Transport Workers' Union of AustraliavLinfox Australia Pty Ltd

[2013] FWC 6490

[2013] FWC 6490 [Note: a correction has been issued to this document]

FAIR WORK COMMISSION

INTERIM DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Transport Workers' Union of Australia
v
Linfox Australia Pty Ltd
(C2013/5288)

COMMISSIONER ROE MELBOURNE, 3 SEPTEMBER 2013

Expiry of contract – proposed redundancy or redeployment – whether suitable alternative position.

Introduction

[1] By notification dated 25 July 2013, the Transport Workers’ Union of Australia (TWU) requested the assistance of the Commission in the settlement of a dispute relating to redundancy and redeployment under the Linfox Australia (Bulk Petroleum) Agreement 2011 (the Oil Industry Agreement). The Respondent employer is Linfox Australia Pty Ltd (Linfox).

[2] A conference was held on 8 August 2013. I was satisfied and the parties agreed that:

● The dispute had been pursued through the appropriate steps of the disputes settlement procedure of the Agreement (Clause 22) and was unable to be resolved through conciliation and was now appropriately able to be determined by FWC by arbitration pursuant to Clause 22.1(e) of the Oil Industry Agreement.

● The matter in dispute is a matter authorised to be resolved through the disputes settlement procedure of the Oil Industry Agreement in that it is a matter “that arises at the workplace between an Employee and Linfox and or Linfox and the TWU about the Agreement or the employment relationship (including for the avoidance of doubt, in relation to the NES).”

[3] The matter in dispute is whether or not employees are entitled to be paid redundancy pay in accordance with Clauses 23.3, 23.4 and 23.5 of the Oil Industry Agreement in a situation where Linfox has lost the Mobil contract from 31 August 2013 and Linfox is seeking to redeploy the drivers to work on other contracts not involving the transport of bulk petroleum and covered by other collective agreements.

[4] The relevant provisions of the Oil Industry Agreement are:

“23. REDUNDANCY

23.1 Redundancy means circumstances where Linfox has made a definite decision that it no longer wishes the job the Employee has been doing done by anyone.

23.2 Discussions before terminations

(a) Where Linfox has made a definite decision that it no longer wishes the job an Employee has been doing done by anyone, and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, Linfox shall hold discussions with the Employee directly affected and with the Employee's representatives.

(b) The discussions shall take place as soon as is practicable after Linfox has made a definite decision which will invoke the redundancy provisions and shall cover, among other things, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any termination on the Employees concerned.

(c) For the purposes of the discussion Linfox shall, as soon as practicable, provide all relevant information about the proposed terminations including the reasons for the proposed terminations, the number of Employees likely to be affected, and the period over which the terminations are likely to be carried out. Provided that Linfox shall not be required to disclose confidential information the disclosure of which, would be inimical to Linfox's interests.

Alternative employment

23.3 Where Linfox obtains a suitable alternative position for the affected Employee:

(a) with Linfox; or

(b) with another employer,

the Employee will not be entitled to any severance pay in accordance with clause 23.5 below, whether they accept or refuse the alternative employment. This includes all offers of alternative employment arranged by Linfox, whether on a transmission of business or not.

Redundancy pay

23.4 Subject to clause 23.3, where an Employee's employment is terminated due to redundancy,

Linfox shall pay redundancy pay in respect of the Employee's continuous period of service as outlined in clause 23.5.

23.5 Employees will receive three weeks pay for each completed year of continuous service. The redundancy payment, exclusive of notice, shall be capped at 52 weeks pay.

23.6 The Employees affected will be provided with assistance in future employment through training in preparation of letters of application and resumes and interview skills. Reasonable time will be made available, by mutual agreement between the Employee and Linfox, for Employees to attend job interviews.”

[5] To resolve the dispute in this matter it is necessary for me to determine whether or not the proposed alternative positions constitute suitable alternative positions for the purpose of Clause 23.3 of the Oil Industry Agreement. 1 Linfox also argued during the proceedings that it is also necessary for me to determine whether or not the provisions of Clauses 23.3, 23.4 and 23.5 are activated by the circumstances of this case as Linfox argues that they have a right to redeploy the affected employees to other Linfox work pursuant to the common law contract signed by employees and Linfox when they were first employed.

[6] The alternative duties proposed by Linfox involves the distribution of general merchandise in articulated vehicles to Coles and Woolworths stores and the drivers would be covered by the Linfox Road Transport and Distribution Centres National Enterprise Agreement 2011 (Distribution Agreement). The distribution centre the affected workers currently use is at Yarraville in Melbourne and it is proposed that the affected employees would work from any of the following distribution centres at Broadmeadows, Laverton, Mulgrave, Somerton or Truganina in Melbourne. Linfox has advised that the affected drivers can choose the location from these alternatives. Given the distribution of these sites around Melbourne I am satisfied that the change of location does not prevent the proposed positions from being suitable alternative positions.

[7] The TWU argue that the positions are not suitable alternative positions because:

(a) The Distribution Agreement provides lower rates of pay and conditions.
(b) The underpinning Award also provides for lesser conditions.
(c) The work required is of a lesser skill level and requires a lesser licence and lesser experience.
(d) The tanker driver work is perceived in the industry to be of a higher standard requiring greater care and skill and this is reflected in higher pay and conditions.
(e) There are likely to be other opportunities for tanker drivers to pursue in the industry outside of Linfox in the future.
(f) The employees understood that they were strictly employed by Linfox as tanker drivers and had an expectation that they would be entitled to redundancy if work as a tanker driver was no longer available.

[8] It is not contested that the Distribution Agreement provides for lower rates of pay and conditions than the Oil Industry Agreement. The nature of the differences between the two Agreements is difficult to quantify due to different shift arrangements, incidence of overtime, and the use of a “common hourly rate” in the Oil Industry Agreement in lieu of a number of disability and penalty payments.

[9] I do not consider that the reference to the Transport Workers’ (Oil Agents/ contractors) Award 2001 to be of much significance given that it has been replaced by the Modern Award, the Road Transport Award 2010, and any transitional period will finish in mid 2014. However, the Award differences are Agreement differences to the extent that they are incorporated into the Oil Industry Agreement.

The contract of employment

[10] Linfox submits that all the affected employees received a letter of offer when they were first employed which Linfox and the employee were required to sign. Linfox submits that this letter constitutes a contract of employment. Mr Robinson, the TWU delegate at the site, and the affected drivers, gave evidence that they did not recall signing the letter or its contents. However, I am satisfied by the evidence of Mr Jones for Linfox about Linfox policy and practice and by the copies of relevant letters he provided, that affected employees did receive and sign a letter of offer. The letters of offer do not differ substantially except in respect to the provision in respect to probation.

[11] The standard letters of employment for weekly employees contain the following paragraph or words to similar effect:

“Linfox may at its discretion and without notice, change your workplace, duties, classification, grade, rates of pay, hours of work, or reporting relationship at any time in order to meet its business needs. You agree that you will not claim or receive compensation for such changes.”

[12] The identification of work location, duties and supervisor in the letter of offer is expressed to be of an ‘initial’ nature.

[13] The standard letters also provide that:

“Please note that during your employment your rights and obligations, including duties and rates of pay, will also be governed by the provision of the award or enterprise agreement that is in force and applicable to the work performed by you at that time. The provisions of such award or enterprise agreement will take precedence over the terms and conditions contained in this letter to the extent of any inconsistency. However, the provisions of any award or enterprise agreement are not incorporated into the contract of employment created by your acceptance of this offer.”

....

“The failure of Linfox at any time to insist on performance of any term of this letter is not a waiver of its right at any later time to insist on performance of that or any other term of this letter.”

[14] The clause in respect to probation for those who commenced their employment with Linfox as fuel tanker drivers provided that “given the special and demanding nature of your initial duties, your probationary period will be six months from commencement of weekly employment”. The clause in respect to probation for the employees who commenced employment with Linfox in the retail distribution business provide for a three month probationary period and makes no mention of the “special and demanding nature” of the work.

[15] Linfox referred to the decision of Vice President Watson concerning the redeployment of Linfox warehouse workers due to the closure of Linfox’s Gillette operations at Scoresby under a different Linfox collective agreement (the Gillette case). 2

[16] The Vice President made the following analysis of the relationship between the common law contract and the collective agreement as it affected redundancy:

“[17] A potential redundancy situation arises when a role disappears, work disappears or an operation of the employer at a particular work location disappears. Whether this leads to the termination of employment of the affected employees depends on what the employer decides to do with the employees consequent upon the relevant event. Whether an obligation arises to pay or negotiate redundancy pay depends on the wording of the relevant instrument creating the redundancy entitlement or obligation to negotiate.

[18] If another position is found for the employee, and this position is within the scope of the contract of employment, then at common law the redeployment to that other position will not constitute an express or constructive termination of employment.

[19] This situation may be altered by the terms of an award or certified agreement. Entitlements to redundancy pay often arise from such instruments rather than the contract of employment and therefore the circumstances that give rise to an entitlement are to be considered by reference to the tests in such instruments.” 3

[17] The contracts of employment in the Gillette case contained similar clauses to those I have referred to earlier as applicable to this case. The Vice President specifically referred to the following contract provision:

“Linfox may at its discretion and with one week’s notice change your workplace, duties, classification, grade, rates of pay, hours of work, or reporting relationship at any time in order to meet its business needs. You agree that you will not claim or receive compensation for such changes.”

[18] The Vice President commented as follows:

“In my view the contracts of employment of the employees concerned comprehend employment at locations other than the Scoresby Distribution Centre. It is likely that an alternative position would need to be at a reasonable commuting distance from the original work location and the residence of the employees affected. I do not consider that the additional travel time of approximately 30 minutes is unreasonable in this regard. I therefore do not believe that there is an express or constructive termination of employment of any of the three employees.” 4

[19] In certain circumstances the express terms of the contract provision would be unreasonable and oppressive. It would allow a driver to be transferred to a cleaning job at lower pay, reduced working hours and at a remote location. The Vice President concluded that, notwithstanding the words of the contract and without any reference to any applicable award or agreement, “it is likely that an alternative position would need to be at a reasonable commuting distance from the original work location and the residence of the employees affected.”

[20] In the circumstances of this case it is accepted that with a few isolated exceptions detailed in the witness statements the affected employees have been engaged as fuel tanker drivers working from the same depot throughout the period since they first started work as fuel tanker drivers for Linfox. The evidence of the TWU witnesses confirmed that there have been occasions when tanker drivers have been transferred to retail distribution work as punishment for breaches of the standards required as tanker drivers or to meet a temporary business requirement or at the request of an employee to meet their personal circumstances. This evidence was not contradicted by Mr Jones, National Workplace Relations Manager for Linfox. Mr Jones referred to a number of situations where employees of Linfox have been redeployed to other work consequent upon business change. Except for two relatively recent cases involving tanker drivers these examples involved the transfer of work and employees from one location to another. 5 The two cases where redeployment has been as a result of loss of contract and has involved a move from tanker driving work to retail distribution work were in 2012 and 2013. The first case involved one tanker driver in South Australia and the second case involved five tanker drivers in Sydney. In both cases the redeployment was accompanied by a compensation package and occurred by agreement with the TWU and affected employees.

[21] The affected employees answered advertisements for a vacancy for a tanker driver and gave evidence that this was the job they believed that they had been engaged to perform and would continue to perform. In some cases they have been doing this work for Linfox for more than a decade.

[22] The contracts of employment of the employees concerned comprehend employment at locations other than Yarraville and employment on duties other than as a tanker driver and at rates of pay and conditions different from those which apply to tanker drivers. However, the extent of change which could reasonably be implemented must take into account the long period of employment as a tanker driver, the fact that throughout this period the terms and conditions of employment have been regulated by a separate award and a separate collective agreement than those that apply to the rest of Linfox operations, the special licence and training required for tanker drivers, and the consistently higher rates of pay and conditions which have been applied to this work. I doubt that the contract could allow transfer to a lower paid job, at a new location, under lesser conditions, and performing work which does not utilise the specialist licence applicable to tanker drivers. It may well allow one or more of these changes in isolation but taken together I consider it unlikely that the contract could allow all of these changes. However, it is not necessary to finally determine the effect of the contract of employment as I am satisfied that the matter can and should be determined based upon the provisions of the Oil Industry Agreement.

The Oil Industry Agreement.

[23] Linfox argue that there is no requirement to go beyond the contract of employment because the provisions of the Oil Industry Agreement only apply “where an Employee's employment is terminated due to redundancy.” Linfox argue that the employees concerned are not being terminated and therefore there is no requirement to consider whether or not the redeployment is a suitable alternative position or suitable alternative employment.

[24] I do not regard this as a proper reading of the provisions of the Oil Industry Agreement read in the context of the Agreement as a whole. It is readily apparent that despite some infelicities of expression the redundancy and redeployment provisions of the Agreement are of similar effect to the provisions commonly found in industrial instruments. Essentially the standard provisions found in industry instruments require that in situations where the job is redundant, that is, where due to operational reasons the employer does not require the job to be performed by anyone, unless redeployment to a suitable alternative position is available, the employee is entitled to redundancy pay. If there is a suitable alternative position and that position is declined by the employee then the employee is not entitled to redundancy pay. An examination of Clause 23 read as a whole reveals that its overall content and structure is similar to redundancy provisions commonly found in Awards, Agreements and the Fair Work Act 2009.

[25] The starting point is Clause 23.1 which defines redundancy in the normal manner as a “circumstance where Linfox has made a definite decision that it no longer wishes the job the Employee has been doing to be done by anyone”. That is, redundancy is about a situation or a circumstance, it is not confined to the termination of an employee. Clause 23.2 is a standard clause about consultation with affected employees and their representatives and the exploration of alternatives to avoid or minimise adverse effects. Clause 23.3 is about redeployment to a suitable alternative position. Clearly this is one of the matters which could be considered as part of the consultation in Clause 23.2. Clause 23.4 is about the conditions under which redundancy pay is applicable. Clause 23.5 is about the amount of redundancy pay.

[26] The reference in Clause 23.3 to “the affected employee” is clearly a reference to an employee who is affected by a redundancy situation or circumstance as defined in Clause 23.1. In a redundancy situation redeployment is considered prior to the employee being terminated due to redundancy. Clause 23.3 would have no work to do if it only operated after the employee was terminated due to redundancy. Clause 23.4 begins: “Subject to clause 23.3, where an Employee's employment is terminated due to redundancy, Linfox shall pay redundancy pay...” There is a heading above Clause 23.4 “Redundancy Pay.” I am satisfied that read as a whole the provisions in Clause 23.3, 23.4 and 23.5 regulate entitlements in a redundancy situation. They are not limited to a situation where an employee’s employment is terminated due to redundancy. The expression in Clause 23.4 “where an Employee's employment is terminated due to redundancy, Linfox shall pay redundancy pay” simply makes it clear that an entitlement to redundancy pay as specified in Clause 23.5 is limited to a redundancy situation where no alternative solutions have been found through consultation in Clause 23.2 and consideration of suitable alternative employment. If there are no alternatives found through Clause 23.2 and 23.3 and the employer proceeds to make the worker redundant by terminating their employment there is a requirement to pay redundancy pay in accordance with Clause 23.5.

[27] I am satisfied that the Oil Industry Agreement provides that Linfox is not required to pay redundancy pay in a situation where it “obtains a suitable alternative position for the affected Employee”. It follows that if the only position offered by Linfox to the affected employee in a redundancy situation is not a suitable alternative position then the employee is entitled to redundancy pay when terminated due to redundancy.

[28] In the circumstances of this case I am not determining whether or not the affected employees should or should not be terminated and paid redundancy pay. That is a decision for Linfox to make in light of my decision. I am determining whether or not there is a redundancy situation and whether or not the position offered is suitable alternative employment pursuant to the Oil Industry Agreement.

Is there a redundancy circumstance or situation?

[29] The Oil Industry Agreement defines a redundancy circumstance as follows:

“23.1 Redundancy means circumstances where Linfox has made a definite decision that it no longer wishes the job the Employee has been doing done by anyone.”

[30] I am satisfied that Linfox has made a definite decision that it no longer wishes the jobs of the affected employees to be done by anyone. Linfox has lost the Mobil tanker driving contract and the jobs associated with that contract are no longer required to be performed by any Linfox employee.

[31] The work of the affected employees is currently regulated by the Oil Industry Agreement and not by any other agreement. The tanker drivers are not regularly involved in performing work under any other agreement. Apart from Mr Warner all the affected employees have worked consistently for many years as tanker drivers under the Oil Industry Agreement or its predecessors. Mr Warner became a tanker driver in March 2006 but returned to Coles distribution work from July 2007 until April 2008. He has been a tanker driver since that time. 6

[32] I am satisfied that this is a redundancy circumstance as defined by Clause 23.1 of the Oil Industry Agreement. If I am satisfied that the redeployment proposed by Linfox is to a suitable alternative position then pursuant to Clause 23.3 the affected employees will not be entitled to any severance pay, whether they accept or refuse the alternative employment. If I am satisfied that the redeployment proposed by Linfox is not to a suitable alternative position then the affected employees will be entitled to severance pay should Linfox not continue their current employment.

[33] The behaviour of Linfox in this dispute prior to the hearing is also consistent with this being a redundancy circumstance. The letter given to affected employees on 18 July 2013 by Linfox was that “several meetings have taken place in accordance with the relevant provisions of the Agreement”. The letter refers to redeployment. 7 I am satisfied that this is a reference to the requirements to consult in a redundancy circumstance under Clause 23 of the Oil Industry Agreement.

Suitable alternative position.

[34] In The Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 8 the Full Bench found that:

“What constitutes “acceptable alternative employment” is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification “acceptable” is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 9

[35] This approach was adopted by the Full Bench in National Union of Workers and Tontine Fibres (A Division of United Bonded Fabrics Pty Ltd) 10 and in a number of decisions under the present Act.

[36] The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer. 11

[37] In order to establish whether the alternative employment obtained by the employer is acceptable it is necessary to have regard to such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters (including the location of the employment and travelling time). 12 The nature of the employment including the status of the employment and the skills and qualifications required have also been found to be relevant.

[38] In the circumstances of this case the factors of work location and job security and continuity favour a finding that the alternative employment is suitable. It is accepted that the tanker drivers have the qualifications and skills to be able to perform the alternative employment. Only a short period of training and familiarisation may be required. By accepting redeployment the affected employees would retain the benefit of significant amounts of accrued personal leave which would otherwise be lost.

[39] Linfox refer to the nature of its business and its long standing practice of seeking to retain workers in the business when restructuring occurs. Linfox conducts business on a contract basis and it is part of the ordinary course of the business that existing contracts sometimes come to an end. The location of work and the labour and vehicles required also fluctuate to meet customer needs. Linfox have a long standing but unwritten policy of redeploying employees to other sites and only resorting to retrenchment as a last resort. 13 I am satisfied from the evidence that Linfox do have a longstanding practice of seeking to redeploy employees to other sites in the case of loss of contract or relocation of contract and only resorting to retrenchment as a last resort.

[40] There are a number of provisions in the Oil Industry Agreement which lend some support to this approach. Clause 13 Objectives of This Agreement includes the objectives of “maintain job security and workplace representation”; “assist Linfox to operate its business flexibly so that it can be responsive to constantly changing customer and marketplace requirements” and “develop a highly motivated, multi-skilled, flexible and adaptable workforce.” Clause 15 Continuous Employment refers to “the need to continue to build workplace arrangements that contribute to the ongoing viability of Linfox in a highly competitive market”.

[41] I accept the evidence of the affected employees concerning their expectation that they were engaged as tanker drivers and that they would be entitled to redundancy pay should there be a loss of contract such that work as a tanker driver was no longer available. I accept the evidence of Mr Robinson that the redundancy clause was negotiated in recent agreements precisely to protect the tanker drivers in the event that the contract was lost and it was never the expectation that tanker drivers could be transferred to non-tanker driving activities in such a circumstance. However, expectations of employees, even if genuinely held, do not constitute the mutual intention of the parties and cannot override the plain words of the Oil Industry Agreement. The plain words are not ambiguous. The question of suitable alternative position must be determined having regard to the normal industrial considerations. Similarly, I accept the evidence of Linfox that they have a policy of retrenchment as a last resort and that they believe that employees in signing the acceptance of the letter of offer when they commenced employment with Linfox understood that they could be redeployed. However, that redeployment must meet the requirements of the Oil Industry Agreement; that is, it must be a suitable alternative position.

[42] I now turn to the two major factors which the TWU argue should lead to a conclusion that the alternative positions are not suitable. Firstly, the TWU argues that the work required is of a lesser skill level and requires a lesser licence and lesser experience and that the work as a tanker driver is of a higher status and is perceived in the industry to be of a higher standard requiring greater care and skill and this is reflected in higher pay and conditions. Secondly, the TWU argues that even taking into account the compensation package offered by Linfox the affected employees will suffer significant reduction in wages and conditions.

[43] It is not in contest that the tanker drivers are required to use B double vehicles which entitle them to a level 7 or level 8 classification under the Oil Industry Agreement. Two of the affected drivers are at level 8 and the balance are at level 7. The alternative employment will involve use of articulated vehicles which would entitle drivers to a level 6 classification under the Distribution Agreement. The classifications in the two agreements are comparable.

[44] Mr Robinson gave evidence with some passion about the particular skills and status of tanker drivers. Mr Robinson described the special characteristics of tanker driving which are not present with retail distribution driving as including the loading and unloading of the vehicle unassisted, the higher licensing and dangerous goods requirements, the requirement to wear protective clothing, certain roads cannot be used, responsibilities for weights is higher, medical assessment requirements are higher and minimum training requirements are higher.

[45] Linfox pointed to the position descriptions for the job of tanker driver and the job of retail driver. The additional requirements for tanker driver are requirements to have “current dangerous goods licence, defensive driving qualifications and any other specific licence/accreditation as required” and to have “strong understanding of dangerous goods regulations and completion of emergency response training (desirable).” The position summary for the tanker driver also includes reference to “strong knowledge of proper handling, transfer and documentation of Dangerous goods, in addition to maintaining relevant licenses and accreditations.” 14

[46] Linfox also point to some new skills which the drivers would have access to if they were to work in the retail distribution area.

[47] I am satisfied that there is much in common between the tanker driver work and the alternative work. Both jobs require high levels of driving skills and customer relations skills. However, I am also satisfied that the job as a tanker driver has a higher status and requires higher levels of qualification and licences and additional skills associated with the handling of dangerous goods and their regulation. Mr Jones gave evidence for Linfox that whereas tanker drivers were transferred to the retail business as a punishment the reverse did not and would not occur. The letters of appointment referred to the “special and demanding nature” of the tanker driving work as warranting a longer probation period. In this sense the affected drivers understandably perceive the alternative duties as a demotion. This is a significant factor against a finding that it is a suitable alternative position.

[48] However, Linfox have proposed measures which significantly mitigate this factor. In particular Linfox propose that the affected drivers have a right to first refusal in the event that additional tanker work is obtained by Linfox. In other words, if Linfox obtains additional tanker work the affected drivers would be able to transfer back to this work if they wished. There is no certainty that Linfox will be successful in obtaining substantial ongoing contracts in this area in the future. However, the evidence suggests that Linfox is actively pursuing major contracts and also smaller shorter term contracts for fuel work. When considered in the context of the nature of the Linfox business and the objectives of the Oil Industry Agreement this commitment mitigates this negative aspect of the alternative position.

[49] The TWU and Linfox agree that there are the following significant differences between the two agreements.

Oil Industry Agreement	Distribution Agreement
Base Pay	$29.44 per hour grade 7 base. (Common Hourly Rate $38.87) $30.13 per hour grade 8 base. (Common Hourly Rate $39.77)	$23.24 per hour base rate (grade 6 - maximum available)
Superannuation	14.5%	12%
Annual leave loading	22.5%	17.5%
Hours	35 hour week	38 hour week

[50] Under the Oil Industry Agreement there are advantageous provisions re laundry and dry cleaning, meal and rest breaks are all paid, an additional week’s annual leave is achieved for those on particular shift patterns, 12 hour shift rosters are the norm maximising income, and training and licence costs are met. The Common Hourly Rate under the Oil Industry Agreement, which is the rate which applies for all hours worked on normal shifts inclusive of penalty payments and allowances is more than 1.5 times the base rate of pay in the Distribution Agreement. The tanker drivers are rostered to work 48 hours per week at the common hourly rate and regularly work additional shifts at an hourly rate which is 20% higher.

[51] The evidence of the affected drivers is that they will each lose approximately $500 per week. The estimates of the affected drivers vary depending upon whether they are Grade 7 or Grade 8 and their particular pattern of employment.

[52] Linfox did not challenge the calculations of the TWU that showed that regardless of the shift worked under the Distribution agreement the affected drivers would earn significantly less than they would have earned for the same pattern of work as tanker drivers.

[53] There may be significant changes to the shifts which are required to be worked by employees who have been on a particular shift arrangement as a tanker driver for many years. This could be a major disruption to the life of such an employee. However, changes to shift arrangements are always possible due to changes in business needs under either Agreement.

[54] The parties referred to two previous cases where the redeployment of employees of Linfox has been considered. 15 Both cases related to the relocation of employees to perform the same work in a different location. In the Adidas case the rates of pay for each employee increased upon transfer. In most cases the increase in pay was more than $5000 per annum. Linfox provided compensation to ensure that in the first 12 months all employees received at least a $4000 increase. Linfox also proposed to pay $5000 compensation for the relocation and also to give redeployed employees priority for any suitable vacancies which arose closer to the former site over the next two years. There was no significant change in working hours or conditions. Commissioner Lee found that the $5000 compensation for relocation largely but not entirely met the additional travel costs for employees. There were some differences in the circumstances and the compensation offered in the Gillette case but overall employees did not face significant economic disadvantage and the compensation package including the option to transfer closer to home if work became available was taken into account.

[55] In this case the compensation package outlined in the Linfox submissions to the hearing includes:

● First right of refusal to the affected drivers to job opportunities as a tanker driver which arise in the future.

● An upfront payment of the difference between the current common hourly grade 7 rate and the standard retail driver rate in relation to accrued annual leave.

● A one off payment of 13 weeks at the difference between the common hourly grade 7 rate and the standard retail driver rate.

● Continuation of superannuation contributions at 14.5%.

● Long service leave taken within 12 months of redeployment at the grade 7 common hourly rate in the oil industry agreement.

[56] I am satisfied that even taking into account the compensation package the tanker drivers face the prospect of significant economic disadvantage. The difference in the wages and conditions under the two agreements is wide. The compensation package does not bridge that gap unless there is a quick return to tanker driving work. Linfox may be successful at some point in obtaining further tanker driving work but there are no guarantees this will occur. I am satisfied that the affected drivers would be significantly disadvantaged in respect to wages and conditions of employment as a result of the redeployment even after taking into account the compensation package. This is a significant factor standing against a finding that the proposed redeployment is not to a suitable alternative position.

[57] Taking into account all of the objective circumstances I have no hesitation in concluding that the proposed redeployment is not to suitable alternative positions within the meaning of Clause 23.3 of the Oil Industry Agreement.

[58] At the hearing I asked Linfox to confirm that base rates of pay and calculations provided by the TWU in respect to the Oil Industry Agreement were correct and whether it was correct that the transfer by agreement between the TWU and Linfox of tanker drivers in the Silverwater NSW case had been to Grade 7 rather than the Grade 6 which is offered in the current circumstance. Following the hearing Linfox confirmed these two matters but also took the opportunity to “reassess its position and revise the compensation package offered to the affected drivers.” The revised position is as follows:

“(a) the Affected Drivers will be 'grandfathered' (red circled) on their current base fuel rate [Grade 6 - $28.7617; Grade 7 - $29.4442 or Grade 8 - $30.1281] until 31 December 2017. All other terms and conditions arising from the Distribution Agreement will apply; with full continuity of employment and accrued entitlements;

(b) On 31 December 2017 the Affected Drivers will be paid an upfront payment of the difference between their base fuel rate and the standard retail driver rate (Grade 6 NEA) in relation to all accrued annual leave;

(c) On the 31 December 2017 the Affected Drivers will be paid a further upfront payment of 13 weeks paid at a rate equal to the difference between their base fuel rate and the standard retail driver rate (Grade 6 NEA);

(d) the Affected Drivers will continue to receive superannuation contributions at the rate of 14.5% on their ordinary time earnings; and

(e) long service leave taken within 12 months post 31 December 2017 will be paid at the 'grandfathered' (red circled) base fuel rate.”

[59] Those drivers who are currently at Grade 8 will benefit from the changes to (b), (c) and (e). The major difference for all drivers is the change in (a) to the base rate which will apply during the period until 31 December 2017. The revised package appears to materially reduce the disadvantages in respect to wages and conditions upon redeployment.

[60] I do not consider that it is procedurally fair to make a final decision in this matter based upon the revised compensation package at this stage. The TWU need the opportunity to make further submissions and there may be a need to revisit some of the evidence. It is my preliminary view that it would also be inappropriate to simply ignore the revised compensation package because it was provided after the conclusion of the proceedings. FWC is an industrial tribunal and parties should be encouraged to adjust their positions during a dispute in order to facilitate a resolution. However, I will not make a final decision as to whether or not I should have regard to the revised compensation package until after I have heard submissions from the TWU.

[61] I consider that I should issue this interim decision based upon the evidence and submissions that were before me. The parties are urged to meet to discuss the situation and there will be a further hearing to finalise the matter at 2pm on 11 September 2013. The TWU are to advise FWC and Linfox by 5 September 2013 if they wish to lead further evidence and the nature of that evidence and or if they wish to further cross examine Mr Jones.

COMMISSIONER

 1   Outline of Submissions by Linfox, at para 7.

 2   National Union of Workers v Linfox Australia Pty Limited[2008] AIRC 647.

 3   [2008] AIRC 647, at paras 17-19.

 4   [2008] AIRC 647, at para 24.

 5   Exhibit Linfox 1, at paras 34 and 35.

 6   Exhibit Linfox 1, at paras 8-15.

 7   Exhibit Linfox 2.

 8   Print J4414.

 9   Print J4414, at page 194.

 10   [2007] AIRCFB 1016.

 11   Re Target Retail Agreement 2001, PR916204, at para 6.

 12   Re Clerks Salaried Staffs (Agriculture Award) 1999, Print S1216.

 13   Exhibit Linfox 1, at paras 27-31.

 14   Exhibit Linfox 1, Attachment DJ2.

 15   See the Adidas case National Union of Workers v Linfox Australia Pty Ltd[2012] FWA 7695, and the Gillette case referred to earlier [2008] AIRC 647.

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