United Voice v Asset Industries Australia Pty Ltd T/A Asset Industries

[2018] FWC 7243

[2018] FWC 7243

FAIR WORK COMMISSION

DECISION

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

United Voice
v
Asset Industries Australia Pty Ltd T/A Asset Industries
(C2018/5232)

COMMISSIONER SIMPSON BRISBANE, 12 DECEMBER 2018

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

[1] On 20 September 2018, United Voice (the Applicant) filed an application with the Fair Work Commission (the Commission) pursuant to s.739 of the Fair Work Act 2009 (the Act) to deal with a dispute in accordance with the dispute settlement procedure in the Asset Industries Pty Ltd and United Voice Clean Start Union Collective Agreement 2015-2018 (the Agreement).

[2] The substantive application concerned redundancy entitlements under clause 51 of the Agreement.

[3] The Applicant submitted that, pursuant to clause 53 of the Agreement, the Commission has jurisdiction to arbitrate a dispute between an employer and an employee where either party has requested the Commission to arbitrate or the subject matter of the dispute arises under the Agreement or the National Employment Standards (the NES). 1

[4] Asset Industries Australia Pty Ltd T/A Asset Industries (the Respondent) did not object to the Commission exercising jurisdiction in this matter pursuant to clause 53 of the Agreement. I am satisfied the FWC has jurisdiction to determine the matter.

Relevant Provisions

[5] Clause 51 of the Agreement provides:

“51.1 Definitions

(a) Acceptable alternative position means a position with the same or substantially similar hours, tasks and remuneration to the employee's original position.

(b) Business includes trade, process, business or occupation and includes part of any such business.

(c) Redundancy occurs where an employer decides that the employer no longer wishes the job the employee has been doing to be done by anyone and this is not due to the ordinary and customary turnover of labour.

(d) Transmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transmitted has a corresponding meaning.

(e) Week's pay means the employees ordinary pay as defined in clause 4.

51.2 Transfer to lower paid duties

As an alternative to making an employee redundant, the employer may elect to transfer an employee to lower paid duties. Where an employee is transferred to lower paid duties by reason of redundancy the same period of notice must be given as the employee would have been entitled to if the employment had been terminated. The employee is entitled to maintain his or her former rate of pay for the period of the notice. However, the employer may opt to make payment in lieu thereof of an amount equal to the difference between the former ordinary rate of pay and the new ordinary time rate for the number of weeks of notice still owing.

51.3 Discussions before termination on redundancy

(a) Where the employer has made a definite decision that the employer no longer wishes the job the employees have been doing done by anyone and that decision may lead to termination of employment, the employer shall have discussions as soon as practicable with the employees directly affected and their union, UNITED VOICE discussions shall cover, among other things, the reasons for the proposed terminations, measures to avoid or minimize the terminations, and measures to mitigate the adverse effect of any terminations on the employees concerned.

(b) For the purposes of discussion, the employer shall as soon as practicable provide in writing to the employees concerned and UNITED VOICE, all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. However, the employer shall not be required to .disclose confidential information the disclosure of which, when looked at objectively, would be against the employer's interests.

51.4 Period of notice of termination on redundancy

If the employment of an employee is to be terminated due to redundancy the employee shall be given notice of termination as prescribed by clause 50.

51.5 Employee leaving during notice period

Where the employer gives an employee notice of termination in circumstances of redundancy, the employee may terminate his/her employment during the period of notice set out in clause 48. In this circumstance the employee will be entitled to receive the benefits and payments they would have received under this clause had they remained with the employer until the expiry of the notice, but will not be entitled to payment in lieu of the balance of that period of notice.

51.6 Severance pay

The employer must pay severance pay to an employee whose employment is terminated by reason of redundancy. The amount of severance pay in respect of a period of continuous service is determined as follows:

Period of continuous Service

Less than 1 year

1 year and less than 2 years

2 years and less than 3 years

3 years and less than 4 years

4 years and less than 5 yeas

5 years and less than 6 years

6 years and less than 7 years

7 years and less than 8 years

8 years and less than 9 years

9 years and less than 1 0 years

10 years and over

Severance Pay

Nil

4 weeks pay

6 weeks pay

7 weeks pay

8 weeks pay

10 weeks pay

11 weeks pay

13 weeks pay

14 weeks pay

16 weeks pay

12 weeks pay

*weeks pay shall be the average weekly hours worked by an employee, paid at the ordinary pay rate as defined in clause 4.

51 .7 Additional severance pay for employees aged over 4S years with 10 years or more continuous service

In addition to the severance pay in 51.6 an employee with not less than 10 years continuous service, who is over the age of 45 years, must be paid an additional 4 weeks severance pay.

51 .8 Alternative Employment

(a) This provision does not apply in circumstances involving transmission of business as set out in 50.5.

(b) Without limiting the effect of clause 49.8, an employer will not be liable to pay severance if the employer obtains an acceptable alternative position for an employee.

51 .9 Change of contract

(a) This clause deals change of contract (as defined in clause 4) and the specific circumstances surrounding the employment of employees who have been subject to the operation of clause 43.5 of this Agreement.

(b) Acceptable alternative employment with the incoming contractor

The outgoing contractor will not be required to the pay severance referred to in clause 51.6 to an employee who at the time of the change of contract was an employee of the outgoing contractor and who becomes an employee of the incoming contractor where:

i. The employee has accepted an acceptable alternative position (as defined in clause 51 .1a)) with the incoming contractor; and

ii. The employee is not required to serve a probationary in the new acceptable alternative position, subject to clause 49.8c); and

iii. iii The outgoing contractor has paid out all of the employee's accrued statutory and award entitlements on termination of the employee's employment; and

iv. The outgoing contractor has fully complied with their obligations under clause 47 of this Agreement.

51 .10 Employees not offered a position

So as to avoid doubt, any employees of the outgoing contractor who are not offered an acceptable alternative position (as defined in clause 51 .6) with either the incoming or the outgoing contractor are entitled to severance pay calculated in accordance with clause 51 .3.

51 .11 Notification to Centrelink

Where the employer makes a decision to terminate the employment of an employee, or of employees, on account of redundancy the employer shall notify Centrelink as soon as possible, giving relevant information including a written statement of the reason(s) for the termination(s), the number and categories of the employees likely to be affected, and the period over which the termination(s) are intended to be carried out.

51 .12 Job search entitlement

During the period of notice of termination given by the employer in accordance with clause 50, an employee shall be allowed up to one day's time off Without loss of pay during each week of notice for the purpose of seeking other employment.

51 .13 Transmission of Business

(a) The provisions of clause 50.5 are not applicable where a business, either before or after the date of this agreement, transmitted from an employer (in this sub-clause called the transmitter) to another employer (in this sub-clause called the transmittee), in any of the following circumstances:

(b) Where the employee accepts employment With the transmittee which recognises the period of continuous service which the employee had with the transmitter and any prior transmitter to be continuous service of the employee with the transmittee; or

i. Where the employee rejects an offer of employment With the transmittee:

(c) in which the terms and conditions are substantially similar and no less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmitter; and

(d) which recognises the period of continuous service which the employee had with the transmitter and any prior transmitter to be continuous service of the employee with the transmittee.”

[6] Sections 738 and 739 of the Act provide:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

Background

[7] The Respondent is a cleaning company that held the contracts to provide cleaning services at several Commonwealth Government buildings located in Canberra.

[8] Sixteen members of the Applicant Union (the member employees) were employed by the Respondent as cleaners at different sites around Canberra (the relevant sites). The relevant sites were located at:

•  10-12 Mort Street;

•  4 Mort Street; and

•  50 Marcus Clarke Street.

[9] In October 2017, the Commonwealth Government entered into an agreement with Broadspectrum Pty Ltd (Broadspectrum) to provide property management services at the relevant sites (among others). The property management services provided to the Commonwealth Government by Broadspectrum at the relevant sites extended to the procurement and management of the site’s contracts for the provision of cleaning services.

[10] Broadspectrum communicated to the Respondent that it would be terminating their contracts to provide cleaning services at the relevant sites. Broadspectrum instead awarded the relevant contracts to a joint venture between Prompcorp Pty Ltd and Services Associates Pty Ltd (the incoming contractor), with the cleaning services to be undertaken by employees of Prompcorp.

[11] As a consequence of the termination of the contracts, six of the member employees subsequently ceased employment with the Respondent on 31 August 2018. The remaining ten member employees ceased employment with the Respondent on 30 September 2018.

[12] Up to the time of their termination and at all times relevant to this application, the affected employees were employed by the Respondent pursuant to the Agreement. Upon termination of their employment with the Respondent, the member employees were paid a base rate of $24.06 per hour.

[13] Subsequent to their termination, the following six member employees (the full time employees) were successful in gaining full time employment with the incoming contractor:

•  Tshering Choden

•  Loday Tshering

•  Maria Waldock

•  Maria Vaz

•  Karma Dema

•  Kezang Choden

[14] Subsequent to their termination, the following three member employees (the part time employees) were successful in gaining part time employment with the incoming contractor:

•  Yonten Galey

•  Steven Ortlepp

•  Nina Price

[15] Both the full time and part time employees (the relevant employees) were employed by the incoming contractor on a base rate of pay of $22.39 per hour and were subject to a six month probationary period.

[16] The Respondent accepted it was required to pay redundancy pay to the employees who were terminated and did not subsequently gain employment with the incoming contractor.

[17] However, the Applicant submits that the member employees employed by the incoming contractor are entitled to redundancy pay pursuant to clause 51 of the Agreement. The Respondent disputed this and submitted that the relevant employees are not entitled to redundancy pay due to their attainment of subsequent employment with the incoming contractor. The matter was the subject of two conferences before the Commission which did not resolve the dispute. The matter was listed for a directions hearing on 15 October 2018. Directions were issued on 16 October 2018 as follows:

1. The Applicant is required to file submissions in the Fair Work Commission, and serve a copy on the Respondent, by no later than 5.00pm on Friday 19 October 2018.

2. The Respondent is required to file submissions in the Fair Work Commission, and serve a copy on the Applicant, by no later than 5.00pm on Wednesday 7 November 2018.

3. The Applicant will provide an agreed statement of facts and question for arbitration to the Respondent by 5:00pm Monday 12 November 2018.

4. The parties will confer with each other and will file in the Fair Work Commission an agreed statement of facts and question for arbitration by 5:00pm Friday 16 November 2018.

[18] The parties confirmed that they agreed that the Commission should determine the dispute on the papers and no evidence was called by either party.

[19] Submissions were filed and the parties confirmed agreement to the following question for arbitration.

1. Is the employment acceptable alternative employment under the Asset Industries Pty Ltd and United Voice Clean Start Union Collective Agreement 2015 – 2018?

Applicant’s Submissions

[20] The Applicant submitted that, pursuant to s.119 of Part 2-2 of the Act, all national system employees have a legislative entitlement to redundancy pay under the National Employment Standards, which cannot be derogated from under an enterprise agreement.

[21] The Applicant submitted that clause 51.6 of the Agreement guarantees severance pay, in accordance with the outlined schedule, to employees of the Respondent who are terminated by reason of redundancy.

[22] The Applicant further submitted that clause 51.8 of the Agreement relevantly provides that the employers’ obligation to pay severance pay will not arise if the employer “obtains an acceptable alternative position” for an employee who is made redundant. 2

[23] The Applicant submitted that the Respondent did not obtain alternative employment for the relevant employees. Further, or in the alternative, the Applicant submitted that the Respondent did not obtain acceptable alternative employment for the relevant employees.

[24] In support of its submission that the Respondent did not obtain alternative employment for the relevant employees, the Applicant relied on the authority of the decision of the Full Court of the Federal Court in FBIS International Protective Services (Aust.)v Maritime Union of Australia. 3In FBIS, the Court (comprised of Jessup, Rangiah and Bromberg JJ) established that the test for discerning whether an employer has obtained alternativeemployment for employees who are facing redundancy and would be entitled to redundancy pay, requires the employer to demonstrate they have taken some active step to facilitate the employees’ offer of alternative employment.

[25] The Applicant noted that one of the relevant matters the Court took into account when determining whether an employer has satisfied the test is whether they have made an arrangement with the alternative employer to secure the transferring employees’ entitlements are maintained, including recognising their period of service with the former employer. The Applicant noted that evidence of such an agreement between a former employer and an alternative employer would be compelling evidence that the former employer obtained employment for the employees facing redundancy.

[26] The Applicant submitted that the fact an employee ceases employment with one employment and then commences employment with another is not sufficient to satisfy the test in FBIS. The Applicant submits that the test in FBIS requires some active step to be taken by the employer to ensure the employees facing redundancy would be employed by the alternative employer. The Applicant argued that this requires the Respondent to demonstrate that they ‘got’ or ‘acquired’ work for the relevant employees.

[27] The Applicant submitted that the Respondent has put forward no evidence to demonstrate it has satisfied the test in FBIS and thereby obtained alternative employment for the transferring employees. The Applicant submitted that the only action taken by the Respondent in relation to the alternative employment obtained by the relevant employees was to forward a list of the employees who worked at the relevant sites to the incoming contractor. The Applicant submitted that this is wholly insufficient evidence to satisfy the test in FBIS.

[28] The Applicant contended that in the absence of any further evidence, including the absence of an agreement of the kind outlined at paragraph [22] above, the Respondent has failed to demonstrate it obtained alternative employment for the relevant employees and is therefore liable to pay them severance pay pursuant to clause 51.6 of the Agreement.

[29] Notwithstanding its submission that the Respondent did not obtain alternative employment for the relevant employees, the Applicant submitted that clause 51.8 of the Agreement required the Respondent to obtain alternative employment that was acceptable within the definition outlined at clause 51.9(b) and 51.1(a) of the Agreement.

[30] The Applicant submitted that the employment obtained by the relevant employees subsequent to their termination by the Respondent was not acceptable within the definition outlined at clause 51.9(b) and 51.1(a) of the Agreement.

[31] The Applicant directed the Commission to clause 51.9(b)(ii) of the Agreement, which specifies that acceptable alternative employment does not include employment that is subject to a probationary period (my emphasis).

[32] The Applicant submitted that, due to the fact that the alternative employment the relevant employees obtained with the incoming contractor was subject to a probationary period, the alternative employment obtained by the employees was not acceptable within the definition outlined at clause 51.9(b) of the Agreement.

[33] The Applicant further directed the Commission to clause 51.1(a) of the Agreement, which defines an “acceptable alternative position” as a position with the “same or substantially similar hours, tasks and remuneration to the employee's original position.”

[34] The Applicant submitted that the relevant employees’ alternative employment position with the incoming contractor does not have substantially similar remuneration to that of the relevant employee’s original employment positions with the Respondent. The Applicant contended that the relevant employees’ remuneration for their alternative employment with the incoming contractor is not substantially similar (my emphasis) as their current base rate of pay is 6.94% per hour less than their previous base rate of pay for their employment with the Respondent. Consequently, the Applicant submitted that the alternative employment obtained by the relevant employees subsequent to their termination by the Respondent, was not acceptable within the definition outlined at clause 51.1(a) of the Agreement.

[35] The Applicant submitted that, notwithstanding its submission that the Respondent did not obtain alternative employment for the relevant employees; the Respondent did not obtain acceptable employment for the relevant employees. Consequently, the Applicant submitted that the Respondent is liable to pay the relevant employees severance pay, pursuant to clause 51.6 of the Agreement.

Respondent’s Submissions

[36] The Respondent submitted that, pursuant to clause 51.6 of the Agreement, it paid severance pay entitlements to the member employees who did not obtain alternative employment with the incoming contractor.

[37] The Respondent rejected the Applicant’s submission that it did not obtain acceptable alternative employment for the relevant employees.

[38] The Respondent submitted that it did obtain acceptable alternative employment positions for the relevant employees, within the definition of 51.1(a) and 51.9(b) of the Agreement. Consequently, the Respondent claims that it is not liable to pay the relevant employees severance pay, pursuant to clause 51.8(b) of the Act.

[39] The Respondent submitted that, in the circumstances, it has complied with its obligations under the National Employment Standards in s.119 of Part 2-2 of the Act.

[40] The Respondent contended that it did obtain alternative employment for the relevant employees in line with the test in FBIS.  4 The Respondent rejected the Applicant’s submission that the test established in FBIS requires an employer, through an arrangement with the alternative employer, to ensure that employees facing redundancy obtain alternative employment positions on the same or substantially similar terms. The Respondent further rejected that the decision in FBIS stipulates that, in order to avoid being liable to make redundancy payments, an employer must ensure that the entitlements and periods of service of employees facing redundancy are guaranteed and recognised by an alternative employer. The Respondent instead submitted that the precise wording of the test from FBIS requires an employer to produce evidence that they “assisted the employees to find alternative employment” and were a “a strong moving force towards the creation of the available opportunity”.

[41] The Respondent claimed that their actions in meeting with and handing over forms of documentation to the incoming contractor were the primary reason the relevant employees were offered alternative employment, asserting that the relevant employees would not have obtained further employment had the Respondent not taken this action. The Respondent therefore submitted that their actions were sufficient to meet the test in FBIS. Consequently, the Respondent submitted that they complied with their obligation to obtain alternative employment for the relevant employees, pursuant to clause 51.8(b) of the Act.

[42] The Respondent further submitted that the alternative employment obtained by the employees was acceptable within the definition of clause 51.9(b) of the Act. The Respondent submitted that it has no authority to direct the incoming contractor not to subject the relevant employees to a probationary period and it would be unreasonable for the Commission to find that it had an obligation to do so.

[43] The Respondent further submitted that the alternative employment obtained by the employees was acceptable within the definition of clause 51.1(a) of the Act. The Respondent submitted that the base rate of pay that the relevant employees were to be paid by the incoming contractor is 93.06% of their previous base rate of pay for their employment with the Respondent. The Respondent submitted that in the circumstances the remuneration the relevant employees are paid in their alternative employment position is substantially similar to the remuneration they were paid in their previous employment position.

[44] The Respondent submitted that they were able to obtain acceptable alternative employment positions for the relevant employees and hence, pursuant to clause 51.8(b) of the Act, are not liable to pay them severance pay.

Consideration

[45] It is notable that the submissions go beyond the agreed question for arbitration in that they address both the question as to whether the Respondent obtained alternative employment for the relevant employees, and also whether the Respondent obtained acceptable alternative employment which was the issue the agreed question was directed to. Despite the parties having put to the Commission that the dispute be resolved by answering the question put, as was noted in FBIS 5the matters set out in s.120(1) are jurisdictional facts for the exercise of the discretion in s.120(2).

[46] As provided in s.55 of the Fair Work Act 2009 (FW Act) an enterprise agreement must not exclude the NES or any provision of the NES. The Agreement itself notes at clause 7 that it is to be read in conjunction with the NES and if a term of the Agreement is detrimental to an employee when compared to a Standard in the NES, the Standard prevails over the Agreement. It is notable that the words at clause 51.8 of the Agreement and s.120(1)(b) are sufficiently similar as to have the same effect with regard to the obtains issue.

[47] Contrary to the Respondent’s submission, the Full Court of the Federal Court said the following regarding the obtains issue.

“19. With respect to the Full Bench in Clothing Trades, we consider it a distraction to introduce the issue of whether the employer was “a strong moving force towards the creation of the available opportunity.” To proceed in that way would be to introduce unnecessary complications into the connotation of an ordinary word in the English language. If someone comes into possession of something, either literally in the case of a chattel or figuratively in the case of a new legal relationship or other incorporeal benefit, we cannot understand how the question whether he or she “obtained” that thing would be answered differently depending on whether he or she, or someone else on his or her behalf, was a “strong moving force” in the events which led to the possession.

20. With respect to the Full Bench’s reliance on the Shorter Oxford, the present might be one of those rare occasions on which it is useful to refer to the corresponding full entry in the Oxford English Dictionary itself. Relevantly, that reads:

To come into the possession or enjoyment of (something) by one’s own effort, or by request; to procure or gain, as the result of purpose and effort; hence, generally, to acquire, get.

We would not regard the reference to “effort”, and to “purpose and effort” in this meaning as implying the existence of some kind, much less a strong kind, of “moving force” in bringing about the new state of possession referred to. They imply, rather, that the possession must be the result of the conscious, intended, acts of the person concerned, as distinct from, for example, coming into possession of something by gift or inheritance. Moreover, we cannot perceive any reason why what is described as the “general” connotation of the word – “to acquire, get” – should not be regarded as a perfect fit for the purposes sought to be achieved by the relevant provision in the standard award clause before the provision became the subject of legislation.

…

22. The 49 employees did obtain employment with ACG. It seems to be uncontentious that this employment was acceptable. But, on the facts referred to earlier in these reasons, we would not find that the applicant obtained the employment for those employees. It may have facilitated the opportunity for them to apply for employment with ACG, but what it obtained for them was something less than offers of employment which they could accept or decline as a matter of choice.

23. It was clear from the facts of the present case as set out by the Full Bench there was more that the applicant might have done to advance the prospects of any application which it proposed to make under the section…”

[48] The Respondent submitted that it informed Prompcorp Pty Ltd of the employees’ contact details, experience and years of service. It initiated forms of documentation to the incoming contractor in the hope that the employees would be awarded the jobs with the new contractor.

[49] As the Applicant has submitted the Respondent did not call evidence that it obtained the employment. For the reasons as summarised above in the Applicant’s submissions the Respondent has not made out from its submissions that it obtained the employment. The Respondents submissions at their highest amount to something less than having obtained the offers of employment.

[50] In relation to the agreed question, I have also concluded in favour of the Applicant, and found the answer to the question to be no. From the submissions it appears to be accepted that the employees would be required to serve a probationary period contrary to clause 51.9(b)(ii) of the Agreement, which specifies that acceptable alternative employment does not include employment that is subject to a probationary period (my emphasis).

[51] I am also not satisfied that the positions were the “same or substantially similar hours, tasks and remuneration to the employee's original position” as contemplated in clause 51.1(a) as the remuneration for the alternative employment with the incoming contractor was not substantially similar as the base rate of pay was 6.94% per hour less.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR702665>

 1   Submissions of the Applicant dated 22 October 2018 at [2]-[3].

 2 Ibid at [21].

 3 [2015] FCAFC 90.

 4 FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90.

 5 FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 para 21