Riggs v IBM Australia Ltd

Case [2021] FedCFamC2G 235

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

Riggs v IBM Australia Ltd [2021] FedCFamC2G 235

File number(s): MLG 3721 of 2020
Judgment of: JUDGE MCNAB
Date of judgment: 8 November 2021
Catchwords: INDUSTRIAL LAW – interpretation of a redundancy clause – clause dealing with the transition of employees with more generous redundancy entitlements – correct rate of pay for the calculation of redundancy entitlements – application dismissed.
Legislation:

Fair Work Act 2009 (Cth) ss 50, 546(3)(c).

ISSCA/Telstra Transitional Arrangements Agreement 1997  cls 8.1, 10.

Cases cited:

Treasury Wine Estates Vintners Ltd v Pearson [2019] FCAFC 21

Workpac v Skene Pty Ltd [2018] FCAFC 131
Division: Division 2 General Federal Law
Number of paragraphs: 70
Date of last submission/s: 9 July 2021
Date of hearing: 11 June 2021, 9 July 2021
Place: Melbourne
Counsel for the Applicant: Ms G Jardine
Solicitor for the Applicant: Rubicon Compensation Lawyers
Counsel for the Respondent: Ms F Leoncio
Solicitor for the Respondent: Ashurst Australia
Table of Corrections
10 November 2021 In paragraph 56 the word “that” has been deleted as a repeated word.
10 November 2021 In paragraph 61 the word “the” has been inserted between the words “takes” and “matter”.
10 November 2021 In paragraph 62 the word “industry’s” has been replaced with the word “industrial” and the word “fundamental” has been replaced with the word “formulated”.

ORDERS

MLG 3721 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

JULIE RIGGS

Applicant
AND:

IBM AUSTRALIA

Respondent

ORDER MADE BY:

JUDGE MCNAB

DATE OF ORDER:

8 NOVEMBER 2021

THE COURT ORDERS THAT:

1.The Application filed on 19 October 2020 be dismissed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 10 November 2021

Judge McNab

INTRODUCTION

  1. This matter comes before the Court by way of an application filed on 19 October 2020 and an amended statement of claim filed on 18 January 2021 (“the ASOC”). By that application, the Applicant claims that the Respondent contravened s50 of the Fair Work Act 2009 (Cth) (“the FW Act”), by underpaying her entitlement to redundancy pay under the ISSCA/Telstra Transitional Arrangements Agreement 1997 (“the Agreement”).

  2. The Applicant claims that, by reason of the contravention of s50 of the FW Act, she is entitled to compensation and that a pecuniary penalty should be imposed against the Respondent.

  3. By its further amended defence filed on 21 April 2021 (“the FAD”), the Respondent denies the Applicant’s claim and says that,…

Continue reading Riggs v IBM Australia Ltd

Sign in free to access the full text

Details
AGLC
Riggs v IBM Australia Ltd [2021] FedCFamC2G 235
Case
[2021] FedCFamC2G 235
Decision Date

CaseChat Overview and Summary

The matter before the Court involved a dispute between Riggs and IBM Australia Ltd regarding the calculation of her redundancy entitlements under the Agreement. The Court was required to determine the proper interpretation of the redundancy clause in the Agreement, specifically in relation to the calculation method and the rate of pay to be applied. The Applicant argued that she had been underpaid by $101,746.56, while the Respondent contended that she had been overpaid by $27,383. The Court considered the principles of interpreting industrial instruments, including the need to read the words of the instrument as a whole in light of its industrial context and purpose. The Court examined the background and context in which the Agreement was certified, including the negotiations between ISSCA and Telstra unions, and the desire to offer attractive and fair terms to Telstra employees transitioning to IBM Australia.

The Court concluded that the proper interpretation of the redundancy clause in the Agreement required the application of the IBM Australia standard for all service, with a particular safety net for employees who might be retrenched within the first two years after transferring or who had a potential entitlement to a redundancy pay benefit in excess of the IBM cap of 65 weeks. The Court found that the Applicant had been paid her full entitlements in accordance with the relevant statutory requirements and that the Respondent had not contravened s50 of the FW Act. The Applicant’s claim for compensation, penalty, and statutory interest was dismissed. The Court reserved judgment on the issue of costs.

The Court's decision was based on a thorough analysis of the evidence and the principles of interpreting industrial instruments. The Court found that the proper construction of the redundancy clause in the Agreement required the application of the IBM Australia standard for all service, with a particular safety net for certain employees. The Court concluded that the Applicant had been paid her full entitlements in accordance with the relevant statutory requirements and that the Respondent had not contravened s50 of the FW Act. The Applicant’s claim for compensation, penalty, and statutory interest was dismissed. The Court reserved judgment on the issue of costs.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The matter ultimately came before the Court on 11 June 2021 for Final Hearing via Microsoft Teams, where both parties had Counsel appear on their behalf. The matter was adjourned part heard to 9 July 2021 so that parties could make oral closing submissions. At the conclusion of the hearing on 9 July 2021, which occurred in person, judgment was reserved.BACKGROUND The Court has the benefit of a statement of agreed facts filed on behalf of both parties by the Applicant on 22 March 2021. The Court has regard to that document in formulating these background facts. On or about 8 July 1991, the Applicant commenced employment with Telstra. In 1994, IBM and Lend Lease Corporations Australia Ltd formed a joint venture, Integrated Systems Solutions Corporation Australia Ltd (“ISSCA”), which delivered IT services to the finance industry and government sectors. On 2 June 1997, the Australian Industrial Relations Commission certified the Agreement. On 14 July 1997, Telstra and ISSCA executed an agreement for the outsourcing of certain IT functions of Telstra to ISSCA. On the same day, ISSCA changed its name to IBM Global Services Australia Ltd. On 24 July 1997, the Applicant’s employment was transferred from Telstra to IBM Global Services Australia Ltd (“IBM Global”). She was employed as a Finance Officer. On or about 5 January 2004, the Applicant became an employee of the Respondent, IBM Australia Ltd (“IBM” or “the Respondent”). From about 22 May 2017, the Applicant held the position of Director, Enterprise Licencing Software and Solutions, Asia Pacific, in a full-time capacity. On 29 May 2020, the Applicant was advised that her position was to be made redundant, effective on 28 August 2020. On 31 August 2020, the Respondent terminated the Applicant’s employment by way of redundancy. At the time of her termination, the Applicant was working for the Respondent in a full-time capacity. At all relevant times, the Respondent applied the Agreement to the Applicant’s employment. On 14 September 2020, the Applicant was paid a redundancy payment in the gross sum of $304,388.40. The Applicant disputes the Respondent’s calculation of her redundancy payment. The Applicant claims that, on her construction of cl 10 of the Agreement she has been underpaid by $101,746.56. The Respondent claims that the Applicant has been paid her full entitlements in accordance with the relevant statutory requirements. Indeed, at [7] of an outline of submissions filed on 28 May 2021, the Respondent contends that the Applicant has been overpaid in the sum of $27,383.The Respondent does not seek repayment of any alleged over payment. ORDERS SOUGHT By way of the ASOC, the Applicant seeks orders as follows:(1)a declaration that the Respondent contravened s50 of the FW Act;(2)compensation for the breach of s50 of the FW Act;(3)a pecuniary penalty be imposed as against the Respondent for its breach of s50 of the FW Act, and for that penalty to be paid to the Applicant pursuant to s546(3)(c) of the FW Act; and(4)statutory interest.

Evidence

Evidence Before The Court

It is useful for the Respondent’s evidence be set out before the Applicant’s evidence as the Respondent’s evidence goes to the background circumstances in which the Agreement was certified. Evidence given on behalf the Respondent The following people gave evidence on behalf of the Respondent:(1)Mr David Patton, now a Clinical Psychologist but previously a consultant in the human resource team of the Respondent business at the time the Agreement was certified, who relied on his affidavit filed on 20 April 2021; and(2)Ms Shivaun Bromley, Talent and Transformation Leader for the Respondent, relying on her affidavit filed on 20 April 2021. By his affidavit, Mr Patton sets out that a significant aspect of his responsibilities in his role with the Respondent was the negotiation with Telstra unions (and, in effect, with Telstra) of a transitional Greenfields industrial agreement, which would become the Agreement. Mr Patton states at [19] of his affidavit that:19.The task was to have about 2000 Telstra employees agree to transition to ISSC Australia on IBM terms, plus another 1000 independent contractors come over under novated contracts. At that time, Telstra employees were covered by a large number of industrial awards, agreements and conditions, which were designed for the public sector telecommunications environment of Telstra and its past iterations. ISSC Australia and IBM Australia sought all of its employees to have uniform modern terms and conditions of employment designed for the emerging IT outsourcing services market in the commercial sector. ISSC Australia sought to offer attractive and fair terms that would maximise the take up rate of Telstra employees through voluntarily acceptance of job offers. Mr Patton goes on to say that ISSCA was concerned with applying the redundancy pay calculation method that was applied by IBM Australia to transitioning Telstra employees. Mr Patton sets out that ISSCA’s calculation method of the redundancy benefit was eight weeks of pay plus two weeks of pay for each year of service, with the benefit to be capped at 65 weeks of pay. So, for example, if a hypothetical employee was to be made redundant after two years of service, they would receive 12 weeks of pay pursuant to the calculation method. Mr Patton sets out that, in contrast, Telstra’s redundancy calculation method of the redundancy benefit at that time was to four weeks of pay for each of the first five years of service and three weeks of pay for each subsequent year of service, capped at 80 weeks. Mr Patton says that, based on those calculation methods, “the IBM system was more generous during the first few years after which the Telstra system became more generous”. Mr Patton then states at [26] of his affidavit that:26.My intention during the negotiations, which was accepted in the final terms, was to have the IBM Australia standard apply for all service but with a particular safety net for employees who:(a) might be retrenched within the first two years after transferring; or(b)who, after the first two years, had a potential entitlement to a redundancy pay benefit in excess of the IBM cap of 65 weeks - something which would occur as at July 1999 under the historical Telstra system after more than 21 years' service.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The Applicant then states on 14 October 1996, she was provided with a document entitled ‘Information Technology Group Telstra/ISSCA Due Diligence Update’: see annexure JR9. The Applicant asserts that this document, amongst other things, confirms the arrangements in relation to how redundancy payments were to be calculated and that it confirms that the redundancy clause was written out in full to avoid any misunderstanding. CONSIDERATION The principles of interpreting industrial instruments are well settled. The starting point is the words of the industrial instrument read as a whole in light of its industrial context and purpose. As stated by the Full Court (Tracey, Bromberg and Rangiah JJ) in Workpac v Skene Pty Ltd [2018] FCAFC 131 (“Skene”) at [197]:[2] 197. The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context: City of Wanneroo v Holmes (1989) 30 IR 362 at 378 (French J). The interpretation “… turns on the language of the particular agreement, understood in the light of its industrial context and purpose …”: Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2] (Gleeson CJ and McHugh J). The words are not to be interpreted in a vacuum divorced from industrial realities (Holmes at 378); rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament (Holmes at 378–9, citing Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR(NSW) 498 at 503 (Street J)). To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced: see Kucks v CSR Limited (1996) 66 IR 182 at 184 (Madgwick J); Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16] (Marshall, Tracey and Flick JJ); Amcor at [96] (Kirby J).[2] See also Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10. In construing the words of the industrial instrument, the Court is to have regard to the industrial purpose of the Agreement, and the commercial and legislative context in which it applies. In considering its commercial purpose, the Court should give attention to the background, context and market in which the parties were operating, as known to both parties: see, for example, Treasury Wine Estates Vintners Ltd v Pearson [2019] FCAFC 21 (per Rares, Perry and Charlesworth JJ) (“Pearson”). In this matter, the Court must determine how the Applicant’s redundancy entitlement is to be calculated pursuant to the Agreement and the relevant rate to which the calculation method is to be applied. In doing so, the Court must determine the proper construction of cl 10 of the Agreement, which makes reference to cl 8, as set out above.