Health Services Union v Healthscope Operations Pty Ltd
[2020] FCCA 1045
•22 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HEALTH SERVICES UNION v HEALTHSCOPE OPERATIONS PTY LTD | [2020] FCCA 1045 |
| Catchwords: INDUSTRIAL LAW – Fair Work Proceedings – redundancy – alleged contraventions of the Enterprise Agreement approved under the Fair Work Act 2009 (Cth) – whether the respondent was required to notify the relevant employees of the decision to introduce the major change – whether the respondent contravened the model consultation term by failing to consult with the affected employees – what constitutes a major change – application dismissed. |
| Legislation: Fair Work Act 2009 (Cth), ss.50, 205, 546 Healthscope - NSW- Health Professionals & Support Services Agreement 2014 2017, cl 3.16, 3.17 |
| Cases cited: Australian Building and Construction Commissioner v Hall (2017) 269 IR 28 Australian Nursing and Midwifery Federation v Bupa Aged Care Pty Ltd [2017] FCA 1246 Bragdon v Director of the Fair Work Building Industry Inspectorate (2016) 242 FCR 46 Port Kembla Coal Terminal Ltd v Construction, Forestry, Mining and Energy Union (2016) 248 FCR 18 Sensis Pty Ltd v Gundi (2017) 276 IR 470 |
| Applicant: | HEALTH SERVICES UNION |
| Respondent: | HEALTHSCOPE OPERATIONS PTY LTD |
| File Number: | SYG 746 of 2018 |
| Judgment of: | Judge Humphreys |
| Hearing date: | 4 May 2020 |
| Date of Last Submission: | 4 May 2020 |
| Delivered at: | Parramatta |
| Delivered on: | 22 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Guy |
| Solicitors for the Applicant: | Health Services Union |
| Counsel for the Respondent: | Mr Darams |
| Solicitors for the Respondent: | Lander & Rogers Lawyers |
ORDERS
The application is dismissed.
No order as to costs.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
SYG 746 of 2018
| HEALTH SERVICES UNION |
Applicant
And
| HEALTHSCOPE OPERATIONS PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
Healthscope Operations Pty Ltd (“Healthscope”) operated, at the time, 11 private hospitals in New South Wales (“NSW”). These include the Newcastle Private Hospital (“Newcastle Private”). Healthscope purchased Newcastle Private in 2010.
Newcastle Private, until November 2017, operated its own onsite laundry, supplying clean linen to the hospital. With the exception of one other hospital, all other nine hospitals owned by Healthscope in NSW outsourced laundry services to Spotless Linen Services (“Spotless”), pursuant to a Master Agreement that covered 31 Healthscope hospitals on a national basis.
In or around June 2016, Healthscope began considering the closure of the Newcastle Private laundry and outsourcing the laundry service to Spotless, pursuant to the Master Agreement. Various reports were prepared and considered. Advice from various areas including Finance, Human Resources and the Industrial Relations, were considered. It is common ground that a final decision to close the laundry at Newcastle Private was taken on 16 November 2017.
On 24 November 2017, a meeting with the laundry staff was called by the General Manager of Newcastle Private. A total of 12 staff were affected by the decision, comprised of one General Service Officer Level Two and 11 General Service Officer Level One. It is again common ground that these positions are at or one above base grade level, within the relevant Enterprise Bargain, that covered the staff at Newcastle Private.
At the meeting, the laundry staff were told that Healthscope was outsourcing laundry services to Spotless and that the services of the laundry staff were no longer required. Affected staff were each given a letter that contained various information about their redundancy payout or alternatively redeployment options within Newcastle Private or another hospital owned by Healthscope, Hunter Valley Private, being the remaining Healthscope hospital within NSW that operated an onsite laundry. Staff were told the laundry was closing that afternoon and they were no longer required to attend work.
Again, it is common ground that ultimately 10 of the 12 affected staff took a redundancy and two were redeployed within Healthscope. Those who took the redundancy finished at Newcastle Private by late December 2017.
On the afternoon of 24 November 2017, the applicant, the Health Services Union (“HSU”), which had coverage of the affected staff, lodged a dispute with the Fair Work Commission. The matter was unable to be resolved at the Fair Work Commission. On 21 March 2018, the HSU filed an Application and Statement of Claim within the Fair Work Division of the Court.
Statement of Claim
The Statement of Claim seeks a total of 9 declarations that Healthscope breached relevant clauses of the Healthscope - NSW- Health Professionals & Support Services Agreement 2014-2017 (“the Agreement”), being the relevant Enterprise Bargain, in place at the time and in so doing, contravened s 50 of the Fair Work Act 2009 (Cth) (“the FW Act”). The Statement of Claim seeks the imposition of pecuniary penalties payable to the applicant, pursuant to s 546(3) of the FW Act.
Relevant Provisions of the Enterprise Bargain
There are three relevant provisions of the Agreement. They are as follows:
Clause 3.16 of the Agreement relevantly states:
3.16 Consultation Regarding Major Workplace Change
3.16.1 Employer to notify
(a) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.
(b) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retaining or transfer of employees to other work or locations; and the restricting of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.
3.16.2 Employer to discuss change
(a) The employer must discuss the employees affected and their representatives, if any, the introduction of the changes referred to in subclause 3.16.1, the effects the changes are likely to have on employees and measures and mist give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
(b) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in subclause 3.16.1.
(c) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employers interests.
Consultation Regarding Major Workplace Changes
Clause 3.17 of the Agreement relevantly states:
Clause 3.17 Redundancy
3.17.1 Application
(a) This clause shall apply in respect of full-time and part-time employees employed in the classifications specified in Schedules A and B of this Agreement.
(b) Notwithstanding anything contained elsewhere in this Agreement, this clause shall not apply to employees with less than one year’s continuous service and the general obligation on employers shall be no more than to give such employees an indication of the impending redundancy at the first reasonable opportunity, and to take such steps as may be reasonable to facilitate the obtaining by the employees of suitable alternative employment.
(c) Notwithstanding anything contained elsewhere in this Agreement, this clause shall not apply where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect of duty, or in the case of casual employees, apprentices or employees engaged for a specific period of time or for a specified tasks or tasks or where employment is terminated due to the ordinary and customary turnover of labour.
3.17.2 Redundancy
(a) Discussions before terminations:
(1) Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing to be done by anyone pursuant to paragraph (a) of clause 3.16.1 above, and that decision may lead to the termination of employment, the employer shall hold discussions with the employees directly affected and, if requested by the employees, their relevant representatives.
(2) The discussions shall take place as soon as is practicable after the employer has made a definite which will invoke the provision of subparagraph (a) of this subclause and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations, and measures to mitigate any adverse effects of any termination on the employees concerned.
(3) For the purposes of the discussions the employer shall, as soon as is practicable, provide to the employees concerned and any relevant representatives, if applicable, including any nominated union, all relevant information about the proposed terminations including 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 which the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information, the disclosure confidential information, the disclosure of which would adversely affect the employer.
Redundancy
Further, in addition in approving the Agreement, the Fair Work Commission found the Agreement did not contain a consultation term that complied with s 205(1) of the FW Act. Consequently, the Fair Work Commission noted that pursuant to s 205(2) of the FW Act, the model consultation clause in the Fair Work Regulations 2009 (Cth) (“the FW Regulations”) was taken to be part of the Agreement (see Healthscope-NSW-Health Professionals and Support Services Agreement 2014-2017 [2014] FWCA 4117 at [5]).
The model consultation clause is as follows:
Model consultation term
(1) This term applies if the employer:
(a) has made a definite decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise that is likely to have a significant effect on the employees; or
(b) proposes to introduce a change to the regular roster or ordinary hours of work or employees.
Major change
(2) For a major change referred to in paragraph (1)(a):
(a) the employer must notify the relevant employees of the decision to introduce the major change; and (b) subclauses (3) to (9) apply.
(3) The relevant employee may appoint a representative for the purposes of the procedures in this term.
(4) If:
(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and
(b) the employee or employees advise the employer of the identity of the representative; the employer must recognise the representative.
(5) As soon as practicable after making its decision, the employer must:
(a) discuss with the relevant employees:
(i) the introduction of the change; and
(ii) the effect the change is likely to have on the employees; and
(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and
(b) for the purposes of the discussion – provide, in writing, to the relevant employees:
(i) all relevant information about the change including the nature of the change proposed; and
(ii) information about the expected effects of the change on the employees; and
(iii) any other matters likely to affect the employees.
(6) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.
(7) The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees.
(8) If a term in this agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the employer, the requirements set out in paragraph (2)(a) and subclauses (3) and (5) are taken not to apply.
(9) In this term, a major is likely to have a significant effect on employees if it results in:
(a) the termination of the employment of employees; or
(b) major change to the composition, operation or size of the employer’s workforce or to the skills required of employees; or
(c) the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or
(d) the alteration of hours of work; or
(e) the need to retrain employees; or
(f) the need to relocate employees to another workplace; or
(g) the restricting of jobs. Change to regular roster or ordinary hours of work.
(10) For a change referred to in paragraph (1)(b):
(a) the employer must notify the relevant employees of the proposed change; and
(b) subclauses (11) to (15) apply.
(11) The relevant employees may appoint a representative for the purposes of consultation; and
(12) If:
(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and
(b) the employee or employees advise the employer of the identity of the representative; the employer must recognise the representative.
(13) As soon as practicable after proposing to introduce the change, the employer must:
(a) discuss with the relevant employees the introduction of the change; and
(b) for the purposes of the discussion – provide to the relevant employees:
(i) all relevant information about the change, including the nature of the change; and
(ii) information about what the employer reasonably believes will be the effects of the change on the employees; and
(iii) information about any other matters that the employer reasonably believes are likely to affect the employees; and
(c) invite the relevant employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities)
(14) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.
(15) The employer must give prompt and genuine consideration to matters raised about the change by the relevant employees.
(16) In this term: relevant employees means the employees who may be affected by a change referred to in subclause (1).
It is to be noted that cl 3.16 in the Agreement and the Model Consultation clause, requires consultation only in the case of “major changes in production, program, organisation structure or technology that are likely to have significant effects on employees”. Clause 3.17.2 of the Agreement requires discussions before terminations once cl 3.16.1 of the Agreement is enlivened. Healthscope denied that the outsourcing of linen services at the Newcastle Private amount to a major change and that as a result, the requirement to consult was not required.
Both parties agree that this is a threshold question. If this question is answered in the negative, the applicant’s case fails.
Evidence before the Court
The applicant relied upon 3 affidavits, namely:
a) Affidavit of Lisa Anne Davis sworn 27 September 2018;
b) Affidavit of Jodie Maree Hancock sworn 27 September 2018; and
c) Affidavit of Toby Scott Warnes sworn 5 October 2018.
Ms Davis and Ms Handcock worked in the laundry at Newcastle Private. Mr Warnes is an Industrial Officer with the applicant.
The respondent relied upon a single affidavit; namely
a) Stephen Gameren, Hospitals State Manager NSW and ACT Healthscope, sworn 13 February 2019.
Was the outsourcing of the laundry and linen services a major change?
Counsel for the applicant submits that what constitutes a “major change” was considered by the Full Court of the Federal Court of Australia, in Port Kembla Coal Terminal Ltd v Construction, Forestry, Mining and Energy Union (2016) 248 FCR 18 at [187] per Jessup, Rangiah and White JJ (“PKCT”). In determining what constitutes a major change, it is necessary to consider the size and importance of the change in which the redundancies are associated, however, the task to be undertaken is not one of a comparison of examining the number of employees who will be made redundant and the number of employees in the overall workforce. Such an approach is not conducive in determining whether the change was major (see Australian Nursing and Midwifery Federation v Bupa Aged Care Pty Ltd [2017] FCA 1246 (“Bupa”) at [23] – [24] per O’Callaghan J).
In this present case, the applicant concedes that with only 12 employees working at Newcastle Private, they were not a “major” portion of Healthscope’s workforce at Newcastle Private, covered by the Agreement of 205 employees, as at 16 November 2017, or out of the total 2884 employees, covered by the Agreement state wide.
Counsel for the applicant submits however that the closure required the following significant considerations:
a) the requirement for an analysis report in June 2016;
b) the requirement for Healthscope to put in place a ‘transitional plan’;
c) the fact that keeping the on-site laundry open would require “a significant amount of money on capital equipment”; and
d) the requirement that the laundry services at Newcastle Private Hospital be linked to the ‘Master Agreement’ between
theHealthscope and Spotless.Counsel for the respondent argues that what is a “major change in production, program, organisation, structure or technology” is to be determined by reference to, or in the context of the respondent’s overall business or enterprise and not limited to the Newcastle Private Hospital. In PKCT, Jessup J held at [187] that a “major change” had to be assessed by reference to the facts which went beyond, but included, the fact that redundancies had occurred. In PKCT, White J, at [499], did not regard a simple comparison of the total number employees made redundant to the overall workforce, has been determined of the question. His Honour, White J, held that much depended on the circumstances of the case including, for example, the seniority and importance of the employees in the employer’s operations and the consequences for the continuing employees of the redundancies.
In Bupa, O’Callaghan J referred to the above in coming to his decision that the redundancies of 23 employees, out of over 3000, did not constitute a “major change” to, in that case, the structure of the employer’s enterprise.
It was further submitted by Counsel for the respondent that the change, which was implemented, was in fact in keeping and consistent with Healthscope’s then, organisational structure, as it resulted in further harmonisation throughout Healthscope’s business or enterprise, in respect of its’ hospital linen service.
Counsel for the respondent also notes the applicant alleges that the first respondent has contravened a civil remedy provision of the FW Act. As a result, contraventions must be “clearly established” (see Bragdon v Director of the Fair Work Building Industry Inspectorate (2016) 242 FCR 46 at [45]). It further follows that the finding sought by the applicant, are ones not to be made lightly (see Australian Building and Construction Commissioner v Hall (2017) 269 IR 28 at [18] – [20]).
Further, the applicant bears the onus of establishing the relevant facts going, not only to the operation of the clauses, but the alleged conventions (see Sensis Pty Ltd v Gundi (2017) 276 IR 470 at [34] - [37]).
In the current case, it cannot be said that the forced redundancy of 12, out of a total of 2884 employees, covered by the Agreement state wide, can be considered to be a “major change”. While no doubt a major change and distressing to the employees themselves, that is not the test. As noted by Jessup J in PKCT at [187]:
In the present case, it is enough to reiterate that the forced redundancy of three employees out of a workforce of about 98 did not of itself constitute a major change within the meaning of cl 7.1.
The Court does not consider it appropriate to consider the size of the change as being restricted to the Newcastle Private Hospital alone.
Further, in Bupa, O’Callaghan J stated at [25], that:
…here the proposed change does not involve a large number redundancies and the importance of the change is highlighted by the seniority of the roles.
In the current case, 11 out of the 12 affected employees were a General Service Officer Grade 1 or base grade, with a supervisor at General Service Officer Grade 2. While the employees provided an essential and needed service, it cannot be said that they were senior within the organisation and that the change contemplated, would have significant knock-on effects to the rest of the organisation.
In the current case, the decision to close the laundry and replace it with an out sourced service provided by Spotless, was consistent with Healthscope’s operations in the majority of its other hospitals, both within NSW ACT and nationally. The evidence of Mr Gameren was that the addition of Newcastle Private to the contract with Spotless did not require any renegotiation of the contract, rather the contract was merely extended within its existing framework to include Newcastle Private. All of these matters lead the Court to the conclusion that the closure of the laundry and the redundancy of the 12 employees, who worked there, cannot be said to be a “major change” which enliven the consultation requirements under the Enterprise Bargain.
The Court has noted the matters put forward by the applicant, in relation to the work that was undertaken by the respondent prior to the closure being announced. The Court does not regard these as being indicative of the closure of the laundry as being a “major change”, rather they constitute simply due diligence by Healthscope in firstly considering whether or not the change should be implemented as being financially sound and secondly, ensuring all relevant requirements in relation to the employees and under the Enterprise Bargain were met. This included providing them with information as to potential redeployment within the employer and individual redundancy benefits, should redundancy be accepted.
The Court does not accept that the capital expenditure, which would have been required to replace the existing equipment within the Newcastle Private laundry, being $430,000, is indicative of a “major change”, given the overall size and operating budget of the respondent.
Conclusion
As the Court is not satisfied that the closure of the laundry was a “major change” in the production, program, organisation, structure or technology of Healthscope, that was likely to have significant effects on employees, the Court is not satisfied that cl 3.16 of the Agreement, which required consultation regarding major workplace change, was enlivened.
That being the case the applicant’s claim cannot be made out.
The application is dismissed.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Humphreys
Associate:
Date: 22 May 2020
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