1
Fair Work Act 2009
s.739—Dispute resolution
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries
Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
Safries Pty Ltd
(C2013/7238)
SENIOR DEPUTY PRESIDENT
O’CALLAGHAN ADELAIDE, 8 APRIL 2014
Application to deal with a dispute - interpretation of an agreement - redundancy payments for
casual employees.
[1] On 15 November 2013 the “Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
sought the assistance of the Fair Work Commission (FWC) in the resolution of a dispute
about redundancy entitlements under the Safries Pty Ltd Penola South Australia Enterprise
Agreement 2012 (the Agreement). The application was made pursuant to s.739 of the Fair
Work Act 2009 (the FW Act) and relied on the dispute resolution procedure in the Agreement.
[2] The matter was the subject of a conciliation conference on 4 December 2013. A
number of issues relative to the impending redundancies were resolved. There was however,
no agreement reached relative to the payment of redundancy entitlements to casual
employees.
[3] On 20 December 2012 the AMWU requested that this issue be determined by the
Commission, but that, given the Christmas holiday period, further consideration of it should
be deferred for some weeks.
[4] In a telephone conference on 15 January 2014 the parties agreed that the matter to be
referred to the Commission was:
Does Appendix 1 of the Agreement have application to employees directly engaged
by Safries as a regular casual employee and, if so, what entitlements does this
Appendix then establish?
[5] The parties agreed on a timetable for the provision of written submissions with an
opportunity to request a hearing. Both parties have provided submissions and submissions in
reply. No request for a hearing has been made. This decision takes these written submissions
into account.
[2014] FWC 2352
DECISION
E AUSTRALIA FairWork Commission
[2014] FWC 2352
2
The Agreement Dispute Resolution Process
[6] Clause 22 of the Agreement details arrangements for the settlement of disputes with
respect to the Agreement. These arrangements provided for the progressive escalation of
disputed matters, culminating in a dispute being referred to the Commission for conciliation,
and then arbitration.
[7] There is no disagreement between the parties that this matter, raised with the
Commission prior to the redundancies taking effect, should now be determined by the
Commission pursuant to this clause.
The background to the dispute
[8] Safries Pty Ltd is part of the McCain Group of companies. For convenience, I have
simply referred to it as Safries.
[9] Safries set out a summary background to this matter. I do not understand that there is
any dispute about the background facts.
[10] In December 2012, the employees engaged by Safries became employees of the
McCain Group of Companies. Those employees at the Penola manufacturing facility were
advised in or around October 2013, that processing at Penola would cease on 20 December
2013. On 15 December 2013, 12 casual employees were dismissed. Redundancy payments
were made to weekly hire employees. The AMWU asserts that, on a proper construction of
the Agreement, redundancy payments are due to those 12 regular casual employees.
The Agreement
[11] The Agreement commenced operation on 30 August 2012 and has a nominal expiry
date of 1 February 2015. The AMWU is a party covered by the Agreement. The Agreement
incorporates, except to the extent of any inconsistency, the terms of the Food, Beverage and
Tobacco Manufacturing Award 2010 (the FBT Award) with respect to production employees
and the Manufacturing and Associated Industries Award 2010 (the Manufacturing Award)
with respect to employees who would otherwise be covered by that award. Specifically, the
Agreement states:
“If an incorporated Award term (to the extent that the incorporated Award applies to a
particular employee covered by this Agreement) is inconsistent with an express term of
this Agreement, the express term in the Agreement prevails over the incorporated
Award term to the extent of the inconsistency.”1
[12] In considering the matter in dispute I have had particular regard to clause 8 which
purports to provide limitations on the circumstances under which labour hire casual
employees may be engaged. Additionally, clause 9 of the Agreement provides for a six
monthly review of casual employees and for arrangements relative to conversion to full-time
roles.
[13] Appendix 1 of the Agreement deals with Redundancy and Retrenchment situations.
This Appendix sets out the process to be followed in a redundancy situation including
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employee selection and redeployment arrangements not relevant to the current closure
situation.
[14] Clause 14 of Appendix 1 states:
“14 Periods of short-term employment will accumulate from year to year included for
the purpose of calculating length of service under this agreement. Provided that the
break between periods of short term or casual employment does not exceed six (6)
months. Leave negotiated between the employer and the employee or authorized leave
under the terms of the award that exceed the six (6) month period, will not be
considered to have removed the entitlement of the accumulation of prior short term
service in the calculation of length of service under this agreement.”
[15] The following clauses are covered by a heading:
“REDUNDANCY/RETRENCHMENT PAYMENTS (Weekly Employees Only)
15 For employees who seek voluntary redundancy/retrench 3 weeks pay plus 3 weeks
payment for each completed year of service to a maximum of 45 weeks.
16 For employees compulsorily made redundant or retrenched by the employer 3
weeks pay and 4 weeks payment for each completed year of service.
17 Any periods of short term service under Clause 14 and included as service under
this agreement shall be paid at the rate of 1.5 weeks per accumulated year of short-
term service. This adjustment recognises the 3% bonus paid for periods of short-term
employment.
18 In the event of compulsory redundancy or retrenchment any short term service
under Clause 14 and included as service under this agreement shall be paid at the rate
of 2.5 weeks per accumulated year of short term service. This adjustment recognises
the 3% bonus paid for periods of short-term employment.”
[16] In considering the matter I have also taken into account the following provisions of the
FBT Award:
clause 13 Casual Employment
clause 19 Redundancy.
[17] Notwithstanding that I understand that the casual employees in question are
production employees, I have taken into account the following provisions of the
Manufacturing Award:
clause 14 Casual Employment
clause 23 Redundancy.
[18] Because the Manufacturing Award and the FBT Award (the Awards) refer to the
redundancy pay entitlements set out in the National Employment Standards, I have also noted
ss.119 to 123 of the FW Act.
[2014] FWC 2352
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The Submissions
[19] The AMWU position is that full-time casual employees working regularly scheduled
hours under the Agreement are entitled to redundancy payments. The AMWU asserts that
Appendix 1 of the Agreement does not distinguish between different types of regular
employees.
[20] The primary AMWU position2 in this respect is that the Agreement is unambiguous
such that the redundancy obligation arises. In the alternative, the AMWU asserts3 that the
casual conversion clause of the Agreement should be taken to be a trade-off for the casual
conversion rights under the Manufacturing Award such that casual employment was
recognised for redundancy purposes.
[21] The AMWU asserts that the Agreement, including the redundancy provisions, reflect
the arrangements set out in the Safries Pty Ltd Penola South Australia Enterprise Agreement
2003 and that no reliance on past redundancy practices can be inferred because redundancies
have not previously occurred. Further, that the Agreement redundancy arrangements excluded
only irregular casual employees and that the casual employees seeking redundancy payment
should be regarded as "weekly full time casual employees".4 Finally, the AMWU argues that
the employer's failure to convert these casual employees to weekly hire employees should not
now be relied upon so as to then deny those employees payment for redundancy entitlements.
[22] The Safries position is that Appendix 1 does not apply to casual employees but
establishes redundancy entitlements for permanent, full or part-time employees which take
account of short-term periods of employment, or casual employment, on the part of those
employees. Safries assert that the Agreement must be read on the basis that the Award
provisions relative to casual employees did not establish a right to redundancy payments.
[23] In terms of Appendix 1, Safries assert that this Appendix concerns only the process of
retrenchment/redundancy and redundancy pay for eligible employees.5 Safries concluded:
“It follows, therefore, that the Agreement and Appendix 1 must be read in conjunction
with the FBT Award, and because the FBT Award provides for redundancy in
accordance with the NES (clause 19), it is submitted that the corollary is that the
Casual Employees are excluded from redundancy pay entitlements.”6
[24] Safries also relies on the Termination, Change and Redundancy decisions of the
Australian Industrial Relations Commission.7 It asserts that Appendix 1 does not establish a
mechanism for calculation of redundancy pay for casual employees and the history of the
Agreement provisions does not support the AMWU position.
[25] Safries assert that Appendix 1 is ambiguous and hence the FWC should have regard to
extraneous material in reaching a conclusion about this issue. Safries argues that the casual
conversion provisions of the Agreement modify the relevant Award provisions to take into
account the seasonal nature of its work and do not form a basis for the redundancy claim by
casual employees.
[26] Finally, Safries assert that two of these employees were variously engaged as casual
and short-term employees whilst another employee was, at the time of the termination of her
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employment, a weekly hire employee and was recognised as such through redundancy
payments.
Findings
[27] The approach to the interpretation of an agreement provision was recently reviewed by
a Full Bench of the Commission8 in the following terms:
“[28] The task of construing an expression in an enterprise agreement (such as the
expression ‘subject to any appeal rights’ in clause 24.1.1(e)) begins with a
consideration of the ordinary meaning of the words having regard to their context and
purpose. As Gleeson CJ and McHugh J observed in Amcor Limited v CFMEU:
“The resolution of the issue turns upon the language of the particular
agreement, understood in the light of its industrial context and purpose ...”
[29] Context may appear from the text of the agreement taken as a whole, its
arrangement and the place in it of the provision under construction. The legislative
context against which the agreement was made and in which it was to operate is also a
relevant contextual consideration.
[30] The task is to identify the common intention of the parties as expressed in the
terms of their agreement, the subjective intentions or expectations of the parties are
irrelevant. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd the High Court described the
task, in the context of commercial contracts, as follows:
“It is not the subjective beliefs or understandings of the parties about their
rights and liabilities that govern their contractual relations. What matters is
what each party by words and conduct would have led a reasonable person in
the position of the other party to believe. References to the common intention
of the parties to a contract are to be understood as referring to what a
reasonable person would understand by the language in which the parties have
expressed their agreement. The meaning of the terms of a contractual document
is to be determined by what a reasonable person would have understood them
to mean. That, normally requires consideration not only of the text, but also of
the surrounding circumstances known to the parties, and the purpose and object
of the transaction.”
[31] Importantly, the task of interpreting an enterprise agreement does not involve
rewriting a provision in order to give effect to the Commission’s view of what would
be fair and just, without regard to the terms of the agreement. As Madgwick J
observed in Kucks v CSR Limited:
“But the task remains one of interpreting a document produced by another or
others. A court is not free to give effect to some anteriorly derived notion of
what would be fair or just, regardless of what has been written into the award.
Deciding what an existing award means is a process quite different from
deciding, as an arbitral body does, what might fairly be put into an award. So,
for example, ordinary or well-understood words are in general to be accorded
their ordinary or usual meaning.”
[2014] FWC 2352
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[32] The Acts Interpretation Act 1901 (Cth) may also be applicable to the construction
of agreements approved under Division 4 of Part 2-4 of the Act, as if the agreement
were an act. This may be so because of the operation of s.46 of the Acts Interpretation
Act 1901 (Cth), which states:
“s.46 Construction of instruments
(1) If a provision confers on an authority the power to make an instrument that
is neither a legislative instrument for the purpose of the Legislative Instruments
Act 2003 nor a rule of court, then (a) this Act applies to any instrument so
made as if it were an Act and as if each provision of the instrument were a
section of an Act; and (b) expressions used in any instrument so made have the
same meaning as in the enabling legislation as in force from time to time; and
(c) any instrument so made is to be read and construed subject to the enabling
legislation as in force from time to time, and so as not to exceed the power of
the authority.
(2) If any instrument so made is to be read and construed subject to the
enabling legislation as in force from time to time, and so as not to exceed the
power of the authority.”
[33] The application of the Acts Interpretation Act 1901 (Cth) to awards made by the
Commission was the subject of some consideration by French J (as he then was) in
City of Wanneroo v Australian Municipal Administrative, Clerical and Services Union
(Wanneroo), in which his Honour said:
“The interpretation of legislative instruments is dealt with in the Legislative
Instruments Act 2003 (Cth). Awards and agreements made under the Act are
declared, by s 7(1) of the Legislative Instruments Act, not to be legislative
instruments — see Item 18 in the table set out in s 7(1). This leaves such
awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) ...
An award is an instrument made by an authority, in this case the Australian
Industrial Relations Commission, and so attracts the application of the Acts
Interpretation Act for the purposes of its interpretation.”
[34] Section 7(1) of the Legislative Instruments Act 2003 (Cth) declares that ‘fair
work instruments (within the meaning of the Fair Work Act 2009)’ are not ‘legislative
instruments.’ The definition of a ‘fair work instrument’ in s.12 of the Act includes an
enterprise agreement. An ‘enterprise agreement’ is defined to include, relevantly, a
‘single enterprise agreement’ which is in turn defined to mean an enterprise agreement
made as referred to in s.172(2). The 2011 Agreement is such an agreement. It follows
that for the purpose of s.46(1) of the Acts Interpretation Act 1901 (Cth) enterprise
agreements may be instruments which are neither legislative instruments nor a rule of
court.
[35] Section 46(1) of the Acts Interpretation Act 1901 (Cth) may apply because an
enterprise agreement is an instrument which is neither a legislative instrument nor a
rule of court and which is made by an authority (the Commission) pursuant to a power
conferred on it by the Act. While s.182 speaks of an enterprise agreement being
‘made’ when a majority of the employees that will be covered by it cast a valid vote to
[2014] FWC 2352
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approve the agreement, the operation and enforcement of enterprise agreements is
contingent on their approval by the Commission. Enterprise agreements come into
operation seven days after their date of approval by the Commission, or from any later
date specified in the agreement itself (s.54(1)). Section 50 provides that a person must
not contravene a term of an enterprise agreement that applies to the person. This is a
civil remedy provision and means that enterprise agreements are enforceable in the
same way as awards and other instruments made under the Act. An agreement only
applies to a person while it is in operation (s.52) and as we have noted an agreement
only operates once it has been approved by the Commission.
[36] A consequence of the application of the Acts Interpretation Act 1901 (Cth) to
enterprise agreements would be that extrinsic materials may be used as an aid to
construction, as provided for in s.15AB of that act.”
(references removed)
[28] I have adopted this approach.
[29] The Agreement must be read in concert with the appropriate award. Whilst I
understand that the appropriate award is the FBT Award, I have nevertheless considered both
that award and the Manufacturing Award.
[30] The Agreement refers specifically to casual employees in terms of Labour hire
casuals, (clause 18), casual conversion arrangements (clause 9) and Parental Leave (clause
12). It is not until Appendix 2 "Safries Seven Day Roster Agreement Food Preservers 2012",
that there is a partial definition of casuals which is in the following terms:
“Casuals:
Employment of casuals will occur in line with the provisions contained in this
Agreement to cover for absenteeism and unavailability, as well as for the occasions
when production requirements may require additional personnel etc.
The casuals who work less than 38 hours in a week will be paid the appropriate
overtime payment for working a shift in excess of 8 hours, plus for such overtime 30%
of ordinary time if on night shift.
Casuals who work above 38 hours in one week will be paid the appropriate overtime
payment for working in excess of 38 ordinary hours on shift in any week – time and a
half for the first three hours and double time thereafter, plus for such overtime 30% of
ordinary time if on night shift.”
[31] That provision appears to be related to the seven day roster arrangements rather than
an actual definition of casual employment and a description of how that employment operates.
[32] There is no wages schedule in the Agreement. Clause 6 establishes wage increases
based on wages payable under the previous Agreement. The Safries Pty Ltd Penola South
Australia Enterprise Agreement 2010 records wage rates in the form of an undertaking but
again does not define casual employment, nor establish casual loadings.
[2014] FWC 2352
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[33] Consequently, it is necessary to consider the relevant award provisions. The FBT
Award (clause 13) and the Manufacturing Award (clause 14) establish definitions of casual
employment including casual loadings. I note that the Awards exclude casual employees from
paid personal/carers and annual leave. Casual employees are able to access parental leave in
terms consistent with the provisions of the FW Act. In terms of redundancy arrangement, the
Awards incorporate the provisions of the National Employment Standards set out in the FW
Act. Section 123 establishes that redundancy payments set out in s.119 are not applicable to
casual employees.
[34] I note that the non-application of redundancy payment entitlements to casual
employees has long been recognised by the Commission.9 In 2000, the Australian Industrial
Relations Commission (the AIRC) reviewed casual employment arrangements in the Metal,
Engineering and Associated Industries Award 1998. In deciding to increase the casual loading
to 25%, the Full Bench took into account the non-application of redundancy provisions to
casual employees.10 The Full Bench concluded:
“[180] Except in relation to quantification, the debate between the applicant and
respondents about the inclusion of components for notice of termination and severance
was not responsive to the counter-propositions each advanced. In our view, no one
aspect of the award entitlements is more prominent on the face of the Award than the
discrepancy between the notice of termination required to be given to full-time and
other continuing employees, and the lack of any such requirement applicable to
casuals. Like the express exclusion of casuals from paid leave and severance benefits,
the difference in entitlements to notice of termination of employment is an intended
difference in the award based incidents of full-time and casual employment. The
question that must be determined in this context is what, if any, value should be
attributed to those differences in a loading designed to achieve a balance between
different types of employment related to the minimum standards established by the
Award.
[181] Notice of termination is an award right for full-time and part-time employees.
Thus it is a vested but contingent benefit and incident of that type of employment. The
standard of notice of termination established by the TCR Award in 1984 is identical in
quantum to the statutory prescription now applied to termination of employments
other than summary dismissals by section 170CM of the Act. Conversely, there is no
more important incident of casual employment than the term of hire and the associated
lack of entitlement to reasonable notice; or, at least to notice corresponding to that
made available to full-time or part-time employees. Fixed term employees whose
contracts expire also have no award or statutory right to notice. There is no
termination of their employment: it merely expires.
[182] It is no less clear in our view that the comparative disadvantage of casual
employees relative to weekly hire employees in relation to entitlement to notice has
widened since 1974, and quite markedly again since 1984. That widening is a
consequence, indeed an intended effect, of the legislative scheme as well as a by-
product of some changes imported into the Award.
[183] We consider that the different entitlements to notice and to severance benefits
are appropriately to be taken into account in any judgment of the adequacy of the
casual rate loading. The differences, together with the employment by the hour
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distinction, are fundamental to the respective types of employment. However, we are
not persuaded that there is any cogency in the approximations made by the AMWU
about the value of the respective entitlements based on average or estimated numbers
of "dismissals" of casuals, or an attributed number of terminations of full-time
employment.”11
[35] In 2008, as part of the Award Modernisation programme the AIRC confirmed the
application of the 25% casual loading and the approach applied in 2000 with respect to the
Metal, Engineering and Associated Industries Award 1998.12
[36] The Awards thus make it clear that casual employees are not entitled to redundancy
pay irrespective of whether the casual employee is regularly engaged or otherwise.
[37] The Awards also make clear that employment is either on a full-time or part-time
weekly hire basis or, is of a casual nature. There is no recognition of a hybrid arrangement of
the nature suggested by the AMWU. Additionally, the Awards do not provide for a deeming
arrangement whereby a casual employee can be deemed to be a weekly hire employee.
[38] Consequently, in terms of the Agreement, unless Appendix 1 can be read as
establishing an entitlement for redundancy pay, I do not consider that any such right can be
inferred. There is certainly nothing in the Agreement that establishes that casual employees
can be regarded as "weekly full time casual employees" such that there is a prima facie right
to redundancy pay. Further, there is nothing in the Agreement that represents a form of
automatic transition from casual employment to weekly hire employment independent of the
casual conversion provisions in clause 9.
[39] Clauses 15, 16, 17 and 18 of Appendix 1 are preceded by a heading:
"Redundancy/Retrenchment Payments (Weekly Employees Only)". These clauses are the
only provisions in Appendix 1 which provide for redundancy payments. Consequently, the
proposal that employees engaged on a regular casual basis at the time of a redundancy should
receive redundancy payments requires that this clear and unambiguous heading be ignored.
[40] I think that Appendix 1 must be read as establishing an entitlement to redundancy
payments for weekly employees on the basis that these payments recognise periods of short-
term or casual employment within the limitations established by clause 14. Those periods of
short-term or casual employment entitle the weekly hire employee to receive redundancy
payments calculated at a lesser rate of accrual for that period. There is no specific entitlement
to redundancy pay for employees who, at the time of the redundancy, were not weekly hire
employees.
[41] In reaching this conclusion about the provisions of Appendix 1, I have had regard to
the history of this provision. The parties have not provided information about the background
of this Appendix but it appears to have been inserted in the 2003 agreement applicable to
Safries in terms which reflect the current Appendix redundancy and retrenchment payment
provisions. Consequently, I do not consider that there is anything in the history of this
provision which establishes a payment entitlement for casual employees.
Conclusion
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[42] I have concluded that the Agreement does not provide for payment of redundancy
provisions to casual employees. Specifically, Appendix 1 has application to employees
directly engaged by Safries in that it establishes the accrual of redundancy benefits with
respect to certain periods of short-term or casual employment. It does not however, provide
for a redundancy payment entitlement to persons who, at the time of the termination of the
employment, were engaged as regular casual employees.
SENIOR DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
Price code C, PR549461
1 Safries Pty Ltd Penola South Australia Enterprise Agreement 2012, clause 0.5, para 3
2 AMWU Submissions of 4 March 2014, para 6
3 AMWU Submissions of 4 March 2014, para 7
4 AMWU Submissions of 23 March 2014, para 4
5 Safries Submission of 5 March 2014, para 15
6 Safries Submission of 5 March 2014, para 16
7 (1984) 8 IR 34
8 DP World Brisbane Pty Ltd v MUA [2013] FWCFB 8557, paras 28-36
9 See Termination, Change in Redundancy Case, (1984) 8 IR 34, para 312
10 (2001) 105 IR 27 (Print T4991), paras 177-185
11 (2001) 105 IR 27 (Print T4991), paras 180-183
12 See [2008] AIRCFB 1000, paras 47-52
THE FAIR WORK AUSTRALIA MMISSION THE SEAA
