Textile, Clothing and Footwear Union of Australia v Emu (Aus) Pty Ltd
[2011] FWA 9063
•22 DECEMBER 2011
[2011] FWA 9063 |
|
DECISION |
Fair Work Act 2009
s.526 - Application to deal with a dispute involving stand down
Textile, Clothing and Footwear Union of Australia
v
Emu (Aus) Pty Ltd
(C2011/4734)
COMMISSIONER GOOLEY | MELBOURNE, 22 DECEMBER 2011 |
Application to deal with a dispute involving stand down.
[1] The Textile Clothing and Footwear Union of Australia (TCFUA) made an application pursuant to section 526 of the Fair Work Act 2009 (FW Act) for Fair Work Australia to deal with a stand down dispute.
[2] On 8 June 2011, Emu (Aust) Pty Ltd (the Respondent) advised its employees that they were to be stood down on 9 and 10 June 2011. Employees were advised that they could access annual leave or take the two days as unpaid leave.
[3] The dispute was referred to conciliation on 19 July 2011 but it was not resolved. It was referred to arbitration on 10 October 2011.
[4] Ms Vivienne Wiles appeared for the TCFUA and Ms Elizabeth Tueno of counsel was given permission to appear for the Respondent.
Background
[5] The Respondent manufactures sheepskin products at its factory in South Geelong. It employs approximately 66 employees including 36 production employees, 3 warehouse employees and 27 sales and administrative employees. 1 The Respondent imports sundry items from China which are used in the production of its products.
[6] No enterprise agreement applies to the employees. The Textile Clothing Footwear and Associated Industries Award 2010 2applies to the employer and employees.
[7] On or about 1 June 2011, it became apparent to the production manager Mr Andrew Clarke that a shipping container had been delayed and, as a result, there would be insufficient sundry items in stock which were necessary for the production process. Therefore there was insufficient work for some of its employees in the manufacturing area.
[8] On 8 June 2011 certain production employees were advised that they would be stood down on 9 and 10 June 2011. As a result, 34 production employees were stood down. The warehouse employees and the sales and administrative employees were not stood down.
The evidence of the Respondent
[9] Mr Clarke is the production manager for the Respondent. It was his evidence that on 1 June 2011 he approached Mr Steve Maul, the Warehouse Manager, to discuss his concerns that there would not be enough work for some of the production employees as the delivery of a shipping container had been unforeseeably delayed. 3 Mr Maul asked Mr Clarke to consider whether there was other work the employees could do so that they could avoid standing the employees down. Mr Clarke and Mr Maul developed a list of possible jobs however they concluded that it was not possible to redeploy the workers to those jobs.4
[10] Mr Clarke advised Mr Max Quarrell, one of the full time production workers, about what was happening. A few days later Mr Quarrell suggested to Mr Clarke that employees could take a few extra days off. 5 Mr Clarke considered this a reasonable solution as the Respondent was “short on goods used in the production of items, the warehouse was full of inventory and the company was up to date on all orders.” He discussed this with Mr Maul and Mr Paul Neate who is the Respondent’s company director. After these discussions Mr Clarke discussed it with all the employees concerned6 at a meeting held on 8 June 201. Mr Clarke explained that the container had been delayed.7 Mr Clarke asked the workers in the factory area whether it was possible for them to take two days off either as paid or unpaid leave.8 He asked if anyone was unhappy with the proposal but it was endorsed by a majority of the employees.9 It was his evidence that if the employees had not supported the proposal he would have looked at other options.10
[11] Mr Maul gave evidence that the order for these goods was placed in early April 2011. 11 It was his evidence that the goods would normally be delivered in six weeks.12 It was his evidence that when placing orders the Respondent allowed for a week’s delay in the delivery of goods. Therefore goods ordered in early April 2011 should have arrived by 1 June 2011.
[12] It was put to Mr Maul that the orders had been placed on 8 February 2011. He accepted this but said a subsequent order had been placed in April 2011. 13 It was his evidence that it was the delay in the delivery of the April order that was causing the Respondent problems.14
[13] It was Mr Maul’s evidence that in addition to filling specific orders the Respondent makes products in anticipation of future orders. 15
[14] It was put to Mr Maul, in cross examination, that the employees or some of them could have continued to part produce some of the products. He said that had already been occurring for a week before the stand down. 16
[15] It was his evidence that from 1 June 2011 until 8 June 2011 he instructed Mr Clarke to “get people to go and do as many things as you can to try and keep production flowing while we try and work out if we can do something else with them in different areas.” 17
[16] It was Mr Maul’s evidence that there was no stand down as employees volunteered to take time off. It was his evidence that employees could refuse. 18 It was his evidence that no-one objected.19
[17] Mr Max Quarrell, a production worker with the Respondent, gave evidence 20 that was consistent with the evidence of Mr Clarke.
[18] Ms Maryanne Kelly, an employee of the Respondent, gave evidence 21 that was consistent with the evidence of Mr Clarke. She was asked by Mr Clarke to find out if the employees wanted the time off with pay or without. She then asked individual employees their preference and recorded the information and provided it to payroll.22
The evidence of the TCFUA
[19] Ms Michelle O’Neil, the National Secretary of the TCFUA, gave evidence that employers did not have an automatic right to stand down employees and that consequently a number of awards had provided for additional protections for workers in the textile clothing and footwear industry. 23 She also gave evidence that employers factor into their production plans contingency plans to deal with domestic and off shore supplier arrangements.24
[20] Ms Elizabeth Macpherson, an organiser with the TCFUA, gave evidence that she became aware on 16 June 2011 that employees had been stood down when she was telephoned by members employed by the Respondent. She was asked if the company had advised the TCFUA. 25 She contacted Mr Maul who advised her that the employees had been stood down. It was her evidence that Mr Maul said he had been directed by Mr Neate, the owner of Emu (Aust) Pty Ltd, to stand down employees. Mr Maul denied this in cross examination. Mr Neate who prepared a witness statement was not called to give evidence.
[21] Ms Macpherson told Mr Maul that she wished to meet to discuss the employees being paid for the two days. 26 Mr Maul reiterated that he was following Mr Neate’s direction and at this point Ms Macpherson told Mr Maul that the TCFUA would be seeking the assistance of Fair Work Australia.
[22] On 17 June 2011 Ms Macpherson received a message to call the company as “Paul wished to meet with [her].” 27
[23] It was Ms Macpherson’s evidence that in the next week she was advised by members that Mr Neate addressed workers and told them that if he found out who had called the union “they won’t be working here anymore.” 28
[24] Mr Quarrell and Ms Kelly denied being threatened by Mr Neate and further denied that anyone else had been threatened.
[25] Ms Jennifer Kruschel, who is the Assistant Secretary of the Victorian Branch of the TCFUA, gave evidence that she had been given responsibility for organising the Emu site and she telephoned Emu on 20 June 2011 and advised that the TCFUA wished to meet with the company and that she was available that day. She was advised that Mr Maul would only meet with Ms Macpherson. 29 No meeting took place.
Legislative Framework
[26] Section 524 of the FW Act provides as follows:
“524 Employer may stand down employees in certain circumstances
(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
(a) industrial action (other than industrial action organised or engaged in by the employer);
(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
(2) However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:
(a) an enterprise agreement, or a contract of employment, applies to the employer and the employee; and
(b) the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.
Note 1: If an employer may not stand down an employee under subsection (1), the employer may be able to stand down the employee in accordance with the enterprise agreement or the contract of employment.
Note 2: An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).
(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.”
[27] Section 526 of the FW Act provides as follows:
“526 FWA may deal with a dispute about the operation of this Part
(1) FWA may deal with a dispute about the operation of this Part.
(2) FWA may deal with the dispute by arbitration.
Note: FWA may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).
(3) FWA may deal with the dispute only on application by any of the following:
(a) an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1));
(b) an employee in relation to whom the following requirements are satisfied:
(i) the employee has made a request to take leave to avoid being stood down under subsection 524(1) (or purportedly under subsection 524(1));
(ii) the employee’s employer has authorised the leave;
(c) an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (a) or (b);
(d) an inspector.
(4) In dealing with the dispute, FWA must take into account fairness between the parties concerned.”
The submissions of the TCFUA
[28] The TCFUA submitted that the Respondent stood down the employees in contravention of section 524 (1) (a), (b) and (c) of the FW Act.
[29] The TCFUA submitted that there was no evidence of any industrial action or any breakdown of machinery or equipment of the Respondent and that the stoppage of work was not caused by a reason for which the employer could not be reasonably held responsible. 30
[30] The TCFUA submitted, after referring to the explanatory memorandum, that section 524(1)(c) is directed at “physical barriers to employees at their workplace or similar unpreventable and unanticipated events, such as incessant rain.” 31
[31] The TCFUA submitted that ordering the necessary components for production is within the reasonable control of the Respondent. 32
[32] The TCFUA submitted that the Respondent had not established on the balance of probabilities that the delay in the delivery of goods from China was the cause of the stand-down. 33
[33] The TCFUA submitted that even if the delay was the cause of the stand-down the Respondent was responsible for the delay. Ensuring that there are sufficient components is the responsibility of the Respondent. 34 The Respondent did not take any steps to source alternative supplies.35
[34] The TCFUA submitted that there was no evidence before the Tribunal of any breakdown of any machinery or equipment. 36
[35] The TCFUA submitted that the employees could have been usefully employed. They could have continued the production of the products and the manufacturing process could have been completed after the components were delivered. 37
[36] The TCFUA submitted that the real reason for the stand-down was the general economic environment. 38
Submissions of the Respondent
[37] The Respondent submitted that it stood down the employees because there was a stoppage of work due to circumstances beyond the control of the Respondent. 39 It submitted that the delayed delivery of goods caused a shortage of supplies which in turn delayed manufacture. These circumstances were beyond the Respondent’s control.
[38] Alternatively it submitted that it stood down the employees as a result of a breakdown of machinery or equipment that was beyond the control of the employer. 40
[39] The Respondent accepted that it bore the onus of establishing that the employees could not be usefully employed. 41 It submitted that there was no work available for the affected employees and even if they could have been employed, i.e. in cleaning or assisting in the warehouse, that would have compromised both safety and efficiency of those working areas.42
[40] Further it was submitted that it looked at alternative work and there was none available. 43
[41] It was submitted that if the production had continued without the delayed items it would have created a backlog and “given the downturn that they were experiencing, it just would have built up supply which they couldn’t get rid of, and in a commercial, economic sense that just wasn’t practical at all.” 44
[42] Further it submitted that its decision to stand down was reasonable having regard to:
- The initial suggestion of taking days off came from an employee;
- There was consultation with employees;
- The delay only affected production employees;
- The Respondent considered alternative work;
- The Respondent knew how long the stand down would be for; and
- The Respondent did not threaten any employees. 45
[43] It was further submitted that there was a breakdown in the machinery in China which caused a delay in the delivery of the goods. 46
Findings
[44] There was insufficient evidence to establish that there had been a breakdown of machinery for which the Respondent could not be reasonably held responsible. Further there was no suggestion that the stoppage of work was caused by industrial action.
[45] I must therefore determine if there was a stoppage of work for any cause for which the Respondent could not be reasonably held responsible.
[46] In this case the Respondent had placed an order for goods in April 2011. No copy of the order document was tendered in evidence. It was the Respondent’s evidence that it had built into its normal delivery times some allowance for contingencies. Here the goods were not produced in time to be shipped to Australia. No evidence was called as to why, once this fact was known, no alternative methods of delivery other than by sea, was considered.
[47] It was Mr Clarke’s evidence that delays can be caused by “manufacturing plants overseas, how busy they are, what season they’re in et cetera. There’s a lot of variables.” 47
[48] The evidence of the Respondent’s witnesses was incomplete. In its submissions the Respondent accepted that it was not able to clearly point to what caused the delay in the shipment of the order. 48 The Respondent did not call anyone with any direct knowledge of why the order was delayed. In its submissions it relied upon a witness statement of Mr John Feng which was filed. Mr Feng was the company director for the Chinese manufacturing company but as Mr Feng was not available for cross examination, the witness statement was not tendered. Other than Mr Feng’s residence overseas, no adequate explanation was given as to why he was not called. No attempt was made to arrange a video link so that his evidence could be given without inconvenience to Mr Feng.
[49] Mr Feng’s statement did indicate that an order had been placed on 8 February 2011 for soles, insoles, heel covers, swing tags and other such items. This was the order Mr Clarke 49 advised was not shipped because the Respondent did not want to ship a half full container and this order arrived at the same time as the April order.
[50] The Respondent, in its final submissions, accepted that the evidence about the cause of the delay was not entirely clear and relied upon Mr Maul’s evidence. Mr Maul had no direct knowledge of why the shipment had been delayed. He said that it was caused by “power outages in one of the factories that we use over there and that caused the delay that they couldn’t actually manufacture the product that we needed.” 50 He accepted in examination in chief that this happened “a lot more than it should.”51 He provided no details about the duration of the power outage. His evidence was unsourced hearsay and I have not had regard to it.
[51] I am unable to conclude on the evidence before me that the delay in the delivery was for reasons for which the Respondent could not be reasonably held responsible. No record of the April or February order was produced, no evidence from the manufacturer in China was called and no other cogent evidence was provided that explained the delay.
[52] Not every delay in delivery of goods is beyond the control of the Respondent. For example, the Respondent chose not to ship a half full container of goods for commercial reasons. These were goods it needed for its production process. That is entirely their right. However the delay in that delivery was entirely in their control. As Mr Clarke stated there are many factors which can delay the delivery of goods. In this case the Respondent must establish that it had taken those factors into account when placing orders, such that it can establish that the stoppage of work that flowed from the delay was for reasons which it could not reasonably be held responsible. In this matter it has not produced sufficient evidence to establish this.
[53] Having concluded that the stoppage of work was not for reasons for which the Respondent could not reasonably be held responsible, it is not necessary to determine if the employees could have been usefully employed on 9 and 10 June 2011. However had it been necessary I would have concluded, on balance, that not all the employees could have been usefully employed.
[54] There is evidence that some employees could have continued the production of the goods without the delayed parts. This would have caused a stockpiling of goods. Further it would not have been possible for all the employees to perform work on the early parts of the production process on 9 and 10 June 2011 and then work on the remaining components when they arrived as not all employees could do every job in the process.
[55] Further I accept the evidence that the employees had already been partly producing the goods in the period after 1 June 2011 so there was already a backlog of partly produced products in the factory.
[56] I have concluded that the employees could not have been usefully allocated other work despite the Respondent’s contradictory evidence. On the one hand it was the Respondent’s evidence that there was no work for the employees to do but it was also the Respondent’s evidence that had employees not volunteered to take the time off they would not have stood down the employees. They would have looked at other options but they didn’t because the employees were happy to take the time off. 52 Further it was the Respondent’s evidence that they had in fact looked at alternative work for employees but there was no available work.
[57] The Respondent’s submission that the employees volunteered to take the two days off warrants careful consideration. Two employees gave evidence for the Respondent. It was clear that these employees believed that employers had an automatic right to stand down employees. 53
[58] No employees were called to give evidence for the TCFUA. The TCFUA officials gave hearsay evidence of complaints from employees received by them however the identity of these complainants was not disclosed. Nor were any particular details of the complaints provided. It appears the employees rang the TCFUA to advise that they had been stood down and they asked whether the union could do anything about it. 54
[59] It was the TCFUA’s contention that the employees did not have a choice about taking leave. The only choice the employees had was whether to take the time as paid or unpaid leave. 55
[60] On the basis of the evidence I am not prepared to find that the employees volunteered to take time off. While I do not question the bona fides of Mr Clarke, employees who are unaware of the legal rights of an employer to stand down employees, who did not have the opportunity to obtain independent advice and who did not know the alternatives to being stand down, are not in a position to exercise a choice.
[61] Despite the Respondent’s contradictory evidence I find that the employees could not be usefully employed on 9 and 10 June 2011. I accept the evidence of the Respondent that a backlog of products had already occurred and that due to the nature of the production process it was not possible for employees to be engaged in part producing products. I also accept that the stood down employees could not be usefully employed elsewhere in the factory or warehouse.
Conclusion
[62] In resolving the dispute I must have regard to the fairness between the parties and I have done so.
[63] I have had regard to fact that the employee witnesses were willing to take leave to assist their employer at this time. Had I determined that employees, having been fully informed of their rights and after being given the opportunity to obtain independent advice, had made a choice in these circumstances to take leave, I may have resolved this dispute differently. While I accept the evidence of Mr Clarke that he believed there was no opposition to his proposal I have found that employees in fact did not have a choice.
[64] I have found that the Respondent was not entitled to stand down the employees on 9 and 10 June 2011. In these circumstances I have concluded that it is appropriate to order the weekly employees who took paid leave should have their leave recredited and those who took leave without pay should receive pay for the ordinary hours of work for the period of the stand down. I will therefore issue orders [PR518261] to give effect to this decision.
COMMISSIONER
Appearances:
V Wiles for the Textile Clothing and Footwear Union of Australia.
E Tueno for the Respondent.
Hearing details:
2011.
Melbourne:
October 10.
1 Exhibit R5 at [10]
2 MA000017
3 Exhibit R2 at [2]
4 Ibid at [3]-[4]
5 Ibid at [6]
6 Ibid at [7]
7 Ibid at [8]
8 Ibid at [9]-[10]
9 Ibid at [11]
10 Transcript PN 603
11 Ibid PN 273-274
12 Ibid PN 276
13 Ibid PN 292
14 Ibid PN 293
15 Ibid PN 304
16 Ibid PN 328
17 Ibid PN 392
18 Ibid PN 368
19 Ibid PN 397
20 Exhibit R3
21 Exhibit R4
22 Ibid at [5]-[6]
23 Exhibit TCFUA 1 at [4]
24 Ibid at [6]
25 Exhibit TCFUA 3 at [5]
26 Ibid at [7]
27 Ibid at [9]
28 Ibid at [10]
29 Exhibit TCFUA 4 at [5]
30 Exhibit TCFUA 6 at [13]
31 Exhibit TCFUA 7 at [4]
32 Exhibit TCFUA 6 at [16]
33 Exhibit TCFUA 7 at [6]
34 Ibid at [8]
35 Ibid at [11]
36 Ibid at [13]
37 Ibid at [17]
38 Transcript PN 898
39 Exhibit R5 at [16]
40 Ibid at [17]
41 Ibid at [20]
42 Ibid at [22]
43 Transcript PN 965
44 Ibid PN 938
45 Exhibit R5 at [27]
46 Transcript PN 962
47 Ibid PN 531
48 Exhibit R5 at [19]
49 Transcript PN 533
50 Ibid PN 236
51 Ibid PN 237
52 Ibid PN 603-604
53 Ibid PN 805, 865
54 Ibid PN 139
55 Ibid PN 142
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