The Australian Workers' Union v Veolia Environmental Services (Australia) Pty Ltd

[2013] FWC 8910

[2013] FWC 8910

The attached document has the change fixing a reference in the document. The reference is as follows:

In para [10] of the attached Decision is makes reference to "[2012] FWCFB 2434" - this should be "[2013] FWCFB 2434".

Jenny Hannay

Associate to Simpson.

Dated 12 December 2013.

[2013] FWC 8910

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

The Australian Workers’ Union
v
Veolia Environmental Services (Australia) Pty Ltd
(C2013/822)

COMMISSIONER SIMPSON BRISBANE, 11 DECEMBER 2013

Dispute about entitlement to redundancy - Whether jobs redundant - Agreement requires mutual agreement on suitability - Alternative interpretation considered - Clause inferior to NES - NES applies - Offers would not have been other acceptable employment.

[1] On 30 April 2013 Veolia Environmental Services (Australia) Pty Ltd (the Employer) made an application under s.739 of the Fair Work Act 2009 (the Act) in matter number C2013/4121 to have a dispute resolution process conducted in accordance with clause 2.2 ‘Resolving Workplace Concerns or Grievances’ of the Veolia Environmental Services (Australia) Pty Ltd Gladstone Aluminium Enterprise Agreement 2012 - 2014 (the 2012 Agreement) between it and certain employees who were members of The Australian Workers’ Union (the AWU). A conference was conducted which did not resolve the matter however the parties agreed to have further discussions in an attempt to resolve the matter.

[2] On 3 June 2013 the AWU filed its own application under s.739. Both dispute notifications were in regard to whether or not offers of alternative employment made by the Employer to members of the AWU were suitable alternative employment, and whether the employees were entitled to redundancy pay under Clause 3.7 of the Agreement.

[3] The AWU application was listed for conciliation conference on the 9 July 2013. After the conciliation was unsuccessful the AWU requested the matter proceed for the arbitration. Directions were issued requesting the parties submit an agreed statement of facts and agreed questions for determination. While the matter was listed under the AWU matter number I requested that both parties confirm at the commencement of the hearing that the arbitration was an arbitration of both dispute applications. Both parties consented to this course.

[4] On a separate matter, given that the grievance procedure in the 2012 Agreement states that all parties agree that all industrial grievances and disputes arising under the agreement or in relation to the National Employment Standards be dealt with strictly in accordance with that clause, I sought clarification on the parties views regarding jurisdiction to deal with the dispute exercising power under Section 120 of the Act should that be required. This was raised as submissions from both parties made arguments concerning the operation of section 120, and the Employer submissions argued in the alternative to its primary submission that in the event of a finding the employees were redundant and that the Act provisions applied, redundancy pay should be reduced to nil. The parties advised they adopted a pragmatic approach to the dispute and accepted jurisdiction was available under section 120 to resolve the dispute.

[5] An Agreed Statement of Facts was provided at the commencement of the hearing by the parties with minor amendments to an earlier version. 1 It read as follows:

[6] Agreed Statement of facts:

The parties

1. The Applicant (Union) is and was at all material times:

(a) an organisation registered pursuant to the provisions of the Fair Work (Registered Organisation) Act 2009 (Cth);

(b) an employee organisation within the meaning of the Fair Work Act 2009 (Cth) (FW Act);

(c) a registered employee association within the meaning of the FW Act;

(d) an industrial association within the meaning of the FW Act; and

(e) entitled to represent the industrial interests of some of the employees of the Respondent.

2. The Union has, and at all material times had, members employed by the Respondent.

3. The Respondent (Veolia) is and was at all material times a corporate entity capable of being sued. Veolia carries on a water, energy and waste management solutions business.

The Gladstone contract

4. Veolia was party to two contracts pursuant to which it provided services to Queensland Aluminium Limited (QAL) in Gladstone, Queensland. The two contracts were the:

(a) QAL Hydroblast contract; and

(b) QAL Scaffolding contract.

5. The contracts were up for renewal with QAL in or around March or April 2013. Veolia bid for both the contract tenders.

6 On 8 April 2013, Veolia was advised by QAL that it was unsuccessful in retaining the Hydroblast contract and required to demobilise its operations by 1 May 2013.

7 The unsuccessful bid for the QAL Hydroblast contract raised the possibility of redundancies in respect of Veolia employees engaged on the QAL Hydroblast contract.

8. On 8 April 2013, at approximately 12.30 pm, Jim O’Donnell (Veolia Operations Manager, Gladstone) met with Veolia employees engaged on the QAL Hydroblast contract in the crib room of the QAL site. Mr O’Donnell advised the employees that:

(a) Veolia had been unsuccessful in retaining the QAL Hydroblast contract and had not heard back in respect of the tender for the QAL Scaffolding contract;

(b) Veolia was required to demobilise from the site on or before 1 May 2013;

(c) the unsuccessful tender for the QAL Hydroblast contract raised the prospect of redundancies;

(d) Veolia would actively maximise redeployment opportunities for those employees who had been engaged on the QAL Hydroblast contract;

(e) if they required any assistance or had any questions, they should approach Jim O’Donnell or their supervisor; and

(f) Veolia would keep employees informed about the process.

9 On 8 April 2013, Mr O’Donnell advised James Ryan (Union Delegate) about Veolia’s loss of the QAL Hydroblast contract and the prospect of redundancies as a consequence.

10 Veolia employees were made aware of the options regarding employment with ToxFree subsequent to the termination of Veolia’s QAL Hydroblast contract. ToxFree is the company that was successful in the tender for the QAL Hydroblast contract.

11. On 15 April 2013, Mr O’Donnell placed notices around the QAL worksite of employment opportunities for Veolia positions in wider Australia for staff to read.

Offers of redeployment

12 On 15 April 2013, employees engaged on the QAL Hydroblast contract were advised by Jim O’Donnell that due to the loss of the contract, Veolia proposed to undertake a restructure of its Gladstone Regional Operations.

13 Veolia considered that it had immediate requirements for employees undertaking similar work at similar classifications at the Yarwun Alumina Refinery (YAR). YAR is located within 10 kilometres of Gladstone and within the Gladstone Area Radius as defined in the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (Agreement).

14 On 15 April 2013, the following Veolia employees, amongst others, received letters of offer of redeployment to suitable alternative employment at YAR:

(a) David Metcalfe, Operator (Water Blaster) (Casual) at QAL;

(b) Mark Johns, Operator (Water Blaster) at QAL;

(c) David Mansfield, Operator -Industrial Services at QAL;

(d) Ben McEachran, Tradesperson -Trade Assistant at QAL;

(e) Stephen Poole, Operator (Casual) -Industrial Services at QAL,

(d) Lester Huston, Operator (Water Blaster) (Casual) at QAL; and

(e) Paul Skipper, Operator (Water Blaster) at QAL.

(collectively, Employees).

15 Veolia sent further letters dated 22 April 2013 detailing offers of redeployment which provided as follows:

David Metcalfe

16. Mr Metcalfe was offered redeployment to the position of Industrial Services Operator Level 2 (Casual) at YAR. The letter stated that the offer of redeployment constituted an offer of suitable alternative employment in accordance with the Agreement, which applied to Mr Metcalfe’s employment. The letter further stated:

(a) Mr Metcalfe’s proposed position would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr Metcalfe’s initial role because once redeployed Mr Metcalfe would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr Metcalfe’s current role;

(vi) required to wear the same uniform which would continue to be provided by Veolia;

(vii) performing work at a site with equivalent or better site conditions to Mr Metcalfe’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(x) Veolia would continue to recognise all of Mr Metcalfe’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

17. Veolia acknowledged that Mr Metcalfe’s gross pay would decrease from $36.63 per hour to $35.67 per hour, which represented an approximate 2.6% decrease in Mr Metcalfe’s remuneration.

Mark Johns

18. Mr Johns was offered redeployment to the position of Industrial Services Operator Level 3 at YAR. The letter stated that the offer of redeployment constituted an offer of suitable alternative employment in accordance with the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (Agreement), which applied to Mr Johns’ employment. The letter further stated:

(a) Mr John’s proposed position would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr John’s initial role because once redeployed Mr John would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr John’s current role;

(vi) required to wear the same uniform which would continue to be provided by Veolia;

(vii) performing work at a site with equivalent or better site conditions to Mr John’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(b) Veolia would continue to recognise all of Mr John’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

19. Veolia acknowledged that Mr John’s gross pay would decrease from $47.35 per hour to $45.92 per hour, which represented an approximate 3.0% decrease in Mr John’s remuneration.

David Mansfield

20. Mr Mansfield was offered redeployment to the position of Industrial Services Operator Level 3 -24/7 Rostered Shift at Y AR. The letter stated that the offer of redeployment constituted an offer of suitable alternative employment in accordance with the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (Agreement), which applied to Mr Mansfield’s employment. The letter further stated:

(a) Mr Mansfield’s proposed position would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr Mansfield’s initial role because once redeployed Mr Mansfield would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr Mansfield’s current role;

(vi) required to wear the same uniform which would continue to be provided by Veolia;

(vii) performing work at a site with equivalent or better site conditions to Mr Mansfield’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(b) Veolia would continue to recognise all of Mr Mansfield’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

21 Veolia acknowledged that Mr Mansfield’s gross pay would decrease from $47.35 per hour to $45.92 per hour, which represented an approximate 3.0% decrease in Mr Mansfield’s remuneration.

Ben McEachran

22. Mr McEachran was offered redeployment to the position of Industrial Services

Operator Level 3 -24/7 Rostered Shift at Y AR. The letter stated that the offer of

redeployment constituted an offer of suitable alternative employment in accordance

with the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations

2012-2014 Enterprise Agreement (Agreement) which applied to Mr McEachran’s

employment. The letter further stated:

(a) Mr McEachran’s proposed position would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr McEachran’s initial role because once redeployed Mr McEachran would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr McEachran’s current role ;

(vi) required to wear the same uniform which would continue to be provided by Veolia;

(vii) performing work at a site with equivalent or better site conditions to Mr McEachran’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(b) Veolia would continue to recognise all of Mr McEachran’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

23 Veolia acknowledged that Mr McEachran’s gross pay will decrease from $47.35 per hour to $45.92 per hour, which represented an approximate 3.0% decrease in Mr McEachran’s remuneration .

Stephen Poole

24 Mr Poole was offered redeployment to the position of Industrial Services Operator Level 3 -24/7 Rostered Shift at Y AR. The letter stated that the offer of redeployment constituted an offer of suitable alternative employment in accordance with the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (Agreement), which applied to Mr Poole’s employment. The letter further stated:

(a) Mr Poole’s proposed position would be permanent whereas he had been casual.

(b) He would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr Poole’s initial role because once redeployed Mr Poole would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr Poole’s current role;

(vi) required to wear the same uniform which would continue to be provided by Veolia ;

(vii) performing work at a site with equivalent or better site conditions to Mr Poole’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(c) Veolia would continue to recognise all of Mr Poole’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

25. Veolia acknowledged that Mr Poole’s gross pay would decrease from $43.99 per hour to $43.68 per hour, which Veolia considered to represent an approximate 0.7% decrease in Mr Poole’s remuneration.

Lester Huston

26. On 15 November 2010, Mr Huston tendered his resignation from full-time employment which took place on 1 January 2011 due to his wife’s health. Mr Huston stated in his resignation letter that he would be available for work on a casual basis for 1 shift to 2 shifts per week if required by Veolia. He was retained and worked on a casual basis thereafter.

27. Mr Huston was offered redeployment to the position of Industrial Services Operator Level 2 (Casual) at Y AR. The letter stated that the offer of redeployment constituted an offer of suitable alternative employment in accordance with the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (Agreement), which applied to Mr Huston’s employment. The letter further stated:

(a) Mr Huston’s proposed position would continue to be covered by the Agreement and would be subject to substantively the same terms and conditions of employment as Mr Huston’s initial role because once redeployed Mr Huston would be:

(i) required to work the same hours of work on the same roster with similar levels of overtime opportunities available;

(ii) employed at the same classification level;

(iii) performing the same type of work at the same level of responsibility within a commensurate reporting structure;

(iv) supported by the same support services from the regional office including in relation to safety and human resources;

(v) subject to the same policies and procedures as for Mr Huston’s current role;

(vi) required to wear the same uniform which would continue to be provided by Veolia;

(vii) performing work at a site with equivalent or better site conditions to Mr Huston’s current role including in relation to facilities and car parks;

(viii) provided with the same opportunities for career progression through Veolia training and development programs and opportunities; and

(ix) able to increase work skill capabilities as Veolia would provide further training and direction concerning the operation of new or different equipment and machinery.

(b) Veolia would continue to recognise all of Mr Huston’s prior continuous service with Veolia in respect of accrued employment benefits including accrued sick leave and annual leave.

28. Veolia acknowledged that Mr Huston’s gross pay would decrease from $36.63 per

hour to $35.67 per hour, which represented an approximate 2.6% decrease in Mr

Huston’s remuneration.

Employees’ response to offers of redeployment

29. Veolia received correspondence from each of the Employees declining the offer of redeployment to Y AR:

(a) Mr Johns returned the 15 April 2013 letter (First Letter) with the undated handwritten notation “Mark has declined the offer”;

(b) Mr Metcalfe returned the First Letter with the handwritten notation “Thanks but no thanks” dated 16 April 2013;

(c) Mr Mansfield returned the First Letter with the handwritten notation “I do not wish to take this offer. I would like to be made redundant” dated 16 April 2013;

(d) Mr McEachran retuned the First Letter with the handwritten notation “Ben has declined to offer on the attached position” dated 16 April 2013;

(e) Mr Huston returned the First Letter with the undated handwritten notation “Thank you very much for the 6 years I have been with you. But I have decided to stay at QAL”); and

(f) Mr Poole returned the First Letter with the undated handwritten notation

“Pass”.

(g) Mr Skipper declined the offer.

30. On 22 April 2013, Veolia issued letters to each of the Employees requesting that, amongst other things, the Employees provide reasons for their refusal to accept Veolia’s offer of redeployment to YAR pursuant to the First Letter.

31. At approximately 2 30 pm on 22 April 2013, Mr O’Donnell received a telephone call from Mr Mansfield asking whether his redundancy pay would be affected if he declined redeployment. Mr O’Donnell advised that it could. Mr Mansfield indicated that he would respond after he made a few calls to other people.

32. On 22 April 2013, Mr O’Donnell received a telephone call from Mr Poole during which Mr Poole said he would be disadvantaged as any redeployment would limit his earning capacity.

33. Mr Metcalfe returned the 22 April 2013 letter (Second Letter) with the handwritten notation “Not suitable, not commensurate” dated 24 April 2013.

34. Mr McEachran returned the Second Letter with the handwritten notation “Declined, not suitable, not commensurate” dated 24 April 2013.

35. Mr Mansfield returned the Second Letter with the handwritten notation “Declined, not suitable, not commensurate” dated 24 April 2013.

36. Mr Johns returned the Second Letter with the handwritten notation “Declined, not suitable, not commensurate” dated 24 April 2013.

37. On or around 24 April 2013, Mr Poole returned an undated handwritten letter declining the offer for reasons of an alleged substantial reduction in wages.

38. At approximately 2.40 pm on 24 April 2013, Mr O’Donnell received a telephone call from Mr Huston declining the offer of redeployment.

39. On 24 April 2013 Mr O’Donnell spoke to Zac Beers and notified him of the unsuccessful tender bid with regard to the QAL Scaffolding contract. He also discussed the time line for demobilisation of the workforces for both the QAL Hydroblast contract and the QAL Scaffolding contract.

40. On 30 April 2013, Veolia issued final letters to each of the Employees advising that:

(a) the offer of redeployment to suitable alternative employment remained open until 4.00 pm 30 April 2013;

(b) by refusing Veolia’s offer of suitable alternative employment, redundancy pay would not be paid to the Employees;

(c) refusal of the offer of redeployment was unreasonable and accordingly employment with Veolia would be terminated by each of the Employees own accord on 30 April 2013; and

(d) due to the refusal of the alternative employment Veolia consider a dispute has arisen and were applying to Fair Work Commission for resolution .

40. On 30 April 2013, Mr O’Donnell contacted each of the Employees to explain the contents of the final letter, as follows:

(a) He called Mr McEachran, who requested that Mr O’Donnell not contact him anymore;

(b) He called Mr Mansfield at 2 15 pm but the number provided was not available at the time;

(c) He called Mr Metcalfe and left a message on his phone. Mr Metcalfe called back and Mr O’Donnell explained the contents of the letter to him;

(d) He called Mr Huston and explained the contents of the letter to him;

(e) He called Mr John and explained the contents of the letter to him; and

(f) He handed Mr Poole the letter in person.

41. None of the Employees accepted Veolia’s offer of redeployment to YAR.

[7] In addition to the Agreed Statement of Facts the parties provided Agreed Questions for Determination. These were amended at the hearing to include reference to Mr Skipper and Mr Huston as being casual.  2 The amended version was as follows:

Agreed Questions for Determination

The parties seek the Fair Work Commission’s (FWC) determination in respect of the following question arising from the matter:

What, if any, redundancy pay are any of Mark Johns, David Metcalfe, David Mansfield, Ben McEachran, Lester Huston, Stephen Poole and Paul Skipper (Employees) entitled to considering:

1. in respect of Mr Poole, Mr Metcalfe and Mr Huston, the casual employment status of their employment for the QAL Hydroblast contract;

2 the refusal of each of the Employees to accept offered redeployment to the Yarwun Alumina Refinery;

3 whether any refusal of the offer of redeployment was allowed under the provisions of the Veolia Environmental Service (Australia) Pty Ltd Gladstone Operations 2012-2014 Enterprise Agreement (the Agreement);

4 whether the Agreement allows for either party to determine the suitability of alternative employment or requires agreement between the parties;

5 whether the termination of each Employees' employment was at the initiative of the Employee and not at the initiative of the Applicant; and

6 whether the Employees' employment was terminated due to the redundancy of their position.

[8] The AWU filed an outline of submissions and witness statements from Ben McEachran,  3 David Mansfield, 4 David Metcalfe,5 Mark Johns 6 and Stephen Poole .7 The Employer filed an outline of submissions and witness statements from Asher Ryall, 8 Gerard O’Donnell9 and Sharyn Schooth.10

[9] The Employer did not require the AWU witnesses for cross examination and their statements were entered into evidence uncontested. The AWU cross examined each employer witness.

ISSUES IS IN DISPUTE

Casual Issue

[10] Firstly the Employer asserts that Mr Metcalfe, Mr Poole and Mr Huston are not entitled to redundancy pay, either under the Agreement or under the Act as they are casual employees. The AWU accepted that Mr Metcalfe, Mr Poole and Mr Huston were engaged as casual employees under the Agreement in respect of the work at QAL. The redundancy provisions of the Agreement at clause 3.7 apply only to permanent employees. Section 123 of the Act excludes casuals from an entitlement to redundancy pay arising of the National Employment Standards. Accordingly it is clear that Mr Metcalfe, Mr Poole and Mr Huston would not be entitled to redundancy regardless of the determination of other matters that were the subject of dispute. An issue concerning a dispute as to whether employees paid as casual employees might in actuality be permanent employees was considered by a Fair Work Commission Full Bench in Telum Civil (Qld) Pty Limited v Construction Forestry Mining and Energy Union [2013] FWCFB 2434. I adopt the conclusions in that decision to support the finding that Mr Metcalfe, Mr Poole and Mr Huston are excluded from an entitlement to redundancy pay. This determines the first point for consideration listed under the Agreed Question for determination.

Whether Employees were made redundant

[11] The next question arising is whether the remaining four employees namely Mark Johns, David Mansfield, Ben McEachran and Paul Skipper were made redundant by the Employer.

[12] The AWU asserted that the Respondent did not require the job done by the employees to be done by anyone. The AWU further asserted that the employment was terminated at the initiative of the Respondent when it did not offer suitable alternative employment.

[13] Clause 3.7 of the Agreement provides for redundancy and reads as follows:

“3.7 REDUNDANCY

In the event that a permanent employee maybe terminated for reason of redundancy the employee may by agreement be deployed to another site/workshop under this Agreement subject to availability of work and required skills in accordance with the redeployment policy of the Company or be terminated by reason of redundancy at the employee’s choice.

In the event that a permanent employee’s position is made redundant, the Company can decide to offer the employee alternative suitable employment based on the skill set, the suitability of which shall be determined by both the employer and the employee.

Where the employee is terminated for reason of redundancy and no offer of alternative employment is made they will receive a severance payment based on the average weekly earnings of the employee for the period of employment up to twelve (12) months immediately preceding the termination in addition to any notice of termination in accordance with clause 3.6.1 calculated on their period of continuous service as follows:

.................................................”

[14] The Employer argued firstly that none of the employees were made redundant as their employment continued. This submission appeared to refer to ongoing employment gained with the successful new contractor. This argument is easily dismissed as there was no suggestion that the new contractor had a relationship with the Employer to suggest that employment with the new contractor was ongoing employment.

[15] The Employer argued alternatively that the employees terminated their employment at their own volition on the basis that they unreasonably refused the Respondents offer of acceptable alternative employment, ceased work on 30 April 2013 and terminated their employment. The Employer argues that it logically follows that the employees have not been made redundant but chose to leave the Respondents employment.

[16] The Employer argues this is consistent with the first paragraph of clause 3.7 of the Agreement which makes it clear that in the event the employee does not agree to be redeployed, then the termination due to redundancy is at the employee’s choice. Therefore there is no termination at the initiative of the employer.

[17] The Employers argument that the employees terminated their own employment is intertwined with the argument as to whether the alternative roles offered at YAR were in fact the same job as the position they had been employed in at QAL. If the answer is yes then the employees were not made redundant as their role was ongoing. If the answer is no then the employees positions were made redundant and subsequent arguments as to whether the redeployment offer was ‘suitable alternative employment’ (as described in the 2012 Agreement) or ‘other acceptable employment’ as described in section 120 of the Act need to be considered.

[18] This argument requires an examination of the job that the four employees were doing at QAL for the Employer, and whether the jobs at YAR were the same job or a different job.

[19] My task in weighing this submission of the Employer was made more difficult as the material submitted did not include either contracts of employment that were offered and accepted, or existing position descriptions for the four employees at QAL or position descriptions for the proposed new roles at YAR. I raised this in the course of the hearing however the parties appeared content for me to deal with the issue on the material provided. Contracts of employment for two of the casual employees were tendered 11 12but they do not assist me in dealing with the circumstances of the four permanent employees.

[20] The Agreed Facts provided some limited assistance. Mr Johns was described as ‘Operator (Water Blaster) at QAL’, and was offered work at YAR as ‘Industrial Service Operator Level 3 at YAR.’ Mr Mansfield was described as ‘Operator - Industrial Services at QAL’ and was offered the position of ‘Industrial Services Operator Level 3’. Mr Eachran was described as ‘Tradesperson - Trade Assistant at QAL’, and was offered ‘Industrial Services Operator Level 3’. Mr Skipper was described as ‘Operator (Water Blaster) at QAL.’ There was no description in the Agreed Facts of the role he was offered at YAR. The Agreed Facts do state that the offers of redeployment included the words that employees would be “performing the same type of work at the same level of responsibility...” I have limited evidence to compare the scope of duties of the respective roles.

[21] The Agreed Facts at paragraph 13 described the work at YAR as ‘similar work at similar classifications.’ I note the description is not that the work is the same work. The rate of pay is different in all four cases. Evidence of witnesses of the Employer also tended to accept that the role offered was not the same role but a similar role.

[22] The Agreed Facts confirm the QAL Hydroblast contract and the QAL Scaffolding contract were lost by the Employer and that the unsuccessful bid for the Hydroblast contract raised the possibility of redundancies in respect of employees engaged on that contract and that on 15 April 2013 employees engaged on the Hydroblast contract were advised by Jim O’Donnell that the Employer proposed to undertake a restructure of its Gladstone operations.

[23] The Employer sent letters to employees on 15 April 2013 which were attached to the statement of Mr Ryall 13stating the Employer was undertaking a restructure. Set out below are extracts of parts of the letters sent to the affected permanent employees that were consistent.

“..............................

Unfortunately, this means that there will no longer be a position with Veolia Environmental Services in your role of ....................at QAL following 1 May 2013. We are currently exploring possible redeployment opportunities within our Gladstone Operations that are both equivalent and available prior to the conclusion of the QAL contract.

We are pleased to confirm that as a result of our initial search for redeployment opportunities, we have sourced you a new position in our organisation as a...................which we consider to be an acceptable alternative position to your employment.

As a result of this redeployment, your rate of pay will change from .......per hours to ........per hour, to the classification of..........................In accordance with your contract of employment, this letter provides 5 weeks’ notice of the change in rate of pay. Your new salary will commence on ...............

We recognise that these changes require careful consideration. Please take time to consider the redeployment and advise your line manager if you have any feedback or concerns in relation to the new position.

...................................”

[24] Subsequent letters also attached to the statement of Mr Ryalls  14 and sent to affected employees on 22 April 2013 included the following first paragraph.

“ We refer to our letter dated 15 April and our offer to provide you with alternative suitable employment as your current position of.....................at Queensland Aluminium Limited (QAL) with Veolia Environmental Services (VES) is to be made redundant...

................................”

[25] Extracts from the two sets of letters tell against the suggestion that the positions at YAR offered to the four employees were in fact their existing roles just at a different location. The letters clearly indicate the employer did not regard the offers as a continuation of the same job but offers of redeployment made on the basis that the existing jobs would be redundant. I am satisfied they jobs were not the same jobs. This is reinforced by the simple fact that the rate of pay offered was different and lower in each of the four cases.

[26] As the circumstances that caused the jobs at QAL to no longer be required by the Employer were due to the loss of the Employers contract with QAL it cannot be said the employment was terminated at the initiative of the employees. On the basis of the evidence set out above I am satisfied that the employees were made redundant.

[27] These findings determine points 5 and 6 in the points for consideration listed under the Agreed Question for Arbitration and turns the focus to points 2, 3 and 4 in the Agreed Questions for Arbitration and the language in clause 3.7 of the 2012 Agreement for the purpose of determining whether the offers made by the Employer were “alternative suitable employment”.

Meaning of Suitable Alternative Employment

[28] The AWU rely on the words “by agreement” and “at the employee’s choice” in the first sentence of Clause 3.7 regarding redeployment, and the words “determined by both the employer and the employee” in the second paragraph regarding offers for “alternative suitable employment” to argue the clause is intended to be read such that unless an employee agrees that the offer is an offer of “alternative suitable employment”, then it cannot be “alternative suitable employment”.

[29] To further this point the AWU drew attention to the changes in language at clause 3.7 of the 2012 Agreement from that found at Part 11 of the predecessor agreement, the Veolia Environmental Services (Australia) Pty Ltd Gladstone Operations 2009-2011 Enterprise Agreement (the 2009 Agreement). I have highlighted the key changes to the words in the 2009 Agreement relevant for the purposes of the argument below:

“In the event that a permanent employee maybe terminated for reason of redundancy the employee may choose to (the 2012 Agreement deleted ‘choose to’ and inserted ‘by agreement’) be deployed to another site / workshop under this Agreement subject to availability of work and required skills in accordance with the redeployment policy of the Company or be terminated by reason of redundancy at the employees choice.

In the event that a permanent employee’s position is made redundant, the Company can decide to offer the employee alternative suitable employment. (The 2012 Agreement extends this sentence to say “...based on their skill set, the suitability of which shall be determined by both the employer and the employee.”

Should the employee reject the offer of alternative employment the employee will forfeit any entitlement to redundancy pay. (The 2012 Agreement deleted this sentence).

Where the employee is terminated for reason of redundancy and no offer of alternative employment is made they will receive a severance payment..............

....................................”

[30] The AWU said the 2009 Agreement differed from the 2012 Agreement as it allowed the employer to determine the suitability of the alternative employment and did not require agreement between the employer and employee, and it provided for forfeiture of redundancy should the employee reject the alternative employment.

[31] I make the observation in passing that the 2009 Agreement was approved during the bridging period as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the TPCA Act) and its approval was not subject to Section 186(2)(c) as it applied to approval of Agreements after the commencement of the National Employment Standards in January 2010. Section 186(2)(c) reads as follows:

“(2) The FWC must be satisfied that:

(a) .......................................

(b) ......................................

(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and..”

[32] Section 55 in effect provides enterprise agreements may include terms permitted by the NES or terms that are ancillary or incidental to the operation of an entitlement under the NES, or that supplement the NES. A term of an enterprise agreement has no effect to the extent it contravenes s.55. Part 11 of the 2009 Agreement, had it been sought to be included in the 2012 Agreement would have offended s.186(2)(c) as it required an employee to forfeit all redundancy pay automatically upon rejection of alternative employment, rather than a reduction in redundancy pay being subject to an application brought under s.120.

[33] The AWU contend that the change in language from the 2009 Agreement to the 2012 Agreement demonstrates intent of the bargaining parties to provide protection to the employees when it comes to assessing suitability of alternative employment.

[34] Further the AWU contend that the Employer was not entitled to conclude that the offer of alternative employment was suitable as the suitability or otherwise requires agreement between the employer and employee under the 2012 Agreement.

[35] The amendments made to the redundancy clause from the 2009 to the 2012 mean that under the amended wording a rejection of an offer of alternative employment no longer automatically means forfeiture of a redundancy entitlement. As already observed had the previous language been retained it would have sought to exclude the NES and would have no effect to the extent that it contravenes s.55.

[36] I accept as argued by the AWU that the words ‘alternative suitable employment’ as described in clause 3.7 is employment that both the employer and the employee are satisfied is just that. The words “..the suitability of which shall be determined by both the employer and the employee..” are clear and unambiguous. They do not give rise to more than one meaning. That then leads to the words in the final paragraph in clause 3.7.

[37] The relevant words for the purpose of this dispute in the final paragraph of clause 3.7 are unchanged from those found in the 2009 Agreement. In both the 2009 and 2012 Agreements the words used to trigger the payment of redundancy are a failure to offer “alternative employment”, as compared to ‘alternative suitable employment’. The difference in language between the expressions “alternative suitable employment” and “alternative employment” was subject to argument over the correct reading.

[38] The first argument as pressed by the AWU it is that the word “suitable” should be read into the final paragraph of clause 3.7. The second as pressed by the employer is that the words are clear and unambiguous and do not require interpretation, and therefore the reference to alternative employment in the final paragraph of clause 3.7 include all offers of alternative employment, therefore any offer would negate entitlement to redundancy, and only if no offer was made would redundancy entitlements be triggered.

[39] As already observed the words in Part 11 of the 2009 Agreement with particular reference to the third paragraph would now contravene section 55. The circumstances concerning the 2012 Agreement are different. Adopting the first interpretation the words in clause 3.7 do not contravene the NES as the entitlement would be superior and section 120 would have no work to do. This would be because, as argued by the AWU, the redundancy entitlement set out in the table at the bottom of clause 3.7 would flow in every case where there is not a meeting of the minds between the Employer and the Employee on the suitability of the alternative employment offered.

[40] The second interpretation if adopted would mean that Clause 3.7 does not specifically address what flows from an inability for agreement to be reached over whether an offer is ‘alternative suitable employment’. On that reading Clause 3.7 does not link a failure to reach agreement to an entitlement to redundancy pay set out in the table below the clause, as the final paragraph in the Clause would only pertain to circumstances where no offer of alternative employment is made.

[41] Importantly therefore, on the second interpretation of Clause 3.7 the clause does not address the circumstances contemplated by section 120 where an employer obtains other acceptable employment for an employee.

[42] Where an enterprise agreement includes terms to the extent that they give an entitlement that is the same as an entitlement under the NES the terms operate in parallel, but as an enterprise agreement cannot exclude an NES provision then the NES provision applies where the agreement is silent.

[43] Having considered the two alternative readings of Clause 3.7, I am inclined to prefer the first interpretation as argued by the AWU. The wording of Clause 3.7 needs to be read in context. As the previous paragraph in the Clause requires alternative employment to be suitable then it is logical to interpret the reference to any offers of alternative employment being intended to refer to “alternative suitable employment”. The language in the final paragraph of both the 2009 and 2012 Agreements contains the same differentiation from preceding paragraphs; however the interpretation preferred is consistent with industrial norms. The final paragraph in both Agreements is about the amount of the severance payment, it is not directed to the issues contemplated in the preceding paragraphs. It would be highly irregular for parties to agree to exclude entitlement to redundancy pay on the basis that any offer of employment is made regardless of what it might be.

[44] I did not have evidence before me concerning the intent of the negotiators of the language, but from the available material and submissions it is clear the changed language intended to remove the automatic forfeiture of redundancy entitlement if an employee rejected an offer of alternative employment, and also establish a definition of “alternative suitable employment” that required agreement from employer and employee. The words in the 2012 Agreement have the effect of doing both those things.

[45] In the event I am wrong in the view expressed above then I will also consider the effect of the second interpretation preferred by the Employer in this case. In my view on the second interpretation of the 2012 Agreement, Clause 3.7 does not specifically address the circumstance where redundancy has occurred and the employer and employee cannot agree about whether alternative employment offered is suitable or not. If the second interpretation is correct Clause 3.7 is inferior to the NES because Section 120 requires an Employer to seek variation of redundancy pay if it wishes to argue it has obtained “other acceptable employment for the employee”.

[46] In that case, as it has already been determined that the jobs were redundant, redundancy entitlement is payable unless the Employer obtains other acceptable employment for the employee in accordance with section 120 and the FWC determines that the amount of redundancy pay should be reduced to a specified amount (which may be nil). As the severance payment under the Agreement and the NES are identical, regardless of whether Clause 3.7 of the 2012 Agreement or Section 119 of the Act are applied the quantum of severance is the same.

[47] For reasons which I will set out below my preference for the first interpretation over the second does not ultimately affect the determination of the matter, with the possible exception of Mr Skipper’s case. For reasons of completeness I intend to consider what would have flowed from adopting the second interpretation.

Deployment

[48] The AWU submitted that any offer of redeployment must be made in accordance with clause 3.5 of the 2012 Agreement. Clause 3.5 reads as follows:

“3.5 DEPLOYMENT

Due to operational requirements, you may be deployed to other sites covered by this Agreement in Central Queensland provided that such new site(s) do not provide terms and conditions less favourable from the site the Employee was deployed from.”

[49] This clause does not pertain to circumstances of redundancy which are dealt with in Clause 3.7. The Agreement itself covered more than one site and Clause 3.5 dealt with circumstances of deployment to another site under the Agreement as part of the ordinary operation of the business.

[50] Findings set out above concerning the meaning of the words “alternative suitable employment” have addressed the fourth consideration under the list of points under the Agreed Question for Arbitration. Considerations 2 and 3 are considered below.

Acceptability of Alternative Employment

[51] Points 2 and 3 referred to the refusal of each of the Employees to accept offered redeployment to the Yarwun Alumina Refinery and whether that was allowed under the 2012 Agreement.

AWU Argument on Acceptability of Alternative

[52] The AWU referred to a Full Bench decision in Clothing and Allied Trades Union v Hot Tuna  15where it was said that the onus lies on the employer seeking exemption from redundancy provisions to establish the acceptability of alternative employment, the test being an objective one involving consideration of such matters as pay levels, hours of work, seniority, fringe benefits and job security.

[53] The AWU argued that it is not possible to conclude that the alternative employment offered in the letter of 22 April 2013 was suitable alternative employment, based on the lower base hourly rate.

[54] The affected employees were facing a reduction in their base rate of pay of 3%. The AWU said that the reasons provided by the Employer that the terms and conditions were no less favourable did not refer to the rate of pay. The AWU said that payment of overtime and other monetary conditions such as leave and superannuation would be affected as they would be paid on the reduced base rate.

[55] The AWU also argued that the vagaries of the business meant that there is no certainty of future employment as the alternative employment could come to an end by the loss of the contract at the site they are being transferred to, just as had occurred at QAL.

[56] The AWU also referred to the inclusion of the words “not being alternative suitable employment” in the Employers correspondence of 22 April to supports its case. I am satisfied that this was a typographical error as was put by the Employer.

Employer Argument on Acceptability of Alternative

[57] The Employer argues that the employees unreasonably refused the alternative employment offered. The Employer specifically referred to the words “..at the employees choice” in the first paragraph of Clause 3.7 to argue that on an ordinary interpretation of the 2012 Agreement, in the absence of a situation where an employee has agreed to be redeployed, then the employee is taken to have elected to have his or her employment terminated at his or her choice. This argument is rejected as it does not go to the issue of whether the offer was an acceptable alternative; it merely states that the employee can choose not to accept the offer. As I have already found the employee’s jobs were redundant it is clear they did not choose to terminate their existing job, instead they elected not to accept an alternative job offered.

[58] The Employer further argues that the offers were suitable due to the similarities in roles and on the proper construction of clause 3.7 the Agreement expressly provides that entitlement to redundancy pay will only be available to employees that: (a) have been terminated by reason of redundancy; and (b) have not been offered alternative employment.

[59] Further the Employer argues that under clause 3.7 of the 2012 Agreement the offer of alternative employment does not need to be suitable alternative employment. Therefore the employees are not entitled to redundancy pay because they did not accept an offer of alternative employment.

[60] Based on my earlier finding that this element of the dispute would bring in the operation of Section 120 of the Act, the correct test to be applied would be whether the employment was “alternative suitable employment” within the meaning of the 2012 Agreement, but whether the employer “obtained other acceptable employment ” as set out in Section 120.

Conclusions on Acceptability of Alternative

[61] As set out above, on the Employers construction of Clause 3.7 the entitlement to redundancy entitlements does not flow to the four employees by the operation of the final paragraph in that clause. The effect of adopting the Employers interpretation however is also to find that the final paragraph of Clause 3.7 is inferior to the NES and that the NES applies.

[62] The question would then become whether or not an order should be made to vary the employer’s liability to make severance payments. The test to be applies is an objective one. A passage of the Full Bench decision in Clothing and Allied Trades Union of Australia v Hot Tuna Pty Ltd reads as follows;

“...the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters...”

[63] Mr Johns was described as ‘Operator (Water Blaster) at QAL’, paid at $47.35 per hour and was offered work at YAR as ‘Industrial Service Operator Level 3’ at YAR paidat $45.92 per hour. Mr Mansfield was described as ‘Operator - Industrial Services at QAL’ paid at $47.35 per hour and was offered the position of ‘Industrial Services Operator Level 3’ at YAR paid at $45.92 per hour. Mr Eachran was described as ‘Tradesperson - Trade Assistant’ at QAL paid at $47.35 per hour and was offered ‘Industrial Services Operator Level 3’ at YAR paid at $45.95 per hour. Each employee declined the offers to work at YAR on the basis that the said the alternative positions offered were not suitable and not commensurate.

[64] Each employee accepted offers of employment with Toxfree the successful tenderer at QAL. 16 17 18 In accepting the offers of employment with Toxfree the employees lost the benefit of non-transferrable credits such as accrued sick leave, long service leave and seniority as no transmission of business occurred. The loss of transferrable credits was a central basis for establishment of redundancy entitlements. These credits would not have been lost had the employees accepted the alternative employment offered, but such acceptance required an acceptance of lower pay.

[65] The offering of employment on lower pay is analogous with demotion. On some occasions employers opt to preserve or “red-ring” an existing rate of pay in dealing with circumstances such as in this case. The employer elected not to adopt that approach here and instead offered a different but it would appear similar role on lower pay. A Reduction in pay is different to being “red ringed”, it brings with it an associated reduction in status. The location of the alternative work offered was also different, approximately 18 kilometres away from QAL; however the hours of work would appear to have been likely to be similar as would other industrial conditions with continuity of entitlements preserved albeit as highlighted by the AWU in a contracting industry employment is less secure.

[66] The reduction in the hourly pay rate through the alternative employment offered at a lower rate would be compounded for each of the employees during periods when penalty payments applied which appears from the evidence to have been frequent, and also on accrued entitlements such as leave and on superannuation. I note the employer argued a future pay rise was pending under the Agreement; however that pay rise would have applied to their reduced rate of pay. The reduction compared to the rates prior to redundancy would have an ongoing impact.

[67] In the event the employers preferred interpretation of Clause 3.7 is correct (which as stated I don’t accept), considering all of the relevant factors involved in consideration of the matter I would be unable to find for the purpose of Section 120 that the offers made to Mark Johns, David Mansfield and Ben McEachran were acceptable employment given the lower rate of pay being offered. On that basis I would conclude that Mark Johns, David Mansfield and Ben McEachran should not be subject to any exemption of requirement to pay redundancy.

[68] In the case of Mr Skipper no statement has been provided.  19 Given my finding at paragraph 43 he is entitled to redundancy under the terms of the Agreement. In the event that I had adopted the employers preferred reading of Clause 3.7 then I would have been unable to express a view concerning the application of Section 120 to his circumstances in the absence of evidence on income differential.

[69] As stated above, if my approach has been wrong in adopting my preferred interpretation of Clause 3.7, as I would have determined not to exempt requirement to pay redundancy any way the outcome would have still been the same.

COMMISSIONER

Appearances:

Mr T McKernan appearing for The Australian Workers’ Union

Mr A Strain from Norton Rose Australia appearing for Veolia

Hearing details:

Brisbane

2013

19 November

 1   Exhibit 2 Agreed Statement of facts

 2   Exhibit 1 Agreed questions for determination

 3   Exhibit 3 Statement of Mr Ben Mceachran

 4   Exhibit 4 Statement of Mr David Mansfield

 5   Exhibit 5 Statement of Mr David Metcalfe

 6   Exhibit 6 Statement of Mr Mark Johns

 7   Exhibit 7 Statement of M Stephen Poole

 8   Exhibit 9 Statement of Mr Ryall

 9   Exhibit 11 Statement of Gerard McDonnell

 10   Exhibit 12 Statement of Sharyn Schooth

 11   Exhibit 13 Offer of employment contract from Veolia for Stephen Pool (dated 15 April 2010)

 12   Exhibit 14 Offer of employment contract from Veolia for David Metcalfe (dated 1 June 2011)

 13   Exhibit 9 Statement of Mr Ryall dated 3 November and attachment AR 1

 14   Exhibit 9 Statement of Mr Ryall dated 3 November and attachment AR 2

 15   Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226

 16   Exhibit 3 Statement of Mr Ben Mceachran

 17   Exhibit 4 Statement of Mr David Mansfield

 18   Exhibit 6 Statement of Mr David Metcalfe

 19   Transcript 19 November 2013 PN82

Printed by authority of the Commonwealth Government Printer

<Price code B, PR544483>