National Tertiary Education Industry Union v The University of Melbourne
[2013] FWC 919
•14 FEBRUARY 2013
[2013] FWC 919 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Application to deal with a dispute
National Tertiary Education Industry Union
v
The University of Melbourne
(C2012/248)
Educational services | |
DEPUTY PRESIDENT SMITH | MELBOURNE, 14 FEBRUARY 2013 |
Proper application of the agreement; redeployment and redundancy of academic and professional staff; superannuation contributions on redundancy payments.
Introduction
[1] The National Tertiary Education Industry Union (NTEU) seeks the resolution of a dispute about a matter arising under the University of Melbourne Collective Agreement 2010 [AE878271] (the Agreement). This matter was notified pursuant to s.739 of the Fair Work Act 2009 (the Act). Clause 90 of the Agreement empowers Fair Work Australia, now known as the Fair Work Commission, (the Commission) to resolve the dispute by the processes of conciliation and/or arbitration. This matter was not resolved through conciliation.
[2] The matter relates to what the NTEU argue is the failure of the University of Melbourne (University) to properly apply clauses 83 and 84 of the Agreement. Those clauses relate to the Redeployment and Redundancy of Academic (Cl 83) and Professional (Cl 84) staff. There is no relevant material difference between the provisions. No issue is raised as to jurisdiction and the matter proceeded on the merits.
[3] The issue is short in compass and relates to the obligation or otherwise of the University to pay the employer superannuation contribution on the relevant period of notice given to an employee whose employment the University has decided to terminate for reason of redundancy.
[4] The structure of the clauses in the Agreement provide for a period of notice following a determination that the employment will come to an end as a result of a staff member being advised that their employment is to be terminated on the basis of redundancy. This “notice period” can be used to explore redeployment opportunities or can be taken as a payment equivalent to the unexpired portion of the notice. It is the submission of the NTEU that where payment is taken “in lieu of notice” then the University is obliged to make the employer superannuation contribution on the period taken in lieu of notice. It is argued that such a construction is supported by the National Employment Standards and Australian Tax Office (ATO) Rulings.
[5] There is no issue that, in the ordinary sense the employer’s superannuation contribution is paid on notice either worked or in lieu when terminating the contract of employment. However where this differs from those cases is that it is argued by the University that the payment forms part of the redundancy payment and therefore is not notice in the sense used by the ATO rulings. The NTEU takes a contrary view.
[6] This matter does not turn on a Court or ATO ruling but rather what is intended by the agreement.
The Agreement
[7] Clause 83 is headed “Redeployment and Redundancy: Academic Staff”. It provides, where the University has decided to terminate the employment of one or more staff members for reason of economic, technological, structural or similar nature, it will notify the staff member that their employment will terminate (Cl 83.2).
[8] There is then a heading entitled notice period and it provides:
Notice Period
83.3 The relevant notice period for a staff member who has received notification pursuant to clause 83.2 will be determined by a combination of two scales, based on age and length of service.
83.4 Age based scale
Age | Notice |
45 or over | 22 weeks |
40-44 | 20 weeks |
39 or under | 18 weeks |
Length of service
The balance of the notice period is determined by adding three weeks notice for each completed year of continuous service. The maximum period of notice will be 74 weeks.
83.5 A staff member may apply to work out all or part of the relevant period of notice. If there are suitable duties for the staff member to undertake, which will result in sufficient work being available to occupy the time fraction on which the academic staff member is employed, the University will use its best efforts to allow this to occur. This may be either work the staff member has been engaged in previously or work designed to retrain the staff member. If the University has no work for the staff member to do, the staff member will receive a genuine redundancy payment equivalent to the unexpired portion of the notice period. (The underlining is mine.)
[9] To better appreciate the operation of the clause there then appears provision for early separation:
Transition Period
83.6 An eight week transition period will commence immediately upon written notification of termination being given to the staff member pursuant to clause 83.2. By the expiration of fourteen days from the commencement of the transition period, the staff member must indicate to the University which of the following options for separation he or she wishes to choose:
(a) to elect early separation and include the balance of the transition period in his or her redundancy benefits; or
(b) to apply to the Vice-Chancellor for a review of the decision to terminate the staff member's employment and/or to seek redeployment within the University.
Elect early separation
83.7 A staff member who has been given notice pursuant to clause 83.3 may decide to include the balance of the transition period in his or her redundancy benefits, in which case the staff member will receive upon 6termination:
(i) the unexpired portion of the eight week transition period as part of the genuine redundancy payment; and
(ii) the balance of the notice period prescribed in clause 83.3 as part of the genuine redundancy payment; and
(iii) payment on a pro rata basis for long service leave.
83.8 All payments under this sub-clause shall be calculated on the staff member’s salary at the date of cessation of employment.
[10] Later in the clause there are provisions for staff members seeking redeployment.
[11] Clause 84 is headed “Redeployment and Redundancy: Professional Staff”. Again there is a similar approach although a slightly different emphasis. To begin, there is the opportunity to accept a voluntary redundancy within a short period but then there is a process for redeployment. Failure to accept redeployment brings with it certain consequences which, for present purposes, are not relevant.
[12] The Agreement then contains the following provision:
Termination of Employment
84.10 The Vice-Chancellor may terminate a staff member's employment with an entitlement to a genuine redundancy payment equivalent to the unexpired period of the notice period as defined below.
• Where the staff member is 45 years of age or more or has at least 20 years’ continuous service: 12 months
• Where the staff member is 44 years of age: 11 months
• Where the staff member is 43 years of age: 10 months
• Where the staff member is 42 years of age: 9 months
• Where the staff member is 41 years of age: 8 months
• Where the staff member is 40 years of age: 7 months
• All other staff members: 6 months
84.11 Provided that the above periods shall not extend employment beyond a date on which the staff member has indicated in writing his or her intention to retire.
The Approach to Construction
[13] The approach to construction of Agreements is well trodden in the jurisdiction. There should not be a narrow or pedantic approach [Knucks v CSR Limited (1996) 66 IR 182] and the context and setting is critical to a proper understanding of the meaning of the document as a whole [ Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518].
[14] This is the approach I propose to adopt in resolving the dispute as it relates to the application of this Agreement.
The Evidence
[15] For the NTEU evidence was called from Ms Linda Gale. Ms Gale is a Senior Industrial Officer for the NTEU and was a member of the bargaining team which negotiated the Agreement. It was the evidence of Ms Gale that the NTEU sought to deal with this specific matter during bargaining and proposed words to make it clear that the employers contribution to superannuation was payable on the notice period taken in lieu in circumstances of a redundancy It was the evidence of Ms Gale that the University too was concerned to ensure that its view prevailed and suggested some words which the NTEU finally accepted. In cross-examination Ms Gale conceded that the NTEU negotiating team accepted it believing that the new wording still provided a right to employees to receive that employment superannuation contribution on the unexpired portion of any redundancy notice. [Transcript PN106—116]
[16] The University called three witnesses. Ms Sarah Fowler was a Senior Consultant at the University at the time of the negotiations who produced documents reflecting the scope of the negotiations between the parties. Mr Mitchell Brown, who at the time, was Director People and Strategy for the University and Mr Wayne Hirt a Partner at KPMG.
[17] Ms Fowler recalled the NTEU seeking to have the University agree to pay superannuation on all payments made on redundancy. This issue arose from an earlier dispute with a general staff member. Her evidence was that this was rejected by the University. The evidence of Ms Fowler went to the suggested wording of the University where it specifically removed words ‘payments in lieu of notice’ in favour of the words ‘genuine redundancy payments’ equivalent to the unexpired portion of the notice period.
[18] The evidence of Mr Brown also dealt with the history of the earlier dispute and the reason why the University wanted to put beyond doubt the operation of the clause. As to the negotiations, it was the evidence of Mr Brown that the University wanted to ensure that the long-standing practice of not paying superannuation contributions on payments which were made under these clauses was reflected in the Agreement. Mr Brown’s evidence was that when the NTEU accepted the wording of the University in relation to these two clauses the dispute was resolved. He added that there was no doubt in his mind that the NTEU understood what the University had proposed.
[19] The final witness for the University was Mr Hirt. Mr Hirt’s evidence examined the Superannuation Guarantee (Administration) Act 1992, the relevant ATO rulings, the consequences of payments being made within the meaning of the income taxation legislation, his experience of the practice of employers in relation to the payment of superannuation on redundancy payments and other matters relevant to the type of scheme operated by the University. Finally, Mr Hirt expressed a view on the operation of the clauses and whether or not any obligation arose to pay superannuation on unexpired periods of notice.
[20] Mr Hirt’s evidence was clear and assisted in an understanding of the relevant legislative obligations. Mr Hirt’s evidence was that employers did not pay a superannuation contribution on redundancy benefits and that the clause under the Agreement did not, in his view, give rise to any such obligation.
Conclusion
[21] An examination of the history of the negotiations of the Agreement can only lead to the conclusion that the University was not prepared to agree to the view put forward by the NTEU that employer redundancy payments should be made on that part of any unexpired notice that was paid out. Indeed, the University proposed wording, which was accepted by the NTEU, that sought to make clear that it did not apply. The NTEU accepted the language change but held the view privately that a right still existed. The dynamics of those negotiations means that the University was entitled to believe that its objective constituted the mutual intention of the parties. The history of the application of the clause to University staff also supports the contention of the University. When viewed objectively there is great force to the argument of the University.
[22] The language finally settled upon in the agreement also distances itself from any suggestion that employer superannuation payments should be made on the payment of an unexpired notice. The language changed from the phase “in lieu of notice” to one which for academics was: If the University has no work for the staff member to do, the staff member will receive a genuine redundancy payment equivalent to the unexpired portion of the notice period.
[23] The approach seeks to differentiate between notice in lieu and a genuine redundancy payment equivalent to the unexpired portion of the notice period.
[24] For professional staff the approach is the same where it states: an entitlement to a genuine redundancy payment equivalent to the unexpired period of the notice period.
[25] From the evidence of Mr Hirt, I am also satisfied that the provision is one which does not create any tension with Australian Taxation Law.
[26] I find myself in agreement with Mr Bourke when he said that:
● the language of the Agreement did not support the NTEU case;
● custom and practice did not support the NTEU case; and
● the construction is contrary to the course of the negotiations of the Agreement
[27] I find that the application of the Agreement is that where an Academic or Professional staff member is paid an amount equivalent to the unexpired portion of the notice period then employer superannuation contributions on that amount are not paid.
DEPUTY PRESIDENT
Appearances:
R. Thomas for the National Tertiary Education Industry Union.
J. Bourke of Senior Counsel on behalf of the University of Melbourne.
Hearing details:
2012.
Melbourne:
September, 27 and 28.
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