National Union of Workers v NCI Holdings Pty Ltd T/A NCI Packaging
[2017] FWC 329
•18 JANUARY 2017
| [2017] FWC 329 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
National Union of Workers
v
NCI Holdings Pty Ltd T/A NCI Packaging
(C2016/5632)
DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 18 JANUARY 2017 |
Application to deal with a dispute in accordance with the dispute settlement procedure of an enterprise agreement; redundancy entitlements; meaning of a “week’s pay”; whether a “week’s pay” includes shift loading.
[1] By its application lodged on 20 September 2016, the National Union of Workers (NUW) applies to the Fair Work Commission (Commission) under s.739 of the Fair Work Act 2009 (Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure in the NCI Holdings Pty Ltd (Northcote) and National Union of Workers Enterprise Agreement 2015 (Agreement). The Agreement covers NCI Holdings Pty Ltd (NCI), certain of its employees and the NUW.
[2] The dispute concerns redundancy pay entitlements arising under clause 21.6 of the Agreement.
[3] NCI manufactures packaging materials and operates manufacturing plants at Northcote and Tullamarine in the state of Victoria.
[4] Prior to its closure in 2014, NCI operated a manufacturing plant in Bayswater. A number of NCI’s employees who had previously worked at the Bayswater manufacturing plant were transferred to work at the Northcote plant. Clause 21 of the Agreement contains a provision which deals with that which is described as a “relocation agreement” that applies only to these employees, who are therein described as “ex Bayswater employees”.
[5] In early 2016, NCI announced that it intended to close the Northcote manufacturing plant. Ex Bayswater employees at the Northcote plant have been offered the choice (presumably in accordance with clause 21) of relocating to the Tullamarine manufacturing plant or having their employment terminated on redundancy grounds.
[6] While a number of employees have opted to relocate to the Tullamarine plant, a number have also elected to have their employment terminated on redundancy grounds and thereby become entitled to receive a redundancy payment.
[7] The redundancy pay entitlement for ex Bayswater employees is contained in clause 21.6 of the Agreement. That provision sets out various forms of payment to which an ex Bayswater employee becomes entitled on termination of employment for reasons of redundancy and relevantly for the purposes of this dispute, an ex Bayswater employee becomes entitled to “three and one half (3.5) weeks per each year of service or part thereof…”. 1
[8] The issue in dispute concerns the constituent elements of a “week’s pay” for the purposes of determining the dollar value amount of three and one half weeks for each year of service or part thereof that is to be paid to an eligible ex Bayswater employee pursuant to that part of clause 21.6 of the Agreement. For its part, the NUW maintains that an ex Bayswater employee’s redundancy pay includes that employee’s applicable shift loading. NCI says that an ex Bayswater employee’s redundancy pay entitlement is to be calculated using the applicable base rate of pay.
[9] As may be discerned from the above, the resolution of the issue in dispute turns ultimately upon the proper construction of various provisions of the Agreement and the application of orthodox principles of construction.
[10] The NUW and NCI filed written submissions and both were content for the issue in dispute to be determined “on the papers” without the need for a hearing. Both the NUW and NCI accepted that I was properly seized with jurisdiction to determine the dispute by arbitration. The principles applicable to the proper construction of an enterprise agreement are not in dispute and were canvassed at length in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited. 2 There is no need to rehearse them here.
[11] The starting point to construing the provision at issue is the text of the provision and that begins with an examination of the ordinary grammatical meaning of the words used in the context of the Agreement as a whole.
[12] Clause 21 of the Agreement provides the following:
“21 Relocation Agreement
21.1 This relocation agreement will apply solely in the event of ex Bayswater employees working at the Northcote site being relocated to Tullamarine (Vic) on a partial or total relocation.
21.2 All employees will be given the following options.
Tullamarine Relocation
21.3 Employees who wish to relocate to the Tullamarine site will be entitled to a travel allowance of:
Year 1: $5,000
Year 2: $2,500
21.4 There will be an 8 week trial period prior to acceptance of the new permanent position. If the person is not satisfied with the position, the redundancy contained in this appendix will apply.
21.5 Wage rates at Tullamarine will apply upon transfer. If current wage rate is higher, the higher rate will apply.
REDUNDANCY
21.6. If an employee decides not to transfer due to their work place having changed significantly, the following will apply:
● Notice period will be four weeks
● Three and one half (3.5) weeks per each year of service or part thereof will be paid
● An additional one weeks (sic) pay per year of service or part thereof will be paid for employees over 45 years of age
● Sick leave outstanding to be paid up to a maximum of six weeks
● All annual leave and annual leave loading to be paid
● All unused long service leave entitlements shall be paid out providing that the employee has at least seven years (sic) service with the company.”
[13] Clause 21 of the Agreement is not one of general application. The entitlements to redundancy payments on termination for reasons of redundancy set out therein apply only to a limited class of employees described as ex Bayswater employees. Clause 21 provides ex Bayswater employees with the option of relocating to the Tullamarine manufacturing plant, or the termination of employment on redundancy grounds and the payment of the various components of redundancy payment set out therein. It appears that the redundancy payment option may be accessed either before any relocation, during or at the conclusion of the eight week trial relocation period set out in clause 21.4.
[14] Clause 21.6 sets out the redundancy pay entitlement of a non-transferring ex Bayswater employee. Relevantly, such an employee, on termination of employment, becomes entitled to a payment equal to three and one half weeks per each year of service or part thereof. The constituent elements of that which would constitute a “week’s pay” is not defined.
[15] The issue of redundancy is also dealt with elsewhere in the Agreement. Clause 20 provides the following:
“20 REDUNDANCY
The provisions of this clause are the minimum entitlements of company’s (sic) in the event of redundancy. The Union specifically reserves the right to make additional claims in respect of terminations and redundancies.
20.1 Discussions before terminations
20.1.1 Where the company has made a definite decision that the company no longer wishes the job the employee has been doing to be done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the company shall hold discussions with the employees directly affected and with their nominated representative who may be the Union.
20.1.2 The discussions shall take place as soon as practicable after the company has made a definite decision which will invoke the provisions of sub clause 20.1.1 hereof and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.
20.1.3 For the purposes of the discussion the company shall, as soon as practicable, provide in writing to the employees concerned and their nominated representative who may be the Union, all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. Provided that any company shall not be required to disclose confidential information the disclosure of which would be inimical to the company's interests.
20.2 Transfer to lower paid duties
Where an employee is transferred to lower paid duties for reasons set out in clause 20.1.1 hereof, the employee shall be entitled to the same period of notice of transfer as he or she would have been entitled to if his or her employment had been terminated, and the company may at the company's option, make payment in lieu thereof of an amount equal to the difference between the former ordinary time rate of pay and the new lower ordinary time rates for the number of weeks of notice still owing.
20.3 Severance pay
20.3.1 All retrenched employees shall receive 3.5 weeks (sic) pay for each year of completed service and pro-rata for part years of service provided that an employee with at least 1 year but not more than 2 years (sic) service will receive 4 weeks (sic) pay. There will be maximum pay out under this sub-clause of seventy (70) weeks (sic) pay. Week's pay means the rate of pay as prescribed herein for the employee concerned and applicable shift loading.
20.3.2 Annual Leave
All accumulated annual leave and leave loading shall be paid out on termination.
20.3.3 Long Service Leave
All unused long service leave entitlements shall be paid out on termination, providing that the employee has at least seven years (sic) service with the company. This clause needs to be read in conjunction with Clause 35.1.
20.3.4 Sick Leave
A maximum of six weeks sick leave will be paid out to employees provided that the employee has a minimum of two weeks leave accrued.
20.3.6 (sic) Selection of Employees
In the first instance the company will request volunteers. In the event that there are not enough volunteers, employees will be retrenched after being assessed according to the skill protection, capability and performance.
20.4 Employee leaving during notice
An employee whose employment is terminated for reasons set out in clause 20.1.1 hereof may terminate his / her employment during the period of notice and, if so, shall be entitled to the same benefits and payments under this clause had he/she or she remained with the company until the expiry of such notice. Provided that in such circumstances the employee shall not be entitled to payment in lieu of notice.
20.5 Alternative employment
The company in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if the company obtains acceptable alternative employment for an employee.
20.6 Time off during notice period
20.6.1 During the period of notice of termination given by the company for reasons set out in clause 20.1.1 an employee shall be allowed up to one day's time off without loss of pay during each week of notice for the purpose of seeking other employment.
20.6.2 If the employee has been allowed paid leave for more than one day during the notice period for the purpose of seeking other employment, the employee shall, at the request of the company, be required to produce proof of attendance at an interview or he or she shall not receive payment for the time absent.
For this purpose a statutory declaration will be sufficient.
20.7 Transmission of business
20.7.1 Where a business is before or after the date of this agreement, transmitted from an company (in this sub clause called "the transmittor") to another company (in this sub clause called "the transmittee") and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:
20.7.1(a) the continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission; and
20.7.1(b) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee:
20.7.2 In this sub clause "business" includes trade, process, business or occupation and includes part of any such business and "transmission" includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and "transmitted" has a corresponding meaning.
20.8 Employees exempted
This clause shall not apply where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect of duty, or in the case of casual employees, apprentices or employees engaged for a specific period of time or for a specified task or tasks, for a period of less than twelve months.
20.9 Incapacity to pay
The company, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied on the basis of the company's incapacity to pay.”
[16] Unlike clause 21, clause 20 of the Agreement is one of general application applying to all employees covered by the Agreement in the event of redundancy. It makes provision for consultation before an employee’s employment is terminated on redundancy grounds and sets out, inter alia, severance pay and related entitlements that are to be paid to an employee whose employment is terminated for reasons of redundancy.
[17] In contrast to clause 21.6, the provision dealing with severance pay found in clause 20.3 contains a definition of a “week’s pay” as meaning “the rate of pay as prescribed herein for the employee concerned and applicable shift loading”.
[18] The NUW accepts that when read in isolation, clause 21.6 of the Agreement does not provide an entitlement for ex Bayswater employees to be paid any applicable shift loadings or penalties on redundancy pay in the circumstances prescribed. However, it maintains that such an interpretation is a very narrow construction of the Agreement. The NUW argues that clause 21.6 must not be read in a vacuum and must be read together with and in the context of the broader redundancy entitlements at clause 20. It says that the entitlement to redundancy pay in clause 21.6 must be read and interpreted in accordance with the definition of a “week’s pay” in clause 20.3. A “week’s pay” is not defined in any other clause of the Agreement.
[19] According to the NUW, the redundancy pay entitlement in clause 21.6 must source its definition of a “week’s pay” from clause 20.3, thereby requiring that shift loading be paid to the ex Bayswater employees who become entitled pay.
[20] NCI maintains a contrary view and says that clause 21.6 operates according to its terms and does not operate together with clause 20.
[21] I consider that both textual and contextual considerations tell against the construction advanced by the NUW.
[22] To begin, the entitlement to a redundancy payment set out in clause 21.6 arises in entirely different circumstances to the entitlement severance payment under clause 20.3. The former arises in circumstances where an ex Bayswater employee exercises an election as between permanent relocation to the Tullamarine manufacturing plant on the one hand, and on the other, accepting a redundancy payment because the employee is not satisfied with the position into which the employee is to be permanently transferred (clause 21.4) or accepting a redundancy payment because that employee has decided not to transfer to the Tullamarine manufacturing plant due to “their workplace having changed significantly” (clause 21.6). In this respect, the redundancy entitlement arises out of self-selection by the employee in circumstances where that employee has the option of transferring to the Tullamarine manufacturing plant but does not wish to do so.
[23] The entitlement to severance pay under clause 20.3 applies to an employee who is covered by the Agreement in circumstances where NCI has made a definite decision that it no longer wishes the job that the employee has been doing to be done by anyone (excepting ordinary and customary turnover of labour), and after consultation that employee’s employment is terminated for that reason (clauses 20.1 and 20.3) having been selected by the employer in accordance with the procedure set out in clause 20.3.6. Thus, entitlement to severance pay under clause 20.3 arises by reason of an act of NCI, not an election by the employee.
[24] Secondly, the various components of the payments are to be made under the specific relocation scheme established by clause 21 and the redundancy scheme established by clause 20 of the Agreement differ in a number of material respects. These differences are briefly chronicled below:
● The entitlement to severance pay under clause 20.3 is expressed to be an entitlement that the employee “shall receive 3.5 weeks (sic) pay for each year of completed service and pro-rata for part years of service”. A “week’s pay” is thereafter defined as including “applicable shift loading”. The entitlement under clause 21.6 is expressed as “[T]hree and one half (3.5) weeks per each year of service or part thereof will be paid”. There is no definition of a “week’s pay”. The phrase a “week’s pay” is not used to express the entitlement and there is no explanation as to that which is meant by the constituent elements of the payment to be made described as “three and one half weeks”. However, in my view, the expression “[T]hree and one half (3.5) weeks per each year of service or part thereof will be paid”, is intended to convey an entitlement of 3.5 weeks’ pay for each year of service or part thereof. This seems to me to be clear from the very next dot point in clause 21.6 which provides for an “additional one weeks (sic) pay for each year of service or part thereof” for employees over the age of 45 years;
● The severance pay entitlement for an employee of at least one year but not more than two years’ service under clause 20.3 is four week’s pay as compared to the three and one half weeks redundancy payment under clause 21.6;
● The severance pay entitlement under clause 20.3 contains a cap so that the maximum payment to which any employee becomes entitled is 70 weeks’ pay. This stands in contradistinction to the uncapped entitlement to redundancy pay found in clause 21.6;
● The severance pay entitlement in clause 20.3 does not contain any additional payment for employees who are over 45 years of age. This is to be contrasted with the provision for an “additional one weeks (sic) pay per year of service or part thereof” for employees over 45 years of age found in clause 21.6;
● The payment to an employee of the six weeks sick leave in clause 20.3 is conditional upon the employee having a minimum accrual of sick leave of two weeks. No such limitation is to be found in clause 21.6 which simply provides that sick leave outstanding will be paid up to a maximum of six weeks;
● Under the redundancy provisions in clause 20, an employee whose employment is to be terminated on redundancy grounds may terminate his or her employment during the notice period and remain entitled to the same benefits that he or she would have received had the employee remained in employment until the expiry of the notice period (clause 20.4). No such waiver of the requirement of the employee to work out the notice period is to be found in clause 21. Clause 21.6 merely provides that there will be a notice period of four weeks; and
● There is no provision in clause 21 comparable to that found in clause 20.5 which enables NCI to apply to the Commission to have the general severance pay prescriptions varied if it obtains acceptable alternative employment for an employee.
[25] In combination, these differences point to clauses 20 and 21 being engaged in different circumstances and so it is unsurprising that the entitlements and in particular, the calculation thereof, might be founded upon a differing rationale. For that reason, the argument advanced by the NUW that the provisions be read together is not sustainable.
[26] Thirdly, it seems to me that the absence of a definition of a “week’s pay” in clause 21.6 is a telling factor against the construction favoured by the NUW. The definition of a “week’s pay” in clause 20.3 could have been engaged for the purposes of clause 21.6 in a number of ways, but was not. The entitlement to redundancy pay in clause 21.6 could have been expressed as being that found in clause 20.3. Alternatively, a “week’s pay” could have been defined for the purposes of clause 21.6 either expressly or by reference to the definition in clause 20.3.
[27] Moreover, it is apparent that where an entitlement to payment by reference to “weeks” or some other period is intended to convey an entitlement to more than the ordinary rate of pay to which an employee is entitled under the Agreement, then express reference is made to give effect to the intention. One example is found in clause 20.3, but another is found in clause 22.1.5 which deals with the calculation of payment in lieu of notice which must otherwise be given on termination of employment under clause 22.1.1.
[28] Clause 22 relevantly provides:
“22 TERMINATION OF EMPLOYMENT
22.1 Notice of termination by company
22.1.1 In order to terminate the employment of an employee, the company shall give to the employee the following minimum notice:
Period of continuous service | Period of Notice |
1 year or less | 1 week |
Over 1 year and up to the completion of 3 years | 2 weeks |
Over 3 years and up to the completion of 5 years | 3 weeks |
Over 5 years | 4 weeks |
. . .
22.1.3 Payment in lieu of the notice, shall be made if the appropriate notice period is not given. Provided that employment may be terminated by part of the period of notice specified and part payment in lieu thereof.
. . .
22.1.5 In calculating any payment in lieu of notice the wages an employee would have received in respect of the ordinary time he/she would have worked during the period of notice had his/her employment not been terminated shall be used. [my underlining]
[29] Further examples may be found in clauses 34.10 and 35, which deal respectively with payments during periods of annual and personal leave and provide as follows:
34.10 Payment for period of leave
34.10.1 Each employee before going on leave shall be paid all wages which would normally become due and payable during the period of leave.
34.10.2 For the purpose of this agreement, wages shall be at the wage rates contained herein for the occupation in which the employee was ordinarily employed immediately prior to the commencement of their leave or the termination of their employment, as the case may be, and in addition to the above payment:
34.10.2(a) any leading hand allowances, first aid allowance. [my underlining]
. . .
35.3 Entitlement to paid personal leave and payment
. . .
35.3.2 If an employee takes personal leave, the Company must pay the employee, for the period of the personal leave, the amount the employee would reasonably have expected to be paid by the Company if the employee had worked during that period.” [my underlining]
[30] In these circumstances, it seems to me to follow that the ordinary grammatical meaning of the words in clause 21.6 used in the context of the Agreement as a whole, is that the reference to an eligible ex Bayswater employee being paid a redundancy payment by reference to the enumerated “weeks per year of service or part thereof” is a reference to that employee being paid the ordinary rate of pay for the number of hours of ordinary hours of work that that employee works in a week as prescribed in the Agreement.
[31] It follows that any “applicable shift loading” does not form part of the 3.5 weeks per year of service or part thereof, or the additional one week’s pay for each year of service or part thereof in respect of employees over the age of 45 years redundancy pay entitlements set out in the second and third points of clause 21.6 of the Agreement.
Conclusion
[32] For the reasons given, any “applicable shift loading” does not form part of the 3.5 weeks per year of service or part thereof, or the additional one week’s pay for each year of service or part thereof in respect of employees over the age of 45 years redundancy pay entitlements set out in the second and third points of clause 21.6 of the Agreement.
[33] The dispute is determined accordingly.
DEPUTY PRESIDENT
Written submissions:
NUW, 22 November 2016
NCI, 13 December 2016
1 Clause 21.6 of the Agreement.
2 [2014] FWCFB 7447 at [19]-[41].
Printed by authority of the Commonwealth Government Printer
<Price code C, PR589445>
1