Kuredale Pty Ltd v Fair Work Ombudsman
[2021] FCCA 332
•25 February 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Kuredale Pty Ltd v Fair Work Ombudsman [2021] FCCA 332
File number(s): PEG 96 of 2020 Judgment of: JUDGE KENDALL Date of judgment: 25 February 2021 Catchwords: INDUSTRIAL LAW – application for review of compliance notice issued by respondent – whether the applicant contravened relevant agreement as alleged in the compliance notice – whether a resignation falls within the meaning of “redundancy” – interpretation of award and agreement – compliance notice confirmed. Legislation: Fair Work Act 2009 (Cth), ss 119, 123, 141, 700, 716, 717
Fair Work Bill 2008 (Cth)
Fair Work Regulations 2009 (Cth)
Workplace Relations Act 1996 (Cth), s 513
Workplace Relations Amendment (Work Choices) Bill 2005 (Cth)
Cases cited: 4 yearly review of modern awards—Construction awards [2018] FWCFB 6019
Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932] HCA 9
Award Modernisation - Decision [2009] AIRCFB 345
Certain Lloyd’s Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56
Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd [2004] FCA 403
City of Wanneroo v Holmes (1989) 30 IR 362
Deal v Father Pius Kodakkathanath [2016] HCA 31
George v Rockett [1990] HCA 26
R v Wallis [1949] HCA 30
Rhodes v Firepower Pump Systems Pty Ltd t/as Territory Fire Service & Training [2020] FCCA 1649
Short v FW Hercus Pty Ltd (1993) 40 FCR 511
Yirra Pty Ltd (t/as Richmond Demolition and Salvage) v Summerton [2009] FCAFC 50
Number of paragraphs: 116 Date of hearing: 18 February 2021 Place: Perth Counsel for the Applicant: Ms K Michael Counsel for the Respondent: Ms H Millar Solicitor for the Applicant: Aherns Lawyers Solicitor for the Respondent: Australian Government Solicitor ORDERS
PEG 96 of 2020 BETWEEN: KUREDALE PTY LTD ACN 064 308 890
Applicant
AND: FAIR WORK OMBUDSMAN
Respondent
ORDER MADE BY:
JUDGE KENDALL
DATE OF ORDER:
25 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The Compliance Notice issued on 4 March 2020 by the Fair Work Ombudsman pursuant to s 716(2) of the Fair Work Act 2009 (Cth) is confirmed pursuant to s 717(3) of the Fair Work Act 2009 (Cth).
2.There be no order as to costs.
3.The application dated 31 March 2020 otherwise be dismissed.
REASONS FOR JUDGMENT
JUDGE KENDALL
The applicant, Kuredale Pty Ltd (“Kuredale”), commenced proceedings in this Court on 31 March 2020 pursuant to s 717(1)(a) of the Fair Work Act 2009 (Cth) (the “Act”) seeking review of a compliance notice issued by the respondent, the Fair Work Ombudsman (the “FWO”), on 4 March 2020. Kuredale claims that the compliance notice should be cancelled. The FWO claims that the compliance notice should be confirmed.
BACKGROUND
Kuredale manufactures steel girders, lintels and other steelworks which form part of a building structure. It will, on occasions, enter a building site and place or position its steelworks. Kuredale employs a number of employees and, for the purposes of this proceeding, employees are employed under the Metro Lintels Offsite Enterprise Agreement 2016 (the “Agreement”).
On 13 July 2020, the FWO filed a Notice to Admit Facts. No dispute was raised. Accordingly, the following facts are admitted in this proceeding:
1. Victor Trigo was employed by the Applicant from on or around 6 November 2015 to 19 December 2019.
2. Victor Trigo worked at the University of Western Australia site, 35 Stirling Hwy, Crawley in the State of Western Australia from December 2018 to the time of providing written notice of his resignation on 19 November 2019.
3. Mitchel ten Vaanholt was employed by the Applicant from on or around 10 October 2011 to 3 December 2019.
4. Mitchel ten Vaanholt worked at the University of Western Australia site, 35 Stirling Hwy, Crawley in the State of Western Australia at the time of providing written notice of his resignation on 6 November 2019.
On or around 2 December 2019, the FWO received an inquiry from Mr Trigo alleging that he had not been paid redundancy entitlements. An inquiry from Mr ten Vaanholt was lodged a few days later.
The FWO is the statutory appointed body responsible for monitoring and enforcing compliance with the Act. The FWO utilises “Fair Work Inspectors” to carry out the FWO’s functions. These inspectors exercise various powers, including the power to issue “compliance notices” under s 716 of the Act.
Section 716 allows an inspector to issue a notice to an employer if the inspector reasonably believes that an employer has contravened:
(a)a provision of the National Employment Standards;
(b)a term of a modern award;
(c)a term of an enterprise agreement;
(d)a term of a workplace determination; a term of a national minimum wage order; and/or
(e)a term of an equal remuneration order.
The notice may direct the employer to take particular actions or produce particular documents within a specified time: the Act, s 716(2). A failure to comply with a compliance notice may, without reasonable excuse, expose an employer to litigation and pecuniary penalties.
Following the inquiries from Mr Trigo and Mr ten Vaanholt, an inspector commenced an investigation. Following the investigation, the inspector reasonably believed that Kuredale had contravened a term of the Agreement.
The inspector issued a compliance notice on 4 March 2020 which provided:
Details of the contravention(s)
6. The Agreement applies to the Employer.
7. The Agreement’s redundancy provisions in clause 22.1 refer to the redundancy provisions in clause 17 of the BUILDING AND CONSTRUCTION GENERAL ON-SITE AWARD 2010 (Award).
8. The Employer employed Victor Trigo from 6 November 2015 until 3 December 2019.
9. The Employer employed Mitchell Ten Vaanholt from 10 October 2011 until 19 December 2019.
10. Victor Trigo and Mitchell Ten Vaanholt ceased to be employed by the Employerfor reasons other than misconduct or refusal of duty.
11. Victor Trigo and Mitchell Ten Vaanholt are entitled to redundancy payments of 8 weeks In accordance with clause 17 of the Award. Clause 17 of the Award defines a week’s pay as the ordinary time hourly rate at the time of termination multiplied by 38.
12. The Employer contravened the clause of the Agreement set out in the table below in relation to Victor Trigo and Mitchell Ten Vaanholt by failing to pay them redundancy pay.
…
Redundancy Entitlements contravention
Failing to pay the applicable redundancy payment, based on their length of service at the end of their employment (Redundancy Entitlement).
Required action under this Compliance Notice
13. In accordance with section 716(2) of the FW Act, I require you by 3 April 2020 to:
Step 1 - calculate and rectifv underpayments
(a) in respect of the contravention referred to … above pay Victor Trigo and Mitchell Ten Vaanholt 8 weeks redundancy pay in accordance with clause 17 of the Award.
On 31 March 2020, Kuredale filed an application in this Court seeking review of the compliance notice pursuant to s 717 of the Act.
Section 717 of the Act provides:
Review of compliance notices
(1) A person who has been given a notice under section 716 may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(a) the person has not committed a contravention set out in the notice;
(b) the notice does not comply with subsection 716(2) or (3).
(2) At any time after the application has been made, the court may stay the operation of the notice on the terms and conditions that the court considers appropriate.
(3) The court may confirm, cancel or vary the notice after reviewing it.
Kuredale’s application filed 31 March 2020 appears to takes no issue with the form of the compliance notice. That is, Kuredale does not claim that the compliance notice does not comply with s 716(2) or (3). Rather, the sole ground on which Kuredale seeks to have the notice “cancelled” is pursuant to s 717(1)(a) of the Act.
These reasons for judgment consider whether the compliance notice should be cancelled.
THE APPLICATION
Kuredale seeks the following orders:
1. The Compliance Notice issued to the Applicant dated 4 March 2020 by Troy Johnston, Fair Work Inspector of the Fair Work Ombudsman (“Compliance Notice”) be cancelled pursuant to section 717(3) of the Fair Work Act 2009 (“Act”).
2. The Respondent pays the Applicant’s costs of this Application to be assessed or agreed pursuant to section 570(2)(b) of the Act.
The materials before the Court include:
(a)the application filed 31 March 2020;
(b)an affidavit of Kylie Simone Michael sworn 31 March 2020. Ms Michael is Kuredale’s solicitor. Her affidavit attaches correspondence exchanged in relation to the compliance notice and alleged contravention and the relevant Agreement and undertakings;
(c)an affidavit of Sarah Anicic affirmed 7 May 2020. Ms Anicic is a solicitor for the FWO. Her affidavit annexes material relevant to the investigation which led to the issuance of the compliance notice;
(d)an affidavit of Mitchel ten Vaanholt affirmed 1 July 2020. Mr ten Vaanholt lodged the inquiry which formed part of the investigation. In his affidavit, he states that he wishes to withdraw his “case” against Kuredale;
(e)an affidavit of Peter Heyden sworn 1 July 2020. Mr Heyden is the general manager at Kuredale. Mr Heyden’s affidavit states that he received a phone call from Mr Trigo who, he says, stated that he also wanted to withdraw his complaint;
(f)an affidavit of Troy Johnson affirmed 27 January 2021. Mr Johnson is the Fair Work Inspector responsible for the investigation and issuing the compliance notice. His affidavit annexes various file notes relevant to the investigation;
(g)an affidavit of Victor Trigo affirmed 30 July 2020. Mr Trigo’s affidavit confirms that the file notes of Mr Johnson are an accurate record;
(h)the Notice to Admit Facts filed 13 July 2020;
(i)an outline of written submissions filed by Kuredale on 24 August 2020; and
(j)an outline of written submissions filed by the FWO on 8 September 2020.
Mr Trigo was briefly cross-examined. He was asked whether he had advised Kuredale that he wanted to withdraw the complaint he had made the FWO. He responded that he did not wish to do so. Mr Trigo’s response was direct and made without hesitation.
The parties appeared before the Court on 19 February 2021. Kuredale was represented by Ms Michael. The FWO was represented by Ms Millar. The Court thanks both Counsel for their considerable assistance.
The grounds upon which Kuredale claims that it did not commit the contravention set out in the compliance notice are:
a. The Employees are not entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, pursuant to the Enterprise Agreement;
b. Further or in the alternative, the Employees are not entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, pursuant to the Onsite Award;
c. Further or in the alternative, the Employees should not be entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, as it would be contrary to the parliamentary intention in relation to redundancy definitions similar to clause 17.2 of the Onsite Award; and,
d. Further or in the alternative, the Employees should not be entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, as it would be contrary to public policy.
The Court will consider Grounds “A” and “B” separately. Grounds “C” and “D” can be considered together.
The Court notes that Kuredale makes reference to the fact that Mr ten Vaanholt has now been re-employed by Kuredale. Kuredale notes that it can apply to the Fair Work Commission for any redundancy pay (if it is found that such an entitlement exists) to be “set to nil”. Whether or not this is the case, the Court does not consider it to be of significance to the issues here. If Kuredale wishes to pursue that course after these proceedings, the company may do so. However, the fact that persons (who were, in effect, responsible for this litigation being initiated) no longer want to continue or now wish to “withdraw” is of no weight.
THE ALLEGED CONTRAVENTION
Before considering the “Grounds”, it is necessary to provide some context in relation to the alleged contravention the subject of the compliance notice.
It does not appear to be in dispute that Mr Trigo and Mr ten Vaanholt were covered by the Agreement (see, Ms Michaels Affidavit at [9] and Ms Anicic’s Affidavit at [11]). Clause 22 of the Agreement states:
22.0 REDUNDANCY
22.1 Redundancy entitlements are provided for in the NES when an employee is working on-site, but when an employee is working off-site and this Agreement applies then the redundancy provisions of the Building and Construction General On-site Award 2010 Clause 17 - Industry specific redundancy scheme - apply.
22.2 Depending on the specific employment history and circumstances of an individual employee, one or other of these redundancy schemes could be more beneficial to the employee in question.
22.3 It is the intention of the parties that the redundancy scheme which provides for the greater entitlement shall be utilised for the employee in question. The amount of redundancy pay is in addition to the period of notice to which the Employee is entitled
The FWO “reasonably believed” that the redundancy provisions of the Building and Construction General On-site Award 2010 (the “Award”) applied. Clause 17 of the Award provides:
17. Industry specific redundancy scheme
17.1 The following redundancy clause for the on-site building. engineering and civil construction industry ( as defined) is an industry specific redundancy scheme as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B- Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.
17.2 Definition
For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning
To the extent that it is necessary, the Court will reference other clauses of the Award and the Agreement below.
Finally, the Court notes that it has had regard to the affidavits of Mr ten Vaanholt, Mr Heyden, Mr Johnson and Mr Trigo. Those affidavits are of limited weight to the critical issue before the Court. The issue before the Court is one of construction and interpretation of the Agreement and Award. The matters addressed in the affidavits do not have any bearing on that issue. To the extent they are relevant, the Court will address this below.
CONSIDERATION
Ground A
Kuredale first argues that Mr ten Vaanholt and Mr Trigo are not entitled to redundancy pay under the Agreement as the plain and ordinary meaning of the word “redundancy” is not satisfied in the particular circumstances of this case. It is stressed that Mr ten Vaanholt and Mr Trigo resigned. They were not made “redundant” as per the plain and ordinary meaning of that word.
Kuredale refers to the dictionary definition of “redundancy” and notes that the ordinary meaning of “redundancy” denotes an employee becoming superfluous. Kuredale says that that is not what occurred here. The plain and ordinary meaning of the word, it is submitted, should be applied.
In the alternative, it is noted that the Agreement makes reference to the National Employment Standards and the National Employment Standards refer to “redundancy” in the following terms:
(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
Accordingly, Kuredale argues, the National Employment Standards ought (alternatively) to apply.
Kuredale’s arguments, both in the first instance (i.e., in arguing that the dictionary definition should be applied) and in the alternative (i.e., in arguing that the Court should have regard to the National Employment Standards) are rejected.
Dealing with the National Employment Standards argument first, there is no basis for this argument. Clause 22.1 states:
22.1 Redundancy entitlements are provided for in the NES when an employee is working on-site, but when an employee is working off-site and this Agreement applies then the redundancy provisions of the Building and Construction General On-site Award 2010 Clause 17 - Industry specific redundancy scheme - apply.
The reference to the National Employment Standards is limited to employees working on-site. There is no dispute here that Mr ten Vaanholt and Mr Trigo were not on-site employees. There is also no dispute that the Agreement applied to them. On that basis, and as expressly stated in cl 22.1, cl 17 of the Award governed the redundancy entitlements of employees under the Agreement – not the National Employment Standards.
Further, s 123 of the Act expressly states that “this division” (i.e., the division relating to notice of termination and redundancy) does not apply to those covered by an industry specific redundancy scheme. Hence, by excluding the “division” the “definition” of redundancy in s 119(1) is not applicable. Had it been the intention that an industry specific redundancy scheme could only make provision for the amount of redundancy pay (and not what was meant by the term redundancy), s 123 would not have been drafted as broadly as it has been.
Accordingly, the definition of “redundancy” in s 119 of the Act is of no assistance to Kuredale.
In relation to whether the compliance notice should be set aside as Kuredale did not commit the alleged contravention because the plain and ordinary meaning of “redundancy” does not include resignation, the Court finds as follows.
The plain and ordinary meaning of a word is the “starting point” for any dispute about interpretation. However, the plain and ordinary meaning must be read with the Agreement as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362. Context includes reference to other documents with which there is an association (such as an award) and to the ideas that gave rise to an expression in a document from which it has been taken (such as the definition of a term as provided in the associated document): Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518.
While it is true that there is no definition of “redundancy” in the Agreement, this does not mean that the plain and ordinary meaning must apply. The context relevant to the redundancy provisions is important. The Court should not apply a narrow and literal interpretation where cl 22 itself directs how the provision is to operate.
Clause 22.1 provides:
22.1 Redundancy entitlements are provided for in the NES when an employee is working on-site, but when an employee is working off-site and this Agreement applies then the redundancy provisions of the Building and Construction General On-site Award 2010 Clause 17 - Industry specific redundancy scheme - apply.
Clause 22.1 dictates that cl 17 of the Award applies for redundancy purposes. Further, cl 22.1 does not limit the operation of cl 17 of the Award (i.e., it does not state that the definition of redundancy in cl 17 of the Award does not apply or that specific parts of cl 17 of the Award are not adopted). It expressly refers to cl 17 of the Award as a whole.
The FWO submits that cl 22.1 of the Agreement is express and unambiguous. It specifically applies to a clearly defined subset of employees (those who work ‘off site’). Clause 22.1 of the Agreement specifically provides that cl 17 of the Award is applicable. Clause 17 of the Award contains an express definition of “redundancy”. That definition is, therefore, applicable to those covered by cl 22.1 of the Agreement and is to be the preferred and only definition.
However, as the FWO points out, cl 4 of the Agreement states:
4.0 RELATIONSHIP TO AWARDS, LEGISLATION AND OTHER INSTRUMENTS
4.1 This Agreement operates to the exclusion of any award.
4.2 Where any legislation, award, policy, procedure or other document is referred to in this Agreement it is not incorporated into and does not form part of this Agreement. In particular, references to entitlements provided for in the National Employment Standards (NES) and other legislation are:
4.2.1 for information only and do not incorporate those entitlements into this Agreement; and
4.2.2 not intended as a substitute for the detailed provisions of the NES and other legislation
Clause 4.0 is arguably inconsistent with cl 22. That is, cl 22 expressly includes the provisions of the Award but cl 4 states that the Agreement operates to the exclusion of the Award and that any reference is not “incorporated” and does not form part of the Agreement.
An issue arises as to which provision prevails.
As the FWO submits, pursuant to the maxim generalia specialibus non derogant (i.e., when in conflict, provisions of general application do not override specific provisions), the specific express provisions of cl 22.1 outweigh the general provisions of cl 4. Hence, cl 22.1 is to be applied according to its terms.
While the maxim of generalia specialibus non derogant is often invoked in relation to the interpretation of statutes, it is nonetheless relevant and of assistance when interpreting awards and agreements. This is so because the Court’s task in interpretive matters of this sort is to “divine, from the language they have used, the apparent intention of the parties” and the drafters of the Agreement: Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd [2004] FCA 403 at [171].
The Court notes that the maxim applies in cases where applying a general provision would allow avoidance of a particular limitation or, as is the case here, avoidance of a particular entitlement, imposed by a more specific provision. Alternatively, express affirmative words that state that a redundancy provision in the Award apply should be understood as importing “a negative” (i.e., that a redundancy should not be covered according to some other course such as the National Employment Standards): R v Wallis [1949] HCA 30; Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932] HCA 9.
Accordingly, the Court finds that the meaning to be given to “redundancy” for those covered by the Agreement is to be determined by reference to the provisions of the Award. That is, cl 17 of the Award is incorporated into cl 22.1 of the Agreement. Clause 22.1 is, in the Court’s view, clear in this regard.
In accordance with the dictionary definition of “redundancy”, an employee who resigns would not be entitled to redundancy entitlements. However, in this case it is not the dictionary definition which applies. As found above, cl 17 of the Award applies and cl 17.2 provides a very specific and wide definition of the term “redundancy”. That definition provides:
17.2 Definition
For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning.
Accepting that Mr ten Vaanholt and Mr Trigo resigned, cl 22.1 of the Agreement (applied to the circumstances here) and cl 17 of the Award stipulate that they are entitled to redundancy pay of 8 weeks.
The compliance notice is not liable to be set aside on the basis that the contravention alleged was not committed because the plain and ordinary meaning of “redundancy” applies in this case. The plain and ordinary meaning of redundancy is not applicable in the circumstances of this case.
Ground A fails.
Ground B
Ground B argues that the compliance notice should be set aside on the basis that Kuredale has not contravened the Agreement because the compliance notice was issued on the basis of the incorrect redundancy scheme. Alternatively, Mr ten Vaanholt and Mr Trigo ceased to be employed by reason of a “refusal of duty”.
This argument relies on what is provided in cll 22.2 and 22.3 of the Agreement, as follows:
22.2 Depending on the specific employment history and circumstances of an individual employee, one or other of these redundancy schemes could be more beneficial to the employee in question.
22.3 It is the intention of the parties that the redundancy scheme which provides for the greater entitlement shall be utilised for the employee in question. The amount of redundancy pay is in addition to the period of notice to which the Employee is entitled
Kuredale submits that the two “redundancy schemes” are:
(a)the entitlements as per the National Employment Standards; and
(b)the entitlements as per cl 17 of the Award.
Kuredale then provides a comparison and says that Mr ten Vaanholt would receive a greater entitlement under the National Employment Standards if he was made “redundant” as defined by the National Employment Standards. Mr Trigo, on the other hand, would receive the same entitlement under the National Employment Standards as he would under the Award (if he was to be made “redundant” as per the National Employment Standards). Accordingly, Kuredale submits (at least in relation to Mr ten Vaanholt), the National Employment Standards applied and he is not entitled to any payments as he “resigned”.
Put simply, here, the Award as relevant to the particular circumstances (i.e., in the case of a resignation) and for these particular employees, was clearly more beneficial and provided a greater entitlement to Mr ten Vaanholt and Mr Trigo than the National Employment Standards. As borne out by cl 22.3, the intention of the parties is, therefore, that the entitlements under the Award apply.
The compliance notice was not, therefore, issued on an incorrect basis.
The “redundancy scheme” that was applicable to Mr ten Vaanholt and Mr Trigo was the scheme provided for in cl 17 of the Award. Clause 22.3 does not dictate that the redundancy scheme applicable to Mr ten Vaanholt was that which was provided for in the National Employment Standards. The correct understanding of the Agreement is that the redundancy scheme applicable in these particular circumstances was specified in the Award.
Kuredale, in the context of Ground B, also submits in written submissions that the compliance notice was “defective”. Insofar as this is a submission that the compliance notice was defective because it was based upon the incorrect redundancy scheme, the reasons above explain why this is not the case.
Insofar as the reference to “defective” can be taken to suggest that the compliance notice did not comply with s 716 of the Act, the Court disagrees. It is noted that Ms Michael at the hearing of this matter did not advance any submissions in this regard. However, for the sake of finality, the Court will address whether the notice complied with s 716 in any event.
Section 716 provides:
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
(c) a term of an enterprise agreement;
…
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b) produce reasonable evidence of the person's compliance with the notice.
(3) The notice must also:
(a) set out the name of the person to whom the notice is given; and
(b) set out the name of the inspector who gave the notice; and
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e) explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
Here, the compliance notice was issued on 4 March 2020 by Mr Johnson. There is no dispute, and the evidence before the Court confirms, that Mr Johnson was an inspector appointed pursuant to s 700(1)(a) of the Act.
When considering whether Mr Johnson had formed a “reasonable belief” the test is objective. It requires the Court to consider whether there were sufficient facts known to Mr Johnson which would induce the reasonable person to form the belief: George v Rockett [1990] HCA 26 at [8]-[10].
Mr Johnson’s evidence, which was not challenged, was that he formed a reasonable belief that Kuredale had contravened cl 22.1 of the Agreement as:
12.1 . The Agreement applies to the Applicant.
12.2. The Agreement's redundancy provisions in clause 22.1 refer to the redundancy provisions in clause 17 of the Building Award.
12.3. The Applicant employed Mr Trigo from 6 November 2015 to 19 December 2019.
12.4. The Applicant employed Mr ten Vaanholt from 10 October 2011 to 3 December 2019.
12.5. The Employees ceased to be employed by the Applicant for reasons other than misconduct or refusal of duty.
12.6. The Employees are entitled to redundancy payments of 8 weeks in accordance with clause 17 of the Building Award. Clause 17 of the Building Award defines a week's pay as the ordinary time hourly rate at the time of termination multiplied by 38.
12.7. The Applicant contravened clause 22.1 of the Agreement in relation to the Employees by failing to pay them the applicable redundancy payment, based on their length of service at the end of their employment.
The facts and matters that Mr Johnson makes reference to are sufficient for a reasonable person to have formed a reasonable belief that a contravention of the Agreement had occurred.
Section 716(1) is satisfied.
The compliance notice stated:
Required action under this Compliance Notice
13. In accordance with section 716(2) of the FW Act, I require you by 3 April 2020 to:
Step 1 - calculate and rectifv underpayments
(a) in respect of the contravention referred to in row (a) of the table above pay Victor Trigo and Mitchell Ten Vaanholt 8 weeks redundancy pay in accordance with clause 17 of the Award
14. In accordance with section 716(2) of the FW Act, I require you to produce the following reasonable evidence of your compliance with the actions specified in paragraph 13 above:
(a) a schedule that sets out the underpayment rectification information for the Redundancy Entitlement in respect of Victor Trigo and Mitchell Ten Vaanholt, and
(b) proof that full payment has been made to Victor Trigo and Mitchell Ten Vaanholt, in respect of the payments required to be made by Step 1, such as a bank transfer showing the transfer of funds to each employee.
Both requests fall within s 716(2).
In relation to s 716(3), the compliance notice:
(a)set out the names of the four individuals that the notice was given to: the Act, s 716(3)(a);
(b)stated the name of Mr Johnson (the inspector who gave the notice): the Act, s 716(3)(b);
(c)set out the brief details of the contravention by stating that Kuredale had contravened cl 22.1 of the Agreement by failing to pay Mr ten Vaanholt and Mr Trigo their redundancy entitlement: the Act, s 716(3)(c);
(d)stated that a failure to comply with the compliance notice or providing false or misleading information can contravene a civil remedy provision and civil penalties may be imposed at [2]-[3] and [16] of the notice: the Act, s 716(3)(d); and,
(e)explained that Kuredale may apply to the Court for review of the compliance notice on the two bases set out in s 717(1): the Act s 716(3)(e).
Further, as far as the Court can ascertain, there are currently no matters prescribed under the Fair Work Regulations 2009 (Cth).
The compliance notice was not “defective”. It complied with all of the requirement of s 716(2)-(3). The inspector who issued the notice was validly empowered to do so.
Finally, Kuredale makes reference in its written submissions in relation to Ground B that:
The Compliance Notice provided no explanation as to why the Applicant was allegedly required to pay redundancy pay to the Employees under the Onsite Award as opposed to the NES
Put simply, the compliance notice did not need to provide an explanation. All the compliance notice needed to contain was a “brief” description of the contravention. Here, it did so (as detailed above). It did not need to explain how or why the inspector was of that view. Rather, it only needed to set out the critical facts and the relevant provision. The “reasoning process” was not required under s 716(2).
The Court is satisfied that the compliance notice should not be set aside on the basis that the FWO used the incorrect redundancy scheme.
Kuredale also submits that an employee resigning from their employment falls within the “plain and natural” meaning of “refusal of duty”. Accordingly, Mr ten Vaanholt and Mr Trigo do not meet the definition in cl 17.2 of the Award. Kuredale further submits that it is manifest from the general scope and intention of the Award that injustice and absurdity would result from construing clause 17.2 of the Award to cover a situation where an employee resigns.
Kuredale further states that there is no decision binding on this Court which dictates that a “resignation” is included within the meaning of “redundancy”.
Kuredale refers to Yirra Pty Ltd (t/as Richmond Demolition and Salvage) v Summerton [2009] FCAFC 50 (“Yirra”). In that matter, the Full Court of the Federal Court heard an appeal from the Industrial Relations Court of Appeal of South Australia. The Industrial Magistrate had found that a “refusal of duty” is directed at a situation where an employee refuses to perform aspects of the employee’s job upon request (as opposed to a resignation). That finding was not, Kuredale submits, challenged on appeal. Kuredale also refers to a decision of this Court, Rhodes v Firepower Pump Systems Pty Ltd t/as Territory Fire Service & Training [2020] FCCA 1649 (“Rhodes”), wherein it was found that an analogous clause of a different award included circumstances where an employee resigned.
The Court accepts that it is not “bound” by the decision in Rhodes. It does, however, find Rhodes to be instructive. In Rhodes, Judge Riethmueller found that a provision of the exact same wording of cl 17.2 of the Award in that case extended to a “resignation”. Relevantly, His Honour stated:
13. On the second issue in this matter, whether or not the applicant’s resignation falls within the award definition of ‘redundancy’, the relevant clause of the Plumbing and Fire Award is cl.18.2, which states:
18.2 Definition
For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning.
14. This is a curious clause in that the ordinary meaning of the word ‘redundancy’ would not, it seems to me, include a situation where an employee chooses to resign and leave ongoing employment. It also seems that an extended definition of ‘redundancy’ could easily be accommodated on the basis that in various industries with different corporate structures and the like, more technical definitions of redundancy could miss cases where on a practical level people have been made redundant in the ordinary, common sense use of the term, but not formally by a particular employer terminating employment. In this sense, it initially appears that the applicant is outside the breadth of the idea of redundancy. However, the clause itself provides an extended meaning to cover any cessation of employment that does not involve misconduct or refusal of duty. A more literal reading of the clause gives redundancy a meaning well beyond the ordinary use of the word.
15. This clause has had a long history and it took some time to identify some authoritative statements about the operation of the Plumbing and Fire Award. In the 4 Yearly Review of Modern Awards – Construction Awards [2018] FWCFB 6019, the Commission said (at paragraph [82]):
[82] In respect of the claim to alter the definition of redundancy, it may be accepted that the definition adopted in the form of the 1990 variation did not apparently match the intention of Commissioner Palmer that the scheme only apply to employer-initiated terminations of employment. However that may be, the definition is a foundational element of the industry-scheme which itself, as the Award Modernisation Full Bench found in 2009, has become an established feature of the building and construction industry. Moreover it is part of the broader application of the scheme which the Full Bench found it necessary to take into account in order to reach the conclusion that the scheme was not less beneficial than the NES provisions. That is a matter relevant to the requirement for fairness in the modern awards objective. Changing the definition would, we consider, alter the industrial balance of the scheme and its historic industry-specific character. The same conclusion may be reached in respect of the proposed exemption of small employers, as proposed in different forms by the HIA and the MBA. Further, as already stated, it has not been demonstrated that the rationale for not excluding small employers does not remain as valid in today’s circumstances as it was found to be in 1990.
16. This paragraph seems to acknowledge that the initial intention of Commissioner Palmer, when this type of clause was initially used, was that it would not extend to resignations. However, it has come to have the extended meaning and been used as such for some time. This position was, again, noted and not departed from in the 4 Yearly Review of Modern Awards – Plain Language – Standard Clauses [2018] FWCFB 7449 (at paragraph [19]):
[19] We note that the industry-specific redundancy schemes in the Building and Construction General On-site Award 2010 (Building Award) and the Plumbing and Fire Sprinklers Award 2010 (Plumbing and Fire Award) were recently considered by the Construction Full Bench in the Award Stage of the Review and that no changes were made to these provisions. [FN: [2018] FWCFB 6019 at [83]-[84]]. In that matter, the Housing Industry Association (HIA) sought to remove the industry-specific redundancy scheme in the Building Award, or in the alternative, to amend the definition of redundancy. A similar claim was made by the Master Plumbers Group (MPG) in relation to the Plumbing and Fire Award. The Full Bench rejected these claims and concluded:
‘[83] As was found to be the case in the Transitional Review, we consider that the cases advanced by the HIA, the MBA and the CCF amount to little more than a re-agitation of the issues heard and determined by the Award Modernisation Full Bench. No cogent reasons have been advanced to depart from the conclusions reached by the Full Bench, and the evidence has not demonstrated any relevant change in circumstances. We do not consider that any variation to clause 17 is necessary in order for the Building Award to meet the modern awards objective, or that the variations proposed by the claimants would necessarily achieve the objective. The claims to vary clause 17 of the Building Award are therefore rejected.
[84] With respect to the Plumbing and Fire Award, we consider the same conclusions apply for the same reasons, and the MPG claims are rejected.’ [FN: Ibid at [83]–[84]].
17. There has been little judicial consideration of the operation of clauses in terms of cl.18.2 or similar, even though they do appear in quite a large number of Awards and have done so for many years now. In Anthony R. Van Der Heul v J.C. and S.J. Van Der Heul (Ecoson Contractors) [1993] SAIRC 56, an Industrial Magistrate found that an equivalent clause covered the resignation of an employee. Other cases concluded that it covered a situation that involved wrongful dismissal, rather than redundancy: see Inspector Jonathan Andrews v Tomlinson’s Concrete Pty Ltd [2000] NSWCIMC 24 and Construction, Forestry, Mining and Energy Union and McCormick Civil Constructions Pty Ltd; National Building and Construction Industry Award 1990 [1993] CthArbRp 801; (1993) 7 CAR 111.
18. When the Australian Workers’ Union Construction and Maintenance Award 1989 was ‘simplified’ in 2002, a redundancy clause in similar terms was altered to change the definition back to the more limited common meaning of ‘redundant’. However, this clause was, again, altered in 2005 on the basis that the agreement to the change by The Australian Workers’ Union was in error: see The Australian Workers’ Union – Re Redundancy – PR 964916 [2005] AIRC 974.
19. It also appears that issues around the operation of this type of clause was in the government’s mind back in the mid-2000’s, as they made mention of it in the explanatory memorandum to the Workplace Relations Amendment (Work Choices) Act 2005 (‘Workplace Relations Act’), where (at paragraph [1609]), the government said:
1609. Some current awards define redundancy as occurring when an employee ceases to be employed by an employer in any situation, other than for reasons of misconduct or refusal of duty. This broad definition of redundancy may lead to redundancy payments being paid in some circumstances where termination of employment was not at the initiative of the employer and on the grounds of operational requirements. This includes, for example, to the estate of an employee that has died while still employed. Award terms providing for redundancy payments in ordinary resignation situations are also not to be treated as a redundancy.
20. This led to legislation that required clauses of this type to be categorised either as a genuine redundancy or an allowable incentive-based payment under s.513 of the Workplace Relations Act in order for those clauses to be valid. This in turn led to litigation. A State Magistrate in South Australia found in favour of an employee who resigned on the basis of such a clause in an Award: see Summerton v Yirra Pty Ltd t/as Richmond Demolition and Salvage [2008] SAIRC 43.
21. This decision was appealed to the Federal Court of Australia: see Yirra Pty Ltd (t/as Richmond Demolition and Salvage) v Summerton [2009] FCAFC 50 (‘Yirra’s case’). In Yirra’s case, Spender ACJ, although in the minority on the outcome, noted that at common law ‘redundancy’ had its usual meaning, referring to a situation where an employer no longer wished to have anyone doing a particular job: see paragraph [30] where his Honour referred to Bray CJ’s comments in R v Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6 at paragraph [8]. Spender ACJ, went on (at paragraph [39]) to state that the clause:
39. …contemplates payments in all cases where the employee resigns, and in all cases where the employer has terminated the employment other than on the grounds of operational requirements or where the employer is insolvent (regardless of the number of employees the employer has), excepting only where the employer has terminated the employment for misconduct or refusal of duty.
22. The majority judges, Graham and Tracey JJ, took the same view as to the interpretation of the clause itself, saying (at paragraph [110]):
110. It is clear that, but for the operation of certain statutory provisions, the employee would have an entitlement to redundancy pay under the award.
23. More recently, in Construction, Forestry, Mining and Energy Union v Concrete Constructions (WA) Pty Ltd [2017] FWCFB 3912, the Commission noted (at paragraph [13]) that:
13. This clause does not require a dismissal and so would apply when the employment of an employee engaged for a fixed term or a specified task comes to an end.
24. The effect of the clause is that a payment made under the clause may, in some cases be such as to fall within the common law understanding of a redundancy payment, but in other cases would be what the common law would categorise as a termination or severance payment. Under these clauses, the term ‘redundant’ has been given quite an extended meaning, taking it outside of its normal, everyday meaning and certainly well-beyond the common law meaning that would be ascribed to that term.
25. This difference between the Award definition and the ordinary definition of ‘redundancy’ can now be seen in other areas. For example, in an Australian Tax Office Class Ruling on whether a payment was within the definition of an ‘eligible termination payment’, when made under this clause through a trust fund, the Commissioner found that such a payment could only be assessed as a potential ‘bona fide redundancy’ payment on a case-by-case basis; and said ‘this can include resignation, age retirement, permanent disability and death as well as bona fide redundancy’: see CR 2007/32, Income Tax: tax treatment of payments to members of the South Australian Building Industry Redundancy Scheme Trust, 1 July 2000 at paragraph [60].
26. Considering the authorities that I have been able to locate on this difficult issue, I have come to the view that the proper interpretation of the clause is that it does cover a situation where an employee resigns. In this regard, it also seems to me that I am bound by the Full Court of the Federal Court’s decision in Yirra’s case and that the remaining other authorities and treatments of the clause are consistent with that interpretation.
27. I, therefore, find that the clause does cover the situation in this case where the applicant resigned.
Ms Michael at hearing sought to distinguish Rhodes by stating that Rhodes “concerns a different award”. Counsel submitted that the circumstances which surround this Agreement and the Award differ from what was considered in Rhodes (i.e., Plumbing and Fire Sprinklers Award 2010 (Cth)).
While Judge Riethmuller was considering a different award to that which is relevant to this case, the particular provision of the particular award considered in Rhodes is identical to the provision in issue here (cl 17.2 of the Award). Further, His Honour’s detailed analysis arose from a consideration of cases that arose from various awards which include the same provision (including the Award in issue here). Accordingly, the fact that a different award was being considered in Rhodes does not lead the Court to conclude that His Honour’s detailed analysis is “incorrect” or “should not be followed”. Rather, the Court agrees with His Honour’s detailed analysis in Rhodes as to the evolution and history of clauses akin to cl 17.2 of the Award.
At [26] of Rhodes, His Honour states that he considered himself bound by the remarks of the Full Court in Yirra in coming to the conclusion he did. At the hearing Ms Michael stated, respectfully, that His Honour “was wrong in that regard”. Ms Michael submitted that Yirra does not require this Court to find that a “resignation” falls within the meaning of “redundancy” as that particular issue was not the subject of any argument or debate before the Full Court in Yirra. Ms Michael pointed to [20], [105] and [117] of Yirra in this regard.
Ms Millar for the FWO referred to the same passage of Yirra (at [110]) that Judge Riethmuller relied upon and considered himself bound by. Ms Millar noted that Yirra was not considering the Act. Rather, Yirra considered provisions under the Workplace Relations Act 1996 (Cth) (the “WR Act”).
The Court notes the following remarks made in Yirra at [140] in relation to the terms “misconduct or refusal of duty”:
… Insofar as it makes it a condition of payment that the employee has not ceased to be employed by reason of misconduct or refusal of duty it does no more than preclude payments to employees who breach their contracts of employment. Put another way: employers are not required to make severance payments to employees, no matter how long they have served, if the termination of the employment agreement results from a failure, by the employee, to perform his or her obligations under the employment contract.
Here, there is no indication that either Mr ten Vaanholt or Mr Trigo had failed to perform their obligations under any employment contract. In fact, it appears that Mr ten Vaanholt and Mr Trigo fulfilled all of their duties until their final day of employment (including in relation to the notice of resignation). Accordingly, it is at least arguable that Yirra does in fact bind this Court and requires it to find that a resignation does not amount to a “refusal of duty”.
Nonetheless, the Court need not express a concluded view as to whether Yirra is “binding authority” (per se) that a resignation does not amount to a “refusal of duty” and is therefore within the meaning of “redundancy”. The Court itself is satisfied that the plain and ordinary meaning of “refusal for duty” does not include a resignation.
First, the term must be considered in the context of the word which proceeded it (which is “misconduct”). A “refusal of duty” would thus extend to a conscious and deliberate refusal to undertake a task that was directed by the employer which fell within the terms of the employment relationship (i.e., a refusal to attend work on a certain day).
Second, and perhaps more importantly, a resignation connotes a legal and lawful end to the requirement to undertake any duties for an employer. It is not a “refusal”. It is a consensual and diplomatic end to an employment relationship.
Third, even if Yirra does not bind this Court, the statements made at [110] and [140] support the Court’s view that a “refusal of duty” does not encompass a “resignation”. A resignation is not a failure to perform obligations under the contract of employment. While Ms Michael states, in reference to [110] of Yirra, that the “certain statutory provisions” are not identified by the Court, it is apparent that reference was being made to s 513 of the WR Act and the “allowable award matters”. That is, in context, the Court considers that what is being implied at [110] in Yirra is that, but for the definition of “redundancy pay” (in s 513(4)) and what the Court considered was meant by “incentive-based payments” in s 513 of the WR Act, the respondent would have been entitled to “redundancy pay” under the award in question. Here, as noted further below, there is no equivalent to s 513 of the WR Act (or, rather, the detail in s 513 of the WR is not replicated in the Act).
Fourth, the applicant has not persuaded the Court that Judge Riethmuller’s analysis in Rhodes is wrong. As noted, His Honour’s detailed analysis of the history and application of such a clause tends to suggest that it is accepted that a “resignation” falls within the meaning of “redundancy”.
A “refusal for duty” does not extend to a resignation.
Ground B is, accordingly, dismissed.
Ground C and Ground D
As noted above, the Court will consider Ground C and Ground D together. They provide:
c. Further or in the alternative, the Employees should not be entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, as it would be contrary to the parliamentary intention in relation to redundancy definitions similar to clause 17.2 of the Onsite Award;
d. Further or in the alternative, the Employees should not be entitled to 8 weeks’ redundancy pay as alleged in the Compliance Notice, as it would be contrary to public policy
Kuredale’s submissions in support of these grounds are as follows:
C. No entitlement to redundancy pay as it would be contrary to parliamentary intention
66. As stated in the explanatory memorandum for the Workplace Relations Amendment (Work Choices) Bill 2005 at [1609]:
“Some current awards define redundancy as occurring when an employee ceases to be employed by an employer in any situation, other than for reasons of misconduct or refusal of duty. This broad definition of redundancy may lead to redundancy payments being paid in some circumstances where termination of employment was not at the initiative of the employer and on the grounds of operational requirements. This includes, for example, to the estate of an employee that has died while still employed. Award terms providing for redundancy payments in ordinary resignation situations are also not to be treated as a redundancy.” [emphasis added]
67. Accordingly, clause 17.2 of the Onsite Award should not be interpreted as covering the Employees’ resignations55 as doing so would be contrary to parliamentary intention in respect of redundancy definitions of the sort.
68. The Applicant therefore submits, further or alternatively to paragraphs 29 to 65 above, that:
a. The Applicant has not committed the contravention set out in the Compliance Notice as clause 17.2 of the Onsite Award should not be interpreted as giving the Employees an entitlement to redundancy pay following their resignations; and
b. The Compliance Notice ought to be cancelled pursuant to section 717(3) of the Act.
D. Public Policy
69. It has been considered that a redundancy definition similar to clause 17.2 of the Onsite Award reflects the desire to “address the historically transient construction workforce”, by providing “an incentive to remain with one employer, with scaled payments relative to length of service”.
70. If it is found that the redundancy definition in clause 17.2 of the Onsite Award covers the situation in this case where the Employees simply resigned, then:
a. employees covered by the redundancy provisions of the Onsite Award in the construction and building industries at large would be encouraged to resign from their employment in the confidence that they will receive redundancy pay as a result;
b. the issue of the transient construction workforce will be heightened rather than managed.
71. If it is found that the wording of clause 17.2 of the Onsite Award includes the situations other than the plain and ordinary meaning of “redundancy” such as the Employees’ resignation in this case, then it will create a slippery slope and open the floodgates for all employees that are covered by awards with such ‘redundancy’ definitions to claim redundancy pay in situations where their employment was not terminated by the employer, including termination of employment due to resignation, death of the employee, the employee becoming totally incapacitated for work, the employee retiring, or the employee losing a qualification required to carry out the employee’s work.
72. The Applicant submits that, in order to avoid the opening of those floodgates, and in the interests of:
a. upholding the public’s confidence in the fairness of the justice system; and
b. economic efficiency, that is, the efficient allocation of the resources of employers like the Applicant to contribute to the growth of the construction and building industry and the economy at large, rather than rewarding or lining the pockets of employees who have resigned and are thus no longer contributing to the growth of the building industry or the economy at large,
it is open for the Court, having regard to the subjective factors of this case, to find that the Employees’ resignations do not fall within the definition of redundancy in clause 17.2 of the Onsite Award, and that the Applicant did not, therefore, commit the contravention set out in the Compliance Notice.
Kuredale refers to the Explanatory Memorandum to the Workplace Relations Amendment (Work Choices) Bill 2005 (Cth) (the “Amendment Bill”). Judge Riethmueller also referred to the Amendment Bill in Rhodes but nonetheless came to the conclusion that the intended operation of the Award was that a resignation was included in the meaning of “redundancy”. The Court accepts His Honour’s analysis in that regard.
Further, what Kuredale overlooks is that neither the WR Act or the Amendment Bill had a provision in the terms of s 141 of the Act, which provides:
When can a modern award include an industry-specific redundancy scheme?
(1) A modern award may include an industry-specific redundancy scheme if the scheme was included in the award:
(a) in the award modernisation process; or
(b) in accordance with subsection (2).
Note: An employee to whom an industry-specific redundancy scheme in a modern award applies is not entitled to the redundancy entitlements in Subdivision B of Division 11 of Part 2-2.
Coverage of industry-specific redundancy schemes must not be extended
(2) If:
(a) a modern award includes an industry-specific redundancy scheme; and
(b) the FWC is making or varying another modern award under Division 5 so that it (rather than the modern award referred to in paragraph (a)) will cover some or all of the classes of employees who are covered by the scheme;
the FWC may include the scheme in that other modern award. However, the FWC must not extend the coverage of the scheme to classes of employees that it did not previously cover.
Varying industry-specific redundancy schemes
(3) The FWC may only vary an industry-specific redundancy scheme in a modern award under Division 5:
(a) by varying the amount of any redundancy payment in the scheme; or
(b) in accordance with a provision of Subdivision B of Division 5 (which deals with varying modern awards in some limited situations).
(4) In varying an industry-specific redundancy scheme as referred to in subsection (3), the FWC:
(a) must not extend the coverage of the scheme to classes of employees that it did not previously cover; and
(b) must retain the industry-specific character of the scheme.
Omitting industry-specific redundancy schemes
(5) The FWC may vary a modern award under Division 5 by omitting an industry-specific redundancy scheme from the award.
The Explanatory Memorandum for the Fair Work Bill 2008 (Cth) states:
551. Clause 141 permits a modern award to include an industry-specific redundancy scheme in limited circumstances, and also provides rules about varying or omitting such a scheme. A legislative note reminds readers that an employee to whom an industry-specific redundancy scheme in a modern award applies is not entitled to redundancy entitlements under the NES.
552. Subclauses 141(1) and (2) allow a modern award to include an industry-specific redundancy scheme if the scheme was included in the modern award in the award modernisation process. The award modernisation request issued by the Minister for Education, Employment and Workplace Relations sets out the following factors relevant to whether such a scheme is included in a modern award: when considered in totality, whether the scheme is no less beneficial to employees in the industry than the redundancy provisions of the NES; and whether the scheme is an established feature of the industry.
553. FWA may also include an industry-specific scheme in a modern award where it makes or varies another modern award so that it covers employees who were previously covered by a modern award that included such a scheme. In such a situation, FWA must ensure that the coverage of the scheme is not extended to classes of employees that it did not previously cover.
554. The intention is that the industry specific nature of such a scheme should be retained if it is to remain in a modern award. This is because industry-specific schemes, developed with the needs of employees and employers in the particular industry in mind, operate to the exclusion of the general redundancy entitlements in the NES. If such a scheme no longer meets industry specific needs, the NES should apply.
555. Subclauses 141(3) and (4) set out the limited ways in which an industry-specific redundancy scheme may be varied – i.e., to vary the amount of redundancy payment in the scheme, or in the limited circumstances permitted by Subdivision B of Division 5 (e.g., to remove an ambiguity).
556. In varying an industry-specific redundancy scheme, FWA must retain the industry-specific character of the scheme.
557. FWA may also omit an industry-specific redundancy scheme (subclause 141(5)).
558. In addition to industry specific-schemes dealt with by clause 141, a modern award may also deal with redundancy by including terms that supplement the NES
Clearly, Parliament’s intention in enacting s 141 was to allow specific industry awards to retain their particular redundancy schemes. The decision as to whether the specific redundancy schemes were to be included in an award was delegated to the Australian Industrial Relations Commission (the “AIRC”) during the awards modernisation process.
When considering cl 17 of the Award, the AIRC noted as follows in the Award Modernisation - Decision [2009] AIRCFB 345:
[75] We have decided to include the current industry award redundancy provisions in the modern award as an industry-specific redundancy scheme.
…
[77] We are satisfied that the redundancy scheme in the building industry award redundancy provisions is an established feature of the building and construction industry. Having regard to the arbitral history and general application of the current redundancy prescriptions within awards in the building and construction industry the scheme is properly described as an industry specific redundancy scheme.
[78] The redundancy benefits in the NES had their origin in the Termination, Change and Redundancy Case, (TCR Case) 23 modified in the Redundancy Case 2004. However, award provisions for redundancy in the building and construction industry took a different path, reflecting the particular circumstances of employment in that industry. That arbitral history commenced with a decision in 1989 of a Full Bench, which applied the TCR Case with modifications to suit the employment terms and conditions applying in the industry. Special provision was included for the accrual of redundancy benefits because of the high labour mobility in the industry. Before an order could be issued, however, some employer parties to the relevant awards obtained an order nisi for prohibition in the High Court. The Full Bench orders, and the High Court proceedings, were overtaken by a 1990 decision which determined what was to become the final form of the redundancy provisions for the building and construction industry. That decision was based on an in-principle agreement between organisations respondent to the awards. Two appeals against this decision were dismissed.
[79] In June 1998, another Full Bench of the Commission considered the redundancy scheme within building and construction industry awards, inserting the provisions in the Building and Construction Industry (Northern Territory) Award 1996, against the opposition of employers. The Full Bench stated:
“We are satisfied that the variation of the Award in the terms set out in Exhibit B13 would bring that award into conformity with comparable federal awards that apply generally in the building and construction industry throughout Australia. Those provisions, and …the corresponding State awards, reflect the outcome of a relatively tortuous process of arbitration and negotiation. That process resulted in the development of what was described by several Full Benches as “one general statement of benefits to apply to redundancy in the building and construction industry… ….
We are satisfied that it is appropriate, and consistent with the merits of the case, that the award should be varied to reflect what we accept to be effectively a national minimum award or safety net standard condition applicable to the building and construction industry.”
[80] Whilst, as noted in our 23 January 2009 statement, the current award prescription does not reflect the standard for larger employers arising from the Redundancy Case 2004 decision, when regard is had to the slightly more beneficial scale of benefits in earlier years, the broader application of the benefit and the pattern of limited periods of continuous service within the industry to which the building and construction redundancy provisions were directed we are also satisfied that when considered in totality, the scheme is no less beneficial to employees in the industry than the redundancy provisions of the NES. In relation to the pattern of service in the industry, we have relied on to the data supplied by Incolink, BERT and CoINVEST contained in the CFMEU submission of 11 March 2009.
[81]The Master Builders Australia (MBA) and some other employer bodies contended that the building industry arrangements cannot constitute an industry specific redundancy scheme. It was pointed out that the application of the scheme extends beyond redundancy as defined by the NES. Some suggested that the definition of redundancy in the current award provisions should be modified to reflect the NES. We do not accept these submissions. There are several reasons. First, in determining whether a particular scheme is an “industry specific redundancy scheme” the Commission can have regard to the factors mentioned in the passage we have set out above. Having regard to those factors, we are satisfied that they apply to the scheme. Secondly the definition of redundancy in the NES does not apply to an industry specific scheme. Clause 64, which is in Subdivision C—Limits on scope of this Division – of the NES, provides that Subdivision B does not apply to an employee covered by a modern award which includes an industry-specific redundancy scheme. While Subdivision B sets out the circumstances in which the NES entitlement to redundancy pay arises and to the amount of the entitlement that sub-division does not apply to an industry-specific redundancy scheme. It follows that an industry-specific redundancy scheme can deviate from the NES redundancy prescription in relation to both the circumstances in which the benefits arise and the amount of the benefits. Thirdly, the ability to include an industry-specific redundancy scheme in a modern award implies that the scheme as a whole can be included. A modified scheme might not meet the criterion, found in the consolidated request, that the scheme be a feature of the industry. Finally, the building industry scheme clearly falls within the definition of industry specific redundancy scheme in s.12 of the Fair Work Bill 2009, the relevant part of s.12 reads:
“industry-specific redundancy scheme means redundancy or termination payment arrangements in a modern award that are described in the award as an industry-specific redundancy scheme.”
[82] The modern award has clarified provisions permitting some other payments to be offset against payments required under the industry specific redundancy scheme. Payments made to an employee from a redundancy pay fund, where such payments are made, or contributions on behalf of an employee to such a fund where no payments are made upon termination can be offset.
It cannot be said that it is against Parliamentary intention for a “redundancy” to include a “resignation” when the Act specifically allows for industry-specific redundancy schemes. If Parliament intended for there to be a “uniform” definition of redundancy it would have stated so in s 141 of the Act. That is it would have made it clear that industry specific redundancy schemes must have a specific definition of “redundancy”. The Court notes that s 513(4) of the WR Act did provide that definition. However, this definition has not been replicated in the current Act.
Here, the term was included in the award modernisation process. It was Parliament’s intention that the redundancy scheme in the Award, including the definition of redundancy, was to apply.
Ground C is dismissed.
In relation to Ground D, as noted in Rhodes, as recently as 2018 there were submissions advocating for the removal of the redundancy scheme in the Award or amendment the definition of “redundancy” in the Award: 4 yearly review of modern awards—Construction awards [2018] FWCFB 6019. Those submissions were rejected and the decision was made that the redundancy scheme in the Award was to remain as is. The redundancy scheme did not offend the objective of the modern awards.
In circumstances where it has been found that the redundancy provisions in cl 17 of the Award do not offend the modern awards objective, the Court does not consider that there are “public policy” reasons for the definition of redundancy to be limited. If that were the case (i.e., that there were public policy reasons for the clause to not be interpreted as it has here), then it could hardly be considered as being in accordance with the modern awards objective and the Fair Work Commission would have acted accordingly to vary or omit the clause. It did not. Instead, it expressly approved the clause.
Kuredale’s submissions that the “floodgates” will open is also not accepted. This clause has been a part of various awards for a not insignificant period of time (at least since 1990). There has been very little litigation to date that challenges the scope of what is meant by “redundant”. This suggests that employers alike have accepted that they are required to pay “redundancy” when an individual resigns.
Further, the High Court has warned against approaching the task of interpretation by reference to what might be regarded as a desirable policy, imputing that to the text and then characterising that as the purpose of the text: Deal v Father Pius Kodakkathanath [2016] HCA 31 at [37]. The meaning of a particular provision must be derived from what is stated and not from any assumption about what the desired or desirable reach or operation of the relevant provision or word should be: Certain Lloyd’s Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56 at [26].
Here, the plain text of cl 17.2, the historical context of cl 17.2 and Parliament’s clear intention for industry specific redundancy schemes to remain with very minimal limitations (with those limitations being governed by the Fair Work Commission) are such that the Court does not consider that it would be against public policy to interpret “redundancy” broadly. Indeed, that is what the clause intends and has intended for some time.
Finally, accepting that Mr ten Vaanholt and Mr Trigo wished to withdraw their complaint, the Court does not understand how this supports Kuredale’s public policy argument. Mr ten Vaanholt and Mr Trigo are two employees. Ms Michael stated in submissions that there are “many employees”. The fact that two employees may have changed their mind about whether they were entitled to “redundancy pay” does not support a finding that such a clause is against public policy.
Ground D is dismissed.
Did Kuredale commit the contravention as set out in the compliance notice?
The Court has, for the reasons above, dismissed each ground that Kuredale raises to suggest that it did not commit the contravention alleged in the compliance notice. Accordingly, the Court is not satisfied that Kuredale has proved that the contravention as alleged did not occur.
Here, the inspector correctly understood that cl 22 of the Agreement required that Kuredale pay Mr Trigo and Mr ten Vaanholt 8 weeks of redundancy pay. This entitlement arose from cl 17 of the Award which, relevantly, includes a “resignation” within the meaning of redundancy.
In circumstances where the basis upon which Kuredale sought review of the compliance notice (under s 717(1)(a)) is not established, the Court finds that the compliance notice must be confirmed pursuant to s 717(3).
COSTS
Kuredale made submissions that costs should be awarded as the issuance of the compliance notice was an unreasonable act that has caused Kuredale to incur costs. Given that Kuredale has been unsuccessful in relation to the substantive application, the costs application must also fail.
The FWO makes no submission or claim for costs. As such, there will be no order as to costs.
CONCLUSION
Having reviewed the compliance notice and found that Kuredale has failed establish that the contravention set out in the compliance notice has not been established and that the compliance notice is otherwise compliant with s 716, the Court confirms the notice pursuant to s 717(3). An order will be made to that effect.
There will be a further order that there be no order as to costs.
The application filed 31 March 2020 will, otherwise be dismissed.
I certify that the preceding one hundred and sixteen (116) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kendall. Associate:
Dated: 25 February 2021
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