DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Cameron Fraser; Construction, Forestry, Maritime, Mining and Energy Union
v
JFM Civil Contracting Pty Ltd
(C2020/4367)

Appeal against decision [2020] FWC 2546 of Commissioner Spencer at Brisbane on 15 May 2020 in matter number C2020/2036.

Introduction and background

[1] The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) has lodged an appeal, for which permission is required, against a decision of Commissioner Spencer issued on 15 May 2020 1 (decision). The decision concerned an application made by JFM Civil Contracting Pty Ltd (JFM) for the redundancy entitlement owing to Mr Cameron Fraser, a former employee of JFM, under clause 17 of the Building and Construction General On-site Award 2010 (Award) to be reduced to nil pursuant to s 120 of the Fair Work Act 2009 (FW Act). The Commissioner granted the application and ordered that the redundancy entitlement be reduced to nil pursuant to s 120(2) of the FW Act. The CFMMEU contends in its appeal that the decision was beyond power and should be quashed because s 120 of the FW Act does not authorise the Commission to reduce redundancy entitlements conferred by the Award.

[2] In circumstances where the current COVID-19 pandemic prevents the Commission from conducting in-person hearings, the Commission inquired of the parties whether they were prepared to have the appeal determined on the written submissions and without conducting a hearing. Both parties consented to this course. It was considered that the appeal could be adequately determined without the parties making oral submissions for consideration. Accordingly, the appeal has been conducted without holding a hearing pursuant to s 607(1) of the FW Act.

[3] This appeal was originally allocated to a Full Bench consisting of Vice President Hatcher, Deputy President Asbury and Deputy President Kovacic. Sadly, on 31 July 2020, Deputy President Kovacic passed away. On 12 August 2020, the President of the Commission, Ross J, reconstituted the bench to consist of Vice President Hatcher, Deputy President Asbury and Deputy President Gostencnik. The parties were informed of this the same day, and advised that Deputy President Gostencnik would read the submissions and other materials filed by the parties, and would join in the decision-making process of the reconstituted Full Bench on that basis. The parties were given an opportunity to object to this course, but no communication of any objection was received, and accordingly the matter has been determined on the basis described.

[4] The background of the matter is as follows. JFM operates in the building and construction industry and is covered by the Award. It is a small business with less than 15 employees. Mr Fraser was employed by JFM for over four years in a position that was covered by the Award. On 11 November 2019, JFM provided its employees, including Mr Fraser, with a notice to the effect that they might potentially be made redundant five weeks after the date of the notice. Mr Fraser then resigned his employment in order to take up alternative employment elsewhere.

[5] It was not in dispute that these circumstances gave rise to an entitlement under clause 17 of the Award for Mr Fraser to be paid redundancy pay by JFM. Clause 17 of the Award provides for an industry specific redundancy scheme. In this respect, clause 17.1 provides:

17.1 The following redundancy clause for the on-site building, engineering and civil construction industry (as defined) is an industry specific redundancy scheme as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.

[6] Clause 17.2 defines “redundancy” for the purpose of the industry specific scheme in clause 17 as follows:

17.2 Definition

For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning.

[7] There was no dispute that Mr Fraser’s resignation in the circumstances earlier described constituted a redundancy within the meaning of clause 17.2.

[8] The scale of redundancy pay under the scheme is provided for in clause 17.3(a) as follows:

17.3 Redundancy pay

(a) A redundant employee will receive redundancy/severance payments, calculated as follows, in respect of all continuous service with the employer:

Period of continuous service with an employer		Redundancy/severance pay
1 year or more but less than 2 years		2.4 weeks’ pay plus for all service in excess of 1 year, 1.75 hours pay per completed week of service up to a maximum of 4.8 weeks’ pay
2 years or more but less than 3 years		4.8 weeks’ pay plus, for all service in excess of 2 years, 1.6 hours pay per completed week of service up to a maximum of 7 weeks’ pay
3 years or more than but less than 4 years		7 weeks’ pay plus, for all service in excess of 3 years, 0.73 hours pay per completed week of service up to a maximum of 8 weeks’ pay
4 years or more		8 weeks’ pay

[9] The above scale indicates that Mr Fraser was entitled, based on his length of service, to eight weeks’ pay. The Commissioner at one point considered that Mr Fraser’s redundancy entitlement was reduced by one week under clause 17.6 because Mr Fraser left during his period of notice to take up alternative employment, 2 but subsequently proceeded on the basis that he had an entitlement of eight weeks’ pay.

[10] JFM made the application the subject of the Commissioner’s decision on 1 April 2020 pursuant to s 120 of the FW Act. Section 120 forms part of a scheme of redundancy pay entitlements contained in Subdivision B of Division 11 of Part 2-2, The National Employment Standards, of the FW Act. Section 120 provides:

120 Variation of redundancy pay for other employment or incapacity to pay

(1) This section applies if:

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and

(b) the employer:

(i) obtains other acceptable employment for the employee; or

(ii) cannot pay the amount.

(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.

[11] JFM’s application was brought on the basis that it could not pay the amount to which Mr Fraser was entitled under clause 17 of the Award, and therefore that the section applied by virtue of s 120(1)(b)(ii).

[12] Section 120(1)(a) provides that the section applies where the relevant employee is entitled to be paid an amount of redundancy pay by the employer because of section 119. Section 119, which also falls within Subdivision B, provides:

119 Redundancy pay

Entitlement to redundancy pay

(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer.

Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

Amount of redundancy pay

(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:

[13] The Note to s 119(1) points to the fact that ss 121-123 provide for a number of situations in which an employee does not have an entitlement under s 119. One of these provisions is s 123(4)(b), which provides:

Other employees not covered by redundancy pay provisions

(4)  Subdivision B does not apply to:

…

(b)  an employee to whom an industry-specific redundancy scheme in a modern award applies;…

…

The decision

[14] In the decision, the Commissioner commenced by setting out the background to the matter, and said:

“[4] It was agreed that JFM is a small business with less than 15 employees. Section 121 (1)(b) of the Act provides an exclusion for small business employers that exempts them from the obligation to pay for redundancy. However, s.123(4)(b) of the Act removes this exclusion for small business employers if there is an industry specific redundancy scheme that is applicable. In the current circumstances, clause 17.1 of the Award provides for an industry specific redundancy scheme and that the exclusion for small business employers is not applicable, therefore making the redundancy payable in accordance with clause 17.3 of the Award, where an employee ceases to be employed by an employer.

[5] Mr Fraser was employed for over four years. In accordance with s.119 of the Act, the redundancy pay equivalent to this redundancy period is 8 weeks. Mr Fraser communicated his resignation to take up other work during the notice period. The employer, in accordance with clause 17.6 of the Award, is therefore at liberty to deduct a week of notice off the redundancy period; therefore, the claim is reduced to 7 weeks.”

[15] The Commissioner set out the relevant provisions of the Award and the legislative scheme, and then summarised the submissions and evidentiary material provided by the parties. Those submissions made no reference to s 123(4)(b). In her consideration, the Commissioner expressed her satisfaction that JFM “had an obligation to pay redundancy pursuant to the industry specific redundancy scheme”, 3 and focused on the question of whether JFM had the capacity to pay this entitlement. The Commissioner found, based on an analysis of the financial position of JFM, that it had no capacity to pay the entitlement due to financial losses and a downturn in available work and income. The Commissioner stated the following conclusion:

“[47] When taking all of the criteria and circumstances into account, in accordance with s.120(1)(b)(ii) and (3), and for the reasons set out above, the redundancy payment of eight (8) weeks [sic] is reduced to nil (0) pursuant to s.120 (2) of the Act.

[48] I Order accordingly.”

[16] No further consideration was given in the decision to the applicability and effect of s 123(4)(b).

Appeal submissions

[17] The CFMMEU submitted that it had standing to appeal as a person aggrieved pursuant to s 604(1) because it was a registered organisation under the Fair Work (Registered Organisations) Act 2009 (Cth), its eligibility rules permit it to represent the interests of employees covered by the Award and, should the decision remain undisturbed, it had the potential to adversely impact the interests of a significant number of the CFMMEU’s current and future membership cohort. It contended that, for these reasons, it had an interest in the decision beyond that of an ordinary member of the public. The CFMMEU submitted that permission to appeal should be granted because the decision raised issues of importance regarding the interaction between the redundancy provisions in the FW Act and industry-specific redundancy schemes contained in modern awards, manifested an injustice to Mr Fraser, was attended by sufficient doubt to warrant its reconsideration, and was inconsistent with several other single member decisions of the Commission.

[18] The decision was in error, the CFMMEU submitted, because the Commissioner in paragraphs [4] and [5] of the decision incorrectly identified the source of Mr Fraser’s redundancy entitlement as s 119 of the FW Act rather than clause 17 of the Award. As a result, the Commissioner erroneously treated s 120 as applicable to Mr Fraser’s entitlement. Section 120, it was submitted, was not available to reduce redundancy entitlements arising under a modern award because s 123(4)(b) excludes its operation, as well of that of s 119, where an industry-specific redundancy applies to an employee.

[19] JFM submitted that the CFMMEU did not have standing to bring the appeal because it was not a party to the proceedings before the Commissioner, the appeal was not brought by Mr Fraser, neither Mr Fraser nor any of JFM’s employees was a member of the CFMMEU, the decision did not impact or affect the members of the CFMMEU or the CFMMEU itself. The suggestion, it was submitted, that the decision might have some future impact on other, unknown members of the CFMMEU does not create any real, direct and present impact which would cause the CFMMEU to be a person aggrieved for the purpose of s 604(1)(a).

[20] JFM also submitted that permission to appeal should not be granted because the decision does not raise any issues of importance and general application but related only to the factors which allowed for a reduction in redundancy pay in the specific circumstances of JFM and Mr Fraser. It submitted that in the absence of valid standing, the CFMMEU’s grounds of appeal need not be considered by the Commission, that the appeal should be dismissed, and that it should be awarded its costs of and incidental to the appeal on an indemnity basis. JFM did not made any submissions about the merits of the appeal.

Consideration

Standing

[21] Section 604(1) of the FW Act permits a “person who is aggrieved by a decision” to appeal the decision with the permission of the Commission. The “person aggrieved” formulation for standing to initiate appellate or judicial review proceedings has been assigned a broad meaning. In the Federal Court Full Court decision in Right to Life Association (NSW) Inc v Secretary, Department of Human Services, 4 Lockhart J said, in relation to the “person aggrieved” test for standing to apply for judicial review of a decision under the Administrative Decisions (Judicial Review) Act 1977 (Cth):

“The applicant's interest must not be remote, indirect or fanciful. The interest must be above that of an ordinary member of the public and must not be that of a mere intermeddler or busybody. The ADJR Act has selected in ss. 5 and 6 as its criterion for standing the expression "a person aggrieved". The word "interest" is not used in ss. 3 and 5. The term a "person aggrieved" is not a restrictive one; it is of very wide import.

Plainly the applicant need not have a legal, financial or proprietary interest in the subject matter of the proceeding. The applicant must establish that he is a person who has a complaint or grievance which he will suffer as a consequence of the decision beyond that of an ordinary member of the public.” 5

[22] This approach was referred to with approval by French CJ and Keane J in the High Court decision in Argos Pty Ltd v Minister for Environment and Sustainable Development. 6 In the same decision, Hayne and Bell JJ said (footnote omitted):

“The focus of the inquiry required by the words is upon the connection between the decision and interests of the person who claims to be aggrieved. The interests that may be adversely affected by a decision may take any of a variety of forms. They include, but are not confined to, legal rights, privileges, permissions or interests. And the central notion conveyed by the words is that the person claiming to be aggrieved can show that the decision will have an effect on his or her interests which is different from ("beyond") its effect on the public at large.” 7 

[23] The same approach has been taken in relation to the “person aggrieved” test for appeal in s 604(1) of the FW Act. 8

[24] The CFMMEU does not have a direct legal, financial or proprietary interest in the subject matter of the proceeding the subject of the decision under appeal. Nonetheless, we consider that it is a person aggrieved by the decision. The CFMMEU’s rules entitle it to represent the interests of employees covered by the Award, and there is no question that it has members covered by the Award. Rule 4 of the CFMMEU’s rules provide that its objects include to “[t]o regulate and protect the wages and conditions under which all members or other persons entitled to become members of the Union may be employed...”, “...to foster the bests interests of the members of the Union” and “[t]o protect members from any infringement of their rights”. The decision stands as authority for the proposition that the redundancy entitlements of employees under the Award may be reduced by a specified amount or to nil pursuant to s 120 of the FW Act. In that respect, it is inconsistent with at least three earlier single-member decision in which it was determined that s 120 does not authorise the reduction of redundancy entitlements arising under clause 17 of the Award, namely Coolabah Landscapes v Cooper, 9  Coastal Formwork Pty Ltd10 and Highland Land Company Pty Ltd t/a Duraseal.11 The decision can therefore be regarded as representing a basis for the diminution of the redundancy entitlements of the CFMMEU’s current and future members covered by the Award and in that sense affects and disadvantages the interests of the CFMMEU. That is an effect which is different to and goes beyond the effect of the decision on the public at large.

Permission to appeal and the merits of the appeal

[25] The Commission’s power to reduce redundancy entitlements arises under s 120 of the FW Act. Section 120 only applies if the employee is entitled to be paid redundancy pay under s 119 of the FW Act. If s 119 is not the source of an employee’s redundancy entitlement, then there is no power under s 120 to reduce that entitlement.

[26] As earlier stated, there was no dispute in the proceedings before the Commissioner that Mr Fraser’s redundancy entitlement arose under clause 17 of the Award. JFM’s own application identified the Award as the source of the entitlement. The Commissioner found that Mr Fraser’s employment with JFM was covered by the Award, and no party took issue with that finding in the appeal. That being the case, s 119 did not apply to Mr Fraser, and he did not derive a redundancy entitlement from it, because the effect of s 123(4)(b) was that Subdivision B of Division 11 of Part 2-2, which contains s 119, did not apply to him. Consequently s 120 also did not apply (both because Mr Fraser was not entitled to a redundancy payment under s 119 as required by s 120(1)(a) and because s 123(4)(b) rendered s 120 inapplicable to him). There was therefore no power under s 120 to reduce Mr Fraser’s redundancy entitlement.

[27] The Commissioner appears to have erroneously conflated Mr Fraser’s redundancy entitlement under clause 17 of the Award with the redundancy entitlements provided for by s 119. In paragraph [4] of the decision, the Commissioner recognised that Mr Fraser had a redundancy entitlement under clause 17 of the Award, but in the next paragraph the Commissioner referred to Mr Fraser’s redundancy entitlement as being eight weeks’ pay “in accordance with s 119 of the Act”. However, the Commissioner subsequently expressed her satisfaction that JFM “had an obligation to pay redundancy pursuant to the industry specific redundancy scheme”. This involved a failure to recognise that the relevant effect of s 123(4)(b) is that, where an employee is entitled to redundancy pay under an industry-specific redundancy scheme in a modern award, the redundancy entitlements provided for in s 119 do not apply.

[28] The effect of the error described was that the Commissioner acted beyond power in reducing Mr Fraser’s redundancy entitlement under clause 17 of the Award pursuant to s 120 of the FW Act. JFM has not identified any alternate source of power for the order made by the Commissioner. Clause 17 of the Award does not itself contain any provision analogous to s 120 which would empower the Commission to reduce the entitlements arising under the provision.

[29] Because the Commissioner’s decision and order were beyond power, and the decision disturbed the well-settled position established in previous single-member decisions, we consider that the grant of permission to appeal would be in the public interest. Permission to appeal must therefore be granted in accordance with s 604(2). For the reasons stated above, we have decided to uphold the appeal and quash the decision. JFM’s application pursuant to s 120 of the FW Act must also be dismissed as incompetent.

Orders

[30] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is upheld.

(3) The decision ([2020] FWC 2546) is quashed.

(4) The application in matter C2020/2036 is dismissed.

VICE PRESIDENT

Hearing details:

Determined on the written submissions filed.

Final written submissions:

CFMMEU – 1 July and 4 August 2020.

JFM – 22 July 2020.

Printed by authority of the Commonwealth Government Printer

<PR722681>

 1   [2020] FWC 2546

 2   Ibid at [5]

 3   Ibid at [43]

 4   [1995] FCA 33, 56 FCR 50

 5   Ibid at p.65

 6   [2014] HCA 50, 254 CLR 394 at [48]

 7   Ibid at [61]

 8   Australian Industry Group [2010] FWAFB 4337, 196 IR 125 at [9]- [12]; Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2013] FWCFB 276 at [29]; Australian Mines and Metals Association Inc; Master Builders Australia Limited v Construction, Forestry, Maritime, Mining and Energy Union [2018] FWCFB 3710 at [30]

 9   [2015] FWC 1337

 10   [2016] FWC 2705

 11   [2020] FWC 844