1
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 Decision1 (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
1 [2014] FWC 3877
2 [2014] FWC 4914
[2014] FWCFB 7946
DECISION
E AUSTRALIA FairWork Commission
[2014] FWCFB 7946
2
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:
“2.A APPLICATION
This Agreement shall apply at Darrell Lea Chocolate Shops Pty Ltd to all employees
engaged at and from 160 and 200 Rocky Point Road, Kogarah NSW 2217 and 3
Brooks Road, Ingleburn NSW 2565 who, would have, but for the existence of this
Agreement been covered by any of the following Modern Awards:
a) Food, Beverage and Tobacco Manufacturing Award 2010;
b) Manufacturing and Associated Industries and Occupations Award 2010; and
c) Miscellaneous Award 2010;
d) Storage Services and Wholesale Award 2010.”
[3] Clause 2.E(f) of the Darrell Lea Agreement provided:
“f) Existing over award payments and conditions of employment shall continue to
apply as if they were a term of this agreement except where the expressly stipulated
terms of this agreement provide otherwise.”
[4] Clause 2.F of the Darrell Lea Agreement contained a prohibition against extra claims
as follows:
“2.F NO EXTRA CLAIMS
It is a term of this Agreement that the parties bound by the Agreement shall not pursue
any extra claims for the life of the Agreement.”
[5] Clause 11 of the Darrell Lea Agreement was entitled “Introduction of Change;
Discussions before Redundancy; Redundancy Provisions. It provided:
“11 INTRODUCTION OF CHANGE; DISCUSSIONS BEFORE
REDUNDANCY; REDUNDANCY PROVISIONS
11.A INTRODUCTION OF CHANGE
a) Employer's duty to notify
Where the employer is planning to introduce major changes in production program,
organisation, structure or technology that are likely to have significant effects of
employees, whether or not a decision has been made the employer shall notify the,
employees who may be affected by the proposed changes and their union.
“Significant effects” include termination of employment, major changes in the
composition, operation or size of the employer's workforce or in the skills required,
the elimination or diminution of job opportunities, promotion opportunities or job
[2014] FWCFB 7946
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tenure; the alteration of hours of work; the need for retraining or transfer of employees
to other work or locations and the restructuring of jobs. Provided that where the award
makes provisions for alterations of any of the matters referred to herein an alteration
shall be deemed not to have significant effect.
b) Employer's duty to discuss change.
The employer shall discuss with the employees affected and their union, inter alia, the
introduction of the changes, the effects the changes are likely to have on employees,
measures to avert or mitigate the adverse effects of such changes on employees and
shall give prompt consideration to matters raised by the employees and/or their union
in relation to the changes.
The discussions with employees affected and their union shall commence as early as
practicable.
For the purposes of such discussion, the employer shall provide in writing to the
employees concerned and their union, all relevant information about the changes
including the nature of the changes proposed; the expected effects of the changes on
employees and any other matters likely to affect employees provided that any
employer shall not be required to disclose confidential information the disclosure of
which would be inimical to the employer's interests.
The employer shall provide information in languages other than English for employees
of non-English speaking background.
11.B DISCUSSIONS BEFORE REDUNDANCIES
The company shall endeavour to minimise the likelihood of redundancy during the
life of this agreement. However, should redundancies become necessary following
the discussions in accordance with Clause 11.A (i) of this agreement, discussions
shall take place in accordance with the award and this EBA, as soon as is
practicable after the employer has made a definite decision that the employer no
longer wishes the job the employee has been doing to be done by anyone.
For the purpose of the discussion the employer shall, as soon as practicable,
provide in writing to the employees concerned and the union all relevant
information about the proposed terminations, the reason for the proposed
terminations, the number and categories of employees likely to be effected, and
the number of employees normally employed and the period over which the
terminations are likely to be carried out. The discussions will address measures to
avert or mitigate the adverse effects of redundancy and the employer will give
prompt consideration to matters raised by the employee, delegates and their union.
Redundancy to the extent practicable, will be on a voluntary basis.
Any disputes arising from the implementation of this clause or a Redundancy
programme wil l be resolved in accordance with Clause 19, Dispute Settlement
Procedures of this Agreement.
11.C REDUNDANCY PAYMENTS AND BENEFITS
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a) Severance and Redundancy Payment
Each employee made redundant will receive four (4) weeks payment at the
current rate. This provision only applies to those employees with twelve (12)
months continuous service with the employer.
b) Period Of Notice
Each employee with at least three (3) months continuous service (excluding
casual employees) will receive four (4) weeks notice of redundancy.
Employees over the age of 45 will be entitled to one additional week of notice.
The Company may elect not to give an employee notice of termination and pay
in lieu of notice instead.
c) Service Payments
Redundant employees with one (1) or more year of continuous service shall
receive four (4) weeks payment for each year of service up to a maximum of
72 weeks. This payment will be made on a pro-rata basis for part years service
based on completed months of service.
d) Personal/Carers leave
An employees sick leave balance will be paid out at the ordinary rate of pay
(excluding shift loading).
e) Pro-rata Long Service Leave
Consistent with the New South Wales Long Service Leave Act 1995 (NSW),
pro-rata Long Service Leave payments shall apply to employees with five (5)
years or more service, based on completed months of service.
f) Annual Leave/Annual Leave Loading
All annual leave entitlements will be paid out together with annual leave
loading. Pro-rata annual leave will be calculated for the final year of service.
g) Superannuation
The terms and conditions of the relevant Superannuation Trust Deed will be
observed in all respects.
The Company will provide details of their obligations under the relevant
Superannuation.
The Company undertakes not to offset any of the redundancy payments
received by employees against final superannuation benefits received.
h) Other Benefits Of Redundancy
An employee becoming redundant in accordance with this Agreement shall,
during their period of notice, be given reasonable time off without loss of pay
to attend job interviews provided it is established to the satisfaction of the
employer that the application for time off is genuine, prior notice is given and·
the time is mutually agreed.
i) Alternative Employment
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Employees will be provided with reasonable paid time off for the purpose of
attending interviews or other legitimate job search activities. Subject to
substantiation of interview attendance, this may be up to eight (8) hours per
week.
In addition, the Company will provide all reasonable advice, guidance and
assistance to employees facing retrenchment to ensure they are able to
maximise opportunities available to them. Counselling on job search
techniques, resume preparation and interview skills will also be provided by a
recognised external, professional provider.
A Certificate of Service will be provided to each employee on the day of
termination stating the employee's length of service, most recent position in the
company and reason for termination.
j) Financial Planning Services
The Company recognises that superannuation and termination payments,
taxation considerations, etc. are governed by complex legislation. The
company will arrange for a Financial Planning Seminar to be conducted by
agreed financial consultants.
Attendance at these seminars is voluntary and at no cost to employees. Apart
from covering the subjects listed above in more detail, the financial counsellors
will also assist employees with the necessary paperwork if they wish to roll-
over their benefits.
k) Centerlink [sic] Information
The Company will arrange for representatives of this department to provide
on-site seminars and a follow-up service for relevant employees.
l) Transfers and Reclassifications
Where an alternative position exists within the site which is within the same
field of work and at the same or higher rate of pay and similar conditions of
employment, the positions shall be offered to relevant employees who have not
indicated a preference in separating from the Company.
Where an alternative position exists within the site for which no employees of
similar skills applies, the Company shall offer employment to employees
within the same field of work and provide the necessary training to enable the
work to be undertaken in a safe manner.
Where an employee elects to transfer into an alternative position on site, any
option of retrenchment which has been provided in writing to an employee will
remain open for a period of three (3) months, provided that the company will
be deemed to have met all commitments in respect to notification and
consultation under this Agreement.
11.D REDUNDANCY PROVISIONS FOR TOTAL PLANT CLOSURE
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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 such a
need arise.”
[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):
“As you are aware, we were appointed joint and several voluntary administrators of the
Companies.
The sale of the business to DL Assets Pty Ltd (“DLA”) is scheduled to be completed
on 7 September 2012.
We understand that DLA has offered you employment from completion through its
related entity DL Employment Pty Ltd (“DLE”). The Purchaser has advised us that the
offer is on terms and conditions of employment that are no less favourable overall than
your current terms and conditions of employment with the Companies.
If you wish to accept DLA’s offer, we would be happy for your employment with the
Companies to terminate by mutual agreement effective on 7 September 2012. If you
wish to accept, please sign below, and (subject to the completion of the sale) that
termination will occur.
If you accept the offer, all of your accrued leave entitlements (if applicable) will
transfer to DLE on completion. Accordingly, the Companies will not make any
payments in respect of such entitlements. Further, as your employment will terminate
by agreement, you will not be entitled to notice of termination of employment or
severance/redundancy pay. Your salary will be paid up to 7 September 2012 in the
usual fashion.
[2014] FWCFB 7946
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This letter is not an indication that the Administrators are adopting any previous
contracts of employment that existed or may have existed between you and the
Companies.
If you have any questions please do not hesitate to contact [named contact person] of
my office on [telephone number]. Otherwise, if you wish to accept DLA’s offer,
please sign below where indicated and return to me no later than 7 September 2012.”
[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:
“2. What terms and
conditions will
I be on at VIP?
DLE are offering you the same terms and conditions as
you had at Darrell Lea.
3. What happens
with my current
entitlements?
DLE will recognise your current accrual of annual
leave and leave loading, long service leave and
personal/carer’s leave, as well as your prior service
with Darrell Lea. Your effective employment start date
will not change.
4. What happens if
I say no?
If you do not accept the offer to be employed by DLE.
• You will not be entitled to any redundancy pay as
you have been offered employment on the same terms
and conditions and you have chosen to decline that
offer;
• The administrators will confirm that you have
resigned and may require you to work your notice
period. We will not meet any payments in lieu of
notice; and
• You will be entitled to your annual leave and long
service leave entitlements at the time you finish with
Darrell Lea. There is no guarantee Darrell Lea will
hold sufficient assets to discharge these obligations at
that point in time. Please note that as you have been
offered employment on the same terms and conditions
and therefore may not be eligible to apply for GEERS.
Please contact GEERS for further information.”
[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:
“1. Offer of employment
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Subject to the completion of the sale of the Darrell Lea business to the Company, the
Company offers you employment in the same position on terms the same as your
current terms and conditions of employment with Darrell Lea Chocolate Shops Pty Ltd
(ACN 000 498 386) (Darrell Lea).
This offer of employment is conditional upon the completion of the sale of the Darrell
Lea business to the Company. The date on which this sale occurs is the deemed
‘Completion Date’ and is anticipated to be the 7th of September 2012.
This employment offer is automatically withdrawn if the sale of the Darrell Lea
business is not completed.
You will commence work on and from the Completion Date.
The Company will recognise your current accrual of annual leave and leave loading,
long service leave and personal/carer’s leave, if applicable, as well as your prior
service with Darrell Lea.
Your notice period under your current employment contract or applicable enterprise
bargaining agreement will remain the same.
2. Location:
The Company currently conducts its business at 160 Rocky Point Road, Kogarah and
200 Rocky Point Road, Kogarah (Kogarah Sites) and at 3 Brooks Road, Ingleburn
(Ingleburn Site). Initially your position will be based at the Kogarah Site(s) but if the
Company decides to move all or some of the operations of the business to the
Ingleburn Site you may be required to work at the Ingleburn Site or at any other
location from which the business may be conducted in the future (not being more than
the distance between the Kogarah Sites and the Ingleburn Site from your home
address).”
[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
[2014] FWCFB 7946
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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:
“1. The dispute concerns the impending closure of the Kogarah site and the relocation
of the business to Ingleburn.
2. The AMWU contends that, as a matter of law, the positions of employees at the
Kogarah site will be made redundant by this move. As such, the obligation to make
payments under cl. 6.6 of the Agreement will be enlivened.
3. At issue is whether the offer of alternative employment at Ingleburn is acceptable
alternative employment within the meaning of s.120 of the Fair Work Act 2009
(Cth).
4. A number of employees, due to their individual personal circumstances, are unable
to move to Ingleburn. The AMWU contends that the offer of employment is not
reasonably acceptable and as such these employees are entitled to their redundancy
payments.”
[2014] FWCFB 7946
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[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
3 Second Decision at [7]
4 Second Decision at [12]-[25]
5 Second Decision at [26]-[38]
6 Second Decision at [40]-[41]
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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,
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]
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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:
“I am satisfied and find that the travel time from west to east in the
morning from Ingleburn to Kogarah is often the equivalent of sitting in
a slow moving car park queue. I am satisfied and find that, at some
times in a day, going in either direction, it can take well in excess of an
hour and fifteen minutes to travel between those destinations. I am
satisfied and find that an average journey can take between 40 and 55
minutes each way. I am satisfied and find that a perfect trip without
excess traffic can take 38 - 40 minutes.”15
(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:
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]
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“[57] I considered the circumstances of each of these employees and decided that DLE
no longer required their jobs to be done by anyone, that the offer of employment at
Ingleburn was not a reasonable offer of alternative employment and that they were
entitled to a redundancy payment pursuant to the DLE Agreement.”
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:
[2014] FWCFB 7946
14
(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 Ltd17 and Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union v Nestlé 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
17 [2012] FCAFC 87
18 [2005] FCA 488
[2014] FWCFB 7946
15
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 Limited21 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
19 (1977) 180 CLR 266
20 (1936) 55 CLR 499
21 [2013] FCA 1351 at [52]
[2014] FWCFB 7946
16
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 Amadio22 and the NSW
22 (1983) 151 CLR 447
[2014] FWCFB 7946
17
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
23 (2005) 64 NSWLR 149 at [66]
[2014] FWCFB 7946
18
Brisbane Pty Ltd v The Maritime Union of Australia24, 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 Holcombe25, 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
decisions26, 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 198327:
“The reference to ‘the job’ is primarily a reference to the physical and mental tasks
carried out for the employer, but aspects of the work, including location of the work,
are not excluded from consideration as elements of the job. In a different statutory
context there is a somewhat similar usage of the term under the United Kingdom
Employment Protection (Consolidation) Act 1978 under which written particulars must
be supplied to employees of the terms of employment, including "the title of the job
which the employee is employed to do". There “‘job’ means the nature of the work
which the employee is employed to do in accordance with his contract and the capacity
and place in which he is so employed.”
For the location of employment to be accepted as an element of the job for the
purposes of testing a redundancy situation, performance of work at a particular
location needs to have been a term of the particular employment. A relocation of the
work to be done in the course of employment may then justify a determination that the
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)
[2014] FWCFB 7946
19
employer no longer wishes the job to be done if the relocation is unilaterally
determined and is of such a degree that it is effectively a unilateral repudiation of the
contract of employment. A relocation will not be in breach of the contract of
employment if transferability within employment is an express or implied term of the
original contract of employment, or if there has subsequently been a consensual
variation of the terms of employment by agreement expressly made between the
parties or able to be implied through conduct of the employer and employee.”
[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:
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
[2014] FWCFB 7946
20
(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
[2014] FWCFB 7946
21
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:
(a) matters pertaining to the relationship between an employer that will be
covered by the agreement and that employer’s employees who will be
covered by the agreement;
(b) matters pertaining to the relationship between the employer or
employers, and the employee organisation or employee organisations,
that will be covered by the agreement;
(c) deductions from wages for any purpose authorised by an employee who
will be covered by the agreement;
(d) how the agreement will operate.
[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
30 See Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309
[2014] FWCFB 7946
22
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 Limited31 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 parties35, could not
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].
[2014] FWCFB 7946
23
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 Ltd36, 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:
“50. NO EXTRA CLAIMS
This Agreement is intended to deal comprehensively with all the matters which pertain
to the employment relationship between the Company and its employees. The parties
acknowledge and agree that the Agreement is in full and final settlement of all matters,
claims and demands however described whether or not any matter, claim or demand is
specifically addressed within the Agreement
The parties must not, during the term of this Agreement, pursue any further claims
about any matter which pertains to the employment relationship. The parties further
undertake to not, during the life of this Agreement, initiate any campaigns of direct
industrial action intended to secure new and improved rates and conditions during the
term of this agreement or at the end of this Agreement.”
[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:
“Other provisions of the Wagstaff agreement recognise the need for continuous change
and improvement and the obligations on Wagstaff to advance workplace safety. The
risks to employee safety posed by drug and alcohol use have long been recognised by
this Tribunal and compulsory drug and alcohol testing is, of itself, not so extraordinary
that it could not be argued to be a reasonable employer instruction or that it could be
regarded as an extra claim for the purposes of clause 50 of the Wagstaff agreement.”
36 [2012] FCAFC 87
[2014] FWCFB 7946
24
[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):
“[50] The problem with the CFMEU argument is that, despite cl 50, the agreement
should not be construed as dealing comprehensively with all matters relating to the
employment relationship (Ansett Transport Industries (Operations) Pty Ltd v Wardley
(1980) 142 CLR 237 at 287-288). Statutory instruments (such as awards and the
agreement) operate concurrently with contracts of employment, but they do not
entirely supplant them (Byrne v Australian Airlines Limited (1995) 185 CLR 410 at
418-421, 456). Most importantly, it was not the intention of the agreement to inhibit
either party taking steps to improve safety at the workplace. Cl 50 is to be read subject
to cl 16.”
[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:
“It will be seldom, in my opinion, that an award will lend itself to the "covering the
field" test of inconsistency on the subject of the contract of employment. Few, if any,
awards reflect an intention to express completely, exhaustively or exclusively the law
governing that contract between the parties. It will generally be a case of specific
provisions which will, of course, have the effect of rendering inoperative any
provisions of subordinate law, whether common law or statutory, touching that
employment with which they are inconsistent.”
[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-à-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
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
[2014] FWCFB 7946
25
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-à-vis State laws47:
“The Federal instrument, which prescribes performance of the shearers' contract of
service, is the award of the Commonwealth Court of Conciliation and Arbitration. But
unlawful as it is to depart from the course which such an instrument describes and
requires, the instrument itself is, nevertheless, not "a law of the Commonwealth"
within the meaning of those words in sec. 109. Sec. 109 cannot, therefore, operate
directly upon it so as to render a State law invalid because it is inconsistent with the
intentions which the arbitrator expresses in the award. But these considerations do not
end the matter. They do establish that if State law is superseded it must be upon the
ground that the State law thereupon becomes inconsistent with the meaning and effect
of the Commonwealth Conciliation and Arbitration Act itself. But the provisions of
that Act itself, which establish awards made under its authority, may have a meaning
and effect consistently with which State law could not further affect a matter for which
such an award completely provides. If the Act means not only to give the
determinations of the arbitrator binding force between the disputants but to enable him
to prescribe completely or exhaustively what upon any subject in dispute shall be their
industrial relations, then sec. 109 would operate to give paramountcy to these
provisions of the statute, unless they were ultra vires, and they in turn would give to
the award an exclusive operation which might appear equivalent almost to
paramountcy.”
[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
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
[2014] FWCFB 7946
26
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 Ltd49 (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:
“A right to the payment of award rates is imported by statute into the employment
relationship, which is contractual in origin, and, express promise apart, it is only in that
sense that it can be said that award rates are imported into the contract of employment.
The award regulates what would otherwise be governed by the contract. But award
rates are imported as a statutory right imposing a statutory obligation to pay them. The
importation of the statutory right into the employment relationship does not change the
character of the right. As Latham CJ points out in his judgment in Amalgamated
Collieries of WA Ltd v True [(1938) 59 CLR 417 at 423], the legal relations between
the parties are in that situation determined in part by the contract and in part by the
award.”50
[62] The judgment of Latham CJ in Amalgamated Collieries of WA Ltd v True51 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:
“The creation of the relation of employer and employee depends upon an agreement
between them and not upon any award. Thus, the existence of the obligations under an
award in relation to a particular employer and employee always depends on the
existence of a contract between them.”52
[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:
48 Ibid at 484-485
49 (1995) 185 CLR 410
50 Ibid at 420
51 (1938) 59 CLR 417
52 Ibid at 423
[2014] FWCFB 7946
27
“So, also, there are terms of their relationship which do not depend upon any award. For
example, the employee must always obey the lawful orders of his employer, but
awards do not commonly include a term to that effect. In my opinion, however, it is
unnecessary in this case to work out in detail the basis of the relations created by
employment under an award.”
[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 Nestlé Australia Limited55. 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:
“[17] The contract of employment between an employer and an individual employee
is not apt to be described as "a different form of agreement". When cl 3.6 refers to "this
agreement [applying] to all existing and new employees", its intention is to exclude
other industrial agreements, such as AWAs or s 170LK agreements. In other words,
the purpose of the sub-clause is to maintain the primacy of collective bargaining. It
does not, and cannot, forbid Nestlé from offering employment on terms which do not
detract from benefits provided to employees under the certified agreement. No breach
of cl 3.6 has been established by Nestlé offering employment to the relevant
employees on the condition of the acceptance of the terms contained in the letter,
including the medical examination clause. The certified agreement does not apply to a
53 (1995) 185 CLR 410 at 456
54 Ibid
55 [2005] FCA 488
[2014] FWCFB 7946
28
person unless that person becomes an employee. No employment relationship is
established until the letter of appointment is signed, indicating the employee’s
acceptance of employment on the terms offered. The matters dealt with in the letter
cannot dilute the conditions provided to employees in the certified agreement because
once an industrial instrument applies, it overrides any inconsistent contractual term. As
said in Byrne at 421:
‘The contract may provide additional benefits, but cannot derogate from the
terms and conditions imposed by the award ... the award operates with
statutory force to secure those terms and conditions.’ ”
[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 Nestlé 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 Nestlé 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
[2014] FWCFB 7946
29
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 Karam56. 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 198357:
“For the location of employment to be accepted as an element of the job for the
purposes of testing a redundancy situation, performance of work at a particular
location needs to have been a term of the particular employment. A relocation of the
work to be done in the course of employment may then justify a determination that the
employer no longer wishes the job to be done if the relocation is unilaterally
determined and is of such a degree that it is effectively a unilateral repudiation of the
contract of employment. A relocation will not be in breach of the contract of
employment if transferability within employment is an express or implied term of the
original contract of employment, or if there has subsequently been a consensual
variation of the terms of employment by agreement expressly made between the
parties or able to be implied through conduct of the employer and employee.”
[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 Fibres58:
“[17] The Commissioner decided that cl.17 applied in that UBF had made a definite
decision that it did not wish the jobs at Mooroolbark to be done by anyone. Although
there is no explicit finding to that effect, we think it is to be implied from the fact that
he went on to consider whether the redeployment obligation in cl.17.1.3 applied. But
in any event the conclusion is inescapable that UBF had decided that it did not want
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
[2014] FWCFB 7946
30
the Mooroolbark jobs performed by anyone. While UBF argued that the jobs were
simply being relocated to the Coburg site, we think that the closure of the Mooroolbark
site speaks for itself.”
[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 follows59:
“It is a matter of degree whether an employer's relocation of the place of work is a
breach which goes to the root of the employee's contract. A change of place of
employment within an existing establishment, or a relocation of the place of work
within the same general locality, would not generally be held to be sufficiently
fundamental a breach to amount to a repudiation of the contract. Where the degree of
change of location does go to the root of the contract, the employer's requirement to
transfer is a repudiation of the contract which upon acceptance by the employee is a
termination of employment.
We emphasise that the application of these principles must turn upon the facts and
merits of each particular case. Structural adjustment of Australian industry demands a
relatively high level of organisation and employment mobility. It would be contrary to
the public interest if liability for payment of severance benefits were to become a
disincentive to necessary relocations of employment associated with organisational
change. A careful assessment of the contract of employment and the surrounding
circumstances is necessary to establish whether there is merit in a claim that a
redundancy has been generated by a relocation of employment.
In the circumstances of this case we conclude that the change of location of
employment was of such degree as to amount to a repudiation of the original contract
of employment. The evidence disclosed that to travel to the St Marys plant by car from
Annandale between 6.00 a.m. and 7.00 a.m. would require about 45 minutes. For one
employee, additional travel by car of approximately two and a quarter hours per day
would have been necessary. Most of the employee witnesses either walked or had a
short bus trip to work at Annandale. The three female employees covered by the claim
each referred to their need to cook and be home for children after work. The use of
public transport to get to St Marys would entail additional travel in the early hours of
the morning. The extent of extra travel was variously estimated in a range from about
two to five hours per day and we accept that disruption of the living arrangements of
those involved was entailed. We consider that the employees were entitled to, and did
accept the employer's demand to relocate to St Marys as a repudiation of the
employment contract. The legal effect was to terminate their employment with effect
from 30 September 1988.”
[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
59 [1989] AIRC 528; (1989) 31 IR 35 at 50 (footnotes omitted)
[2014] FWCFB 7946
31
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 decisions60 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:
“An employer, in a particular redundancy case, may make application to the
Commission to have the general severance pay prescription varied if he/she obtains
acceptable alternative employment for an employee.”
[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:
120 Variation of redundancy pay for other employment or incapacity to pay
(1) This section applies if:
60 (1984) 8 IR 34 and (1984) 9 IR 115
61 (1984) 9 IR 115 at 135
[2014] FWCFB 7946
32
(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.
[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
demonstrates62, “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
62 [2014] FWCFB 6737 at [20]-[33]
63 Ibid at [26]
64 (1977) 180 CLR 266
[2014] FWCFB 7946
33
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
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]
[2014] FWCFB 7946
34
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.
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.
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