Townsend, Leonard Cecil v General Motors-Holdens Ltd

[1981] FCA 32

Re: LEONARD CECIL TOWNSEND
And: GENERAL MOTORS-HOLDEN'S LIMITED (1981) 50 FLR 355
No. V23 of 1980
Industrial Law - Conciliation and Arbitration

COURT

IN THE FEDERAL COURT OF AUSTRALIA

INDUSTRIAL DIVISION
VICTORIA DISTRICT REGISTRY
Keely J.

CATCHWORDS

Industrial Law - non-observance of award - failure to give 3 months notice of annual close down - whether notice must specify commencement of close down - penalty - discretionary power to order employer to pay "the amount of the underpayment" - matters relevant to discretion - whether power to order payment of a smaller amount - General Motors-Holden's Limited (Part I) General Award 1978 - Conciliation and Arbitration Act 1904 s.119

Conciliation and Arbitration - Breach and non-observance of award - Failure to give three months' notice of annual close-down - Whether notice must specify commencement of close-down - Imposition of penalty - Discretion to order payment of "amount of underpayment" of wages - Whether discretion to order less than "amount of underpayment" - Conciliation and Arbitration Act 1904 (Cth), s. 119.

HEADNOTE

The applicant sought the imposition of a penalty and the recovery of wages under s. 119 of the Conciliation and Arbitration Act 1904 for alleged breaches and non-observances of cl. 24 (1) of the General Motors-Holden's Ltd. (Part I) General Award 1978 (the award). The applicant alleged that the respondent required one employee to take annual leave and did stand off another employee for the purposes of the annual close-down without giving either "not less than three months' notice thereof" as required by cl. 24 (1) of the award. It was alleged that on 27th June, 1979, the respondent informed its employees of the Christmas close-down and indicated that the fourth week of the 1979 annual leave would be incorporated in the 1980 Easter break but failed to state the commencement of that break. On 13th March, 1980, the respondent gave notice to its employees of the duration of the Easter break stating that it would commence on 2nd April, 1980. Both of the employees referred to in the application were stood off during the Easter break. One had no entitlement to annual leave and was not paid for this period. Accordingly that employee's pay for this period was sought to be recovered in addition to the imposition of a penalty.

Held: (1) Where an employer wishes to "stand off" its employees including those "not then qualified for annual leave" for the purposes of the annual close-down, cl. 24 (1) of the award requires the employer to give three months' notice of its intention to close down on a particular date and the notice which is required is notice of both the commencing date and duration of the intended close-down.
(2) Failure to give notice of the commencing date of the intended close-down is a clear breach of both the spirit and the letter of cl. 24 (1) of the award and is not merely a "technical breach".
(3) The court has a discretion to order payment of "the amount of the underpayment" of wages which discretion must be exercised bona fide having regard to the policy and purpose of the Conciliation and Arbitration Act. Once the condition precedent to the making of an order under the discretionary power has been established the order should be made unless there are good reasons for not doing so.

Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation (1971), 127 CLR 106, referred to.

Bowling v. General Motors-Holden's Ltd. (1980) 50 FLR 79, followed.
(4) The court has no discretionary power to order payment of an amount less than "the amount of the underpayment".

Tucker v. Van Schellan (1965), 20 I.I.B. 882; Tucker v. Ayres (1966), 21 I.I.B. 1704, referred to.

HEARING

Melbourne, 1981, March 10-11, 19. #DATE 19:3:1981

APPLICATION.

M. R. Hickey, for the applicant.

C. G. Polites (solicitor), for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Holding, Redlich & Co.

Solicitors for the respondent: Moule Hamilton & Derham.

J. J. ISLES

ORDER

1. A penalty of five hundred dollars ($500.00) is imposed upon the respondent in respect of a non-observance of the General Motors-Holden's Limited (Part I) General Award 1978.

2. The penalty shall be paid to the Vehicle Builders Employees Federation of Australia.

3. The respondent shall pay to John Buckanek the sum of $176.75.

JUDGE1

This is an application under s.119 of the Conciliation and Arbitration Act 1904 (the Act) for the imposition of a penalty upon the respondent for alleged breaches and non-observances of a term of the General Motors-Holden's Limited (Part I) General Award 1978 (the award). The first alleged breach, as amended without objection at the hearing, was that the respondent required an employee, one Herbert Muench, "to take annual leave without giving him not less than three (3) months notice thereof as required by Clause 24(1)" of the award. The second alleged breach was that the respondent "did stand-off John Buckanek for the purpose of an Annual close-down without giving him not less than three (3) months notice thereof as required by Clause 24(1) of" the award. The application also sought in the alternative the imposition on the respondent of penalties in respect of the same conduct as being in each case a "non-observance" of the award. In final address Miss Maureen Hickey of counsel, who appeared for the applicant, stated that only one penalty was sought in respect of the conduct the subject of the application (cf. s.119(1A)).

It was conceded by Mr Colin Polites, solicitor, who appeared on behalf of the respondent, that at all material times:

1. The Vehicle Builders Employees Federation of Australia (the Federation) was a registered organization of employees within the meaning of the Act;

2. The respondent was incorporated and was capable in law of suing and being sued;

3. Herbert Muench and John Buckanek were employed by the respondent pursuant to the award and were members of the Federation;

4. Leonard Cecil Townsend, the applicant, was an officer of the Federation authorized under the rules of the Federation to sue on its behalf.

It was common ground that on 27 June 1979 there were posted on the "usual" notice boards in the plant where Messrs Muench and Buckanek were employed copies of a notice in the following terms:

"GENERAL MOTORS-HOLDEN'S LIMITED

FISHERMEN'S BEND

PLANT NOTICE

1979 ANNUAL LEAVE

TO ALL PLANT AND SALARIED EMPLOYEES

To enable employees to make holiday arrangements for their Annual Leave, this is a preliminary advice that the Plant will be closed down for three weeks over the Christmas/New Year period as follows :

Leave will commence as from the completion of work on Friday, December 21, 1979 and will be resumed at the normal starting time on Thursday, January 17, 1980.

The fourth week of 1979 Annual Leave will be incorporated with the 1980 Easter Break.

In those Departments or Sections where work is to continue during the above closedown periods, employees will be so advised by supervision as soon as possible.

(signed) E R PRENTICE

Manager

Personnel Administration

MELBOURNE

June 27, 1979"

On 6 December 1979 another document was posted on the notice boards headed "Annual Closedown Bulletin" which gave details of the hours to be worked by various categories of employees on 21 December 1979. It is not necessary to set out its terms.

On 13 March 1980 there were posted on the notice boards copies of a further notice which included the following terms:

"GENERAL MOTORS - HOLDEN'S LIMITED

Fishermen's Bend

B U L L E T I N

TO ALL EMPLOYEES:

EASTER ANNUAL LEAVE

Employees are reminded that the five days of outstanding 1979 Annual Leave will be taken in conjunction with Easter.

Leave will commence as from the completion of work on Wednesday April 2, 1980 and work will be resumed at the usual starting time on Monday, April 14, 1980. (Sunday, April 13, 1980 for night shift).

. . ."

Mr Muench "took three weeks of his annual leave from the end of work on 21 December 1979, and returned to work on 17 January 1980", for which period of leave he was paid $667.63. He took the remaining week of his annual leave for 1979 from the end of work on 2 April 1980, returning to work on 14 April 1980, for which period of leave he was paid $232.53.

Mr Buckaned "was stood off from the end of work on 21 December 1979, and returned to work on 17 January 1980". For that period "he was paid $432.17, being proportionate leave payment on the basis of 3.08 hours' payment for every 5 ordinary days which he had worked". He "was stood off from the end of work on 2 April 1980, and returned to work on 14 April 1980". Having no entitlement to annual leave on 2 April 1980 he was not paid for any of the five days (3, 8, 9, 10 and 11 April) in respect of which he was "stood off".

Clause 24(1) (the sub-clause) of the award included the following provision:

"Annual close down

(1) Where the Company closes down its plant or a section or sections thereof for the purpose of allowing annual leave to all or the bulk of the employees in the plant or section or sections concerned, the following provisions shall apply:

(i) It may be giving not less than 3 months notice of its intention so to do stand off for the duration of the close down all employees in the plant or section or sections concerned . . .

. . . "

It could not be argued that the notice dated 13 March 1980 satisfied the requirement of the sub-clause for "3 months notice of its intention" to stand off employees for the duration of the close down in April 1980 but Mr Polites argued that the notice of 27 June 1979 constituted such a notice. His contention was that the respondent had complied with the sub-clause by giving notice of its intention to stand off all employees for one week which was to "be incorporated with the 1980 Easter Break". He placed great reliance upon the word "duration" in the sub-clause, submitting that the notice was sufficient if it specified the duration of the intended close down notwithstanding that it did not specify the commencing date. He submitted that the sub-clause only required the respondent to give notice (1) of its intention to close down the plant and (2) of the duration of the intended close down.

I am unable to accept that submission. In my opinion where an employer wishes to "stand off" all of its employees (including those "not then qualified for a full entitlement to annual leave") the sub-clause is intended to require the employer to give 3 months notice of its intention to close down the plant on a particular date. An employer's right to "stand off" all of its employees only arises upon the giving of such a notice. The sub-clause is dealing with an employer which has formed an intention to close down its plant and in my view the notice required is notice of both the commencing date and the duration of the intended close down. It is necessary that the employer's intention has crystallized as to both of those matters - date and duration - for the sub-clause to operate requiring notice of that intention.

The sub-clause is designed to permit the employer to close down a plant or section and "stand off", without pay for some days, those employees "who are not then qualified for a full entitlement to annual leave" - provided that the employer fulfils the requirements of the sub-clause. It has no application to an employer whose future intentions are so uncertain that he has not decided when the plant is to close down. Such an employer has not formed an intention to stand off employees for the duration of a close down. The most that can be said is that he has tentatively decided that he wishes to close down the plant at some unknown future date. He cannot give notice of the intended close down until he has decided the commencing date of the close down - and the intention of the sub-clause is that he must give at least 3 months notice of that commencing date. Sub-clause 24(1)(v) of the award permits one or two separate periods of close down. Where, as in this case, the employer intends to close down for two separate periods, the notice required as to the intended close down applies with equal force to both periods and he must give notice of the commencing date and the duration of both periods.

The purpose of the sub-clause so construed is clear: to enable the employees to make plans in respect of the period of the close down. The introductory words of the notice of 27 June 1979 (which is set out above) in saying "To enable employees to make holiday arrangements for their Annual Leave . . . " acknowledge that purpose - although that acknowledgement in 1979 cannot, of course, throw light upon the meaning of the words used in the sub-clause in the 1978 award. Such holiday arrangements or other plans plainly cannot be made by the employees without knowing the commencing date of the intended close down. Hence the requirement for notice of that date. Notice merely of the duration of the proposed close down - without knowing the commencing date - would be of little use to the employees in making their plans.

The notice of 27 June 1979 relied upon by the respondent merely gave notice that the fourth week would "be incorporated with the 1980 Easter Break". The notice did not give the commencing date of the period of the intended close down. That period of one week might have been immediately before the "Easter Break" or immediately after it or it might have included one or more days before and the remaining days after Easter. The notice was quite uncertain. It follows that in my view the applicant has proved that the respondent committed a non-observance of clause 24(1) of the award in failing to give the notice required by that sub-clause in respect of the close down of one week commencing at the end of work on 2 April 1980.

The maximum penalty that may be imposed by this Court in respect of a non-observance of the award is one thousand dollars (s.119(1D)(a)(i)). I am unable to agree with Mr Polites' description of the non-observance as a "technical breach". In my view the failure to give notice of the commencing date of the intended close down is a clear breach of both the spirit and the letter of the sub-clause. The respondent's notice, by failing to state the commencing date of the intended close down, cut right across the purpose of the sub-clause - to enable employees to make plans.

It was argued by Miss Hickey on behalf of the applicant that in determining the amount of the penalty the Court should take into account the fact that the respondent was not prepared to re-instate the annual leave entitlement of Mr Muench - being the week's leave used by him in April 1980 following upon the respondent's defective notice. I accept Mr Polites' argument that it would not be proper to take that fact into account in determining the amount of penalty.

Having considered the matters advanced on behalf of the respondent, I accept Mr Polites' submission that non-observance does not call for a penalty close to the maximum. I consider that $500.00 is an appropriate penalty. Under s.120 of the Act I order that the penalty be paid to the Federation - an order sought by Miss Hickey and not opposed by Mr Polites.

Miss Hickey also asked the Court to find that Mr Buckanek "has not been paid an amount to which he is entitled" under the award and to make an order, under s.119(3) of the Act, that the respondent pay to Mr Buckanek the amount of the underpayment. That application was opposed by Mr Polites who agreed, however, that the amount to which he was entitled, if the Court found that there was an entitlement, was $176.75 (being five days at $35.35 per day).

Section 119(3) is in the following terms:
"(3) Where, in any proceedings against an employer before a Court specified in sub-section (1), it appears to the Court that an employee of that employer has not been paid an amount to which he is entitled under an order or award, that Court may order that the employer shall pay to the employee the amount of the underpayment but no order shall be made in respect of so much of the underpayment as relates to any period more than six years prior to the commencement of the proceedings."

Mr Polites argued that it could not be said that Mr Buckanek "has not been paid an amount to which he is entitled" under the award because he did not in fact attend for work during the fourth week of the annual close down. He relied upon clause 6(e) of the award which provided as follows:
"(e) Performance of work

An employee not attending for duty shall except as provided by clauses 23, 24, 25, 26, 27, 28 of this award lose his pay for the actual time of such non-attendance."
I accept Miss Hickey's argument that clause 6(e) does not apply to an "employee not attending for duty" by reason of the fact that he has been told by the employer that he is not to attend for duty because the employer has decided to close down the plant.

The Court has a discretion as to whether to make the order sought, but I accept Miss Hickey's argument that the sub-section does not confer upon the Court a discretion to decide, as a result of considering what is fair or reasonable in all the circumstances, to order payment of an amount less than the amount of the underpayment found by the Court to have occurred, cp. the decision of the Victorian Industrial Appeals Court in Tucker v. Van Schellan (1965) 20 Industrial Information Bulletin 882. Nor would it be open to the Court to reduce the amount to be ordered in a particular case because it considered that the employer was "a person of sincerity and integrity" or one who "would not deprive any person of his just dues" Tucker v. Ayres (1966) 21 Industrial Information Bulletin 1704.

On the other hand, the sub-section requires that, before such an order can be made, "it appears to the Court" that there has been an underpayment. The Court would not have power to order payment of the full amount claimed if it came to the conclusion that the employee's evidence as to the amount was inaccurate - see Tucker v. Tivendale (1965) 20 Industrial Information Bulletin 1679. However, such a decision to order payment of less than the amount claimed would be because of the evidence as to the amount to which the employee was entitled under the award: it would not be an exercise of a discretionary power.

It may be that the Court's discretionary power would permit the Court to make an order for payment of an amount less than "the amount of the underpayment" where the reduced amount was ordered by reason of the amount that the employee had earned from another employer whilst "stood off" by the respondent - cf. Smithers and Evatt JJ. in Bowling v. General Motors-Holdens Pty Ltd (1975) 8 A.L.R. 197 at p.216 in exercising a discretion under s.5(5) of the Act to "order that the employee be reimbursed any wages lost by him". However, I prefer to express no opinion as to that question which does not arise on the facts of these proceedings and which has not been fully argued.

The "discretion must be exercised bona fide, having regard to the policy and purpose" of the Act - per Windeyer J. in Finance Facilities Pty Ltd v. Commissioner of Taxation (1971) 127 C.L.R. 106 at 134. Where an award requires the payment of an amount by an employer, it is plainly the policy and purpose of the Act that the employer comply with the award unless compliance with some other prescription of the award (e.g. as to the giving of notice of a close down) takes him outside the award obligation. Miss Hickey submitted that the respondent should not be allowed to benefit from its non-observance of the award in respect of Mr Buckanek and also that Mr Buckanek should be placed by the Court, as far as s.119(3) permits it to do so, in the same position as if there had been no breach. I accept her submission that the Court in exercising its discretion under s.119(3) should have regard to the principles expressed in the reasons for judgment of the Full Court in Bowling v. General Motors-Holden's Limited (1980) 23 Australian Industrial Law Review 8 in exercising the discretionary power under s.5(5) of the Act to direct that an employee be reinstated. On those principles, once the condition precedent to the making of an order under the discretionary power has been established, the order should be made unless there were good reasons for not doing so. Further, in deciding whether to make an order it is proper to take into account that an employer should not benefit from its breach.

In my opinion the Court should make the order sought under s.119(3) in respect of Mr Buckanek and accordingly the respondent is ordered to pay to John Buckanek the sum of $176.75. Perhaps I should add that if, contrary to the view which I have expressed, the Court has power, in the circumstances of this case, to order payment of an amount less than the amount of the underpayment, in my opinion no grounds whatever have been shown to exist for ordering payment of an amount less than the amount of the underpayment.

The applicant also sought an order under s.119(3) that the respondent pay to Mr Muench an amount equal to one week's pay. In my opinion the Court has no power to make such an order. Mr Muench (unlike Mr Buckanek) was in fact paid for the fourth week of the close down as he had at that time an entitlement to annual leave. In those circumstances, although the respondent has committed a non-observance of the award in respect of him, it cannot be said that he "has not been paid an amount to which he is entitled" under the award. Accordingly, that application is refused.