DECISION

Fair Work Act 2009
s.604—Appeal of decision

Helensburgh Coal Pty Ltd
v
Neil Bartley and Ors
(C2021/214)

Appeal against decision [2020] FWC 5756 of Commissioner Riordan at Sydney on 24 December 2020 in matter numbers U2020/9414, U2020/9415, U2020/9416, U2020/9417, U2020/9418, U2020/9419, U2020/9420, U2020/9421, U2020/9422, U2020/9423, U2020/9424, U2020/9425, U2020/9426, U2020/9427, U2020/9428, U2020/9429, U2020/9430, U2020/9431, U2020/9432, U2020/9434, U2020/9435, U2020/9436, U2020/9437 and U2020/9438 – permission to appeal granted – appeal upheld.

[1] Helensburgh Coal Pty Ltd seeks permission to appeal and, if permission is granted, appeals a decision of Commissioner Riordan dated 24 December 2020 (Decision) 1. The Commissioner in the Decision was dealing with an application for relief from unfair dismissal by Mr Neil Bartley and 23 others (together the Respondent). The Appellant objected to the applications on the grounds that it said the dismissals were genuine redundancies within the meaning of section 389 of the Fair Work Act 2009 (FW Act). The decision only dealt with that question and did not deal with the merits of the application.

[2] At the commencement of the appeal hearing we indicated to the parties that it was our preliminary view that permission to appeal should be granted. We remain of that view that the grounds for the grant of permission to appeal have been met and do grant permission to appeal. For the reasons that follow we grant the appeal.

[3] The background to this matter is uncontentious and is set out at paragraphs [6]-[10] of the Decision.

The decision

[4] Section 389 of the FW Act sets out the matters to be considered in determining if a dismissal is a case of genuine redundancy:

Section 389 of the FW Act states:

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.

[5] The Commissioner indicated the changes in the Appellant’s operational requirements 2 (s.389(1)(a)). There was no contrary position put by the Respondents.

[6] The Commissioner then set out the contentions advanced by each of the parties in relation to the consultation obligations. The Commissioner ultimately found (and it is not subject to appeal) in relation to the consultation obligations that those obligations had been met (s.389(1)(b)).

[57] I am satisfied and find that the Respondent has consulted with the Applicant and the CFMMEU. A total of 8 meetings were conducted between the parties. Whilst there is some disagreement as to whether agreement was reached in relation to a number of issues, it has been widely held that consultation does not require agreement between the parties in order to satisfy the obligation. The outstanding issue of the promised review of Mr Murdoch did not occur, but this issue could have been resolved by a telephone call or an exchange of emails.

[7] In relation to the question of whether it would be reasonable in all of the circumstances to redeploy the Respondents within the employer’s enterprise (associated entities not being relevant) the Commissioner considered, in particular, whether the Appellant was obliged to redeploy the Respondents into roles that were being currently performed by contractors.

[8] The Commissioner, at [36], identified the decision in Pettet and Ors v Mt Arthur Coal Pty Ltd 3 as succinctly encapsulating the relevant considerations in relation to s.389(2)(a) of the FW Act as follows:

[6] The principles concerning the interpretation and application of s.389(2) have been stated in two Full Bench decisions, Ulan Coal Mines Ltd v Honeysett 4  and Technical and Further Education Commission t/a TAFE NSW v Pykett5. Those principles were summarised in Huang v Forgacs Engineering Pty Limited6 as follows:

“(1) The exclusion in s.389(2) poses a hypothetical question which must be answered by reference to all of the relevant circumstances. 7 

(2) The question is concerned with circumstances which pertained at the time of the dismissal. 8 

(3) In order to conclude that it would have been reasonable to redeploy the dismissed person, the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. 9 

(4) A number of matters are capable of being relevant in answering the question, including the nature of any available position, the qualifications required to perform the job, the employee’s skills, qualifications and experience, the location of the job and the remuneration which it offered. 10”

[9] The Commissioner stated that, based on his knowledge arising from a recent decision issued by him 11 which involved “similar industrial parties and advocates/representatives”, the Appellant is not “philosophically opposed to “insource” work by removing contractors from the Mine.” Further, he observed that “current management of the [Appellant] are open to the concept of employees taking over the roles, duties and responsibilities of contractors.”12

[10] The Commissioner noted that at [38] that “[t]he majority of the Applicant’s evidence was focused on the work being performed by Mentser. Mentser commenced a 5-year contract at the Mine in April 2020 for the maintenance of the conveyor belts at the Mine.”

[11] In assessing the evidence of various witnesses the Commissioner found Mr Davey (for the applicants below) to “be a witness of credit”. He made no statement as to the credit or otherwise of Ms O’Brien for the respondent below. The evidence of Mr Murdoch for the applicants below was accepted and he was not required for cross examination.

[12] The Commissioner considered in detail the evidence in relation to the skills and training of employees of Menster (a contractor at the Mine undertaking conveyor belt maintenance 13) and those of the employer. Evidence in relation to this was given by Ms O’Brien for the Appellant and Mr Davey (each subject to cross examination) and Mr Murdoch who gave uncontested evidence.

[13] As it relates to the question of redeployment the Commissioner found:

[58] I am not satisfied that the work being performed by Nexus or Mentser is specialist work. The unchallenged evidence of Mr Murdoch is that the work being performed by the contractors falls within the skills and competencies of the permanent workforce on the basis that they either still perform the work, previously performed the work for the Respondent or previously performed the work whilst working for a contractor performing this work. Mr Davey testified that there were now employees of the Respondent who could “volcanise the belt,” having previously worked for a contractor who undertook that task. As a result, the skills required to perform this specialised work were present within the skills and competencies of the permanent staff. I also accept the unchallenged evidence of Mr Davey that some of the work being performed by the Nexus employees was previously undertaken by employees of the Respondent and was basic black coal work.

[59] I have adopted the test utilised by Ms O’Brien (see paragraph [20]). As a result, I find that the work performed by Mentser and Nexus to not be specialist work. The work is ongoing and sustaining. As a result, it would have been reasonable in all of the circumstances to redeploy the dismissed permanent employees into these roles. I find that the permanent employees have the necessary skills, qualifications and experience to undertake the functions being performed by these contractors.

…

[61] Whilst the Respondent appears blissfully unaware of the actual nationally accredited qualifications which are required to perform the full range of functions on the conveyor belts, the Respondent is equally unaware of the formal qualifications of the remaining Mentser employees. Providing evidence for 13 and 11 Mentser employees when only 8 are employed identifies a flawed evaluation process, especially when the General Manager of the Mine testified that she relied on Exhibit 4 (which contains the redacted names of the 13 Mentser employees) in making her decision not to redeploy any of the permanent employees to undertake this work.

[62] I do not accept the submission that the Respondent would have been required to employ additional supervisors to supervise the conveyer belt work. It is plainly obvious that the Mentser employees are self-supervised, working in groups of 2. There is no reason why the permanent employees could not have followed the same supervision pattern or be supervised by an existing Deputy.

[63] I am satisfied and find that it would have been reasonable for the Respondent to insource some, if not all, of the work that is being undertaken by both Nexus and Mentser and redeploy its dismissed employee into these roles. As a result, the Applicants’ termination does not satisfy section 389(2)(a) of the Act.

[14] For these reasons the Commissioner dismissed the objection of the Appellant and remitted the applications for unfair dismissal for further programming.

The Appeal

[15] The Appellant advances five grounds of appeal:

•  Ground 1: the work of the two contractors referred to in the Decision (Menster and Nexus) had been outsourced by Peabody [the Appellant] and it was no longer work within Peabody’s ‘enterprise’. Therefore, the work of Menster and Nexus did not represent a redeployment opportunity for the purposes of s.389(2) of the FW Act.

•  Ground 2(a): Alternatively, if the work was properly to be considered in the application of the test in s.389(2) of the FW Act, the Commissioner failed to apply the correct test (namely whether it was 'reasonable in all of the circumstances' for the employees to be redeployed to that work).

•  Ground 2(b): Alternatively, to the extent the Commissioner can be taken to have attempted to apply the correct test, the Commissioner failed to correctly apply the test because scrutiny of his reasons reveals that he failed to consider 'all of the circumstances'. The relevant circumstances which were not taken into account include:

(i) Evidence of significant distressed economic situation of the Appellant;

(ii) Evidence that the Applicant regarded belt cleaning and improvement as specialist work and had utilised a contractor to carry out such work for a number of years and had no plan to carry out such work via its own employees;

(iii) The relevant inquiry was not whether the day to day tasks were regarded by the Appellant as specialist but rather whether the service provided by the contractor was regarded by the Appellant as specialist;

(iv) Evidence of the short term nature of other project work to be completed by Nexus;

(v) Evidence that upskilling and training which would be required of the Appellant in order for the tasks to be completed meant the Appellant reasonably concluded redeployment into that work was not efficient or optimal;

(vi) Evidence that the Appellant would need to employ a supervisor or Deputy from another part of the Mine to carry out supervision;

(vii) Evidence of Ms O’Brien of the specific work and projects being performed by Nexus and Menster employees

(viii) To displace contractors in order to create redeployment opportunities would effect the rights of third parties including the two contractors and their employees displaced by the decision.

•  Ground 3: The Commissioner took into account matters which were not relevant to the application of the correct test:

(i) His findings, based on observations in an unrelated matter, that the Appellant was ‘open’ to taking over the roles, duties and responsibilities of contractors;

(ii) That Ms O’Brien was not personally aware of the relevance or requirement of the completion of a Certificate 3 training course by a majority of Menster employees and she could not say if the course was nationally accredited and portable or was ‘mickey mouse’.

•  Ground 4: The Commissioner failed to specify which of the Respondents were persons in relation to which it should be found that it was reasonable for them be to redeployed, or to make the relevant finding in relation to each such Respondent.

Appeal principles

[16] 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. 14  There is no right to appeal and an appeal may only be made with the permission of the Commission.

[17] Section 400 of the Act applies to this appeal. It provides:

“(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.

(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.”

[18] In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s 400 of the Act as “a stringent one”. 15  The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.16The public interest is not satisfied simply by the identification of error, or a preference for a different result.17 In GlaxoSmithKline, a Full Bench of the Commission identified some of the considerations that may attract the public interest:

“… the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 18 

[19] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 19  However, that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.

[20] The decision under appeal is of a discretionary nature. Usually, such a decision can only be successfully challenged on appeal if it is shown that the discretion was not exercised correctly. 20 It is not open to an appeal bench to substitute its view on the matters that fell for determination before the Commissioner in the absence of error of an appealable nature in the decision at first instance. As the High Court said in House v The King:21

“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”

Consideration

[21] The Respondent says that the issue of whether work performed by contractors is work within the enterprise was not an argument advanced below and was expressly disavowed by the applicant below and that the Appellant should be held to the case advanced below. It says that the Appellant should not be allowed to rely on material not before the Commissioner.

[22] We reject this submission of the Respondent. In our view a determination of whether it is reasonable to redeploy employees into work currently performed by contractors entails a consideration of whether the work performed by the contractors is work in which it is capable to redeploy employees.

[23] Further, the Commissioner certainly proceeded on the basis that “the primary issue for determination is whether the Respondent had an obligation to redeploy the Applicants into roles that were being performed by contractors.” 22 This does not appear to exclude a consideration of whether the work of contractors is work within the employer’s enterprise.

[24] In Maritime Union of Australia v Toll Energy Logistics Pty Ltd 23  the Full Bench said:

[99] At the hearing we determined that we should permit the parties to adduce evidence and both parties did so.

[100] In Reihana v Mastercare Highrise Cleaning Services Pty Ltd, 24 the Full Bench endorsed the following approach to the admission of new evidence:

“The majority in J.J. Richards 25 recognised that s.607(2) confers a discretion on a Full Bench hearing on appeal to ‘admit further evidence’ and ‘take into account any other information or evidence’ and that the principles governing the admission of fresh evidence on appeal in the courts provide a useful guide to the exercise of the discretion. In that regard, in Akins v National Australia Bank,26 Clarke JA said:

‘The Court is empowered to receive further evidence upon the hearing of an appeal (s.75A(7) of the Supreme Court Act 1970) but pursuant to subs (8) of that section may not receive further evidence after a trial on the merits ‘except on special grounds’. Although it is not possible to formulate a test which should be applied in every case to determine whether or not special grounds exist there are well understood general principles upon which a determination is made. These principles require that, in general, three conditions need be met before fresh evidence can be admitted. These are: (1) It must be shown that the evidence could not have been obtained without reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible.’” (Endnotes omitted)

[25] The material sought to be relied upon by the Appellant on appeal goes to the proper construction of the term “enterprise” as it appears in s.389 of the FW Act. We are satisfied, in this instance, that the determination of that matter goes to the public interest. While we accept that the Appellant could have led such evidence in the proceedings before the Commissioner on this question, and that its reasons for failure to do so are opaque, we are satisfied that further material in relation to this question should be admitted in the interests of resolving the matter before this Full Bench.

Ground 1

Appellant

[26] Ground 1 essentially alleges that the work carried out by the employees of the contractors, being Menster and Nexus, is not work within the Appellant’s enterprise and therefore does not present an opportunity that could be considered for redeployment.

[27] The Appellant submits that the term “enterprise” needs to be given the same and consistent meaning within s.389 of the FW Act where it appears.

[28] The Appellant submits that it is accepted, in the context of s.389(1), that a decision to outsource work will be a change in the operational circumstances of the enterprise such that the work is no longer required to be performed by anyone. In Suridge v Boral Window Systems Pty Ltd T/A Dowell Windows 27 Commissioner Hampton said that the “reference to having the job no longer performed by anyone [as it appears in s.389(1) of the FW Act], must mean by anyone employed by the business and to extend that to include an independent contractor supplying services would produce unintended consequences including that employees displaced in this way would not be entitled to severance pay.”28

[29] Based on the reasoning in Suridge the Appellant says that, once the work has been outsourced, it is no longer work in the control of the employer or within the employer’s enterprise. “Enterprise” as used in s.389(1) of the FW Act therefore refers to that work carried out within the direct business of the employer and does not extend beyond that. However, in the Decision under appeal, it is suggested that “enterprise” as it appears in s.389(2) extends to that work carried out by a true contractor that is not within the managerial or operative control of the employer.

[30] The Appellant says that it would be counter intuitive to suggest that the scope of the employer’s enterprise could have a different meaning under s.389(1) and s.389(2) of the FW Act. “Enterprise”, it says, must therefore be confined (in the majority of circumstances) to work for which the employer is the direct employer in relation to the work performed and can travel no further than employer’s sphere of operation. That is, “enterprise” as used in s.389 of the FW Act connotes concepts of ownership, or at least control, by the employer. The Appellant submits that the concept of “enterprise” as it proposes is consistent with how the term is relevantly used in other parts of the FW Act. It says the term “enterprise” is most commonly used in relation to enterprise agreements and that, except in some specific exceptions such as single interest employers, an enterprise agreement can only be made with employees of one particular employer. The concept of an enterprise agreement being made with the employees of one employer, and their employer, adds support to a conclusion that the limits of “enterprise” as used in s.389(2) of the FW Act extends, at the very least, to exclude work which is in the enterprise of an independent employer (in this case the contractors engaged by the Appellant).

[31] The Appellant says that further support for its proposition can be found in the decision in Pykett 29 where the Full Bench held that the word “redeploy” should be given its normal meaning, that is to transfer [an employee] “to another job, task or function.”30 The Appellant submits that, in order to be able to redeploy, the employer must have the power to effect that transfer. It could not do this if the work the employee is to be transferred to is work that is outsourced to a contractor (that is, a different employer) and hence no longer in the control of the employer. The Appellant says that s.389(2) can therefore only be directed to redeployment opportunities within the employer’s enterprise and not the enterprise of another company.

[32] The Appellant accepts that the work of an independent contractor could be work within the employer’s sphere of operation or control in circumstances of labour hire or individual contractors where the employer exercises some control over the work performed. It seeks, however, to distinguish this from work of a “true independent contractor with managerial autonomy engaged to deliver a project or achieve a result…”

[33] The Appellant acknowledges the possibility that work carried out by employees of contractors may be relevant to the test in s.389(2)(a) of the FW Act (of work that was within the Appellant’s enterprise) as contemplated in decisions of the Commission commencing with Teterin & Ors v Resource Pacific Pty Ltd t/a Ravensworth Underground Mine (Teterin). 31 However, the Appellant says that when the correct application of s.389(2)(a) of the FW Act is considered in the light of decisions both pre and post Teterin the conclusion in Teterin that the work of an independent contractor can be within the employer’s enterprise “does not represent good law”.

[34] The Appellant rather seeks to rely on the decisions in Corcoran v The Trustee for the Express Parts t/as On Time Group of Companies Pty Ltd (Cocoran), 32 Stickley v Kestrel Coal Pty Ltd (Kestral)33 and Brown v Clermont Coal Operations Pty Ltd (Clermont Coal),34 each a decision of a single Member which, the Appellant says, supports its proposition that the work of independent contractors is not work within an employer’s enterprise.

[35] For these reasons the Appellant says that the Commissioner was in error in considering work of the contactors as work within the employer’s enterprise that should be considered for the purpose of determining if redeployment was reasonable in all of the circumstances.

[36] The Appellant says that it does not seek to read any additional words into s.389(2)(a) and that the matters it raises – if adopted – would not create uncertainty. It rather seeks to give clarity that section 389(2) requires that attention be given to redeployment opportunities within the employer’s enterprise and not the enterprise of a contractor.

[37] The Appellant says that guidance from the Full Bench is necessary in relation to when an opportunity for redeployment should be found to be within the employer’s enterprise. That guidance is necessary to resolve the “practical and legal problem” and whether there should be some threshold enquiry. The first enquiry, it says, is if the work is within the employer’s enterprise such that it is necessary to determine what is (and is not) within the enterprise prior to deciding if redeployment is reasonable.

Respondent

[38] The Respondent says the propositions put forward by the appellant are vague and require the insertion of words into s.389(2)(a) that are not there.

[39] The Respondent says that the term “enterprise” is defined in s.12 of the FW Act and that contractors are capable of falling within that definition. The Respondent submits that the provisions of s.389(2) of the FW Act are unambiguous when read as a whole. To adopt the proposition of the Appellant would require a greater restriction on the term “enterprise” than as defined in s.12 of the FW Act where there are no grounds to do so.

[40] The Respondent submits that to adopt the approach of the Appellant and to attempt to distinguish between contractors where the employer has managerial and operative control and where it does not is to set an artificial division and also seeks to draw a distinction amongst contractors that is vague and uncertain.

[41] The Respondent further says that the term “reasonable in all of the circumstances” as used in s.389(2) equips the decision maker with a broad discretion that requires all relevant matters to be taken into account without limitation. A matter such as managerial control may well be a relevant factor to be considered in determining the reasonableness or otherwise of redeployment.

[42] With respect to the decision of the Commission in Teterin the Respondent says that, on appeal, the Full Bench found that the requirement of s.389(2) that redeployment be assessed “in all the circumstances” means that “it is not possible to establish binding rules concerning the application of s.389(2) in all cases irrespective of the circumstances of each particular case”. 35 The Respondent relies on the decision on appeal in Stickley v Kestral Coal36 where the Full Bench rejected the argument that the Member at first instance had erred in applying a binding principal that s.389(2) automatically excluded from consideration work performed by contractors. The Full Bench found instead that that the Commissioner had not applied such a principle but rather had considered redeployment to work performed by contactors but ultimately found such redeployment was not reasonable. The Full Bench in the Kestral appeal approached the question on the basis that s.389(2) does not automatically exclude from consideration the work performed by contractors.

[43] The Respondent submits that this approach was adopted in the decisions of single Members of the Commission in Pettet v Mt Arthur Coal Pty Ltd (Pettet), 37 Huang v Forgacs Engineering Pty Ltd (Forgacs)38 and in Clermont Coal where there has not been a finding that contractors are automatically excluded from consideration of the reasonableness of redeployment.

[44] The Respondent says that there are no grounds for the Commission to depart from established Full Bench decisions evidenced in the Teterin appeal or Kestral appeal on this subject matter.

Consideration

[45] “Enterprise” is defined in s.12 of the FW Act as follows:

enterprise means a business, activity, project or undertaking

[46] Section 389 of the FW Act uses the term “enterprise” in two contexts. Firstly, in s.389(1) in relation to the requirements of the enterprise and then s.389(2) of the FW Act in relation to redeployment. We agree that the meaning of “enterprise” should be consistent over both subsections.

[47] The Explanatory Memorandum to the Far Work Bill 2009 in relation to what is now s.389 of the FW Act states (underlining added):

1546.            This clause sets out what will and will not constitute a genuine redundancy.  If a dismissal is a genuine redundancy it will not be an unfair dismissal.

1547.            Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.  Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.

…

1549.            It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.

1551.            Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).”

[48] That is, the meaning of “enterprise” as used in s.389 of the FW Act is given effect through the definition in s.12 of the FW Act. This suggests that no other limitation should be placed on the word “enterprise” than the meaning given to it in s.12.

[49] Further, and in particular given the Explanatory Memorandum, we do not consider there is anything to be gained in considering the term as used in the context of enterprise agreements made pursuant to Part 2-4 of the FW Act. Section 172 of the FW Act (in Part 2-4) sets out the types of enterprise agreement that may be made and the scope of such agreement with the scope being limited by the employer and not by the definition of enterprise in s.12 of the FW Act. Section 172(2) of the FW Act states, for example that “An employer…may make an enterprise agreement”. The enterprise does not make the enterprise agreement but rather the employer. There is no suggestion that an employer and an enterprise are necessarily synonymous. To seek to limit the term “enterprise” as used in s.389 of the FW Act (which is in Part 3-2) by a limitation on the scope of an enterprise agreement that is permitted by s.172(2) of the FW Act is therefore rejected.

[50] We would also observe that the consideration within s.389(2) is to whether there may be redeployment within “the employer’s enterprise” or “the enterprise of an associated entity of the employer”. The consideration is not to whether there may be redeployment by “the employer” or associated entity.

[51] We do not consider there to be any basis to suggest that the reasoning in Suridge will lead to two different meanings of the word “enterprise” in s.389 of the FW Act.

[52] In Suridge Commissioner Hampton was considering, firstly, if the applicant was, in fact, redundant in circumstances where the respondent in that matter has determined to outsource the maintenance function performed by the applicant. As we read the decision in Suridge the matter being considered was if the employer had changed its operational requirements such that the employer no longer required the job of the employee performed within the business, hence giving rise to a redundancy (entitlement). The observation of the Commissioner went to the absurdity of an outcome if it was that outsourcing did not result in a redundancy entitlement – that is an employee’s work could be outsourced, but, because it was being performed by a contractor, would not result in an entitlement to redundancy pay to the displaced employee. Further, the decision in Suridge is in line with para. 1549 of the Explanatory Memorandum set out above at [47]. Suridge does not, on our view, disturb the Explanatory Memorandum reference to s.12 of the FW Act.

[53] The issues confronting this Full Bench and the submissions in relation to the scope of an enterprise were not before the Commission in Suridge and it would be wrong to seek to limit the meaning of “enterprise” based on that decision.

[54] We would also observe that the Decision under appeal does not suggest that employees of the Appellant should be redeployed such that they would be employed by the contractors. Rather, it concluded that the work of the contractors should be insourced by the Appellant and the affected employees redeployed to that work as continuing employees of the Appellant. To the extent the Decision might be read to suggest that the Appellant could or should redeploy its own employees to a contractor (we do not consider it can be so read) for the reasons articulated by the Appellant we agree that this is not possible. The work to which an employee might be redeployed must, ultimately, be work over which the employer has control. The operative question raised by this appeal is if the employer can be required to insource work so that the work is within the scope discussed in Pettet.

[55] In Teterin Deputy President Lawrence concluded that:

[102] In my view, the decision in Pykett means that “work within the employer’s enterprise” would include work carried out by employees of contractors engaged by the Respondent and working within RUM.

[56] In dismissing the arguments of the Respondent in Teterin that the work of the contractors’ employees should be excluded from consideration of work available for redeployment, the Deputy President said:

[110] I do not think that this is correct if it means that consideration of the work being done by contractors is excluded from consideration as to whether a job, position or other work is ‘available’ as required by Pykett .

[111] The real difficulty is an evidentiary and practical one. The Applicants were unable to provide enough evidence that work could be made available through the displacement of contractors or put forward a practical proposal as to how this could be done.

[112] This is particularly because the Commission has said, in the cases quoted in this decision, and I accept that:

• positions cannot be created where there are none

• displacing existing occupants of positions is not appropriate

• a requirement that there be a complete change in the employer’s employment strategy is not appropriate

[57] The reference to Pykett in Teterin is to the following passage:

[36] We have earlier set out the submissions of the appellant and the respondent as to the proper construction of s.389(2) (see paragraphs [15] to [18] above). We accept the respondent’s submissions. For the purposes of s.389(2) the Commission must find, on the balance of probabilities, that there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must also be an appropriate evidentiary basis for such a finding. Such an interpretation is consistent with the ordinary and natural meaning of the words in the subsection; the Explanatory Memorandum and Full Bench authority. We acknowledge that the facts relevant to such a finding will usually be peculiarly within the knowledge of the employer respondent, not the dismissed employee. If an employer wishes to rely on the ‘genuine redundancy’ exclusion then it would ordinarily be expected to adduce evidence as to the following matters:

(i) that the employer no longer required the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;

(ii) whether there was any obligation in an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and

(iii) whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employer.

[58] It is apparent that Deputy President Lawrence took the expression “a job, position or other work” as not excluding work within the employer’s enterprise that may be undertaken by contractors.

[59] On appeal of the decision in Teterin the Full Bench of the Commission said:

[35] We accept the appellants’ submission that the propositions stated in paragraph [112] of the Decision cannot be treated as binding principles applicable to every case under s.389(2). We did not understand the respondent to have submitted otherwise. Section 389(2) requires the reasonableness of redeployment to be assessed “in all the circumstances”, meaning that it is not possible to establish binding rules concerning the application of s.389(2) in all cases irrespective of the circumstances of each particular case. However, there is nothing in the Decision to suggest that the Deputy President’s “acceptance” of these propositions affected the outcome of the matter before him. He did not accept that work performed by contractors was excluded from consideration under s.389(2), and reached his determination on the basis of the evidence before him about that matter. 39

[60] The conclusion reached by the Deputy President in Teterin (that the work of contractors was not excluded from consideration of ‘available’ work) was not overturned on appeal. The Full Bench observed, without criticism, that the Deputy President “did not accept that work performed by contractors was excluded from consideration”. What is to be taken from that Full Bench, regardless of the view that might be had of the approach of the Deputy President, is that there are no binding rules in the application of s.389(2) and the reasonableness of redeployment must be determined “in all the circumstances” taking into account the available work.

[61] Likewise, the Full Bench in the Kestral appeal said of the decision under appeal in that matter:

[15] In our view, the considerations leading to the ultimate conclusion regarding the work of the contractor’s employees were all properly considered and taken into account. We are not persuaded that the discretion was improperly exercised or that there were any significant errors in the findings of fact. The facts and circumstances were considered by the Commissioner to be relevant circumstances in making the requisite overall judgment. The decision does not apply a binding principle that s.389(2)(a) has no application in relation to the work of contractors. 40

[62] To the extent that each of these appeal decisions has considered the question of redeployment to the work of contractors, neither establishes any rule and both state, correctly in our view, that there is no binding principle established in relation to the consideration of the work of contractors.

[63] To the extent that the Appellant seeks that we do so, we decline to conclude that the decisions in the Teterin appeal or Kestral appeal are wrong.

[64] We do not consider that any of the single member decisions referred to by the Appellant suggest any other approach. As the Full Bench in the Kestral appeal said:

[14] In this passage the Commissioner was applying the relevant element of the definition. The language used to summarise the requirement varied from the language in the section. In no case was there any ‘obligation’ in a legal sense to employ employees in roles filled by employees of the contractor. However, this passage must be considered in the context of the decision as a whole. Properly understood, in our view, the Commissioner was expressing a conclusion in relation to the reasonableness of continuing to employ persons to perform the work that had become work of contractors. The Commissioner did not state that work being performed by contractors was irrelevant to that process. Indeed the Commissioner expressly considered those circumstances.

[15] In our view, the considerations leading to the ultimate conclusion regarding the work of the contractor’s employees were all properly considered and taken into account…

[65] To the extent that Deputy President Bull in Cocoran did not consider redeployment to the work undertaken by the contractor (that of an owner-driver) he would appear to have been in error in that he did not consider if redeployment was reasonable “in all of the circumstances” but rather dismissed the option because the work was carried out by a contractor. The brevity of that decision does not allow any greater conclusion to be drawn.

[66] In the decision in Brown it is apparent that Vice President Catanzariti did consider whether redeployment to positions occupied by contractors was reasonable in all of the circumstances. At [64] he set out the circumstances at the Collinsville Open Cut Mine and the deliberate decision to restrict direct labour until an enterprise agreement was secured. At [65] the Vice President noted the rationale for this as set out in evidence and then at [66] accepted that evidence. Having found no permanent vacancies at Collinsville the Vice President concluded that

[67] I do not find that in these circumstances it was reasonable for the Respondent’s associated entity to create positions where there were none, or to displace existing contractors or completely change its employment strategy in order to accommodate the Applicants. 

[67] Likewise, in Pettet and Forgacs a range of redeployment “options” were considered, including work carried out by a labour hire employee and that of a contractor. A conclusion was reached in each that redeployment was not reasonable “in all of the circumstances”.

[68] It follows from the above that we agree that there are no binding principles that attach to a consideration of whether redeployment within the enterprise is “reasonable in all of the circumstances”. It also follows that we do not consider that redeployment to the work conducted by contractors is automatically excluded from such a consideration.

[69] We would observe however that it would generally be the case that a range of matters would need to be considered in determining if redeployment to work undertaken by a contractor would be reasonable in all of the circumstances including the degree of control over the work of the contractor by the employer, the length of the contract and period left to run, any requirement to change the employer’s business strategy (e.g. to have all maintenance work performed by a contractor etc), the history of contracting the work in question, the rights of third parties, to name but a few. It may also be that consideration should be given to the issues identified by Deputy President Lawrence in Teterin: that positions cannot be created where there are none and that displacing existing occupants of positions may not be appropriate. The difficulty, as was observed in Pykett, is that the knowledge of the circumstances pertaining to the contractors will often be held by the employer and not by an employee who may consider the redundancy not to be genuine. Matters of procedural fairness may also require an opportunity being given to an affected contractor to be heard on these issues. But these are matters to be considered by a Member in dealing with an application where redeployment to the work of a contractor is being pursued. They do not form binding principles but rather may be relevant matters to consider.

[70] Further, we do not consider it reasonable to establish a rule, as suggested by the Appellant, as to what contracted work it might be feasible to consider and what should be automatically discounted in considering the reasonableness or otherwise of redeployment. The broad discretion afforded to the decision maker in determining if redeployment is “reasonable in all of the circumstances” should not be circumscribed in such a manner.

[71] As was observed in Ulan Coal Mines Ltd v Honeysett 41:

[26] First, s.389(2) must be seen in its full context. It only applies when there has been a dismissal. An employee seeking a remedy for unfair dismissal cannot succeed if the dismissal was a genuine redundancy. In other words, if the dismissal is a case of genuine redundancy the employer has a complete defence to the application. Section 389(2) places a limitation on the employer’s capacity to mount such a defence. The defence is not available if it would have been reasonable to redeploy the employee. The exclusion poses a hypothetical question which must be answered by reference to all of the relevant circumstances.

[72] It follows that we do not consider the work of contractors is automatically excluded from consideration. This ground of appeal is therefore not made out.

Appeal ground 2(a) and 2(b), 3 and 4

We deal with these grounds of appeal together.

Appellant

[73] The Appellant says that the Commission did not apply the correct test in relation to s.389(2)(a). Rather the Appellant says that the Commissioner confused the possibility or practicality of redeployment with the reasonableness of such redeployment and, in this respect, applied the wrong test in deciding if the requirements of s.389(2)(a) were met.

[74] The Appellant says that, while the Commissioner set out the correct test at [59] of the Decision (whether it would have been reasonable in all of the circumstances), what he did, in fact, undertake was a more limited test of whether the work performed by the contractors was specialist work. Further, at [63], the Commissioner considered the reasonableness on the basis of whether it was reasonable for the Appellant to insource work.

[75] Even if the Commissioner did apply the correct test the Appellant submits that he failed to consider all of the relevant evidence in deciding if it was reasonable – in particular he failed to have regard to all of the circumstances, including the economic environment, that the Appellant had considered the reasonableness of displacing contractors, that the work of Menster was specialist work and to redeploy the Appellant’s employees to that would require additional supervisory requirements and training by the Appellant.

[76] The Appellant further submits that the Commissioner did not give due weight to the evidence of Ms O’Brien that the Menster work was specialist work, that the work had been outsourced since 2019 and that, in any event, Menster was transitioning to lower number of employees working on that contract.

[77] The Appellant further submits that the Commissioner erred in taking into account (to the extent he did) the lack of knowledge of Ms O’Brien in relation to the Menster training course in concluding that redeployment was reasonable.

[78] The Appellant submits that the Commissioner erred in taking into account that the Appellant was open to insourcing work at [37] of the Decision.

[79] The Appellant lastly says that the Commissioner, in reaching his conclusion that redeployment was reasonable in all of the circumstances, was required to make a finding as to reasonableness of redeployment in relation to each individual employee. The Appellant does not say that the Commissioner was required to identify a specific role for each employee but was required to make a specific finding that there was a reasonable redeployment opportunity for each. This, it says, requires, a consideration of the number of redeployment opportunities, the qualification of each employee and a finding of reasonable in relation to each respondent.

Respondent

[80] With respect to appeal grounds 2,3 and 4 the Respondent says that they are no more than a series of complaints about the decision reached by the Commission. They are an invitation by the Appellant for the Full Bench to “get into the weeds” of the decision and, based on relevant authority, it says we should not do so.

[81] The Respondent says that the Appellant ran its case based on the proposition that its employees did not have the skill set necessary to undertake the work of the contractors. Mr Murdoch, a witness for the Applicant in the proceedings below, gave uncontested evidence as to the skills of employees of the Appellant. He was not required for cross examination. Further, Ms O’Brien agreed that the employees of the Appellant could do the work performed by the Menster employees after a period of retraining.

[82] Further, the Respondent says that the findings of the Commissioner at [59] and [62] were open to him based on the evidence before him.

[83] The Respondent submits that the proposition of the Appellant that the Commissioner was required to make a finding in relation to each individual employee is to resort to the “appellate fine tooth comb” and that it is foolish to suggest that the Commissioner needed to repeat the same finding in relation to each of the 24 applicants.

Consideration

[84] In Gelagotis v Esso Australia Pty Ltd T/A Esso (Esso) 42 the Full Bench said:

[48] We would also observe that the Decision which is the subject of the appeal before us must be read fairly and as a whole and not with an eye attuned to detect error. As Kirby J observed in Minister for Immigration and Ethnic Affairs v Wu Shan Liang: 43 

‘The reasons under challenge must be read as a whole. They must be considered fairly. It is erroneous to adopt a narrow approach, combing through the words of the decision maker with a fine appellate tooth-comb, against the prospect that a verbal slip will be found warranting the inference of an error of law.’

[85] We have been mindful of this in determining the matter before us. However, the approach as set out in Esso does not mean that matters subject to appeal should not be properly considered in the appeal process.

[86] In determining if it was reasonable in all of the circumstances for the employees to be redeployed into work performed by contractors the Commissioner would, by necessity, need to consider if the work performed by contractors could be performed by employees – in this regard the Commissioner would need to have regard to the skills and training of the employees concerned and consider this in some appropriate manner against the skills required in the work of the contractors. In this respect whether the contractor work was “specialist work” is a relevant consideration to the extent of such a skills assessment. Further, a relevant consideration in determining if redeployment was reasonable in the circumstances is a consideration of the reasonableness or practicality of the employer insourcing the work performed by contractors. We consider that in making the assessment he did the Commissioner was required to consider and balance, in addition to the nature of the work, the feasibility of insourcing that work from the employer’s perspective.

[87] There is no question in our minds that, in determining if it was reasonable in all of the circumstances to redeploy employees into work currently performed by contractors, issues associated with the practicality of insourcing the work is highly relevant and must be determined. We have, at [69], outlined some relevant matters to consider in this respect although again emphasise that there are no binding principles. All of the circumstances need to be considered.

[88] In reaching his conclusion that the Appellant was open to insourcing the work of contractors the Commissioner said:

[37] Based on my knowledge from my recent decision in Construction, Forestry, Maritime, Mining and Energy Union v Peabody CHPP Pty Ltd [2020] FWC 6287, which involved the same or similar industrial parties and advocates/representatives, I am aware that the Respondent is not philosophically opposed to “insource” work by removing contractors from the Mine. The “insourcing” of the CHPP shows that the current management of the Respondent are open to the concept of employees taking over the roles, duties and responsibilities of contractors. I note that the CHPP was operated by contractors for at least the last 20 years. I have taken this into account.

[89] On review of the decision in Construction, Forestry, Maritime, Mining and Energy Union v Peabody CHPP Pty Ltd (CHPP) 44 referenced by the Commissioner we can find no grounds on which it could reasonably be concluded that the Appellant is not “philosophically opposed” to insourcing work by removing contractors from the site. The decision in CHPP was in relation to a dispute over the recognition of service. The Commissioner in CHPP said:

[3] In June 2019, the Respondent decided to insource the operation of the CHPP from a contractor called SADA Pty Ltd (SADA). Its employees were working under the SADA Metropolitan Coal Processing Plant Enterprise Agreement 2018 (the Agreement).

[90] There is nothing else in CHPP that references any consideration of, or reason for, the insourcing of work by the Respondent in that case or how that decision might be referable to the circumstances being considered in the Decision now under appeal. The reference to the decision in CHPP does not provide grounds for the conclusion reached by the Commissioner in the Decision. The insourcing of the Menster work was critical in the reasoning for determining that it was reasonable in all of the circumstances to redeploy employees to the work performed by Menster. To the extent the Commissioner relied on the decision in CHPP as evidence that insourcing was not an unreasonable step for the Appellant to make we do not consider that he had an evidentiary basis to reach that conclusion and on this matter the Commissioner reached a conclusion that was not available to him and was in error.

[91] We would conclude that the reasonableness or otherwise of the Appellant insourcing work of Menster and Nexus is not the inquiry required of the Commission. As mentioned above, whether work could or should be insourced is, in our opinion, a necessary matter to decide as part of the inquiry as to whether it is reasonable, in all of the circumstances, to redeploy the employees to that work. The reasonableness of insourcing is not, in our view, the correct question and is certainly not determinative of the matter and in this respect the Commissioner fell into error.

[92] As to the Appellant’s contention that findings were required for each individual employee, it is not the role of the Commission to determine who should or should not be offered redeployment opportunities that might arise from a decision to insource work being performed by contractors. This is a decision for the Appellant. We would observe however that it is not apparent that any evidence was put before the Commissioner in relation to the specific skills and knowledge of each applicant below. For this reason alone the task the Appellant says was not undertaken with respect to each employee could not have been undertaken. This lack of specificity may have an impact as to the determination of whether redeployment of each Applicant was reasonable in all of the circumstances. Given our finding above we do not need to consider if this was an appealable error on the part of the Commissioner. We do consider however that, unless the skills and training of each of the employees is the same, if it is determined that some or all of the contracted work is to be insourced a determination is required of each employee as to whether it was reasonable, in the circumstances for the individual to be redeployed. Ultimately, this decision having been made, the employer is then aware of the pool of employees to be considered for redeployment. The application for unfair dismissal of any employee who it is found it is not reasonable in the circumstances to redeploy would fail on the grounds of the genuineness of the redundancy (other consideration being as they were found by the Commissioner) and would not need to be further considered by the employer.

[93] This is not to suggest that the obligation is on the Commission to determine who should be redeployed but to determine to whom it was reasonable in the circumstances to redeploy had the work been insourced.

[94] Having found as we have it is not necessary to consider the further grounds of appeal. We would observe however that the Commissioner reached the decisions in relation to supervision, the economic situation confronting the Appellant, training and skills based on the evidence before him. We would not, in any case, find appealable error in relation to those matters given the case run below.

Orders

[95] We order as follows:

(a) Permission to appeal is granted.

(b) The appeal is upheld.

(c) The decision of Commissioner Riordan of 24 December 2020 ([2020] FWC 5756) is quashed.

(d) The matter is remitted to Commissioner Riordan for determination.

VICE PRESIDENT

Appearances:

Mr D Williams and Mr T Walthall for the Appellant

Mr A Walkaden for the Respondent

Hearing details:

2021.

Telephone hearing:

18 March.

Printed by authority of the Commonwealth Government Printer

<PR729986>

 1   [2020] FWC 5756

 2   [2020] FWC 5756 at [13]

 3   [2015] FWC 2851

 4   [2010] FWAFB 7578, 199 IR 36 

 5   [2014] FWCFB 714, 240 IR 130

 6   [2014] FWC 2264 at [34]

 7   Ulan Coal Mines Ltd v Honeysett [2010] FWAFB 7578, 199 IR 363 at [26]

 8   Ibid at [28]; Technical and Further Education Commission t/a TAFE NSW v Pykett [2014] FWCFB 714, 240 IR 130 at [24]

 9   Pykett at [36]

 10   Ulan at [28]

 11   Construction, Forestry, Maritime, Mining and Energy Union v Peabody CHPP Pty ltd [2020] FWC 6287

 12   Decision at [37]

 13   Decision at [38]

 14   Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 [17] per Gleeson CJ, Gaudron and Hayne JJ (Coal and Allied Operations Pty Ltd)

 15   (2011) 192 FCR 78; (2011) 207 IR 177 [43].

 16   O’Sullivan v Farrer and another (1989) 168 CLR 210 [216] – [217] per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 243 CLR 506 [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78; (2011) 207 IR 177 [44]-[46].

 17   see: GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266 (‘GlaxoSmithKline’); Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] WAFB 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].

 18   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 [27]; (2010) 197 IR 266.

 19    Wan v AIRC (2001) 116 FCR 481 at [30].

 20   House v king (1936) CLR 499 at [504]-[505] per Dixon, Evatt and McTiernan JJ

 21   Ibid

 22   Decision at [35]

 23   [2015] FWCFB 7272

 24   [2013] FWCFB 4960

 25   [2010] FWAFB 9963

 26   (1994) 34 NSWLR 155

 27   James Suridge v Boral Window Systems Pty Ltd T/A Dowell Windows [2012] FWA 3126 (Suridge)

 28   Suridge at [74]

 29   Technical and Further Education Commission v Pykett [2014] FWCFB 714 at [25].

 30   Pykett at [25]

 31   [2014] FWC 1578

 32   [2017] FWC 2357 at [61]

 33   [2015] FWC 2884 at [158]

 34   [2015] FWC 3862 at [67]

 35   [2014] FWCFB 5505 at [35]

 36   [2015] FWBFC 4760 (Kestral appeal)

 37   [2015] FWC 2851

 38   [2014] FWC 2264

 39   Teterin and Ors v Resource Pacific Pty Limited t/a Ravensworth Underground Mine [2014] FWCFB 4125 (Teterin appeal)

 40   Stickley and Ors v Kestral Coal Pty Ltd [2015] FWCFB 4760 (Kestral appeal)

 41   [2010] FWAFB 7578

 42   Mr Michael Gelagotis v Esso Australia Pty Ltd T/A Esso; Mr Michael Harwell v Esso Australia Pty ltd T/A Esso [2018] FWCFB 6092

 43   Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 291. See also Technical and Further Education Commission (t/as TAFE NSW) v Pykett (2014) 240 IR 130 at [45]; Esso Australia Pty Ltd v Australian Manufacturing Workers’ Union (2015) 247 IR 5 at [25].

 44   [2020] FWC 6287