[2014] FWCFB 7946
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

DL Employment Pty Ltd
v
Australian Manufacturing Workers' Union
(C2014/4486)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT BOOTH
COMMISSIONER MCKENNA

SYDNEY, 1 DECEMBER 2014

Appeal against decisions of Senior Deputy President Drake at Sydney on 28 April 2014 in transcript, 8 July 2014 and 4 August 2014 in matter number C2014/289.

Introduction

[1] This is an appeal against a decision of Senior Deputy President Drake issued on transcript on 28 April 2014 (First Decision), a decision published on 8 July 2014 giving reasons for the First Decision 1 (Second Decision), and a further decision giving further reasons for the First Decision published on 4 August 20142 (Third Decision). These decisions were made by the Senior Deputy President as a result of the conduct of an arbitration to resolve a dispute pursuant to the disputes settlement procedure in clause 6.3 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015 (DLE Agreement). That dispute concerned whether DL Employment Pty Ltd (DLE) should pay redundancy entitlements to a number of employees who declined to comply with DLE’s direction for them to relocate to its new production plant at Ingleburn upon the closure of its existing plant at Kogarah. The Senior Deputy President determined that six employees - Mark McNeil, Stephen Perry, Joseph Atalifo, Blagoja Stueski, Blaga Mirceska and Paul Gioffre (Claimant Employees) - were entitled to redundancy pay. DLE’s appeal essentially challenged that outcome.

Factual background

[2] The dispute had its origins in the circumstances in which DLE employed a number of persons who had formerly been employed by Darrell Lea Chocolate Shops Pty Ltd (Darrell Lea) in 2012. Darrell Lea was a well-known Australian manufacturer and retailer of renowned confectionary products such as Rocklea Road, chocolate nougat Easter eggs and soft-eating liquorice. As at August 2012, Darrell Lea operated its manufacturing facility at 200 Rocky Point Road, Kogarah in New South Wales (with an associated facility at 160 Rocky Point Road), and operated a warehousing facility at 3 Brooks Road Ingleburn. Darrell Lea’s employees were covered by the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement 2009-2012 (Darrell Lea Agreement). Clause 2.A of the Darrell Lea Agreement prescribed the scope of coverage of the agreement as follows:

[3] Clause 2.E(f) of the Darrell Lea Agreement provided:

[4] Clause 2.F of the Darrell Lea Agreement contained a prohibition against extra claims as follows:

[5] Clause 11 of the Darrell Lea Agreement was entitled “Introduction of Change; Discussions before Redundancy; Redundancy Provisions. It provided:

[6] Darrell Lea found itself in financial difficulties in 2012 and went into voluntary administration on 3 July 2012. Its business continued operating under the control of the administrator, PPB Advisory (PPB). In August 2012 the Quinn family, which operated a pet food manufacturing business through various corporate entities, entered into an arrangement with PPB to purchase the assets of Darrell Lea’s confectionary business in order to continue to conduct the manufacturing side of the business, with the completion date being 7 September 2012. In order for the Quinn family to operate the business from that date it was necessary for a number of the persons then employed by Darrell Lea to continue to work in the business. DLE, a company owned by the Quinn family, was to be the employing entity.

[7] On 3 September 2012 the administrator, without prior notice, convened meetings of employees at the Kogarah plant. The employees were divided into two groups for this purpose: employees who were to be offered continuing employment by DLE were sent to the High Boil Room, and employees who were not going to be offered such employment were sent to the canteen. The Claimant Employees were amongst those sent to the High Boil Room.

[8] Each of the employees sent to the High Boil Room was provided with a number of documents. Firstly there was a letter from the administrator, which read (omitting formal parts):

[9] The administrator also provided a document which set out in tabular form a set of questions it considered employees would have about the “transfer of employment”. The first question was “When do I need to return the copy letters by”, and the answer was that it was “important that as many letters are signed and returned by close of business on Monday 3 September 2012”, but that it was appreciated that not all employees would be on site to complete this, and accordingly that the deadline would be 7 September 2012. The remaining three questions and answers were as follows:

[10] There was also an offer of employment by DLE to each of the employees in the High Boil Room (including the Claimant Employees) contained in a standard-form but individually addressed letter from DLE which, omitting formal parts, read:

[11] The part of the above letter under the heading “Location” was referred to in DLE’s submissions as the “Location Term”, and we will use the same expression in this decision to refer to it.

[12] The employees at the meeting in the High Boil Room were also addressed by representatives of the administrator and the Quinn family. It does not appear to have been in dispute that the representatives of the Quinn family told the employees that the new owners of the business intended to build a new production facility at the Ingleburn site, and that the relocation to Ingleburn would occur at approximately Easter 2014 or in 18 months.

[13] Each of the Claimant Employees signed DLE’s offer of employment, and each commenced employment with DLE on 7 September 2012. There was no dispute that, by virtue of the transfer of instruments provision in Div 2 of Pt 2-8 of the Fair Work Act 2009 (FW Act), the Darrell Lea Agreement covered DLE and its employees at the Kogarah and Ingleburn sites on and from 7 September 2012, including the Claimant Employees.

[14] In the period from December 2012 to March 2013, DLE and the Australian Manufacturing Workers’ Union (AMWU) negotiated a new enterprise agreement and also engaged in discussions concerning the proposed relocation to Ingleburn. The AMWU raised the cost of transport to Ingleburn and the position of a number of employees (including the Claimant Employees) who did not wish to work at Ingleburn. The AMWU’s position in these negotiations and discussions was that employees could not be required to relocate to Ingleburn. DLE’s position was that all relevant employees were required to relocate.

[15] The new enterprise agreement ultimately negotiated by DLE and the AMWU and approved by the employees did not contain any specific provision concerning the relocation of the production facility to Ingleburn, and for relevant purposes largely reproduced the provisions of the Darrell Lea Agreement. The DLE Agreement was approved by the Commission on 20 June 2013 and commenced operation from 27 June 2013. Clause 1.3, Application, of the DLE Agreement identified the employees covered by the agreement and was in terms identical to clause 2.A of the Darrell Lea Agreement. Clause 1.5(g) reproduced the terms of clause 2.E(f) of the Darrell Lea Agreement. Clause 1.8, No Extra Claims, was in the same terms as clause 2.F of the Darrell Lea Agreement. The various components of the redundancy provision in clause 11 of the Darrell Lea Agreement were repeated in the DLE Agreement, albeit in a somewhat disaggregated way: clause 11.A of the Darrell Lea Agreement became clause 2.3 of the DLE Agreement, clauses 11.B and 11.C of the Darrell Lea Agreement became clauses 6.6(a) and 6.6(b) of the DLE Agreement (with some different paragraph numbering), and clause 11.D of the Darrell Lea Agreement became clause 6.7 of the DLE Agreement (with the heading changed to simply “Total Plant Closure”).

[16] Further discussions concerning the move to Ingleburn, including discussions in early 2014 with particular individual employees (including the Claimant Employees) concerning their personal circumstances, were not successful in resolving the dispute about that matter. In a letter dated 18 March 2014 sent to all employees, including the Claimant Employees, the General Manager of DLE made what might be interpreted as a direction for employees to transfer to the Ingleburn plant when it opened in May 2014. In letters dated 16 May 2014, employees who refused to move to Ingleburn (including the Claimant Employees) were informed that their employment with DLE would cease at the end of shift on 16 May 2014.

[17] On 26 February 2014, the AMWU notified a dispute to this Commission pursuant to the dispute resolution procedure in clause 6.3 of the DLE Agreement. The subject matter of the dispute was described as follows:

[18] Clause 6.3 of the DLE Agreement empowered the Commission to resolve the dispute by conciliation or, if necessary arbitration. Conciliation was not successful, and as a result the Senior Deputy President conducted an arbitral hearing of the matter on 26 and 27 March and 2 and 9 April 2014.

The Decisions

[19] The Senior Deputy President issued the First Decision ex tempore and without supporting reasons because DLE’s move of its production operations to Ingleburn was imminent. In the First Decision the Senior Deputy President shortly stated her conclusions that, firstly, she was not satisfied that the contracts constituted by the letters of offer signed in September 2012 by the employees (which contained the Location Term) disentitled any of the Claimant Employees the subject of the dispute to redundancy payments, secondly, that each of the Claimant Employees was entitled to redundancy payments on the basis of identified matters including their family and personal circumstances and, thirdly, that she was not satisfied that two other employees the subject of the dispute were entitled to redundancy payments.

[20] The Second Decision was stated to be concerned with the questions of whether the September 2012 contracts containing the Location Term were enforceable against the employees who signed them and whether those contracts imposed a new obligation on those employees to work at Ingleburn instead of Kogarah at the direction of DLE. 3 The Senior Deputy President analysed in detail the evidence concerning the meeting on 3 September 20124, and then dealt with the evidence concerning consultations concerning the move to Ingleburn (including in the context of the negotiations which led to the making of the DLE Agreement) and the emergence of the dispute with the AMWU concerning the position of certain employees.5 The Senior Deputy President then stated the following conclusions:

(1) The administrator’s letter of 3 September 2012 and the accompanying table contained the misleading proposition that DLE was offering employment on the same terms and conditions as those that applied to their current employment with Darrell Lea. It was clear that the Location Term imposed “a new and unrestrained obligation on employees to move to Ingleburn at the direction of DLE, or a location at a similar distance, without triggering any entitlement to redundancy payments” that had not existed in the Darrell Lea Agreement. 6

(2) The Location Term sought to be imposed by DLE was an extra claim of the type prohibited by clause 2.F of the Darrell Lea Agreement and could not be imposed upon employees as a condition of continued employment. Further, because of the stipulation in clause 2.E(h) of the Darrell Lea Agreement that no employees could be employed on terms other than its terms, and because the Location Term was not a term of the Darrell Lea Agreement, employees could not be required to work in accordance with that term. The contracts offered and signed in September 2012 were of no effect to the extent that they purported to amend or set aside any term of the Darrell Lea Agreement. In addition, the meeting of 3 September 2012 was conducted in contravention of the Introduction of Change and Redundancy clauses of the Darrell Lea Agreement. 7

(3) Alternatively the events of 3 September 2012 were not capable of giving rise to a contractual obligation between the employees. The employees were required to make a decision based upon the information provided to them by DLE and the administrator, and had no independent source of information. The employees were told, and/or provided with documents which advised that, if they rejected the contracts they would be treated as having resigned, they would not be entitled to any redundancy pay entitlements, there was no guarantee that Darrell Lea held sufficient assets to pay them their accrued leave entitlements, and they may not be eligible for payments from the Commonwealth Government-administered General Employee Entitlements and Redundancy Scheme (GEERS). They were also told, incorrectly, that DLE was offering employment on the same terms and conditions as in the Darrell Lea Agreement. The result was that the employees had no opportunity to make an informed choice. The offer of continuing employment should not have been made hand in hand with an announcement that failure to accept would result in non-payment of redundancy entitlements. This conduct amounted to duress. The Claimant Employees were long-term employees with significant entitlements, were generally not young, had limited skills outside the specialised work in the confectionary industry, and lacked sophistication and experience in the matters at hand. Additionally, many of them did not have English as their first language, and no attempt was made to provide interpreters for the meeting. The arrangement “for long-term employees in a crisis situation, with likely problems of understanding and language, was a paltry and shabby exercise”. 8

(4) Accordingly DLE did not have an absolute right to redeploy employees from Kogarah to Ingleburn arising from the contracts offered on 3 September 2012. 9

[21] In the Third Decision the Senior Deputy President gave her reasons for her conclusion that the Claimant Employees had not been offered suitable alternative duties and were entitled to redundancy benefits pursuant to the DLE Agreement. 10 The Senior Deputy President summarised the evidence relevant to each of the Claimant Employees at some length11 and then stated the following general conclusions:

(1) The closure of the Kogarah site meant that the work that was performed by the employees at that site was no longer required to be performed by anyone. The employees there were contracted to perform confectionary work at Kogarah, with Ingleburn previously only having been a warehouse site. The closure of the Kogarah site created redundancies. 12

(2) DLE did not consult concerning the redundancies as required by clause 6 of the DLE Agreement. There was no consideration of the personal circumstances of any employee when considering Ingleburn as an offer of reasonable alternative employment, and, notwithstanding the employees were not told about this, DLE had already decided that the contract offered and accepted in September 2012 was a total answer to any claim for redundancy entitlements. 13

(3) The $70 per week travel allowance proposed by DLE was taken into account, but was not considered to be a significant issue in the determination to be made because the cost of travel was not a factor that affected the decision of the Claimant Employees that Ingleburn was not a reasonable offer of alternative employment. 14

(4) Distance and the consequent additional travel time were significant factors in relation to all the Claimant Employees. In this respect the Senior Deputy President concluded:

(5) DLE had made various offers in the course of negotiations with the AMWU which occurred during the course of the hearing and sought to raise some of these offers in cross-examination of witnesses, but it had been determined that evidence and cross-examination would only be allowed concerning offers that were still open when the hearing proceeded. DLE’s offer of a bus service from Kogarah to Ingleburn for dayshift workers in lieu of the travel allowance was not considered to transform the offer of employment at Ingleburn into a reasonable offer of alternative employment, because it would require the three of the Claimant Employees who worked on night shift to transfer to day shift and thereby suffer a considerable reduction in wages, and did not ameliorate the significantly increased travel time for each of the Claimant Employees. 16

[22] The Senior Deputy President then set out, for each of the Claimant Employees, the “personal circumstances and difficulties” which caused her to conclude that employment at Ingleburn was not a reasonable alternative. Finally the Senior Deputy President concluded:

Submissions

DLE’s submissions

[23] DLE submitted that the Senior Deputy President erred in respect of each of the three bases upon which she determined that the Location Term did not operate to defeat the Claimant Employees’ redundancy payment claims. The first of these was that the Location Term was an extra claim that was prohibited by clause 2.F of the Darrell Lea Agreement. DLE submitted that clause 2.F did not render the Location Term inoperative for three reasons:

(1) The Location Term was not a claim; rather it was part of an offer of a contract of employment which the employees chose to accept. The offer did not constitute an attempt to vary the terms and conditions established by the DLE Agreement because that agreement did not deal with the possibility that the employer might require employees to work at a different location.

(2) At the time that DLE offered the employees contracts of employment containing the Location Term, and at the time the employees accepted those offers (that is, 3 September 2012 and 3-5 September 2013 respectively), the employees were still engaged by Darrell Lea, and their employment with DLE did not commence until 7 September 2012. Section 313(1) of the FW Act did not operate to make the Darrell Lea Agreement binding upon DLE until “after the time” it employed the employees - that is, on or after 7 September 2012. Therefore the offers of employment containing the Location Term could not have involved any contravention of clause 2.F of the Darrell Lea Agreement because at the time they were made (and accepted), DLE was not bound by clause 2.F or any other provision of the Darrell Lea Agreement.

(3) Even if the offer of employment containing the Location Term could be characterised as a “claim”, it was not an “extra claim”. It was not inconsistent with, nor did it involve an attempt to vary, the Darrell Lea Agreement because that agreement did not stipulate at which of the two sites to which the agreement applied any particular employee was required to work, was silent on whether there was a power to require employees to transfer their job locations, and recognised the existence of separate contracts of employment containing additional obligations upon employees. Additionally, because clause 11(a) contemplated workplace changes involving “the need for transfer of employees to other work or locations”, by necessary implication proposals for the transfer of employees to another work location (such as the Location Term in DLE’s job offers) were permitted to be advanced for acceptance.

[24] DLE submitted that the Senior Deputy President also erred in finding that it had contravened clause 2.E(h) of the Darrell Lea Agreement by offering employment to the employees on the basis that they entered into a contract containing the Location Term, in that:

(1) at the time the offers were made, the Darrell Lea Agreement did not bind DLE;

(2) the Darrell Lea Agreement should not be interpreted, despite clause 2.E(h), as dealing comprehensively with all matters related to the employment relationship, since statutory instruments such as enterprise agreements operate concurrently with contracts of employment but do not entirely supplant them (relying upon Construction, Forestry, Mining & Energy Union v Wagstaff Piling Pty Ltd 17 and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestl� Australia Limited18);

(3) clause 2.E(h), properly construed, did not prevent DLE from offering a contract of employment the terms of which were not inconsistent with the Darrell Lea Agreement; and

(4) the Location Term was not inconsistent with any provision of the Darrell Lea Agreement, and the offer of contracts of employment with this term therefore did not contravene clause 2.E(h).

[25] It was further submitted that the Senior Deputy President erred in finding that the employees entered into their contracts of employment with DLE containing the Location Term under duress. Duress was not part of the AMWU’s case at first instance, and DLE was never properly put on notice that the Senior Deputy President was considering making a finding of this nature. In any event, DLE submitted, economic duress required threatened or actual unlawful conduct. There was no finding that DLE engaged in conduct of this nature. Further, the Senior Deputy President’s findings that at the meeting on 3 September 2012 the representatives of DLE put a proposition to the employees that was incorrect, that the offer of employment was misleading in that it represented that the current terms and conditions would remain unchanged but then included the Location Term, that the employees had no opportunity to make an informed choice, and that it was inappropriate to make the offers of employment hand in hand with the announcement that a failure to accept would result in non-payment of redundancy entitlements, were not supported by the evidence. And, DLE submitted, even if the contracts were entered into under duress, that only meant that they were voidable, not that they were void. The employees had elected to affirm rather than rescind the contracts, as demonstrated by their attendance at work, acceptance of remuneration and lack of complaint about the Location Term until well into 2014.

[26] In the alternative, DLE submitted that even if the Location Term was not an operative term or condition of the employees’ employment, the Senior Deputy President nonetheless erred in finding that the closure of the Kogarah plant and the direction for employees to work at Ingleburn created redundancies. Even if the employees’ contracts of employment were silent on the question of whether employees could be directed to transfer, it did not follow that DLE had repudiated those contracts in directing the employees to work at Ingleburn. Having regard to the fact that Ingleburn was only 34 kilometres away from the Kogarah plant, that the work, pay and other conditions of employment were the same, that DLE had given 18 months’ notice of the relocation and had consulted extensively about it, and had put in place arrangements to facilitate travel to the site, it could not be said that DLE had evinced an unwillingness to render substantial performance of the contracts of employment or had breached an essential term or had committed a serious breach of a non-substantial term.

[27] DLE submitted further in the alternative that even if the employees had been made redundant, there remained the question of whether it had offered the employees reasonable alternative employment at Ingleburn such as to justify the avoidance or reduction of any entitlements to redundancy. Although the DLE Agreement did not contain any express provisions requiring or permitting the avoidance or reduction of redundancy pay entitlements in relation to any offer of reasonable alternative employment, it was submitted that provisions of this nature should be implied on the basis of the test for implication of contractual terms enunciated by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings. 19

[28] It was accepted by DLE that the Senior Deputy President’s decision concerning whether DLE had offered the employees reasonable alternative employment was a discretionary one, and that accordingly it was necessary for it to establish appellable error of the type identified in House v The King. 20 DLE submitted that the Senior Deputy President erred by failing to accept and take into account the evidence concerning open offers made to the employees concerning steps it was prepared to take to ameliorate the impact of the move to Ingleburn, including the provision of a bus service from the Kogarah site to Ingleburn or, alternatively, the payment of a travel allowance. DLE also pointed to a number of matters not taken into account with respect to individual employees.

[29] It was submitted that permission to appeal should be granted because the appeal concerned important questions concerning the right of an employer to rely upon express rights in the contract of employment and the circumstances in which an employer can move its business without giving rise to redundancies, and because the decisions under appeal were attended by sufficient doubt to warrant their reconsideration such that substantial injustice would be caused by a refusal of permission.

AMWU’s submissions

[30] The AMWU submitted that the Senior Deputy President correctly decided that the Location Term was an extra claim and therefore involved a breach of the no extra claims prohibition in clause 2.F of the Darrell Lea Agreement. The proposition advanced in the appeal by DLE that the Location Term was part of an offer and not a claim was not argued at first instance and therefore could not be raised in the appeal. In any event, the AMWU submitted, it was a claim in the sense discussed by the Federal Court (Bromberg J) in Marmara v Toyota Motor Corporation Australia Limited 21 in that it was “a proposal ... to materially change the terms and conditions of employment other than in a manner already provided for by the Agreement”. It was also an extra claim because it involved the creation of a unilateral and unconditional right to vary the location of work that did not exist in the Darrell Lea Agreement. Clause 2.E(h) expressed an intention that the Darrell Lea Agreement cover the field, and operating in combination with clause 2.F prevented the parties from seeking to impose or enforce terms or conditions either different to those in the Darrell Lea Agreement or not contained in that agreement. The equivalent provisions in the DLE Agreement had the same effect. Neither Agreement contained any provisions obliging employees to transfer to Ingleburn, and the Location Term could not be relied upon to give rise to such an obligation because it contravened the provisions of the agreements referred to.

[31] It was likewise submitted that the argument that the Darrell Lea Agreement did not apply to DLE when contracts of employment containing the Location Term were offered and accepted was not raised before the Senior Deputy President, and that accordingly DLE was precluded from raising it in the appeal. Alternatively the AMWU submitted that, whilst it was accepted that the Darrell Lea Agreement only covered DLE from the time the employees commenced work with it on 7 September 2012, once the Darrell Lea Agreement did begin to bind DLE it operated to displace inconsistent rights and obligations contained in any individual employment contract and thus rendered the Location Term inoperative.

[32] The AMWU submitted that, contrary to DLE’s submissions, the Senior Deputy President was correct to find that the Location Term was in breach of clause 2.E(h) of the Darrell Lea Agreement. Clause 2.E(h) had the effect earlier referred to, and because the Location Term was inconsistent with the terms of the Darrell Lea Agreement, it constituted an attempt to employ persons other than under the terms of the Darrell Lea Agreement.

[33] On the issue of duress, the AMWU submitted that the issue had properly arisen during the course of the hearing at first instance. The Senior Deputy President had made it clear to DLE that she understood the AMWU’s case to be that the contracts including the Location Term were unenforceable, and offered DLE additional time to deal with this issue (which was refused). That DLE understood the nature of the case it had to meet was demonstrated by the fact that it cross-examined the Claimant Employees about the manner in which the contracts were entered into and adduced evidence concerning the ability of the Claimant Employees to read and understand the contracts. Economic duress could be constituted by unconscionable conduct, and DLE’s conduct at the meeting of employees on 3 September 2012 was unconscionable in that:

(1) The workforce was generally unsophisticated (with many having only limited English skills) and highly dependent upon the continuance of their jobs due to the length of their employment, their age and the specialisation of their jobs, and were therefore placed at a special disadvantage at the meeting. This was aggravated by the lack any prior notification of the purpose of the meeting and the lack of consultation concerning the selection of those who were to be offered continued employment.

(2) DLE represented to the employees at the meeting that continued employment was contingent on them signing the offered contracts, and if they did not sign they would lose their jobs and not receive any of their entitlements either from Darrell Lea or GEERS. They further misrepresented the terms of the proffered contracts as being the same as the employees’ current terms and conditions of employment (noting that DLE now accepted that there was no implied term in the employees’ contracts with Darrell Lea permitting employees at Kogarah to be directed to work anywhere else).

[34] The above, the AMWU submitted, constituted unconscionable conduct in that, as discussed by the High Court in Commercial Bank of Australia Ltd v Amadio 22 and the NSW Court of Appeal in ANZ Banking Group Ltd v Karam23, it involved an unconscientious taking advantage of a special disadvantage. Further, DLE engaged in unlawful conduct by concerting with the administrators of Darrell Lea to contravene the consultation provisions of the Darrell Lea Agreement. The mere fact that the Claimant Employees had performed work for DLE did not mean that they had elected to affirm the contract, since performance by a party, particularly in circumstances where it reserves the right to terminate, is not in and of itself evidence of an election to terminate. It had been made clear to DLE on behalf of the Claimant Employees in 2012 that they did not accept that DLE had the right to require them to move to Ingleburn, and the Claimant Employees had never conducted themselves in a way consistent with the affirmation of the contracts.

[35] It was submitted that the conclusion that the Location Term was in breach of the Darrell Lea Agreement and the DLE Agreement, and entered into under duress, meant that upon the closure of the Kogarah Plant the Claimant Employees had become redundant. In the absence of any provision empowering DLE to direct the Claimant Employees to transfer their work location, it was necessarily the case that the employees’ jobs were located at Kogarah, with the result that the closure of the plant meant that those jobs were no longer required to be done by anyone. The circumstances of the Claimant Employees described in the Third Decision meant that the location of their jobs at Kogarah was an essential term of their employment contracts, and DLE’s attempt to require them to transfer to Ingleburn constituted a repudiation of those contracts.

[36] On the issue of whether DLE had offered the Claimant Employees reasonable alternative employment, the AMWU submitted that, notwithstanding the way the matter had been conducted by the parties at first instance, the DLE Agreement did not either expressly or impliedly provide that DLE could escape its redundancy pay obligations by offering reasonable alternative employment. In any event, it was submitted, the Senior Deputy President’s findings on this issue were not attended by House v The King error. The Senior Deputy President took into account and considered the matters relevant to each application including the evidence concerning the time it would take for each Claimant Employee to travel to Ingleburn. The only offer made by DLE that was operative at the time of the hearing concerning transport to Kogarah was considered at length by the Senior Deputy President in the Third Decision; it was otherwise appropriate for evidence of offers and settlement negotiations to be excluded from evidence.

[37] The AMWU submitted that permission to appeal should be refused because the issues raised by the appeal were not novel, the decisions were not attended by sufficient doubt to enliven the public interest, and the decisions were attended by a high level of discretion and were not attended by any House v The King error.

Consideration

Permission to appeal

[38] The dispute resolution procedure in clause 6.3 of the DLE Agreement makes no reference to there being a right or capacity to appeal an arbitrated decision made pursuant to the clause. In that circumstance, consistent with the conclusion of the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia 24, the appeal provisions in s.604 of the FW Act apply, including the requirement for permission to appeal.

[39] We consider that permission to appeal should be granted. The parties have in their submissions raised some important arguments which were not raised at first instance and therefore not considered by the Senior Deputy President. In accordance with the principles stated by the High Court in Coulton v Holcombe 25, we consider that it was open to the parties to raise those new arguments in the appeal since they involved questions of law which would not have led to further evidence being adduced had they been raised before the Senior Deputy President. We consider it necessary in the public interest to determine whether those arguments could operate to alter the outcome of the matter as determined by the Senior Deputy President.

Were the Claimant Employees redundant?

[40] The first issue requiring determination in the appeal is whether, upon the closure of the Kogarah production plant, the Claimant Employees’ positions had become redundant. Clause 6.6(a) of the DLE Agreement provides that the redundancy process is initiated by a “definite decision that the employer no longer wishes the job the employee has been doing to be done by anyone”. Both parties agreed that this formulation, which is derived from the standard redundancy provisions developed in the two Termination, Change & Redundancy Case decisions 26, provided the determining criterion as to whether the Claimant Employees had been made redundant. The contest between them was whether the “job” that each employee occupied was one located only at the Kogarah plant, or whether the “job” was one which could, at the employer’s direction, be relocated to the new plant at Ingleburn.

[41] The importance of the terms of the contract of employment in relation to whether a relocation of work leads to a redundancy situation was explained in the following way by a Full Bench of the Australian Industrial Relations Commission (AIRC) in Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 27:

[42] The terms of the contract of employment may, of course, be affected in their operation by a statutory instrument such as an award or agreement made or approved under industrial legislation applying to the same employment. The contract of employment may provide for matters additional to and not inconsistent with such a statutory instrument, and in that circumstance the instrument and the contract may be said to co-exist, but where the contract contains provisions inconsistent with those in the instrument, the provisions in the instrument will apply by virtue of the statute which gives it effect, and the inconsistent provisions of the contract will be displaced in their operation and rendered inoperative. 28 In the case of an enterprise agreement made and approved under the FW Act, the effect of s.50 of the FW Act is that a person bound by the enterprise agreement must not contravene any of its terms. Section 50 is a civil remedy provision29 which may be enforced under Part 4-1 of the FW Act and a breach of which may attract a pecuniary penalty. Therefore, for the purpose of the analysis adverted to in Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983, it is necessary in this case because of the existence of the Darrell Lea Agreement and the DLE Agreement to consider the relevant provisions of those agreements and their interaction with the contracts of employment of the Claimant Employees.

[43] It is necessary to begin the analysis by reference to the position which applied to the Claimant Employees’ employment with Darrell Lea at the time immediately before DLE became the employer. The evidence did not disclose that there was any written contract of employment between Darrell Lea and any of the Claimant Employees. There had been an attempt to locate any such contracts, but none was found. A written offer of employment on identified terms was found for one other employee, Grace Famiglietti, who was the subject of the proceedings before the Senior Deputy President, but there was no basis in the evidence to conclude that letters in the same terms existed in relation to any of the Claimant Employees. Nor was there any evidence identifying any oral contractual terms. Accordingly the express terms of the contracts between the Claimant Employees and Darrell Lea remain unknown. Neither party submitted that in those circumstances we should imply the existence of any contractual terms governing the locality of work.

[44] We have earlier set out the relevant provisions of the Darrell Lea Agreement. There is no dispute that that agreement contained no express provision authorising the employer to direct an employee to transfer his or her work location from Kogarah to Ingleburn or anywhere else. And, although the Darrell Lea Agreement contained no provisions at all dealing directly with the issue of the locality of work, there are a number of strong textual and extrinsic indications that it did not contemplate that production employees such as the Claimant Employees could be required to work anywhere other than Kogarah:

(1) The coverage provision in clause 2.A provided that the agreement was only to apply “to all employees engaged at and from” the identified Kogarah and Ingleburn locations (being the locations at which work was performed at the time the Darrell Lea Agreement was entered into). The coverage of the agreement was not formulated so that it applied wherever the work was performed during its period of operation. This indicates that the parties did not conceive of the work covered by the agreement being performed at any location other than the identified locations.

(2) The fact that, at the time the Darrell Lea Agreement was entered into, all production work was performed at Kogarah and that Ingleburn was and could only be used for warehousing purposes militates against the proposition that transferability between the two sites was contemplated. This is confirmed by the fact that employment under the Darrell Lea Agreement was split (by clause 10) into three separate streams: confectionery employees (who performed the production role), maintenance employees (generally persons with a trade qualification or in training for one) and warehouse employees. No provision allowing for interchangeability between the classifications streams is identifiable.

(3) Clause 11.C(l), which dealt with “Transfers and Reclassifications” in a redundancy situation, referred to a requirement for the employer to offer redundant employees alternative positions that were “within the same field of work” and “within the site”. We consider that in this provision, the same field of work must be read as referring to the same classification stream, and the same site must be read as the same geographical work location. The clause made no provision with respect to transfer to an alternative position at a different site, and even at the same site the employee could accept or reject an offer of alternative employment and was not required to transfer to it.

(4) Clause 11.D, headed “Redundancy Provisions for Total Closure” provided: “The company recognises that there are circumstances particular to plant closures which must be taken into account when an announcement of such major change occurs. The company undertakes to discuss such issues with the parties should a need arise”. Taking into account the placement of this clause within the provisions of the Darrell Lea Agreement concerning major change and redundancy, its heading and its text, it is apparent that total plant closure was contemplated by the parties as being an event that would lead to redundancies.

[45] We therefore conclude that the Darrell Lea Agreement provided for production employees to be located at the Kogarah site only, and did not permit the employer to direct them to transfer to a different work location. There is no evidence that the contracts of employment between the Claimant Employees and Darrell Lea contained any provision to a different effect, so the interaction between the Darrell Lea Agreement and any such contracts of employment need not be considered.

[46] The next question is whether, notwithstanding that the Darrell Lea Agreement bound DLE when it commenced to employ the Claimant Employees, DLE acquired a right to transfer the Claimant Employees to Ingleburn as a result of their acceptance of DLE’s written offer of employment of 3 September 2012 containing the Location Term. We consider that the determination of that question turns upon whether there is any inconsistency between the Location Term and any relevant provision of the Darrell Lea Agreement that would result in the Location Term being displaced in its operation.

[47] Clause 2.E(h) of the Darrell Lea Agreement is critical in this context. As earlier noted it provided that “The employer and the Unions agree that no employee, including apprentices and trainees, shall be employed other than under the terms of this agreement”. This provision, read in accordance with the ordinary meaning of the language used, prohibited the engagement of employees on terms and conditions of employment inconsistent with those in the Darrell Lea Agreement, or not contained in that agreement.

[48] The FW Act authorises provisions with this effect forming part of an enterprise agreement. What is permitted to be contained in an enterprise agreement made and approved under the FW Act is prescribed by s.172(1) as follows:

(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

[49] Section 172(1) operates subject to certain exclusions concerning unlawful terms (ss.194 and 195) and provisions providing for mandatory content (ss.202-205) which are not relevant to this appeal.

[50] The broad scope of s.172(1) - in particular paragraph (a) - is readily apparent. The “matters pertaining” formulations in s.172(1)(a) has been the subject of extensive jurisprudence. 30 For present purposes, it is sufficient to say that it would encompass all the rights and obligations of the employer and employee in their capacity as such in respect of each other. There is nothing to suggest that provisions in an enterprise agreement dealing with “matters pertaining” may not be expressed as negative stipulations, such as prohibitions on certain conduct, as well as positive ones. A provision in an enterprise agreement to the effect that the rights and obligations of the employer and employees covered by the agreement are exhaustively stated in the agreement is therefore permissible under s.172(1). Whether such a provision would render inoperative a provision in a State law otherwise applicable to the relevant employment relationship would depend upon how s.29 of the FW Act applied in a particular case. But in respect of the contract of employment, we consider that a provision of this nature would validly operate to displace any rights and obligations in the contract of employment inconsistent with or not contained in the enterprise agreement, with the possible exception of terms implied by law (which we discuss further below). Therefore there is nothing in the interpretation of clause 2.E(h) referred to above which is inconsistent with the provisions of the FW Act. DLE did not identify in its submission any inconsistency of this nature with any specific provision of the FW Act.

[51] This interpretation of clause 2.E(h) gives it an operation which is consistent in purpose with two other provisions of the Darrell Lea Agreement. The first is the no extra claims provision in clause 2.F. That provision is to be read as having the same effect as the no extra claims provision considered by the Federal Court (Bromberg J) in Marmara v Toyota Motor Corporation Australia Limited 31 and on appeal by the Federal Court Full Court (Jessup, Tracey and Perram JJ) in Toyota Motor Corporation Australia Limited v Marmara32, namely prohibiting “a proposal made by a party to the Agreement to materially change the terms and conditions of employment set out in the Agreement other than in a manner already provided for by the Agreement”33 (but not to the extent of excluding the capacity of parties to seek a variation of the agreement under ss.207 or 208 of the FW Act34). The second is the latter paragraph of clause 2.D, which as earlier noted provided: “The employer and the unions agree that they shall bargain collectively in relation to any matter, whether arising from this Agreement or not, and in relation to the renewal, extension, variation or renegotiation of this Agreement”. This clause evinces an intention that the terms and conditions of employment for employees was to be determined by a process of collective bargaining involving the AMWU, and not by any alternative means including agreements negotiated or reached with individual employees.

[52] Clauses 2.E(h), 2.F and 2.D, taken together, demonstrate that it was an object of the Darrell Lea Agreement to set out in a comprehensive and prescriptive fashion the terms and conditions of employment to apply while the agreement remained in force, with there to be no alteration to those terms and conditions except by a variation to the agreement under the FW Act through a further process of collective bargaining. As a concomitant to this, any establishment of terms and conditions of employment inconsistent with or not found in the Darrell Lea Agreement through individual bargaining with employees or persons to be employed was forbidden.

[53] This is not to say that the Darrell Lea Agreement completely displaced the operation of contracts of employment between each of the Claimant Employees and their employer. When an industrial instrument prescribes the respective rights and obligations of an employer and employees covered by it, it operates in respect of employment relationships separately brought into being by individual contracts of employment; the industrial instrument does not itself create employment relationships. To that extent, the Darrell Lea Agreement could not displace the employment contract. Contractual terms consistent with the Darrell Lea Agreement (such as the provision in the DLE letters of offer that employment would be “on terms the same as your current terms and conditions of employment with Darrell Lea”) would not be affected by clause 2.E(h). Further, it may be that contractual terms which are implied by law in employment contracts because they are regarded as inherent to the nature of the employment relationship, independent of the presumed intentions of the parties 35, could not be displaced because any purported exclusion or modification of such terms might negate the existence of the employment relationship upon which the operation of the instrument depends. But there is no impediment to clause 2.E(h) being interpreted as not permitting the employer to employ persons by way of written contracts containing express terms different to those found in the Darrell Lea Agreement.

[54] As outlined earlier, DLE resisted this interpretation of clause 2.E(h) by reference to two Federal Court decisions. In the first, Construction, Forestry, Mining & Energy Union v Wagstaff Piling Pty Ltd 36, the Federal Court Full Court (Buchanan, Flick and Katzmann JJ) considered an application made under s.39B of the Judiciary Act 1903 for writs of certiorari and mandamus in relation to a decision of a Full Bench of this Commission concerning the interpretation of certain provisions of a union collective agreement made under s.328 of the Workplace Relations Act 1996 and remaining in force under Sch 3 Pt 2 cl 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. The question of interpretation which the Full Bench determined (in an appeal from a single member) was whether the employer bound by the agreement was entitled to implement a system of mandatory drug and alcohol testing. The agreement contained a specific provision which required the parties to apply an appended drug and alcohol policy which made no reference to mandatory testing. It also contained two other provisions of relevance. Firstly, clause 16 provided: “Nothing in this Agreement shall take precedence over the Occupational Health & Safety Act 2004 (as amended)”. Secondly clause 50 provided:

[55] The Full Bench determined that no provision of the agreement prohibited the employer from introducing mandatory drug and alcohol testing. In relation to clause 50, the Full Bench said:

[56] All of the members of the Federal Court Full Court determined that, in circumstances where the Commission was exercising a power in the nature of a private arbitration, any opinion expressed by the Full Bench concerning the proper interpretation of the agreement was not open to jurisdictional challenge, even if the opinion was incorrect. 37 That was a conclusion sufficient for the disposition of the application before the Court. However the Court went on to express an obiter conclusion concerning the correct interpretation of the agreement.38 The Court concluded that the agreement did not expressly or implicitly prevent mandatory random drug and alcohol testing39 and, in relation to the applicant’s reliance on clause 50 said (in a passage upon which DLE seeks to rely):

[57] The critical conclusion in the above passage was that clause 50 was to be read down by reference to clause 16, which confirmed that nothing in the agreement was intended to affect the operation of the applicable occupational health and safety legislation. Thus the employer was entitled to take steps necessary to discharge its obligations under that legislation, including by implementing mandatory drug and alcohol testing uninhibited by clause 50. 40 That was a conclusion based on the specific provisions of the agreement in question. We do not consider that the passage can otherwise be read as advancing a universal proposition that a provision of a statutory industrial instrument can never seek to “cover the field” so far as it may lawfully do so under its governing statute. The following observation of Wilson J in Ansett Transport Industries (Operations) Pty Ltd v Wardley41 (cited in the above passage) does not deny this as a possibility:

[58] The judgment of Mason J in Wardley similarly adverted to the possibility that a federal award might have a broad exclusionary effect (in this case vis-�-vis State laws) when his Honour concluded in relation to the industrial instrument in question: “From my examination of the Agreement as a whole, I conclude that it should not be viewed as a general industry award which seeks to determine exhaustively the respective rights of employer and employee”. 42 Mason J referred in the course of his judgment43 to the earlier High Court decision in T A Robinson & Sons Pty Ltd v Haylor44. In that case, the Court was required to consider whether a particular federal award which was silent on the subject of long service leave was inconsistent with the provisions of the Long Service Leave Act 1955 (NSW) and thus rendered those provisions invalid under s.109 of the Constitution. Relevant circumstances in that case included that the industrial dispute which had given rise to the federal award had involved a claim for long service leave and that the conciliation commissioner who arbitrated the dispute had rejected that claim in making the award to settle the dispute. Notwithstanding these circumstances, the Court concluded that there was “nothing to show that he meant that his determination should cover the ground of long service leave to the exclusion of any right arising from any other source of authority”, but at the same time indicated that the conciliation commissioner might have achieved that result (provided it was within the ambit of the dispute) when it said “If he had entertained any such intention he should have expressed it in his award”.45 The Court had earlier, in its discussion about how inconsistency could arise between a federal award and a State law, referred with approval to the judgment of Dixon J in Ex Parte McLean.46 In that judgment, Dixon J explained that the governing statute under which federal awards were made might have the effect of giving a federal award an exhaustive operation vis-�-vis State laws47:

[59] Dixon J went on to confirm that the Conciliation and Arbitration Act 1904 had empowered the making of federal awards with “this exclusive authority” and that the arbitrator of an industrial dispute under that Act “can make his award the exclusive measure of industrial rights and duties between the disputants”. 48

[60] In this appeal, unlike in Wardley, TA Robinson & Sons and McLean, we are not concerned with an award made in settlement of an industrial dispute under a statute made in exercise of the legislative power in s.51(xxxv) of the Constitution or an inconsistency between a federal award and a State law. Whether a particular enterprise agreement made under the FW Act constitutes an exclusive statement of the rights and obligations of the employer and the employees covered by that agreement depends upon the terms of the agreement in question. However these decisions demonstrate that there is no reason to approach this question on the basis of a predisposition that an industrial instrument can never determine exclusively the respective rights of employer and employee (subject to the exceptions earlier discussed).

[61] We do not consider that anything in the High Court decision in Byrne v Australian Airlines Ltd 49 (which is cited in the passage from CFMEU v Wagstaff Piling earlier quoted) stands contrary to this, subject to two exceptions. In the judgment of Brennan CJ and Dawson and Toohey JJ, their Honours said:

[62] The judgment of Latham CJ in Amalgamated Collieries of WA Ltd v True 51 referred to points out that “an award never deals with all the matters which affect the relations of any particular employer and any particular employee” because:

[63] In this passage Latham CJ made the point we have adverted to earlier that the existence of the employment relationships upon which an industrial instrument operates must arise from separate contracts of employment. Latham CJ also observed, immediately following the above passage:

[64] The above passage may arguably be read as a reference to contractual terms which are implied by law in employment contracts, a matter which we have also earlier discussed. Certainly the obligation on the employee to comply with the lawful and reasonable directions of the employer is one such term implied by law. We do not consider that the proposition that the legal relations of an employer and employee covered by an industrial instrument may also in part be determined by the contract of employment is inconsistent with our earlier analysis.

[65] For completeness, it may be noted that in the judgment of McHugh and Gummow JJ in Byrne, their Honours observed that the concept of the “industrial dispute” which was central to the federal industrial relations system was “concerned not with the relationship of individual employer and individual employee or former employee, so much as with a more general relationship inhering in the subject-matter of the dispute, such that it can be identified as involving the collective relationship between employers and employees as such”. 53 For this reason, federal awards under the statute then in existence “whilst they arise out of or are connected with the relationship of employer and employee, include much that is outside the contract of service, its incidents and the work done under it”.54 It is clear that these statements, whilst significant in the context of a federal industrial relations statute founded on the industrial disputes power in s.51(xxxv) of the Constitution, have little or no application to the current FW Act system which is based on different heads of constitutional power.

[66] The second decision relied upon by DLE to resist the interpretation of clause 2.E(h) referred to above was Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestl� Australia Limited 55. In that matter the Federal Court (Marshall J) determined that a clause in an agreement certified under the Workplace Relations Act 1996 which provided that “This agreement shall apply to all existing and new employees and no employees shall be employed under a different form of agreement except by the agreement of the parties” did not prevent the employer in that case from engaging employees on the basis of a requirement in the letter of appointment to attend a medical examination if required. The Court’s reasons for that conclusion were as follows:

[67] The above conclusion was founded upon an interpretation of the clause in question which confined its operation and made it inapplicable to provisions in the contract of employment. That clause was clearly expressed in terms different to clause 2.E(h) of the Darrell Lea Agreement. As the contractual requirement in question in Nestl� was not otherwise inconsistent with the relevant agreement, there was no basis for the Court to conclude that it was rendered inoperative by the agreement (noting that the Court separately concluded that a “no extra claims” provision in the agreement also did not apply because it only covered claims by the employer and the union parties against each other). Otherwise, we consider, there is nothing in the Nestl� decision which departs from our earlier analysis concerning the Wagstaff Piling decision.

[68] We therefore reject DLE’s submissions made in reliance upon these two decisions. We consider that clause 2.E(h) of the Darrell Lea Agreement is to be interpreted in the way earlier discussed. The Location Term in the DLE appointment letters purported to confer upon the employer a right which was not only not contained in the Darrell Lea Agreement, but was also inconsistent with the terms of the Darrell Lea Agreement discussed in paragraphs [44] and [45] above which had the effect of locating the Claimant Employees’ jobs at Kogarah. In those circumstances clause 2.E(h) prohibited DLE, once it became bound by the Darrell Lea Agreement, from employing persons on the basis that the Location Term applied.. The Location Term was therefore displaced and rendered inoperative.

[69] As earlier discussed, the terms of the DLE Agreement were, in all relevant respects, the same as the Darrell Lea Agreement. Clauses 1.5(g), 6.6 and 6.7 of the DLE Agreement are therefore to be interpreted as having the same effect as clauses 2.E(h) and 11 of the Darrell Lea Agreement. We conclude therefore that the Location Term was inoperative in respect of the Claimant Employees at all times while the Darrell Lea Agreement and the DLE Agreement applied to their employment with DLE.

[70] That conclusion means we do not need to consider DLE’s submission concerning whether the Location Term was affected by the operation of the “no extra claims” provision in the Darrell Lea Agreement or was vitiated by reason of duress. On the duress point, we simply observe that it is strongly arguable that the conduct of Darrell Lea (through its administrator) in organising and conducting the meetings of employees on 3 September 2012 was unlawful in that it failed to comply with the consultation provisions in clauses 11.A and 11.B of the Darrell Lea Agreement in contravention of s.50 of the FW Act. DLE submitted that, even if that was so, it could not mean that it had engaged in any unlawful conduct because it was not bound by the Darrell Lea Agreement as at 3 September 2012 and therefore could not have breached any provision of that agreement at that time. It might have been argued by the AMWU in response that this submission should not succeed because, under s.550 of the FW Act, involvement by a person in a contravention of a civil remedy provision of the FW Act (such as s.50) is itself a contravention of that provision. It might further have been argued that DLE’s role in the organisation and conduct of the 3 September 2012 meetings constituted involvement, under s.550 of the FW Act, in a contravention by Darrell Lea of s.51 of the FW Act, and that this was unlawful conduct which met the test for duress in ANZ Banking Group Ltd v Karam 56. Because of the conclusion we have reached about the effect of clause 2.E(h) of the Darrell Lea Agreement and clause 1.5(g) of the DLE Agreement, it is not necessary for us to pursue these potential issues any further.

[71] As earlier stated, DLE made an alternative submission that, even if the Location Term was not operative, it did not follow that the Claimant Employees were made redundant, because the conduct of DLE in directing the Claimant Employees to transfer to Ingleburn did not constitute a repudiation of the Claimant Employees’ contracts of employment. That submission was clearly based on the following passage in the decision of the Full Bench of the AIRC in Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 57:

[72] Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 concerned a question very similar to that here, namely whether employees had been made redundant when their existing work location in Sydney was closed down and they were required to transfer to another work location some 40 kilometres away, and whether the employees were as a consequence entitled to severance pay benefits under the applicable award. We have some reservations as to the necessity in that situation of analysing the position in terms of whether the employer’s conduct is repudiatory of the contract of employment. Once a “job” for the purpose of the analysis is identified as having a particular location, it is difficult to understand why (apart from any de minimis change of location) the abolition of employment at that location would not compel the conclusion that the employee’s job is no longer required to be performed by anyone. That was effectively the approach taken by a Full Bench of the AIRC in National Union of Workers v Tontine Fibres 58:

[73] In any event, we consider that DLE’s closure of the Kogarah plant and its purported direction for the Claimant Employees to transfer to Ingleburn to work constituted a repudiation of the Claimant Employees’ contracts of employment. In reaching that conclusion, we would adopt the same process of analysis as that of the Full Bench in Re Rubber, Plastic & Cable Making Industry (Consolidated) Award 1983 as follows 59:

[74] We consider that the proposed change of location here was likewise of such a degree as to constitute a repudiation of the Claimant Employees’ contracts. The additional distance to the Ingleburn site (approximately 34 kilometres), the significant additional travelling time involved (even if one takes DLE’s lower-end estimate of this), and the extent of the consequential disruption to the long-established patterns of the Claimant Employees’ personal lives and circumstances (as described in detail in the findings of the Senior Deputy President in the Third Decision) cumulatively support this conclusion with respect to each of the Claimant Employees.

[75] The Senior Deputy President was therefore correct in finding that the existing positions of the Claimant Employees had been made redundant. It is not in dispute that the employment of each of the Claimant Employees has now terminated as a result of the closure of the Kogarah plant and the refusal of the Claimant Employees to comply with DLE’s direction to move to Ingleburn. For the reasons we have already stated, we consider that DLE’s closure of the Kogarah plant and its direction to the Claimant Employees to attend for work at Ingleburn was repudiatory conduct. The Claimant Employees, by refusing to continue their employment at Ingleburn, have accepted DLE’s repudiation of their employment contracts. That constitutes a termination of employment which entitles the Claimant Employees to the redundancy payments and other benefits provided for in clause 6.6(b) of the DLE Agreement.

Reasonable alternative employment

[76] Having found that the Claimant Employees had been made redundant, the Senior Deputy President went on in the Third Decision to deal with the further issue posed to her for determination by the parties, namely whether DLE had offered the Claimant Employees reasonable alternative employment at Ingleburn such as to justify the non-payment or reduction of the redundancy pay amounts specified in clause 6.6(b) of the DLE Agreement. The joint approach of the parties in this respect was misconceived, and led the Senior Deputy President to unnecessarily determine an issue which simply did not arise for consideration in the matter.

[77] The Termination, Change & Redundancy Case decisions 60 which first established standard award redundancy provisions in the federal sphere, including a minimum scale of severance pay, conferred upon the employer an entitlement to apply to have its severance pay obligations waived or reduced where it obtained acceptable alternative employment for redundant employees. The standard provision established in this respect was as follows61:

[78] Awards and agreements made since the Termination, Change & Redundancy Case decisions have commonly contained provisions of this nature, although the precise formulation of such provisions has varied. In respect of the minimum redundancy pay entitlements prescribed as part of the National Employment Standards by s.119 of the FW Act, s.120 provides:

(1) This section applies if:

(2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.

(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.

[79] However, there is no provision of this nature contained in the DLE Agreement which operates to modify the obligation of DLE to pay the prescribed amounts of redundancy pay to any employees whose employment terminates by reason of redundancy. Indeed the “Transfer and Reclassification” provisions of clause 6.6(b) make it clear that to the extent that employees may be offered alternative positions “within the site”, they retain the option of being retrenched. This is inconsistent with any notion that the offer of acceptable alternative employment by DLE under the DLE Agreement, even at the same work location, can result in DLE escaping its redundancy pay obligations if the employee chooses not to accept the offer.

[80] DLE conceded that s.120 of the FW Act applies only to the NES redundancy entitlements in s.119, and has no application to the redundancy pay entitlements in the DLE Agreement. This was a proper concession. Section 120 only applies if the employee “is entitled to be paid an amount of redundancy pay by the employer because of section 119”. In this case, the relevant entitlement does not arise because of s.119 but because of the terms of the DLE Agreement. The inclusion of redundancy pay entitlements that are more generous than the NES scale is authorised by s.55(4)(b). As the analysis in the Full Bench decision in Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd demonstrates 62, “it is possible for an enterprise agreement to provide for a term which requires a redundancy entitlement to be paid unencumbered by s.120 of the Act” where that entitlement is more beneficial to employees than that prescribed by s.119.63 That is what the DLE Agreement does.

[81] We reject DLE’s submission that a provision allowing for the avoidance of redundancy pay entitlements where the employer obtains acceptable or suitable alternative employment is to be implied in the DLE Agreement utilising the tests for the implication of contractual terms on the basis of business efficacy enunciated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings. 64 It is doubtful whether those tests are applicable to an enterprise agreement made under the FW Act since, as was explained by the Federal Court Full Court in Toyota Motor Corporation Australia Limited v Marmara65, an enterprise agreement “is an agreement in name only” and has more of a “legislative character”.66 In any event, those tests would not permit the implication of such a term. However desirable such a term may be from an employer’s perspective, it is not necessary for the effective operation of the redundancy provision in the DLE Agreement. Nor is it so obvious that it “goes without saying”, as demonstrated in part by the fact that DLE in its submissions advanced two alternative and quite different formulations for the proposed term. Finally we note that in a number of decisions courts have declined to imply any redundancy provisions in employment contracts on the basis of business efficacy.67

[82] Accordingly, even if the Senior Deputy President erred in her consideration of whether the Claimant Employees had been offered reasonable alternative employment, this could not have affected the outcome. Under the terms of clause 6.6 of the DLE Agreement, the Claimant Employees were entitled to redundancy payments upon the basis that they were made redundant and their employment was terminated. The question of whether they were offered reasonable or acceptable alternative employment had no relevance to this entitlement.

[83] In any event, had it been necessary for us to consider the issue of reasonable alternative employment, we would not have found any relevant error. The Senior Deputy President’s factual findings were reasonably available on the evidence and relevant matters were taken into account. DLE’s complaint about this aspect of the Third Decision is, properly characterised, that matters were not given the weight which DLE would have liked them to be given. No error in the making of a discretionary decision can properly be found on that basis. 68

Conclusion and orders

[84] We find no error in the Senior Deputy President’s conclusion that the Claimant Employees were entitled to redundancy payments under clause 6.6 of the DLE Agreement. That conclusion was in the nature of an opinion which the Senior Deputy President formed in the course of conducting the arbitral process required under clause 6.3 of the DLE Agreement in relation to the dispute put before the Commission for resolution. The parties conducted the proceedings at first instance (and on appeal) on the basis that the appropriate outcome of the dispute was to be determined in accordance with the Commission’s opinion concerning the legal rights of the Claimant Employees to redundancy payments under the DLE Agreement, and accordingly the formation of such an opinion was required in arbitrating the dispute. Nonetheless it remains necessary for a final determination or final orders to be made identifying the arbitrated outcome of the dispute, since it is not the role of the Commission to declare the legal rights of parties. We will refer the matter back to the Senior Deputy President for that purpose pursuant to s.607(3)(c).

[85] We emphasise that the result at which we have arrived in this appeal has been determined by the somewhat unusual provisions of the Darrell Lea Agreement and the DLE Agreement as they operated in relation to the particular facts of this case. We do not purport to state any broader principles concerning the vexed issue of job location and redundancy.

[86] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is dismissed.

(3) The matter is referred to Senior Deputy President Drake for the making of a final determination or final orders in completion of the dispute resolution process conducted under clause 6.3 of the DLE Agreement.

al of the Fair Work Commission with the memeber's signature.

VICE PRESIDENT

Appearances:

T. Saunders of counsel with S. Boatswain solicitor for DL Employment Pty Ltd.

L. Saunders with J. Wilson for the Australian Manufacturing Workers’ Union.

Hearing details:

2014.

Sydney:

18 and 22 September.

 1   [2014] FWC 3877

 2   [2014] FWC 4914

 3   Second Decision at [7]

 4   Second Decision at [12]-[25]

 5   Second Decision at [26]-[38]

 6   Second Decision at [40]-[41]

 7   Second Decision at [42]-[44]

 8   Second Decision at [45]-[53]

 9   Second Decision at [54]

 10   Third Decision at [1]

 11   Third Decision at [2]- [41]

 12   Third Decision at [43]

 13   Third Decision at [44]

 14   Third Decision at [46]

 15   Third Decision at [47]

 16   Third Decision at [50]

 17   [2012] FCAFC 87

 18   [2005] FCA 488

 19   (1977) 180 CLR 266

 20   (1936) 55 CLR 499

 21   [2013] FCA 1351 at [52]

 22   (1983) 151 CLR 447

 23   (2005) 64 NSWLR 149 at [66]

 24   [2013] FWCFB 8557 at [46]-[50]

 25   (1986) 162 CLR 1

 26   (1984) 8 IR 34 and (1984) 9 IR 115

 27   [1989] AIRC 528; (1989) 31 IR 35 at 48-49 (footnotes omitted)

 28   Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 287 per Wilson J; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 420-421 per Brennan CJ and Dawson and Toohey JJ; Quickenden v O’Connor (2001) 184 ALR 260 at [69] per Black CJ and French J (as he then was) and at [131] per Carr J.

 29   Section 539

 30   See Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309

 31   [2013] FCA 1351

 32   [2014] FCAFC 84

 33   [2013] FCA 1351 at [52], affirmed on appeal in [2014] FCAFC 84 at [37]

 34   [2014] FCAFC 84 at [112]

 35   See Neal and Chin, The Modern Contract of Employment at [6.40].

 36   [2012] FCAFC 87

 37   Buchanan and Katzmann JJ at [41]; Flick J at [62]-[65] and [69]

 38   Ibid per Buchanan and Katzmann JJ at [45]-[50], Flick J agreeing at [71]

 39   Ibid at [45]

 40   Ibid, as discussed at [46]-[47]

 41   (1980) 142 CLR 237 at 287

 42   Ibid at 262

 43   Ibid at 260

 44   (1957) 97 CLR 177

 45   Ibid at 184

 46   (1930) 43 CLR 472

 47   Ibid at 484

 48   Ibid at 484-485

 49   (1995) 185 CLR 410

 50   Ibid at 420

 51   (1938) 59 CLR 417

 52   Ibid at 423

 53   (1995) 185 CLR 410 at 456

 54   Ibid

 55   [2005] FCA 488

 56   (2005) 64 NSWLR 149 at [66]

 57   [1989] AIRC 528; (1989) 31 IR 35 at 48-49 (footnotes omitted)

 58   (2007) 168 IR 143

 59   [1989] AIRC 528; (1989) 31 IR 35 at 50 (footnotes omitted)

 60   (1984) 8 IR 34 and (1984) 9 IR 115

 61   (1984) 9 IR 115 at 135

 62   [2014] FWCFB 6737 at [20]-[33]

 63   Ibid at [26]

 64   (1977) 180 CLR 266

 65   [2014] FCAFC 84

 66   Ibid at [88]-[89]

 67   For example, Sterling Commerce (Australia) Pty Ltd v Iliff (2008) 173 IR 378 at [28]-[34]; Dellys v Elderslie Finance Corporation Ltd (2002) 132 IR 385 at [15]-[21].

 68   Restaurant and Catering Association of Victoria [2014] FWCFB 1996 at [57]-[58]

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