Max Solutions T/A Max Solutions Pty Ltd v Karla Alvarado, Thi-Quyet Nguyen
[2022] FWCFB 229
•8 DECEMBER 2022
| [2022] FWCFB 229 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.604—Appeal of decision
MAX Solutions T/A MAX Solutions Pty Ltd
v
Karla Alvarado, Thi-Quyet Nguyen
(C2022/5262)
| VICE PRESIDENT CATANZARITI | MELBOURNE, 8 DECEMBER 2022 |
Appeal against decision [2022] FWC 1815 of Commissioner Simpson at Brisbane on 12 July 2022 in matter number C2022/3137 and C2022/3161
MAX Solutions T/A MAX Solutions Pty Ltd has lodged an appeal under s 604 of the Fair Work Act 2009 (Cth) (Act) for which permission to appeal is required, against a decision[1] of Commissioner Simpson issued on 12 July 2022. The decision concerned two applications made by MAX Solutions under s 120 of the Act on 26 May 2022.
The applications were made on the basis that MAX Solutions had obtained other acceptable employment for the respondent employees pursuant to s 120(1)(b)(i) of the Act.
In each application, MAX Solutions identified the MAX Solutions Enterprise Agreement 2020[2] (Agreement) as the basis of the respondent employees’ entitlement to redundancy pay.[3] It was not in dispute that, under the Agreement, Ms Alvarado’s redundancy pay entitlement was 10 weeks’ pay and Mrs Nguyen’s redundancy pay entitlement was 13 weeks’ pay. The applications sought to reduce the amount of redundancy pay owing to the respondent employees to nil.
The Commissioner dismissed the applications on the basis that he was not satisfied that the Commission was empowered to reduce the redundancy pay owing to the respondent employees under the Agreement.
MAX Solutions seeks permission to appeal the decision. It contends that the Commissioner erred in his construction of the Agreement and the application of s 55 of the Act. MAX Solutions also raises a procedural fairness concern.
The appeal was subject to a hearing in respect of both permission to appeal and the merits of the appeal. MAX Solutions was represented, with permission. The Australian Services Union (ASU) appeared for Ms Alvarado and Mrs Nguyen appeared on her own behalf.
The Agreement
Clause 9.4 of the Agreement deals with “Redeployment, Retirement and Redundancy” and provides as follows:
“9.4 Redeployment, Retirement and Redundancy
9.4.1This Section only applies to permanent employees and temporary employees whose employment does not terminate on completion of the employee’s temporary employment contract.
9.4.2The Company may terminate an employee’s employment where it determines that the job or position in which the employee is engaged does not need to be performed by anyone.
9.4.3The Company will make reasonable efforts to redeploy employees who would otherwise be retrenched where there is a redundancy.
9.4.4An employee who is terminated under the provisions of this Section is entitled to a redundancy payment based on the employee’s length of continuous service in accordance with the following table:
Employee’s period of continuous service with the Company on termination
Redundancy payment
LESS THAN 1 YEAR Nil At least 1 year but less than 2 years 4 weeks At least 2 years but less than 3 years 6 weeks At least 3 years but less than 4 years 7 weeks At least 4 years but less than 5 years 8 weeks At least 5 years but less than 6 years 10 weeks At least 6 years but less than 7 years 11 weeks At least 7 years but less than 8 years 13 weeks At least 8 years but less than 9 years 14 weeks At least 9 years but less than 10 years 16 weeks At least 10 years 13 weeks
9.4.5The weeks’ pay specified in clause 9.4.4 is the employee’s base rate of pay for the employee’s ordinary hours of work.
9.4.6An employee who is terminated on account of redundancy will also be provided with the notice of termination of employment that is required under clause 9.2.1 and may be paid in lieu of all or part of that notice.
9.4.7Where an employee is redeployed to a lower level position as a result of a redundancy, the employee will continue to be paid at the higher level for a period of time that is based on the employee’s length of service. For these purposes the number of weeks specified in the redundancy payment column in clause 9.4.4 will be the number of weeks the employee will continue to be paid at the higher level.
9.4.8An employee is entitled to finish his or her employment with the Company during the notice period. Where this occurs, the employee will not be paid for the part of the notice period that was not worked, but his or her redundancy payments and other termination payments will be calculated as though the employee worked for the entire notice period.
9.4.9Where the Company provides an employee with notice of termination on the grounds of redundancy, he or she is entitled to up to one day off with pay each week in order to look for another job. The Company may require the employee to provide evidence of his or her job search activities on any paid time off work under this clause. Where the employee does not provide such evidence, the Company may withhold payment for that time.”
It is relevant to note that the redundancy payment to which an employee is entitled pursuant to clause 9.4.4 of the Agreement is identical to the entitlement at s 119 of the Act until an employee has accrued 10 years’ continuous service, following which an additional one week is payable over and above the NES entitlement.
The decision under appeal
The decision concerns a preliminary issue identified by the Commissioner concerning MAX Solutions’ “standing” to bring the applications. The Commissioner’s concern arose on the basis that “the Agreement did not appear to provide capacity for Max Solutions to seek an order under section 120 to seek a reduction in redundancy pay.”[4] The Commissioner invited submissions on this matter and, with the consent of the parties, determined the “jurisdictional issue” on the papers.[5]
The Commissioner commenced by summarising MAX Solutions’ submissions,[6] and accepted that it had standing to bring the applications under s 120 of the Act. The Commissioner was satisfied that:[7]
“…where the terms of the Agreement and the NES are the same or similar as is the case here, they operate in parallel and by force of section 55(6) the NES applies as a minimum standard.”
Further, the Commissioner expressed satisfaction that clause 9.4 of the Agreement dealing with redundancy is “ancillary or incidental to and supplementary to the NES. It is not detrimental to an employee in any respect when compared to the NES.”[8]
The Commissioner observed that the Agreement did not include a provision which allowed for the reduction of the redundancy pay entitlement under clause 9.4.[9]
The Commissioner distinguished the applications before him from three Full Bench authorities dealing with applications under s 120 of the Act. The Commissioner distinguished DL Employment Pty Ltd v Australian Manufacturing Workers’ Union[10] (DL Employment) and Construction, Forestry, Maritime, Mining and Energy Union v JFM Civil Contracting Pty Ltd[11] for similar reasons, being that the basis of the redundancy entitlements in each of those cases did not arise because of s 119 of the Act.[12] By comparison, the Commissioner considered that the redundancy entitlement in the applications before him “arises from both the Agreement and the NES.”[13]
The Commissioner also distinguished the decision in Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd[14] (FBIS) in two respects. First, the Commissioner determined that clause 9.4 of the Agreement did not contain a term which enabled an employee’s redundancy entitlement to be varied or modified at all, whereas the relevant FBIS enterprise agreement contained a limited capacity to modify redundancy pay in circumstances where an employee refused an offer of “suitable alternative employment.”[15] The Commissioner found that clause 9.4 of the Agreement “could not be viewed as detrimental compared to section 120 of the Act in the same way as clause 2.5.5.1(c) was viewed as detrimental in the FBIS matter.”[16]
Secondly, the Commissioner stated that the capacity to modify redundancy pay in FBIS was determined to be detrimental when compared to the NES, particularly as it was not subject to any requirement to make application to the Commission for an order before the redundancy entitlement could be varied. Accordingly, the Commissioner observed that the provision was not regarded by the Full Bench in FBIS “as being ancillary or incidental to, or supplements the NES” pursuant to s 55(4).[17] Rather, the Commissioner continued, the Full Bench found in FBIS that the relevant FBIS enterprise agreement provision “offended section 55.1 on the basis that it excluded the NES or any provision of the NES.”[18]
Turning to the applications before him, the Commissioner noted that clause 1.5 of the Agreement does not support a conclusion that “the redundancy amounts in clause 9.4 are able to be reduced by application under section 120 in the circumstances…”[19] Clause 1.5 is a “NES precedence clause” and provides as follows:
“1.5 National Employment Standards
1.5.1Where the National Employment Standards are more beneficial to an employee than the provisions of this Agreement, the more beneficial provisions will apply to the employee.”
The Commissioner stated that MAX Solutions’ interpretation is that “the redundancy amount at clause 9.4 can be reduced relying on section 120 despite the Agreement saying nothing about an ability to reduce the redundancy amount, the only exception being the specific circumstances in section 9.4.7 pertaining to acceptance of an offer of redeployment.”[20] In respect of this contention, the Commissioner continued:[21]
“This interpretation favoured by Max Solutions flies in the face of clause 1.5 of the Agreement because it would not be more beneficial to an employee than the provisions of the Agreement, to allow a redundancy amount arising from clause 9.4 to be reduced in reliance on the NES when the Agreement itself does not provide (other than the specific circumstances in clause 9.4.7) for this ability.”
The Commissioner concluded that, unlike the position in FBIS where s 120 of the Act had “work to do to apply as a minimum standard,” the Agreement “standard of itself is either the equal of, or superior to the NES regarding section 119 and unlike section 120, the Agreement does not provide for a reduction of redundancy entitlements when the employment relationship ends.”[22]
The Commissioner therefore determined that s 120 of the Act had no work to do as a minimum standard in the circumstances before him, because “no potential outcome of a substantive hearing could improve upon the existing Agreement entitlement, and the interaction between the Agreement and the NES prevents a reduction in the entitlement relying on section 120.”[23]
The Commissioner dismissed each of the applications.[24]
Appeal grounds
By way of its notice of appeal, MAX Solutions appeals the decision on three bases. MAX Solutions submits that the Commissioner:
1. erred in the interpretation of clause 1.5 of the Agreement (ground one);
2. erred in finding the Agreement excluded the operation of s 120 of the Act (ground two); and
3. did not afford procedural fairness to the parties (ground three).
MAX Solutions submits that the grant of permission to appeal is in the public interest. It submits, inter alia, that the correctness of the approach taken by the Commissioner should be the subject of appellate authority, noting that the principles may have wider application. MAX Solutions also refers to a decision of a single member in Application by MAX Solutions Pty Ltd t/a MAX Solutions[25] which reached a different conclusion in similar circumstances under the Agreement to those arising in the applications before us.
Mrs Nguyen’s submissions on appeal do not directly address the grounds of appeal. The ASU, on behalf of Ms Alvarado, submits that it is not in the public interest to grant permission to appeal, as the decision is not inconsistent with relevant Full Bench authority. Nor, it is said, does the decision disclose appealable error. With respect to the contention of procedural unfairness, the ASU contends that there was no requirement or utility for MAX Solutions to be further heard on the matter once the preliminary jurisdictional point had been determined. Accordingly, it rejects that there was a denial of procedural fairness.
Consideration
The issue raised on appeal concerns the construction of the Act insofar as it relates to the application of s 120 of the Act to an agreement entitlement to redundancy pay. We consider these matters before turning to address the grounds of appeal.
The “minimum standards” maintained by the NES
The objects of the Act are established by s 3 of the Act. This includes, by s 3(b), the object of ensuring a “safety net of fair, relevant and enforceable minimum terms and conditions” through, amongst other things, the NES. Section 5(3) of the Act provides that “Part 2‑2 contains the National Employment Standards, which are minimum terms and conditions that apply to all national system employees.” Divisions 3 to 12 of Part 2-2 of the Act constitute the NES.[26]
The courts have described the NES as “terms and conditions of employment.”[27] The Full Court of the Federal Court in WorkPac Pty Ltd v Skene said as follows:[28]
“In the hierarchy of terms and conditions of employment, the National Employment Standards are at the pinnacle. The Standards have primacy over terms and conditions of employment provided by all other instruments including an enterprise agreement, modern award or a contract of employment.”
Section 61(1) provides that the NES are “minimum standards that apply to the employment of employees” and cannot be “displaced.”[29] The “minimum standards relate” to the 11 “matters” set out in s 62(2). Section 61(1) of the Act has the effect that, if an enterprise agreement contravenes the NES, the NES remains enforceable.[30] Only the employer is capable of being penalised under the Act for contravening the NES.[31]
The Full Bench in Family Friendly Working Arrangements[32] considered the minimum standards of the NES in the following terms:
“…the ‘minimum standards’ in the NES comprise minimum employment entitlements of employees. Any obligations of an employee or ‘rights’ of an employer under the terms of the NES constitute qualifications to the employee receiving a benefit, not substantive employer benefits or rights…”[33]
(footnotes omitted)
It follows that the rights of employers with respect to NES entitlements under the Act are, properly characterised, conditions (or qualifications) to the NES entitlements of employees when considering the “minimum standard” in the NES. The Act, in giving effect to the NES as a minimum standard, has effect where an employee is not afforded at least the minimum terms and conditions of employment in the NES.
Interaction between the NES and an enterprise agreement
Enterprise agreements the NES are distinct instruments and relate only insofar as the instruments respectively provide. Enterprise agreements may be about “permitted matters.”[34] It is uncontentious that “permitted matters” allow for the inclusion of terms which deal with the NES generally, the 11 matters dealt with in the NES, or a provision of the NES. Should an enterprise agreement contain terms of this kind, s 55 of the Act may be engaged.
The Full Bench in Family Friendly Working Arrangements considered the manner in which the NES is given effect under the Act in the context of a decision concerning a modern award.[35] We adopt this aspect of the decision insofar as it is directly applicable to enterprise agreements and expand on it as follows.
Section 55 of the Act deals with the interaction between the NES and an enterprise agreement. Section 55(1) relevantly provides that an enterprise agreement must not exclude the NES or any provision of the NES.[36] Not all exclusions in the manner contemplated by s 55(1) are prohibited by the Act. The Full Bench in Family Friendly Working Arrangements stated that “if an award or agreement term can operate so as to exclude the NES or a provision of the NES, this must be permitted by other provisions of s 55 or of the Act more broadly.”[37] In this respect, ss 55(4) and 55(5) provide that an enterprise agreement may include “terms” that:
(a)are ancillary or incidental to the operation of an entitlement of an employee under the NES, and/or supplement the NES, but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES (s 55(4)); and
(b)have the same (or substantially the same) effect as provisions of the NES, whether or not ancillary or supplementary terms are included as referred to in (a) above (s 55(5)).
In relation to s 55(4), these terms may only be included in an enterprise agreement to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the NES. In relation to s 55(5), terms that have the same or substantially the same effect as provisions of the NES are no better or worse than the NES. “To the extent” a term of an enterprise agreement is permitted by ss 55(4) and 55(5), s 55(7) provides that the term does not contravene s 55(1).[38]
Section 55(6) provides as follows:
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.
The supplementary explanatory memorandum to the Fair Work Bill 2008 states that s 55(6) “is designed to ensure the integrity of the NES, while allowing flexibility in relation to ‘above-NES’ entitlements.”[39]
Section 55(6)(a) has the effect of preventing an employee from receiving a double benefit from an entitlement that is simultaneously provided for in an enterprise agreement and the NES, but only “to the extent” an employee is given the same entitlement. Where the terms of the NES and the terms of an enterprise agreement do not give an employee the same entitlement, the agreement entitlement and the NES entitlement do not operate in parallel.
One effect of a NES entitlement operating in parallel is that an enterprise agreement may contain terms conditioning the entitlement that are different to the effect of related NES provisions to the corresponding NES entitlement. Alternatively, an enterprise agreement may contain a term which provides for a NES entitlement but be silent on the related NES provisions to that entitlement.
Section 55(6)(b) operates to “apply” provisions of the NES relating to a NES entitlement to the corresponding agreement entitlement as a “minimum standard,”[40] but only “to the extent” the entitlements are the same. The term “minimum standard” is similarly used in s 61(1) of the Act. We concur with the view of the Full Bench in Family Friendly Working Arrangements[41] that the minimum standard of concern to s 55(6)(b) is the same as the minimum standard referred to in s 61(1). Sections 55-56 and 61 are significant and related provisions with respect to the status of the NES in the Act and bear a harmonious construction. It follows that the terms and conditions of employment in the NES which do not function to maintain the minimum standards of employment of employees are not the focus of the “minimum standard” in s 55(6)(b).
Where a NES provision does not satisfy the minimum standard requirement, it continues to apply to the enterprise agreement pursuant to s 55(6)(b). However, there is no basis in s 55(6)(b) or otherwise in the Act for the NES provision to affect the agreement entitlement. Unless the enterprise agreement otherwise provides for the interaction with the NES, the related NES provision is excluded from having effect on the enterprise agreement entitlement. The terms of the enterprise agreement which operate to give rise to this exclusion must be permitted under s 55(7) or excluded to the extent of the inconsistency by s 56.
Importantly, s 55(6)(b) has the effect that related provisions of the NES apply to an agreement entitlement. A related NES provision is not incorporated into an enterprise agreement as a term or condition of the enterprise agreement. For example, where an enterprise agreement provides an employee entitlement to four weeks of paid annual leave per year but does not specify how annual leave is to be accrued, the related provision of the NES concerning how annual leave is to be accrued applies to the enterprise agreement entitlement and is capable of being enforced as a provision of the NES in the operation of the enterprise agreement, and not as a term of an enterprise agreement.[42]
The note to s 55(6) illustrates a further intended effect of the provision.[43] The situation postulated in the note to s 55(6) was the subject of a decision of the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Ltd.[44] The Court, by majority, confirmed that the provisions of the NES which relate to a NES entitlement only apply to the extent that the entitlement in an enterprise agreement gives an employee the same entitlement.[45] The majority said the following of s 55(6):
“[116] [Section 55 indicates] that the terms and conditions of employment for which the FW Act provides may be those in the NES and (relevantly) supplementary terms in a modern award or in an enterprise agreement. To the extent that the award or enterprise agreement entitlement is the same as the NES entitlement, the two entitlements operate in parallel. The NES standards do apply to the award or enterprise agreement entitlements, but only to the extent to which the entitlements in the latter match those in the former. That follows from the preface in s 55(6) which indicates that the NES apply to terms in the modern award or enterprise agreement “to the extent” that those terms give the employee an entitlement which is “the same as” the NES entitlement.
…
[119] Accordingly, s 55(6) has the effect that the NES contained in s 89 is concerned with the entitlements to paid annual leave arising under the NES itself, and not with all entitlements to paid annual leave.”
It follows that s 55 of the Act permits an enterprise agreement to provide for an entitlement addressed in the NES. The agreement entitlement may be different to the NES entitlement by supplementing the NES entitlement. The enterprise agreement may attach conditions to the supplementary component of the agreement entitlement which are detrimental to an employee when compared to the related NES provisions related to the entitlement. The terms giving effect to these conditions would not be the subject of s 55.
The provisions of the NES relating to redundancy pay
Division 11 of Part 2-2 establishes the entitlement to notice of termination of employment (Subdivision A), redundancy pay (Subdivision B) and Limits on the scope of the Division (Subdivision C).
Section 119(1) sets out the entitlement to redundancy pay. It provides as follows:
119 Redundancy pay
Entitlement to redundancy pay
(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
Note:Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.
…
The quantum of redundancy pay entitlements are set out in s 119(2) of the Act, by reference to an employee’s period of continuous service with their employer on termination.
Section 120 of the Act is a provision of the NES which is related to the NES entitlement to redundancy pay. It provides as follows:
120 Variation of redundancy pay for other employment or incapacity to pay
(1) This section applies if:
(a)an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and
(b) the employer:
(i) obtains other acceptable employment for the employee; or
(ii) cannot pay the amount.
(2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.
(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.
In the determination of an application pursuant to s 120 of the Act, the preconditions in s 120(1) require the Commission to be satisfied, first, that each employee the subject of the application has an entitlement to redundancy pay “because of” s 119 and, second, that the employer has either obtained acceptable employment for the employee or cannot pay the redundancy entitlement to which the employee is entitled under s 119.
Upon establishing the existence of the preconditions in s 120(1), the Commission may determine under s 120(2) whether the relevant employee’s entitlement to redundancy pay under s 119 should be reduced by an amount it considers appropriate.[46]
Pursuant to s 120(3), “The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.” It follows that s 120 is not concerned with the redundancy pay of an employee under an enterprise agreement or a contract. It is concerned with the NES entitlement to redundancy pay under s 119. This position is reflected in ss 120-122 of the Act, each of which operate to vary or exclude an employee’s entitlement to redundancy pay under s 119, and s 123 which excludes the operation of Division 11 of Part 2-2 in certain circumstances. The NES provisions concerning the NES entitlement to redundancy pay are, with some minor exceptions,[47] to be regarded as conditions to an employee’s entitlement to redundancy pay in s 119.
Sections 119 and 120 of the Act establish a minimum entitlement to be paid an amount of redundancy pay under s 119 which cannot be reduced other than by application to the Commission under s 120. The requirement that such applications are to be determined by the Commission, in limited circumstances, is a benefit to the employee. However, the Commission’s power to reduce redundancy pay under s 120 is enlivened upon application by “the employer” to the Commission. An employer’s right to apply to the Commission to reduce an employee’s redundancy pay entitlement is not, in our view, a benefit to the employee under the NES.
The Agreement
In its Form F45A for each respondent employee, MAX Solutions identifies the Agreement as the source of the entitlement to redundancy pay.[48] The relevant redundancy pay provision of the Agreement, clause 9.4, is set out at [7] above.
The principal issue in the appeal is whether the entitlement to redundancy pay in the Agreement is capable of being reduced by application to the Commission under s 120 of the Act. The Commissioner concluded that the redundancy pay could not be reduced pursuant to an application under s 120. For the reasons that follow, the Commissioner’s conclusion was correct.
Clause 9.4 of the Agreement contains an entitlement to an amount of redundancy pay which is either the same or greater than the amount in s 119(2) depending on the years of continuous service of the employee. The enlivening conditions to the redundancy pay entitlement reflect the NES for the purposes of each respondent. Clause 9.4 does not detract from the NES entitlement in any way. It is therefore capable of inclusion in the Agreement as a s 55(4) and/or a s 55(5) term and is not otherwise varied in its operation by the NES precedence clause in the Agreement. Further, clause 9.4 of the Agreement makes no reference to the NES. The entitlement to redundancy pay therefore operates as a distinct entitlement for employees to whom the Agreement applies.
To the extent the Agreement entitlement is the same as the NES, s 55(6)(a) operates such that that the NES and Agreement entitlement operate in parallel but not so as to confer a double benefit. It follows that, where the Agreement entitlement to redundancy pay is invoked, s 119 is excluded from the Agreement by the operation of clause 9.4.
The Agreement does not contain an express right which entitles MAX Solutions to make an application to the Commission pursuant to s 120 of the Act to reduce an employee’s entitlement to redundancy pay under the Agreement.[49] No such right can be implied as a matter of construction.[50]
In principle, to the extent that clause 9.4 of the Agreement and the entitlement to redundancy pay in s 119 of the Act are the same, the provisions of the NES relating to the NES entitlement apply to the Agreement entitlement by operation of s 55(6)(b). However, the related NES provisions apply as a “minimum standard” in the manner described above at [27] and [38]. That is, the minimum standards of employees.
While s 120 of the Act is a provision relating to the NES entitlement to redundancy pay, s 120 is fundamentally a right of an employer to apply to the Commission to reduce an employee’s redundancy pay entitlement. In this case, s 120 does not satisfy the “minimum standard” requirement in s 55(6)(b). If follows that neither the Act pursuant to s 55(6)(b) or otherwise, or the Agreement, provide that s 120 affects the Agreement entitlement to redundancy pay.
A jurisdictional prerequisite for an application under s 120 is that “an employee is entitled to be paid an amount of redundancy pay because of section 119.” It is difficult to envisage a situation where s 120 could satisfy the “minimum standard” requirement in s 55(6)(b) to affect an enterprise agreement entitlement to redundancy pay, or any circumstance where s 55(6)(b) could be relied upon to support an application satisfying the precondition in s 120(1).[51]
Ms Alvarado’s redundancy pay entitlement of 10 weeks’ pay under clause 9.4.4 of the Agreement mirrors the NES. The Agreement does not contemplate a mechanism for reducing that entitlement by way of an application under s 120 of the Act, or at all. In these circumstances, while s 120 applies to Ms Alvarado’s Agreement entitlement to redundancy pay by way of s 55(6)(b), in applying as a minimum standard s 120 would not be engaged at all. Further, the jurisdictional prerequisites under s 120(1) are not made out.
Mrs Nguyen is entitled to 13 weeks’ redundancy pay pursuant to clause 9.4.4 of the Agreement (which is superior to the 12-week redundancy pay entitlement that would otherwise be owing to Mrs Nguyen under the NES). To the extent the entitlement is the same as the NES, the reasoning with respect to Ms Alvarado’s entitlement apples. In relation to the entitlement to an amount of redundancy pay that is greater than the NES, being one additional weeks’ redundancy pay, only the Agreement conditions apply to that amount. The Agreement does not contemplate any manner in which the supplementary entitlement to redundancy pay under clause 9.4.4 can be reduced, and so the additional week cannot be reduced at all.
We turn now to consider the appeal grounds advanced by MAX Solutions.
Appeal ground two
We commence with appeal ground two.
MAX Solutions submits that the Commissioner erred in the application of s 55(6) of the Act by finding that s 120 did not apply “due to the terms of the Agreement” and by failing to follow the reasoning of the Full Bench in FBIS.[52]
MAX Solutions contends that the Commissioner’s conclusion at [38] of the decision (see [16] above) is erroneous in two respects. It is submitted that the Commissioner erred:[53]
(1) in finding that the redundancy entitlement arose from clause 9.4 of the Agreement as opposed to the NES; and
(2) in relying on the premise that an entitlement needs to be reflected in the Agreement when the NES provides for such an entitlement.
MAX Solutions says that each of these errors is founded on a misapplication of ss 55(4) and 55(6) of the Act. In summary, MAX Solutions submits that a NES entitlement co-exists with an agreement entitlement such that in the present case, s 120 of the Act remained enforceable.[54] MAX Solutions notes that there is nothing in clause 9.4 of the Agreement which addresses the reduction in redundancy pay where “other acceptable employment” is offered, unlike the position in DL Employment.[55]
For the reasons that follow, we do not accept that the Commissioner erred in the manner contended by MAX Solutions.
Consistent with the position expressed at [51] to [61] of this decision, we do not regard the Commissioner’s ultimate conclusion that s 120 of the Act did not apply in the applications before us to be erroneous. Without restating the position earlier expressed concerning our construction of the Act, we provide the following in response to the contentions advanced.
To the extent that the Commissioner concluded that the respondent employees’ redundancy pay entitlement arose from “both” the Agreement and the NES, the Commissioner erred. The redundancy pay entitlements in the Agreement operate in parallel with the corresponding NES entitlement, but MAX Solutions only seeks to reduce the Agreement entitlement. MAX Solutions acknowledged in its applications to the Commission that the Agreement formed the basis for the respondent’s redundancy entitlements.[56]
The NES entitlement is not “subsumed” by the Agreement in the manner contended by MAX Solutions,[57] such that the entitlement to redundancy pay is “founded” interchangeably from both clause 9.4 of the Agreement and s 119 of the Act.[58] MAX Solutions’ reliance upon the decision in Family Friendly Working Arrangements in support of this contention is misplaced. As explained by the Full Bench in Family Friendly Working Arrangements,[59] s 55(6) explains how the NES interacts with enterprise agreement entitlements that “subsume” a NES entitlement pursuant to s 55(5); relevantly, with the terms operating in parallel. Clause 9.4 of the Agreement therefore operates in parallel with the corresponding NES entitlement, with the terms of the NES applying to clause 9.4 applying only as a minimum standard. The Agreement and the NES are mutually exclusive sources of the entitlement to redundancy pay, relating only insofar as the Act and the Agreement provide. As described above, the Act and the Agreement do not interact in a manner which allows s 120 to affect the entitlement to redundancy pay in clause 9.4.
MAX Solutions also contends that the Commissioner erred by failing to follow the reasoning of the Full Bench in FBIS.[60] We reject this contention. The decision in FBIS considered an enterprise agreement containing terms that were materially different to those in the Agreement. Of significance in FBIS was an agreement term which automatically reduced an employee’s redundancy pay entitlement to nil and was therefore detrimental to an employee when compared to s 120 of the Act.[61] No similar provision operates under the Agreement and the Commissioner was correct to distinguish FBIS on this basis.
Further to the above, MAX Solutions notes that clause 9.4 of the Agreement is silent on the capacity to reduce an employee’s entitlement to redundancy pay where other acceptable employment is offered. It points generally to the decision of the Full Bench in DL Employment in this respect.[62] The enterprise agreement applicable to the relevant employees in DL Employment did not, as in the Agreement before us, contain a reduction mechanism.[63] It follows that the factual circumstances in DL Employment are, in all material respects, similar to the applications before us. Despite this, MAX Solutions does not otherwise address the conclusion of the Full Bench in DL Employment that s 120 of the Act only applies “if the employee ‘is entitled to be paid an amount of redundancy pay by the employer because of section 119’” other than to advance its position that the respondents’ redundancy entitlement is founded in both s 119 of the Act and clause 9.4 of the Agreement.[64]
The Full Bench in DL Employment determined, on the facts before it, that the relevant redundancy pay entitlement did not arise because of s 119 but because of the terms of the relevant enterprise agreement. As noted at [58] above, a jurisdictional prerequisite for an application under s 120 is that “an employee is entitled to be paid an amount of redundancy pay because of section 119.” Consistent with the position in DL Employment, and our preceding analysis, the entitlement to redundancy pay does not arise because of s 119 of the Act, but rather because of the terms of the Agreement.
While we have identified an error in the decision in relation to the Commissioner’s conclusion that the entitlement to redundancy pay entitlement arose from “both” the Agreement and the NES, we are satisfied that the conclusion which the Commissioner reached in respect of the application of 120 of the Act to the Agreement was correct. Appeal ground two is dismissed.
Appeal ground one
We turn now to appeal ground one. MAX Solutions submits that the Commissioner erred in finding that the NES precedence clause in the Agreement, clause 1.5, “prevented a successful application in the first instance.”[65]
MAX Solutions contends that the Commissioner erred in the interpretation of clause 1.5 of the Agreement on two bases. First, it is submitted that the operation of clause 1.5 requires the consideration of two conflicting provisions, and where the Agreement does not address the reduction in redundancy payments in the event of “other acceptable employment,” there was no conflicting provision.[66]
Second, it is said that the Commissioner failed to consider s 120 as a whole and focused exclusively on the practical outcomes of the applications.[67] When considered as a whole, MAX Solutions submits that s 120 imposes an obligation on an employer to find further employment for employees who would otherwise be without secure, ongoing jobs. The provision, while providing an employer the benefit of reducing redundancy payments, imposes as a condition precedent the burden of taking steps to place an employee in a position of advantage; where they will not be rendered unemployed.[68] Taken as a whole, it is submitted that the provision is of substantial benefit to an employee who would otherwise be in a position where they would face termination of employment on redundancy grounds.[69]
Contrary to this approach, MAX Solutions submits that the Commissioner considered the question of whether there was a less beneficial result for the employees by not receiving a redundancy payment as a consequence of the applications. The Commissioner did not consider the scope, purpose or operative features of the provision.
As to the latter contention raised by MAX Solutions, we do not accept the notion that s 120 imposes an obligation on an employer to find suitable alternative employment for its employees, such that it is a benefit to employees. There is no obligation to find an employee alternative employment. The requirement to obtain other acceptable employment for the employee is simply a prerequisite to the employer making an application under s 120. Consistent with our analysis at [50] of this decision, we do not regard the capacity to reduce an employee’s entitlement to redundancy pay as a benefit or an entitlement of an employee. Rather, it is a condition to the NES entitlement to redundancy pay which functions to reduce, on application to the Commission, the entitlement to redundancy pay under s 119.
As to MAX Solutions’ first contention, we accept that the Commissioner’s reliance on the NES precedence clause in the Agreement was misplaced.[70] However, we reject the contention[71] that s 120 ought to have prevailed on the basis that there was no provision in the Agreement which conflicted with its operation, such that the NES precedence clause could not function to exclude s 120. Neither the NES precedence clause nor any other clause of the Agreement permits s 120 of the Act to affect the Agreement entitlement to redundancy pay. Ground one is dismissed.
Appeal ground three
Appeal ground three alleges a failure to provide MAX Solutions with an opportunity to make submissions on the determinative issue at first instance.[72]
MAX Solutions submits that the parties were not provided with an opportunity to be heard in relation to the merits of the dispute before the applications were dismissed.[73] In the absence of an opportunity to make submissions “on the basis on which the Commission dismissed the Applications,” MAX Solutions says it was denied procedural fairness.[74]
The key issue for determination by the Commissioner was whether the jurisdictional prerequisites for the making of an application pursuant to s 120 of the Act, in the circumstances applicable to the respondent employees, were made out.
The specific question raised by the Commissioner concerned the applicability of s 120 to the Agreement entitlement to redundancy pay. That question is, in substance, correct. MAX Solutions addressed the Commissioner’s preliminary view by way of submissions dated 6 June and 8 June 2022.[75]
We nevertheless accept that there may have been a denial of procedural fairness in circumstances where the issue MAX Solutions was invited to address was one of standing, not jurisdiction. Upon reaching a state of satisfaction that MAX Solutions had standing to bring the application, the appropriate course would have been to further program the substantive application for hearing. This is particularly so in circumstances where the matter was determined on the papers.
However, MAX Solutions has now had the benefit of an appeal and a fulsome opportunity to present its case insofar as it relates to jurisdiction. For the reasons given, we are not satisfied that the jurisdictional prerequisites for an application under s 120 have been made out.
Therefore, while appeal ground three reveals an error in the Commissioner’s processes, upholding the appeal on this ground alone would be inutile. Appeal ground three is dismissed.
Permission to appeal
An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker.[76] There is no right to appeal and an appeal may be made only with the permission of the Commission.
Subsection 604(2) of the Act requires the Commission to grant permission to appeal if satisfied that it is “in the public interest to do so.” The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.[77] The public interest is not satisfied simply by the identification of error, or a preference for a different result.[78] In GlaxoSmithKline Australia Pty Ltd v Makin[79] a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“… the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.”[80]
It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[81] However, that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.
Disposition
The appeal concerns the construction of the Act insofar as it relates to the application of s 120 to an agreement entitlement to redundancy pay. The appeal therefore raises questions of general importance, and we consider that it is in the public interest to grant permission to appeal. However, for the reasons stated, we consider that the Commissioner was correct in his principal conclusion that the redundancy entitlements owing to the respondent employees under the Agreement could not be reduced by way of an application pursuant to s 120 of the Act and we would dismiss the appeal on this basis.
Order
We order as follows:
1. Permission to appeal is granted.
2. The appeal in C2022/5262 is dismissed.
VICE PRESIDENT
Appearances:
Mr Rawlings of Counsel, for the Appellant
Mr Henderson of the Australian Municipal, Administrative, Clerical and Services Union, for the first Respondent
Mrs Nguyen, on her own behalf
Hearing details:
2022.
Microsoft Teams (Video).
21 September.
[1] [2022] FWC 1815
[2] AE509828; [2020] FWCA 6755
[3] Appeal Book (AB) 20 at [1.4]; AB 25 at [1.4]
[4] Decision at [3], AB 7
[5] Decision at [7], AB 8
[6] Decision at [9]-[25], AB 9-14
[7] Decision at [28], AB 14
[8] Decision at [29], AB 14
[9] Decision at [33] and [37], AB 15
[10] (2014) 247 IR 234; [2014] FWCFB 7946 (DL Employment)
[11] [2020] FWCFB 4866; 300 IR 122 (JFM Civil Contracting)
[12] Decision at [26] and [27], AB 14
[13] Decision at [28], AB 14
[14] [2014] FWCFB 6737; (2014) 245 IR 287 (FBIS). This decision was the subject of judicial review, see FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 although the conclusions of the Full Bench with respect to s 55 of the Act were not disturbed
[15] Decision at [30], AB 14
[16] Decision at [33], AB 15
[17] Decision at [35], AB 15
[18] Ibid
[19] Decision at [36], AB 15
[20] Decision at [37], AB 15
[21] Decision at [38], AB 15-16
[22] Decision at [39], AB 16
[23] Decision at [40], AB 16
[24] Decision at [43], AB 16
[25] [2021] FWC 4063
[26] Fair Work Act 2009 (Cth), s 61(3)
[27] Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29, 271 CLR 495 at [15]-[16] and [19]
[28] [2018] FCAFC 131, 280 IR 191 at [87]
[29] Fair Work Act 2009 (Cth), s 61(1); Re Family and domestic violence leave review 2021 (2022) 315 IR 123 at [190]
[30] See, Construction Forestry Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45, 218 IR 108
[31] Fair Work Act 2009 (Cth), s 44
[32] Re 4 Yearly Review of Modern Awards — Family Friendly Working Arrangements [2018] FWCFB 1692, (2018) 276 IR 249 at [143]-[145]
[32] Ibid
[33] The Full Bench observed that the one qualification to this is that s 118 provides that an award or agreement may specify the notice of termination that an employee is required to provide in order to terminate his or her employment at FN 142
[34] Fair Work Act 2009 (Cth), s 172(1)
[35] Re 4 Yearly Review of Modern Awards — Family Friendly Working Arrangements [2018] FWCFB 1692, (2018) 276 IR 249 at [136]-[160]
[36] Fair Work Act 2009 (Cth), s 55(1); see Re Canavan Building Pty Ltd[2014] FWCFB 3202, 244 IR 1 at [36]; Re family and domestic violence leave review 2021[2022] FWCFB 2001, 315 IR 123 at [180]; Re 4 yearly review of modern awards—Alleged NES Inconsistencies[2015] FWCFB 3023; 249 IR 358 at [37]
[37] At [150]
[38] Fair Work Act 2009 (Cth), s 55(7)
[39] Supplementary explanatory memorandum to the Fair Work Bill 2008 at [29]
[40] Re 4 Yearly Review of Modern Awards — Family Friendly Working Arrangements [2018] FWCFB 1692, (2018) 276 IR 249 at [145]
[41] Ibid
[42] Fair Work Act 2009 (Cth) ss 44 and 186(6); cf Fair Work Act 2009 (Cth) s 50
[43] It is observed that the note does not form part of the Act and is not capable of use in the process of construction as an extrinsic material, see Acts Interpretation Act 1901 (Cth) ss 13(1) and 15AB; Fair Work Act 2009 (Cth) s 40A; Construction, Forestry, Mining and Energy Union v Glendell Mining Pty Ltd [2017] FCAFC 35, 249 FCR 495 at [118]
[44] [2017] FCAFC 35, 249 FCR 495
[45] Ibid at [107] and [116]
[46] Ready Workforce (A Division of Chandler Macleod) Pty Ltd t/a Chandler Macleod v Andrew Low and Ors[2022] FWCFB 173 at [23]; Australian Commercial Catering Pty Ltd v Marcelia Powell and Maria Togia and Marcelia Powell v Australian Commercial Catering Pty Ltd[2016] FWCFB 5467 at [35]
[47] See eg, Fair Work Act 2009 (Cth) s 122(4)
[48] AB 20 at [1.4], 25 at [1.4]
[49] Cf, Joinery and Building Trades Award 2020 cl 37.4(f)
[50] See DL Employment at 267, [81]
[51] Cf Dl Employment and JFM Civil Contracting with FBIS
[52] Appellant’s submissions on appeal dated 15 August 2022 (Appellant’s submissions) at [2], [11]-[25]
[53] Ibid at [12]
[54] Ibid at [13] and [15]
[55] Ibid at [14]
[56] AB 20 at [1.4]; AB 25 at [1.4]
[57] Appellant’s submissions at [17]
[58] Ibid at [22]
[59] Re 4 Yearly Review of Modern Awards — Family Friendly Working Arrangements [2018] FWCFB 1692, (2018) 276 IR 249 at [142]-[143]
[60] Appellant’s submissions at [2]
[61] FBIS at [27]
[62] Appellant’s submissions at [14] and FN 8
[63] DL Employment at 267, [79]
[64] Appellant’s submissions at [22]
[65] Ibid at [2] and [26]-[44]
[66] Ibid at [26]-[38]
[67] Ibid at [39]-[44]
[68] Appellant’s submissions at [41]
[69] Ibid at [42]
[70] Decision at [40]
[71] Appellant’s submissions at [36]
[72] Ibid at [2], [45]-[48]
[73] Ibid at [45]
[74] Ibid at [47]-[48]
[75] AB 122-128
[76] Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
[77] O’Sullivan v Farrer and another (1989) 168 CLR 210 at [216]-[217] per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 243 CLR 506 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal& Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78; (2011) 207 IR 177 at [44]-[46]
[78] GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office[2014] FWCFB 1663 at [28]
[79] [2010] FWAFB 5343
[80] Ibid at [27]
[81] Wan v AIRC (2001) 116 FCR 481 at [30]
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