1
Fair Work Act 2009
s.604 - Appeal of decisions
Nilsen (SA) Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia
(C2016/3535)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT WELLS
COMMISSIONER BISSETT SYDNEY, 25 MAY 2016
Appeal against decision [2016] FWC 2095 of Senior Deputy President O'Callaghan at
Adelaide on 5 April 2016 in matter number C2016/2523.
Introduction
[1] Nilsen (SA) Pty Ltd (Nilsen) has lodged an appeal against a decision of Senior Deputy
President O’Callaghan issued on 5 April 20161 (Decision). The Decision was made arising
out of an application made by the Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) pursuant to
s.739 of the Fair Work Act 2009 (FW Act) and clause 11 of the Nilsen (SA) Pty Ltd -
Contracting Division Collective Agreement 2013 (Agreement) for the Commission to resolve
a dispute concerning the interpretation of redundancy provisions contained in clause 41 of the
Agreement. Clause 11 of the Agreement is a dispute settlement procedure which ultimately
empowers the Commission to arbitrate and issue a binding determination in relation to
disputes relating to matters arising under the Agreement or the National Employment
Standards. Clause 11(5) contemplates that a decision made by the Commission under the
clause is appealable in accordance with the provisions of the FW Act. Consequently
permission is required for the appeal under s.604 of the FW Act.
[2] The dispute concerned whether there was an entitlement to pro rata redundancy
payments for part-years of service under the Agreement. In that respect the relevant
provisions of the Agreement were as follows:
“41.2 Pay
(a) In addition to the period of notice prescribed for ordinary termination, an employee
whose employment is terminated by reason of redundancy, shall be entitled to the
1 [2016] FWC 2095
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DECISION
E AUSTRALIA FairWork Commission
[2016] FWCFB 3119
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amount of redundancy pay in respect of a continuous period of service in accordance
with the following table.
Employee's period of continuous service with
employer on termination
Redundancy pay period
At least 1 year but less than 2 years 4 week's pay
At least 2 years but less than 3 years 6 week's pay
At least 3 years but less than 4 years 7 week's pay
At least 4 years but less than 5 years 8 week's pay
At least 5 year but less than 6 years 10 weeks
At least 6 year but less than 7 years 11 weeks
At least 7 years but less than 8 years 13 weeks
At least 8 years but less than 9 years 14 weeks
At least 9 years but less than 10 years 16 weeks
At least 10 years 12 weeks
(b) Week's pay means the gross weekly base rate of pay, at the date of termination.
(c) An employee shall be entitled to a pro rata payment for any period of continuous
service which is less than a full year at any of the year levels referred to above.
(d) Where an employee who is terminated receives a benefit from a severance pay
scheme, he/she shall only receive the difference between the redundancy pay specified
above and the amount of the severance benefit he or she receives which is attributable
to employer contributions. If the severance benefit is greater than the amount under the
table herein then he/she shall receive no payment under that table.
41.3 Exemption
Redundancy shall not apply:
• where termination of employment is a consequence of malingering, inefficiency,
neglect of duty, misconduct or refusing duty, or conduct that justifies summary
dismissal.
• to apprentices and trainees.
• to employees employed on a casual basis.
• to employees employed by employers who operate exclusively within the cottage
sector of the housing industry.
• to employees engaged for a specific period of time for a specific task or tasks.
• where legislation provides that the employer is not required to pay redundancy.”
[3] The CEPU contended that the effect of clause 41.2(c) was that for any length of
service, an employee was entitled to a pro rata entitlement to redundancy pay calculated in
accordance with the payment scale in clause 41.2(a). Nilsen’s primary contention was that
clause 41.2(c) was inconsistent with clause 41.2(a), had been included in the Agreement
unintentionally, had no purpose and should be removed. Alternatively Nilsen contended that
the pro rata requirement only commenced in relation to employees who had completed 12
months’ continuous service, so that (for example) employees who had at least 1 year but less
than 2 years’ service would receive a pro rata payment in the range of 1-4 weeks’ pay.
[2016] FWCFB 3119
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[4] The Senior Deputy President’s conclusions in relation to these competing contentions
were as follows:
“[12] Clause 41.2(c) provides for a pro rata payment arrangement. I am unable to
regard this provision as ambiguous. On its plain words it appears to me to provide for
recognition of periods of continuous service which are less than the full year specified
in the table in clause 41.2(a). On this basis the table in clause 41.2(a) establishes a
minimum requirement of one year’s continuous service to entitle an employee to four
weeks’ redundancy pay [and] clause 41.2(c) provides that this four weeks’ pay is to be
calculated on a pro rata basis over that first year. Once an employee has completed
that first year of continuous service, the pro rata payment will then apply in the event
of a redundancy situation calculated on the basis of the next increase in redundancy
payment amounts. For example, an employee who has completed, say 1.5 years’
continuous service would receive five weeks redundancy pay and an employee who
had completed 2.5 years’ continuous service would receive 6.5 weeks’ pay. In each
case, continuous service which reflects the minimum entitlement for an amount of
redundancy pay specified in clause 41.2(a) must qualify any employee for that
payment and the pro rata amount will vary between that minimum and the next
specified maximum payment. Once an employee has achieved 10 years’ continuous
service the provisions of clause 41.2(c) have no further work to do as a maximum
redundancy pay of 12 weeks is then specified. There is a potential issue associated
with the calculation of pro rata amounts for an employee who has between nine and 10
years’ service. My preliminary view is that the 16 week payment cannot be reduced on
a pro rata basis until the employee has achieved 10 years’ service because such a
reduction would be inconsistent with the National Employment Standards. This matter
has not, however, been argued to me.
[13] With respect to the secondary Nilsen position, there is nothing in the Agreement
which would limit the pro rata payment mechanism to situations where an employee
has completed one year’s service.”
[5] On appeal, Nilsen has only challenged one aspect of the Decision, namely the
conclusion that clause 41.2(c) provides for pro rata redundancy payments for employees with
less than 12 months’ continuous service. It contended that this conclusion was incorrect, and
pointed to the last item in the list of exemptions specified in clause 41.3, and to s.121(1)(a) of
the FW Act, which provides that employees with less than 12 months’ continuous service are
excluded from the benefit of the minimum redundancy pay benefits provided for in s.119. The
relevant effect of clause 41.3, Nilsen submitted, was that clause 41.2(c) did not apply to any
employees with less than 12 months’ service when they were made redundant, and
consequently no pro rata benefit was payable to them.
Consideration
[6] We consider that Nilsen’s argument on appeal is correct. Clause 41.2 of the
Agreement specifies the redundancy payments required to be made by Nilsen when the
employment of any employee is terminated by reason of redundancy. It has three elements:
(1) Clause 41.2(a) provides for a scale of payments based on completed years of
continuous service. Clause 41.2(b) is an ancillary provision which defines the
term “week’s pay” when used in clause 41.2(a).
[2016] FWCFB 3119
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(2) Clause 41.2(c) provides for pro rata benefits for part-years of service.
(3) Clause 41.2(d) provides that where the employee receives a benefit under an
industry severance pay scheme, Nilsen is only required to pay any difference
between such a severance payment and the redundancy payment otherwise
specified by clause 41.2.
[7] It is apparent from the heading and chapeau in clause 41.3 that the clause has the
purpose of specifying categories of employees in relation to whom Nilsen is exempted from
paying the redundancy payments specified in clause 41.2. The sixth category of exemption
refers to “where legislation provides that the employer is not required to pay redundancy”.
Although there might be room for debate about the scope of the term “legislation”, it would at
least include the FW Act, being the statute under which the Agreement was made and which
establishes the National Employment Standard for redundancy entitlements. Therefore any
general exemption from a requirement to pay redundancy entitlements in the FW Act would
be picked up by clause 41.3 of the Agreement and be applicable to clause 41.2.
[8] Section 119 of the FW Act sets out the minimum redundancy payments required as
part of the National Employment Standards. The section provides:
119 Redundancy pay
Entitlement to redundancy pay
(1) An employee is entitled to be paid redundancy pay by the employer if the
employee’s employment is terminated:
(a) at the employer’s initiative because the employer no longer requires the job
done by the employee to be done by anyone, except where this is due to the
ordinary and customary turnover of labour; or
(b) because of the insolvency or bankruptcy of the employer.
Note: Sections 121, 122 and 123 describe situations in which the employee does not
have this entitlement.
Amount of redundancy pay
(2) The amount of the redundancy pay equals the total amount payable to the
employee for the redundancy pay period worked out using the following table at the
employee’s base rate of pay for his or her ordinary hours of work:
Redundancy pay period
Employee’s period of continuous service with the
employer on termination
Redundancy pay
period
1 At least 1 year but less than 2 years 4 weeks
2 At least 2 years but less than 3 years 6 weeks
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3 At least 3 years but less than 4 years 7 weeks
4 At least 4 years but less than 5 years 8 weeks
5 At least 5 years but less than 6 years 10 weeks
6 At least 6 years but less than 7 years 11 weeks
7 At least 7 years but less than 8 years 13 weeks
8 At least 8 years but less than 9 years 14 weeks
9 At least 9 years but less than 10 years 16 weeks
10 At least 10 years 12 weeks
[9] As the note to s.119(1) explains, sections 121, 122 and 123 set out circumstances in
which the entitlements provided for by s.119 are not required to be paid by the employer.
Relevantly, s.121(1)(a) provides:
121 Exclusions from obligation to pay redundancy pay
(1) Section 119 does not apply to the termination of an employee’s employment if,
immediately before the time of the termination, or at the time when the person was
given notice of the termination as described in subsection 117(1) (whichever happened
first):
(a) the employee’s period of continuous service with the employer is less than
12 months; or
…
[10] On one view s.121(1)(a) is otiose except for the situation where an employee has not
reached 12 month’s service at the date he or she is given notice but has done so at the actual
date of termination of employment, because the scale of redundancy payments in s.119(2)
does not provide for any payment to an employee who at the date of termination does not
have 12 months’ continuous service. Be that as it may, s.121(1) clearly describes a category
of employees to whom an employer is not required to pay redundancy entitlements. It is
clearly an exemption of the type referred to in the last item in clause 41.3 of the Agreement,
and it therefore operates with respect to the redundancy entitlements specified in clause 41.2.
[11] That means that the effect of clause 41.3 is that an employee with less than 12 months’
service at the date when notice of termination for employment for reason of redundancy is
given or at the date when any such termination takes effect is not entitled to any redundancy
payment under the Agreement. That conclusion must apply irrespective of how clause 41.2(c),
taken in isolation, is interpreted. However, there is good reason to think that clause 41.2(c)
has been drafted in terms such as to give it an operation consistent with the last item in clause
41.3. The pro rata entitlements for which clause 41.2(c) provides only apply in respect of
employees “at any of the year levels referred to above”. This is clearly a reference to the scale
of redundancy benefits set out in clause 41.2(a). The scale sets out “year levels” at which
various amounts of redundancy pay are to apply. The first or lowest “year level” is “At least 1
year but less than 2 years”, and the last or highest is “At least 10 years”. It would be at least
arguable that employees with less than 12 months’ service fall below the minimum level of
service required to come within the first “year level” and therefore are not “at any of the year
levels referred to above”, with the result that clause 41.2(c) does not apply to them. However
[2016] FWCFB 3119
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it is unnecessary to express a final view about this, noting that the point was not argued before
us.
[12] The argument which Nilsen has advanced on appeal was not properly articulated
before the Senior Deputy President (who decided the matter on the basis of the parties’
written submissions only). The issue concerning employees with less than 12 months’ service
was subsumed into the larger alternative argument put forward by Nilsen (an argument which
it did not repeat in the appeal). Further, although Nilsen referred to clause 41.3 in its
submissions at first instance, it never drew the Senior Deputy President’s attention to
s.121(1)(a) of the FW Act upon which the relevant effect of the clause was necessarily
founded. The Senior Deputy President therefore did not receive the assistance in Nilsen’s
submissions to which he was entitled and, as a result, interpreted clause 41.2 of the
Agreement in a way which was, in one respect, in error.
[13] The usual principle is that a party should not be permitted to argue a case on appeal
which it did not raise at first instance, and that permission to appeal would not be granted to
permit this to occur.2 As was stated by the High Court in Coulton v Holcombe:3
“To say that an appeal is by way of rehearing does not mean that the issues and the
evidence to be considered are at large. It is fundamental to the due administration of
justice that the substantial issues between the parties are ordinarily settled at the trial. If
it were not so the main arena for the settlement of disputes would move from the court
of first instance to the appellate court, tending to reduce the proceedings in the former
court to little more than a preliminary skirmish.”
[14] However where the new argument raised by an appellant raises a pure question of law
the determination of which could not possibly have been affected by any evidence the other
party may have wished to adduce at first instance had the point then been raised, an appellate
court or tribunal may allow the argument to be advanced and determined. In O'Brien v
Komesaroff4 the High Court said:
“In some cases when a question of law is raised for the first time in an ultimate court of
appeal, as for example upon the construction of a document, or upon facts either
admitted or proved beyond controversy, it is expedient in the interests of justice that
the question should be argued and decided …”.
[15] The above passage was quoted with approval in Coulton v Holcombe, with the Court
making it clear that the operation of the principle was not confined to an ultimate court of
appeal.5
[16] Because Nilsen’s argument here was indubitably correct and concerned the proper
interpretation of a provision of an enterprise agreement which specified the redundancy
entitlements Nilsen is required to pay its employees, we consider it appropriate to grant
permission to appeal. Nilsen is bound under clause 11 of the Agreement to comply with any
2 See ASU v Yarra Valley Water Corporation [2013] FWCFB 7453, (2013) 232 IR 440 at [23]-[24]
3 (1986) 162 CLR 1 at 7
4 (1982) 150 CLR 310 at 319
5 (1986) 162 CLR 1 at 8
[2016] FWCFB 3119
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arbitral decision of the Commission made pursuant to that clause in resolution of a dispute.6 It
would be manifestly unjust to refuse permission to appeal where the result would be that
Nilsen would be bound to make redundancy payments to employees who, under the terms of
clause 41 of the Agreement, are not entitled to them.
[17] The appropriate remedy in the appeal is to vary the Decision pursuant to s.607(3)(a) of
the FW Act to make it clear that redundant employees with less than 12 months’ service are
not entitled to pro rata redundancy payments under clause 41.2(c).
[18] Finally, out of abundant caution we make the following observation. It was raised in
the submissions before us that clause 15.6 of the Electrical, Electronic and Communications
Contracting Award 20107 is in the same terms as clause 41.2(c) of the Agreement. However
the context of clause 15 of the Award in its entirety, which concerns redundancy, is quite
different to clause 41 of the Agreement. In particular, the Award contains no equivalent to
clause 41.3 of the Agreement. Nothing in this Decision is intended to be understood as
expressing any view, directly or indirectly, about the proper interpretation of clause 15.6 of
the Award.
Orders
[19] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Decision is varied to state that a redundant employee is not entitled to pro
rata redundancy payments under clause 41.2(c) of the Agreement if,
immediately before the time of the employee’s termination, or at the time when
the employee was given notice of the termination, the employee’s period of
continuous service is less than 12 months.
VICE PRESIDENT
Appearances:
B. Duggan solicitor for Nilsen (SA) Pty Ltd.
J. Rogers and G. Noble for Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia.
6 Linfox Australia Pty Ltd v Transport Workers Union of Australia [2013] FCA 659, (2013) 213 FCR 479 at [18]-[33]
7 MA000025
OF THE FAIR WORK MISSION THE
[2016] FWCFB 3119
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Hearing details:
2016.
Melbourne:
18 May.
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Price code C, PR580461
