Jessica Bennetts v Western NSW Medicare Local Ltd
[2015] FWC 6517
•22 SEPTEMBER 2015
| [2015] FWC 6517 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Jessica Bennetts
v
Western NSW Medicare Local Ltd
(C2015/3278)
DEPUTY PRESIDENT BOOTH | SYDNEY, 22 SEPTEMBER 2015 |
Alleged dispute about any matters arising under the enterprise agreement and the NES - payment of redundancy payments - ordinary and customary turnover of labour - redundancy payments not payable.
[1] Jessica Bennetts has made application to the Fair Work Commission to deal with a dispute about the payment of redundancy payments to employees of Western NSW Medicare Local Ltd (WML).
[2] The dispute arises because WML has foreshadowed the termination of employment of employees without the payment of redundancy pay.
[3] Ms Bennetts and WML agree that the employees’ employment is being terminated due to redundancy on the basis that WML no longer requires the work performed by these employees to be performed by anyone. However, they disagree about whether the employees are entitled to redundancy pay. WML contend that redundancy pay is not payable because the termination of employment occurs in the ordinary and customary turnover of labour, as defined in the Western NSW Medicare Local Enterprise Agreement 2013 (the Agreement), that covers the employees. Ms Bennetts disagrees.
[4] The dispute was the subject of a telephone conciliation before me on 7 August 2014. Ms Bennetts, who is the Human Resources Manager, represented herself and WML was represented by Stephen Jackson, CEO. The dispute was not resolved during conciliation.
[5] Clause 6 of the Agreement contains a dispute resolution procedure. Ms Bennetts and Mr Jackson agree that this procedure applies to this dispute and have agreed, as they must do under this clause, to ask the Fair Work Commission to resolve the dispute by arbitration.
[6] They have agreed a question to be arbitrated and provided an agreed Statement of Facts, attached to this decision. There are otherwise no disputed facts. They have asked the Commission to arbitrate the dispute “on the papers”, that is, without the need for a hearing. In the circumstances I consider that the Commission has the power to resolve the dispute by arbitration and that it is appropriate to so without a hearing.
[7] The question that I am asked to answer is as follows:
1. Does the employer have a legal obligation to pay redundancy pay to the employees listed below, whose employment was terminated because of the termination of funding to the Western NSW Medicare Local?
2. If yes,
(a) is the entitlement listed below (see separate sheet) for each employee the correct entitlement?; or
(b) If no, what amount is the correct amount for each employee?
[8] For the reasons outlined below I find that the answer to the first part of the question posed by the parties is No. It is therefore not necessary to answer the second part of the question.
[9] I have chosen not to incorporate the list of names of the employees concerned in the decision because doing so is not necessary for the purpose of making or understanding the decision and to maintain the privacy of those employees.
The context of the dispute
[10] The events leading up to this situation are set out in paragraphs 1 – 12 of the agreed Statement of Facts as follows:
1. NSW Medicare Local (WML) is a federally funded not-for-profit community health care organisation.
2. Prior to 30 June 2015, WML employed approximately 126 employees, whose terms and conditions of employment were governed by the National Employment Standards and the Western NSW Medicare Local Enterprise Agreement 2013 (EA).
3. Since its inception, WML’s operations have been substantially dependent on government funding. While the composition and funding of specific programs facilitated by WML has varied from year to year, the continued provision of government funding was not in contention prior to May 2014.
4. In the May 2014 budget, the Commonwealth Government announced that funding to Medicare Locals would cease at 30 June 2015, terminating the deed one year earlier than agreed.
5. It has never been a normal feature of WML’s business to lose funding completely.
6. The then Opposition clearly stated prior to its election to government that there would be no changes to Medicare Locals.
7. The 61 strong Medicare Local network has been replaced by 31 Primary Health Networks (PHN).
8. In or about October 2014, Western NSW Medicare Local entered into a consortium arrangement known as Western Health Alliance Limited (WHA) with Far West NSW Medicare Local and 2 small Aboriginal health service providers for the purposes of tendering for the Western NSW Primary Health Network (WPHN).
9. In June 2015, the Federal Department of Health (DoH) informed WHA of its selection to form the WPHN arising from the tender process.
10. As part of the establishment of the WPHN, some but not all of the WML’s existing employees have been offered employment by the WPHN. These employees were transferred as per the transfer of business provisions in the Fair Work Act 2009 (s331).
11. Some staff have remained with WML (now trading as Marathon Health) under substantially the same terms and conditions.
12. In some circumstances, WML has indicated that it will terminate the employees’ employment due to redundancy on the basis that WML no longer requires the work performed by those employees to be performed by anyone (Redundancies).
The legal framework
[11] Clause 15 of the Agreement is titled Redundancy Pay and reads as follows:
“15 REDUNDANCY PAY
15.1 In some situations, the NES provides for “Redundancy Pay” if an Employee’s employment ends. However, the parties recognise that Redundancy Pay is not payable in all situations where an employer no longer requires the job done by an employee to be done by anyone.
15.2 In particular, the parties acknowledge and agree that:
(a) in order to be able to engage and retain staff, the ML relies on the continuance or renewal of periodically rotating funding contracts that are awarded by funding bodies (principally DoH)
(b) the continuance or renewal of funding from DoH and other funding bodies is far from guaranteed and depends on a range of factors outside the ML’s control, including Government policy which regularly dictates the variation and cessation of funded activities;
(c) DoH does not allow the ML to use its funding for Redundancy Pay other than in exceptional circumstances;
(d) if ML loses finding generally, or for particular programs or services, and is unable to relocate Employees to another contract or funded program or service, the ML must, regrettably, end the employment of staff engaged in connection with those funded activities;
(e) as a consequence of these factors, it is part of the ordinary and customary turnover of labour that ML Employees will from time to time cease employment with the ML because funding ends; and
(f) Redundancy Pay is not payable where termination of employment occurs in the ordinary and customary turnover of labour.
15.3 In light of the above, the parties acknowledge that Redundancy Pay will generally not be paid to:
(a) Maximum Term Employees whose employment ends upon expiry of their Maximum Term (where this aligns with the end of a periodic funding period); or
(b) Permanent Employees (or other Employees) whose employment ends because the ML loses funding for their position or for activities upon which the need for their position depends (whether or not this occurs at the scheduled expiry of a periodic funding period).
15.4 Redundancy Pay is also not payable to Casual Employees or Fixed Term Employees (or in other situations where Redundancy Pay would not be payable under the NES or order of FWC)
15.5 Where there is any dispute between the parties, or between ML and particular Employees, about the application of this clause or Redundancy Pay under the NES, the dispute is to be handled in accordance with clause 6.”
[12] The clause sets out the conditions under which redundancy pay provided by the National Employment Standards is notpayable. The clause is capable of being understood on a plain reading of the words. The whole of the clause must be considered in the context of the Agreement but it is not necessary to have regard to any surrounding circumstances to understand the meaning of the clause. 1
[13] There is no disagreement between the parties as to the meaning of the clause. The dispute arises because there is a disagreement about whether the circumstances set out in the agreed Statement of Facts enliven the conditions set out in the clause. Mr Jackson says they do. Ms Bennetts says they do not.
[14] Ms Bennetts provides the following reasoning for her position in her Form F10 2:
“Further, the Applicant contends that the trigger for the Redundancies is the significant overhaul of the Federal health system arising from the Government’s abolition of the ML network and not the loss of a contract in the ordinary course of WML’s business. It has never been a normal feature of WML’s business to lose funding completely. In these circumstances, the exception in clause 15.2(f) of the EA does not apply meaning redundancy pay is payable under the EA.”
Does the Agreement operate so as to deprive the employees in question of redundancy pay?
[15] The Agreement defines the term “ordinary and customary turnover of labour”. This term appears in the National Employment Standards (NES) under the Act but is not defined in the Act.
[16] The Agreement on the other hand is thorough and specific in its definition of the term.
Having set out the factors that affect the funding of a Medicare Local, the Agreement is explicit that “it is part of ordinary and customary turnover of labour that ML Employees will from time to time cease employment with the ML because funding ends.” (my emphasis).
[17] The Agreement means that redundancy pay is not payable to employees who cease employment with the ML because funding ends.
[18] It is clear that the funding for WML has ended. It is clear that employees’ jobs are redundant because funding for WML has ended.
[19] The Agreed Statement of Facts says it has never been a normal feature of WML’s business to lose funding completely. 3 The 61 strong Medicare Local network has been replaced by 31 Primary Health Networks.4 Does this make a difference to the application of the clause? Or put another way, is the reason that WML funding ends, a relevant factor in whether the clause applies or not? On a plain reading of the clause I cannot conclude that it is.
[20] Clause 15.2 (d) fortifies this conclusion with its reference to “..if ML loses funding generally, or for particular programs or services…” . This is consistent with clause 15.3 (b) where the parties acknowledge that Redundancy Pay will not generally be paid to “Permanent Employees (or other Employees) whose employment ends because the ML loses funding for the position or for activities upon which the need for their position depends (whether or not this occurs at the scheduled expiry of a periodic funding period)”.
Is there any reason why the Agreement should not be applied?
[21] Section 739 5 of the Act confines the powers of the Commission in resolving a dispute to a decision that is not inconsistent with the Act or a fair work instrument that applies, in this case the Agreement. I have asked myself whether, in finding that the Agreement operates so as to deprive employees of redundancy pay, I would offend this provision of the Act.
[22] Clause 2 of the Agreement deals with “How the EA Operates”. Clause 2.3 provides that the Agreement operates in accordance with its terms and the Act. It provides that the Agreement is the entire agreement between WML and employees in relation to collectively applicable terms of employment.
[23] Clause 2.4 provides that the Agreement operates subject to the Act. It states:
“If any provision contravenes the Fair Work Act or otherwise is (or becomes) unlawful, then that provision has no effect to the extent that it would be unlawful”
[24] Clause 4 of the Agreement deals with “Effect on Other Awards and Agreements”. Clause 4.4 provides that the Agreement applies subject to the Act and cannot exclude any provisions of the National Employment Standards (NES) and that any provision which (for any reason) is, or becomes, inconsistent with the Act or the NES has no effect to the extent of the inconsistency.
[25] Section 55 of the Act governs the interaction between the NES and a modern award or enterprise agreement. An enterprise agreement must not exclude a provision of the NES but may include terms that are ancillary to or incidental to the operation of an entitlement of an employee under the NES or a term that supplements the NES.
[26] Section 119 of the Act deals with redundancy pay in the following terms:
Entitlement to redundancy pay
(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
…..
[27] As s.119 does not define the term “ordinary and customary turnover of labour” I consider that clause 15 of the Agreement operates to define the term as it applies to employees covered by the Agreement. The definition neither excludes a provision of the NES nor is it inconsistent with the Act. Accordingly there is nothing in the Act that prevents the plain meaning of the Agreement applying to the employees in question.
[28] It is not open to me to conclude that the drafters of the Agreement did not intend to deprive employees of redundancy pay in the circumstances of this case, even though I consider this a harsh outcome.
Conclusion
[29] I find that the answer to the first part of the question posed by the parties is ‘No’. Therefore, it is not necessary to answer the second part of the question.
DEPUTY PRESIDENT
Appearances:
J. Bennetts, the Applicant.
S. Jackson, for the Respondent.
Final written submissions:
Agreed Statement of Facts received 21 August 2015.
Attachment
1 The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited [2014] FWCFB 7447.
2 Form F10 Application to the Commission to deal with a dispute in accordance with a Dispute Settlement Procedure.
3 Paragraph 5 of Agreed Statement of Facts.
4 Paragraph 6 of Agreed Statement of Facts.
5 Section 739 (5) Fair Work Act 2009.
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