[2011] FWAFB 2425 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT WATSON |
|
Appeal against decision [[2011] FWA 167] of Commissioner Bissett at Melbourne on 25 January 2011 in matter number C2010/4802 - permission to appeal granted - appeal upheld - remitted to Commissioner.
[1] This is an appeal by Coles Group Supply Chain Pty Ltd (CGSC) against a decision made by Commissioner Bissett on 25 January 2011. 1 That decision was made in proceedings initiated by an application pursuant to s.739 of the Fair Work Act 2009 (the Act) by the National Union of Workers (NUW) under the dispute settlement provisions in the Coles Group Supply Chain Pty Ltd and National Union of Workers (Hoppers Crossing) Enterprise Agreement 2010-2012 (the Agreement).2 Clause 6 of the Agreement is entitled Procedures for the Avoidance of Industrial Disputes.
[2] On 2 September 2010, the NUW made an application to have a dispute resolution procedure conducted under clause 6 of the Agreement. The dispute concerned the application of the redundancy provisions in Appendix A of the Agreement. In particular, the dispute related to the redundancy payment due to Mr J Smith in circumstances where he would most likely be made redundant in the first half of 2011.
[3] The matter on which a determination was sought by Commissioner Bissett, as agreed between the parties, was:
“What is the severance pay entitlement of Jason Smith pursuant to clause (b) of Appendix A of the Coles Group Supply Chain Pty Ltd (Hoppers Crossing) and National Union of Workers Enterprise Agreement 2010-2012, assuming he is made redundant on 1 April 2011?” 3
[4] Appendix A - Redundancy - of the Agreement provides:
“Coles Group Supply Chain Pty Ltd and the National Union of Workers agree that if Team Members are to be made redundant at the Hoppers Crossing Distribution Centre or the Laverton Distribution Centre during the period 1 July 2010 and the expiration of this Agreement, the following will apply:
a) Voluntary redundancies shall be offered in the first instance, with length of service being the determining factor for Team Member release. (Where special individual Team Member circumstances arise, these will be considered, providing satisfactory evidence is submitted supporting such special circumstance).
b) (ii) For Team Members employed at the Coles Group Supply Chain- Hoppers Crossing site and permanent Team Members employed prior to 1 July 2005, five weeks severance pay for each completed year of permanent employment, (pro-rata on each completed month). Any change to the content of this clause can only occur by agreement with the majority of these Team Members, their representatives, and the company.
(ii a) For Team Members employed at the Coles Group Supply Chain- Hoppers Crossing site after 1 July 2005, five weeks severance pay for each completed year of permanent employment, with the severance component only, capped at 55 weeks (pro-rata on each completed month).”
[5] The employment history of Mr Smith, which is relevant to the dispute, is as follows:
• From October 1989 to August 1997: employed full-time by Kmart at an Altona North retail store;
• From August 1997 to April 1998: employed as a casual at the Kmart Hoppers Crossing warehouse;
• From April 1998 to September 2000: employed as a casual at the Coles Myer Logistics (CML) Hoppers Crossing warehouse;
• From September 2000 to January 2007: employed full-time at CML Hoppers Crossing warehouse;
• From January 2007 to August 2010: employed full-time at CGSC Hoppers Crossing warehouse; and
• From August 2010 until redundancy: employed full-time at CGSC Laverton warehouse.
[6] In the matter before Commissioner Bissett, there was no dispute about the following matters:
• CML and CGSC are the same legal entity;
• Kmart and CML/CGSC were members of the “Coles Myer Group” and are related entities;
• The change of operations at the Hoppers Crossing warehouse from Kmart to CML in April 1998 involved a transmission of business;
• The period of full-time employment from September 2000 until the time of redundancy was counted toward Mr Smith’s permanent employment, with the Agreement applying at both the Hoppers Crossing and Laverton sites; and
• The period of casual warehouse employment from August 1997 to September 2000 did not count towards Mr Smith’s permanent employment.
[7] In relation to the issue which was in dispute, Commissioner Bissett found that the period of full-time retail employment from October 1989 to August 1997 counted towards Mr Smith’s permanent employment for the purposes of the redundancy provision in Appendix A of the Agreement. 4
Appeal grounds and submissions
[8] In the appeal, CGSC pressed only those grounds in its Notice of Appeal which went to alleged error by Commissioner Bissett in her construction of Appendix A of the Agreement. CGSC submitted that the Commissioner erred by:
(i) concluding that Mr Smith’s employment with the Kmart retail store counted as permanent employment for the purpose of the redundancy provision in circumstances where:
(ii) finding that Mr Smith’s employment with the Kmart retail store was “deemed” to be recognised by the redundancy provision:
[9] CGSC submitted that Commissioner Bissett erred in finding that the period of Mr Smith’s employment in retail with Kmart from 1989-1997 is relevant employment for the purposes of the redundancy provisions in the Agreement because the Kmart period was with a different entity, with no legislative, industrial or contracting deeming provisions, and the Kmart period was at a different location involving completely different work, regulated by a different industrial instrument between Kmart and a different union respondent. It submitted that “Permanent Employment” is not defined but must mean continuous permanent employment with CML/CGSC or at least a total of periods of permanent employment with CML/CGSC under the Agreement.
[10] CGSC submitted that Commissioner Bissett was wrong to construe the Agreement to include service with a different employer to that covered by the Agreement, as well as service not covered by the Agreement. It submitted that, in light of the finding by Commissioner Bissett, 5 it was necessary to somehow deem Mr Smith’s full-time employment with Kmart as employment with CGSC. She did so on the basis of the “transfer” of the business from Kmart to CML in April 1998, a contractual rather than legislative deeming. In this respect, CGSC submitted that the Commissioner erred because contractual arrangements included continuity of service to permanent Kmart employees and not casual employees. Mr Smith was a casual Kmart employee, who voluntarily left a casual position at Kmart to take up a casual CML position and was not subject to any contractual arrangement to recognise continuity of service of Kmart employees.
[11] The NUW submitted that the construction of the redundancy provision advanced by CGSC was too narrow and an interpretation which caused inconvenience and injustice. It submitted that Commissioner Bissett was right to find that the service of Mr Smith as a casual employee was employment of a regular and systematic nature, with a reasonable expectation of continuing employment and created no bar to the periods of permanent employment being added together for the purposes of the redundancy entitlement under the Agreement.
[12] The NUW submitted that the Commissioner was right to find that there was a contractual deeming of the Kmart employment as employment with CGSC. 6 The NUW submitted that such a finding was substantiated by the evidence of Mr Smith that he had not resigned his employment with Kmart, all company records record his commencement date as October 1989 and CML/CGSC had confirmed his service commencing 1989 (the date he commenced work at the Kmart retail store) for the purposes of long service leave, service anniversaries and redundancy entitlements and, whilst the CGSC Operations Manager, Mr M Howden, gave evidence that permanent Kmart employees were given an undertaking as to continuity of service, there was no evidence that such an undertaking was not given to casual employees.
[13] In the appeal, the NUW also submitted that there was legal or industrial deeming found in the incorporation of clause 6.3 of the Storage Services Retail Victorian Warehouses Award 2000 (the Award) 7 as part of the Agreement through the operation of clause 5.1.1 of the Agreement. Clause 6.3 of the Award, at the relevant time, was a transmission of business provision, which provided that continuity of employment of the employee shall be deemed not to have been broken by reasons of transmission and the period of employment which the employee has had with the transmittor shall be deemed to be service of the employee with the transmittee. This is not an argument put to Commissioner Bissett at first instance.
Consideration
[14] We agree with the Commissioner’s characterisation of the task before her:
“This is not a case of differing interpretations of a clause but whether or not certain employment is relevant for the purpose of that clause. There is, in my opinion, little that needs to be determined in terms of the meaning of the redundancy clause, except whether the period of retail employment with Kmart is employment for the purpose of redundancy pay in the Agreement. If the answer to that is yes, a further question arises as to whether or not the period of casual employment breaks continuity of service for redundancy purposes.” 8
[15] In respect of the second question, the Commissioner found that the period of employment as a casual employee and as a limited tenure employee were clearly periods of service with CGSC and its predecessor that contributed to a period of continuous service. 9 We see no error in this conclusion or the reasoning10 which led her to that conclusion.
[16] The question for determination in the appeal is whether Commissioner Bissett erred in finding that the transmission of business and transfer of employees from the Kmart warehouse to CML constituted deeming of Mr Smith’s full-time service at the Kmart retail store contractually or by way of an industrial or legislative instrument. With such deeming, there was no error in the decision of the Commissioner, notwithstanding the circumstances relied upon by CGSC in its first appeal ground. Absent such deeming, Mr Smith’s Kmart retail store employment cannot be recognised, as the Commissioner found. 11 Contractual deeming was found to have occurred by the Commissioner. Deeming through an industrial instrument by incorporation of clause 6.3 of the Award was not advanced by the NUW at first instance.
[17] In her decision, Commissioner Bissett rejected the proposition that any previous service is “permanent employment” for the purposes of the redundancy clause 12 and accepted the argument of CGSC that, absent any deeming, Mr Smith’s retail employment with Kmart cannot be recognised,13 but found that the transmission of business and transfer of employees from the Kmart warehouse to CML in effect provided that deeming.14
[18] In finding that deeming occurred, the Commissioner noted that, at the time CML took over the running of the warehouse from Kmart, permanent employees of Kmart had their employment transferred to CML (now CGSC) and inferred that at the time of the transfer of employees from Kmart to CML, employees were advised as to the conditions of the transfer of their employment including the extent to which service and accrued entitlements with Kmart would be recognised by CML. 15 The Commissioner noted that it was open to CGSC to put evidence before her that the transfer from Kmart to CML did not include any transfer of service for non-casual employees but it did not.16 In those circumstances, the Commissioner inferred that the transmission of business and transfer of employees from the Kmart warehouse to CML in effect provides that the transmission of business and transfer of employees from Kmart warehouse to CML provided the necessary deeming.
[19] Notwithstanding the likelihood that employees were advised as to the conditions of the transfer of their employment including the extent to which service and accrued entitlements with Kmart would be recognised by CML, there was no direct evidence of what contractual arrangements, if any, were put to Mr Smith at the time CML took over the running of the Kmart warehouse in 1998, or indeed to any employees transferring at the time.
[20] Mr Howden gave evidence that his examination of Mr Smith’s personnel file disclosed no representation to him that his period of employment at the Kmart retail store prior to 1997 would be credited to him for the purpose of calculating severance pay under the Agreement or any predecessor agreement. 17 Although Mr Howden gave evidence that continuity of employment for redundancy purposes was recognised for permanent Kmart employees who were required to transfer their employment to CML in 1998,18 there was no evidence of the contractual arrangements made with these or any other category of employee at the time of the transfer. Mr Smith gave evidence that all company records had his commencement date as a date in October 1989, that this date had been used for purposes of calculating long service leave and anniversaries and that whenever he had queried his redundancy entitlement with administrative staff, they had referred to the date in October 1989 as the date his service with the company commenced.19 However, he gave no evidence as to what contractual arrangements, if any, were conveyed to him at the time of the transfer in 1998.
[21] Given Mr Smith’s retail employment with Kmart cannot be recognised for purposes of redundancy entitlements under the Agreement, unless that service was deemed to be service for that purpose, and the absence of any direct evidence of contractual arrangements which provided for such deeming, the finding of the Commissioner that such deeming occurred was not available on the evidence. To the extent that the Commissioner relied on the proposition that CGSC failed to put evidence that the transfer from Kmart to CML did not include any transfer of service for non-casual employees, the Commissioner erred. She was required to make a finding, on the evidence, that a contractual commitment to transfer of service of Mr Smith existed.
[22] For this reason, we grant permission to appeal.
[23] Having granted permission to appeal, we have decided to admit the new evidence which the NUW sought to introduce - a 1998 communique, under the name of Kmart, in which the transfer from Kmart to CML is said to “not affect your entitlements or conditions of employment in any way”. It does not provide direct evidence of contractual arrangements entered into with Mr Smith at the time of the transfer. Further, there is no evidence as to who the circular was distributed to and whether it was provided to or seen by Mr Smith. Copies of the letter of transfer referred to in the circular, particularly any letter provided to Mr Smith at the time of the transfer, might provide directly relevant evidence.
[24] Accordingly, even with the admission of the new evidence, we uphold the appeal and quash the Commissioner’s decision.
Rehearing
[25] For the reasons given above, we are not satisfied that the evidence supports a finding that there was a contractual deeming of the Kmart retail service at the time of the transfer of Mr Smith to CML in 1998.
[26] However, in the appeal the NUW advanced the proposition that there was legal or industrial deeming found in the incorporation of clause 6.3 of the Award as part of the Agreement through the operation of clause 5.1.1 of the Agreement.
[27] In this respect, the NUW submitted that:
1. Clause 5.1 of the Agreement provides:
5.1.1 This Agreement shall incorporate the Storage Services Retail Victorian Warehouses Award 2000 (as at 08 March 2002), provided that this Agreement shall prevail to the extent of any inconsistency.”
2. The 2010 Agreement was made under the Act which, in s.257, authorises the incorporation of material included in an award. The terms of the Award were therefore incorporated as terms of the Agreement, subject to the Agreement prevailing to the extent of any inconsistency.
3. Clause 6.3 - Transmission of business, of the Award provides:
“6.3 Transmission of business
6.3.1 Where a business is before, on or after the date of this award, transmitted from an employer (in this clause called the transmittor) to another employer (in the clause called the transmittee) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:
6.3.1(a) the continuity of the employment of the employee shall be deemed not to have been broken by reasons of such transmission; and
6.3.1(b) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.
6.3.2 In this clause business includes trade, process, business or occupation and includes part of any such business, and transmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law, and transmitted has a corresponding meaning.”
[28] There were no terms in the Agreement inconsistent with clause 6.3 of the Award. The term “permanent employment” in Appendix A of the Agreement would, by operation of clause 6.3 of the Award, include any permanent employment with a previous employer where there has been a transmission of business from the previous employer to the current employer.
[29] CGSC submitted that the transmission of business clause in clause 6.3 of the Award is a definitional clause which only has effect in relation to the redundancy clause in the Award and has no work to do in respect of the Agreement redundancy provision. In addition, it objected to the NUW introducing a new ground in support of its original application on appeal, submitting that if the argument had been raised before Commissioner Bissett, it would have introduced relevant evidence as to whether or not it would have been the intention of the parties to incorporate clause 6.3 of the Award when formulating the Agreement.
[30] We have considered whether we should rehear and determine the original application ourselves, including consideration of the additional award based deeming argument raised by the NUW on appeal. However, since the point was not raised before the Commissioner at first instance and CGSC did not have an opportunity to bring evidence on the point, we have decided that the better course is to remit the matter to Commissioner Bissett to deal with the subject matter of the decision in [2011] FWA 167. This will provide the parties with the opportunity to seek to put additional argument and evidence on the Award deeming issue.
SENIOR DEPUTY PRESIDENT
Appearances:
M Follett, of counsel, for the appellant.
N Campbell, of counsel, for the respondent.
Hearing details:
2011.
Melbourne:
April 12.
3 [2011] FWA 167, at para 6.
4 [2011] FWA 167, at paras 64-68.
5 [2011] FWA 167, at para 60.
6 [2011] FWA 167, at para 60.
7 AP796002.
8 [2011] FWA 167, at para 19.
9 [2011] FWA 167, at para 40.
10 [2011] FWA 167, at paras 23-40.
11 [2011] FWA 167, at para 60.
12 [2011] FWA 167, at para 59.
13 [2011] FWA 167, at para 60.
14 [2011] FWA 167, at para 60.
15 [2011] FWA 167, at para 59.
16 [2011] FWA 167, at para 60.
17 Appeal Book, at p. 50.
18 Appeal Book, at p. 50.
19 Appeal Book, at p. 47.
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