Maxim Electrical Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
[2010] FWA 44
•7 JANUARY 2010
Note: An appeal pursuant to s.604 (C2010/2646) was lodged against this decision.
[2010] FWA 44 |
|
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2009/11117)
COMMISSIONER BLAIR | MELBOURNE, 7 JANUARY 2010 |
Alleged dispute concerning the validity of notices of termination provided to various employees.
[1] This matter came to Fair Work Australia (the Tribunal) by way of a s739 application by Maxim Electrical Pty Ltd (the Company) with the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the Union) being the respondent.
[2] The dispute concerns the validity of notice provided to various employees. The matter was heard on 22 December 2009. A brief summary of the matter is as follows.
[3] In or about July 2009, Maxim made a decision to make most of its current workforce redundant. This was due to a number of economic factors. On the 5 August 2009, Maxim sent the relevant employees a letter (the first letter) explaining the position of the company and setting out the steps it was taking and had already taken to maintain the workforce to date.
[4] Maxim again wrote to all relevant employees on the 11 August 2009 (the second letter). The second letter largely repeated the terms of the first letter.
[5] On the 19 August 2009, a further letter was sent by Maxim to the relevant employees (the third letter). Part of the third letter states:
“You are currently employed in a position of Electrical Worker as a direct permanent employee (Position). We regret to inform you that the position will become redundant on the 25 September 2009 (Termination Date). As Maxim is having to reduce its operations we do not have any alternative employment to offer you.
As a consequence of your position becoming redundant your employment will be terminated on the termination date. This letter constitutes notice of termination of five weeks.”
[6] The applicant stated that all relevant employees received the same letter although each employee had differing entitlements to notice under the EBA. The applicant asserted in most cases the relevant employees received more notice of termination under the third letter than they were entitled to under the EBA.
[7] The union in the matter referred the third letter to the Electrical & Communications Industry Disputes Board (the board) for resolution under clause 12.2.7. The applicant participated in the disputes settlement procedure in good faith. Its expectation was that as the party invoking the dispute settling procedure, the union should be acting in strict compliance with that procedure.
[8] On 12 November 2009 the board issued its decision. Its decision stated that:
a) the letter of the 19 August 2009 to employees did not amount to effective notice as required by clause 13.1 of the agreement; and
b) that the employer was therefore required to make payment in lieu of notice calculated at the date of termination, namely the 25 September 2009
[9] The board further determined that no payment was due to employees under clause 16.1 (of the common clauses of the agreement).
[10] Now before the Tribunal is a rehearing of the issue related to the letter dated 19 August 2009 (the third letter). The Tribunal must now determine whether in fact the third letter constitutes valid notice of termination. The third letter states:
“I apologise for sending another letter regarding this matter but it is important to get it to get it right for everyone’s piece of mind. I intend to send you updates each week as to the status of our workload.
As you are aware from our letter of 11 August 2009, Maxim Electrical has suffered a decrease in its operations as a result of the downturn in the construction industry. Consequently, Maxim has a shortage of ongoing and future projects, and some positions at Maxim have become surplus to Maxim’s requirements.
You are currently employed in the position of Electrical Worker, as a direct permanent employee (Position).
We regret to inform you that the Position will become redundant on 25/09/09 (Termination Date). As Maxim is having to reduce its operations, we do not have any alternative employment to offer to you.
As a consequence of your position becoming redundant, your employment will be terminated on the Termination Date. This letter constitutes notice of termination of 5 weeks.
Upon termination, you will receive payment of your accrued entitlements, including any severance payment to which you are entitled pursuant to Enterprise Agreement.
You are required to continue to perform your duties the Position (sic) until the Termination Date. However, depending upon the work available during the notice period Maxim may:
1. direct you to perform any role or other duties during the notice period;
2. terminate your employment prior to the Termination Date, in which case Maxim will make payment to you in lieu of the balance of the notice period;
3. rescind the redundancy and declare your position to be ongoing if Maxim successfully obtains ongoing work which requires the Position to be performed, in which case your employment will not be terminated.
We remind you that prior to the termination of your employment you remain employed by Maxim and are required to act in accordance with your obligations as an employee. Failure to do so may lead to your termination without notice and loss of entitlements.
We thank you for your service and wish you the best with your future endeavours.”
[11] The applicant in the matter asserts that the third letter dated 19 August 2009 constitutes valid notice of termination. The respondent in the matter asserts that the third letter does not provide valid notice of termination on the following grounds:
a) the third letter does not constitute notice under the EBA;
b) it is ambiguous or uncertain. That is, employees did not know if they were going to be made redundant;
c) it was given to all employees; and
d) it was the custom and practice in the industry to notice in lieu.
[12] Having considered the arguments put forward by the respective parties the Tribunal is not convinced that the third letter, the letter dated 19 August 2009, provides a valid notice of termination.
[13] The letter states:
‘We regret to inform you that the position will become redundant on the 25/9/09 (Termination Date). As Maxim is having to reduce its operations we do not have any alternative employment to offer you.
As a consequence of your position becoming redundant, your employment will be terminated on the Termination Date. This letter constitutes notice of termination of five weeks.”
[14] There are, however, three conditions tied to that notice of termination. The letter states:
“You are required to continue to perform your duties the Position until the Termination Date. However, depending upon the work available during the notice period Maxim may:
1. direct you to perform another role or other duties during the notice period;
2. terminate your employment prior to the Termination Date, in which case Maxim will make payment to you in lieu of the balance of the notice period;”
[15] The Tribunal has no difficulty with those first two conditions. It is the third condition that the Tribunal believes provides enough ambiguity to invalidate the termination date and also provides a great degree of uncertainty to those employees that did in fact receive the third letter. The third condition states:
“3. rescind the redundancy and declare your position to be ongoing if Maxim successfully obtains ongoing work which requires the Position to be performed, in which case your employment will not be terminated.”
[16] Although the applicant argues that if it were inclined to activate point 3, that is to rescind the redundancy and declare the persons position to be ongoing, that the employee themselves must agree to such a rescission, the Tribunal does not accept that that was a condition identified in the third letter dated 19 August 2009. There is no mention of consent. It is a unilateral decision to rescind the notice of termination and although the applicant states that it is a question of law that the employee must agree, that’s not what the third letter implies. The intent of the third letter, that is to provide notice of termination but also to be conditional in that the employer can withdraw it is enforced by a further letter of the 23 September 2009 which states as follows:
“We refer to our letter dated 19 August which provided you with notice for the termination of your employment on the 25 September 2009.
This letter is to inform you that we are rescinding the notice provided in our letter of the 19 August 2009 and confirm that your employment will continue beyond the 25 September 2009.
We are still tendering for up and coming projects and endeavouring to find more work and will provide you with information in respect of our current work in the coming days.”
[17] That letter dated 23 September 2009 reinforces the view taken by the Tribunal that the letter of the 19 August 2009, the third letter, provides the degree of uncertainty to invalidate any argument that the letter constitutes valid notice of termination. Accordingly the Tribunal would determine that the third letter, 19 August 2009, does not constitute a valid notice of termination and therefore the employer is required to pay the appropriate notice period to those employees made redundant. The Tribunal does appreciate the applicant’s argument that it was attempting to be as open, fair and reasonable as possible in circumstances where it had formed the intention to terminate most of its employees. The Tribunal does appreciate the difficulties the company found itself in. However those difficulties do not mitigate against the Tribunal finding that the third letter does not constitute a valid notice of termination.
[18] In regards to the Union’s claim that payment is due under clause 16.1, the Tribunal does accept the applicant’s argument on the balance of fairness, it would be totally unfair for the Tribunal to order additional payments under clause 16.1 being made to those effected employees. Accordingly that argument raised by the respondent is dismissed.
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