Kuredale Pty Ltd v Fair Work Ombudsman

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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

  1. 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

  2. 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”).

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Details
Case
[2021] FCCA 332
Decision Date

CaseChat Overview and Summary

Kuredale Pty Ltd sought judicial review of a compliance notice issued by the Fair Work Ombudsman (FWO). The FWO contended that the compliance notice should be confirmed, while Kuredale argued for its cancellation. The dispute arose from allegations by two former employees, Victor Trigo and Mitchel ten Vaanholt, that they had not been paid redundancy entitlements. Kuredale employed these individuals under the Metro Lintels Offsite Enterprise Agreement 2016, and the FWO, through a Fair Work Inspector, issued the compliance notice based on a belief that Kuredale had contravened a term of this agreement.

The central legal issue before the Court was whether the compliance notice was validly issued, specifically concerning Kuredale's obligation to pay redundancy entitlements to Mr Trigo and Mr ten Vaanholt. Kuredale argued that the employees were not entitled to redundancy pay because they had resigned, and therefore their positions were not "redundant" in the ordinary dictionary sense of becoming superfluous. Alternatively, Kuredale contended that the National Employment Standards (NES) regarding redundancy should apply. The FWO maintained that the compliance notice correctly identified a contravention of the Agreement.

Kendall J rejected Kuredale's arguments. The Court found that clause 22.1 of the Agreement expressly stipulated that for offsite employees, the redundancy provisions of clause 17 of the Building and Construction General On-site Award 2010 applied, not the NES. Furthermore, section 123 of the Fair Work Act 2009 (Cth) excludes the NES redundancy provisions for employees covered by an industry-specific redundancy scheme, such as the one in the Award. Therefore, the Court concluded that the interpretation of the Agreement and the Award, as referenced in the compliance notice, was correct, and the employees were entitled to redundancy pay under the Award's provisions.

Consequently, the Court confirmed the compliance notice issued by the FWO, finding that Kuredale had failed to establish that the contravention alleged in the notice had not occurred and that the notice was otherwise compliant with section 716 of the Act. The application to cancel the notice was dismissed, and there were no orders as to costs.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.CONSIDERATIONGround 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.