1
Fair Work Act 2009
s.739 - Application to deal with a dispute
Construction, Forestry, Mining and Energy Union (CFMEU);
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia (CEPU); "Automotive,
Food, Metals, Engineering, Printing and Kindred Industries Union" known
as the Australian Manufacturing Workers' Union (AMWU)
v
Spotless Facility Services Pty Ltd T/A Spotless
(C2014/6157)
Manufacturing and associated industries
JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER BLAIR
MELBOURNE, 19 FEBRUARY 2015
Alleged dispute regarding the meaning of ‘redundancy’ in an enterprise agreement - the
concept of ‘ordinary and customary turnover of labour’ not relevant to the entitlement to
redundancy under the agreement.
[1] The issue before the Commission is the proper construction of clause 6.3 of the
Spotless National Maintenance Enterprise Agreement 2014 (the Agreement) and, specifically,
whether the concept of ‘ordinary and customary turnover of labour’ is relevant to the
entitlement to redundancy pay under clause 6.3.
[2] Before turning to the terms of clause 6.3 of the Agreement and the parties’ contentions
we propose to briefly set out the background to this matter.
[3] Spotless Facility Services Pty Ltd (Spotless) is in the business of providing facility
management services, including property management, maintenance, waste management,
grounds maintenance, security, catering/food services, and cleaning services, through
commercial contracts, to a diverse base of customers which have outsourced such services
including corporations, government departments, public entities and municipal councils.
Spotless provides these services in a range of industries across Australia, including health,
education, leisure, sport, entertainment and defence.
[4] Since 2000, Spotless has held various contracts with the Australian Government
(Department of Defence) under which it has provided services, such as garrison support
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DECISION
AUSTRALIA FairWork Commission
[2015] FWCFB 1162
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and/or comprehensive maintenance services, at several Australian Defence Force (ADF) sites
across Australia. Historically the duration of these contracts has varied from 6 years to 10
years, after which time Spotless must re-tender for work.
[5] Following a tender process, Spotless was appointed to provide maintenance services to
the Commonwealth Government (Department of Defence) at the following sites:
RAAF Base Pearce, Bullsbrook, Western Australia;
Campbell Barracks, Swanbourne, Western Australia;
Fleet Base West, Garden Island, Western Australia;
RAAF Base, Darwin, Northern Territory;
Larrakeyah Barracks, Northern Territory;
Robertson Barracks, Northern Territory;
RAAF Base, Curtin, Western Australia; and
RAAF Base, Tindal, Northern Territory.
[6] Spotless was contracted to provide maintenance services at these sites until 30
September 2014 (the Contract).
[7] Prior to the expiration of the Contract, Spotless tendered for a new contract to provide
the services to the Department of Defence for a 6 year period (with an option for a further 4
years) commencing from 1 October 2014, but was unsuccessful in obtaining the new contract.
As a result of the expiry of the Contract, Spotless terminated the employment of its 78
employees who were providing maintenance services at the Western Australian and Northern
Territory ADF sites, with effect from 30 September 2014. These 78 Spotless employees were
covered by the Agreement.
[8] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union
(AMWU), Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia (Electrical Division) (CEPU) and Construction,
Forestry, Mining, and Energy Union (Construction and General) (CFMEU) are covered by the
Agreement. On 2 September 2014 the AMWU and the CFMEU lodged a s.739 Dispute
Application in which they contend that the 78 employees are entitled to a redundancy
payment pursuant to clause 6.3 of the Agreement. On 11 September 2014, Spotless lodged a
s.739 Dispute Application in which it contends that it is not required to make a redundancy
payment to any of the 78 employees because the termination of their employment, as a result
of the expiration of the Contract, was due to the ordinary and customary turnover of labour.
On 11 September 2014 Spotless also lodged a s.120 Variation of Redundancy Pay
Application. The s.120 application will only be agitated if the Full Bench were to determine,
contrary to the submissions of Spotless, that the termination of employment by reason of the
expiration of the Contract constituted a ‘redundancy’ for the purpose of clause 6.3 of the
Agreement.
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[9] It is common ground that the Commission is empowered to determine the disputed
question by arbitration, pursuant to clause 3.1.2(c) of the Agreement and s.739(4) of the Fair
Work Act 2009 (Cth) (the FW Act).
[10] On 8 October 2014, the parties lodged a joint document setting out the proposed
question for arbitration by the Commission, namely whether the concept of ‘ordinary and
customary turnover of labour’ is relevant to the entitlement to redundancy pay under clause
6.3 of the Agreement.
[11] The resolution of the controversy before the Commission depends upon the meaning
to be attributed to clause 6.3 of the Agreement, specifically, the meaning of the term
‘redundancy’.
[12] The principles relating to the construction of enterprise agreements have recently been
the subject of consideration by a Full Bench of the Commission in The Australasian Meat
Industry Employees Unions v Golden Cockerel Pty Limited1 (Golden Cockerel). In that
matter the Full Bench distilled the following principles for the decided cases:2
“1. The Acts Interpretation Act 1901 (Cth) does not apply to the construction of an
enterprise agreement made under the Act.
2. In construing an enterprise agreement it is first necessary to determine whether an
agreement has a plain meaning or contains an ambiguity.
3. Regard may be had to evidence of surrounding circumstances to assist in determining
whether an ambiguity exists.
4. If the agreement has a plain meaning, evidence of the surrounding circumstances will
not be admitted to contradict the plain language of the agreement.
5. If the language of the agreement is ambiguous or susceptible to more than one
meaning then evidence of the surrounding circumstance will be admissible to aide the
interpretation of the agreement.
6. Admissible evidence of the surrounding circumstances is evidence of the objective
framework of fact and will include:
(a) evidence of prior negotiations to the extent that the negotiations tend to
establish objective background facts known to all parties and the subject
matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common
assumption.
7. The resolution of a disputed construction of an agreement will turn on the language of
the Agreement understood having regard to its context and purpose.
8. Context might appear from:
(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
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(c) the legislative context under which the agreement was made and in which it
operates.
9. Where the common intention of the parties is sought to be identified, regard is not to
be had to the subjective intentions or expectations of the parties. A common intention
is identified objectively, that is by reference to that which a reasonable person would
understand by the language the parties have used to express their agreement.
10. The task of interpreting an agreement does not involve rewriting the agreement to
achieve what might be regarded as a fair or just outcome. The task is always one of
interpreting the agreement produced by parties.”
[13] No party took issue with the principles set out in Golden Cockerel.
[14] Before turning to the parties’ contentions we propose to say something about the
legislative context.
[15] Spotless submits that the objects of the FW Act and of Part 2.4 favour a construction
of industrial instruments that will operate fairly to both sides and foster a co-operative
workplace environment.3 We accept that this is so. The Agreement was made pursuant to
s.182 of the FW Act and was approved by the Commission pursuant to s.186. This is a
relevant contextual consideration, as Kirby J observed in Amcor Limited v Construction,
Forestry, Mining and Energy Union & ors (Amcor) (omitting footnotes):4
“[64] Also set out in other reasons, or described there, are the provisions of the Act that
constitute the legislative background against which the Agreement was made and certified. It
was a background that would have been in the minds of both parties (Amcor and its agent on
the one side and the Union on the other) who negotiated the Agreement and hammered out its
terms. The legislative background is therefore part of the common knowledge attributable to
the parties to the Agreement. So far as it is relevant, it would ordinarily be assumed that, in
agreeing as they did, the parties intended the Agreement to take its place within the industrial
setting created by the Act.
[65] To some extent, that industrial setting also incorporates not only the provisions of the Act
dealing with the special problem of redundancy in employment under federal awards and
certified agreements but also consideration by courts and industrial tribunals during the past
three decades of the issue of redundancy in employment.”
[16] It is also relevant to observe that the scheme of the FW Act encourages enterprise
bargaining underpinned by a guaranteed safety net of minimum terms and conditions
established by the National Employment Standards (the NES), modern awards and modern
minimum wage orders (see generally ss3(b) and (f); s55; s56; s61; s134(1)(b); s186(2)(c) and
(d); and s193).
[17] The NES is set out in Part 2-2 of the FW Act. ‘Redundancy pay’ forms part of the
NES (ss119-123) and s.119 defines the circumstances in which an employee is entitled to
redundancy pay. Section 119 relevantly provides:
1. An employee is entitled to be paid redundancy pay by the employer if the employee’s
employment is terminated:
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(a) at the employer’s initiative because the employer no longer requires the job done
by the employee to be done by anyone, except where this is due to the ordinary and
customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer. (emphasis added)
[18] Sub-section (2) of s.119 sets out a table specifying the amount of redundancy pay,
calculated by reference to the employee’s period of service.
[19] Section 55 of the FW Act governs the interaction between the NES and a modern
award or enterprise agreement, it provides as follows:
Interaction between the National Employment Standards and a modern award or
enterprise agreement
National Employment Standards must not be excluded
(1) A modern award or enterprise agreement must not exclude the National Employment
Standards or any provision of the National Employment Standards.
Terms expressly permitted by Part 2-2 or regulations may be included
(2) A modern award or enterprise agreement may include any terms that the award or
agreement is expressly permitted to include:
(a) by a provision of Part 2-2 (which deals with the National Employment Standards);
or
(b) by regulations made for the purposes of section 127.
Note: In determining what is permitted to be included in a modern award or enterprise agreement by a
provision referred to in paragraph (a), any regulations made for the purpose of section 127 that
expressly prohibit certain terms must be taken into account.
(3) The National Employment Standards have effect subject to terms included in a modern
award or enterprise agreement as referred to in subsection (2).
Note: See also the note to section 63 (which deals with the effect of averaging arrangements).
Ancillary and supplementary terms may be included
(4) A modern award or enterprise agreement may also include the following kinds of terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an
employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in
any respect, when compared to the National Employment Standards.
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an
employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the
number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or
paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay
(which is the rate required by sections 90 and 99).
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Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring
an employee to give more notice of the taking of unpaid parental leave than is required by
section 74.
Enterprise agreements may include terms that have the same effect as provisions of the
National Employment Standards
(5) An enterprise agreement may include terms that have the same (or substantially the same)
effect as provisions of the National Employment Standards, whether or not ancillary or
supplementary terms are included as referred to in subsection (4).
Effect of terms that give an employee the same entitlement as under the National
Employment Standards
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an
enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent
that the terms give an employee an entitlement (the award or agreement entitlement) that
is the same as an entitlement (the NES entitlement) of the employee under the National
Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as
to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES
entitlement apply, as a minimum standard, to the award or agreement entitlement.
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year,
the provisions of the National Employment Standards relating to the accrual and taking of paid
annual leave will apply, as a minimum standard, to 4 weeks of that leave.
Terms permitted by subsection (4) or (5) do not contravene subsection (1)
(7) To the extent that a term of a modern award or enterprise agreement is permitted by
subsection (4) or (5), the term does not contravene subsection (1).
Note: A term of a modern award has no effect to the extent that it contravenes this section (see
section 56). An enterprise agreement that includes a term that contravenes this section must not be
approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it
contravenes this section (see section 56).
[20] Section 55 provides that an enterprise agreement must not exclude any provision of
the NES5 but it may include terms that are ancillary to or incidental to the operation of an
entitlement of an employee under the NES or a term that supplements the NES.6
[21] We now turn to the parties’ contentions.
[22] The CEPU and the AMWU contend that the answer to the disputed issue is no,
because:
(i) the Agreement does not distinguish between redundancies on the basis they are
the result of the ordinary and customary turnover of labour; and
(ii) the NES exclusion of redundancies which are the product of the ‘ordinary and
customary turnover of labour’ does not operate in respect of entitlements under the
Agreement.
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[23] The primary submission advanced on behalf of the CEPU and the AMWU is
encapsulated at paragraphs [7] and [8] of their written submissions:
“Construction is an exercise confined by the text of the instrument. It is wrong in principle to
commence the task of construction by reference to some a priori standard of proper industrial
practice or other extrinsic matters. In other words, the present case does not involve any
inquiry as to whether redundancies which result from the loss of contract should be treated
differently to other redundancies or whether other instruments draw a distinction. The question
is whether this Agreement in fact distinguishes between redundancies on that basis.
The words “customary and ordinary turnover of labour” do not appear in the Agreement. If
the parties had intended to exclude from the redundancy provisions retrenchments resulting
from the customary and ordinary turnover of labour it would have been a simple matter for
them to do so. They did not. The parties’ manifest intention, as recorded in the text of the
Agreement, was to apply severance pay benefits to all redundancies without distinction. That
manifest intention must be vindicated.”
[24] The CFMEU in its response submissions advanced similar propositions to those
advanced by the other unions. The CFMEU’s argument is summarised at paragraph [5] of its
response submissions as follows:
“5 The CFMEU submits that the concept of “ordinary and customary turnover of labour” is
not relevant to the entitlement to redundancy pay under clause 6.3 of the Spotless National
Maintenance Enterprise Agreement 2014 because:
5.1 the ordinary meaning of “redundancy” does not exclude terminations by reason of
“ordinary and customary turnover of labour”;
5.2 the Agreement does not contain any words corresponding to such an exclusion;
5.3 the Agreement incorporates by reference the definitions of “redundancy” from 2
modern awards that are inconsistent with an exclusion of terminations due to ordinary
and customary turnover of labour;
5.4 the legislative framework established by the Act favours a construction of the
Agreement that is not encumbered by such an exclusion;
5.5 the other provisions of the Agreement that utilise the term “redundancy” are
inconsistent with that term being limited in the way suggested;
5.6 the existence of Modern Awards that provide redundancy payments that are
inconsistent with such an exclusion establish that there could be no common
understanding of “redundancy” being limited by those circumstance.”
[25] Spotless contends that the term ‘redundancy’ in clause 6.3 takes its meaning from
s.119 of the FW Act and from the interpretation of that term by Australian industrial tribunals
so as to exclude a termination of employment arising from the ‘ordinary and customary
turnover of labour’. Spotless concludes its submissions as follows, at paragraph [79],:
“The nature of the 2014 Enterprise Agreement, the manner of its expression (in particular, the
absence of a definition of “redundancy”), the incorporation of the modern awards, the
legislative context in which it operates and the industrial purpose it serves, combine to suggest
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that the meaning of “redundancy” in clause 6.3 should be construed to exclude the ordinary
and customary turnover of labour.”
[26] We now turn to the proper construction of the Agreement. For the reasons which
follow we reject Spotless’ contention as to the proper construction of clause 6.3 and have
concluded that the concept of the ‘ordinary and customary turnover of labour’ is not relevant
to the entitlement to redundancy pay under clause 6.3. We begin with the terms of the
provision in contention. Clause 6.3 of the Agreement provides as follows:
6.3 Redundancy
6.3.1 For any employee whose employment with the Company commenced prior to 1
November 2005 the following severance pay scale shall apply.
6.3.2 An employee whose employment is terminated by reason of redundancy shall be
entitled to the following amounts of severance pay in respect of a continuous period of
service:
Less than 3 months = Nil
3 to 6 months = 1 week’s pay
More than 6 months = 3 weeks’ pro-rata per year of service
Severance pay under this clause shall be capped at 33 weeks’ pay.
6.3.3 For any employee whose employment with the Company commences after 1 November
2005 the following severance pay scale shall apply.
6.3.4 Severance
An employee whose employment is terminated by reason of redundancy shall be entitled
to the following amounts of severance pay in respect of a continuous period of service:
Period of Continuous Service Severance Pay
1 year and less than 2 years 4 weeks’ pay
2 years and less than 3 years 6 weeks’ pay
3 years and less than 4 years 7 weeks’ pay
4 years and less than 5 years 8 weeks’ pay
5 years and less than 6 years 10 weeks’ pay
6 years and less than 7 years 11 weeks’ pay
7 years and less than 8 years 13weeks’ pay
8 years and less than 9 years 14 weeks’ pay
9 years and less than 10 years 16 weeks’ pay
10 years and over 12 weeks’ pay
6.3.5 In order to avoid retrenchments, the Company may, on the giving of 4 weeks’ notice to
an employee, reasonably relocate the employee to another work location. Reasonable
relocation is relocation that does not require a change of residence or more than an additional
hour of total travel time to and from work. Any disputes that arise in relation to the
reasonableness of a requirement to relocate will be resolved through the dispute resolution
procedure in clause 1.9 of this agreement.
6.3.6 Alternative Employment
The Company in a particular redundancy case may make application to the Commission to
have the severance pay prescription varied if the Company obtains acceptable alternative
employment for an employee.
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6.3.7 Transfer to Lower Paid Duties
An employee whose job has become redundant may apply for any alternative job with the
Company. Where an employee whose job has become redundant accepts an offer of an
alternative job by the Company the rate of pay for which is less than the rate of pay for the
former position, the employee shall be entitled to the same period of notice of the date of
commencement of work in the new position as if the employees employment had been
terminated, and the Company may opt to make payment in lieu thereof of an amount equal to
the difference between the former rate of pay and the new lower rate for the number of weeks
of notice still owing.
[27] Clause 6.3 is headed ‘Redundancy’. Clause 6.3.2 and 6.3.4 provide for the payment of
severance pay to ‘an employee whose employment is terminated by reason of redundancy’.
Clause 6.3.6 provides that ‘the Company in a particular redundancy case may make
application to the Commission to have the severance pay prescription varied if the Company
obtains acceptable alternative employment for an employee’ and clause 6.3.7 provides that
‘an employee whose job has become redundant may apply for any alternative job with the
Company.’
[28] Importantly, clause 6.3 does not contain a provision that excludes the entitlement to
redundancy pay in circumstances where an employee’s employment is terminated due to ‘the
ordinary and customary turnover of labour’.
[29] Clause 1.5 of the Agreement is also relevant, it provides as follows:
1.5 Awards and Appendices
1.5.1 This Agreement is underpinned by the following Awards to the extent of the scope of
work and geographical area covered in each:
Manufacturing and Associated Industries and Occupations Award 2010
Electrical, Electronic and Communications Contracting Award 2010
Plumbing and Fire Sprinklers Award 2010
Building and Construction General On-site Award 2010
Joinery and Building Trades Award 2010
1.5.2 It is intended by the parties that the terms of the awards described in clause 1.5.1 be
incorporated into the agreement, having regard to the scope of those awards. The terms of this
Agreement and Appendices shall prevail over the terms of the Award(s) to the extent of any
express inconsistency. The appendices to this agreement which prescribe conditions of
employment for work performed in the areas within the scope of those appendices shall
prevail over the agreement and the awards to the extent of any inconsistency. (emphasis
added)
[30] Subclause 1.5.2 incorporates the terms of the 5 awards (the Awards) specified in
clause 1.5.1 into the Agreement. That subclause also provides that the terms of the
Agreement prevail over the terms of the Awards ‘to the extent of any express inconsistency’.
It is not entirely clear what ‘express inconsistency’ is intended to mean though it plainly is a
different concept to ‘inconsistency’ simplicitor as that word is used later in subclause 1.5.2,
without the descriptor ‘express’.
[31] The evidence surrounding the negotiation of the Agreement is of little assistance.
Negotiations for the current Agreement commenced in October 2013. The negotiations were
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protracted. The Agreement was approved by employees in approximately April 2014 and
approved by the Commission on 6 May 2014. In the course of negotiating the Agreement
there was no discussion between the parties in relation to the meaning of the term
‘redundancy’.7 The only discussion about redundancy, in the course of negotiating the
Agreement, was that the Unions made a claim for severance pay entitlements to be paid to
industry funds. This claim was rejected by Spotless. In that context there was also discussion
about acceptable, alternative employment, but the parties did not discuss the definition of
‘redundancy’ in the course of the negotiations.
[32] We also note that previous industrial agreements contain a term substantially the same
as clause 6.3 of the Agreement: see the Spotless P&F Pty Ltd (Maintenance) Enterprise
Agreement 2005 (certified on 23 February 2006 PR968706), Spotless P&F Pty Ltd
(Maintenance) Enterprise Agreement 2005- as varied in 2008 (18 March 2009, PR98614) and
the Spotless National Maintenance Enterprise Agreement 2012-2013 (certified on 18 January
2006 [2013] FWCA 434). As is the case in the Agreement, there was no definition of the term
‘redundancy’ in any of these previous enterprise agreements.
[33] There are four broad limbs to Spotless’ contention as to the proper construction of
clause 6.3,:
the Agreement context;
the legislative context;
the industrial context; and
the commercial context.
[34] We propose to deal with each of these submissions in turn.
(i) The Agreement context
[35] Spotless relies on the terms of clause 1.5 of the Agreement and the incorporation of
particular provisions from the Awards into the Agreement in support of its contention as to
the proper construction of clause 6.3.
[36] As we have noted, clause 1.5 incorporates the terms of 5 awards into the Agreement.
[37] Clause 23 of the Manufacturing and Associated Industries and Occupations Award
2010 (the Manufacturing Award) deals with redundancy in the following terms:
“Redundancy pay is provided for in the NES.”
[38] The Electrical, Electronic and Communications Contracting Award 2010 and the
Joinery and Building Trades Award 2010 contain a provision in similar terms (at clauses 15.1
and 17.1 respectively).
[39] It is convenient to deal with these three awards first, before turning to the redundancy
provisions in the other two incorporated awards.
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[40] Spotless relies on the incorporated redundancy term in the Manufacturing Award, set
out above, in support of its proposed construction of clause 6.3. Two points are advanced in
this regard.
[41] First, it is submitted that having regard to clause 1.5.2 of the Agreement the
redundancy term in the three awards are incorporated into the Agreement and hence NES
redundancy provisions are incorporated into the Agreement.
[42] We reject this submission. It is predicated on the erroneous assumption that the
redundancy term in the three Awards incorporates the NES redundancy provisions into the
relevant awards. On its face the provision in question is simply a notation to the effect that
the NES makes provision for redundancy pay. It is not intended to create any award
obligation in relation to redundancy pay.
[43] The second point advanced by Spotless is that by virtue of the incorporated term
clause 6.3 of the Agreement must be read consistent with s.119 of the FW Act. We reject this
submission also.
[44] As we have already pointed out, the NES redundancy provisions are not incorporated
into the three awards. Therefore, the NES redundancy provisions are not incorporated by
reference into the Agreement by operation of clause 1.5. As the NES redundancy provisions
are not terms of the Agreement through incorporation and for the reasons given later, there is
no basis for reading clause 6.3 of the Agreement consistently with (or subject to the limitation
in) s.119 of the FW Act.
[45] The other two awards incorporated into the Agreement deal with redundancy
differently. Clause 17 of the Building and Construction General On-site Award 2010 (the
Building On-site Award) provides as follows:
17. Industry specific redundancy scheme
17.1 The following redundancy clause for the on-site building, engineering and civil construction
industry (as defined) is an industry specific redundancy scheme as defined in s.12 of the
Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B—
Redundancy pay of Division 11 of the NES do not apply to employers and employees
covered by this award.
17.2 Definition
For the purposes of this clause, redundancy means a situation where an employee ceases to
be employed by an employer to whom this award applies, other than for reasons of
misconduct or refusal of duty. Redundant has a corresponding meaning.
17.3 Redundancy pay
(a) A redundant employee will receive redundancy/severance payments, calculated as
follows, in respect of all continuous service with the employer:
Period of continuous service with Redundancy/severance pay
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an employer
1 year or more but less than 2 years 2.4 weeks’ pay plus for all service in
excess of 1 year, 1.75 hours pay per
completed week of service up to a
maximum of 4.8 weeks’ pay
2 years or more but less than 3 years 4.8 weeks’ pay plus, for all service in
excess of 2 years, 1.6 hours pay per
completed week of service up to a
maximum of 7 weeks’ pay
3 years or more than but less than
4 years
7 weeks’ pay plus, for all service in
excess of 3 years, 0.73 hours pay per
completed week of service up to a
maximum of 8 weeks’ pay
4 years or more 8 weeks’ pay
(b) Provided that an employee employed for less than 12 months will be entitled to a
redundancy/severance payment of 1.75 hours per week of service if, and only if, redundancy
is occasioned otherwise than by the employee.
(c) Week’s pay means the ordinary time hourly rate at the time of termination multiplied
by 38. Hour’s pay means the ordinary time hourly rate at the time of termination.
(d) If an employee dies with a period of eligible service which would have entitled that
employee to redundancy pay, such redundancy pay entitlement will be paid to the estate of
the employee.
(e) Any period of service as a casual will not entitle an employee to accrue service in
accordance with this clause for that period.
(f) Service as an apprentice will entitle an employee to accumulate credits towards the
payment of a redundancy benefit in accordance with this clause if the employee completes
an apprenticeship and remains in employment with that employer for a further 12 months.
17.4 Redundancy pay schemes
(a) An employer may offset an employee’s redundancy pay entitlement in whole or in
part by contributions to a redundancy pay scheme.
(b) Provided that where the employment of an employee is terminated and:
(i) the employee receives a benefit from a redundancy pay scheme, the
employee will only receive the difference between the redundancy pay in this clause
and the amount of the redundancy pay scheme benefit the employee receives which
is attributable to employer contributions. If the redundancy pay scheme benefit is
greater than the amount payable under clause 17.3 then the employee will receive
no redundancy payment under clause 17.3; or
(ii) the employee does not receive a benefit from a redundancy pay scheme,
contributions made by an employer on behalf of an employee to the scheme will, to
the extent of those contributions, be offset against the liability of the employer
under clause 17.3, and payments to the employee will be made in accordance with
the rules of the redundancy pay scheme fund or any agreement relating thereto. The
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employee will be entitled to the fund benefit or the award benefit whichever is
greater but not both.
(c) The redundancy pay scheme must be an Approved Worker Entitlement Fund under
the Fringe Benefits Tax Regulations 1992 (Cth).
17.5 Service as an employee for the Crown in the Right of the State of Western Australia, the
Crown in the Right of the State of New South Wales, Victorian Statutory Authorities, or the
Crown in the Right of the State of Victoria will not be counted as service for the purpose of
this clause.
17.6 Employee leaving during notice period
An employee whose employment is to be terminated in accordance with this clause may
terminate their employment during the period of notice and if this occurs, the employee will
be entitled to the provisions of this clause as if the employee remains with the employer
until expiry of such notice. Provided that in such circumstances, the employee will not be
entitled to payment instead of notice.
17.7 Transfer of business
(a) Where a business is, before or after the date of this award, transferred from an
employer (in this subclause called the old employer) to another employer (in this subclause
called the new employer) and an employee who at the time of such transfer was an
employee of the old employer in that business becomes an employee of the new employer:
(i) the continuity of the employment of the employee will be deemed not to have
been broken by reason of such transfer; and
(ii) the period of employment which the employee has had with the old employer
or any prior old employer will be deemed to be service of the employee with the new
employer.
(b) In this subclause, business includes trade, process, business or occupation and
includes part of any such business and transfer includes transfer, conveyance, assignment or
succession whether by agreement or by operation of law. Transferred has a corresponding
meaning.
[46] Clause 18 of the Plumbing and Fire Sprinkler Award 2010 (the Plumbing Award) is in
similar terms.
[47] Spotless submits that insofar as the Building On-Site Award and the Plumbing Award
contain an industry specific redundancy clause, such a clause cannot operate alongside clause
6.3 in the Agreement as they are inconsistent with clause 6.3. On this basis it is submitted
that these award clauses cannot affect the construction argument.
[48] The alleged inconsistency between the two award provisions and clause 6.3 is said to
be because the award provisions establish an industry specific redundancy scheme which
deals with employers paying into a fund whereas clause 6.3 provides for the employer to
make payment to redundant employees. Further, it is asserted that the parties to the
[2015] FWCFB 1162
14
Agreement intended that there would be one redundancy scheme flowing across the
operations of Spotless, that is the scheme set out in clause 6.3.
[49] We are not persuaded that the redundancy term in these two awards are expressly
inconsistent with the terms of clause 6.3. Contrary to the submission advanced on behalf of
Spotless the award clauses do not require the employer to make contributions to a redundancy
pay scheme. Clause 17.4(a) of the provision in the Building On-site Award makes it clear that
‘[a]n employer may offset an employee’s redundancy pay entitlement in whole or in part by
contributions to a redundancy pay scheme’. Hence the making of contributions to a
redundancy pay scheme is merely one way that an employer may choose to meet its
redundancy pay obligations. It seems to us that Spotless may also meet its obligations by
making the severance payments to employees covered by that award.
[50] Nor are we persuaded by the assertion that the parties to the Agreement intended that
there would only be one redundancy scheme across Spotless, namely the scheme set out in
clause 6.3 of the Agreement. No substantive argument was advanced in support of this
assertion and it is inconsistent with the terms of clause 1.5 of the Agreement. It is clear from
subclause 1.5.2 that the parties intended that ‘the terms of the awards ... be incorporated into
the agreement, having regard to the scope of those awards’ (emphasis added). The
expression ‘having regard to the scope’ of the relevant awards clearly means that the
operation of the incorporated award terms will be confined by the scope of the relevant award.
Such a provision necessarily means that different terms may apply to different sections of the
Spotless workforce.
[51] Contrary to Spotless’ submission the redundancy clause in these two awards is
relevant to the construction argument. This is so because, as each clause makes clear, the
clause includes a definition of redundancy (at cl 17.2), which does not include the exclusion
for which Spotless contends, and the clause is an industry specific redundancy scheme (within
the meaning of s.12 of the FW Act) hence the NES redundancy pay provisions do not apply
(see s.123(4)(b)). There is no ‘express inconsistency’ (within the meaning of clause 1.52 of
the Agreement) between the definition of redundancy in the incorporated awards and the
terms of the Agreement - because clause 6.3 of the Agreement does not contain a definition of
redundancy. In these circumstances the definition of redundancy in the incorporated awards
applies to the employees covered by the Agreement who fall within the scope of those
awards.
[52] The effect of clause 1.5 of the Agreement is to incorporate by reference the
redundancy provisions found in the Building On-Site Award and the Plumbing Award into the
Agreement and employees to whom the Agreement applies who also fall within the scope of
those awards are thereby covered by those provisions.
[53] Consequently s.119 of the FW Act does not apply to those employees and is not
relevant to determining the redundancy entitlement of those employees under clause 6.3 of the
Agreement.
[54] It follows that at least in relation to employees with the scope of the Building On-site
Award and the Plumbing Award are concerned the concept of ‘ordinary and customary
turnover of labour’ derived from the NES is irrelevant to their entitlement to redundancy pay
under the Agreement.
[2015] FWCFB 1162
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(ii) The legislative context
[55] Spotless submits that the redundancy provisions in the NES provide a further
contextual consideration which supports the construction for which it contends.
[56] By virtue of s.55 the parties to an enterprise agreement cannot exclude the operation of
the redundancy provisions in s.119. The parties are permitted to include ancillary or
supplementary terms in their enterprise agreement. Spotless submits that in the present case
the parties have done so, but only to the extent that they have made provision for employees
who commenced employment prior to 1 November 2005 (cl.6.3.1), re-location of employees
in order to avoid ‘retrenchments’ (cl.6.3.5), alternative employment (cl.6.3.6) and transfer to
lower paid duties (cl.6.3.7).
[57] Specifically, Spotless contends that the Agreement does not displace the meaning of
‘redundancy’ in s.119 of the FW Act. That is to say, the parties have not provided a
‘supplementary’ or ‘ancillary’ definition of ‘redundancy’ in the Agreement and nor have they
excluded the concept of ‘redundancy’ in s.119(1) of the FW Act, which, it is submitted, continues
to apply by virtue of s.55 of the FW Act.
[58] We do not find this submission persuasive. As we have mentioned, the scheme of the
FW Act encourages enterprise bargaining underpinned by a guaranteed safety net of
minimum terms and conditions established by, among other things, the NES. We see no
warrant for implying into the Agreement the terms of s.119(1)(a) which limit an employee’s
entitlement to redundancy pay to situations where the termination of their employment is not
‘due to the ordinary and customary turnover of labour’.
[59] The NES set a minimum standard, they are not a code. It is clearly contemplated that
enterprise agreements may supplement the NES in the manner contemplated by s.55(4). In
this instance the parties have supplemented the NES provision by providing that all
employees ‘whose employment is terminated by reason of redundancy’ are entitled to the
payment of severance pay as prescribed in subclauses 6.3.2 and 6.3.4 depending on the
commencement date of their employment. The structure of clause 6.3 is quite different to the
terms of s.119 of the FW Act. Subclauses 6.3.2 and 6.3.4 set out the severance payments to
which an employee who has been terminated by reason of redundancy are entitled. In other
words, the entitlement to severance pay and the quantum of that entitlement are dealt with in
the same subclauses. Section 119 is quite different. The entitlement to redundancy pay is
dealt within s.119(1) whereas the quantum of the entitlement is dealt with in s.119(2).
[60] Further, s.119(1) does not define ‘redundancy’, rather it sets out the limited
circumstances in which an employee becomes entitled to redundancy pay under the NES.
Clause 6.3 of the Agreement also does not set out a definition of ‘redundancy’ but rather sets
out the levels of severance entitlement to which an employee becomes entitled if that
employee’s employment is terminated by reason of redundancy. Both the quantum of the
entitlement and the class of persons to whom the entitlement is payable is expanded by clause
6.3 of the Agreement when compared to the NES, but neither provision defines redundancy.
[2015] FWCFB 1162
16
[61] Definitions of redundancy are to be found in two of the incorporated instruments
discussed earlier. Those definitions are not limited to the circumstances in which a
redundancy pay entitlement will arise under the NES.
[62] We therefore see no persuasive reason to reading down the phrase ‘whose employment
is terminated by reason of redundancy’ in clause 6.3 of the Agreement by limiting the
entitlement only to the class of persons entitled to redundancy pay found in s.119(1)(a). As
we have already indicated the latter does no more than scope out the class of persons to whom
redundancy pay under the NES must be made. It does not define ‘redundancy’ and is
therefore of little assistance in identifying a person ‘whose employment is terminated by
reason of redundancy’ within the meaning of clause 6.3 of the Agreement.
(iii) The Industrial context
[63] The meaning of ‘redundancy’ in s.119 of the FW Act is also submitted to be consistent
with the redundancy standard set by the Commission in the Termination, Change and
Redundancy Case8 (‘TCR Case’) and the Supplementary TCR Case (‘Supplementary TCR
Case’). The redundancy standard set down by the Full Bench in the TCR Case is that
redundancy provisions do not apply to termination of employment due to the ordinary and
customary turnover of labour. In the Supplementary TCR Case the Full Bench of the
Commission stated:9
“The employers submitted that the redundancy provisions should not apply to termination of
employment “associated with the general turnover of labour or a seasonal downturn within the
industry or reclassification or alteration of working conditions”…
...it was not our intention that the redundancy provisions should apply to the “ordinary and
customary turnover of labour”; an expression used by Mr Justice Fisher in his decision related
to the Employment Protection Act in New South Wales.
….we did not intend the redundancy provisions to apply where an employee is dismissed for
reasons relating to his/her performance, or where termination is due to a normal feature of
business. ….In the circumstances, we are prepared to provide that the redundancy provisions
shall not apply where the termination of employment is “due to the ordinary and customary
turnover of labour...”
[64] Spotless submits that the term ‘redundancy’, in the present case, arises in an industrial
instrument and it must take its colour from that industrial context. It is submitted that the
term ‘redundancy’ is understood in the industrial context as excluding termination of
employment based on the ‘ordinary and customary turnover of labour’ and that the
circumstances of the present case accord with Amcor in which the High Court approached the
meaning of a clause in an industrial agreement by reference to the provisions in the FW Act
and the industrial context, including the TCR Case.10
[65] We accept the proposition that in Amcor the High Court had regard to the industrial
context, including the TCR Case, in construing the industrial instrument which was the
subject of those proceedings. It also had regard to the legislative context. However it must
also be accepted that Amcor turned ultimately on the meaning of the phrase ‘should a position
become redundant and an employee subsequently retrenched’ contained in the relevant
industrial instrument understood against that context. The language used in the Agreement at
[2015] FWCFB 1162
17
issue in this dispute is in material respects different to that employed in the industrial
instrument the subject of the decision in Amcor. Elements of the context considered in Amcor
are also different to that which currently pertains, notably the legislative context, and the rules
relating to when a business is ‘transmitted or transferred’ have altered in some significant
respects. It is clear from the joint judgement of Gummow, Hayne and Haydon JJ and from the
judgement of Kirby J that the transmission of business regime then in place was an important
contextual consideration in construing the meaning of ‘business’ and ‘position’ in deciding,
on the facts in Amcor that the positions in the business conducted by Amcor and continued to
be conducted by PaperlinX Ltd were not redundant.11
[66] The meaning of the word ‘redundancy’ is not fixed and the term will take colour from
its context.12 However, in any relevant context it is the abolition of a position which leads to
that position being redundant. The cause of the abolition of the position – whether business
restructure, technological advance, loss of contract/ordinary turnover or otherwise – is a
separate matter, albeit one which may determine the entitlements of the redundant employee.
Indeed the presence of the express exclusion in s.119 (and in the predecessor TCR case)
demonstrates that the abolition of a position as a result of ordinary and customary turnover is
a redundancy; albeit one that does not give rise to an entitlement to redundancy pay. The
exclusion would otherwise be entirely otiose. As we have earlier indicated, s.119 does not
define ‘redundancy’. It merely sets out the circumstances in which an employee will or will
not have an entitlement to redundancy pay under the NES. Doubtless employees who fall
within the class have been dismissed by reason of redundancy, but ‘redundancy’ is not
thereby so narrowly confined. Further, although we accept that the industrial contextual
considerations identified by Spotless lend some support to its contention, other industrial
contextual considerations cannot be ignored. There is firstly the incorporation of the
redundancy provisions of the Building On-Site Award and the Plumbing Award which each
carry a definition of redundancy which is contrary to the meaning of redundancy contended
for by Spotless.
[67] Secondly, as has been pointed out by the AMWU and the CEPU, Spotless (in its
various iterations including the corporate entity involved in this dispute) has made a number
of agreements, some under the FW Act, which contain provisions relating to redundancy and
which expressly exclude severance pay entitlements in the case of ‘ordinary and customary
turnover of labour’ including loss of contract.13
[68] These contextual considerations diminish the force the general TCR formulation as a
contextual consideration might otherwise have in construing clause 6.3 of the Agreement.
[69] In the circumstances we are not persuaded that the industrial context mandates the
result that the phrase ‘an employee whose employment is terminated by reason of
redundancy’ in clause 6.3 of the Agreement should be read down by reference to the
unexpressed exclusion of ordinary and customary turnover of labour.
(iv) Commercial context
[70] Spotless also points to the fact that at the time the Agreement was made, the parties
knew that Spotless’ business was dependent upon limited term commercial contracts with
[2015] FWCFB 1162
18
third parties. This is said to be an objective fact to which the Full Bench can have regard in
construing the meaning of clause 6.3.14
[71] That the parties were aware of the commercial context and yet did not take the step of
expressly excluding the ending of a commercial contract from the entitlement to severance
pay under the Agreement tells against the narrow construction of the Agreement contended
for by Spotless.
Conclusion
[72] For the reasons given above the answer to the question referred to us for consideration
is no. The dispute will otherwise be dealt with by Commissioner Blair.
PRESIDENT
Appearances:
Mr Fagir of Counsel and Mr Nguyen for the AMWU and CEPU, Mr Borg for the CFMEU
Mr Parry QC with Ms Siemensma of Counsel and Ms Caylock for Spotless Facility Services
Pty Ltd
Hearing details:
Melbourne
22 December 2014
Printed by authority of the Commonwealth Government Printer
Price code C, PR561167
1 [2014] FWCFB 7447
2 Ibid at [41]
3 Amcor v CFMEU (2005) 222 CLR 241 at 273 [103] per Kirby J.
4 Amcor at 261-262
5 Section 55(1) of the FW Act.
6 Section 55(4) of the FW Act.
7 Witness Statement of John Daniel Douglas, Exhibit Spotless 1 at paragraphs 23-24
8 (1984) 8 IR 34
9 (1984) 9 IR 115
10 The approach in Amcor was also adopted by the Full Bench in Svitzer Australia Pty Ltd v Maritime Union of Australia, The
Northern New South Wales Branch [2011] FWAFB 7947. In that case the Full Bench concluded at [70] that the relevant
redundancy clause must be read in the context of the Act.
11 See (2005) 222 CLR 241at [56] - [57] per Gummow, Hayne and Heydon JJ and at [111] - [113] per Kirby J.
[2015] FWCFB 1162
19
12 Amcor Limited v CFMEU (2005) 222 CLR 241.
13 See Outline of Submission in Reply for the AMWU and CEPU at [5] and schedule A
14 In the Award Simplification Decision – Nationwide/AWU and LHMU Australian Defence Forces Services Consent Award
1992 (PR904940, Senior Deputy President Cartwright) the Commission varied the award to replace the words “arising
from the loss or termination of a contract held by the employer” with the test case standard, “due to the ordinary and
customary turnover of labour” and observed at [27] that “it may be that Spotless can demonstrate that, in the context of
its business, dismissals arising from the loss of a contract are, in fact, dismissals due to the ordinary and customary
turnover of labour.”
