Leo and Green Pty Ltd v CFMEU
[2000] FCA 830
•20 JUNE 2000
FEDERAL COURT OF AUSTRALIA
Leo & Green Pty Ltd v CFMEU [2000] FCA 830
INDUSTRIAL LAW – where entitlement to severance and retrenchment pay arose under clause 26 of the Coal Mining Industry (Production and Engineering) Interim Consent Award 1990 – whether retrenchment occurs upon receipt of notice or on expiry of four-week period for which notice provides – consideration of relevance of history of an award clause to proper construction of it.
Coal Mining Industry (Production and Engineering) Interim Consent Award 1990 cl 26
Coal Industry Act 1946
Workplace Relations Act 1996 s 178, s 422
Industrial Relations Amendment Act 1995Byrne v Australian Airlines (1995) 185 CLR 410 cited
Glacier Metal Co Ltd v Dyer [1974] 3 All ER 21 discussed
Birrell v Australian National Airlines Commission (1984) 5 FCR 447 cited
Short v F.W. Hercus Pty Ltd (1993) 40 FCR 511 cited
Australian Colliery Staff Association v Queensland Mines Rescue Service
(1999) FCA 395 cited
Chantler v Local Government Superannuation Board (1985) 9 IR 284 cited
Lawrence v Clutha Development Proprietary Ltd (unreported, Keely J, 10 May 1985) - approvedLEO & GREEN PTY LTD v CONSTRUCTION FORESTRY MINING AND ENERGY UNION
Q 31 OF 1999SPENDER J
20 JUNE 2000
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 31 OF 1999
BETWEEN:
LEO & GREEN PTY LTD
APPLICANTAND:
CONSTRUCTION FORESTRY MINING AND ENERGY UNION
RESPONDENTJUDGE:
SPENDER J
DATE OF ORDER:
20 JUNE 2000
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The orders of Industrial Magistrate MacCallum SM of 1 February 1999 concerning Christopher John Birchley be set aside.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 31 OF 1999
BETWEEN:
LEO & GREEN PTY LTD
APPLICANTAND:
CONSTRUCTION FORESTRY MINING AND ENERGY UNION
RESPONDENT
JUDGE:
SPENDER J
DATE:
20 JUNE 2000
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This is an appeal from part of a judgment of the Industrial Magistrate, Ms MacCallum SM, given on 1 February 1999 at Ipswich, by which the Court ordered that Leo & Green Pty Ltd pay severance pay and retrenchment pay (the payments) to one Christopher John Birchley.
The appeal turns on the meaning and effect of clause 26 of the Coal Mining Industry (Production and Engineering) Interim Consent Award dated September 1990 (the Award). The Award was made by the Coal Industry Tribunal pursuant to the powers given to it by the Coal Industry Act 1946. The appeal really turns on the question of when, pursuant to clause 26 of the Award, the entitlement to receive the payments arises. Both parties agree that the entitlement arises when an employee is retrenched. The dispute is as to when it can be said that an employee is retrenched. The appellant contends that an employee is retrenched at the expiration of the four weeks notice of retrenchment which an employee is entitled to receive; the respondent contends that an employee is retrenched when the notice of retrenchment is first communicated.
The factual circumstances giving rise to this dispute I take from the findings of the Magistrates Court. Leo & Green Pty Ltd mined coal for the mine owner, Idemitsu, but in late 1996/early 1997 that contract was lost, and as a consequence the company’s workforce was “laid off”. The Magistrate said:
“…[the] company advised [Mr Birchley] by letter dated 30th January, 1997 that [his] employment would be terminated at the end of [his shift] on 28 February 1997 …
[the letter] clearly set out that reduction of hands would be in accordance with relevant provisions of the Leo and Green Ebenezer Open Cut Enterprise Agreement … Mr Birchley wrote a letter of resignation dated 10.2.97 … and stating an intention to resign as from 14.2.97. This was because he had obtained employment with Thiess Contractors at a mine site some distance west of Mackay.
As a consequence of a discussion with Geoff Hillier, the Mine Production Manager for the Respondent company, to the effect that he would not be getting any severance or retrenchment pay he withdrew by agreement his letter of resignation. Mr Birchley alleges that there was then a discussion between his new employer and Mr Leo and although the terms of that contact are disputed by Mr Leo the fact is that Birchley left the respondent’s employ on the date originally intended, namely 14.2.97. However it is fair to say that even on Mr Birchley’s version there was no firm agreement that he would get any retrenchment and severance pay when he left the respondent’s employ before the termination date specified.”
Clause 26 of the Award relevantly provides as follows:
“(a) Severance Pay
(1)Subject to paragraph (2) hereof, when a reduction of hands is decided upon by an employer respondent to this award an employee who is retrenced [sic] shall be entitled to receive from the employer severance pay calculated at the rate of one ordinary week’s pay for each completed year of employment.
(2)An employer who no later than seven days after the date of termination of employment obtains or causes to be made available for the employee at another mine operate[d] by the employer work which the employee is competent to perform which carries the same or higher classification rate of pay, which the employee was receiving at the date of termination of service which [may] reasonably be regarded as permanent and which is in the same general locality as the employee’s previous employment, shall not then be liable for payment to the employee of severance pay as provided in paragraph (1) hereof.
(b)Retrenchment Pay
(1)Subject to paragraph (2) hereof, when a reduction of hands is decided upon by an employer respondent to this award by reason of technological change, market forces or diminution of reserves, an employee notwithstanding the provisions of Clause 5 herein shall receive one month’s (four working weeks) notice of retrenchment and in addition to the payment required to be made under paragraph (a)(1) hereof shall be entitled to receive from the employer retrenchment pay calculated at the rate of two ordinary week’s pay for each completed year of employment with a minimum payment notwithstanding the length of employment of two ordinary week’s pay.
(2)An employer who no later than seven days after the date of termination of employment obtains or causes to be made available for the employee at another coal mine …work which the employee is competent to perform which carries the same or higher classification rate of pay which the employee was receiving at the date of termination of service and which may reasonably be regarded as permanent shall not then be liable for payment to the employee of retrenchment pay as provided in paragraph (1) hereof.”
The Magistrate accepted the submission of Mr Horneman-Wren, counsel for the complainant before her (as he was for the respondent in this Court) which was, in essence, that the entitlement to the payments arises when the notice of termination is given, and not when the notice expires. The Magistrate also accepted that:
“… it matters not whether an employee resigns in a formal sense or whether it is agreed he can leave at an earlier date than that specified in the Termination Notice, the obligation to pay arises upon the giving of the notice of termination.”
The appeal from her Worship’s decision comes to the Federal Court pursuant to s 422 of the Workplace Relations Act 1996 (the Act). The Construction Forestry Mining and Energy Union (the CFMEU) had lodged a complaint and summons pursuant to s 178 of the Act, which provided that where there had been a breach of an award a penalty may be imposed and an order may be made for the payment of any moneys which had not been paid or which were underpaid.
The Award here was made by the Coal Industry Tribunal (the Tribunal), and clause 26 had a history. That history commenced with a “decision” of the Tribunal on 19 January 1983, which was headed “In the matter of an industrial dispute or matter wherein …” and named various employee’s associations and the New South Wales Coal Association and Queensland Coal Owners’ Association as parties, and which related to a decision made in respect of a claim for benefits upon retrenchment. Under the heading “Quantum”, the Tribunal said:
“The present award provision is for one ordinary week’s pay for each completed year of service provided the employee has had five years service with the employer”.
The Tribunal later said:
“I do find however that the existing provision is inadequate if the effect of retrenchment is loss of membership of the industry, ie if no place within it is available”.
After referring to a number of relevant factors, the Tribunal later found:
“… my assessment of the appropriate amount is three ordinary weeks pay for every completed year of service.
The decision will be implemented in the following manner. The existing severance pay provisions are to be retained, subject to the removal of the barrier [this is a reference to the requirement for five years service]. There will be a further provision made for retrenchment on the specified grounds of technological change, market forces and diminution of reserves. This further provision which will provide for two weeks pay for every completed year of service with a minimum of two weeks pay for every employee will be in addition to the adjusted provision for severance pay. The provision – apart from its requirement for notice of one month – will only require such payment if another job within the industry in the district in which the mine is situated is not found or made available. The replacement job must be obtained or made available no later than seven days after termination and must carry at least the same award rate of pay.”
On April 11 1983 the Tribunal published a further “decision” involving the same parties as those referred to above, which commenced:
“The Tribunal’s decision on applications by coal mining unions for retrenchment provisions was handed down on 19 January 1983. Following the decision a number of the parties sought clarification of the provisions of the ensuing order and an application for a conference to that end was made by the Miners Federation on 16 February 1983.”
The Tribunal noted that a number of questions had been raised before the Tribunal. It then set out the clause under consideration, which was materially the same as clause 26 in the Award here, and listed a number of the questions raised with answers given to them. Relevant to the present case are question 7 and question 19 and the answers given to each, as follows:
“Q.7Employees are given four working weeks notice by the employer in accordance with sub-clause 26(1)(c) of the N.S.W. Miners Award. What retrenchment pay, if any, is payable if the following circumstances arise during the notice period:
(a)An employee resigns to take up a position at another mine?
(b)An employee resigns for personal reasons other than as in (a)?
A.(a) and (b)
No entitlement arises. The employee retains his right to resign during the period, but if he does so by his unilateral act he relinquishes his rights under the clause. See also the answer to Question 19.
…
Q.19Must a retrenched employee work out the full four weeks notice to become entitled to retrenchment benefits?
A.Yes. As with the rulings given to questions 7(a) and 7(b) I do not mean by this ruling that there cannot be mutual agreement to vary the position in appropriate circumstances. However, in none of these cases is there any unilateral right to do other than comply with the award.”
Seven years after these “decisions” were published, the Award under which the present complaint before the Industrial Magistrate was made came into existence. Pursuant to the Industrial Relations Amendment Act 1995 the Tribunal was abolished, but provision was made that an award of the Tribunal was deemed to be an award of the federal Commission.
The appellant contends that the Magistrate erred in applying to the provisions of the Award principles which apply to contracts. It was said that an award was a creature of statute, and an award is not bound to follow the common law principles relating to contract.
In Byrne v Australian Airlines (1995) 185 CLR 410, Brennan CJ, Dawson and Toohey JJ said at 420:
“A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract.”
Their Honours said at 421:
“The correct view, in our opinion, is that reflected by the remarks of Isaacs J in Josephson v Walker [(1914) 18 CLR 691], a case in which an employee claimed the unpaid balance of wages due under an award. Isaacs J said (63):
‘And the unpaid balance is claimed as due by virtue, not of a common law contract, but of the statutory obligation which subsists notwithstanding any agreement to the contrary – no man being capable under the Statute of contracting himself out of his rights or obligations in this respect. The right claimed is a new right. It is a right which was unknown before to the law: a right to receive from an employer more than was bargained for.’”
The proper construction of clause 26 of the Award does not depend on the importation into it of concepts or interpretations appropriate to the common law. McHugh and Gummow JJ said in Byrne:
“The appellants sought support for their submissions as to Australian law from developments in labour law in the United Kingdom. But these reflect the particular industrial relations system of that country. It hardly needs to be stated that social conditions, the history of labour relations, and the relevant legislative schemes differ significantly”.
And later:
“…the Australian system of state supported and legislatively-based dispute prevention and resolution, not merely by contractual bargaining but by conciliation, arbitration and an award structure, remains significantly different.”
The above submissions were made on behalf of the appellant in response to the reliance by the CFMEU on cases such as Glacier Metal Co Ltd v Dyer [1974] 3 All ER 21. In that case an employee was given six weeks notice on 20 July 1973, the effect of which was that his contract of employment would terminate on 31 August 1973. Subsequently, the employee orally requested the employers that his employment be terminated on 10 August 1973. The employers agreed to that request, and the employee left his employment on that date. On a complaint of unfair dismissal, it was contended for the employers that the employee had not been “dismissed” within the meaning of the relevant Act, it being asserted by the employer that the contract had been terminated by the employee’s own act. The National Industrial Relations Court held that the notice given by the employee to the employers did not constitute a notice to terminate the employee’s contract, but was merely a request by the employee to leave his employment on the earlier date. The Court held that the operative action terminating the employee’s contract was at all times that of the employers in giving the employee notice of dismissal on 20 July 1973. It followed that the employee had been dismissed within the meaning of the Act.
The Court agreed that the true position was that the respondent employee:
“was not giving notice terminating his employment. What he was doing was saying to the company, ‘You have given me a notice of dismissal which will terminate my contract on 31st August. Do you mind if I leave the employment of the company on 10th August?’ And the company agreed to that request. On that view of the matter, the operative action terminating the employee’s contract was at all times that of the appellant in giving him notice of dismissal on 20th July.”
The Court held that the Tribunal’s conclusion was correct when it held that:
“when a man says, ‘I accept the sacking and would like to go on Friday with cards and money’, that can only mean, ‘I am going as a result of the sacking, and I wish the sacking to take effect not on 31st August, but on Friday 10th August’.
In Birrell v Australian National Airlines Commission (1984) 5 FCR 447, Gray J held that the giving of notice of termination of a contract in accordance with the terms of that contract is a unilateral right, but that upon such notice having been given, it can only be withdrawn with the consent of both parties. His Honour said at 457, in relation to the exercise of the unilateral right, that:
“Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice.” (emphasis added.)
In seeking the proper construction of clause 26 of the Award, it is not irrelevant to have regard to its history. In Short v F.W. Hercus Pty Ltd (1993) 40 FCR 511, Burchett J said, at 517:
“The question was raised whether it is legitimate, for the purpose of construing a clause of an award, to look at what was called the history of the provision. In Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 at 251, 254 and 256-257, the Commonwealth Industrial Court construed an industrial agreement containing a clause which had appeared in a succession of similar agreements over a period of about 25 years. The clause being perhaps ambiguous, the court relied on its adoption by the parties from the series of prior agreements, under which a particular interpretation had been accepted, as showing its true construction.”
Later he said:
“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use.”
His Honour said, at 518-9:
“But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions – and this is the other answer to the argument put – would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived.”
While it may be said that the opinion of the drafter of clause 26 of the Award as to its meaning or application cannot prevail if that opinion is contrary to the true meaning of the clause, where a clause is ambiguous, it seems to me not irrelevant to have regard to that preferred interpretation.
It can be accepted that the structure of clause 26 is that paragraphs (a)(1) and (b)(1) create an entitlement to severance pay and retrenchment pay when the conditions in those paragraphs exist: see Cooper J in Australian Colliery Staff Association v Queensland Mines Rescue Service (1999) FCA 395 at 15. The question is when the conditions in those paragraphs can be said to exist.
I accept that the operative action terminating Mr Birchley’s employment was the notice of retrenchment provided to him by the appellant. It does not follow, in my opinion, that the entitlement to severance pay or retrenchment pay arises when the notice of retrenchment is given. One of the meanings of the word, “retrench” in the Macquarie Dictionary is “to sack or dismiss, as part of an effort to economise.” In Chantler v Local Government Superannuation Board (1985) 9 IR 284, Lusher J in the Supreme Court of New South Wales said at 297:
“In common understanding the employee is described as redundant when he is superfluous to or in excess of or unnecessary for the needs or requirements of the particular enterprise or in other words there is a lack of or reduction of work available for him to perform. He is retrenched, ie., reduced from or removed from the workforce for the same reason.”
In my opinion, a person is not retrenched at the time he or she receives a notice of retrenchment. The very notion of a notice of retrenchment is to provide, in advance, information of a state of affairs to come into existence at a later time. Again, in my opinion, a person is not retrenched when he or she receives a notice of retrenchment, even though that notice cannot be unilaterally withdrawn by the employer. The worker is retrenched at the expiry of the notice. I think this is the preferable construction of clause 26 of the Award.
The quantum of both severance pay and retrenchment pay depends on the length of service. The length of service does not end when a notice of retrenchment is given. The expiry of the period of notice determines the end of the service, on which the quantum of the payments is based. The entitlement to receive the payments is obviously directed to the termination of the employment. I agree that clause 26 (b)(1) of the Award should be read as if the words “who is retrenched” were inserted immediately after the reference to an “employee” in the third line of the print. I agree with the observations by Keely J in Lawrence v Clutha Development Proprietary Ltd, an unreported judgment of Keely J in the Federal Court of 10 May 1985. His Honour’s opinion was expressed in paragraph 7:
“That opinion is based upon (i) the construction of clause 28(1) as a whole, (ii) the similarity of wording in sub-clauses (a) and (c) of that clause, (iii) the fact that the entitlement under sub-clause (c) is expressed as being “in addition to the payment required to be made under sub-clause (a)”, and (iv) the use of the words ‘retrenchment pay’ in sub-clause (c), in dealing with the employee’s entitlement.”
That case, his Honour held, was not a case of retrenchment within the meaning of clause 28 in the award there, which was materially no different from clause 26 in the Award here, but there was a “voluntary retrenchment” which was constituted, not by a decision of the employer, but by the employee’s decision made because he had been offered an inducement to leave his employment.
The context which the predecessor of clause 26 came into existence is clear to me. When introducing it (in the January 1983 “decision” referred to at para 7 herein), the Tribunal expressed the view that the pre-existing provision was inadequate “if the effect of retrenchment is loss of membership of the industry, ie if no place within it is available.”
It was that consequence which was contrasted in the Tribunal’s reasons with the situation where “further employment within the industry can be found within a reasonable period”. That consideration is reflected in the exemptions provided in clause 26(a)(2) and (b)(2) of the Award, although the restrictions speak only of the employer providing or causing to be found alternative employment within a reasonable proximity at no less rate of remuneration, rather than further employment within the industry generally.
It might be thought counter-productive that the possible forfeiture of severance and retrenchment pay would act as a disincentive to a person under notice of retrenchment seeking alternative employment, and would incline a person to wait until the period of notice of retrenchment had expired before taking up alternative employment in the industry, so as to have the benefit of the payments but still have ongoing employment in the industry. However, it seems clear that the purpose of the significantly enhanced severance and retrenchment payments was to provide a more adequate provision for, in the Tribunal’s words, “loss of membership of the industry”.
For the above reasons, the appeal should be allowed, and the orders of Industrial Magistrate MacCallum SM of 1 February 1999 concerning Christopher John Birchley be set aside.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender J. Associate:
Dated: 20 June 2000
Counsel for the Appellant: Mr G. Martin, SC Solicitor for the Appellant: Hunt & Hunt Counsel for the Respondent: Mr S. Horneman-Wren Solicitor for the Respondent: Nall Payne Date of Hearing: 24 June 1999 Date of Judgment: 20 June 2000
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