The Australian Workers' Union v Barro Group Pty Ltd
[2014] FWC 4543
•25 JULY 2014
| [2014] FWC 4543 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
The Australian Workers’ Union
v
Barro Group Pty Ltd
(C2014/4212)
COMMISSIONER LEWIN | MELBOURNE, 25 JULY 2014 |
Alleged dispute regarding termination of employment - Payment during period of notice.
[1] This decision concerns an application for the Commission to deal with a dispute. The dispute relates to notice of termination of employment and payments to Mr Sebastian Smith by Barro Group Pty Ltd (Barro) during that notice. An application is made under s. 739 of the Fair Work Act 2009 (the Act) by the Australian Workers’ Union (the AWU) to deal with the dispute. Mr Smith’s employment is subject to the Mountain View Quarries (Sunshine, Pt Wilson, Maude, Donnybrook, Nyora & Wyndhamvale) Enterprise Agreement 2013 (the Agreement).
[2] The Agreement is an enterprise agreement which contains a procedure for dealing with disputes as referred to in s.738 (b) of the Act. The terms of the dispute settlement procedure of the Agreement are set out in Clause 33 of the Agreement, as shown below:
“33. DISPUTE RESOLUTION
33.1 If a dispute relates to:
a) a work matter directly relating to employees cover by the Agreement only; or
b) the National Employment Standards (except for disputes related to reasonable grounds for refusal of requests for flexible working arrangements or additional unpaid parental leave) this clause sets out procedures to settle the dispute.
33.2 a party to the dispute may appoint another person, organisation or association to accompany or represent them in relation to the dispute, at any stage of the dispute
33.3 In the first instance, the parties to the dispute must try to resolve the matter at the workplace level, by, but not limited to:
a) discussion between the employee or employees and relevant supervisors and/or management
b) if the matter is not resolved at this level the dispute shall be referred to the Quarry Operations Manager
c) should the matter remain unresolved, a party to the dispute may refer the matter to and meet with the Divisional General Manager or more senior level of the Company's management (as appropriate)
33.4 If the dispute cannot be resolved at the workplace, and all agreed steps for resolving it have been taken as outlined above, the dispute may be referred to the Fair Work Commission (FWC) for resolution by mediation and/or conciliation and, where the matter in dispute remains unresolved, arbitration. If arbitration is necessary, the FWC may exercise the procedural powers in relation to hearings, witnesses, evidence and submissions which are necessary to make the arbitration effective.
Any outcome determined under this clause cannot be inconsistent with any relevant Construction Codes of Practice and Guidelines or inconsistent with legislative obligations.
The decision of FWC will bind the parties, subject to either party exercising a right of appeal against the decision to a Full Bench.
33.5 It is a term of this Agreement that while the parties are trying to resolve the dispute using the procedures in this term:
a) an employee must continue to perform his or her work as he or she would normally, unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and
b) an employee must comply with a direction given by the company to perform other available work at the same workplace, or at another workplace, unless:
1. the work is not safe; or
11. applicable occupational health and safety legislation would not permit the work to be performed; or
111. the work is not appropriate for the employee to perform; or
IV. there are other reasonable grounds for the employee to refuse to comply with the direction
33.5 The parties to the dispute agree to co-operate to ensure that the dispute resolution procedures are carried out as quickly as is reasonable possible, and agree not to escalate the dispute unless the party initiating the action has genuinely attempted to resolve the dispute at the workplace level.”
[3] The AWU is an organisation covered by the Agreement. The AWU raises the dispute on Mr Smith’s behalf. The dispute was the subject of conciliation on 8 May 2014. The dispute was unresolved and this decision is for the purposes of arbitration of the dispute by the Commission in accordance with clause 33.4 of the Agreement.
[4] The AWU submitted as follows:
- Maintenance
- Operate most fixed plant
- Operate most mobile plant
“4 Mr Sebastian Smith was employed by Barro Group Pty Ltd from April 2005 at the Point Wilson Quarry. Mr Smith could perform the following tasks within the quarry:
5 As part of his employment the applicant was expected to work at least 50 hours per week, including Sundays which was a maintenance day. Mr Smith was engaged to work permanent night shift, which attracted a permanent night shift penalty of 31%.
6 On 31st May 2012 the applicant sustained a significant injury to his knee. Following a series of operations, Mr Smith was cleared to return to work on modified duties. The only restrictions placed on Mr Smith were climbing stairs, knelling or squatting. This still enabled Mr Smith to perform the following duties within the quarry: Operate the crusher, dump truck, weighbridge and perform some maintenance. This work he continued to do until he was prevented from operating the dump truck due to the medication he was on. Following this he was required to take on additional duties.
7 In December 2013 Mr Smith was required to undergo additional surgery and was off work for four months.
8 On the 3rd April, Mr Smith was notified by the company (Attachment) that he was to be terminated on the 1st May 2014. The letter provided Mr Smith with four weeks notice. The reasons provided by the company was that Mr Smith was unable to carry out the inherent requirements of his pre injury position and will be unable to carry out the inherent requirements of his pre injury position and will be unable to do so for the foreseeable future.
9 At the time of his termination, Mr Smith was in receipt of 80% of his ordinary 38 hour week wage and this is what he received during his four week notice period.”
10 Clause 25.1 of the agreement provides the following: Other than the provisions set out below Notice of Termination shall be in accordance with the provisions of the National Employment Standards and the incorporated award.
11 The National Employment Standards Section 117(1) of the Act provides for the following: An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of termination.
12 This section however does not describe the make up of what should be paid during the notice period.
13 Section 117(2) however describes what must apply and the type of payments that must apply should an employee be paid out in lieu of notice: (2) The employer must not terminate the employee’s employment unless: (a) the time between giving notice and the day of the termination is at least the amount the employer would have been liable to pay to the employee at the full rate of pay for the hours the employee would have worked had the employment continued until the end of minimum period of notice. (The minimum period of notice in this case being 4 weeks).
14 “Full rate of pay” is defined is section 18 (1) of the Ac: The full rate of pay of a national system employee is the rate of pay payable to the employee including the following:
(a) Incentives- based payments and bonuses;
(b) Loadings;
(c) Monetary allowances;
(d) Overtime and penalty rates;
(e) Any other separately identified amounts.
15 In this case I would argue, if Mr Smith was not on workers compensation or was paid in lieu of notice he would have received at least a minimum payment of four weeks’ pay at the 50 hours rate and an additional 31% shift loading.
16 Clause 25 of the agreement also incorporates the provision of Quarry Award, Clause 14 of the award deals with termination of employment. However this clause at 14.1 states: Notice of termination is provided for in the NES.
17 Mr Smith I would argue should have been paid out his notice period at his “full rate of pay” It is the intent of the notice period and the payments to be provided that an employee would not be disadvantaged if notice was actually given and worked or paid in lieu. In Mr Smith’s case, he has been disadvantaged by being off work and in receipt of workers compensation.
[5] The essential elements of the submissions made by Barro are extracted as follows:
18. The primary aspect of termination is time. Time for the terminated employee to make appropriate personal arrangements look for another job, et al. It is only in the situation where the employer does not give the terminated employee the notice time period, that in lieu of that time period the employer would pay the employee the equivalent.
19. However it is clear that the issue of payment in lieu of the notice period only applies when the time period is not given.
20. There is no provision in the Fair Work Act 2009, the Agreement or the Award that the AWU has identified in its Outline of Submissions that provides otherwise.
21. The issue of payment of the terminated employee during a period of notice is also not a matter specifically dealt with in the above mentioned industrial instruments. The amount of payment is only covered where payment in lieu of the notice period is activated. This does not apply in this situation and therefore has no relevance to this matter.
...
25. In this situation Smith was the recipient of payments under a worker’s compensation scheme. Those payments had been in place for some time. During the notice period Smith continued to receive those compensation payments. The notice period did not affect the quantum of payment. The situation prior to the notice period continued throughout the notice period. Smith was not disadvantaged financially during the notice period when compared to the situation immediately prior to the period of notice commencing.
Characterisation
[6] My understanding of the scope of the dispute is that, contrary to the view of Barro that Mr Smith has no further entitlement under the Agreement and that none should arise from the determination of the dispute by the Commission, the AWU contends that Mr Smith should be paid the amounts prescribed by Clause 25 of the Agreement for termination in lieu of notice, for four weeks, in the circumstances of this case. I arrive at this conclusion be reference to paragraph 15 of the AWU submissions. Although this is complicated by a slightly different formulation of what payment it is claimed should be made in paragraph 17 of the AWU submissions.
Relevant provisions - Agreement, Award and NES
[7] It is appropriate to set out the respective provisions of the Agreement, the Quarrying Award 2010 and the National Employment Standards (NES) concerning termination of employment, for reasons which will become immediately apparent below.
Agreement provisions - Termination of employment
AGREEMENT
“25. TERMINATION OF EMPLOYMENT
25.1 Other than the provisions set out below Notice of Termination shall be in accordance with
the provisions of the National Employment Standards and the incorporated award.
25.2 Notice of termination by the employer is provided for in the NES.
25.3 At the sole discretion of the employer, payment in lieu of the notice (given by the
employer), may be made provided that employment may be terminated by part of the notice period and part payment in lieu.
25.4 The required amount of payment in lieu of notice must equal or exceed the total of all amounts that, if the employee's employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period. That total must be calculated on the basis of:
(i) the employee's ordinary hours of work (even if not standard hours); and
(ii) the amounts ordinarily payable to the employee in respect of those hours, including (for example) allowances, loading and penalties; and
(iii) any other amounts payable under the employee's contract of employment.
25.5 The period of notice in this clause shall not apply in the case of dismissal for conduct that justifies summary dismissal or to casual employees, apprentices or employees engaged for a specified period of time or for a specific task or tasks.
25.6 Statement of Employment
The employer shall upon receipt of a request from an employee whose employment has been terminated, provide to the employee a written statement specifying the period of their employment and the classification of work performed by the employee.
25.7 Notice of termination by an employee
a) The notice of termination required to be given by an employee is the same as that required of an employer except that there is no requirement on the employee to give additional notice based on the age of the employee concerned.
b) If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this Agreement or the NES, an amount not exceeding the amount the employee would have been paid under this Agreement in respect of the period of notice required by this clause less any period of notice actually given by the employee.
c) It is preferred that the termination of employment (resignation) be in writing (letter of resignation).”
AWARD - Quarrying Award 2010 (MA000037)
“14. Termination of employment
14.1 Notice of termination is provided for in the NES.
14.2 Notice of termination by an employee
The notice of termination required to be given by an employee is the same as that required of an employer except that there is no requirement on the employee to give additional notice based on the age of the employee concerned. If an employee fails to give the required notice the employer may withhold from any monies due to the employee on termination under this award or the NES, an amount not exceeding the amount the employee would have been paid under this award in respect of the period of notice required by this clause less any period of notice actually given by the employee.
14.3 Job search entitlement
Where an employer has given notice of termination to an employee, an employee must be allowed up to one day’s time off without loss of pay for the purpose of seeking other employment. The time off is to be taken at times that are convenient to the employee after consultation with the employer.”
NES
“117 Requirement for notice of termination or payment in lieu
Notice specifying day of termination
(1) An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).
Note 1: Section 123 describes situations in which this section does not apply.
Note 2: Sections 28A and 29 of the Acts Interpretation Act 1901 provide how a notice may be given. In particular, the notice may be given to an employee by:
(a) delivering it personally; or
(b) leaving it at the employee’s last known address; or
(c) sending it by pre-paid post to the employee’s last known address.
Amount of notice or payment in lieu of notice
(2) The employer must not terminate the employee’s employment unless:
(a) the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b) the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
(3) Work out the minimum period of notice as follows:
(a) first, work out the period using the following table:
Period | ||
Employee’s period of continuous service with the employer at the end of the day the notice is given | Period | |
1 | Not more than 1 year | 1 week |
2 | More than 1 year but not more than 3 years | 2 weeks |
3 | More than 3 years but not more than 5 years | 3 weeks |
4 | More than 5 years | 4 weeks |
(b) then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.”
Approach to the dispute
[8] The various provisions above expressly prescribe the payment to be made to an employee in lieu of notice of termination of employment, they do not, however, expressly prescribe the amounts to be paid to an employee during a period of notice of termination of employment. Before proceeding to determine the dispute by arbitration it is appropriate therefore to address the approach to the dispute in light of the fact that the terms of the Agreement do not expressly prescribe the amount of payment to be made to Mr Smith during the notice of termination the subject of the dispute.
[9] The first consideration is the nature of the dispute and the terms of the dispute settlement procedure provided for by the Agreement. The Agreement provides that the procedure as set out in Clause 33 applies to “a matter directly related to employees cover[ed] by the Agreement only”; “and the National Employment Standards” There can be no doubt that a dispute over the amount of payment to be made to an employee during a period of notice of the termination of their employment is a dispute which can be properly characterised as directly related to an employee’s employment and / or the National Employment Standards. Both the Agreement and the National Employment Standards provide for notice of termination of employment.
[10] The parties to the Agreement have therefore provided that the dispute is one within the scope of Clause 33 so that the dispute may be determined by the Commission, by arbitration, if required. Moreover, the parties have by their Agreement conferred a power of private arbitration upon the Commission to determine the outcome of the dispute. The power of private arbitration is not conditioned by the Agreement except that an arbitrated outcome cannot be inconsistent with any Construction Codes of Practice or Guidelines or legislative obligations, as stated in Clause 33.4.
[11] The Commission must perform the function of private arbitration in accordance with section 739 of the Act. In particular, the Commission must perform the function of private arbitration in accordance with its statutory charter, which includes the limitations on that function imposed by s 595 of the Act. When the Commission determines a dispute by private arbitration, as provided for by s 739 (4) of the Act, it must do so in accordance with section 577 of the Act, which is as follows:
“577Performance of functions etc. by the FWC
The FWC must perform its functions and exercise its powers in a manner that:
(a) is fair and just; and
(b) is quick, informal and avoids unnecessary technicalities; and
(c) is open and transparent; and
(d) promotes harmonious and cooperative workplace relations.
Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).”
[12] Likewise, in performing a function of private arbitration pursuant to s. 739 (4) of the Act, the Commission must take into account the matters prescribed by s.578 of the Act as relevant to the circumstances of the dispute to be determined. S.578 is set out below:
578 Matters the FWC must take into account in performing functions etc.
In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:
(a) the objects of this Act, and any objects of the part of this Act; and
(b) equity, good conscience and the merits of the matter; and
(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
[13] The arbitration of a dispute in accordance with those statutory provisions is not a determination of the legal rights of Mr Smith or the obligations of Barro at common law or under a statute, such as a law governing workers compensation. Such functions are judicial in nature and may only be performed by courts of competent jurisdiction.
[14] In performing the function of private arbitration the Commission must do so on what the parties present for consideration.
[15] In order to deal with the dispute in this matter it is necessary to determine what payment should be made to Mr Smith in all the circumstances of the case, in the absence of an express term of the Agreement prescribing the amount of such payment.
[16] A determination of this kind differs from that which flows from an analysis of the text of a particular term of an enterprise agreement which directly expresses an entitlement or an obligation in relation to specified circumstances.
[17] In the case of ASL Industrial Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) 1 the Full Bench was required to consider an appeal against a decision of a single member of the Commission in relation to the true meaning of the words in an Enterprise Agreement, made under s.739 (4) of the Act, which described the conditions under which an employee became entitled to a travel allowance. The issue was what was meant by the words “Company base” in the relevant context of the terms of the Agreement.
[18] In the course of the decision the Full Bench identified the nature of the decision of the member at first instance as follows:
“[5] The grounds of appeal challenge the conclusions of the Deputy President in construing clause 15 of the Agreement. As the dispute involved the determination of the true meaning of the terms of the Agreement, the decision cannot be described as a discretionary decision. Hence in this appeal the questions to be determined are whether permission to appeal should be granted, and if so, whether the interpretation adopted by his Honour was correct. The conventional considerations in determining whether to grant permission to appeal are whether there is sufficient doubt in the decision at first instance to warrant its reconsideration or whether an injustice may result if permission is not granted. The Commission is required to grant permission to appeal if it considers that it is in the public interest to do so. We consider that there is sufficient doubt in the decision to warrant its reconsideration and we grant permission to appeal on that basis.
[6] ALS contends that on a proper construction of the Agreement, the ordinary meaning of the words in clause 15.5 are not relevantly ambiguous and allow ALS to nominate the Alcoa Refinery as an employee’s home base. It further contends that in holding otherwise and having regard to the surrounding circumstances his Honour was in error. In the alternative, it submits that the evidence of the surrounding circumstances did not warrant a departure from the ordinary meaning.”
[19] The Full Bench noted the distinction between a decision which involves the proper construction of an express term of an Enterprise Agreement and what was described as a discretionary decision in settlement of a dispute, where construction of the express term(s) of an Agreement is not the hinge upon which the determination of the dispute turns.
[20] In the present case the Commission will exercise the power of private arbitration in relation to what will, by operation of the terms of the Agreement and in particular Clause 33, become Mr Smith’s legal entitlement 2 in relation to payment in respect of the period of notice given by Barro for the termination of his employment. The effect of the arbitration will be that the arbitrated outcome will become an enforceable term of the Agreement.
[21] In making the necessary determination in a fair and just manner it is appropriate to consider, as far as possible, what the intention of the makers of the Agreement was, in relation to the issue in dispute. That is to be sought by considering the relevant terms of the Agreement in the immediate and broader context of the Agreement. Usually, the determination of a dispute about the proper meaning of the words of the Agreement will yield to the application of the principles in the Decision of the Federal Court of Australia in Re Kucks 3 as follows:
‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’
[22] Although originally determined for the purpose of interpreting and applying the terms of industrial awards, the reasoning in Kucks has been endorsed by the Commission and its predecessors as appropriate for the determination of disputes concerning the operation of the express terms of enterprise agreements. 4
Consideration
[23] While there is some difference in the task of determining a dispute on a subject in respect of which the terms of an Agreement may not be express, by private arbitration, and the judicial determination of extant legal rights, duties and obligations under an industrial award or instrument, I consider the guidance in Re Kucks is nevertheless useful where it can be used to bring to bear a fair and just determination of a dispute of the kind before me. However, it may be that in some cases the intention of the Agreement makers is elusive and the Commission must nevertheless determine the dispute by arbitration. Where the scope of a dispute settlement procedure extends, in a general manner, beyond the determination of disputes about the express terms of an Agreement, as noted, the Commission must perform the function of private arbitration in accordance with sections 577 and 578 of the Act.
[24] In my view, a fair and just answer to the question underlying the dispute, taking into account equity good conscience and the substantial merits of the case, is to be found by commencing with consideration of the maximum entitlement which, as far as possible, may be identified as appropriate payment during a period of notice from the terms of the Agreement, the Award and the NES.
[25] I consider that there could be no justification for a conclusion that Mr Smith should have been paid anything more than if, instead of giving four weeks’ notice of the termination, Barro had terminated the employment by making a payment in lieu of notice. In this respect, in my view, had Barro done so it would have been obliged to make the payments prescribed in Clause 25 of the Agreement.
[26] The terms of Clause 25 of the Agreement which prescribe Barro’s obligations when making payment in lieu of notice have been set out previously. Critically, it must be noted that the amount to be paid is the amount Barro would have become liable to pay to Mr Smith, pursuant to Clause 25 of the Agreement, if the employment continued for the period of notice, in this case four weeks. (emphasis added)
[27] Additionally, I do not know if Mr Smith had any accrued personal leave entitlements when Barro gave the notice of termination.
[28] In my view, as there is no fair and just reason for Mr Smith to be paid more for the period of notice than would be payable if Barro had terminated the employment with payment in lieu of notice, so too, in my view, can there be no fair and just reason for Mr Smith to receive any less than the amount payable in lieu of notice if he was ready willing and able to work during the notice period.
[29] On what is before me, I am unable to be certain if Mr Smith would have been able to work during the period of notice. The submissions of the AWU reveal some ambiguity on this point. It is not clear if, following the surgery referred to in December 2013, Mr Smith was able to perform the work referred to in paragraph 4 of the AWU submissions or that Mr Smith was performing such work in December 2013, prior to the surgery. For this reason the determination of the dispute should follow a course which allows for various outcomes depending upon the applicable facts.
Determination
[30] I consider the following to be a fair and just outcome of the dispute in all the circumstances of the case, which I have arrived at taking into account the matters referred to in s578 of the Act.
[31] If Mr Smith was performing work as described in paragraph 4 of the AWU’s submissions prior to surgery in December 2013 and was fit for such work during the period of the notice, as described in paragraph 4 of the AWU submissions, Mr Smith should be paid the difference between the amount of payment as prescribed in subparagraphs (i) (ii) and (iii) of Clause 25.4 of the Agreement for the period of notice and the amount already paid to him for the period.
[32] If Mr Smith was performing work as described in paragraph 4 of the AWU submissions prior to surgery in December 2013 but was unable to work accordingly during the notice period due to illness or injury and had no accrued personal leave then Barro need not make any further payment to Mr Smith.
[33] Should Mr Smith not have been able to work due to illness or injury and had during the period of notice accrued personal leave entitlements Barro would have been liable to make payment during the period of notice for any such period of accrued personal leave. Any such payments due should be made and calculated by reference to subparagraphs (i) (ii) and (iii) of Clause 25.4 of the Agreement.
[34] I determine the dispute by arbitration accordingly in accordance with Clause 33.4 of the Agreement.
COMMISSIONER
1 [2014] FWCFB 3491.
2 CFMEU v AIRC (2001) 203 CLR 645 at pg 658 [203 CLR 645].
3 Kucks v CSR Ltd (1996) 66 IR 182.
4 AMWU v Silcar Pty Ltd [2011] FWAFB 2555.
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