McCartney and Secretary, Attorney General's Department
[2020] AATA 765
•7 April 2020
McCartney and Secretary, Attorney General's Department [2020] AATA 765 (7 April 2020)
Division:GENERAL DIVISION
File Number: 2019/4603
Re:Michael McCartney
APPLICANT
AndSecretary, Attorney-General's Department
RESPONDENT
DECISION
Tribunal:Deputy President Dr P McDermott RFD
Date:7 April 2020
Place:Brisbane
The Tribunal affirms the decision under review.
...........................[SGD].............................................
Deputy President Dr P McDermott RFD
CATCHWORDS
FAIR ENTITLEMENTS GUARANTEE – national employment standards – employment terminated – insolvency or bankruptcy of employer – eligibility for advance redundancy payment – definition of service – definition of continuous service – whether the period in which the applicant was a casual employee before the applicant was engaged as a fixed-term employee should be considered as part of the applicant’s continuous service – calculation of redundancy payment – decision under review affirmed
LEGISLATION
Corporations Act2001 (Cth)
Fair Entitlements Guarantee Act 2012 (Cth)
Fair Work Act 2009 (Cth)CASES
Allen v Carbone (1975) 132 CLR 528
Reardon and Secretary, Department of Employment [2016] AATA 1027
Redundancy Case (2004) 129 IR 155
Shortland v Smiths Snackfood Co Limited [2010] FWAFB 5709
Unilever Australia Trading Ltd v Australian Manufacturing Workers’ Union (2018) 279 IR 110SECONDARY MATERIALS
FSG Australia Certified Agreement 2009 – 2012
REASONS FOR DECISION
Deputy President Dr P McDermott RFD
7 April 2020
INTRODUCTION
The applicant has made an application for the review of a decision of the respondent dated 4 December 2018, which affirmed a decision dated 7 May 2018 that the applicant was eligible for an advance payment of $22,814.68 (before tax) under s 15 of the Fair Entitlements Guarantee Act 2012 (Cth) (the Act). The applicant takes issue with the determination that he was eligible for an advance for redundancy pay of $12,024.32.
EMPLOYMENT HISTORY
The applicant was an employee of FSG Australia from 1 April 2008 until 30 June 2018. He was employed under casual, part-time and fixed-term employment agreements.
On 1 April 2008, the applicant was employed as a casual employee: the contract of employment is in evidence.[1]
[1] Exhibit A, T-documents, T8.2.
On 27 February 2012, the applicant was employed as a part-time employee: the contract of employment is in evidence.[2]
[2] Exhibit A, T-documents, T8.4.
From 8 August 2016 until 30 June 2018 the applicant was employed under three contracts of employment as a fixed-term employee. These contracts apply for the following periods:
(a)from 8 August 2016 to 30 June 2017;[3]
(b)from 20 February 2017 to 20 August 2017;[4] and
(c)21 August 2017 to 30 June 2018.[5]
[3] Exhibit A, T-documents, T8.5.
[4] Exhibit A, T-documents, T8.5.
[5] Exhibit A, T-documents, T8.7.
On 30 June 2018, Ms Joan Park and Ms Joanne Dunn were appointed as administrators of FSG Australia pursuant to s 436A of the Corporations Act2001 (Cth). On 2 July 2018, FTI Consulting (Australia) Pty Ltd issued a notice to employees to advise them of this appointment and to advise them of the Fair Entitlements Guarantee Scheme
(“the Scheme”).
On 3 August 2018 FSG Australia was placed into liquidation.
CLAIM FOR ADVANCE
On 12 October 2018 the Applicant made a claim for an advance under s 14 of the Act for the following:
Annual leave $3,180.50 (3 weeks)
Annual leave in loading $556.60
Pay in lieu of notice (PILN) $4,372.48
Redundancy $15,303.62 (14 weeks)
Long Service Leave $3,773.33 (3.5 weeks)
TOTAL $21,186.97
DECISIONS
On 4 December 2018, it was decided under s 15(1) of the Act the applicant was eligible for an advance as claimed except that it was decided that he was entitled to 11 weeks redundancy pay, and three weeks PILN. Under s 15(2) of the Act, the respondent determined that the applicant was eligible for an advance of $22,814.68 (before tax).[6]
[6] Exhibit A, T-documents, T6.
On 10 January 2019, the applicant applied for an internal review of the decision in respect of PILN and redundancy pay.
On 7 May 2019, after an internal review, the decision dated 4 December 2018 was affirmed under s 39(1) of the Act.[7]
[7] Exhibit A, T-documents, T9.
On 1 August 2019, the applicant applied to the Tribunal for review of the 7 May 2019 decision. I am satisfied that this Tribunal has jurisdiction to review the decision of 1 August 2019 under s 40 of the Act.
LEGISLATIVE FRAMEWORK
Objects of the Act
The main objects of the Act are relevantly set out under s 3:
(a)to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers in cases where:
(i) the employers are insolvent or bankrupt; and
the end of the employment of the former employees was connected with that insolvency or bankruptcy; and
(ii) the former employees cannot get payment of the entitlements from other sources....
Effective claim
It is not in dispute that the applicant has made an effective claim under s 14 of the Act. In these circumstances s 15 of the Act provides that the Secretary must decide whether an applicant is eligible for an advance.
Redundancy pay entitlement
Section 6 of the Act defines the kind of employment entitlements that are provided for under the Act. That section provides that a person's:[8]
…redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment.
[Emphasis in original]
[8] Section 6(5) of the Act.
Governing instrument
Section 5 of the Act defines “governing instrument” for employment to include a written law of the Commonwealth, a State or a Territory; an award, determination or order that is made or recorded in writing; a written instrument and an agreement (whether a contract or not).
It is not in issue that the relevant governing instruments in this application are the:
(a)Employment Agreement for the period 21/08/2017 to 30/06/2018 (Employment Agreement)[9];
(b)the FSG Australia Certified Agreement 2009 – 2012 (FSG Australia Certified Agreement)[10] ;and
(c)the Fair Work Act 2009 (Cth).
[9] Exhibit A, T-documents, T8.7.
[10] Exhibit A, T-documents, T8.8.
Applicant’s Employment Agreement
The applicant’s Employment Agreement provides for redundancy pay entitlements as follows:
Period of continuous service Severance Pay ...
More than 6 years but not more than 7 years 10 weeks ...
More than 10 years but less than 11 years 14 weeks ...
The applicant’s Employment Agreement does not define the expressions “service” and “continuous service”.
FSG Australia Certified Agreement
The FSG Australia Certified Agreement contains the following provisions:
2.1.6 Casual Employee
A casual employee for working ordinary time shall be paid 1/38th of the appropriate weekly rate prescribed by this Agreement plus a loading of 23% in lieu of annual leave, sick leave and public holidays and the like.
Payments for casual employees working overtime, or on public holidays, are as specified in this Agreement.
Casual employees shall be paid for a minimum of one (1) hour for each period of engagement.
The casual loading rate shall not be compounded in the calculation of overtime, public holidays or other penalties.
2.1.7 Fixed Term Employee
An employee may be engaged on a fixed term contract, or on a fixed project contract.
A fixed term contract operates for a specific period of time, as agreed between the parties prior to engagement. At the end of the specified period, the contract and the employment of the individual is terminated.
A fixed project contract operates for the duration of a specified work task, or a range of tasks, as agreed between the parties prior to engagement. Once the task(s) is completed, the contract and the employment of the individual are terminated…
2.4 Redundancy
...
2.4.6 Severance pay
(a) In addition to the period of notice prescribed for ordinary termination in (a) of Clause 2.2.1 "Termination by FSG Australia" clause, and subject to further order of the Commission, an employee whose employment is terminated for reasons set out in Clause 2.4.1(a) of the "Consultation Before Terminations" clause, shall be entitled to the following amounts of severance pay:
Period of Continuous Service
Severance Pay
(weeks’ pay)
…
More than 6 years but not more than 7 years
10 weeks
…
More than 10 years but not more than 11 years
14 weeks
…
2.4.11 Employees Exempted
(a)Redundancy shall not apply:
(i) where employment is terminated as a consequence of misconduct on the part of the employee; or
(ii) to employees engaged for a specific period or task(s); or
(iii) to casual employees.
The FSG Australia Certified Agreement does not contain a definition of “service” and “continuous service”.
The Fair Work Act 2009
The Fair Work Act 2009 (Cth) (the Fair Work Act) provides in its objects that it aims to ensure a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards.[11] The National Employment Standards are contained in Part 2-2 of the Fair Work Act. Section 55 of the Fair Work Act provides that an enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards. Any terms of a modern award or enterprise agreement has no effect to the extent that it contravenes s 55 of the Fair Work Act.
[11] Section 3.
One of the National Employment Standards is the entitlement to redundancy pay that is conferred by s 119 of the Fair Work Act. The Fair Work Act provides in s 119(1) of that Act that an employee is entitled to be paid redundancy pay by the employer if the employee's employment is terminated because of the insolvency or bankruptcy of the employer.
Under s 119(2) of the Fair Work Act the amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table in that subsection.
Redundancy pay period
Employee’s period of continuous service with the employer on termination
Redundancy pay period
1
At least 1 year but less than 2 years
4 weeks
2
At least 2 years but less than 3 years
6 weeks
3
At least 3 years but less than 4 years
7 weeks
4
At least 4 years but less than 5 years
8 weeks
5
At least 5 years but less than 6 years
10 weeks
6
At least 6 years but less than 7 years
11 weeks
7
At least 7 years but less than 8 years
13 weeks
8
At least 8 years but less than 9 years
14 weeks
9
At least 9 years but less than 10 years
16 weeks
10
At least 10 years
12 weeks
Section 119 of the Fair Work Act is contained in Division 11 of Part 2-2 of the Fair Work Act. This Division does not apply to a casual employee.[12]
[12] Section 123(1)(c) of the Fair Work Act.
ISSUES FOR DETERMINATION
The issue for determination is whether the period in which the applicant was a casual employee before he was engaged as a fixed-term employee should be considered as part of his “continuous service” for the purposes of calculating his redundancy payment.
The respondent relies upon the decision of the Full Bench of the Fair Work Commission in Unilever Australia Trading Ltd v Australian Manufacturing Workers’ Union (2018) 279 IR 110 (Unilever) which decided that prior periods of casual service before an employee became a permanent employee are not regarded as service in calculating redundancy payments.
The respondent submits that the entitlement of the applicant to redundancy pay is the amount of redundancy pay that he is entitled to under the governing instrument for termination of the employment as provided for by s 6(5) of the Fair Work Act. The respondent contends that the governing instruments which have relevance in this application are the FSG Australia Certified Agreement and the Employment Agreement. The amount of redundancy pay payable to the applicant under the FSG Australia Certified Agreement and his Employment Agreement where “continuous service” is more than six years but not more than seven years, is less than the National Employment Standards for redundancy pay provided under s 119 of the Fair Work Act. The respondent submits that under the FSG Australia Certified Agreement, periods of casual service should not be considered in determining “continuous service” for the purposes of calculating redundancy payments under clause 2.4 of the FSG Australia Certified Agreement, and calculation of severance pay under clause 2.4.6 of that agreement.
The respondent submits that the applicant has received casual loading during his period of casual service to accommodate the fact that casual employees are not entitled to redundancy pay. The respondent also relies upon the Redundancy Case (2004) 129 IR 155 as the purpose of redundancy pay is to compensate an employee for matters not associated with casual employment including the loss of non-transferable credits such as sick leave, and the potential costs associated with loss of employment security, inferior conditions, loss of seniority, lower job satisfaction or diminished social status. These matters are not associated with casual employment.
The respondent submits that under the common law of employment, each engagement of a casual employee under a different contract of employment is a separate engagement[13] and the Employment Agreement and the FSG Australia Certified Agreement do not negate or contradict this general law principle.[14]
[13] See Shortland v Smiths Snackfood Co Limited [2010] FWAFB 5709 at [10].
[14] See Reardon and Secretary, Department of Employment [2016] AATA 1027.
CONSIDERATION
Essentially, I have to decide if the reference to “continuous service” in the FSG Australia Certified Agreement and the Employment Agreement includes a period of casual employment. In my view, it is important to record that there is no evidence that the casual employment of the applicant was of a continuous nature. Indeed, clause 10.1 of the contract of casual employment provides that the applicant was employed on an “hour by hour basis, and due to the nature of the industry, there is no guarantee that you will be employed on a regular and/or systematic basis”.[15]
[15] Exhibit A, T-documents, T8.2.
The period of the applicant’s “continuous service” commenced on 27 February 2012, when he became a part-time employee. Under clause 5.8 of the contract of employment as a part-time, fixed-term employee, the applicant was “expected to devote all of their time, attention and skills during their normal working hours and at other time [sic] as may be necessary to the business of the Organisation and the performance of their duties”.[16] When the applicant commenced his duties as a part-time employee the FSG Australia Certified Agreement was in force. Under clause 2.1.5 of the FSG Australia Certified Agreement the applicant was required to work on a regular basis. Having regard to those clauses I consider that the expression “continuous service” in the FSG Australia Certified Agreement and the Employment Agreement should be interpreted to include the period of employment of the applicant as a part-time employee as well as the period of employment as a fixed-term employee.
[16] Exhibit A, T-documents, T8.4.
I find that the period of employment of the applicant as a part-time employee and as a fixed-term employee commenced on 27 February 2012 and concluded on 30 June 2018; this period was in total some six years, two months and three days. Accordingly, I determine that the period of “continuous service” under the FSG Australia Certified Agreement and the Employment Agreement was a period of more than six years but not more than seven years for the purposes of clause 2.4.6 of the FSG Australia Certified Agreement and clause 32 of the Employment Agreement, both of these provisions confers an entitlement upon the applicant of 10 weeks’ severance pay.
The redundancy provisions of the FSG Australia Certified Agreement do not apply to casual employees.[17] While the applicant was not a casual employee at the time of the termination of his employment it is in my opinion not tenable to regard a period of service as a casual employee as being included in the period of continuous service for the purposes of clause 21 of that agreement. I have had regard to the principle laid down by the High Court of Australia in Allen v Carbone (1975) 132 CLR 528 that in construing a contract it is important to examine the four corners of the contract. Clause 34 of the Employment Agreement incorporates the FSG Australia Certified Agreement into the “Entire Agreement”. Under Part 5 of the FSG Australia Certified Agreement and clauses 17 and 19 of the Employment Agreement, the entitlement to annual leave and long service leave is only conferred upon employees with “continuous service”. I do not consider the period of employment of the applicant as a casual employee prior to entering the Employment Agreement as being part of “continuous service” under both the FSG Australia Certified Agreement and the Employment Agreement. The reference to “continuous service” must be construed as referring to service under those agreements, there being no basis that there is an intention that the expression “continuous service” refers to service that was prior to those agreements. This interpretation is consistent with the ruling of the Full Bench of the Fair Work Commission in the Unilever case[18] that a reference to continuous service in an enterprise agreement did not refer to any prior service.
[17] FSG Australia Certified Agreement, clause 2.4.11.
[18] At [20].
While under the FSG Australia Certified Agreement and the Employment Agreement the applicant is entitled to 10 weeks’ severance pay, the National Employment Standards under the Fair Work Act provides a greater benefit of redundancy pay. Under s 119(2) of the Fair Work Act the applicant is entitled to 11 weeks’ pay ($12,024.32) for a period of continuous service of at least six years but less than seven years. The reference in the provision to “continuous service” does not, in my opinion, refer to casual employment. I have also had regard to s 123(1)(c) of the Fair Work Act, which provides that the Division (which includes s 119) does not apply to a casual employee.
Having regard to s 123(1)(c) of the Fair Work Act, I do not consider that the Act displaces the common law principle that each engagement of casual employment stands alone.[19]
[19] See Unilever at [18]; Shortland v Smiths Snackfood Co Limited [2010] FWAFB 5709 at [10].
As a matter of completeness, I have considered whether the applicant was entitled to more than three weeks PILN. The applicant had applied for an internal review of the decision in respect of both PILN and redundancy pay. There is evidence before me that the applicant received three weeks PILN. Having regard to the fact that there is evidence that the applicant was notified of the termination of employment on 22 June 2018 I have determined that he was not entitled to more than three weeks PILN.
I record my appreciation of the respondent providing the applicant with copies of the precedents that were relied upon.
DECISION
I affirm the decision under review.
I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Deputy President Dr P McDermott RFD
.................................[SGD].......................................
Associate
Dated: 7 April 2020
Date of hearing: 22 January 2020 Applicant: In person Solicitors for the Respondent: Australian Government Solicitor
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