Downer EDI Rail Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
[2025] FWCFB 65
•31 MARCH 2025
| [2025] FWCFB 65 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Downer EDI Rail Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2024/8419)
| VICE PRESIDENT ASBURY | BRISBANE, 31 MARCH 2025 |
Appeal from decision of Commissioner Tran in C2024/3618 – dispute arising under enterprise agreement – appeal upheld
Downer EDI Rail Pty Ltd (Downer) has lodged an appeal under s 604 of the Fair Work Act 2009 (Act) against a decision of Commissioner Tran made on 6 November 2024[1] which determined a dispute that had been referred to the Commission under s 739 of the Act and the dispute resolution procedure in clause 35 of the Downer EDI Rail HCMT T&C Enterprise Agreement 2022 (Agreement). The Agreement covers Downer EDI Rail Pty Ltd (Downer) in respect of its employees who are engaged to perform testing and commissioning activities in classifications listed in the Agreement. It also covers the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), which represents many of these employees.
The dispute concerned the meaning of clause 36 of the Agreement, which provides that, if the company is ‘no longer required to provide labour to perform testing and commissioning activities to the HCMT project’, it shall give at least 3 months’ notice of this to employees. ‘HCMT’ is an abbreviation for ‘high capacity metro trains’. The HCMT project commenced in June 2018 and was expected to continue until mid-2025. It entailed the construction of new trains for the Melbourne passenger network. Downer was contracted to provide services relating to ‘testing and commissioning’ of the newly built trains.
On 20 May 2024, Downer gave employees a memorandum stating that, with the delivery of the last train, Downer’s testing and commissioning contract was coming to an end, and that it was proposing to reduce the size of the workforce by removing 28 technician and 8 team leader roles. It also said that Downer would work with affected employees to identify suitable redeployment options. On 12 July 2024, Downer informed employees that there would be a need for further reductions in labour from September to December 2024.
A number of employees have been made redundant. Those employees received notice of termination of employment under clause 30 of the Agreement, which provides for a minimum notice entitlement of one month or payment in lieu of notice. They also received severance payments under clause 31, which states that the redundancy entitlements in the NES shall apply. It is not in dispute that Downer complied with its obligations under clauses 30 and 31 of the Agreement.
In June 2024, the CEPU advised Downer that in its view clause 36 of the Agreement required the company to give employees 3 months’ notice before making them redundant in connection with the reduced requirement for labour on the HCMT project. Downer disagreed. Its view was that clause 36 only required it to give 3 months’ notice to employees if it was no longer required to provide any labour to the project, and that the subject matter of that notice was the end of the requirement to provide labour, not the end of an employee’s employment. Downer considered that clause 36 had not been engaged because although the project was winding down, the company was still required to provide labour to the project. The CEPU referred the dispute to the Commission in an application under s 739 of the Act.
Clause 36 of the Agreement reads as follows:
‘36. CLOSURE OF WORKSHOP
36.1 Should the Company be no longer required to provide labour to perform testing and commissioning activities to the HCMT project, the Company shall give at least three (3) months’ notice of this to Employees.
36.2 Employees will be considered for suitable redeployment opportunities in other work locations of the Company.’
The CEPU’s application asked the Commission to answer two questions. The first was whether the words ‘no longer required to provide labour’ in clause 36.1 of the Agreement meant ‘all’ labour, or whether the words included a partial reduction in labour, as the CEPU contended. The second question was this: if clause 36.1 applies to a partial reduction in labour, and an employee ‘is made redundant due to the cessation of testing and commissioning duties for the HCTM project’ without receiving the notice in clause 36.1, are they entitled to be paid for the shortfall in notice? The CEPU contended that they were. Downer said that they were not.
In her decision, the Commissioner concluded that the CEPU’s interpretation of clause 36 was correct. The Commissioner stated that there was nothing in the words of clause 36 that suggested that it only applied when the entire operation was at an end, and that Downer’s interpretation was ‘narrow’ and did not take sufficient account of the ‘industrial context and purpose of the provision’ (at [31]). The Commissioner considered that the heading in clause 36 (‘closure of workshop’) was not of great assistance in interpreting the provision, and that the starting point was the text of the clause (at [33]). The Commissioner noted that the union’s submissions and evidence was that the parties knew that the work was for a finite period, that clause 36 was included to provide a greater benefit to employees (at [37]), and that she was satisfied that this was its purpose (at [40]).
The Commissioner stated that: the word ‘labour’ in clause 36 included the employees who would perform the labour (at [42]), and that the words ‘no longer required to provide labour’ covered a partial reduction in labour that occurs because the project is coming to an end; and understood in an ‘industrial context’, the end of a contract did not result in all work coming to a sudden standstill ([43] to [45]). The Commissioner considered that the obligation imposed by clause 36 was that Downer must give employees 3 months’ notice of their employment ending, if the reason for that is because labour is no longer required for commissioning and testing on the HCMT project, including where there is a reduction in labour (at [51]).
The Commissioner stated that she was persuaded that it was appropriate to issue the order sought by the CEPU, which required Downer to pay permanent employees made redundant before the date of the order the difference between 3 months’ notice and the amount of notice they actually received before their employment was terminated ([52] to [54]). The Commissioner further decided that the answer to the second question was ‘yes’ ([55]).
Permission to appeal
A person who is aggrieved by a decision of the Commission must generally obtain the Commission’s permission in order to appeal (s 604(1)). Where the decision was made pursuant to a dispute resolution provision in an enterprise agreement, this position may be modified by the terms of the agreement. In this case, the note that appears under clause 35.2.4 of the Agreement states that a decision of the Commission when arbitrating a dispute is a decision for the purposes of the Act and an appeal ‘may be made’ against such a decision. We do not consider that the note confers a right to appeal in respect of a decision made under the dispute resolution procedure in clause 35. In our view it is a general reference to the appeal mechanism in s 604 and therefore recognises the requirement for permission to appeal to be obtained by the aggrieved party.
The CEPU contended that one factor telling against a grant of permission in this case was that Downer had failed to make the payments required by the Commissioner’s order and had not sought a stay of the decision. We accept that if Downer had contravened the order, this could be a factor that weighed against the granting of permission to appeal. However, we do not consider that Downer has breached the Commissioner’s order. The order did not require that payment be made by any particular date. Therefore in our view compliance with the order would require Downer to make relevant payments within a reasonable time. In light of Downer’s decision to appeal the decision, which was made within the 21 day period required by the rules, we do not consider that a reasonable period for compliance would expire prior to the determination of the appeal.
For the reasons given below, we have concluded that the Commissioner’s answers to the questions submitted for determination were not correct and that permission to appeal should be granted in order for the Full Bench to rectify them.
The appeal
The correctness standard applies to this appeal. The Commissioner’s task was to determine a dispute about the correct meaning of clause 36 of the Agreement. The criterion for the determination of the dispute demanded a unique outcome.[2] The question for the Full Bench in this appeal is whether the Commissioner’s answers to the questions that were submitted for arbitration were correct. In our respectful opinion, they were not correct.
The principles that apply to the interpretation of an enterprise agreement are well established and we do not rehearse them other than to note that the meaning of a provision in an enterprise agreement is to be ascertained by reference to its text and context, with due regard to any objectively manifested intention or purpose.
Clause 36.1 states that, should the company ‘be no longer required to provide labour to perform testing and commissioning activities to the HCMT project’, it will give ‘3 months’ notice of this to Employees’. The ordinary meaning of the words ‘no longer required to provide labour to the project’ is that Downer is no longer subject to a requirement to provide such labour. When this circumstance arises, clause 36 is engaged. Downer must then give employees 3 months’ notice of this. The clause is not concerned with a reduction in labour. It says nothing about the quantity of labour that is provided from time to time. It does not say that notice must be given if Downer is no longer required to provide the same number of employees to the project, or if Downer has a reduced requirement to provide labour. It is concerned with the end of the requirement to provide labour. If Downer is providing any labour to the project of the relevant kind, the notice obligation in clause 36 is not enlivened. Further, the clause is not concerned with notice of termination of employment. It simply makes no reference to it. The subject of the notice that must be given to employees is the cessation of the requirement for Downer to provide labour to the project.
This plain meaning of the text of clause 36.1 is supported by contextual considerations. A separate provision, clause 30, deals in detail with notice of termination of employment. Another, clause 31, deals with redundancy entitlements. These clauses make no reference or allusion to clause 36, nor does clause 36 refer or allude to them. There is no textual or contextual support for the CEPU’s contention that the effect of clause 36 is to provide employees with additional notice of termination of employment. Further, clauses 30 and 31 are found in Part VIII of the Agreement, which is titled ‘termination of employment and redundancy’, whereas clause 36 is found in Part VII of the Agreement, which is stated to concern ‘representation, consultation and dispute resolution’. Textually, contextually, and structurally, termination of employment is separated from the subject matter of the notice arrangements in clause 36. There is simply nothing in the Agreement to link the operation of clause 36 to the termination of an individual employee’s employment.
Clause 36 is a type of provision well known to industrial law and practice. It establishes a collective notice requirement. Such provisions have long been a common feature of the industrial landscape. They are distinct from provisions that require employers to give notice of termination of employment to individual employees. Downer referred in its submissions to some prominent examples of such clauses that are found in modern awards. Clauses 29 of the Cleaning Services Award 2020 and the Security Services Industry Award 2020 contain collective notice provisions that require employers to give employees notice if they do not intend to seek renewal of a contract to provide services, or if such a contract is likely to be terminated. Collective notice provisions are usually concerned with the occurrence of a particular event that may affect a group of workers. They are very different from provisions that require each individual employee to be given a minimum period of notice before their employment may be terminated.
The Commissioner observed that the end of a contract does not result in all work suddenly ceasing. In fact, this is indeed what occurs when the contract finally ends. What the Commissioner no doubt meant was that in the lead-up to the contract’s conclusion, it stands to reason that work might tail off. But that is not a reason to think that the clause is concerned with notice of termination of employment when work starts to wind down, because the clause makes no reference to termination of employment. Further, a collective notice provision of the kind found in clause 36 is one logically engaged prior to the point when the employer is considering the possible termination of employees’ employment. Early notice to the group allows wide-ranging deliberations on what should occur before decisions are made about termination of employment, such as to identify whether particular employees might have a preference to take voluntary redundancy or to be redeployed. This purpose is evident in clause 36.2, which requires Downer to consider employees for suitable redeployment in other work locations of the company.
The Commissioner’s view that clause 36 is intended to provide a benefit to employees is correct, but that is not a reason to prefer the CEPU’s interpretation. A collective notice provision is a very meaningful benefit for employees, for the reasons given above. And if notice is not given as required by clause 36, proceedings can be brought to enforce the benefit that the clause confers.
We reject the CEPU’s argument that Downer’s interpretation of clause 36.1 is a narrow or pedantic one. It is the CEPU’s interpretation that is unduly broad. It travels beyond the meaning that the words of the provision can rationally support. The CEPU’s written submissions contended variously that Downer’s appeal had not demonstrated any error in the Commissioner’s reasoning process. But as we have said, the correctness standard applies to this appeal, not the classes of discretionary error referred to by the High Court in House v The King.[3] The decision cannot be defended on the basis that the Commissioner did not commit any mistake in the decision-making process.
The second question for determination only fell to be answered if the CEPU’s interpretation of the first question was found to be correct. As we have concluded that this is not the case, it is not strictly necessary for us to consider it, as the Commissioner’s answer to the second question falls away. However, to ensure that the dispute is fully determined, we consider it appropriate to address the second question briefly. First, it is very clear that clause 36 does not require that Downer make any kind of payments in lieu of notice to employees who do not receive actual notice as required by clause 36. The CEPU suggested that a reference to provide employees with ‘notice’ of a matter brings with it a connotation that payment will be made in the alternative. We reject this. An obligation to give actual notice does not imply a right to payment if the notice is not given. These are two very different things. As we have noted, failure to comply with the requirements in clause 36 would give rise to proceedings to enforce the benefit the clause confers. Downer could not avoid those proceedings by paying an amount in lieu of the notice to each employee.
Secondly, to the extent that the CEPU contends that, irrespective of the proper meaning of clause 36, the Commissioner had a discretion to determine the dispute by making any order that she thought was appropriate, we reject it. Section 739(5) specifically prohibits the Commission from making a decision that is inconsistent with a fair work instrument, such as an enterprise agreement under which it is arbitrating the relevant dispute. In our view, an order for payment in lieu of notice under clause 36 would contravene this provision of the Act. Subject to the terms of the enterprise agreement, the Commission may make orders it considers appropriate to give effect to its arbitration of the relevant dispute, provided that the order does not go beyond what would be reasonably incidental to that dispute.[4] But the Commission cannot by arbitration under a dispute resolution provision in an agreement create new substantive entitlements, such as a right to payment in lieu of notice that an agreement does not provide for, unless the agreement authorises the Commission to do so.
Conclusion
In our opinion, the correct answer to the first question submitted for determination is that the words ‘no longer required to provide labour’ in clause 36 mean ‘no longer required to provide any labour’. It is not necessary to determine the second question, but it is clear that clause 36 does not require Downer to make any payments in lieu of notice to employees.
We order as follows:
1. Permission to appeal is granted.
2. The appeal is allowed.
3. The decision in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Downer EDI Rail Pty Ltd[2024] FWC 3040 is quashed.
4. On rehearing, we determine that the answers to the questions submitted for arbitration are those provided in [24] above.
VICE PRESIDENT
Appearances:
S. Smith for Downer EDI Rail Pty Ltd.
K. Reidy for the CEPU.
Hearing details:
2025.
Melbourne.
14 February.
[1] [2024] FWC 3040.
[2] See Minister for Immigration v SZVFW (2018) 264 CLR 541 at 563 per Gageler J.
[3] [1936] HCA 40.
[4] See Mitchell v University of Tasmania[2023] FWC 810 [44]-[62] and Mitchell v University of Tasmania[2023] FWCFB 160 [111]-[127].
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