[2014] FWC 3877

FAIR WORK COMMISSION

REASONS FOR DECISION


Fair Work Act 2009
s.739—Dispute resolution

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
DL Employment Pty Ltd
(C2014/289)

SENIOR DEPUTY PRESIDENT DRAKE

SYDNEY, 8 JULY 2014

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] - Redundancy entitlements - New Location clause - Extra Claims clause.

[1] This decision arises from the notification of a dispute pursuant to section 739 of the Fair Work Act 2009 (the Act) lodged by the Automotive, Food, Metals, Engineering, Printing And Kindred Industries Union (AMWU) on 26 February 2014.

[2] Ms Lucy Saunders, Legal Officer, appeared for the AMWU and Mr Fergus Reid, solicitor, appeared for DL Employment (DLE). The application was listed on 26 and 27 March; 2, 9 and 15 April; and 15 May 2014.

[3] The Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012 (Darrell Lea Agreement), approved by Deputy President Booth on 23 July 2012,

[4] Darrell Lea was placed in voluntary administration on 3 July 2012. On 10 July 2012 PPB Pty Ltd trading as PPB Advisory (PPB) was appointed as administrator. Although employees continued to perform work it was not disputed that, following this event, employees suspected that their continuing employment was under threat. 11 The business of Darrell Lea was contracted to be sold by PPB to DLE in August 2012. The sale settled on 7 September 2014.

[5] The DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015 (the DLE Agreement) 12, was approved by Commissioner Cargill on 20 June 2013. It continues to govern the terms and conditions of the employees of DLE who are the subject of this dispute notification. There has been no application to terminate the DLE Agreement.

[6] The DLE Agreement;

[7] The issues I had to determine can be conveniently considered in two parts. The first issue was whether new contracts containing a location clause, signed by employees at or in the days following a meeting called by DLE for 3 September 2013, were enforceable against the employees who signed them. Did those contracts impose a new obligation on those employees to accept work at the direction of DLE at Ingleburn, instead of at Kogarah, where they had always worked until 3 September 2013?

[8] Following the determination of that issue, the individual circumstances of some of the eleven employees who had been directed to work at Ingleburn in mid 2014, but, for various reasons, did not consent to do so, had to be considered.

[9] During the course of the hearing of this application, I gave an indication in conference concerning the circumstances of some these eleven employees. The application in respect of those particular employees was withdrawn by the AMWU.

[10] At the conclusion of the hearing DLE’s plans for removal to Ingleburn were pressing. It wished to move to Ingleburn with its preferred workforce. This workforce included the remaining workers who were disputing the direction to move and the alleged refusal of DLE to meet its obligation to make redundancy payments pursuant to the DLE Agreement. To meet that pressing timetable, I listed the application and delivered my findings in relation to both questions, and orders in relation to the particular employees whose circumstances remained before me for determination. Mr Reid, who does not regularly appear in the Fair Work Commission, misinterpreted what had occurred as merely being indicative and did not immediately instruct his client to comply with the order. A further listing took place on which occasion the situation was clarified.

[11] I will now provide my reasons for my findings and orders in relation to the first issue. I will deal with the second issue concerning the individual circumstances of particular employees in separate reasons for decision.

[12] Early in the afternoon of 3 September 2012, employees were divided into two groups and were directed to 2 different locations. They had had no prior warning regarding the meeting and they were not told the purpose of the division. As it transpired, employees who were not to be offered continuing employment were sent to the canteen and employees who were to be offered continuing employment were sent to the High Boil Room. This notification only concerns the circumstances of the employees who were directed to the High Boil Room.

[13] It is important to consider the letters and documents provided to the employees in the High Boil Room. I have set out below the substance of the documents provided to Mr Paul Gioffre. The letter, table and contract provided to all employees were the same.

(my emphasis)

…”

(my emphasis)

The Meeting of 3 September 2012

[14] Ms Bates, the Human Resources Manager of DLE, was one of the employees directed to the High Boil Room. She had been employed by Darrell Lea from 29 March 2010. She signed a new contract with DLE on 7 September 2012. Ms Bates provided a statement 23 and was cross-examined.

[15] Although Ms Bates was in a better position than most employees to speculate about the purpose of the meeting on 3 September 2013, she had not been informed of its purpose beforehand. Like most employees she had only heard whispers on that day 24 .

[16] In relation to the meeting of 3 September 2012, Ms Bate’s evidence is set out below 25:

[17] In cross-examination Ms Bates confirmed that at the end of that meeting she was provided with a document from PPB Advisory which contained the question “What if I say no?”. The answer provided to that question in the same document was “You will not be entitled to any redundancy pay.”

[18] Ms Bates confirmed that Mr de Vantier, the General Manager of the Quinn family’s group of companies, which included DLE, advised that the new owners were looking at building a state of the art facility for production at Ingleburn and that employment would be at Kogarah initially and then at Ingleburn when the business relocated. It was clear that there would be no change to jobs in the immediate future, that it would be work as usual at Kogarah. Mr Quinn, one of the new owners, confirmed that the move would happen in approximately 18 months time.

[19] In answer to a question from Ms Saunders, Ms Bates confirmed that no one advised the assembled employees that if they accepted the offer they would have to move to Ingleburn 26.

[20] Mr Tsiakos, the operations manager of Darrell Lea provided a statement 27, gave evidence and was cross-examined. His evidence in relation to the selection process of employees selected to work for the Quinn family at DLE employment is extracted below28:

[21] In relation to the meeting of 3 September 2012 Mr Tsiakos gave the following evidence 29:

[22] Mr Tsiakos prepared the list of critical employees but he had no idea which employees would be retained. He did not know whether his own employment would be continued. He did not know what employees were thinking about the circumstances of Darrell Lea because he did not have any meetings with them. He did what PPB asked him to do.

[23] In cross-examination he confirmed that no one from PPB, the Quinn family companies or Darrell Lea went through the contract of employment with employees in the High Boil Room. No one told the employees that they were agreeing to move to Ingleburn. Employees would have understood following the meeting that they could keep working at Kogarah until at least April 2014 30. Employees were given 2 days to sign the contract. He confirmed that it would have been possible for employees to have been told that they were going to be offered employment earlier than 3 September 2012 if PPB or the Quinn family had authorised it.

[24] After the meeting Mr Tsiakos told employees who had not been offered employment that they had to speak to the administrators who he regarded as their current employer. He told employees who had been offered employment that they could accept that employment by signing the letter they had been given on 3 September 2013 or not accept and deal with the administrators who were in the building 31.

[25] Mr Rex DeVantier, the General Manager of the Quinn family group of companies, which includes DLE, gave the following evidence regarding the meeting of 3 September 2012 32.

Consultation

[26] Ms Bates gave evidence 33 of EBA negotiations, and discussions regarding the proposed relocation to Ingleburn, which occurred from December 2012 until March 2013. The AMWU raised as an issue the cost of transport to Ingleburn and employees and the position of particular employees who did not wish to work out Ingleburn. Ms Bates replied as follows “... the business is offering a travel allowance to assist employees in adjusting to the additional cost, however all employees are required to go, so we will not be specifically writing a clause in the EBA to give employees the choice. The business requires all employees to go to be able to run equipment and produce product.”34

[27] No specific new clause was inserted into DLE agreement as requested by the AMWU. The relevant DLE Agreement clauses remained as they had been in the Darrell Lea Agreement.

[28] Ms Bates had meetings with individual employees concerning the proposed relocation. She had standard questions for the employees. These are set out below.

[29] Discussions took place between the AMWU and Darrell Lea and the requests from Darrell Lea for information regarding the difficulties of individual employees regarding the move to Ingleburn. Darrell Lea required information regarding employees circumstances so that they would be able to “… deal with these matters.” The AMWU was slow in providing this information. Eventually, a memorandum dated 19 December 2013 was forwarded to employees. It is extracted below:

[30] As a result of this memorandum there were eight meetings with the employees 37.

[31] Ms Bates agreed that employee concerns regarding the proposed relocation to Ingleburn were a major issue in all EBA discussions 38, that the AMWU position in discussions was consistently that employees who could reasonably refuse to go to Ingleburn would be redundant and that the travel allowance discussed was not included in the DLE Agreement. Her evidence was that DLE did not wish to crowd the EBA. She agreed that DLE did not refer to the contracts signed in 2012 when discussions took place around any prospective redundancies.

[32] The following exchange took place between Ms Bates and I:

(my emphasis)

[33] Ms Bates’ answers to my questions seemed to be inconsistent with DLE’s submissions regarding the effect of the contracts offered on 3 September 2012 and its arguments as to their effect. I asked Ms Bates to leave the hearing room and took that opportunity to raise the issue with Mr Reid. DLE maintained its position.

[34] Ms Bates gave evidence regarding a meeting between herself, Klark Quinn and Jim Tsiakos to discuss the circumstances of the individual employees who had raised difficulties with the move to Ingleburn. The purpose of the meeting was “… to see if it would change anything.” 40 Ms Bates’s evidence was that, if there had been something significant in the material provided by the various employees, she would have gone back to Mr Quinn and said “X, Y, Z, what do you think?”41.

[35] In re-examination Ms Bates agreed that she didn’t have authority to bind DLE on redundancy.

[36] Mr Tsiakos gave evidence 42 regarding the negotiations with the AMWU and employees from November 2012 until March 2013. He emphasised to employees how important it was to DLE that employees with critical skills move to Ingleburn.

[37] Mr Tsiakos confirmed that the AMWU raised concerns in EBA negotiations about individual members whose circumstances did not enable them to go to Ingleburn 43.

[38] Mr Tsiakos’ evidence was that that DLE was willing to consider the individual circumstances of particular employees which might make it unreasonable for them to move to Ingleburn the purposes of ensuring that “… we could get our people to Ingleburn” 44. Mr Tsiakos was cross-examined about the operation of clause 11A to 11D Introduction of Change; Discussions before Redundancy; Redundancy Provisions of the Darrell Lea Agreement. Mr Tsiakos confirmed in cross-examination that he did not raise the operation of the 2012 contracts when meeting with the AMWU to discuss the personal circumstances of some members45. Mr Tsiakos did not raise any issue about the operation of the contracts or the possibility that those contracts might override the Darrell Lea Agreement which was in place when they were signed. He emphasised that employees were needed. He did not tell any employee that they had to go to Ingleburn46.

Conclusion

[39] In August 2012 the business of Darrell Lea was sold by PPB to DLE. The sale of the business was completed on 7 September 2012. The employees of Darrell Lea who moved to the employment of DLE took their accrued entitlements with them. Despite PPB’s claim that they were not adopting any previous contracts of employment that existed or may have existed between employees and “the Companies”, those employees had continuity of employment from Darrell Lea to its administrators and then to DLE, the Quinn family enterprise. The Darrell Lea Agreement applied from certification on 23 July 2012 until 30 September 2012. All of its obligations applied in the period before Darrell Lea went into voluntary administration, in the period when Darrell Lea was being administered by PPB and continued to apply when Darrell Lea was purchased by DLE.

[40] The contract offered by DLE was described by PPB in its letter of 3 September 2012 and the table provided to employees as an offer on the same terms as their current terms and conditions of employment with Darrell Lea. This statement was not accurate. It was misleading for PPB to put that proposition to employees as a statement of fact. It was patent that the contract DLE were offering was intended to impose the new Location Clause set out below.

[41] The proposed new Location Clause contemplated altering specific entitlements and obligations of the parties, to the detriment of employees, by imposing a new and unrestrained obligation on employees to move to Ingleburn at the direction of DLE, or a location at a similar distance, without triggering any entitlement to redundancy payments. This obligation did not exist in the Darrell Lea Agreement.

[42] The Darrell Lea Agreement contained a No Extra Claims clause 47. I am satisfied and find that the Location Clause sought to be imposed by DLE on any employee who wished to continue in employment, which employment was governed by the Darrell Lea Agreement, was an extra claim. I am satisfied and find that a commitment to the Location Clause in the contracts offered on 3 September 2012 could not be imposed upon the employees of Darrell Lea as a condition of continued employment. The Darrell Lea Agreement stipulated that no employees could be employed on terms other than its terms48. The proposed Location Clause was not a clause of the Darrell Lea Agreement and employees could not be required to work in accordance with that term.

[43] It was not open to PPB or DLE to set aside any term of the subsisting agreement and oblige employees to enter into a new contract with different terms. I am satisfied and find that the contract of employment offered by DLE on 3 September 2012, commitment to which was expressed to be a condition of continued employment, could not be offered or entered into without breach of the Darrell Lea Agreement. The contracts offered on 3 September 2012 and signed by employees on that date or thereafter are of no effect to the extent that they purport to amend or set aside any term of the Darrell Lea Agreement.

[44] Clause 2.F and Clause 2.E h) of the Darrell Lea Agreement were not the only clauses attempted to be breached by those conducting the 3 September 2012 meeting. The meeting was conducted as if there were no subsisting obligations arising from the continued operation of Darrell Lea Agreement. The Introduction of Change clause and the Redundancy Clause were also breached.

[45] If I was in error in relying on the continued application of the terms and conditions of Darrell Lea Agreement, I would not in any event have been persuaded that the events of 3 September 2013 were capable of giving rise to a contractual obligation between the High Boil Room employees and DLE.

[46] The employees directed to the High Boil Room did not know what the employees in the canteen were being told. There was no evidence before me concerning what happened at the meeting with employees who were directed to the canteen. I do not know what the canteen employees were told. The High Boil Room employees had to make a decision on the material provided to them at their own meeting. They did not know if the other employees in the canteen were going to be paid their entitlement. They did not have any independent information as to what would happen to them if they rejected the offered contract and went into the rest and residue pool of employees in the canteen.

[47] The only information the High Boil Room employees had was that provided orally at the 3 September 2012 meeting supported by materials provided by PPB at that meeting. They were told that if they rejected the offer by DLE they were to be referred to the administrators, who were present in the room. They were told that if they refused the offer they would not be entitled to redundancy payments. The documents provided to them confirmed that.

[48] The proposition being put by all those in charge of the meeting of 3 September 2012, that is, that the offer from DLE was in exactly the same terms as the existing terms and conditions of employment in the Darrell Lea Agreement, or that they would be no worse off overall, was incorrect. The manner in which it was put was designed to present it as an indisputable fact. The employees had no opportunity to make an informed choice.

[49] Even if the offer of continuing employment on the proffered terms could have been made, it should not have been made hand in hand with an announcement that failure to accept would result in non-payment of redundancy payments. I am satisfied and find that this conduct amounted to duress.

[50] These employees were long-term employees. Their entitlements were significant. They were mostly not young. They had been employed in specialised work and, outside the confectionery industry, their skills might well be regarded as limited. It was of the utmost importance to these employees that they understood what their choices were.

[51] To exacerbate the situation a significant proportion of these employees did not have English as their first language. Although many of them had been in Australia for a long time, they had mostly worked with immigrants from their native lands and many continued to speak in their native languages. Despite management’s knowledge of these particular circumstances, no attempt was made to provide interpreters for any of these workers at the meeting of 3 September 2012.

[52] Despite the employees lack of sophistication and experience in such matters no attempt was made to provide separate advice to each employee, nor was there any opportunity to consult separately, before they had to make a choice on this very significant issue and face the alternative of being sent to see PPB and, as far as they were aware, receive no redundancy payments. They had to choose, without any knowledge of what the alternative might provide, and then see PPB to find out.

[53] This arrangement, for long-term employees in a crisis situation, with likely problems of understanding and language, was a paltry and shabby exercise. For very good reasons, the focus of PPB and DLE was on obtaining the best employees from the pool to suit DLE’s prospects. Unfortunately there was insufficient attention to the needs of the High Boil Room employees and no attention to existing obligations pursuant to the Darrell Lea Agreement.

[54] Did DLE have an absolute right to redeploy employees from Kogarah to Ingleburn arising from contracts offered on 3 September 2012? I have already answered this question in the negative.

[55] I will deal with the circumstances of the particular employees whose circumstances were before me for Decision in separate Reasons for Decision.

SENIOR DEPUTY PRESIDENT

Appearances:

L. Saunders appearing on behalf of the Applicant

P. Reid appearing on behalf of the Respondent

Hearing details:

2013:

26 - 27 March;

9 and 15 April; and

15 May;

Sydney.

 1   Clause 2.A of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 2   Clause 2.B of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 3   Clause 2.C of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 4   Clause 2.E h) of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 5   Clause 2.F of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 6   Subclauses 11.A a) and b) of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 7   Subclause 11.A b) of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 8   Clause 11.B of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 9   ibid

 10   Clause 12 of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 11   Transcript PNs 104-106

 12   [2013] FWCA 3907

 13   Clause 1.3 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 14   Clause 1.4 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 15   Clause 1.2 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 16   Subclause 1.5 g) of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 17   Clause 1.8 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 18   Subclauses 2.3 a) and b) of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 19   Subclause 2.3 b) of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 20   Subclause 6.6 a) of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 21   Ibid

 22   Clause 6.8 of the DL Employment Pty Ltd Enterprise Bargaining Agreement 2012-2015

 23   Exhibit DL Employment 1

 24   Transcript PNs 111-114

 25   Above 23

 26   Transcript PNs 141-143

 27   Exhibit DL Employment 5

 28   Ibid

 29   Ibid

 30   Transcript PN 2588

 31   Exhibit DL Employment 18

 32   Exhibit DL Employment 6

 33   Exhibit DL Employment 1, para 12-25

 34   Exhibit DL Employment 1, para 12(a)

 35   Exhibit DL Employment 1, para 14

 36   Exhibit DL Employment 1, attachment KB-4

 37   Exhibit DL Employment 1, attachment KB-5

 38   Transcript PN 154-179

 39   Transcript PN 180-187

 40   Transcript PN 317

 41   Transcript PN 321

 42   DL Employment 5, para 23-35

 43   Transcript PN 2595

 44   Transcript PN 2600-2602

 45   Transcript PN 2645-2648

 46   Transcript PN 2685-2694

 47   Clause 2.F of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

 48   Subclause 2.E h) of the Darrell Lea Chocolate Shops Pty Ltd Collective Agreement, 2009-2012

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