Electrical Trade Union of Australia v Sims Products Ltd Trading as Besco Batteries

[1988] FCA 834

CATCHWORDS

muSTRIAc U W - award - breach - termination of employment - failure to hold discussions with employees and organization - failure to notify Commonwealth Employment Servicz - whether separate terms - penalty.

Conciliation and Arbitration A c t 1904 ss. 61(f), 119,

119(1A), 119(1D)(a)(i). 120.

Federal Court Rules 0.33 r. 3 .

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No. 30 o f 1986	I I
GRAY J .	!
SYDNEY
3RD FEBRUARY 1988	I
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6136000150- D8 205 4439;# 3

SENT ay: CHAMBERS FAX

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IN THE FEDERAL COURT OF AUSTRALU

NEW SOUTH W E 3 DISTRICT WGISTRX	No. 30 of 1986
WUSTRIAL DIVISION

ELECTRICAL W E S UNIOK

OF AUSTRALIA

Appl lcan t

SIMS PRODUCTS LTD	. tradinq
as BESCO EATER	IES
Respondent

a T E M P O R E REASONS FOR JUDGHENT

JUDGE:	GRAY J.
PLACE:	SYDNEY
W:	3RD FEBRUARY 1988

This is an application pursuant to s.119 of the

goneillation and Arbitration Act 1904 ("the Act"), which

provides for the imposition of a penalty for a breach or

non-observance of a term o€ an award. Mr. Rothman of counsel

Appeared for the applicant; there was no appearance on

behalf of the respondent. Notification was giben previously

to the Court that the respondent would not appear.

Although the application was unopposed, if the

applicant h to succeed it must be by proper evidence. The

Court heard oral evidence from tvo uitneases and received

documente as exhibite.	It also gave leave pursuant to 0.33
r.3 of the Federal Court	Rulea for the applicant to rely on

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an affidavit of its national secretary as to certain matters contained in that aifidavit, on the ground that those matters vere not bona fide in dispute. and on the ground that proof of those matters in compliance with the rules of evidence might occasion or involve unnecessary or unreasonable expense

or delay.

On the basis of this evidence, the Court ie

satisfied on the balance of probabilities of the following

facts . Until 17th October 1986, the respondent carried on a

manufacturing business a t 4 plant at Villawood under the name

Besco Batteries. On that date, at about 2.35 p.m., the

applicant received from the respondent the following telex: I

”E.T.U.

ATTENTION MR. MARTIN PITT SUBJECT: BESCO BATERIES

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TM: WAGEBENT OF BESCO BATTERIES REGRETS TO ANNOUNCE THAT THE VILLAWOOD N.S.W. PLANT WILL

CEASE “LFACTURING ACTIVITY ON FRIDAY 17TH

OCTOBER,1986.

DESPITE F’URC-52 CAPITAL IHVESTHENT TO INCREASE

_ _ _ _ _ _ _ - ~ ~. ~ _ _ ~~

O U T P U T AM) TO IMPROVE TECHNOLOGY, THE BAlTEXY MANUFACTURING HAS SHOWN A RETURN ON OPERATING ASSETS, BmORE CHARGES FOR TAXATION AND

INTEREST. OF LESS THAN 4 PERCENT OVER THE PAST

MTENSIVE EFFORTS HAVE BEEN MADE DURING THAT
TIME TO FIND LONGER-TERH USE FOR THE VILLAWOOD

PLANT. PARTICULARLY IN THE LIGHT OF THE

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BEEN ACHIEVE^. FHAS, THEREFORE, BW DECIDED

TO CLOSE THE IWNFACTURING PLANT AND TO	SELL
THE EQUIPIGNT AND THE LAND AND BUILDINGS.
YOURS FAITHFULLY, S.J. MILNER
GENE3AL WAGER - BESCO”

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SENT ,BY:  CHAMBERS FAX ; 5-11-92 ; 8 : 5 1 ;

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On the same day, the management of the respondent handed to

i t s employees at Villauood the follovinq notice:

"17th October. 1986.

NOTICE TO EMPLOYEES

The management of aesco Batteries regrets to

announce that the Villavoad N.S.W. plant vi11

cease manufacturing activity on Friday 17th
October, 1986.

Despite further capital investment to increase output and to improve technology, the battery manufacturing has shown a return on operating

assets, before charges f o r taxation and

interest, af less than 4 percent over the past

five years.

Extensive efforts have	been made during that
time to find	longer-term uee for the Villawood
Plant,	particularly in the liyht of the

reduced value	of	the Australian dollar.
Hovever,	no satisfactory	arrangements have

been achieved. It has, therefore, been decided to close the manufacturing plant and to sell the equipment and the land and buildings.

We vi11 stop producing batteries at 3.30	p.m.
on Friday 17th	October, 1986.

In accordance with the Federal Metal Industry

Award - under which you work - you are

entitled to a period of notice based on years

of service as follows:

Lensth of Servicp	Entitlement
1 pear or less	1 week's pay
1 year up to completion

of 3 years 2 weeks' pay

3 years up to completion

of 5 years 3 weeks' pay

5 years and over 4 weeks' pay

An addltional week's notice is required I f an employee is over 45 years of age and has

completed more than 2 years o f service.

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SENT	B ~ : C H A ~ B E R S	FAX

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These entitlements vi11 be paid to you, but you are NOT required to work the notice period.

In addition, you are entitled to retrenchment payments in accordance with the Federal Metal Industry Avard which is again based on yeara

of service as follovs:

Lenuth of Service	Entitlement
1 year or less	Nil
1 year up to completion

of 2 years 4 weeks' pay

2 years up to completion

of 3 years 6 veeks' pay

3 years up to completion

of 4 pears 7 weeks' pay

4 years and over E weeks' pay

You are also entitled to your normal

outstanding holiday pay and long service

leave, where applicable, in accordance with

the Award and the relevant Statutory Acts.

The pay you received today pays you for vork up to the close of business on Wednesday 15th October, 1986. The next normal pay day is Friday 24th October. All the entitlements referred to above that are due to you, together vith your normal pay for the two days - Thursday 16th October and Friday 17th	October - will be mailed andlor delivered	so
that they reach you week commencing Monday

20th October.

A further letter will be sent to those employees who are superannuation members

outlining entitlements under the Trust	Deed
and the options available to you.
S.J. MIrPTER,
General Manauer. "
The respondent is bound by the Metal Industry	Ararq

1984, an award made pursuant to the Act. By cl. 4(a)(f) and

(iii) o f Part I of the Award, the Avard i s binding on the

Uetal Trades Industry Association of Australia, an

SENT BY.:CHAMBERS FAX

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organization of employers, and its members. The respondent

was a member of that organization at all relevant times.

Reference should also be made to S. 61(f) of the A c t .

gy c l . 4(aI(i) and ( i i ) Pf Part I of the Award, the applicant is a party to the Award. Members of the applicant

were employed by the respondent on and up to 17th October

1986. On that date they were dismissed	by the notice to
employees already referred	to.

The relevant parts of cl. 42 of Part I of the Award

are as follows:

" ( a ) ( i ) m e r e an employer has made a

definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of iabour and that decision may lead to termination of employment, the employer shall hold discussions with the employees directly affected and

with their union or unions.

(11) The discussions shall take place as

soon as is practicable	after	the
employer has sade	definite	a

decision which will invoke the provisions of paragraph 42(a)(i) hereof and shall cover, inter alia,

may Cslc.1 reasons for the proposed

terminations, measures to avoid or minimise th terminations and

measures to mitigate any adverse

effects of any terminations 3n	the
employees concerned.

(iii)For the purposes of the discussion

the employer shall, as soon as

practicable, provide n i writing to

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SENT 6Y:CHAMBERS FAX

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the employee8 concerned and their

union or unions, all relevant

information about the proposed

terminations inclu&ing the reasons
for the proposed terminations, the

number and categories of employees

likely to be affected, and the

number of workers normally employed

and the period over vhich the

terminations are likely to be

carried Out. Provided that any

employer shall not be required to

disclose confidential information

the disclosure of which would	be
inimical to the	employer's
intereets.

(91 mere a decision has been made to

terminate employees in the circumstances

outlined	in	paragraph	4 2 ( a ) ( l ) hereof,	the
employer	shall	notify	the	Commonvsalth

Employment Service thereof as soon as possible
glving relevant information including the
number and categories of the employees likely
to be affected and the period over which the
terminations are intended to be carried out."

In terms of cl. 42(a), on or before 17th October 1986, the respondent had made a definfte decision that it did not want the jobs of any of i ts employees at the Villawood plant to be

carried out by anyone. This vas not due to the ordinary and

customary turnover of labour. The decision did lead to the

termination of the employment of the employees.

The respondent did not hold discussions vith the

employees directly aftected by that decision, o r with the

applicant. It follow that discussiona did not take place ae

soon as practicable after the decision and did not	cover the
subjects referred to in cl. 42(a)(ii).	Nor vas all relevant
information of the kinds referred to	in cl. 42(a)(iii)

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' SENT 8Y:CHARBERS FAX

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provided to the employees or the applicant. The respondent
was in breach of or failed to observe all of its obligations

under cl. 42Ia).

In addition, no notice of the kind contemplated by

clause 42(g) of the Award was given to the Commonvealth Employment Service. A telephone call was received at the

local office of the Commonwealth Employment Service during

the afternoon of 17th October 1986, from an anonymous person chiming to be an executive of the respondent, warning of the

closure. There vas no provision of any information of the

kind contemplated by cl. 42(g) . The respondent therefore

committed a breach or non-observance of that provision.

Discussion took place as to hov many penalties

could be imposed, i n the light of S. 119(1A) of the Act. T h a t subsection provides that. where two or more breaches of

a term of an avard have been committed and those breaches

have arisen out of a course of conduct, those breaches shall
be treated as constituting a single breach	of that term.

There appears to be no decisive authority on what is a "term"

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for the purpose of this provision. Mr. Rothman vas content to submit that cl. 42fa) and cl. 42(g) of the Award were separate terma and that breachee of them could not be treated

a6 a single breach: see Lynch v. Bucklev Sawmills Ptv.

m. (1984) 3 F.C.R. 503, at p. 507. He was also content to	.i
accept that the different obligation6 in cl. 42fa) could	all

be regarded a8 flowing from one term, and that the breaches of them arose from a course of conduct. I agree that cl. 42(g) is a separate term for this purpose. The obligations imposed by it are quite distinct from those found in cl.

42(a). I reserve my opinion on whether a clause such as cl.

42(a) contains more than one "term". In the present case it

is sufficient to accept the position put forward on behalf	of
the applicant.

Two penaltie8 will therefore be imposed. The

maximum provided for in a. 119(1D)(al(i) of the Act is $1000.

not a large SW in terms. of modern corporate commercial
enterprises.

The respondent has not put forward any evidence or submission in mitigatlon of penalty. From the term8 of the notice to employees, it is plain that the respondent vas avare of cl. 42 of Part I of the Award. The Award itself was

referred to and the obligations under cl. 42(c) as to

severance pay are set out in that notice. It is reasonable

to assume that the respondent was a v ~ r e of its obligations

under cl. 42(a) and cl. 42(g) and chose to ignore them. It

is necessary for all parties to avards to be aware that the

obligations in them are part of the law of the land and muat

be obeyed. The particular obligations in this case have

important consequences for the employees concerned and

breaches of them vere likely to have far reaching effects.

Aa Keely J. said in Lynch V, Bucklev Sawmill8 Ptv. Ltd.

referred t o above, at p. S081

"In this connection	it is important that the
respondent - and other employers bound by	the

award or by other awards under the Act -	understand the importance of complying vith M
avard and it follovs that any decision taken
bp them which is regarded a8 affecting their obligations to comply vith particular provisions of an avard or the avard generally should only be taken after careful
consideration. They must not be l e f t under
the impression that in times of financial difficulty they can breach an avard made under the Act either vith impunity or in the belief that no substantial penalty vi11 be imposed in
respect of a breach found by a court to have
been committed."
Although there is no evidence of any prior breach

on the part of the respondent of any avard, in the circwstances of this case each breach proved is of such significance as to warrant the application of the maximum penalty .

The applicant sought an order for payment of any section provides for a discretion as to the recipient of b

penalty to it~elf, pursuant to a. 120 of the Act. That

penalty. In the present case only the applicant and the Consolidated Revenue Fund are po86ible recipients. An order

that the penalty be paid to the applleant	vi11 tend to
encourage the enforcement of awards.	I therefore propose to
make euch an order.

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For these reasons I make the folloving orders:

l. That the respondent, Sins Products Ltd., pay a penalty of $1000 for breach or non-observance of cl. 42(a) of the Metal Industrv b a r d 1984 Part I.

2.          That the respondent, Slms Products Ltd., pay a penalty of $1000 for breach or non-observance of cl. 42(g) of the Metal Industrv Avard 1984 Part I.

3 . That each penalty be paid to the applicant,

Electrical Trades Union of Auetralia.

Appearances

Applicant: Mr. S. Rothman

fnstructlng Solicltors:  Turner Freeman.

I certify that this and the

precedlng nine ( 9 ) pages are a true copy of the Reasons for Judgment of the Honourable Juetice Gray.