The Australian Workers' Union v Barro Group Pty Ltd

[2015] FWCA 7734

[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:

“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:

• Maintenance



• Operate most fixed plant



• Operate most mobile plant




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