The Australian Workers' Union v Laminex Group Pty Ltd T/A Laminex Australia

[2014] FWC 8273

[2014] FWC 8273

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

The Australian Workers’ Union
v
Laminex Group Pty Ltd T/A Laminex Australia
(C2014/868)

DEPUTY PRESIDENT MCCARTHY PERTH, 26 NOVEMBER 2014

Alleged dispute about any matters arising under the enterprise agreement.

Background

[1] This matter concerns a dispute that arose under the Laminex Dardanup Plant Production Agreement 2013 (the Agreement). The Australian Workers’ Union (the AWU) asserted that the Laminex Group Pty Ltd T/A Laminex Australia (the Respondent) is required to pay redundancy entitlements to Mr Peter Loftus, an employee of the Respondent at its Dardanup manufacturing plant. The Dardanup manufacturing operation located near Bunbury operates 365 days per year, 24 hours per day. Specifically, the Respondent’s plant at Dardanup manufactures particle board, treated paper and decorated boards, and has other activities such as cutting particle board to size.

Facts

[2] The following facts were not in dispute:

● In or about January 2014, the Respondent introduced new equipment, known as the PZK Pallman Ring Flaker or the third PZK, and subsequently closed the log yard at the Dardanup manufacturing plant.

● The installation of the third PZK meant the closure of one section of the plant viz; the log yard. Two “positions” were discontinued one being the day based Log Handling (three current employees) and the other being the 4 shift continuous roster based Bezner Chipper/Knife Room (eight current employees) roles. Thus eleven roles in total became redundant and four “new” Residue Operator positions were established. Four of the current employees remained in the same work area in the “new” roles and seven employees have transferred to multiple other vacant roles across the site based on their personally identified preferences.

● The location of work and hours of work are equivalent between the Log Yard Operator role performed by Mr Loftus and the Process Panels Operator role.

[3] The parties are in dispute as to whether Mr Loftus is entitled to redundancy payments on the grounds as to whether he was given “suitable alternative employment”.

The Applicant’s submissions

[4] The AWU says that although a comparison of the factors of the two different jobs, being Log Yard Operator and Process Panels Operator, identifies some factors which are equivalent between the two jobs, but that a number of significant factors are conflicting. The AWU claims that the consequence of conflicting factors identified through comparison of the Log Yard Operator and Process Panels Operator jobs, is that the Respondent’s offer to the Mr Loftus, was not an offer of suitable alternative employment.

[5] The factors that the AWU relied on in support of that contentions were the following assertions:

● Firstly the rate of pay between the two roles is dissimilar.

● Secondly, that the Process Panels role is the most menial position at the Respondent and no particular skills are required. The Log Yard role required more skill, including problem solving, and was a higher level role within the Dardanup Plant than Process Panels.

● Thirdly that the physical environment of the two roles is significantly distinct. The Log Yard is an outdoor environment whereas the Process Panels role is an indoor shed environment. The Log Yard role required sitting in a chair to operate a control panel for almost half of the working time whereas in Process Panels an employee is standing on concrete floors covered by rubber mats for essentially the entire working time. Furthermore, the indoor Process Panels environment exposes employees to fumes from glue and machinery.

● Finally, the Process Panels role is a more physical role requiring more manual handling tasks. The Respondent have commissioned a report by Kylie English, Physiologist and OSH Ergonomics Consultant from Healthsphere. The report concludes that “[Process Panels] tasks are more active and have a higher frequency in some critical physical demands”.

The Respondent’s submissions

[6] The Respondent submitted that:

● The overriding objective on site, as communicated to all personnel via our monthly site communication sessions, has been to avoid redundancies, if at all possible, to retain our valued and experienced team members.

● To support this objective, multiple vacancies (vacant due to natural attrition) across the site were consciously left open in the months preceding the closure, at a cost of increased overtime and temporary labour hire, to enable affected employees to have a range of options available for them to transfer to upon implementation of this initiative.

● For the twelve months prior to closure an extensive communication and change program was undertaken involving individual and group involvement sessions, including the affected employees and the AWU as well as updates to the site’s Employee Consultative Committee (ECC). As part of this process each affected individual has been provided the opportunity of multiple roles across the site in order of their personal preference. This included a commitment to support the roster pattern, be it a day or shift basis that each individual desired as a first priority. It is pleasing to note that all affected personnel have at least been able to transfer into their second preference if their first choice could not be met.

● The option of redundancy was tabled and discussed via the ECC on two specific occasions; the first being in the early phases of the communication and change program that culminated in a notice from the AWU to all members dated 12 June, 2013 indicating “that redundancy may not apply if an alternate job is offered” and the second time approximately four months prior to implementation where the AWU indicated that legal advice was being sought in relation to the redundancy question. No formal dispute has been raised prior to implementation as a result of these discussions with all personnel transferred into their “new” positions within the current career path structure by the end of January 2014.

● Communication received from the AWU on Monday, 24 February 2014 indicated that four of the affected employees; 1 x 4 shift continuous roster and 3 x day based, were initiating their right to trigger formal dispute proceedings on the basis that “if a position is made redundant at Laminex Dardanup and the job is no longer there that they are entitled to a redundancy under the current enterprise agreement”.

● As the three are currently day-based employees and have requested to remain as such, we have offered each of them one of the vacant available roles that are situated within the “added value” Process Panels area- roles that we have been keeping open for some time in anticipation of the log yard closure. Note that each of them have spent the last 4 years on day shift after anywhere up to 31 years on a continuous 4 shift continuous roster prior to this in which multiple other role alternatives do exist.

● Mr Loftus, was formally transferred to the Process Panels area in January 2014, as a result of the subsequent formal dispute, we have supported their request for extended leave while the dispute resolution process proceeds. The Respondent understands that two of the affected employees are engaged in work for another employer during their long service leave. Although this contravenes our Production Agreement guidelines we have not taken any action against the employees as we continue to seek an outcome to the dispute.

The Agreement provisions

[7] The Agreement provides for redundancy payments in Appendix A - Redundancy Agreement. Clause 1 of Appendix A provides as follows:

“For the purposes of this Appendix, an employee whose contract of employment is terminated by the Company shall be deemed to have been made redundant if such termination is the result of:

(a) a specific job no longer being required to be performed by the employee under taking such job, or;

(b) a reduction in the amount of work available to an employee or employees because of technical and/or mechanical changes, or;

(c) reduced work being available because of economic or market conditions, or;

(d) restructuring of the enterprise and/or reorganisation of work systems or staffing arrangements,

(e) the sale, transmission, assignation (whether immediate or not) of a part or whole of the business; and

(f) no suitable alternative employment has been offered to the employee by the Company within the Company or in the case of the sale, transmission or assignation (whether immediate or not) of the whole or part of the business by the company to another company (hereinafter called the “new employer”), where no suitable alternative employment (which includes continuity of service and recognition of prior service with the company) has been offered to the employee by the new employer

For the purposes of the agreement the Company includes Laminex and all related companies.”

[8] As can be seen from the above the provisions of the Agreement provide a condition precedent to the operation of the Redundancy Appendix that “an employee whose contract of employment is terminated by the Company” (my emphasis). Moreover that condition precedent is reinforced by “that if such termination is the result of the various requirements for the employee” (my emphasis) to be deemed to have been made redundant. Thus, without any further provisions changing or displacing that condition unless there has been a termination of employment nothing else arises including any entitlements that might arise if there was a termination of employment.

[9] What subparagraphs (a) through to (f) then provide is that if one of the conditions in those paragraphs are met then the employee shall be deemed to have been made redundant. However, those conditions are consequent to there being a termination of employment. There is no work for those paragraphs to do if there has not been a termination of employment.

[10] The operation is confused by the provisions of Clause 2 - Application. It states in subclause 2 of that clause:

“2.2 This Appendix does not apply to employees who leave the Company under circumstance of:

(i) Resignation

(ii) Dismissal

(iii) Retirement.”

[11] On a literal reading of that clause unless there is some obscure reason why a dismissal is not synonymous with a termination of employment the clause becomes inoperative when there is an employee who is dismissed as the result of the position that was occupied being made redundant. That could not have been what was intended.

[12] To add to the confusion subclause 2.1 of Clause 2 - Application states:

“2.1 This Appendix shall apply only in those circumstances described in Clause 1 (a) -(f) above.”

[13] On a literal reading then redundancy is defined in Clause 1 as being when an employee’s employment is terminated but by operation of subclause 2.2 the Appendix A - Redundancy does not apply when an employee is dismissed. Then if one applies Clause 2.1 it seems to read as though the paragraphs (a) to (f) are read in isolation from the conditions precedent to those paragraphs in the pre-conditions to the application of (a) to (f).

[14] The whole Appendix appears to me to be more confusing and contradictory than a Colonel Cathcart discussion with Yossarian.

[15] To further compound the confusion Clause 3 provides:

“3.1 Changes to remuneration or rates of pay

3.1.1 Where the Company transfers the employee to a position within the Company at the same site at a comparable remuneration or rate of pay, that position shall be considered suitable alternative employment.(my underlining)

[16] That provision seems to indicate that, despite the condition precedent in Clause 1, a termination of employment, it appears not necessary for some other parts of the Appendix to have application. It seems that what that provision provides is a deeming provision that even if the person has been made redundant then providing the remuneration or rate of pay is the same then it is deemed not to be a redundancy.

[17] Clause 3 also provides:

“3.1.2 Where the Company transfers an employee to a position within the Company at the same site at a lower rate of pay that position shall be considered suitable alternative employment and the Company will either:

(i) Maintain the employee’s rate until such a time as it equals or exceeds the new classification rate of pay.

(ii) Make a ‘once only’ payment in recognition of the reduction in the employee’s classification rate of pay. The amount of the ‘once only’ payment shall be mutually agreed between the parties at the time of accepting the position.”

[18] This also seems to indicate that if the employment of an employee is not terminated then the employee has an entitlement to in effect make-up pay either in salary or as a once off payment.

[19] The AWU submitted that “Mr Loftus’ employment was terminated in January 2014 when his role as Log Yard Operator was made redundant”, apparently asserting that because a position was made redundant that termination of employment necessarily followed. They also submitted that:

“Therefore, sir, we say Mr Loftus has effectively been demoted. He was offered new employment and the old position is no longer required to be performed by the company and although he is working in the new role in process panels, that Mr Loftus has accepted new employment. His old employment as log yard operator was terminated by virtue of the position being no longer required by Laminex and in his new role, which he had no choice to accept given his circumstances as outlined in his witness statement, we say he has been made redundant.”

[20] Mr Loftus evidence was that “After the Log Yard closed I’ve been working in Process Panels.” He also evidenced that he commenced in “the position of process panels” after he accepted it.

[21] The Respondent submitted that, Mr Loftus was transferred to a position at the same site and same rate of pay, subsequently deeming that position to be suitable alternative employment.Presumably by stating that Mr Loftus had been transferred they were asserting that there had not been a dismissal.

[22] Mr Shane Schwartz , the Plant manager, Dardanup plant gave evidence. He stated that:

“The Applicant was transferred to a position within the same company, at the same location, on the same shift roster pattern (as requested by the Applicant) and on the same rate of pay following an extensive change management program. and that Mr Loftus remains a full time permanent employee” (my emphasis).

[23] Mr Shwartz outlined part of the strategy for the major change for the operations of Darnadup as follows:

“The overriding objective on site, as communicated to all personnel via our monthly site communication sessions, has been to avoid redundancies, if at all possible, to retain our valued and experienced team members. This is also considered a positive motivational & cultural benefit for the site and its employees. To support this objective, multiple vacancies (vacant due to natural attrition) across the site were consciously left open in the months preceding the closure, at a cost of increased overtime, to enable affected employees to have a range of options available for them to transfer to upon implementation of this change.

For the twelve months prior to closure, an extensive communication and change program was undertaken involving individual and group sessions, including the affected employees and the AWU as well as updates to the site’s Employee Consultative Committee (ECC). Unfortunately, no formal dispute was raised prior to the implementation as a result of these discussions, with all personnel transferred into their “new” positions within the current career path structure by the end of January, 2014.

In addition, the eleven employees affected by this change have been provided the opportunity of multiple roles across the site in order of their personal preference. This included a commitment to support the roster pattern, be it a day or continuous shift basis that each individual desired as a first priority. 11 The Applicant’s pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and travelling time, are largely unchanged or not changed at all.” (my emphasis)

[24] The Respondent established a procedure whereby those employees whose positions had become redundant were offered alternative positions. Those employees were given the opportunity to express their preferences and the Respondent says that they endeavoured to accommodate those employees if possible.

[25] In Mr Loftus’ case Mr Shwartz stated that:

“In Mr Loftus’s case he gave an indication that his first preference was day shift and he also indicated that that was what he was on at that point in time. The only role on day shift was the process panel role that was available at the time. He also gave a second indication that if all possible he would go on a four-shift basis if he could go into a role close to the log yard which is called the night-operator role; a newly-formed role.”

[26] He further explained the approach during his cross-examination as:

“We are going out of our way to try and avoid redundancies, which I believe inherently is the right thing for a business to do; to try to retain our people and that experience that we have. So we have gone out of our way by actually keeping roles open at increased cost in the short term to have roles available for people to go to which we believe with our career path, all of our production roles are suitable alternative employment. Our other 10 people other than Peter, there are the two guys who have decided not to stay who have moved into other roles which - taking the course of questioning, you know, would have been potentially redundant.” (my emphasis)

[27] It is clear that what the provision was designed to do was to provide for an entitlement to redundancy pay when a termination of employment occurred and define what must be classed as the redundancy of an employee as against the redundancy of a job or position. In essence the provisions are a different way of stating the provisions of s.120 of the Fair Work Act 2009.

[28] It is apparent to me that Mr Loftus was not dismissed at all. He was transferred to another position. There was no termination. There is no requirement to examine subclauses (a) through (f) because they have no relevance once the condition precedent has not been satisfied. Indeed it is obvious that is the case as there is no dispute that paragraph (a) for example was satisfied. The logical consequence on the AWU’s reasoning if paragraph (a) was satisfied it would not matter what happened to Mr Loftus with respect to his employment he would be entitled to redundancy payments.

[29] It is clear enough from the evidence of what occurred here. The position that Mr Loftus had been performing was made redundant. Mr Loftus was then offered other positions to be transferred to and he accepted one of those positions. His employment was never terminated and there is nothing in the Agreement that provides for it to be deemed to have been terminated.

[30] Although it is possible that if Mr Loftus had not accepted another position he may have had his employment terminated. He may well have then argued that the position he was offered did not satisfy any of the conditions of paragraphs (a) to (f) of Clause 1 of Appendix A. But in the absence of a termination one does not get to that consideration and it is pure speculation.

[31] I find that Mr Loftus was not made redundant although his previous position was. As a consequence there is no entitlement to redundancy pay. Indeed regardless of the meeting or not meeting of the conditions of paragraphs (a) to (f) there is no entitlement to any redundancy payments.

[32] Furthermore, what has happened here is that Mr Loftus maintained his rate of remuneration. Even if the AWU is correct that the position is not suitable alternative employment and the work he is performing is at a lower classification level (which I do not find) by operation 3.1.1 the Respondent has satisfied the obligation that would arise from such a situation.

[33] Finally even if all of my findings above are wrong I find that suitable alternative employment has been offered to Mr Loftus. In making that finding I have considered:

● Remuneration/rate of pay and find that it is comparable having regard to the remuneration or rate of pay.

● Reporting Lines/Level Of Responsibility is comparable having regard to the reporting requirements, role title and status.

● Duties are different but comparable having regard to the necessary skills and competencies and capacity for training to acquire any skills and competencies necessary.

● Location is comparable indeed is at the same site but rather than outside is inside.

[34] Whichever way this matter is approached no entitlement for redundancy pay or any other payment arises.

DEPUTY PRESIDENT

Appearances:

E Douglas The Australian Workers’ Union for the Applicant.

D Langridge of the Chamber of Commerce and Industry Western Australia for the Respondent.

Hearing details:

2014.

Perth:

October 30

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