| [2018] FWCFB 4463 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Unilever Australia Trading Limited
v
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
(C2018/1367)
VICE PRESIDENT CATANZARITI |
SYDNEY, 30 JULY 2018 |
Appeal against decision ([2018] FWC 1150) of Deputy President Gooley at Melbourne on 23 February 2018 in matter number C2017/1089 – dispute arising under enterprise agreement – redundancy pay - whether casual service counts towards period of service – error – appeal upheld.
[1] This decision concerns an appeal by Unilever Australia Trading Limited (Unilever) from a decision of Deputy President Gooley 1 in relation to a dispute under the Unilever Australia Trading Limited Tatura Site-Enterprise Agreement 2015 (Agreement).
[2] The dispute concerned a question of interpretation about the redundancy provisions in the Agreement and whether, when calculating permanent employees’ entitlements to redundancy pay, any prior ‘contiguous’ casual or seasonal service was to be counted. The Deputy President concluded that such service was to be included in the calculation. Unilever contends that the Deputy President’s interpretation of the relevant provisions was wrong.
[3] The dispute was brought before the Commission by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, known as the Australian Manufacturing Workers’ Union (AMWU), on behalf of five of its members who were made redundant at the company’s Tatura site, and who challenged the company’s calculation of their redundancy entitlements. It was not in dispute that the Commission had jurisdiction to arbitrate the dispute under clause 9 of the Agreement.
[4] An appeal of a decision is not as of right and permission to appeal must first be obtained.2 The present matter is not a case where the enterprise agreement confers an independent right of appeal. Subsection 604(2) of the Fair Work Act 2009 (Cth) (Act) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 3 The public interest is not satisfied simply by the identification of error, or a preference for a different result.4 Other than the special case in s.604(2), the grounds for granting permission to appeal are not specified. Considerations that would usually justify the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration, or that substantial injustice may result if leave is refused.5
[5] As we explain below, we have concluded that the Deputy President’s construction of the Agreement was wrong, such as to warrant the granting of permission to appeal.
[6] Attachment 4 to the Agreement contains a ‘redundancy agreement’. The preamble in clause 1 of Attachment 4 states that the redundancy agreement ‘does not apply to casual or seasonal employees’. Clause 2.6 and 2.7 of Attachment 4 then state as follows:
“Severance Pay
2.6 Each Employee to be made redundant shall receive four (4) weeks payment at normal rates provided that the Employee has at least twelve (12) months continuous service.
Redundancy payments
2.7 The following redundancy payment provisions will apply to any employee made redundant. These redundancy payments will be in addition to the benefits described in paragraphs 2.5 and 2.6 and will be made in accordance with the following provisions:
(a) Four (4) weeks’ pay per year of service and pro-rata for incomplete years of service;
(b) A cap of 104 weeks applies to redundancy payments.
The calculation of a week’s pay will be the normal hourly rate which includes shift allowance.”
[7] The word ‘service’ in clause 2.7 is not defined in the redundancy agreement or elsewhere in the Agreement.
[8] The employees in question were initially employed on a seasonal and casual basis by Unilever. There was little or no interruption between engagements. 6 In mid-2009, they were offered and accepted permanent employment with Unilever. They received ‘transfer letters’ stating that on commencement of employment with the new entity, their ‘prior continuous permanent service with Unilever will be recognised for all service related entitlements.’ The employees were made redundant from their employment with Unilever in May 2017.
[9] The AMWU, on behalf of its members, contended that their periods of casual and seasonal service should count for the purposes of calculating their redundancy payment under clause 2.7, because the reference to ‘service’ in that provision is not confined to service as a permanent employee.
[10] The company’s position was that ‘service’ in clause 2.7 contemplates continuous service and that periods of past casual and seasonal employment do not count. It further contended that the period of casual and seasonal employment had been rendered with a different entity and that relevant employees had accepted employment with the company on the basis that only prior continuous permanent service with Unilever would be recognised.
[11] The Deputy President concluded that the term ‘service’ in the Agreement had an ordinary meaning, namely a period of employment with an employer. This included periods of ‘contiguous casual, seasonal and permanent employment.’ 7 The Deputy President noted that, whereas clause 2.7 refers simply to ‘service’, the payment arising under clause 2.6 requires 12 months ‘continuous service.’ She examined the other provisions in the Agreement where the word ‘service’ is used,8 and stated that she did not consider the word to have a special meaning in the Agreement.9 The Deputy President also examined the service-related entitlements in the Act, and said that ‘there is no automatic presumption that service excludes or includes service as a casual employee.’10 She went on to state:
“[83] The decision in Donau makes it clear that for the purpose of s.22 periods of causal service are not excluded from the definition of service or continuous service for the purpose of determining the entitlement of a permanent employee to severance pay.
[84] I am not satisfied that there is a common industrial understanding that the word service, when used in an industrial context, excludes service as a casual/seasonal employee.
[85] I am satisfied that unless there is a contra-indication in the Agreement then service includes service as a casual/seasonal employee.
…
[92] As there is no contrary indication I am satisfied that in this Agreement when calculating a permanent employee’s contiguous period of service as casual/seasonal employees counts as service for the purpose of determining the employee’s entitlements under Attachment 4 to the Agreement.”
[12] An appeal under s.604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 11 The approach of a Full Bench to the determination of an appeal depends on the nature of the decision below. In the present case, the Deputy President was resolving a dispute that involved the interpretation of an enterprise agreement. The task of determining the proper interpretation of the Agreement did not involve the exercise of discretion. Accordingly, the Full Bench must determine whether the interpretation of the Agreement adopted by the Deputy President was correct.12 Other decisions made during the course of hearing and determining the matter at first instance might involve the exercise of discretion. Such decisions are appealable on the bases identified in House v The King.13
[13] Unilever advances three principal grounds of appeal. First, it contends that the Deputy President erred by concluding that the reference to ‘service’ in clause 2.7 includes service as a casual or seasonal employee. Secondly, it submits that the Deputy President was wrong to conclude that the word ‘service’ was not ambiguous. Thirdly, it says that the Deputy President erred by not having regard to evidence of surrounding circumstances in determining whether ambiguity existed, including in particular the ‘transfer letters’ issued to relevant employees in 2009, which stated that only prior continuous permanent service would be recognised for all service-related entitlements.
[14] Several separate redundancy-related payments are provided for in Attachment 4 of the Agreement. First, under the heading ‘severance pay’, clause 2.6 states that each employee to be made redundant shall receive four weeks payment at normal rates provided that the employee has at least twelve 12 months ‘continuous service’. Secondly, under the heading ‘redundancy payments’, clause 2.7 provides that each employee made redundant will receive ‘four weeks’ pay per year of service’ (not continuous service). Clause 2.5 states that employees may choose to accept payment in lieu of notice of redundancy. Of central relevance to the appeal is the meaning of ‘service’ in clause 2.7.
[15] For the AMWU, the contrast between clauses 2.6 and 2.7 is stark and determinative. The former is referable to continuous service, the latter is not. ‘Service’ simply means a period of employment. Accordingly, all periods of service as a casual or a seasonal worker count as service for the purposes of the calculation of the redundancy payment under clause 2.7.
[16] The company contended that the reference to ‘service’ should be read consistently with the reference to continuous service in clause 2.6, and that it would be incongruous to have the ‘severance benefit’ and the ‘redundancy payment’ calculated on different bases, that is, continuous and non-continuous service.
[17] The Deputy President concluded that the AMWU’s interpretation was correct. She found that the word ‘service’ in clause 2.7 carries its ordinary meaning and refers to a period of employment. We agree that this is the ordinary industrial meaning of the word ‘service’ in Australia. The definition of ‘service’ in s.22(1) of the Act, although not directly applicable to the interpretation of enterprise agreements, also reflects this common meaning. The concept of service is to be distinguished from ‘continuous service’ which is an unbroken period of service. Whether interruptions in service break continuity of employment may be affected by any relevant provisions in enterprise agreements and also s.22 of the Act, which deals with both service and continuous service for certain purposes.
[18] Casual and seasonal employees render service. In relation to casuals, the common law position is that each engagement stands alone. Each engagement constitutes a period of service, but there is no continuity of service from one engagement to the next. 14 Such is the case also with seasonal workers, who render service for each season they are engaged, but ordinarily do not have continuity of service from one season to the next. The common law position can of course be altered by statute, contract, or an industrial instrument. In this case, the Agreement says nothing about the matter.
[19] While redundancy benefits in enterprise agreements are commonly established by reference to continuous service, this is not always the case. In the present matter, clause 2.6 establishes one payment that is referable to continuous service, namely the severance payment prescribed by clause 2.6, and another payment that is referable to service alone, namely the redundancy payment in clause 2.7. On one view, the reference to ‘service’ in clause 2.7 should be read down in light of clause 2.6, as there is no apparent rationale for calculating these benefits on disparate bases. On the other hand, if different formulas are clearly established for different benefits, it is not necessary for the Commission to inquire into the reasons behind them.
[20] It is true that it would be odd, as Unilever contends, to set 12 months’ continuous service as a precondition for the payment of the four weeks’ severance benefit, but to calculate the redundancy benefit based on any service. On this interpretation, an employee who worked with Unilever for many years, left to work for another employer, and then returned only for a brief period before being made redundant could have their redundancy payment reflect all the earlier years of service. It seems improbable that redundancy benefits would operate on any previous service, including separate past periods of employment, no matter how remote. This consideration might support the contention that clause 2.7 should be read down by reference to clause 2.6. On the other hand, as noted in Berri, the task of interpreting an enterprise agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. 15 Rather, the construction of the agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words, read in context.16
[21] In our opinion it is not necessary to decide whether ‘service’ in clause 2.7 is to be read down by reference to continuous service in clause 2.6. The question of interpretation posed by the present appeal is whether periods of service as casual or seasonal employees should count as service for the purpose of determining entitlements to redundancy payments under clause 2.7 of Attachment 4 of the Agreement. Clause 1 of Attachment 4 bears directly on this question. It states: ‘This Redundancy Agreement does not apply to casual or seasonal employees.’
[22] The AMWU submitted that the effect of this provision is that those who happen to be engaged as casual or seasonal workers at the time of their redundancy are not entitled to the benefits of the redundancy agreement. On the AMWU’s construction, the exclusion in clause 1 relates only to the entitlement to payment, not the calculation of service under the Agreement. We do not agree.
[23] First, the exclusion in clause 1 is clear and of general application. It is the entire redundancy agreement that does not apply to casual or seasonal employees, not just the payment provisions. On the AMWU’s argument, casual and seasonal service counts in the calculation of service under clause 2.7. However, to count casual and seasonal service for the purposes of clause 2.7 would be to apply the redundancy agreement to casual employees; they would accumulate casual and seasonal service during the life of the Agreement which would produce a monetary benefit if subsequently they were made redundant at a time when they were engaged on a permanent basis. On the AMWU’s argument, the redundancy agreement would ‘apply’ to casual or seasonal employees in this important way, when the exclusion in clause 1 states that the redundancy agreement does not apply to them at all.
[24] We appreciate that the casual and seasonal service of the employees who are the subject of the present dispute was not rendered under the Agreement. However that is not to the point. If the AMWU’s construction is accepted, the exclusion does not prevent service of casual and seasonal employees currently employed under the Agreement from counting towards redundancy benefits (after conversion to permanent status) in the future. There is no basis to read down the exclusion in this way.
[25] Secondly, clause 2.7 prescribes a formula of ‘four weeks’ pay per year of service and pro-rata for incomplete years of service.’ The reference to a year of service and incomplete years of service is a further indication that the provision does not contemplate service rendered through casual engagements, which, as noted above, typically entail standalone periods of employment for each engagement. There was no suggestion that the periods of casual engagement departed from the ordinary contractual position in the present case, even though there was a ‘contiguous’ period of successive engagements. On one view, it might be said that a person who worked, say, 260 week days in a 365 day period year as a casual had accumulated a year of service; and that some fraction of such an arrangement is an incomplete year of service. But that is not the ordinary meaning of the words ‘year of service’ or ‘incomplete year of service’. Rather, a casual employee in these scenarios has a collection of individual one day periods of service.
[26] A further difficulty facing the contention that the exclusion in clause 1 relates only to payment is that casual and seasonal employees would not ordinarily be entitled to payment of redundancy benefits anyway. The employer could simply not reengage casual employees; there is no need to make them redundant. The position is similar in relation to seasonal employees; ‘redundancy’ occurring at the end of the season would simply mean that the employer would not reengage the person for the following season, although one could rationally speak of redundancy occurring during the season. In any event, at least in relation to casuals, there is a problem confronting the AMWU’s interpretation: if the exclusion in clause 1 only related to the entitlement to payments – that is, if its function was to disentitle a casual employee to such payments – the provision would be redundant. For the exclusion in clause 1 to be given substantive work to do in relation to casuals, it needs to relate also to service as a casual.
[27] On the question of the significance of the exclusion in clause 1, the Deputy President accepted the AMWU’s contention, and stated that ‘the exclusion in Attachment 4 does no more than say that if an employee is a casual/seasonal employee at the time his or her position is redundant, the employee is not entitled to redundancy pay or severance pay.’ 17 With respect, this conclusion was in error.
[28] There was argument before us about the significance of a decision of the Full Bench in Australian Manufacturing Workers’ Union v Donau Pty Ltd, 18 in which a majority found that a period of ‘contiguous’ casual service counted in the calculation of severance pay under the enterprise agreement in question. That decision turned on its own facts. It should not be understood as establishing any principle about the application of s.22 of the Act to casual employment, or the approach to calculating service in enterprise agreements. It will be recalled that in that case, the National Employment Standards of the Act had been incorporated into the agreement, and it was relevant to consider s.22, which defines service for certain purposes in the Act. It does not define service for the purposes of enterprise agreements. The majority in that case stated that the Act does not exclude a period of regular and systematic casual employment from the definition of service or continuous service for the purpose of severance payments.19 However, we would note that the concept of regular and systematic casual employment is a statutory construct used for the purpose of s.384 of the Act and in certain other limited contexts. It is not reflected in s.22 of the Act.
[29] Our conclusions above are sufficient to determine the appeal in favour of Unilever, and to uphold ground one in the notice of appeal. However, we note for completeness that we do not consider the Deputy President to have erred in concluding that the word ‘service’ was not ambiguous, or by refusing to have regard to surrounding circumstances in considering the interpretation of the Agreement. Further, we agree with the AMWU that it is difficult to see how the transfer letters from 2009 could have been relevant for the purposes ascertaining the meaning of an enterprise agreement made many years later, in 2015. The letters might have been relevant for the purposes of the Commission making factual findings as to what service the employees had rendered. In this regard, ‘service’ in clause 2.7 would accommodate service with a previous employer that the current employer has agreed to recognise, although in the present case it appears that only prior permanent service with the related entity was in fact recognised. In any event, it is not necessary for us to consider these issues further.
[30] It is not necessary or appropriate to refer the AMWU’s application to a member for redetermination, as the point of construction raised by the appeal is discrete and we have determined the correct interpretation. We will therefore make a further decision under s.607(3)(b) in relation to the matter that is subject to the appeal to reflect our conclusion.
[31] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The decision ([2018] FWC 1150) is quashed.
(4) The AMWU’s application under s.739 is determined by further decision of this Full Bench that service of casual and seasonal employees does not count as service for the purpose of calculating redundancy payments pursuant to clause 2.7 of Attachment 4 of the Agreement.
VICE PRESIDENT
Appearances:
Mr A. Manos, of counsel, for Unilever.
Mr B. Terzic for the AMWU.
Hearing details:
2018
Melbourne with video link to Sydney
16 May
Printed by authority of the Commonwealth Government Printer
<PR609527>
2 Fair Work Act 2009 (Cth), s.604(1).
3 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46].
4 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].
5 Also see CFMEU v AIRC (1998) 89 FCR 200; and Wan v AIRC (2001) 116 FCR 481. Also see the Explanatory Memorandum to what is now s.604, at paragraph 2328.
6 [2018] FWC 1150 at [36].
7 Ibid at [75].
8 Ibid at [77] and [78].
9 Ibid at [79].
10 Ibid at [82].
11 See Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
12 Pawel v AIRC [1999] FCA 1660.
13 House v The King (1936) 55 CLR 499.
14 See Wayne Shortland v The Smiths Snackfood Co Ltd [2010] FWAFB 5709 at [10].
15 AMWU v Berri Pty Ltd [2017] FWCFB 3005 at [114], principle 2.
16 Ibid, principle 1.
17 [2018] FWC 1150 at [88].
19 Ibid at [19].