United Voice v Serco Australia Pty Ltd
[2018] FWC 6503
•31 OCTOBER 2018
| [2018] FWC 6503 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
United Voice
v
Serco Australia Pty Ltd
(C2017/6326)
COMMISSIONER JOHNS | SYDNEY, 31 OCTOBER 2018 |
Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].
[1] In 1994 it was alleged that then Prime Minister Paul Keating once said “The best way to see Darwin is at 35,000 feet on the way to Paris.” 1 Having been to both cities, I disagree. 2 Darwin is a sophisticated city that has retained its relaxed charm. It is a modern and multicultural capital city, Australia's gateway to South East Asia and the treasured country to its traditional owners, the Larrakia people. However, notwithstanding its many advantages and attractions, Darwin remains a remote location.
[2] This decision is about whether Serco Australia Pty Ltd (Serco) should resume and continue to pay a Remote District Allowance (RDA) to its employees based in Darwin.
[3] The employees and Serco are covered by the by the Serco Immigration Services Agreement 2015 (Agreement). 3 The Agreement was approved by the Commission, on 10 September 2015. The Agreement passed its nominal expiry date on 31 December 2017. The employees are represented by United Voice.
[4] In the Agreement the RDA is to be found in clause 19(c) of the Agreement. That part of the Agreement is as follows:
“19. Allowances
(c) Remote District allowance. In addition to the rates of pay prescribed in clauses 16, and 18 of this Agreement, if an Employee is located at a Company designated remote district or centre, that Employee will receive a remote district allowance. The remote district allowance is a flat allowance and separate from an Employee's ordinary rate of pay. Further, this allowance would cease to apply if an Employee transfers from a remote district. The allowance will be paid pro rata fortnightly in arrears in accordance with the normal pay cycle.
Effective from the date of operation of this Agreement, the designated remote districts/centres are Christmas Island, and Wickham Point. The remote district allowance will be payable to all Employees working on Christmas Island, including permanent, part-time, specified term, casual and will also apply to Employees on secondment or working under fly in fly out arrangements.
For all other designated remote districts or centres the remote district allowance will only be payable to full-time, part-time or specified term Employees permanently located at that Company designated remote district or centre.
The respective allowances are:
From commencement of the first full pay period from the operative date of the Agreement.
• Christmas Island $7,239.97 per annum ($278.46 per fortnight)
• Wickham Point $7,225.90 per annum ($277.92 per fortnight)
From first full pay period commencing on or after 1 January 2016
• Christmas Island $7,457.17 per annum ($286.81 per fortnight}
• Wickham Point $7,442.68 per annum ($286.26 per fortnight)
From first full pay period commencing on or after 1 January 2017
• Christmas Island $7,658.52 per annum ($294.56 per fortnight)
• Wickham Point $7,643.63 per annum ($293.99 per fortnight)”
(RDA Clause)
[5] However, whilst the Agreement is relevant to the background of the dispute, this is not a dispute about the application of the Agreement. United Voice does not contend that the entitlement to be paid the RDA arises under the Agreement. Rather it is contended that the decision to cease payment of the RDA was not a reasonable exercise of managerial discretion. United Voice seeks relief in the form of an order reinstating the RDA and back-payment to when the payment ceased on 12 November 2017.
[6] Serco challenged the jurisdiction of the Fair Work Commission (Commission) to determine the dispute. On 25 May 2018 I decided that the Commission, as presently constituted, had jurisdiction to determine a dispute. On 12 June 2018 I provided my reasons for so deciding (Jurisdictional Decision). 4 In their final submissions Serco again submit that an order reinstating the RDA would be inconsistent with Agreement and offend against section 739(5) of the FW Act. For the reasons set out below it is unnecessary for me to further address that argument beyond the preliminary assessment in the Jurisdictional Decision.
The hearing
[7] The substantive hearing was conducted in Darwin on 7 August 2018. At the substantive hearing the:
a) Applicant continued to be represented by Mr S Bull, National Industrial Coordinator, United Voice.
b) Respondent continued to be represented by Mr P Brown, Partner, Baker McKenzie. I had previously given Mr Brown permission to represent the Respondent under section 596 of the Fair Work Act 2009 (FW Act).
[8] At the substantive hearing the following exhibits were received.
EXHIBIT NO. | DESCRIPTION |
A1 | Bundle of Letters from the Applicant (received at the jurisdictional hearing) |
2 | Agreed Statement of Facts |
3 | Chronology by United Voice |
4 | Outline of Submissions From United Voice dated 29/06/2018 |
5 | Amended Statement of Aaron Herbig dated 25/06/2018 |
6 | Statement of Michael Trigar dated 29/06/2018 |
7 | Respondent's Outline of Submissions dated 24/07/2018 |
8 | Statement of Alana Fullarton dated 23/07/2018 |
9 | Additional Statement of Alana Fullarton dated 01/08/2018 |
10 | List of Employees |
11 | Email with Attachment, Item 6 from Notice to Produce |
12 | Bundle of Emails dated 18/09/2017 |
13 | Bundle of Pay Slips for Mary-Anne Verden |
14 | Email Chain dated 19/10/2016 |
15 | Email From Tim Harris to Various Recipients dated 27/10/2016 |
16 | Employment Status Change Form for Aaron Herbig |
[9] On 17 August 2018 the parties filed final submissions. In coming to this decision I have had regard to the tendered exhibits, the evidence received at the hearings and the final submissions.
Findings of fact
[10] On 7 August 2018 the parties jointly filed in the Commission an Amended Agreed Statement of Facts. United Voice also filed a detailed chronology (Exhibit 3) that, other than in respect of one matter, Serco accepted. Having regard to the Amended Agreed Statement of Facts, the Exhibit 3 and the evidence at the hearing I make the following findings of fact:
1. The Applicant is and was at all material times an employee organisation within the meaning of that term for the purposes of, and registered under, the FW Act and capable of representing, and entitled to represent the industrial interests of persons employment in immigration detention facilities in the Northern Territory and elsewhere in Australia.
2. The Respondent is an employer in terms of the FW Act and manages and operates immigration detention facilities on behalf of the Commonwealth Government (Commonwealth) on mainland Australia and Christmas Island.
3. In about 2009, the Respondent was appointed by the Commonwealth as the contractor to run immigration detention facilities on mainland Australia. The Respondent continues in this role.
4. From about 8 December 2011 until 31 October 2016, the Respondent managed and operated an immigration detention facility located at Wickham Point referred to as the Wickham Point Immigration Detention Centre on behalf on behalf of the Commonwealth.
5. From May 2013 until 31 October 2016, the Respondent also managed and operated an alternative place of detention (APOD) at Wickham Point on behalf of the DIBP. Both the Detention Facility and APOD located at Wickham Point are collectively referred to in this decision as ‘Wickham Point’.
6. On 17 September 2009, the Serco Immigration Detention Centres Agreement 2009 (2009 Agreement) commenced operation. The 2009 Agreements made no mention of Wickham Point as a location where a RDA was payable.
7. On 20 January 2012, Commissioner Roe of the Fair Work Commission approved the Serco Immigration Services Agreement 2011 which was the subject of a ballot in November 2011 (2011 Agreement). The Serco Immigration Services Agreement 2011 included at paragraph 19(c) a Remote District Allowance for designated remote districts / centres, including:
a) Christmas Island;
b) Darwin;
c) Wickham Point; and
d) Curtin.
8. Wickham Point commenced operation in late November 2011. Employees engaged by the Respondent at Wickham Point within the classifications of the Serco Immigration Services Agreement 2011 (approved by the Fair Work Commission on 20 January 2012) were paid the remote District Allowance for Wickham Point contained at paragraph 19(c) of the Serco Immigration Services Agreement 2011 on and from the fortnightly pay period ending 12 February 2012.
9. On 7 August 2014, Commissioner Bissett approved the Serco Immigration Services Agreement 2014 (the 2014 Agreement). Paragraph 19(c) of the Serco Immigration Services Agreement 2014 dealt with Remote District Allowance and was in identical form to clause 19(c) of the Serco Immigration Services Agreement 2011, except for the dollar value of the respective allowances. The only material change between the 2011 Agreement and the 2014 Agreement with respect to the Remote District Allowance was:
a) the Darwin allowance moving from $6,240 per annum to $6,575.90 per annum; and
b) the Wickham Point allowance moving from $6,240 per annum to $6,575.90 per annum.
10. On 10 September 2015, Commissioner McKenna approved the Serco Immigration Services Agreement 2015 (the 2015 Agreement). The 2015 Agreement deleted the previous references in the 2011 and 2014 Agreements to the locations of Darwin and Curtin for the purposes of the Remote District Allowance.
11. On 9 May 2016, the Respondent wrote to the Applicant and among other things informed the Applicant of the closure of Wickham Point later in 2016 and the intention of the Respondent to implement redundancies at Wickham Point.
12. From about 7 June 2016, the Respondent implemented redundancies at the Wickham Point facility.
13. On 17 September 2016 Michael Trigar accepted a transfer of employment from Wickham Point to Darwin. I am content to find that other Serco employees accepted similar offers. On 4 November 2016 he received a contract variation. He accepted that on 12 November 2016. Neither the offer or contract expressly refer to the RDA.
14. On 31 October 2016, Wickham Point closed. The closure of Wickham Point was a redundancy event and most staff located at Wickham Point were made redundant. A small number of persons employed by the Respondent elected to transfer their place of employment to an immigration detention facility in Darwin (Darwin facility) that the Respondent continued to manage and operate on behalf of the Commonwealth.
15. Also on 31 October 2016 Ms Fullarton sent an email directing that the transferring employees’ “work location” be “identified as the Dawin (sic) Hub” with effect from 1 November 2016. This was aimed at reducing other allowances (e.g. travel allowances) under the Agreement. Surprisingly, for someone so senior, Ms Fullarton did not turn her mind to the RDA.
16. After the closure of Wickham Point, the Respondent engaged staff for its Darwin facility who had not previously worked at Wickham Point. The Darwin facility subsequently became the Northern Australian Alternative Place of Detention (NAPOD).
17. Despite the cessation of the RDA entitlement under the Agreement, the Respondent continued to pay to transferred employees at the Darwin facility and later the NAPOD; the RDA.
18. On 14 November 2016 Paul Simon, the Centre Manager – Darwin Hub, sent an email to a number of employees with a copy to senior managers within Serco about Variation letters that had been sent out in early November 2016. He wrote,
“Your employment contract remains current in all things other than the actual location. You would be aware that unless we change your physical/agreed location of employment, Serco is required to pay you for certain allowances under the EA.
….
The letter you have received is therefore not a new contract, but a variation to your current contract that is necessary to ensure the correct work location is agreed. Our current arrangement with the ABF is for us to operate out of the Mecure Resort. This is not a centre, so we have referred to it as the Darwin Hub for convenience only. Your entitlements will not be diminished in any way by this.” (my emphasis)
19. In April 2017 Aaron Herbig (and presumably other employees who commenced employment after the closure of Wickham Point) received an offer of employment. That offer of employment made no statement about the payment of the RDA. It says that the 2015 Agreement applies but is not incorporated into the contract. By that time that the offer of employment was made to Mr Herbig there was no entitlement to the RDA under the Agreement. However, Serco paid it to him.
20. On 18 September 2017 an employee of Serco within the payroll and administration department based in Perth raised a concern that Serco had been paying the RDA to a number of Darwin based employees (not employed at Wickham Point). A flurry of email exchanges ensued. After some internal consideration it was resolved to stop paying the RDA.
21. On or about 12 November 2017, the Respondent ceased paying the RDA to all Darwin-based employees who had previously been paid the allowance. Some staff that had been receiving the RDA, whilst performing duties at the Darwin facility, subsequently received a letter from Respondent noting:
“As discussed, this letter confirms that due to an administrative error, you have been incorrectly receiving the WPIDC district allowance since your transfer date (or employment) to the NAPOD, this has resulted in an overpayment to you of (amount).
As this error was as a result of the actions of the company, Serco has opted not to recoup monies overpaid.
Please note that this error will be corrected immediately and the WPIDC allowance will cease effective from 12 November 2017.
We sincerely apologise for this error regret (sic) any inconvenience caused to you.”
22. The employees (the subject of the dispute) fall into two categories:
• those who elected to transfer their place of employment from Wickham Point to the Darwin facility; and
• employees engaged prior to 1 November 2017 at the new facility in Darwin.”
The Articulated Questions
[11] United Voice proposed the following Articulated Questions:
“1 Is the Respondent required to continue to pay Darwin-based employees who accepted transfers from Wickham Point on the promise that their terms and conditions will be maintained a RDA?
2. Further, does a similar obligation exist to continue the payment of a RDA for employees engaged after the closure of the Wickham Point facility at the Darwin facility and paid the RDA on engagement?”
Jurisdiction
[12] Section 739 of the FW Act empowers the Commission to deal with certain disputes under enterprise agreement dispute settlement terms.
[13] Clause 739 provides that,
“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.”
[14] The Agreement contains a dispute resolution clause. It is clause 45. It provides as follows:
“(1) Subject to the no extra claims commitments of the parties to this agreement, if a dispute relates to:
(a) a matter arising under the agreement; or
(b) the National Employment Standards;
(c) any other matter which pertains to the employment relationship between employees and the company excluding any matter relating to the termination of an employee’s services.”
(my emphasis)
[15] In the Jurisdictional Decision I held that having regard to the information in the Form F10 application and submissions of the parties I was not satisfied that an affirmative answer to the Articulated Questions would offend against section 739(5) of the Fair Work Act 2009 (FW Act).
Final submissions
[16] In addition to relying upon their earlier submissions made on 5 May 2018, 23 May 2018 and 29 June 2018, United Voice submitted the following:
“1. …
2. The word ‘promise’ which appears in the 2 articulated questions that the Commission has asked for in relation this dispute has a variety of meanings. The New Shorter Oxford English Dictionary, 3rd Edition, reprinted 1993, relevantly defines a promise as:
A declaration or assurance by which a person undertakes a commitment to do or refrain from doing a specified act or gives a guarantee that a specified thing will or will not happen, (or) be done; and
Indication of a future event or condition; esp. something giving strong or reasonable grounds for the expectation of future achievement or good results;
3. A promise connotes a spectrum of behaviour that encompasses precise guarantees to more general expectations concerning future conduct.
4. A promise has no legal significance in isolation unless it is under seal or for consideration. A promise will in the context in which it is given be significant and may form the basis of a contract, the way to assess a person’s failure to do the thing promised and more generally create prospective expectations ‘you have not lived up to your promise’.
5. The Commissioner here is acting as a private arbitrator of a dispute concerning an exercise of managerial discretion that sits outside the relevant industrial instrument 5. We are not asking the Commission to determine whether the decision to cease payment of the remote district allowance (‘RDA’) in November 2017 to a cohort of agreement covered employees was in accordance with the Agreement or that there is a continueing entitlement under the Agreement to the payment of the allowance. The Commission is being asked to arbitrate whether the decision to cease the payment of the RDA was a reasonable exercise of managerial discretion and then determine the consequences of any finding that the decision was unfair or unreasonable. The Agreement’s dispute clause then allows for the making of a ‘determination that is binding on the parties’.
6. The Respondent has presented it case on the basis that for precisely 12 months which traversed a significant and complex restructure of its contract service obligations in the Northern Territory it made an error which I did not notice and paid the RDA to transferring and new employees (‘the Employees’) it retained and engaged to work at the successor facility 6 in the Northern Territory after the closure of Wickham Point. The Respondent’s explanation is that it paid the Employees the RDA in error is incredible.
7. The Respondent paid the allowance in line with its industrial rational namely as an inducement to retain labour when that labour had some scarcity. In the context of the Employees making a choice to remain employed with the Respondent in the Northern Territory, the Respondent made representations and did things that clearly indicated to the Employees that if you stay, RDA will be paid (or will not be taken away).
8. If the payment of the RDA to the Employees can in any way be characterised as a mistake, it was a highly fortuitous mistake that at least from the perspective of local managers who had to manage the closure of Wickham Point and the transition to a much smaller Darwin facility.
Utility of the RDA
9. The Respondent’s only witness was Ms Alana Fullarton, Regional People and Capability Manager- West. Ms Fullarton was the line manager of the managers that managed the transition from Wickham Point to the NAPOD in 2017. We were provided with no real explanation as to why the Respondent did not present any evidence from an employee who was actually involved in the closure of Wickham Point and transition to the NAPOD.
10. Ms Fullarton confirmed the utility of the RDA as an aid in managing labour shortages and disruption caused by a major redundancy event:
Bull: A reason to pay a remote district allowance is that it's done by the employer to induce labour to move to some isolated or remote area or to assist the employer retain a person in that area. You'd agree with that proposition?
Fullarton: Yes.
Bull: The allowance is very much something which can be of great use to an employer because it facilitates and maintains its labour force in a particular area?
Fullarton: Yes. 7
…
Bull: Detention work is somewhat specialised, you'd agree with that?
Fullarton: Yes.
Bull: You do need to retain and have experienced staff?
Fullarton: Yes.
…
Bull: You'd agree that it's important for the smooth running of a facility, big or small, to have some experience staff within the workforce?
Fullarton: Yes.
Bull: That it would, in fact, be very dangerous for an employer such as Serco to have the entire facility where there were no experienced staff. You'd agree with that?
Fullarton: Not ideal. 8
11. Ms Fullarton further confirmed that large redundancy events can be a ‘difficult time’ 9 and that if the Respondent had ceased paying the staff it retained the RDA the job of maintaining services for the Commonwealth in the Northern Territory would have been more difficult: ‘it would have made it difficult but more impossible.’10 Ms Fullarton further confirmed that the best people for the Respondent to retain were experienced staff from Wickham Point11 ‘the best alternative from the perspective of the company’12; rather than bringing experienced staff from interstate which would have been expensive.13
12. Then inconsistently Ms Fullarton states ‘the remote district allowance was paid in error … it wasn’t paid deliberately to retain those people.’ 14 Companies are not conscious of things but their officers and employees are. Ms Fullarton may be giving truthful evidence when she says from her perspective the payment of the RDA was a mistake but the Respondent has failed to adduce any evidence from its employees who might be expected to be able to assist the Commission as to the credibility of the characterisation of the payment of the RDA as a mistake. The Respondent has hide behind a senior manager suitably distant from relevant facts. Accordingly the staff the Respondent wanted to retain were paid an allowance that notionally they would not be entitled to if retained to do the same work in the same region albeit under arguably more difficult and uncertain circumstances.
13. Ms Fullarton clearly states ‘I did not turn my mind to the remote district allowance at all.’ 15 Ms Fullarton needs to be taken at her word. Namely the RDA was a matter that she gave no thought to, did not include the possibility in her planning or management in involvement in the transition from Wickham Point to the NAPOD and the issue only entered her consciousness when Suzanne Moody alerted her to the fact that a group of the Respondent’s employees were receiving the payment in September 2017.16 The Respondent’s case is that a senior human resources manager ‘forgets’ about a significant allowance and ignores all prompts to consider it. The fact that Ms Fullarton essentially presents herself as a witness who until September 2017 knew nothing means that she is of limited utility in assisting the Commission in determining whether other managers of the Respondent were aware of the allowance being paid and or condoned the payment for sound management reasons. One has to query why the Respondent has chosen Ms Fullarton as its only witness.
14. Paul Simon, a manager based in Darwin at the time of the closure of Wickham Point who became the centre manager of ‘Darwin Hub’ and the ‘manager left standing in the Northern Territory’ 17 and still ostensibly the Respondent’s Darwin based manager was not called by the Respondent to give evidence.
15. Mr Simons was the author of a significant email sent on 14 November 2016 to ‘the remainers’ and would have clearly been the most relevant witness that the Respondent could have called to assist the Commission as to the reasons why the Respondent continued to pay Darwin based staff the RDA after Wickham Point closed. The Respondent gave no explanation why it did not call Mr Simons other than ‘as the cards have fallen today with witnesses’ 18 Mr Simons was not available. The failure of the Respondent to present any evidence concerning Mr Simons is significant and casts doubt on its attempt to characterise the continued payment of the RDA as an administrative error.
16. The email exchange 19 that is precipitated by Suzanne Moody’s discovery of the ‘mistake’ is significant and does not make any mention of an error or a mistake. The discussion is premised on there being no entitlement to the payment under the Agreement. The email of Colin Graham of 18 September 2017 describes the Respondent’s payment of the RDA to the Employees in terms of ‘custom and practice’ which is inconsistent with the characterisation of the payment as an error. The failure of the Respondent to present any evidence from Ms Moody also does not assist its case.
17. What is clear is that the payment of the RDA to the Employees had clear utility for the Respondent. It assisted the Respondent maintain a pool of experienced loyal staff in the Northern Territory to deal with what was a complex moment.
18. Despite Ms Fullarton’s protestations that the continued payment of the RDA was a mistake, the Commission should find that the Respondent at least condoned the continued payment of the RDA and payment provided real utility to the Respondent. The failure of Respondent to call a line manager ‘on the ground’ at the time of the closure of Wickham Point and the transition to the NAPOD deprives the Respondent’s case of any credibility. The Respondent choses to rely on a witness from interstate with no real experience of events relevant to the dispute rather than call the local manager who is presumably available in the city where the hearing took place.
Location
19. Part of the Respondent’s case is that the RDA was paid due to an ‘error with respect to the three transferring employees at payroll level … to amend the individual’s personal sub-area code in the payroll system at the point that the individual ceased to be located at Wickham Point and commenced at Darwin hub.’ 20 The characterisation of the payment as a payroll error is problematic in light of the clear attention the Respondent paid to the administrative location of its employees.
20. First, the payment of an RDA is not a default option. After Wickham Point closed, only 1 location under the Agreement was associated with payment of a RDA: Christmas Island. Presumably it would have been a fairly obvious mistake and easily detected if a group of employees not located on Christmas Island were receiving such an allowance. The unconvincing explanation of Ms Fullarton was that the Employees continued to pay the RDA because it was ‘set up incorrectly.’ 21
21. The mistake was repeatedly made. It was made enmass with the transfer of employees on 31 October 2016 to the Mercure Resort in the bulk coding of the initial transfer which also created the new location of Darwin Hub, then repeatedly made when the Respondent hired new permanent staff at the NAPOD such as Aaron Herbig.
22. There is ample evidence that the Respondent in fact paid a great deal of attention to the location of the Employees. The bulk transfer document and related correspondence concerning the Employees clearly indicates that the location of the Employees was thoughtfully changed from Wickham Point to ‘Darwin Hub.’ On 31 October 2016, Ms Fullarton sends an email the Respondent’s payroll team ‘capturing bulk changes required to finalise on-going employment for the affected people on the list. The primary actions required … and to provide a contract variation for each employee with a new work location (their emphasis) identified as Darwin hub.’ 22 The change of location is paramount and approved and initialled by Paul Simons ‘centre manager’.
23. A number of allowances and entitlements accrued to employees under the Agreement in virtue of where they are located. It was therefore in the Respondent’s interest to definitively deal with the new location as an industrial fact. Accordingly, the Respondent took great care to designate Darwin hub as a distinct home location quickly and with intentionality so as to clarify it did not have to pay employees located there travel allowance, a meal allowance and a working away from home allowance:
Bull: So, the priority of locating the Mercure Resort as Darwin Hub, worked for Serco because once you made it a home base, certain working away allowances you didn't have to pay under the agreement. That's correct?
Fullarton: That's correct.
Bull: So back to location. Locating this workplace as a Darwin Hub was very much something which was focused on in the nitty gritty of allowances, because by making it a home base you suddenly didn't have to pay a whole array of working away allowances. Is that correct?
Fullarton: That's correct. 23
The Promises
24. The Respondent did a number of things that reasonably can be construed as promises to the Employees that they would continue to receive the RDA. On any reasonable assessment the Respondent gave the Employees strong or reasonable grounds for the expectation of the future payment to them of an RDA should they chose to work at the NAPOD.
25. After 31 October 2016 and for more than 12 months after this date, the Respondent paid the RDA to the Employees. The allowance was paid in fortnightly instalments and appears on payslips as a separately identified payment. This is conduct we say in the absence in any clear statement disentitling the Employees to the RDA that grounds an estoppel in pais.
26. The Respondent failed to inform its staff that it retained in the Northern Territory that the RDA would not be paid or make any clear or definitive statement concerning whether or not employees would be entitled to an RDA. Ms Fullarton admitted remote or district allowances were a part of the industrial culture of the Northern Territory. 24
27. The Respondent made a number of explicit written statements to the Employees to the effect that ‘nothing to do with their terms and conditions would change.’ The proformas ‘Variation to Letter of Employment’ that all the transferring employees signed noted ‘all other terms and conditions set out in your letter of employment will remain unchanged.’
28. The effect of the statement ‘nothing would change’ was taken by Michael Trigar as meaning his remuneration would not change ‘I signed it (the variation letter) in the belief that … everything I’m doing now is going to be the same, nothing’s going to change.’ 25
29. The location changed but the Respondent continued to pay what was ostensibly a location based entitlement:
Bull: You would agree when a statement like that about, and "The contract of employment remains a contract of employment", and it has got the phrase, "Remain the same", then something happens, a location changes, and they continue to get paid a particular allowance, that that might lead someone to believe that there is a continuing entitlement to that allowance?
Fullarton: Yes. 26
30. On 14 November 2016, Paul Simon sends an email to all employees the Respondent has retained in the Northern Territory and a number of senior managers. The email indicates that Wickham Point is now closed and that there are no longer any formal ABF approved centres in the Northern territory. The Respondent admits that the email is intended as in effect an attempt to calm the remaining staff in the Northern Territory and say that ‘everything is OK, stick with us’. 27
31. The email further notes that the employees’ ‘employment contracts remain current in all things other than the actual location.’ Already at this stage, the Mercure Resort’s location which becomes the NAPOD is a home location and the email seeks to reassure employees located there that they will receive a meal and travel allowances if required to work elsewhere.
32. Mr Simon tells the staff located at the Mercure Resort: ‘Your entitlements will not be diminished in any way by this.’ This is a less ambiguous statement than that contained in the variation letters. The statement that your entitlements will not be diminished speaks to what is actually paid. This statement is important in light of the amount of the RDA ($7,643.74 per annum), the proximity of the statement to the closure of Wickham Point and that the statement is made when there is a new home location for the addressees and around the time that the first pays will be made after the disappearance of Wickham Point as a location and entitling criteria for the allowance. Ms Fullarton admits that an employee who read the email of 14 November 2016 would have assumed that they would continue to receive an RDA at the new Darwin hub. 28
33. The other addressees of the email were all senior managers of the Respondent and they all uniformly chose not to correct what was an obvious possible interpretation of email. Ms Fullarton’s evidence is again incredible and suggests the Respondent’s senior managers didn’t know that there was a Wickham Point RDA, didn’t care or didn’t read the email.
34. The fact that some of the Employees had already signed variations letters by 14 November 2016 is not particularly significant. The email is clearly demonstrating the policy of the Respondent which we can assume existed before the email namely that it wished to reassure those employees it retained that the RDA would continue to be paid indefinitely. The representation is also a promise to the entire workforce which in terms of this dispute is the relevant level of granularity.
35. We used the phrase ‘Nelsonian blindness’ during the hearing to describe the managers of the Respondent’s ‘black spot’ when it came to the Employees being paid $293.63 a fortnight for a year in circumstances where they had no entitlement to the money. Failure to make enquiries in relation to things that one should reasonably have some curiousity about has long been held as basis to infer actual knowledge. In Pereira v Director of Public Prosecutions 29the High Court in the context of the more onerous criminal standard of proof noted ‘the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter.’30
A binding determination
36. The Commission should find that the decision of the Respondent to cease payment of the RDA to the Employees on 12 November 2018 was not a proper exercise of managerial discretion because it was inconsistent with its promise to the Employees that it would continue to pay them the RDA should they continue their employment with the Respondent in the Northern Territory. It is important to recall that the transferring employees made a decision to be loyal to the Respondent and forgo redundancy pay when there was real uncertainty whether there would be any permanent facility in Darwin or where it would be.
37. As noted earlier and particularly in our submission of 23 May 2018, the jurisdiction that is being exercised here is one that does allow managerial discretion to be reviewed and modified. This is a feature of the parties’ agreement through the disputes clause to give to the arbitrator the power to resolve disputes and making a binding determination.
38. It is an exceptional thing for an employer’s ‘right’ to manage its own affairs to be interfered with but here there is a good reason for the Commission to make some determination that modifies the decision of 12 November 2017 to cease paying the RDA to the Employees.
39. The decision is arbitrary and unreasonable. Clear promises were made to the workforce. The Respondent benefited from the fact that the RDA was paid at a critical time when there was disruptive change in its service obligations in the Northern Territory. The Respondent ceases to pay the RDA after the transition has taken place and the new facility is established. Further the Employees are in a sense trapped and have nowhere to go.
40. Even on the Respondent’s case, the decision to cease the payment is unusual and results from its failure to notice that for 12 months that it paid permanent staff based in Darwin a RDA.
41. The Respondent is a large and sophisticated facilities management company. It presented no evidence that payment of the RDA was presenting it with any hardship or that continuation of the payment would be problematic. Its choice to stop payment appears to be entirely motivated by its view that it is not obliged to pay this group the RDA and that it is a saving it can make.
Remedy
42. The agreement provides for the making of a ‘determination that is binding on the parties.’
43. The payment of the RDA should be reinstated with back pay for the Employees.
44. In the alternative, there are other determinations that the Commission might make in resolution of this dispute. A finding that the decision of the Respondent was arbitrary and unreasonable is itself a determination of sorts but should be accompanied by some consequential determination concerning compensation. At the time Wickham Point was closing, the Respondent was prepared to pay $5,000.00 to any permanent employee who transferred to another location. This indicates clearly that the Respondent placed some premium on the retention of experienced staff.”
[17] On 20 August 2018 United Voice provided the Commission with a copy of the decision in United Voice v Serco Group Pty Ltd [2018] FCCA 2190. In short Judge Young ordered that the RDA should have been paid to employees while on annual leave. Accordingly, when the employment of the employees ended the RDA was also payable to them. While interesting it is not immediately apparent how the decision assists in the present matter.
[18] Serco submitted that,
“Applicant Union Evidence
2. The Applicant Union's case at final hearing of the matter included:
• the Statement of Michael Trigar dated 29 June 2018 (Exhibit 6);
• the Statement of Aaron Herbig dated 25 June 2018 (Exhibit 5); and
• the Amended Agreed Statement of Facts dated 7 August 2018 (Exhibit 2).
Respondent's Evidence
3. The Respondent's case at final hearing included:
a. the Statement of Alana Fullarton filed in the Proceedings and dated 23 July 2018 (Exhibit 8);
b. the Additional Statement of Alana Fullarton dated 1 August 2018 (Exhibit 9); and
c. the Amended Agreed Statement of Facts dated 7 August 2018 (Exhibit 2).
Articulated Questions
4. The matter proceeded at the final hearing before the Fair Work Commission as an arbitration pursuant to the terms of the Serco Immigration Services Agreement 2015 (the 2015 EA) and s739 of the Fair Work Act, on the basis of the two following agreed Articulated Questions:
The First Articulated Question
"i. Is the Respondent required to continue to pay Darwin based employees who accepted transfers from Wickham Point on the promise that their terms and conditions would be maintained, a remote district allowance (Remote District Allowance)?"
The Second Articulated Question
ii Further, does a similar obligation exist to continue the payment of a Remote District Allowance for employees engaged after the closure of the Wickham Point facility at the Darwin facility and paid the Remote District Allowance on engagement?"
Submissions re First Articulated Question
5. The First Articulated Question is informed by the evidence of Mr Michael Trigar (Exhibit 6).
6. With respect to the evidence in chief of Mr Michael Trigar, it is the submission of the Respondent that:
a. there is no content in the Statement of Michael Trigar (Exhibit 6) that references any claim that he accepted a transfer from Wickham Point to the Darwin Hub on terms and conditions, other than the variation to the terms and conditions of his contract of employment that related exclusively to the change in location of his employment; and
b. to the extent that Mr Trigar's evidence in chief makes reference to any "promise", the only evidence before the Commission was that Mr Trigar was "offered a transfer to a new centre in Darwin" (paragraph 16, Exhibit 6). This offer was accepted by Mr Trigar and his Contract of Employment varied on 12 November 2016.
7. With respect to the cross examination of Mr Michael Trigar, the evidence before the Commission is:
a. Mr Trigar stated that prior to his acceptance of the offer of permanent employment at Wickham Point in or around August 2015, he did not receive and had no entitlement to the payment of the Remote District Allowance (Transcript PN368 to PN371);
b. Mr Trigar acknowledged that he did not receive the benefit of the Remote District Allowance prior to August 2015 because he was not entitled to the Remote District Allowance under the terms of any Enterprise Agreement (Transcript PN372);
c. Mr Trigar accepted that his Contract of Employment (that evidenced his change in status from casual to full time employment) was the document referred to as Attachment AF5 to the Statement of Ms Alana Fullarton (Exhibit 8), that being a document described as an "Offer of Employment - Detainee Service Officer" dated 23 October 2015 (the Contract of Employment) (Transcript PN381 to PN382);
d. Mr Trigar accepted that his Contract of Employment contained the following features:
i. a clause that any variation to the Agreement would be of no force or effect unless it was reduced to writing and signed by the parties (Transcript PN404 and PN406); and
ii. an acknowledgement that the Serco Immigration Services Agreement 2015 will apply to his employment but would not form part of the agreement (Transcript PN399-403 and 439-440); and
iii. a clause to the effect that the Agreement superseded and excluded any prior or collateral negotiation, understanding, communication, representation or agreement by or between (Mr Trigar) and the Company about (his) employment (Transcript PN441).
e. Mr Trigar accepted that his Contract of Employment was varied at the point of time that he read and signed a letter dated 4 November 2016 described as a "Variation to Letter of Employment" (Annexure AF17 to the Statement of Ms Fullarton) (the Variation Letter). The Variation Letter was signed and returned to the Respondent on 12 November 2016;
Transcript Reference
PN412 You were at Wickham Point at the time you received this letter?
PN413 And it's titled, "Variation to letter of employment", yes? --- Yes.
PN414 You remember signing that document, did you, sir, on 12 November 2016? --- I did sign it.
PN415 And this document varies the first document that I gave to you which is the letter of 23 October 2015, doesn't it? --- Yes.
PN416 Remember a moment ago you said that your understanding of the document dated 23 October 2015 is that it would not change, or words to that effect? --- Yes.
PN417 I then took you to the variation clause. Now I'm putting to you with the benefit of 4 November document in front of you, sir, that the 4 November document varies your employment contract, doesn't it? --- It varies the location.
PN418 Yes. If you were to change the location that's a variation, isn't it? --- Yes.
PN419 And locations are very important within the enterprise agreement because depending upon your location that determines various benefits and allowances, doesn't it? --- It can do.
Mr Trigar acknowledged that the words in his Contract of Employment "all other terms and conditions as set out in your letter of employment will remain unchanged" was a reference to the letter dated 23 October 2015 and that the only thing that had changed by the acceptance of the Variation Letter was his location (Transcript PN428 to PN429).
Was there a "promise"?
8. With specific reference to the Remote District Allowance contained in the Serco Immigration Services Enterprise Agreement 2015, there is no evidence before the Commission that amounts to any representation by Serco or "promise" by or on behalf of Serco as to maintenance of this benefit.
9. At the point of formation of the Contract of Employment in 2015, the evidence of Mr Trigar was as follows:
Transcript Reference
PN443 So I take it, sir, that prior to you signing on 5 November 2015 your contract of employment, no one had represented anything to you about receiving the remote district allowance, had they? --- Prior to that letter?
PN444 Yes? --- Dated 4 November, no.
PN445 So you understood, didn't you, that the only source, the only way that you could get the remote district allowance was if your enterprise agreement provided for that benefit? --- Yes.
10. With reference to the subsequent Variation of the Contract of Employment on 12 November 2016, the evidence is as follows:
Transcript Reference
PN474 It's fine. Now, sir, in your discussions about being redeployed to Darwin, or somewhere in Darwin, if someone had made a comment to you about the remote district allowance or the preservation of the existing remote district allowance when you moved to Darwin, you would have remembered that, wouldn't you? --- Yes.
PN475 And you would have remembered that and you would have put it in your statement, wouldn't you? --- Yes.
PN476 So do I take it, sir, that the fact that there's nothing in your statement where a person from Serco actually speaks to you about the remote district allowance or makes a comment about the remote district allowance, I'm going to assume that because it's not in your statement no such conversation occurred, did it? --- No.
11. The Respondent submits that the only representation made to Mr Trigar prior to his "transfer" to the Darwin Hub in November 2016 was the reference in the letter dated 4 November 2016 in the following terms:
"All other terms and conditions set out in your letter of employment will remain unchanged" (Our emphasis)
This representation referred exclusively to the Contract of Employment and, as such, did not include the Remote District Allowance.
Transcript Reference
PN483 And you agreed with the proposition, sir, that the benefits under the enterprise agreement do not form part of that contract? --- Yes.
PN484 So what I'm going to put to you, sir, is that when my client says, "All other terms and conditions set out in your letter of employment will remain unchanged", that is the letter of 23 October 2015, varied only for one important issue which was the change of location, correct? --- Correct.
PN485 And, sir, that document makes no reference at all to the remote district allowance? --- Correct.
PN486 So, sir, how do you say that is a term and condition of your employment pursuant to your employment contract? --- Because I don't carry this around with me. So when this was given to me and I signed it, when I read, "All other terms and conditions set out in your letter of employment remain the same", obviously I assumed that the conditions I worked in one the day with the benefits and my rate of my pay were all to do with that. That's what I was - that's what I believed.
PN487 But, sir, the sentence that you refer to, the sentence that you rely upon, it doesn't say that. It refers back to a letter of employment which we all agree is the letter of 25 October 2015? --- Yes, I agree.
PN488 Would you agree it was probably a misunderstanding on your part? --- We could put it a lot of ways. Like I said, I don't carry this around with me. I didn't have it on me at the time. So when I was given this letter I signed it in the belief that, well, everything I'm doing now is going to be the same, nothing's going to change.
PN489 But you heard nothing from the lips of anyone from Serco? --- Of course not.
PN490 I should finish the question. You heard nothing from the lips of anyone from Serco to do with anything at all to do with the remote district allowance, correct? --- Correct.
12. With respect to the notion of any putative "promise" (as referred to in the First Articulated Question), the evidence of Mr Trigar in cross examination was as follows:
Transcript Reference
PN494 THE COMMISSIONER: I think, in fairness, I think the question is entitled to be asked.
PN495 MR BROWN: Just in fairness to the witness now, the question that I was - you heard nothing from the lips of anyone from Serco about the preservation of the remote district allowance, did you? --- No.
PN496 No one from Serco said anything that was a promise in relation to the preservation of the remote distract allowance, did they? --- No.
PN497 There was no such promise, was there? --- There was no Serco representative. We were just dealing with the people at the centre.
PN498 There was no such promise, sir, was there? --- No.
Reliance
13. Whilst it remains the primary submission of the Respondent that there is no evidence to the putative promise which is the subject of the First Articulated Question, the Respondent further submits (in the alternative) that there was no reliance in the circumstances of Mr Trigar.
14. To the extent that the Applicant Union asserts any alleged loss or reliance with respect to any "promise" the evidence of Mr Trigar in cross examination was:
Transcript Reference
PN465 And you agreed to stay on because you didn't have any other offer of employment that you could have accepted, did you, sir? --- Yes, I did. I like my job and I wanted to continue working there.
PN466 Sorry, sir, I'm asking you a different question and perhaps you didn't - it's not a criticism. Maybe the question got lost. When you indicated in July that you wanted to stay on it's not that you had some other job opportunity in July, did you? --- No.
Disposition of the First Articulated Question
15. With reference to the First Articulated Question, it is the submission of the Respondent that:
a. there was no promise to the effect pleaded or assumed in the First Articulated Question;
b. Mr Trigar accepted only a change in his location of work on 12 November 2016;
c. the employer made no promise to maintain the Remote District Allowance; and
d. the First Articulated Question should be answered in the negative.
Accordingly, the First Articulated Question must, on the evidence before the Commission, be determined in the negative.
16. In the alternative, if, against the evidence before the Commission, a "decision" was made by the Commission to the contrary, the Respondent repeats the contents of the "Respondent's Submission re Jurisdiction" filed in the Proceedings on 14 May 2018. The Respondent asserts that any "decision" that had the potential to result in Mr Trigar continuing to receive the Remote District Allowance would have been a decision inconsistent with the relevant Industrial Instrument (as defined) and offend section 739(5) of the Fair Work Act.
Submissions re the Second Articulated Question
17. The Second Articulated Question speaks of a "similar obligation" to continue the payment of a Remote District Allowance for employees engaged after the closure of the Wickham Point facility at Darwin, and who were paid the Remote District Allowance on engagement.
18. The Respondent submits that the reference in the Second Articulated Question to a "similar obligation" must, in the context of the Articulated Questions, be a reference to a presumed obligation arising out of a "promise". Again, there is no evidence before the Commission of the putative promise alluded to in the Second Articulated Question.
19. The evidence relied upon by the Applicant Union with respect to the Second Articulated Question was restricted to the Statement of Mr Aaron Herbig dated 25 June 2018 (Exhibit 5) which was admitted into evidence without the requirement for Mr Herbig to be available for cross examination (due to his unavailability) with a number of agreed deletions to the statement as originally filed in the proceedings.
20. Mr Herbig's Statement, as admitted into evidence (Exhibit 5) states that:
a. he accepted redundancy from his employment with the Respondent at Wickham Point "at the end of July 2016 when WPIDC closed";
b. he was, on and from January 2017, engaged as a casual employee in Darwin by the Respondent and that:
i. the Remote District Allowance was not discussed when he was rehired as a casual employee by the Respondent (in January 2017); and
ii. he was not paid the Remote District Allowance whilst engaged as a casual employee at Darwin (on and from January 2017);
c. he was appointed to the position of Detention Service Officer Grade 2 on the basis of an offer of employment dated 19 April 2017; and
d. when he became a permanent full time employee of the Respondent (after April 2017), the Respondent commenced paying him a fortnightly RDA and ceased making the RDA payment on 12 November 2017.
21. Mr Herbig was not available for cross examination at the hearing of the Application and was not cross examined.
22. The Respondent makes the following observations with respect to the Amended Statement of Mr Herbig (Exhibit 5):
a. Mr Herbig's offer of employment dated 19 April 2017 makes no reference to any payment and/or entitlement described as a Remote District Allowance;
b. Mr Herbig's Amended Statement contains no reference to any representation or comment made to him about the payment of the Remote District Allowance (or any allowance) when he elected to move from casual engagements to a full time position in Darwin or around April 2017;
c. Mr Herbig's Statement makes no reference to any promise of any description to maintain any terms and conditions of employment referrable to his prior employment at Wickham Point; and
d. Mr Herbig's Amended Statement contains no evidence of the existence or creation of any obligation relating to the Remote District Allowance that attached itself to his individual terms and conditions of employment as a full time employee based in Darwin.
23. With respect to the Second Articulated Question, it is the submission of the Respondent that Mr Herbig was not engaged on terms and conditions that included any reference to the Remote District Allowance and the Second Articulated question should be answered in the negative.
24. In the alternative, if, against the evidence before the Commission, a "decision" was made by the Commission to the contrary, the Respondent repeats the contents of the Respondent's Submission re Jurisdiction filed in the Proceedings dated 14 May 2018 and continues to assert that any "decision" that had the potential to result in Mr Trigar continuing to receive the Remote District Allowance would have been a decision inconsistent with the relevant Industrial Instrument (as defined) and offend section 739(5) of the Fair Work Act.
Claim in Contract
25. To the extent that the Applicant Union seeks a "decision" from the Fair Work Commission that is based upon a claim in contract, it is the submission of the Respondent that, in each case, the relevant contract for each of the above individuals is (and remains):
Witness Name | Description of Document | Reference in Statement of Alana Fullarton |
Michael Trigar | Offer of Employment dated 23 October 2015 | AF5 |
Aaron Herbig | Offer of Casual Employment dated 3 January 2017 and Offer of Employment dated 19 April 2017 | AF9 and AF10 |
26. In the case of Michael Trigar, his "Offer of Employment" was varied by written agreement on or about 4 November 2017 with reference to an email attaching a letter to Michael Trigar on 4 November 2016, titled "Variation to Letter of Employment", which was returned signed by Michael Trigar on 12 November 2016 (AF15).
27. The Variation Letter related only to his location of work, that being "Darwin Hub, Northern Territory". The Variation Letter specifically noted that "all other terms and conditions set out in your letter of employment will remain unchanged". Mr Trigar was then asked to confirm his acceptance of the variation as contained in the Variation Letter by signing the acceptance statement.
28. Separate and distinct from Mr Trigar's Contract of Employment (comprising of his letter of offer and the Variation Letter), Mr Trigar enjoyed an entitlement pursuant to the relevant and applicable industrial instrument to an allowance referrable to his place or location of work. That entitlement arose out of the applicable industrial instrument, which relevantly provided:
a. in the period on and from 27 January 2012 to 17 September 2015, a Remote District Allowance referrable to a situation where the employee was "located" at a Serco designated remote district or centre, including Darwin and Wickham Point; and
b. in the period on and from 17 September 2015 to the present, a Remote District Allowance that had application to employees located at Wickham Point only.
29. In relation to Mr Trigar, the Commission would comfortably find that he agreed to transfer the "location" of his employment from Wickham Point to Darwin, in circumstances where Mr Trigar was both:
a. subject to the terms and conditions of the 2015 EA; and
b. was transferring from a remote district (Wickham Point) to a non remote district (Darwin);
and that this event brought into operation clause 19(c) of the 2015 EA which provided as follows:
"Further, this allowance would cease to apply if an employee transfers from a remote district."
30. It therefore follows that the Mr Trigar had no entitlement to the Remote District Allowance.
31. Mr Herbig's contract of employment makes no reference to the Remote District Allowance and accordingly had no entitlement to the same benefit.
Evidence of Ms Alana Fullarton
32. Much of the cross examination of Ms Fullarton related to paragraph 11 of her First Statement which described the "error" that resulted in the Remote District Allowance being paid by the Respondent. Her explanation as contained in her Statement at paragraph 11 was as follows:
"11. To the best of my knowledge and belief, Serco ceased paying the Remote District Allowance to the Three Transferring Employees and Mr Aaron Herbig on and from 12 November 2017. Serco made no attempt and has made no attempt to recover the overpayment of the Remote District Allowance. The error with respect to the Three Transferring Employees at payroll level was the failure to amend the individual's personal sub-area code in the payroll system at the point that the individual ceased to be located at Wickham Point and commenced at the Darwin Hub. That is, the computerised payroll system continued to regard the Three Transferring Employees as at Wickham Point and therefore the allowance continued to be paid."
33. In cross examination, Ms Fullarton was questioned extensively about the "error" and was presented with a number of emails relating to the detection of the "error" which led to the following documents being put into evidence by the Applicant Union:
a. email communication from Ms Alana Fullarton to My HR and Antonella Nucera dated 31 October 2016 (Exhibit 11); and
b. email communication from Suzanne Moody (Projects Justice and Immigration) to Michael Strickland, Liz Kavanagh and Colin Graham dated 18 September 2017 (Exhibit 12).
34. It is submitted that Exhibit 11 demonstrates that at the point of confirming the transfer of employees (including Mr Trigar) from Wickham Point to the Darwin Hub, it was her direction to "My HR" to ensure that a new "work location" was identified which reflected the contract variation. In particular, the content of her email dated 31 October 2016 included the following direction to "My HR":
"Please find attached a spreadsheet capturing bulk changes required to finalise ongoing employment for the affected people on the list. The primary actions required are to update the approver / chief in SAP and to provide a contract variation for each employee with a new work location identified as the Darwin Hub."
35. In cross examination, Ms Fullarton admitted that it came to her as a "shock" in September 2017 when Ms Suzanne Moody alerted her by email to the fact that the Remote District Allowance was being paid to a number of employees who had transferred from Wickham Point to the Darwin Hub.
36. When asked in re-examination about the basis for her "shock", her evidence was as follows:
Transcript Reference
PN1091 If you look at them, where is the error in them? --- The error is in the payment of the remote district allowance.
PN1092 Yes, and that is caused by what entry being put in? --- It's automatically set up under the Wickham Point sub-area code.
PN1093 Yes. Thank you. And if you could look at exhibit 11. I think exhibit 11, your gave some evidence about that, and that was your direction to my Hr at the relevant time, and you've been questioned about that extensively. You were then - I'm not showing you this document but you will remember it - there's another document, which was the email from Ms Suzanne Moody, and in response to a question from a friend when you saw that you said that you were shocked? --- Yes.
PN1094 Why were you shocked, madam? --- Because I expected that it would have been removed because there was no entitlement to it under the enterprise agreement.
37. The Commission should, on the evidence, reject the case advanced in cross examination by Mr Bull that the Respondent paid the allowance for "sound business reasons" and/or to smooth the transition (Transcript PN771). The submission described by Mr Bull as an "after-the-fact justification" should also be rejected on the basis of a lack of credible evidence.
38. The proposition that the allowance was knowingly paid to avert what Mr Bull described as "industrial anarchy" has no basis in fact and does not assist the Applicant Union in addressing the apparent inadequacies in the evidence relied upon by the Applicant Union in support of the application.
39. The Respondent recognised that it made errors in not paying Mr Trigar and Mr Herbig in strict accordance with the 2015 EA. This error was acknowledged by the Respondent at the time of the discontinuance of the overpayment. The Respondent noted the error and confirmed that it would not seek to recover back pay. The Respondent has not retreated from that position. Any suggestion that the error may have been deliberate or permitted to occur for a collateral purpose is not supported by the evidence.
14 November 2016 email from Paul Simon to various employees of the Respondent
40. In the course of the cross examination of Ms Alana Fullarton, an attempt was made by Mr Stephen Bull (on behalf of the Applicant Union) to ask questions of Ms Fullarton that related to the 14 November 2016 email which was an attachment to the first Statement of Ms Fullarton (Exhibit 8, attachment AF19). An objection was raised and determined in the absence of the witness. The following exchange occurred:
Transcript Reference
PN768 MR BROWN: The only evidence that is before the Commission as to the acceptance of a variation is Mr Trigar. Mr Trigar accepted his variation two days before. He accepted it on the 12th. In fairness to this witness, if the only evidence before the Commission is that of Mr Trigar, then if he's going to ask this witness questions about this, he has to, in other words, split Mr Trigar off, because what I apprehend is now going to happen is he's going to ask a whole lot of questions about this document and how it may have resonated in the hands of other people who have not given evidence.
PN769 MR BULL: It's principally not focussed on, I supposed, a contract claim.
PN770 MR BROWN: No, it's fairness to the witness. It's fairness to the witness and all I'm going to ask is that if this line of cross-examination proceeds, it has to proceed on the assumption that the only evidence before this tribunal is of a gentleman who accepted his offer on the 12th, 48 hours before this particular email.
PN771 MR BULL: No, no, this is about what the respondent knew and why it did certain things and the reason it's important to put this to the witness in that, you know, our case is fairly clear, it's they paid this allowance for fairly sound business reasons, to smooth the transition. The after-the-fact justification which my friend is instructed to put to you we say is a load of rubbish. They knew exactly what they were doing. They were paying the allowance because otherwise they would have had industrial anarchy. Everyone would have run to the doors and they would have had great difficulty staffing their contract obligations in the Northern Territory.
PN772 So, it wasn't a mistake, they paid it deliberately, and this is evidence of it. It's evidence of a manager essentially, you know, trying to calm the horses saying, "Don't worry", and I'll put it to the witness. There was this, sort of, Nelsonian blindness. Maybe that's not the right metaphor. It was the elephant in the room no one really wanted to talk about it in that, you know, possibly there was a shared understanding that there wasn't an entitlement under the agreement to the continued payment of the allowance, but it seemed to suit everyone just to let things go on as they were.
PN773 MR BROWN: How does this document assist on a shared understanding when the only person who has given evidence has accepted his variation two days before?
PN774 MR BULL: It's not about Mr Trigar.
PN775 MR BROWN: Mr Trigar is the only witness you have.
PN776 MR BULL: It's about what I say is the company knew what it was doing. It wasn't this clerical error made by someone in Perth, you know, inputting stuff and it just shows that they knew exactly what they were doing.
PN777 MR BROWN: We will be holding the applicant union to the articulated question that speaks of a promise and there is only one witness who has given evidence in support of it and that will be the focus of our submissions. These elliptical questions about - - - (Our emphasis)
41. The substance of the objection and subsequent exchange between the advocates and the Commission had proceeded on the fact that the only witness who was called on behalf of the Applicant Union in support of the First Articulated Question was Mr Trigar. Mr Trigar accepted the variation to his Contract of Employment and agreed to transfer to Darwin Hub on 12 November 2016.
42. The contents of the 14 November 2016 email from Paul Simon to various employees of the Respondent (including Mr Trigar) became the focus of a number of exchanges and questions. The relevant exchanges and questions put to Ms Fullarton related to the following paragraph of the 14 November 2016 email:
"The letter you have received is therefore not a new contract, but a variation to your current contract that is necessary to ensure the correct work location is agreed. This is not a centre, so we have referred to it as the Darwin Hub for convenience only. Your entitlements will not be diminished in any way by this." (Our emphasis)
43. With respect to the sentence "Your entitlements will not be diminished in any way by this" which attracted questions from both the Commission and Mr Bull on behalf of the Applicant Union, the Respondent submits that:
a. the reference to "this" is a reference to the Variation of the Contract of Employment;
b. read in the context of the email, the subject matter is the nomination of Darwin Hub as the location of the employment;
c. also read in context, the reference to "your entitlements" is a reference to the entitlements contained in the individual Contract of Employment, which makes no reference to the Remote District Allowance;
d. the Remote District Allowance resides in the relevant industrial instrument which was not part of the Contract of Employment;
e. there is nothing in the evidence of Mr Trigar to the effect that he in any way had regard to the above sentence as a representation and/or a representation that he relied upon. On his own evidence, he confirmed in cross examination his personal decision to transfer and accept the variation occurred two days before; and
f. Mr Trigar was not cross examined in relation to the 14 November 2016 email communication as it was, on his own evidence, not part of his decision making process.
44. In the submission of the Respondent, the Commission would not be assisted in determining the First Articulated Question with regard to the generalised questions put to Ms Fullarton by the Commission as part of the following exchange:
Transcript Reference
PN843 THE COMMISSIONER: Ms Fullarton, can you understand that employees who are in receipt of the remote allowance transitioning to the new location receive this email and would ordinarily assume that they're going to continue to get the remote allowance? I can see where they would have thought that, yes.
PN844 And that wasn't unreasonable of them to think that, was it? No.
PN845 MR BULL: I will just show you - - -
PN846 THE COMMISSIONER: In fact you would probably assume that they would think that.
PN847 MR BULL: I'm just having trouble finding it.
PN848 THE COMMISSIONER: Sorry. You would assume that they would think that.
PN849 MR BULL: I'm just showing you - - -
PN850 THE COMMISSIONER: Sorry, I'm asking the witness a question.
PN851 MR BULL: Sorry, sir.
PN852 THE COMMISSIONER: You would assume that they would understand that be the case, wouldn't you? In hindsight, yes.
45. This application was not advanced by the Applicant Union on the basis of any apparent ambiguity in the documents created and/or distributed by the Respondent which reference the Remote District Allowance. Both Articulated Questions presuppose the existence of a promise to the effect that an employee or employees were "promised" either the Remote District Allowance and/or the maintenance of the Remote District Allowance. There is no evidence before the Commission of any such promise.
Submissions of the Applicant Union (Exhibit 4)
46. Contrary to the Submissions of the Applicant Union, the requirement to pay any form of Remote District Allowance in the Northern Territory did not arise out of any industrial practice.
The Applicant Union did not lead any evidence in support of this contention at the hearing. The benefits in the form of the Remote District Allowance, arose only for the term of:
a. the Serco Immigration Services Agreement 2011;
b. the Serco Immigration Services Agreement 2014; and
c. the Serco Immigration Services Agreement 2015.
47. The bargaining parties (including the Applicant Union) in making the 2015 EA, removed the benefit of Remote District Allowance as it previously applied to employees located in Darwin.
48. Contrary to the Submissions of the Applicant Union, Mr Trigar did not "lose his redundancy". Mr Trigar accepted a redeployment opportunity which, as a matter of law, meant that he was not entitled to a redundancy or severance benefit pursuant to the Industrial Instrument and/or the NES (Transcript PN514).
49. To the extent that the Remote District Allowance is or was an "entitlement", this benefit arose exclusively out of the terms and conditions of the 2015 EA, which clearly stated that the Remote District Allowance was:
a. only applicable to Wickham Point (and Christmas Island); and
b. would cease to apply if an employee transferred from a remote district.
50. Mr Trigar transferred from a remote district in or around November 2016.
51. The Respondent denies that in its dealings with Mr Trigar about the possibility of the individual agreeing to a redeployment, that the new location was unknown. Mr Trigar was aware that the only opportunities that were available in or around mid to late 2016 were within the Darwin metropolitan area. This was conceded in cross examination at Transcript PN470. The Variation Letter (that was accepted by Mr Trigar) specifically stated that his new location would be the Darwin Hub.
52. The allegation of misleading and deceptive conduct (however so described) is denied by the Respondent. There is no evidence of any representation as to the payment and/or maintenance of the Remote District Allowance and/or the continuation of this benefit on and from the date that any employee commenced work at a different location, pursuant to the Variation Letters.
53. There is no evidence before the Commission of a custom and/or practice with respect to the payment of the Remote District Allowance. To the extent that this benefit ever existed, it was:
a. brought into existence in the context of the bargaining between the parties to the respective Industrial Instruments; and
b. bargained out of existence in the context of the negotiations for the making of the 2015 EA.
Disposition of this Application
54. It is the submission of the Respondent that the Application be dismissed.”
Consideration
[19] Looking at a map and it is easy to see why Wickham Point was designated as a remote location. It is:
a) 3,956 kms from Sydney,
b) 3,737 kms from Melbourne.
[20] As a wedge-tailed eagle 31 flies, Darwin is no less remote than Wickham Point.
[21] However, in the context of people living in and around Darwin, Wickham Point it is about:
a) 41 kms (about 30 minutes drive) from Darwin City,
b) 29 kms (about 26 minutes drive) from Virginia, and
c) 23 km (about 20 minutes drive) from Palmeston.
[22] This travel time is comparable to the average time people spend commuting one-way in both Melbourne and Sydney. It has been reported that this has averaged around 35 minutes for some time. 32
[23] The RDA did not feature in enterprise agreements prior to the 2011 Agreement. The RDA was first paid to Serco employees engaged at Wickham Point in February 2012. They ceased being entitled to be paid the RDA under the Agreement two years ago today on 31 October 2016. However, Serco continued to pay the RDA through until 12 November 2017. In the relevant agreements the RDA was always referable to specific locations. It was not characterised more broadly e.g. “Darwin district” or “Northern Territory”. Serco, its employees and United Voice clearly understood (and agreed) that the RDA under the Agreement was an entitlement limited by the terms of the Agreement and the locations it referred to.
[24] Noting the chronology, it can be accepted that the RDA was paid to employees engaged at Wickham Point for 5 ½ years. It was submitted that the payment of a remote or district allowance is a feature of industrial relations in the Northern Territory. However, no evidence was led about the same. Accordingly, while I accept that the payment of the RDA was longstanding, I reject that submission that it was “custom and practice” to pay the RDA. It was paid when the employees worked at the work locations listed in the agreements. It was not paid when they did not.
[25] This changed in November 2016. Wickham Point closed on 31 October 2016, but Serco continued to pay the RDA (but not because it was obliged to do so by the Agreement). It says it did so in error. It was, no doubt, an expensive error.
[26] United Voice conceded that there is no entitlement to be paid the RDA under the terms of the RDA clause in the Agreement. It was an appropriate concession to make.
[27] As stated above, on 17 September 2016 Michael Trigar accepted a transfer of employment from Wickham Point to Darwin. He (like other transferring employees) was told “you will continue in your employment with Serco on the same terms and conditions as your current employment contract…” Consequently, it was only the contractual terms and conditions that were being guaranteed. The RDA was never a term or condition of Mr Trigar (or any other employee’s) contract.
[28] To the extent that the claim is founded in contract I reject it. This is because the Variation Letter received by transferring employees referred to “all other terms and conditions set out in your letter of employment will remain unchanged”. There was never a contractual entitlement to the RDA. The entitlement to the RDA only ever arose under the Agreement. The Variation Letter could not give rise to an entitlement that did not exist under the original letter of employment.
[29] In terms of whether promises were made to employees about the continued payment of the RDA when Wickham Point closed and their reliance upon those promises there was simply no evidence before the Commission about express promises being made to that effect either in writing or orally. In fact the oral evidence was to the effect that no such oral promises were made. United Voice submitted that “additional oral and written representations were made….” but the evidence does not support such a finding. None of the
Applicant’s witnesses gave evidence about being induced to transfer to the Darwin Hub or take up employment with Serco because of the payment of the RDA.
[30] The truth is that when Wickham Point closed and some employees transferred to the Darwin Hub no-one (on the evidence before the Commission) thought to ask “Do we still get the RDA at Darwin Hub?” Similarly, when writing to employees at no time did Serco specifically address the RDA and whether it would continue to pay it when Wickham Point closed. This was an omission by everyone concerned. Noting that the RDA was worth $293.99 per fortnight ($6,239.74 p.a.) and equated to an 11% uplift in the pay received by a Detention Service Officer Grade 2, it is somewhat remarkable that no transferring employee ever asked the question and that Serco never proactively addressed whether the RDA would continue to be paid.
[31] I reject the submission that the cessation of the RDA was “unfair and unconscionable”. To remove the RDA was not particularly harsh or oppressive. It has been an entitlement under the Agreement for a number of years, but that was its only source. It was not paid as a matter of custom and practice. As judged against the norms of society the cessation of the RDA (paid in error for 12 months) was not against conscience. There is no evidence that any transferring employee decided to decline a redundancy because they relied on a representation that the RDA would continue to be paid to them. No transferring gave evidence to the effect that, but for the continuation of the payment of the RDA, they would have elected to take a redundancy when Wickham Point closed.
[32] I also reject the argument that an estoppel arises. The evidence does not support a finding that there was any representation made about the RDA such that any employee relied upon the same when agreeing to transfer employment to the Darwin Hub or accept employment with Serco. There was no evidence that, had an employee been told that they would not receive the RDA, they would have taken a redundancy or rejected an offer of employment with Serco to take up employment with an alternative employer who did pay a remote or district allowance. Contrary to the submissions of United Voice there were no “clear promises … made to the workforce.”
[33] The closest that the evidence goes to establishing a ‘promise’ was the 14 November 2016 email from Paul Simon, the Centre Manager – Darwin Hub. He wrote, in the context of contract variation letters, that “Your entitlements will not be diminished in any way by this” (i.e. the designation of the Darwin Hub). The first point to make is that any employee who had accepted transfer before 14 November 2016 could not claim to have relied upon this ‘promise’ in deciding to accept the offer of transfer. In so far as employees received the email before they accepted the transfer under the terms of the Variation document I am not satisfied that the reference to “your entitlements will not be diminished” was a reference to the RDA. The whole email, considered in context, is about the effect of the Variation to contracts of employment. It does not reference the Agreement. An employee in receipt of the email could not reasonably rely upon it as a statement about the RDA (which has never been a contractual entitlement). In any case, to the extent that it says “your entitlements will not be diminished”, it was not a misstatement. At the time of the email the employees had “entitlement” to the RDA (although it was being paid by Serco).
[34] I am also not satisfied that the conduct of Serco (in continuing to pay the RDA after 31 October 2017) gave rise to a legitimate expectation that the RDA would continue to be paid. The concept of legitimate expectation usually arises in the relation to administrative law principles and flows from the principles of natural justice. However, it can also apply to substantive protection from conduct that is unreasonable, unfair or an abuse of power. None of those concepts apply in the present circumstance. In deciding to stop payment of the RDA Serco was not acting unreasonably or unfairly. It was not, on its behalf, an abuse of power.
[35] I have been referred to a number of decisions concerning the review of managerial discretion. 33 Those cases stand for the proposition that the Commission should be reluctant to interfere with the right of an employer to manage its own business unless it is seeking, from its employees, something which is unjust or unreasonable. In the Essential Energy decision his Honour Deputy President Hamberger set out the meaning of ‘reasonable’ and observed that,
“The test is not whether [the employer] could have acted more reasonably, let alone whether the Commission would have taken the approach adopted by [the employer] if it was the employer.” 34
[36] In the present matter I am not satisfied that it was unreasonable for Serco to stop paying the RDA. There was no obligation to do so under the terms of the Agreement or the employees’ contracts of employment. They had continued to pay it error for 12 months. They resolved not to recover the overpayment. Nothing in the conduct of Serco was “irrational, absurd or ridiculous”. Having regard to the cost of the RDA it was entirely rational for Serco to stop paying it when there was no legal obligation to continue to pay it.
Conclusion
[37] For the reasons set out above, the Commission, as presently constituted, answers the Articulated Questions as follows:
1. Is the Respondent required to continue to pay Darwin-based employees who accepted transfers from Wickham Point on the promise that their terms and conditions will be maintained a RDA?
Answer: No
2. Further, does a similar obligation exist to continue the payment of a RDA for employees engaged after the closure of the Wickham Point facility at the Darwin facility and paid the RDA on engagement?
Answer: No
COMMISSIONER
Appearances:
Mr S Bull, National Industrial Coordinator, United Voice, for the Applicant
Mr P Brown, Partner, Baker & McKenzie, for the Respondent
Hearing details:
Darwin
Tuesday, 7 August 2018
Final submissions:
Exchanged 17 August 2018
Printed by authority of the Commonwealth Government Printer
<PR701626>
1 Cth. Parliamentary Debates. Senate. 23 June 1994. Number 165 (1994) page 1945 (per Senator Robert Hill).
2 If in fact the comment was ever actually made.
3
4 [2018] FWC 3238.
5 Serco Immigration Services Agreement 2015 (‘the Agreement’).
6 The Northern Alternative Place of Detention (‘NAPOD’) also known as the ‘Mercure Resort’ (with no hint of irony).
7 Transcript (‘T’), 7 March 2018, PN650-651.
8 T, PN654 to PN659.
9 T PN665.
10 T PN674.
11 T PN681.
12 T PN683.
13 T PN681.
14 T PN685.
15 T PN811.
16 T PN726.
17 T PN751.
18 T PN780.
19 Exhibit 12.
20 Statement of Alana Fullarton, 23 July 2018, at [11].
21 T PN736.
22 Exhibit 11.
23 T PN839 to 840.
24 T PN641 to 643.
25 T PN488.
26 T PN1073.
27 T PN755.
28 T PN927.
29 [1988] HCA 57; (1988) 82 ALR 217; (1988) 63 ALJR 1; (1988) 35 A Crim R 382 (15 November 1988).
30 As above at [11].
31 Aquila audax – Fauna emblem of the Northern Territory.
32 See: Australian Federated Union of Locomotive Enginemen and State Rail Authority of New South Wales (1984) 295 CAR 188. For further more recent example see: Lloyd v Australian Western Railroad Pty Ltd T/A ARG an Aurizon Company[2017] FWCFB 143 concerning the arbitration of the penalty for a disciplinary process; and Construction, Forestry, Mining and Energy Union v Essential Energy [2016] FWC 2653 concerning the failure of an employer to accept voluntary redundancies. In Essential Energy, the Commission found that it was competent to order the employer to accept voluntary redundancies as it was unreasonable not to.
34 [2016] FWC 2653, para [106]
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