Teekay Shipping (Australia) Pty Ltd v Auld

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FEDERAL COURT OF AUSTRALIA

Teekay Shipping (Australia) Pty Ltd v Auld [2020] FCAFC 206  

Appeal from: Auld & Ors v Teekay Shipping (Australia) Pty Ltd [2019] FWCFB 6047
File number(s): NSD 268 of 2020
Judgment of: RARES, LOGAN AND WIGNEY JJ
Date of judgment: 27 November 2020
Catchwords: INDUSTRIAL LAW – interpretation of industrial agreements – whether Full Bench of the Fair Work Commission made jurisdictional error in interpretation of enterprise agreement and modern award in holding that, read together, they contained a consultation term within the meaning of s 205 of the Fair Work Act 2009 (Cth) – where enterprise agreement and modern award did not contain all elements of consultation term required in s 205 – whether model consultation term prescribed pursuant to s 205(2) to be read to supplement or supplant existing but deficient consultation provisions in enterprise agreement and modern award – where s 205(2) provided model consultation term prescribed by reg 2.09 of the Fair Work Regulations deemed to be term of the enterprise agreement – Held: model consultation term applied to exclusion of insufficient and defective terms dealing with consultation in the enterprise agreement and modern award
Legislation:

Fair Work Act 2009 (Cth) ss 3, 55, 56, 171, 182(1), 186, 187, 201(1), 205, 205(1), 205(1A), 205(2), 253, 257, 394, 563, 570, 582, 615, 796(1)

Federal Court of Australia Act 1976 (Cth), s 20(2)

Fair Work Regulations 2009 (Cth) reg 2.09, sch 2.3

Cases cited:

Auld v Teekay Shipping (Australia) Pty Ltd [2019] FWCFB 6047

Australian Securities and Investments Commission v DB Management Pty Ltd (2000) 199 CLR 321

Kucks v CSR Ltd (1996) 66 IR 182

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 335

SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362

Teekay Shipping (Australia) Pty Ltd v Auld [2020] FCAFC 19

Teekay Shipping (Australia) Pty Ltd v Auld [2020] FWCFB 1074

Treasury Wine Estates Vintners Ltd v Pearson (2019) 268 FCR 12

United Firefighters’ Union of Australia v Country Fire Authority (2015) 228 FCR 497

United Firefighters’ Union of Australia v Country Fire Authority (2014) 218 FCR 210
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 147
Date of hearing: 28 August 2020
Counsel for the Applicant: Mr S Prince SC with Mr B Rauf
Solicitor for the Applicant: Kingston Reid
Counsel for the First to Twenty-First Respondents: Mr A M Slevin
Solicitor for the First to Twenty-First Respondents: Slater & Gordon

ORDERS

NSD 268 of 2020
BETWEEN:

TEEKAY SHIPPING (AUSTRALIA) PTY LTD

Applicant
AND:

GEOFFREY AULD

First Respondent

DARREN MICHAEL HOBBY

Second Respondent

BADEN FRANCIS CROOK (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

RARES, LOGAN AND WIGNEY JJ

DATE OF ORDER:

27 NOVEMBER 2020

THE COURT ORDERS THAT:

1.Orders 3 and 4 made by the twenty second respondent (the Commission) on 5 March 2020 be set aside.

THE COURT DECLARES THAT:

2.The Model Consultation Term (MCT) prescribed…

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Details
Case
[2020] FCAFC 206
Decision Date

CaseChat Overview and Summary

Teekay Shipping (Australia) Pty Ltd challenged the Fair Work Commission’s (FWC) decision to deem a model consultation term to be a term of an enterprise agreement (EA). The EA was between Teekay Shipping and the Maritime Union of Australia. The Full Bench of the FWC had found that the model consultation term prescribed pursuant to s 205(2) of the Fair Work Act 2009 (Cth) applied to the exclusion of any rights or obligations in the EA and an award in respect of the decision to make employees redundant. The Full Bench found that the model consultation term applied to the exclusion of insufficient and defective terms dealing with consultation in the EA and award. Teekay Shipping sought a declaration that the model consultation term did not apply to the exclusion of any rights or obligations in the EA and award and that the redundancy of the respondents was not a genuine redundancy. The Full Bench of the FWC had considered whether the model consultation term applied to the exclusion of insufficient and defective terms dealing with consultation in the EA and award. The Full Bench held that the model consultation term applied to the exclusion of any rights or obligations in the EA and award in respect of the decision to make employees redundant. The Full Bench found that the deeming provision in s 205(2) of the Act operated to make the model consultation term a term of the EA at the time of its approval by the FWC. The Full Bench found that the Act contemplated that a consultation term may involve a process that does not, or indeed cannot, result in any subsequent variation of the major change the subject of consultation in accordance with s 205(1). The Full Bench found that the stage of the employer’s thinking about making or implementing a decision was not necessarily crucial, provided that whatever consultation occurred was about the actual change that the employer finally implemented and the employees had a right to representation of their choice for that consultation. The Full Bench found that the deeming provision in s 205(2) of the Act operated to make the model consultation term a term of the EA at the time of its approval by the FWC and that it applied to the exclusion of any rights or obligations in the EA and award in respect of the decision to make employees redundant. The Court set aside the Full Bench’s decision and declared that the model consultation term became a term of the EA at the time of its approval by the FWC and that it applied to the exclusion of any rights or obligations in the EA and award in respect of the decision to make employees redundant. The Court did not address the question of whether the redundancies were genuine redundancies.

Orders

Orders of the court

1. Orders 3 and 4 made by the twenty second respondent (the Commission) on 5 March 2020 be set aside.

THE COURT DECLARES THAT:

2. The Model Consultation Term (MCT) prescribed pursuant to s 205(3) of the Fair Work Act 2009 (Cth) became a term of the Teekay Shipping (Australia) Pty Limited Seagoing Ratings Dry Cargo Enterprise Agreement 2015 by force of s 205(2) of the Act at the time of its approval by the Commission on 19 October 2017.

3. The terms of the MCT applied to the exclusion of any rights or obligations in clause 9 of the Agreement and clause 8 of the Seagoing Industry Award 2010 in respect of the decision of the applicant made on or about 7 February 2019 to make each of the first to twenty first respondents redundant.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Relevantly, award cl 8 was a consultation term within the meaning of s 205 and is in appendix 3 to the Court’s reasons.BACKGROUNDThe legislative context Relevantly, the Act provided:3 Object of this Act The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations; and …(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and (e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and (f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; …201 Approval decision to note certain mattersApproval decision to note model terms included in an enterprise agreement (1) If:(a) the FWC approves an enterprise agreement; and (b) either or both of the following apply:(i)the model flexibility term is taken, under subsection 202(4), to be a term of the agreement;(ii) the model consultation term is taken, under subsection 205(2), to be a term of the agreement;the FWC must note in its decision to approve the agreement that those terms are so included in the agreement.…205 Enterprise agreements to include a consultation term etc.Consultation term must be included in an enterprise agreement (1) An enterprise agreement must include a term (a consultation term) that:(a) requires the employer or employers to which the agreement applies to consult the employees to whom the agreement applies about:(i) a major workplace change that is likely to have a significant effect on the employees; or (ii) a change to their regular roster or ordinary hours of work; and (b) allows for the representation of those employees for the purposes of that consultation.(1A) For a change to the employees' regular roster or ordinary hours of work, the term must require the employer:(a) to provide information to the employees about the change; and (b) to invite the employees to give their views about the impact of the change (including any impact in relation to their family or caring responsibilities); and (c) to consider any views given by the employees about the impact of the change.Model consultation term (2) If an enterprise agreement does not include a consultation term, or if the consultation term is an objectionable emergency management term, the model consultation term is taken to be a term of the agreement.(3) The regulations must prescribe the model consultation term for enterprise agreements. …389 Meaning of genuine redundancy (1) A person's dismissal was a case of genuine redundancy if:(a) the person's employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise; and (b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.(2) A person's dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:(a) the employer's enterprise; or (b) the enterprise of an associated entity of the employer. (emphasis other than to defined terms and headings added)The ratings’ proceedings in the Commission

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

This raised a question for the Commission of how to construe and reconcile the terms of EA cl 9, award cl 8 and the requirements of s 205 as well as the MCT, if it applied.The Full Bench’s decisions On 2 September 2019, the Full Bench published a “decision” on the question that had been referred to the Full Bench: Auld v Teekay Shipping (Australia) Pty Ltd [2019] FWCFB 6047 (the first reasons). The Full Bench construed Div 4 of Pt 2-4 of the Act, titled “Approval of enterprise agreements” which included ss 186 187 and s 201. They also had regard to the object of both the Act, in s 3, and of Pt 2-4, in s 171. They said that those sections, read in their context, did not preclude the Commission exercising its power to approve an enterprise agreement that did not contain one or both of a flexibility term or a consultation term. That followed from the deeming provisions in ss 202(4) and 205(2) that, if an enterprise agreement did not contain one or both of those terms, the model flexibility term and or the MCT were “taken to be a term of the agreement” (the first reasons [46]–[65]). The Full Bench considered that the scheme of the Act disclosed “a purpose of preserving as much of [an enterprise] agreement as made while also protecting against encroaching upon existing rights (the NES) or protections (unlawful terms)” ([67]). They said that, unlike the operation of ss 55 and 56, which rendered a term of an enterprise agreement inoperative to the extent that it contravened a national employment standard (NES), there was no provision invalidating a term of an enterprise agreement that did not satisfy s 205. They said that both a flexibility term and a consultation term were “in a category altogether different” from a statutory entitlement such as an NES ([72]). The Full Bench reasoned that the deemed inclusion of a model term, by force of ss 202(4) or 205(2), in an enterprise agreement, did not prevent the continuing operation of whatever terms it already contained that dealt with the same subject-matter but failed to comply fully with the Act’s requirements for a flexibility or consultation term (the first reasons [66]–[73]). They said at [73]–[74]):Consistent with the policy and evident purpose of the agreement making provisions of the Act, a non-compliant consultation term of an enterprise agreement need not be rendered as having no effect, because it does not offend against some other statutory entitlement or protection. Such a term can continue to operate, but the relevant model term that is taken to a term of the agreement and (sic) also operates.We therefore consider that the both textual and contextual considerations lead to a conclusion that s.205(2) of the Act does not have the effect of rendering inoperative an existing term in an agreement dealing with consultation. On the assumption that s.205(2) of the Act operated in this case, it follows that clause 9 of the Agreement together with the model consultation term operate as terms of the Agreement. Any conflict between the two provisions may be resolved through the usual means of interpreting agreements.

Ratio Decidendi

Legal Principle Established

First, the ratings argued that, having regard to the construction of s 205 by Perram, Robertson and Griffiths JJ in United Firefighters’ Union of Australia v Country Fire Authority (2015) 228 FCR 497 at 553–554 [240]–[241], EA cl 9 did allow for the Union to represent the employees. They submitted that EA cll 11, 12 and 14, read together with EA cl 9 provided sufficiently for representation and amounted to a consultation term within the meaning of s 205. Secondly, during the course of argument before us, the parties discussed whether the words “the alteration of hours of work” in EA cl 9.1 were wide enough to satisfy the requirements of s 205(1)(a)(ii) and (1A). Thirdly, the ratings argued that award cl 8 provided both for representation and a roster change and cured any deficiencies in EA cl 9 when the two were read together.CONSIDERATIONThe legislative purpose of s 205 The object of the Act is to provide a balanced framework for cooperative and productive workplace relations, that promotes national economic prosperity and social inclusion for Australians. Section 3(e) provides that part of that framework is enabling fairness and representation at work, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms. The objects of Pt 2-4 of the Act set out in s 171 are silent about the purposes of a consultation term. However, the legislative purpose of s 205(1) is not far to seek. It is to require an enterprise agreement to include a term that ensures that when an employer makes, or is about to make, a major change that is likely to have a significant effect on employees, the employer consults with them and allows them to be represented for that consultation. One possible outcome of the consultation process is an agreement that the major change, as decided or contemplated, is varied. One means by which the Act seeks to achieve the object in s 3 is to strike a balance in cases where an employer makes an employee redundant. That occurs in s 389, where the employer can establish that an employee’s dismissal was a case of genuine redundancy only if the conditions prescribed in that section are satisfied, including the condition in s 389(1)(b) that the employer had complied with an obligation is a modern award or an enterprise agreement to consult about the redundancy. Therefore, a legislative purpose of the requirement in s 205 that an enterprise agreement contain a consultation term, as defined in s 205(1) and (1A), is that if an employee is made redundant after the employer has complied with any obligation in the enterprise agreement (or modern award) to consult about the redundancy, and the employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the enterprise, the employee’s dismissal would fall within the definition of a genuine redundancy in s 389(1). It follows that the Act contemplates that a consultation term may involve a process that does not, or indeed cannot, result in any subsequent variation of the major change the subject of consultation in accordance with s 205(1). The stage of the employer’s thinking about making or implementing a decision is not necessarily crucial, provided that whatever consultation occurs is about the actual change that the employer finally implements and the employees have a right to representation of their choice for that consultation. There is no substantive difference in the effect of any decision to make an employee redundant created by the timing ofwhen the employer consults, if either (as EA cl 9.1 provides) it is likely to introduce a change resulting in redundancies and it later implements that very change on the one hand, or after it has made a definite decision (as MCT cl 1(1) provides) to make a major change to effect the same redundancies.