[2018] FWCFB 4181

FAIR WORK COMMISSION

STATEMENT

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards – plain language re-drafting – standard clauses
(AM2016/15)

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
COMMISSIONER HUNT

SYDNEY, 19 JULY 2018

4 yearly review of modern awards – plain language re-drafting – standard clause H.

[1] This statement deals with two outstanding items regarding standard clause H—employee leaving during redundancy notice period.

[2] In a decision 1 issued on 28 August 2017 (the August 2017 decision) we proposed a revised clause H.4 (at [198]) and invited interested parties to make submissions. The ACTU was the only party to make a submission and they did not object to the revised clause. The proposed amendments to clause H.4 were adopted in a decision on 13 June 20182 (the June 2018 decision). The current version of clause H is in the following terms:

H. Employee leaving during redundancy notice period

H.1 An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of the notice.

H.2 The employee is entitled to receive the benefits and payments they would have received under this award or the NES had they remained in employment until the expiry of the notice.

H.3 However, the employee is not entitled to be paid for any part of the period of notice remaining after the employee ceased to be employed.

H.4 Job search entitlement

(a) Where an employer has given notice of termination to an employee in circumstances of redundancy, the employee must be allowed time off without loss of pay of up to one day each week during the period of the notice for the purpose of seeking other employment.

(b) If an employee is allowed time off without loss of pay of more than one day under paragraph (a), the employee must, at the request of the employer, produce proof of attendance at an interview.

(c) A statutory declaration is sufficient for the purpose of paragraph (b).

(d) An employee who fails to produce proof when required under paragraph (b) is not entitled to be paid for the time off.

(e) This entitlement applies instead of clause E.2.

[3] The outstanding items concern clauses H.2 and H.3, and relate to the circumstance where an employee is made redundant and, under clause H, elects to leave their employment before the end of the redundancy notice period. There is no dispute that the employee may make such an election or that the employee is not entitled to be paid notice pay for the period of notice not worked. The disputed issues are whether in such circumstances:

1. a employee is entitled to benefits and payments they would have received had they remained in employment until the expiry of the notice under clause H, or alternatively, under the award; and

2. whether an employer may make deductions from payments due to the employee if the employee did not give the employer the required period of notice of their termination.

[4] In a Statement 3 published on 20 July 2017 (the July 2017 statement) interested parties were invited to make submissions regarding clause H and submissions were received from:

• Australian Council of Trade Unions (ACTU);

• Australian Industry Group (Ai Group);

• Housing Industry Association (HIA); and

• Shop, Distributive and Allied Employees Association (SDA).

[5] It is convenient to deal with the second outstanding issue first. The issue was discussed during a conference on 11 April 2017 4 and in the August 2017 decision we noted that the issue was related to the right of an employer to make deductions from termination payments pursuant to clause E.1(c). We indicated that the issues in relation to clause H would be determined after the issue identified in relation to clause E.1(c) was finalised.5 The issue in respect of clause E.1(c) was finalised in a decision of 18 July 2018.6 It appears that Issue 2 in respect of clause H may have been overtaken by the decisions in relation to clause E.1.

[6] Any party who wishes to press this issue should advise the Commission by 4.00 pm, Friday 27 July 2018.

[7] In relation to Issue 1, Ai Group submits that clause H.2 should be varied as follows:

‘H.2 The employee is entitled to receive the benefits and payments they would have received under clause H of this award or sections 119-122 of the NES had they remained in employment until the expiry of the notice.’ 7

[8] In support of its position, Ai Group submit:

‘The existing entitlement for an employee who leaves during the notice period is to receive the entitlements that they would have received under the redundancy clause of the award, had they remained in employment until the expiry of the notice. This is a very longstanding entitlement that was inserted into awards following the 1984 Termination, Change and Redundancy Decision and Supplementary Decision.

The entitlement was retained in awards after the 2004 Redundancy Case Decision.

For example, clause 23.4 of the Manufacturing Award specifies as follows:

“An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of notice. The employee is entitled to receive the benefits and payments they would have received under clause 23—Redundancy had they remained in employment until the expiry of the notice, but is not entitled to payment instead of notice.”

The redrafted wording obviously results in a substantial increase in the entitlements of employees who are made redundant, and a substantial increase in employer costs. It is not uncommon for an employee to leave during the notice period when the employee’s position becomes redundant. In such circumstances, employees receive their redundancy entitlements and not, for example, the annual leave that would have accrued if the full period of the notice had been worked out.’ 8

[9] HIA support the view expressed by Ai Group. 9

[10] SDA submits that the clause H.2 has the following meaning:

‘if the employee does terminate their employment during the notice period their entitlements are calculated on the basis of the original termination date given by the employer. This provision was included by the Full Bench in the Termination, Change and Redundancy Case (TCR Case) so employees would not be deterred from taking a new job by a loss in any redundancy payments or entitlements.’ 10

[11] The SDA submits the Termination, Change and Redundancy Case supports its position and relied on the following quote from that decision:

‘The ACTU also made claims which relate to an employee under notice of termination who wishes to leave, for example, where an employee has found a suitable job and is required to take up that job early.

It was claimed that such an employee should be granted the benefits of any redundancy provision because to restrict him/her would discourage workers from finding and taking up other employment opportunities and that the early departure of employees in a redundancy situation will often make little difference to employers. It was also claimed that this would be consistent with the tenor of a number of awards and agreements.

Having regard to the reason for our grant of severance pay, subject to the right of an employer to seek a variation if appropriate circumstances exist, we are prepared to grant this part of the ACTU claim. We would emphasize, however, that such an employee would not be entitled to payment in lieu of notice in such circumstances.’ 11

[12] The ACTU submit they do not understand there to be a significant difference between the parties on the intended operation of this clause, and support the submission of the SDA. 12

[13] The equivalent clauses to clause H of the current modern awards, for example clause 12.3 of the Aged Care Award 2010, provide as follows:

‘12. Redundancy

12.1 Redundancy pay is provided for in the NES.

12.2 Transfer to lower paid duties

Where an employee is transferred to lower paid duties by reason of redundancy, the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may, at the employer’s option, make payment instead of an amount equal to the difference between the former ordinary time rate of pay and the ordinary time rate of pay for the number of weeks of notice still owing.

12.3 Employee leaving during notice period

An employee given notice of termination in circumstances of redundancy may terminate their employment during the period of notice. The employee is entitled to receive the benefits and payments they would have received under this clause had they remained in employment until the expiry of the notice, but is not entitled to payment instead of notice.’

[14] The current clauses in modern awards refer to ‘benefits and payments under this clause’.

[15] Ai Group also note that the period of notice referred to in clauses H.1, H.3 and H.4(a) is the period of notice in s.117 of the Act. Ai Group would prefer that this issue is clarified within the wording of the clause. 13

[16] The SDA submits that it is not necessary to amend clause H.3 in the way described by the Ai Group because the purpose of this clause is not to prescribe the amount of notice to be provided to an employee, rather the purpose is to remove the obligation for an employer to pay the employee for the period of notice not worked. 14

[17] A conference of interested parties will be held to discuss the resolution of the remaining two issues in respect of clauses H.2 and H.3.

Next steps

[18] Interested parties are invited to file submissions in respect of issue 2 at paragraphs [6] by 4.00 pm Friday 27 July 2018.

[19] All material should be sent to [email protected].

[20] The Commission will convene a conference of interested parties to discuss the resolution of the remaining two issues in respect of clauses H.2 and H.3 at 2.30pm, Thursday, 2 August 2018 in Sydney. Requests for video link should be made to [email protected].

PRESIDENT

Printed by authority of the Commonwealth Government Printer

1 [2017] FWCFB 4419

2 [2018] FWCFB 3009

3 [2017] FWCFB 3745

4 Transcript, 11 April 2017, paragraphs 3028 – 3040.

5 The ACTU and SDA opposed the proposal, ACTU submission, 11 August 2017, paragraphs 31 – 34; SDA submission, 9 August 2017, paragraphs 44 – 45

6 [2018] FWCFB 4177; also see the June 2018 decision

7 Ai Group submission, 9 August 2017, paragraph 34

8 Ai Group submission, 9 August 2017, paragraphs 31 – 34

9 HIA submission, 9 August 2017, page 2

10 SDA submission, 9 August 2017, paragraph 41