the way our clients are behaving’.[40] 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’.[41] He 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,[42] 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 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’.[43] 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’.[44] He noted that negotiations with the AMWU indicated that there was no agreement on redundancy entitlements and no prospect of an agreement.
[40] ST15, 548.
[41] Ibid.
[42] PMP Print, Distribution, and Digital Enterprise Agreement 2018; T5, 144-284.
[43] ST15, 549.
[44] Ibid.
On 31 July 2020, he provided a follow up newsletter entitled Dispelling Myths Q & A, addressing media coverage about the company’s application to terminate the EA.[45] 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.[46] 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.[47]
[45] ST16, 552-556.
[46] ST16, 554-555.
[47] ST16, 555-556.
For sake of chronology, I note that on 6 August 2020, Ovato updated the company Redeployment and Redundancy Policy.[48] The Policy applied to all Ovato Australia employees not covered by a collective agreement. It applied to those employees eligible for severance payments under the FWA. It overrode all prior policies or guidelines regarding redeployment and redundancy and was to be read and applied in conjunction with the employee’s employment contract. In terms of severance, the Policy provided that affected employees would have severance payments calculated as the greater of (a) as specified in their Contract of Employment or (b) in alignment to the Australian National Employment Standards (NES) Redundancy Entitlements Payments. The Policy set out a rate of payment considerably less favourable than that provided for under the 2018 or for that matter the 2020 EA.[49]
[48] T6, 289.
[49] T6, 287.
The Respondent also relies on a communication prepared by management and circulated prior to voting on the 2020 EA. This document was created sometime between 7 October and 15 October 2020 in anticipation of the voting for the 2020 EA. It includes the following:
Grandfathering of MBK [scil: Moorebank] packages? What is happening here?
Shifts previously worked at MBK will be recognised in the calculations up to when applying shift loadings to the new redundancy clause. All shift loadings for all staff will be included in redundancy calculations up until December 2021. (Clause 22.7)[50]
[50] ST3, 520.
The Respondent contends that these communications suggest that Mr O’Connor’s confirmatory email of November 2019 should not be accepted literally, and that any agreement reached in March 2019 was limited in nature and confined to the question of penalty rates.
I do not accept the logic of this submission. It simply does not follow that the unambiguous meaning conveyed by Mr O’Connor to Ms Griggs on 26 November 2019 as to the corporate understanding of the Grand Chapel agreement should be adjusted because at some later point the Ovato CEO indicated that the company was not in a position to honour the redundancy entitlements in the 2018 EA. Those entitlements would need to be reduced either to the NES, or by securing a new enterprise agreement, with the spectre of insolvency being used to persuade members to support a new enterprise agreement with reduced redundancy rates.
The Respondent also refers to communications received from the insolvency practitioner’s firm many years after the fact as to what the grandfathering agreement was intended to govern. On 15 August 2023, there is an email exchange between a member of the insolvency practitioner’s team (FTI Consulting) and Mr Reeves:
Hi Stephen,
Thank you for your email correspondence.
I spoke to Shay Jones (who was Ovato Limited’s Human Resource Business Partner) in mid‐August 2022 regarding the matter of the NSW Site Consolidation specifically the grandfathering of redundancy as an employee at the time provided a copy of the letter from Adrian O’Connor to Belinda Griggs (included at page 5 of your attached correspondence) to our office. Mrs. Jones advised that the purpose of the letter was not to grandfather all redundancy entitlements but rather grandfather entitlements relating to the shift pattern in place. For example, if an employee was employed to work at Moorebank on night shift however, the only role available for the employee at Warwick Farm post site consolidation was day shift, the shift loading would be grandfathered in a redundancy scenario to include night shift loading.
Further to James’ email correspondence, we do not hold any further documentation such as file notes relating to these discussions which occurred in 2019.[51]
[51] Email dated 15 August 2023: ST29, 741.
This note was written four and a half years after the fact and consists of hearsay twice removed. The author reports on what another person believes. There is no indication as to the basis for Mrs Jones’ belief, especially considering Mr O’Connor’s communication of 26 November 2019. I do not accord this communication much if any weight. It merely reiterates the submission made by the Respondent and has little evidentiary value.
Conclusion regarding the scope of the Grand Chapel agreement
I am satisfied that the agreement was intended to preserve the entitlement of four weeks uncapped pay per year of service until the date of transfer for those employees who accepted redeployment to Warwick Farm and were subsequently retrenched.
Issue 2: Incorporation into contract of employment
Mr Dooley asserts that the Grand Chapel agreement was incorporated as a term of his employment contract. The Respondent argues that the Grand Chapel agreement was not an agreement to which Mr Dooley was a party, that he provided no consideration and that there was no intention to create legal relations.
I note that Mr Dooley was initially employed by PMP Print (as it was then called) under a contract of employment dated 7 October 2004. 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.[52]
[52] T3, 45-46.
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.[53] It is accepted by the parties that as from 11 April 2005, Mr Dooley was employed under an informal (i.e., unwritten) contract of employment.
[53] Transcript, dated 27 June 2022, 6.
The Respondent urges the Tribunal to find that Mr Dooley was not a party to, and did not provide consideration for, this agreement. Mr Dooley gave the following evidence:
Is it fair to say that around that time, there was some concern that redundancy might be coming sooner rather than later if you were to move to Warwick Farm?---Redundancy is very common. The whole thing about the agreement was to give people security in moving forward if they wish to transfer. The choice at that time was to put your hand up for redundancy or move to the Warwick Farm site. Management wanted people to move to the Warwick Farm site. That’s why the agreement was agreed to by management; because they wanted people to move to the site. Otherwise (indistinct) were guaranteed, you would have taken prior to the (indistinct) - you would have taken redundancy prior to Moorebank closing down and going to Warwick Farm, you wouldn’t have gotten the entitlements.[54]
[54] Transcript, 27 June 2022, 12.
I am satisfied that the Grand Chapel agreement was made on his behalf and on behalf of other members, and therefore he may be regarded as a party to the agreement. I note that clause 14 of the 2018 EA provided for consultation and negotiations between senior management and union representatives under a so-called ‘Union Chapel Charter’.[55] The Union Chapel Charter related to meetings, negotiations and communications between employers and union representatives.[56] Clause 14(c) provided 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’.[57] Clause 14(k) gave union delegates ‘the right to have the Company set out in writing any agreements and/or arrangements affecting conditions negotiated at the site upon written request’.[58] (Emphasis added)
[55] T5, 159: The Grand Chapel Charter was carried over from the 2015 EA: T4, 59. It was replicated also in the 2020 EA.
[56] T5, 159.
[57] 2018 EA: T5, 159; 2020 EA: T8, 316.
[58] T5, 160; T8, 317.
Rares J. alluded to evidence that may have supported a finding of the sort discussed in the famous Carlill v Carbolic Smoke Ball case, as being an offer made by the company to an unidentified but distinct group of individuals, and capable of acceptance by a member of that group by providing valuable consideration.[59]
[59] Dooley, para [58], referring to Carlill v. Carbolic Smokeball Co. [1892] EWCA Civ 1; (1893) 1 QB 256.
This doctrine was discussed by the High Court in Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; (1954) 92 CLR 424, where the Court said at 456-457:
A well-known example in which a contract was held to have been made is to be found in Carlill v. Carbolic Smokeball Co. [1892] EWCA Civ 1; (1893) 1 QB 256, which has been recently referred to as "that immortal case on unilateral contract" (J. C. Smith, Law Quarterly Review, vol. 69, p. 107). Other well-known examples are the cases in which a reward is offered for the giving of information or for the finding and returning of lost property (e.g. Williams v. Carwardine (1833) 4 B & Ad 621 (110 ER590) and England v. Davidson [1840] EngR 567; (1840) 11 Ad & E 856 (113 ER 640) ), and the cases in which there is forbearance by a creditor in return for the debtor's promise to give security (e.g. Alliance Bank (Ltd.) v. Broom (1864) 2 Dr & Sm 289 (62 ER 631) ).
In cases of this class it is necessary, in order that a contract may be established, that it should be made to appear that the statement or announcement which is relied on as a promise was really offered as consideration for the doing of the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement. Between the statement or announcement, which is put forward as an offer capable of acceptance by the doing of an act, and the act which is put forward as the executed consideration for the alleged promise, there must subsist, so to speak, the relation of a quid pro quo. One simple example will suffice to illustrate this. A, in Sydney, says to B in Melbourne: "I will pay you 1,000 pounds on your arrival in Sydney". The next day B goes to Sydney. If these facts alone are proved, it is perfectly clear that no contract binding A to pay 1,000 pounds to B is established. For all that appears there may be no relation whatever between A.'s statement and B's act. It is quite consistent with the facts proved that B intended to go to Sydney anyhow, and that A is merely announcing that, if and when B arrives in Sydney, he will make a gift to him. The necessary relation is not shown to exist between the announcement and the act. Proof of further facts, however, might suffice to establish a contract. For example, it might be proved that A, on the day before the 1,000 pounds was mentioned, had told B that it was a matter of vital importance to him (A) that B should come to Sydney forthwith, and that B objected that to go to Sydney at the moment might involve him in financial loss. These further facts throw a different light on the statement on which B relies as an offer accepted by his going to Sydney. They are not necessarily conclusive but it is now possible to infer (a) that the statement that 1,000 pounds would be paid to B on arrival in Sydney was intended as an offer of a promise, (b) that the promise was offered as the consideration for the doing of an act by B, and (c) that the doing of the act was at once the acceptance of an offer and the providing of an executed consideration for a promise. The necessary connection or relation between the announcement and the act is provided if the inference is drawn that A has requested B to go to Sydney.
The position has been stated above in terms of the technical doctrine of consideration, and this is, in our opinion, the correct way of stating it. But it may be referred to a principle which is fundamental to any conception of contract. It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. In such cases as the present, therefore, in order that a contract may be created by offer and acceptance, it is necessary that what is alleged to be an offer should have been intended to give rise, on the doing of the act, to an obligation. The intention must, of course, be judged in the light of the principle laid down in Freeman v. Cooke [1848] EngR 687; (1848) 2 Ex 654, at p 663 [1848] EngR 687; (154 ER 652, at p 656), but, in the absence of such an intention, actual or imputed, the alleged "offer" cannot lead to a contract: there is, indeed, in such a case no true "offer".
The Grand Chapel Update document, signed by the company, on company letterhead, might well be seen as containing an offer capable of acceptance by a person to whom that document was addressed. The Tribunal did not previously consider the evidentiary basis for this theory, for the reason previously stated, namely that the Tribunal did not consider it necessary to undertake a contractual analysis.
However, I consider that there is no necessity to rely on the Carlill doctrine, preferring to rely on the fact that the senior union delegates were acting, and known by the company to be acting, in a representative capacity. The AMWU was acting as an agent for its members. Mr Dooley was one such member.
It may well be that the elements which support an agency theory could be relied upon to establish enforceability under the Carlill doctrine. An element common to both theories is the provision of valid consideration.
I consider that the company received valuable consideration in securing the smooth operation of a challenging site consolidation program and thus avoided the possibility of industrial disputation at a critical time. Although this case is not one where there was an active industrial dispute between the parties, the avoidance of industrial disputation may provide a source of valid consideration.[60] Moreover, Mr Dooley agreed to relocate to Warwick Farm and continue working for the company despite the inconvenience of travelling to a different location. There was a significant benefit to the company in securing his ongoing employment and a lack of industrial disputation.
[60] Rudge v R [2020] NSWSC 1422.
As to whether the Grand Chapel agreement was intended to create legal relations, I note that in Clarke v Pacific National Services Pty Ltd [2023] FCA 699, Katzmann J. stated:
74. The applicants submitted that there was a general presumption that agreements reached between employers and employees are intended to be legally binding, that this presumption is only rebutted “with difficulty”, and that the matters relied on by Pacific National were insufficient to displace the presumption…
75. The applicants’ submission is problematic. In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [26] Gaudron, McHugh, Hayne and Callinan JJ observed:
In this context of intention to create legal relations there is frequent reference to “presumptions”. It is said that it may be presumed that there are some “family arrangements” which are not intended to give rise to legal obligations and it was said in this case that it should not be presumed that there was an intention to create legal relations because it was a matter concerning the engagement of a minister of religion. For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition. (Emphasis added.)
I am satisfied that the AMWU accepted an offer on behalf of its members made by the company CEO on behalf of the company that was intended to create legal relations. The agreement was reached in an industrial setting to discuss critical issues pertaining to the conditions of work. The issue of redundancy was of singular interest to those employees represented by their union at the Grand Chapel meeting, and the subsequent communications emanating from the company CEO Mr O’Connor were clearly intended to convey an important matter of commercial interest to the recipients. It is implausible to suggest that these various communications and promises were merely a ‘puff’ or non-binding gratuitous assurances. They were made for a commercial purpose of allaying the fears of the workplace and, in my view, clearly intended to create legal relations.
Issue 3: Did the 2020 EA extinguish Mr Dooley’s contractual entitlements?
On 16 October 2020, the 2020 EA was passed with a vote of 74% in favour and 26% against.[61] The 2020 EA was lodged with the FWC on 22 October 2020 and approved on 6 November 2020 with an operational date of 13 November 2020.[62] As foreshadowed by Mr Slaven, redundancy payments provided by the 2020 EA were reduced significantly. In short, the 2018 EA provided four weeks per year of service uncapped while the 2020 EA provides two weeks per year of service capped at 52 weeks. For an employee such as Mr Dooley, with 16 years of service, the reduction in redundancy entitlements represented a significant loss.
[61] ST4, 525.
[62] T8, 307.
There is no doubt that the explicit corporate strategy was to reduce employee entitlements to make the company more resilient or more saleable. This strategy was discussed by Black J. in approving the corporate restructuring.[63]
[63] In the matter of Ovato Print Pty Ltd [2020] NSWSC 1882. His Honour was aware that a heavy burden would fall upon the FEG scheme but approved the restructuring as the lesser of two evils, based on evidence that equity raising by the company would fail without a restructuring.
A critical assumption underlying Mr Dooley’s claim is that the 2020 EA is excluded or subordinate to the Grand Chapel agreement in relation to his entitlements to redundancy payments under the FEG Act.
The FWA does not contain any provision to the effect that an approved enterprise agreement automatically negates inconsistent terms within the employee’s contract of employment. The FWA does not prohibit an employer from providing greater benefits than those provided for under an enterprise agreement. There is some authority for the proposition that if the contract of employment provides more favourable entitlements, it may prevail over an industrial agreement. For example, in Rudge v R [2020] NSWSC 1422 (Rudge) Adamson J. stated:
70. The hierarchy of legal instruments in industrial relations in New South Wales has a protective purpose and effect. Thus, if a contract between an employer and an employee is inconsistent with an enterprise agreement, the contract will prevail to the extent to which it confers greater entitlements on the employee than the enterprise agreement but the enterprise agreement will prevail to the extent to which it confers greater entitlements on the employee than the contract. In substance, an employer and employee can contract out of an award or enterprise agreement but only to give an employee greater rights. Applicable statutory provisions which govern industrial relations have the effect that any term of a contract which purports to put the employee in a worse position than under an award or industrial instrument is unenforceable: McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105; [2005] FCAFC 46 at [48] and [50] (Black CJ and Moore J, Lander J agreeing) and Regional Express Holdings Ltd v Clarke [2007] FCA 957; (2007) 165 IR 251 at [56] (Gordon J). As Mr Deguara put it in evidence, “there’s no offence to the law by … paying something higher than the enterprise agreement”. (Emphasis added)[64]
[64] Rudge, at [70].
Professor A. Stewart, a leading academic commentator on the FWA, states that although the matter is not free from doubt, it is lawful ‘to agree privately on terms that are more beneficial to an employee than the registered agreement’.[65] In a related textbook, Creighton and Stewart’s Labour Law,[66] the learned authors cite Rudge with approval.[67]
[65] A. Stewart, Stewart’s Guide to Employment Law, 8.46, p 192, citing SDA v Karellas Investments (2007)166 IR 51; Qube Ports v MUA [2018] FCAFC 72.
[66] See Creighton and Stewart’s Labour Law, para [11.31] at p. 292.
[67] Ibid, [14.115].
In Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 (Qube Ports) the applicant relied on an undertaking contained in an exchange of letters given at the time of employment that previous service would be recognised in calculating a redundancy benefit, despite a provision (clause 5.5) in the 2004 enterprise agreement purporting to exclude such agreements. Clause 5.5 stated that the enterprise agreement would:
5.5 Supersede any other Award, any agreement whether certified or not, (save and except the Stevedoring Industry Retirement and Redundancy Agreement as provided for in cl 33.1 of this Agreement), memorandum of understanding, exchange of correspondence, work practice(s), arrangement(s), written or unwritten which applied prior to the introduction of this Agreement and which regulated the terms and conditions of employment of employees covered by this Agreement.
It was accepted that the applicant was covered by the enterprise agreement and that the recognition of pre-employment service was a term of his employment contract. Under these circumstances, White J. said (Mortimer and Bromich JJ. concurring):
Ground 3: The effect of the 2004 Enterprise Agreement
64. There are well developed principles concerning the construction of industrial awards and agreements, which take account of the fact that they are commonly drafted by lay persons and lack the precision and clarity to be expected in commercial contracts.
65. The principles were reviewed recently by Tracey J in Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829; (2014) 318 ALR 54 at [29][41]. It is not necessary to repeat the principles in detail in these reasons. It is sufficient to say that the Court will seek to identify, in an objective way, the meaning intended by the parties to the agreement having regard to the language they have used and, in doing so, avoid a narrow or pedantic approach. In particular, the Court takes account of the circumstance that the drafters of the agreement were likely of a “practical bent of mind” and likely to have been concerned with expressing their intentions in ways understood in the context of the relevant industry and industrial relations environment. As with commercial contracts, the Court will prefer a construction which gives effect to the presumed purpose of the parties.
66. Qube Ports submitted that cl 5.5 had the effect that the 2004 Enterprise Agreement superseded any previous agreement between Hobart Ports and the Employees, whether written or unwritten, and that this included the terms with respect to recognition of previous industry service found by the Industrial Magistrate. It contended that, properly understood, cl 5.5 meant that the 2004 Enterprise Agreement “covered the field in relation to all terms and conditions of employment” of the Employees to whom it applied “to the exclusion of all anterior terms, contractual or otherwise”. This was so, Qube Ports submitted, whether or not the anterior terms were inconsistent with the 2004 Enterprise Agreement. The Industrial Magistrate had erred by not recognising that this was the effect of cl 5.5.
67. In support of this submission, counsel for Qube Ports referred to the description of enterprise agreements made under Pt 24 of the FW Act by the Full Court in Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84; (2014) 222 FCR 152 (Jessup, Tracey and Perram JJ) at [89]:
... The effect of the legislation is to empower the employer and the relevant majority of its employees to specify terms which will apply to the employment of all employees in the area of work concerned. The legal efficacy of those terms will arise under statute, not contract, and, as mentioned above, will be felt also by those who did not agree to them. Someone, such as an employee subsequently taken on, who had nothing to do with the choice of the terms or the making of the agreement, will be exposed to penal consequences under s 50 if he or she should happen to contravene one of the terms. When viewed in this way, it is not difficult to share in the perception that an enterprise agreement approved under the FW Act has a legislative character.
Counsel submitted that this description also applied to enterprise agreements made under Pt VIB of the WR Act.
68. In my opinion, Qube Ports’ submissions as to the effect of cl 5.5 of the 2004 Enterprise Agreement should not be accepted. Clause 5.5 is not to be understood as directed to individual contracts of employment at all. Instead, cl 5.5 was directed to industrial instruments and arrangements of particular kinds only, namely, those which “regulated” the terms and conditions of the employment of employees covered by the agreement. The word “regulated” suggests that the instruments and arrangements contemplated are those which are external to the contract of employment and which affect its operation in a given case. Further, the reference to “any other Award” and to any agreement whether certified or not points to the clause being directed to instruments and arrangements of a collective kind.
69. I also consider it pertinent that, despite the evident attempt by the drafters of cl 5.5 to cast its application broadly, the terms “contract of employment” and “terms and conditions in a contract of employment”, or like terms, are not used. It would have been obvious for such terms to have been used had it been intended that cl 5.5 should apply to them.
70. Furthermore, as Qube Ports acknowledged in later submissions, it would be contrary to principle to hold that an enterprise agreement made under Pt VIB of the WR Act superseded, in the sense that it displaced, the contract of employment altogether and, for that matter, all of the terms, express or implied, in a contract of employment. The true position is that the relationship of employer and employee depends upon there being a contract of employment between them; that an industrial award or certified agreement has application only when a contract of employment is (or has been) in place; that the award or certified agreement binds the parties only in relation to the matters with which it deals; and that there will invariably be aspects of the relationship which are not governed by the award or enterprise agreement. So much is orthodox principle… It is reasonable to construe cl 5.5 on the basis that those responsible for its drafting were conscious of these basic principles and did not intend that cl 5.5 should infringe them. That understanding provides a ready explanation for cl 5.5 not referring to contracts of employment (Citations omitted).
The present case is somewhat more favourable to the applicant, as there was no provision in the 2020 EA specifically referencing or purporting to exclude the Grand Chapel agreement.
SUMMARY
At the first hearing, the Tribunal found that a Grand Chapel meeting took place on 21 March 2019, two days after the 2018 EA came into effect. The Tribunal found that the AMWU was represented by Ms Lorraine Cassin, National Secretary, and the company was represented by Mr O’Connor, CEO, Print and Residential Distribution.[68] Mr Dooley did not personally attend the Grand Chapel meeting.
[68] There is no list of delegates or participants in the materials before the Tribunal.
The Tribunal found that the topic of redeployment was discussed at the Grand Chapel meeting. The CEO agreed that the redundancy entitlements of those staff would be frozen or grandfathered as at the date of transfer.
The Tribunal noted that shortly after the Grand Chapel meeting, Mr O’Connor and Ms Cassin co-signed a memorandum headed ‘Grand Chapel Update’.[69] This undated memorandum is on letterhead displaying Ovato and AMWU logos. The text states that a Grand Chapel meeting was held on Thursday 21 March, ‘regarding the situation around the NSW site consolidation and movements to Warwick Farm’. The memo states:
The Company has agreed to:
·Maintain employees current hourly wage rates:
·Grandfather/freeze redundancy entitlement for redeployed employees as at date of transfer.[70]
[69] T1.3, 36.
[70] T1.3, 36.
The Tribunal found that on 26 November 2019, Mr O’Connor wrote to Ms Belinda Griggs, Regional Secretary of the NSW Print Division of the AMWU, stating that:
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.[71]
[71] T1.4, 37.
As noted above, the Tribunal was satisfied that an agreement was entered into between the AMWU and the company, each party represented by their executive officers, and that this agreement was capable of constituting and did constitute a governing instrument for Mr Dooley’s employment under paragraph (d) of the definition of ‘governing instrument’ under the FEG Act. However, the 2020 EA was also a governing instrument. The Tribunal found that clause 22.3 of the 2020 EA imposed an absolute cap of 52 weeks and was binding on Mr Dooley. He was therefore not entitled to more than 52 weeks of redundancy pay.
In its original decision, the Tribunal did not analyse whether the Grand Chapel agreement formed part of Mr Dooley’s employment contract. In the Tribunal’s analysis, paragraph (d) of the FEG Act obviated the need to do so. It referred to an ‘agreement whether a contract or not’ (emphasis added).
In the Tribunal’s view it was sufficient that there was an agreement between the company and the AMWU (who were negotiating under the Grand Chapel Charter on an industrial matter for the benefit of their members) and that this agreement might be regarded as the governing instrument of Mr Dooley’s employment for relevant purposes.
The Tribunal has reconsidered Mr Dooley’s application based on the additional evidence provided by the parties and heard submissions from both parties.
I am satisfied that the Grand Chapel agreement was intended to preserve the scale of redundancy pay provided for in the 2018 EA up until the date of transfer to Warwick Farm, and that it was not restricted to the issue of penalty rates. Moreover, for the reasons given above, I am satisfied that the Grand Chapel agreement was incorporated into Mr Dooley’s contract of employment and that it was enforceable against the company. In other words, had he been made redundant while the company was still afloat (assuming a somewhat rosy counterfactual in which the company’s liquidity was replenished) he would have been entitled to enforce the Grand Chapel agreement against the company as a term of his employment contract.
Finally, there is the critical question whether the 2020 EA as an industrial instrument was effective to exclude the more beneficial redundancy provisions applying under Mr Dooley’s contract of employment.
Rares J. considered that there was a ‘direct inconsistency’ between the redundancy provisions in the 2018 and 2020 enterprise agreements, ‘because they were significantly reduced from payments of four to two weeks’ pay for every year of service’.[72] However, his Honour appeared to accept that an employment contract offering more favourable terms than the prevailing enterprise agreement would be capable of being treated as a governing instrument under the FEG Act.[73] It is hard to understand the basis for the remittal unless his Honour considered that the Grand Chapel agreement was potentially capable, as an enforceable contract, of overriding, or at least supplementing, the less favourable redundancy provisions of the 2020 EA.
[72] Dooley, at [53].
[73] Dooley at [58].
I am satisfied that the Grand Chapel agreement constitutes the governing instrument under section 5 of the FEG Act for the purpose of calculating Mr Dooley’s redundancy pay up until the date of transfer and for that purpose the 2020 EA is not the governing instrument. Because I have concluded that the Grand Chapel agreement is legally enforceable in the hands of Mr Dooley, it is not necessary to reach a concluded view as to whether a ‘governing instrument’ under (d) of the definition in section 5 of the FEG Act must be legally enforceable in the hands of the employee.
For the avoidance of doubt, the relevant governing instrument for the period of Warwick Farm service is the 2020 EA.
DECISION
The decision of the review officer made on 20 July 2021 is set aside and remitted to the Secretary with a direction that, for the purposes of calculating his redundancy benefit under the FEG Act, Mr Dooley is entitled to the rate specified in the 2018 EA, namely four weeks per year of service, uncapped up until the date of transfer to Warwick Farm.
I certify that the preceding 104 (one hundred and four) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member
..........[SGD]..............................................................
Associate
Dated: 27 February 2024
Date of hearing: 10 November 2023 Applicant: In person Counsel for the Respondent: Ms J. Lucas Solicitors for the Respondent: Mr S. Reeves, Australian Government Solicitor
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