[2012] FWA 6460 |
|
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Australian Nursing Federation
(C2012/2771)
Aged care industry | |
COMMISSIONER GOOLEY |
MELBOURNE, 1 AUGUST 2012 |
Alleged dispute in relation to redundancy.
Introduction
[1] The Australian Nursing Federation (ANF) notified a dispute with Calvert Manor Pty Ltd trading as Werribee Terrace Aged Care and Lasting Changes Pty Ltd (“Lasting Changes”) pursuant to section 739 of the Fair Work Act 2009 (the FW Act).
[2] Calvert Manor Pty Ltd was party to the Werribee Terrace Aged Care (Calvert Manor Pty Ltd) ANF and HSU Enterprise Agreement 2009 (the Agreement) 1, an agreement approved by Fair Work Australia on 3 August 2009. Pursuant to section 201(2) of the FW Act, the ANF was covered by the Agreement.
[3] On 1 March 2012 Lasting Changes took over the business of Calvert Manor Pty Ltd and there was a transfer of business within the meaning of section 311 of the FW Act. As a consequence, Lasting Changes became bound by the Agreement with respect to transferring employees. So much is not disputed.
[4] Ms Elsa Sodoma was a part time personal care attendant employed by Calvert Manor Pty Ltd from 23 December 2003.
[5] Ms Sodoma was offered employment with Lasting Changes on the following terms:
Your employment will be as per the terms and conditions outlined in the Agreement.
Your normal shifts and times will be as per the roster and the attached timesheet for your current roster.
Your entitlements for annual leave, sick leave and long service leave are acknowledged
You will be entitled to all applicable allowances under the Agreement.
A new minimum employment period will apply in relation to your employment with Lasting Changes Pty Ltd as prior service with Calvert Manor Pty Ltd, the Vendor to us, will not be recognised for unfair dismissal purposes.
[6] In addition to the contract of employment Ms Sodoma was provided with a copy of a code of conduct, a confidentiality agreement and a statutory declaration.
[7] The contract provided that the “employee agrees to comply with the policies and procedures by the employer as varied from time to time to reflect contemporary practice and regulation compliance.”
[8] Ms Sodoma did not accept employment with Lasting Changes and was not paid any redundancy pay by Calvert Manor Pty Ltd.
The Administration
[9] On 6 March 2012 Mr Richard Rohrt advised that he had been appointed as the administrator of ACN 081345333 Pty Ltd (formerly known as Calvert Manor Pty Ltd). Mr Rohrt was advised of the hearing of the application and on 27 March 2012 he advised that he had no objection to the matter proceeding.
[10] Section 440D of the Corporations Act 2001 provides as follows:
“(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property, cannot be begun or proceeded with, except:
(a) with the administrator’s written consent; or
(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
(2) Subsection (1) does not apply to:
(a) a criminal proceeding; or
(b) a prescribed proceeding.”
[11] It was not disputed that the letter from Mr Rohrt was consent for the purpose of section 440D so it is not necessary to consider whether section 440D applies to proceedings before Fair Work Australia. 2
The matter in dispute
[12] While there were some other issues about the terms and conditions offered to employees these were resolved at the conciliation conference. The only issue that was not resolved was whether employees who rejected an offer of employment were entitled to redundancy pay.
[13] The ANF described the dispute as follows:
“(a) Is the effect of Lasting Changes imposing on an employee a new minimum period of employment, for the purposes of the unfair dismissal provisions in the FW Act, that the terms and conditions of employment are not substantially similar and are less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with Calvert Manor?; and
(b) Even if the terms and conditions are determined to be substantially similar and no less favourable, does the second dot point of clause 17.8.1(b) of the Redundancy Provisions require the recognition of continuous service for all purposes, including for the purposes of the ‘minimum period of employment’ contained in the unfair dismissal provisions of the FW Act.” 3
The industrial instrument
[14] The Agreement at clause 42 provided for the resolution of disputes. There was no dispute between the parties that Fair Work Australia had the jurisdiction to resolve the dispute by arbitration.
[15] Clause 6 of the Agreement provided for the incorporation of awards as follows:
“6.1 This Agreement incorporates the allowable and preserved Award entitlements and protected Award conditions of the Awards (as appropriate to each Employee) as in operation on 1 December 2009 and which are set out in Appendix D of this Agreement and form part of this Agreement subject to any limitations specified (“Incorporated Terms”).
6.2 The express terms of this Agreement are supplementary to, and shall be read and interpreted wholly in conjunction with the Incorporated Terms provided that where an express term of this Agreement is inconsistent with an Incorporated Term, the express term will prevail to the extent of any inconsistency.
6.3 The Schedules and Appendices attached to this Agreement form part of this Agreement.”
[16] The relevant award for this matter is the Health and Allied Services - Private Sector- Victoria Consolidated Award 1998 4 (the HASA Award).
[17] Appendix D of the Agreement states that clause 17.8 of the HASA Award is incorporated into the Agreement.
[18] Clause 17.8 of the HASA award provides for redundancy pay and relevantly provides:
“17.8.1 The provisions of this clause are not applicable where a business is before or after the date of this award, transmitted from an employer (in this subclause called the transmittor) to another employer (in this subclause called the transmittee), in any of the following circumstances:
17.8.1 (a) Where the employee accepts employment with the transmittee which recognises the period of continuous service which the employer had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee; or
17.8.1 (b) Where an employee rejects an offer of employment with the transmittee:
● In which the terms and conditions are substantially similar and no less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmittor; and
● Which recognises the period of continuous service which the employee had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee.
17.8.2 The Commission may vary 17.8.1(b) if it is satisfied that this provision would operate unfairly in a particular case.”
Jurisdiction of Fair Work Australia
[19] There is no dispute that Fair Work Australia has jurisdiction to resolve the dispute.
The Evidence
[20] An agreed statement of facts was filed by the parties. 5
Submissions of the Applicant
[21] The Applicant submitted that the imposition of a qualifying period on Ms Sodoma meant that Ms Sodoma was not protected from unfair dismissal until she has served a six month qualifying period with Lasting Changes. 6
[22] The Applicant submitted that job security is a fundamental condition of employment and “a new position, even one ostensibly at the same classification and pay and governed by the same Agreement as the former position is of a fundamentally different nature, especially if the new position can be terminated arbitrarily and without recourse to Part 3-2 of the FW Act.” 7
[23] The Applicant submitted that there is no decision of Tribunal or its predecessors on point. However it submitted that regard could be had to the reasoning of the Tribunal and its predecessors in cases dealing with the notion of acceptable alternative employment. In the cases referred to, one factor that the Tribunal or its predecessors has had regard to, in determining if there was acceptable alternative employment, was whether the employment of the employees was less secure as a result of the change in employment. 8
[24] Further, the Applicant submitted that because Lasting Changes did not recognise Ms Sodoma’s service for all purposes, clause 17.8(1)(b) was not satisfied and therefore even if 17.8(1)(a) was satisfied the Agreement requires both (a) and (b) to be satisfied and therefore Ms Sodoma was entitled to be paid redundancy pay. It is not sufficient that service is recognised for all purposes other than the qualifying period, as the Agreement does not contain such a limitation.
Submissions of Calvert Manor Pty Ltd
[25] No submissions were filed by the Administrator.
Submissions of Lasting Changes
[26] Lasting Changes submitted that section 382 and 384 of the FW Act which defines period of employment for the purposes of the unfair dismissal regime should not be treated as terms and conditions of employment. 9 It was submitted that this would negate the operation of section 384(2) (b) of the FW Act and that would be contrary to the public interest.10
[27] Lasting Changes submitted that clause 17.8.1(b) must be limited to redundancy. In other words, provided the incoming employer recognises continuous service for the purpose of calculating any entitlement to redundancy pay then clause 17.8.1(b) is satisfied. 11
[28] Lasting Changes supported its contention by reference to the National Employment Standards.
[29] Lasting Changes referred to the provisions of the FW Act in particular section 22, which defines continuous service. Subsection 22(5) makes it clear that where there is a transfer of employment service with old employer is service with the new employer. 12
[30] It further referred to section 122 of the FW Act which provides that subsection 22(5) does not apply if the new employer does not recognise the employee’s service with the first employer for the purpose of “this subdivision.” 13
[31] Subsection 122(3) further provides as follows:
“(a) the employee rejects an offer of employment made by another employer (the second employer) that:
(i) is on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than, the employee’s terms and conditions of employment with the first employer immediately before the termination; and
(ii) recognises the employee’s service with the first employer, for the purpose of this Subdivision; and
(b) had the employee accepted the offer, there would have been a transfer of employment in relation to the employee.”
[32] Section 91 is a similar provision and enables the new employer to not recognise a transferring employee’s service with the old employer for the purpose of annual leave.
[33] It was submitted that the principles which underpin the FW Act provisions underpin sub-clause 17.8.1(b). 14
[34] Lasting Changes submitted that the TCR decisions from which the Agreement clause was derived only required recognition of service for redundancy. 15
[35] It was submitted that the minimum period of employment cannot have been in the contemplation of the parties as this concept was only introduced in the 2009 Act. 16
History of the clause
[36] Redundancy provisions were included in awards of the Australian Industrial Relations Commission as a result of the termination change and redundancy (TCR) test case decisions in 1984. 17
[37] In the first TCR decision the Commission made it clear that they “did not envisage severance payments being made in cases of succession, assignment or transmission of business. We intend to provide for transmission of employment in terms similar to cl.5 (5) of the Metal Industry (Long Service Leave) Award (1976) 183 CAR 67.” 18
[38] Relevantly that clause provided as follows:
“(a) Where a business is, whether before or after 11 May 1964, transmitted from an employer (in this sub-clause “the transmittor”) to another employer (in this sub-clause called “the transmittee”) and an employee who at the time of such transmission was an employee of the transmittor in that business became an employee of the transmittee:
(i) the continuity of the service of the employee shall be deemed not to have been broken by reason of such transmission;
(ii) the period of service which the employee has had with the transmitter or any prior transmitter shall be deemed to be service of the employee with the transmittee. 19”
[39] In the supplementary TCR decision the Commission provide that the redundancy clause did not apply in the following circumstance :
“3.(a) Where a business is before or after the date of this award, transmitted from an employer (in this sub-clause called “the transmittor”) to another employer (in this sub-clause called “the transmittee”) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:
(i) the continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission; and
(ii) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.” 20
[40] The history of this clause in the HASA Award and its predecessors was not canvassed before me.
[41] The HASA Award followed the making of the Health Services Union of Australia (Victoria-private sector) Interim Award 1993 (the 1993 Award) and the Health and Allied Services - Private Sector - Victoria - Consolidated Award 1995 (the 1995 Award).
[42] The 1995 Award at clause 19 provided as follows:
“Transmission of business
(i) Where a business is, before, or after the date of this award transmitted from an employer (in this subclause called “the transmittor”) to another employer (in this clause called “the transmittee”) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:
(1) the service shall be deemed not to have broken by reasons of such transmission; and
(2) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.
(ii) In this subclause “business” includes trade, process, business or occupation and includes part of any such business and “transmission” includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and “transmitted” has a corresponding meaning.”
[43] There is nothing in this clause which limited clause 19(i)(2) to the calculation of redundancy pay.
[44] It is worth noting that this clause did not address the circumstance where an employee was offered employment by the transmittee and refused that offer. Clause 19(e) dealt with this in a limited way by providing as follows:
“(e) An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if the employer obtains acceptable alternative employment for an employee.”
[45] On 30 June 1998, pursuant to an application under Item 49 of Part 2 of Schedule 5 of the Workplace Relations and Other Legislation Amendment Act 1996, the Health and Allied Services - Private Sector Victoria Award 1995 was varied and replaced with the HASA Award.
[46] The HASA Award provided at clause 5 as follows:
“5.1.3 Where a business is before or after the date of this award, transmitted from an employer (in this subclause called “the transmittor”) to another employer (in this subclause called “the transmittee”) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:
5.1.3(a) the continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission; and
5.1.3(b) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.
5.1.4 In this subclause ‘business’ includes trade, process, business or occupation and includes part of any such business and ‘transmission’ includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and ‘transmitted’ has a corresponding meaning.”
[47] It is clear from the placement of that clause, that clause 5.1.3(b) was not limited to recognition of service only for redundancy purposes. It is worth noting that in Territory Construction Association 21 the Full Bench accepted that the relocation of this clause from the redundancy clause had unintended consequences and said:
“We agree with the submission of the appellant in relation to this clause; that it may have unintended consequences in relation to other provisions of the award, namely the maternity leave provisions, the air fare provisions and the annual leave provisions. These effects were not adverted to before Commissioner Eames. Accordingly, we allow the appeal on this ground and direct the parties to confer with a view to relocating the transmission provisions within the redundancy clause.”
[48] It does not appear that a similar relocation of the clause to the redundancy clause was made in relation to the HASA Award and clause 5.1.3(b) remained in the HASA Award and was not removed by the variation made by the Australian Industrial Relations Commission in January 2005.
[49] Clause 17 of the HASA Award at that time did not include a specific provision about transmission of business.
[50] The 2004 Redundancy Case Supplementary Decision provided as follows: 22
R.7.1 The provisions of this clause are not applicable where a business is before or after the date of this award, transmitted from an employer (in this subclause called the transmittor) to another employer (in this subclause called the transmittee), in any of the following circumstances:
R.7.1(b) Where the employee rejects an offer of employment with the transmittee:
● in which the terms and conditions are substantially similar and no less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmittor; and
● which recognises the period of continuous service which the employee had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee.
R.7.2 The Commission may vary R.7.1(b) if it is satisfied that this provision would operate unfairly in a particular case.”
[51] The current clause was inserted into the HASA Award in January 2005 (the 2005 variation) as a result of that test case decision. 23
Principles of construction
[52] Vice President Lawler set out detail in Watson v ACT Department of Disability Housing and Community Services the legal principles to be adopted when construing awards and agreements. 24 A Full Bench in The Australian Workers’ Union - West Australia Branch v Co-operative Bulk Handling Limited25 cited Vice President Lawler with approval and made reference to the decision of Logan J in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited.26 Logan J said:
“The starting point must always be the language employed by the parties to an industrial agreement but industrial context and purpose are always relevant when construing that language.”
[53] The Full Bench concluded that “the extract from Watson and the approach of Logan J, inform the manner in which we approach the test of construing the agreement and leads to the conclusion that regard must be had to extrinsic material in order that the meaning of the clause in question may be properly understood.”
[54] I adopt the approach endorsed by the Full Bench.
Conclusions
[55] I do not accept the submissions of Lasting Changes that the parties could not have, when making this Agreement or when the HASA Award was made, have had in their minds the minimum period of employment as this was only introduced into the legislation in 2009.
[56] Shortly after the introduction of unfair dismissal protections into federal industrial law, exclusions were put in place that prevented some employees from making unfair dismissal claims.
[57] If there was a transfer of business the new employer has, since 1994, been able to impose a probationary or qualifying period on transferring employees such that the transferring employee would be excluded from making an unfair dismissal claim during their probationary or qualifying period. 27
[58] So much was known when the 1995 Award, 1998 Award and the Agreement were made.
[59] I do not accept the submissions of Lasting Changes that “Clause 17.8.1(b) must be read as only being concerned with the subject matter of the Clause in which it appears, namely redundancy.” 28
[60] Had the parties intended to limit the application of this clause to redundancy they would have made this clear. They did not. The words of the clause do not limit the circumstances in which an employee’s continuity of service must be recognised to the calculation of an employee’s redundancy pay.
[61] I do not accept the submissions of Lasting Changes that this has the effect of preventing an employer from exercising their rights under section 384(2)(b) of the FW Act. The decision of the transmittee to impose a qualifying period will have an impact on the obligations of the transmittor. When parties negotiate the sale price for the business the decision of the transmittee to require employees to serve a qualifying period will have an impact on the decision of employees to take up positions with the transmittee and therefore will have an impact on the transmittor’s obligations to pay redundancy pay, annual leave and long service leave on termination of employment. Be that as it may the transmittee’s right to require a qualifying period is preserved.
[62] Here Lasting Changes did not recognise the employee’s service for all purposes and therefore Calvert Manor Pty Ltd cannot rely upon clause 17.8.1(b) as absolving it of its obligation to pay Ms Sodoma redundancy pay.
[63] I have therefore concluded that as Lasting Changes did not recognise the continuous service of Ms Sodoma she is entitled to redundancy pay.
[64] Even if I am wrong in my interpretation of clause 17.8.1(b) I have concluded that the terms and conditions offered to Ms Sodoma by Lasting Changes are not substantially similar to the terms and conditions of her employment with Calvert Manor Pty Ltd when considered on an overall basis.
[65] Terms and conditions of employees’ employment derive from the written contract of employment, the industrial instrument, statute and some are implied by operation of law. There is nothing in the Agreement which suggests that the term “terms and conditions of employment” should be read narrowly so as to exclude statutory entitlements. While it is true that most statutory entitlements cannot be altered by the parties to the employment contract here the parties were free to agree or not agree to the inclusion of a qualifying period in the contract of employment.
[66] The qualifying period is a term of Ms Sodoma’s employment contract. It is expressly included in the written contract of employment offered by Lasting Changes. It was within the power of Lasting Changes to offer Ms Sodoma employment on terms and conditions which did not include the qualifying period of employment but it did not do so.
[67] Such a term is a significant change to Ms Sodoma’s terms and conditions of employment. Ms Sodoma had unfair dismissal rights when she was employed by Calvert Manor Pty Ltd. Had she accepted employment with Lasting Changes, in the first six months, her employment could have been terminated unfairly and she would have had no recourse. This is a significant diminution in her job security.
[68] This alone is sufficient for me to conclude that the terms and conditions offered by Lasting Changes were not substantially similar, when considered on an overall basis to the terms and conditions provided by Calvert Manor Pty Ltd. Therefore it is not necessary for me to consider whether the additional contractual terms which Lasting Changes included in the contract of employment were such as to result in the terms and conditions not being substantially similar when considered on an overall basis.
[69] Therefore I find that Calvert Manor Pty Ltd was not able to rely upon the exemption in clause 17.8.1 to absolve it of its obligation to pay Ms Sodoma redundancy pay.
COMMISSIONER
Appearances:
C Dowling for the Applicant.
M Rahilly for the Respondent.
Hearing details:
2012.
Melbourne:
May 24.
2 Silvarich and ors v Gideon Rathner No 4984 of 2000, ALHMWU v Home Care Transport Pty ltd [2002] FCA 497, Smith and ors v Trollope Silverwood & Beck Pty Ltd (In liquidation) and ors PR940508
3 Exhibit A1 at [17]
4 Print Q2805
5 Exhibit A2
6 Exhibit A1 at [18]-[21]
7 Ibid at [22]
8 Ibid at [25]-[32]
9 Exhibit R1 at [13]
10 Ibid
11 Ibid at [15]
12 Section 22(5) of the FW Act
13 Section 122(1) of the FW Act
14 Transcript PN 204
15 Ibid PN 202
16 Exhibit R1 at [16]
17 Termination Change and Redundancy Case No 1 (1984) 8 IR 34 and Termination Change and Redundancy Case No 2 (1984) 9 IR 115
18 TCR No 1 at page 75
19 Print D2035
20 Termination, Change and Redundancy Case No 2 (1984) 9 IR 115, 129-130
21 Q6695
24 [2008] AIRC 291 at [7]-[15]
26 [2010] FCA 591 at [39]
27 See Regulation 39B(1)(c) of the Industrial Relations Regulation, section 170CBA(1) of the WR Act 1996 and section 643(6) of the Workplace Relations Act 1996; and FW Act 384(2)(b)
28 Exhibit R1 at [15]
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<Price code C, AE879671 PR527308 >