DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
CDJV Construction Pty Ltd
(C2014/4855)

Summary - whether notice paid in lieu should provide payment where R&R period commenced - whether determination of dispute an exercise of judicial power.

[1] This matter concerns a dispute under s.739 of the Fair Work Act 2009 (“the Act”) in which the CEPU on behalf of its members employed by the Clough Downer Joint Venture (“CDJV”) and who performed work under the CDJV Construction Pty Ltd GLNG Upstream Project Enterprise Agreement 2011 (“the Agreement”) contests the circumstances in which CDJV gave effect to redundancies upon the wind down of the project.

Summary of issues in dispute

[2] The central issue, at least as the evidence appeared to bring it into focus, was whether or not CDJV had complied with its obligation under the Agreement and under s.117(2)(b) of the Act in relation to the amount of payment made to employees upon termination in lieu of the requisite period of notice where the relevant period of notice - had it been given - fell across what would otherwise have been a period of unpaid, rostered R&R.

[3] The employer took the view that for the purposes of the calculation of the relevant amount to be paid in lieu of notice, the employees would not receive payment for the period of time which the notice period would have fallen across the unpaid period of rostered R&R.

[4] The CEPU opposed this position and argued that notice cannot be given so that it falls across a period of unpaid R&R, or in respect of any other accrued entitlements.

[5] Thus the CEPU argued, in effect, that where payment in lieu of notice is provided the payment in lieu cannot be discounted for reason that the notice period, had it been given, would have fallen across the R&R period.

Legislative and industrial instrument context

[6] In respect of its notice arrangements, clause 7.3(a) of the Agreement relevantly provides that:

For the purposes of this clause; One (1) week’s pay, will be calculated as per the requirements of the Act.

[7] Clause 7.3(b) of the Agreement provides:

Termination by the employer will be in accordance with the terms of the Act.

[8] Clause 7.3(d) of the Agreement provides:

The employer is entitled to choose to pay notice in lieu. Employment may be terminated by part of the period of notice and part payment in lieu of notice (on a pro rata basis).

[9] Section 117 of the Act relevantly provides as follows:

117 Requirement for notice of termination or payment in lieu

Notice specifying day of termination

(1) An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).

Note 1: Section 123 describes situations in which this section does not apply.
Note 2: Sections 28A and 29 of the Acts Interpretation Act 1901 provide how a notice may be given. In particular, the notice may be given to an employee by:

(a) delivering it personally; or

(b) leaving it at the employee’s last known address; or

(c) sending it by pre-paid post to the employee’s last known address.

Amount of notice or payment in lieu of notice

(2) The employer must not terminate the employee’s employment unless:

(a) the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or

(b) the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

[10] Section 117(2)(b) of the Act provides only that payment in lieu of notice must at least be the:

[...] full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

[11] The Act allows for various exceptions to the provision of notice in circumstances set out in s.123 of the Act.

[12] R&R is defined as non-work time (under clause 9.5(c) of the Agreement). Employees who are on R&R earn no income in the period of the R&R leave.

The current case

[13] It appears from the evidence before me that the relevant employees’ employment was terminated at various times on or prior to the 21st day of the 21/7 roster. As the evidence stands, most of the terminations took place around the 17th or 18th day of the roster. In other instances, it was said, the terminations took place at an earlier time in the roster cycle (so that the notice period fell across a period of paid, rostered work). It seems that in some few cases employees were terminated on the 21st day of the roster.

[14] Section 117(2)(b) of the Act obligates an employer, where no requisite period of notice is provided, to pay to the employee payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice. The terms of the Agreement largely reflect those of the s.117 of the Act.

[15] This application arose for reason that the period of time that would have been the notice period, had it been afforded to the employees, would have fallen (in part or wholly so) across the period of R&R, which is a period of time on which employees are not at the direction of the employer and do not earn wages.

[16] The employer contends that where the period of time over which notice - if it had been given - would otherwise have fallen was an R&R period, that was not a period of time in which the employees would have been earning any wages for the purpose of s.117(2)(b) of the Act. The amount to be paid to an employee in lieu of notice would not include any amount for the purposes of the R&R period, as a consequence.

[17] Section 117(2)(a) of the Act appears to obligate an employer to provide an employee a period of notice (determined subject to the employees length of service) prior to the termination of the employee’s employment.

[18] Section 117(2)(a) of the Act refers only to notice being a period of time.

[19] On its face, the sub section does not refer to any other conditions to which the giving of notice must be subject. It does not, for example, state that the notice period must only be given during a period of paid employment, or cannot be given in certain other circumstances (such as when an employee is on leave, paid or unpaid). That is, both s.117(2) and the Agreement do no more than specify that notice is a period of time (and no more).

[20] An employee is afforded the requisite period of time according to their length of service as notice or else they are paid the amount the employer would have been liable to pay the employee had the employee performed his or her ordinary duties across that notice period.

[21] In respect of the determination of the amount to be paid in lieu under s.117(2)(b) of the Act or clause 7 of the Agreement, the focus falls upon the calculation of the amount the employer would have been liable to pay to the employee at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

[22] In so far as the minimum notice period would have run concurrently (in part or whole) with what would otherwise have been a period of unpaid, rostered R&R, it is contended that the employer would not have been liable to pay anything to the employee in respect of that period of time.

[23] But the CEPU contends, to the contrary, that the Agreement cannot be construed in isolation in this manner (and nor presumably can s.117 of the Act). In respect of the Agreement, the CEPU contended that the Agreement was a template agreement and that other employers who had become employer parties to that same agreement had exhibited an appreciation (such that it would have reasonably constituted an objective and commonly held understanding) that notice of termination could not be given concurrent with any period of leave (including R&R). Whether or not the evidence led in this matter supported such a conclusion is beside the point for the moment.

[24] The CEPU also contended that there were various (largely) single member decisions in the courts and tribunals which gave recognition to the ‘legal’ proposition that R&R is much like a form of leave, and an employer has no right to interfere with that form of leave (to which the employee is entitled) by giving notice at a time when an entitlement is being exercised or drawn down. Principal amongst these decisions was a decision in Liquor Hospitality & Miscellaneous Union v Cuddles Management Pty Ltd [2009] FMCA 463 (“the LHMU judgment”), which concerned notice of termination given during unpaid maternity leave (and relied largely upon a number of other decisions in the Western Australian parochial jurisdiction bearing upon notice given during periods of paid leave). The CEPU also relied upon a decision of Commissioner Gooley (as she then was) in CEPU & Ors v Silcar Pty Ltd [2013] FWC 856, which also concerned a period of notice which ran concurrently with a period of leave and was deemed impermissible for that reason (see PN 42-43).

[25] Another decision handed up, of the South Australian Industrial Relations Court, considered circumstances in which notice was given in the context of a contractual term. The Industrial Magistrate concerned determined the matter in relation to the conduct of the parties under that contract and whether that conduct amounted to a withdrawal of notice on consensual terms. (See South Australian Industrial Relations Court in Wanders v Richards Mining Services Pty Ltd [2012] SAIRC 46 (4 October 2012).

[26] Putting aside whether these decisions were relevant to the case at hand, or based on sound reasoning, the CEPU submitted that even where an employer was obligated to pay in lieu of notice, the employer could not take into account for the purposes of determining the amount to be paid to the employee any period of time over which notice would otherwise have fallen which would have been unpaid time (as notice could not have been given in such circumstances in any event). It was presumed generally therefore that notice (under s.117(2)(a) of the Act or pursuant to clause 7 of the Agreement) can only be given in respect of a paid period of time and not when the employee was on an approved period of leave (paid or unpaid) of which rostered R&R is a species.

Jurisdictional question

[27] The CEPU raised the issue in dispute in accordance with the dispute procedure under the Agreement on behalf of the employees whose employment had been terminated. There was a jurisdictional objection raised by the employer at any earlier stage in the life of the matter as to whether there had been compliance with the stepped disputes procedure under the Agreement. The application was adjourned until such time as the employer was satisfied the CEPU and its employees had acted in accordance with the disputes clause.

[28] That objection having been satisfied (and the employer no longer agitated the matter on objection to the progression of the application), the employer subsequently (and on the eve as it were of the hearing of this matter) raised a further and more fundamental jurisdictional objection. In so doing it relied upon facts that had not previously been adduced or asserted.

[29] The employer, in essence, contended that the Commission has no jurisdiction to deal with this application. In summary, the employer argues that the Agreement applies to no employees for reasons that the project to which the Agreement applied has ceased and the joint venture is in the process of being wound up.

[30] Before investigating this claim in its own right it is necessary to set out the relevant provisions of the Agreement.

Agreement and Statutory Framework

[31] The parties to the Agreement are described in the following manner at clause 2 of the Agreement:

2. PARTIES

a. The employer party to this agreement is CDJV Construction Pty Ltd (ACN 154 142 131)

b. The Union parties to this agreement are:

i. The Australian Workers' Union (AWU) in respect of all classifications within the scope of the GLNG Upstream Project; except those classifications listed below as covered by the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union or the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union -Electrical Division.

ii. The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) with respect to all mechanical and fabrication tradespersons, non-destructive testing persons and industrial painters.

iii. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union -Electrical Division (referred to hereafter as (CEPU) in respect of all sprinkler fitting, plumbing, electrical and roofing / siding tradespersons and electrical trades assistants.

iv. Employees of the employer who meet the requirements as set out in Clause 3.

c. The employer, the employees and each of the union parties are referred to collectively as the parties.

[32] Notwithstanding the status of “parties” under the Act, the Agreement applies to the employer and the employees for the following purpose:

3. APPLICATION

a. This Agreement binds and will apply to each of the parties, and to the employees of the employer party:

i. Performing on site construction work within the employers scope of work on the GLNG Upstream Project for Fluor Australia Pty Ltd in Queensland;

ii. In any classifications identified in Sub-Clause 10.3 of this Agreement.

b. In this agreement:

i. Act means the Fair Work Act 2009 (Cth) as amended.

ii. Code means the National Code of Practice for the Construction Industry as amended.

iii. Guidelines means the Australian Government Implementation Guidelines for the Code as revised from time to time.

iv. Shiftworker means (for the purposes of calculating annual leave entitlements) an employee who is regularly rostered to work shifts continuously rostered 24 hours a day over seven (7) days a week and is regularly rostered to work on Sundays and Public Holidays.
[...]

[33] The Agreement applies to the employer and the employees only in so far as five criteria are satisfied. Those five criteria are as follows and require the employer and the employees to be:

1. performing on site construction work;

2. within the employer’s scope of works;

3. on the GLNG Upstream Project;

4. for Fluor Australia Pty Ltd;

5. in Queensland.

[34] Unless these five criteria are made out the Agreement does not apply to the employer and its employees. I will return to this matter further below.

5. DURATION OF AGREEMENT

(a) This Agreement will operate (7) days after the approval by Fair Work Australia and will remain in force until 26 October 2015, or at practical completion of works by the employer for the GLNG Upstream Project, whichever occurs first.

[35] The Agreement purports to have a self executing provision that causes it to remain in force until the earlier of two events occur - one being when a point in time is reached (26 October 2015) and the other being “at practical completion of works by the employer for the GLNG Upstream Project.”

The evidentiary case

[36] The evidence in this matter led by the employer establishes the following factual situation.

[37] The joint venture, which comprised the employer, was formed for the purposes of employing the blue collar employees who assist in the construction of the 400km of gas and water transmission pipelines, compression facilities, camps and associated infrastructure in relation to the wider LNG project.

[38] As the scope of works for the project neared completion, the employer demobilised the employees from the site. The last employee covered by the Agreement for the Agreement’s purposes finished on or around 15 October 2014.

[39] The employer no longer employs any employees covered by the Agreement and does not intend to do so in the future for reasons it has concluded its scope of work.

[40] As the practical completion of works by the employer for the GLNG Upstream Project has been reached, the employer has handed over all work sites to its principal contractor - Fluor (which in turn is contracted by the owner of the GLNG Upstream Project, which is Santos). Fluor was said to have handed over the site to the project owner.

[41] The employer - that is the joint venture - is in the process of being wound up as a consequence of the conclusion of the scope of works it was contracted to undertake. The employer currently employs a very small number of staff (not under the Agreement) for purposes of closing out various financial matters, and other matters such as the calculation of the relevant WorkCover Queensland policy.

[42] The employer contends, where the Agreement no longer applies to any persons, and cannot apply to any employees in the future (as is the case here), and the employer is no longer permitted on site to complete any works (the scope of works having been completed) there is no jurisdiction for the Commission to exercise under the disputes clause under the Agreement.

[43] The CEPU contends to the contrary and cites the majority decision of the Commission in ING Administration Pty Ltd v Ramsin Jajoo (PR974301 4 December 2006) (“Re: ING Administration”) and the further full bench decision in Telstra Corporation Limited v CEPU [2007] AIRCFB 374 (“Re: Telstra”).

[44] By reference to these two decisions, the CEPU contended that the Commission’s jurisdiction is enlivened for the purposes of determining the dispute in question regardless of whether or not the employees who have agitated the dispute (at a time when they were employees) remain employees. The CEPU, in defence of its position, cited the ING Administration decision:

Further, we believe that it would be highly artificial to suggest that the parties to the agreement intended, when making the agreement, that an employee's ability to progress a dispute under the procedure would come to an end when he or she ceased to be an employee. Such an interpretation would mean that even a dispute which progresses to a full hearing and a reserve decision of the Commission, would be incapable of finalisation in the event of termination of employment. We see no basis to find that an employee who commences Step 4 while still employed can follow the step through to the end regardless of termination, yet an employee who does not reach Step 4 while still employed is precluded from accessing the final step in the process. If such serious consequences were intended, it would reasonably expected that a clearer limitation would be written into the agreement of the parties. 1

Consideration of the jurisdictional question

[45] Ordinarily, the Commission would settle or resolve a dispute under s.739 of the Act by determining what rights and obligations should be brought into existence to settle the dispute before it.

[46] Thus, the Commission as a matter of some routine, albeit often indirectly and/or in an understated manner, would create rights and obligations that affect the employees and the employer concerned.

[47] The Commission is not restricted as it might be in exercising arbitral powers when it is exercising powers that arise from an agreement between the relevant parties to submit their disputes as to their legal rights and liabilities for resolution to the Commission (by way of a dispute resolution procedure under an agreement). This is because the Commission in so doing is exercising a power of private arbitration, vested in it by the parties’ agreement, and is not otherwise requiring the parties to submit to binding procedures and enforceable outcomes in relation to the determination of legal rights and liabilities (as might a court).

[48] This, in effect, was a consequential finding of the judgment of the High Court in Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645 (15 March 2001) (“Re: CFMEU”) (discussed further below).

[49] But this is not to say that the private arbitration power so vested in the Commission is without limitation either by its own terms (by qualifying the scope of the power in some manner) or in a more fundamental, constitutional sense.

[50] In this particular situation before me, no employees are currently employed and there can be no employees employed under the Agreement in the future either. The Agreement cannot any longer employ any persons in relation to the scope of works or in the classifications to perform such work; the Agreement no longer applies to any employee under its own terms, and cannot do so in the future.

[51] Indeed, the employer as it was cannot carry out any scope of works on any sites as the scope of works is completed and the relevant sites have been handed back to the owner. The employer’s business has concluded, and it cannot employ anyone else for the purposes of the Agreement, which have been fulfilled.

[52] On the factual case, the circumstances before me are significantly different from those which were before the full benches in Re: ING Administration and Re: Telstra, cited above.

[53] Moreover, the majority in Re: ING Administration (subsequently adopted by the Full Bench in Re: Telstra - see PN 13) did not confer an unfettered power upon the employer and the employer to agree to the scope of the power with which they vested the Commission. That is, the majority in Re: ING Administration (see PN13) expressly relied upon the judgment of the High Court in Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645 (15 March 2001):

The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect.

[54] On the factual case, then, the only determination I am capable of making, therefore, is a determination in respect of past employees, and more specifically whether there has been a contravention of a term of the Agreement for the purposes of s.50 of the Act or whether there has been a contravention of the National Employment Standards under s.44 of the Act in relation to those past employees.

[55] A determination (or declaration) of this character amounts to an exercise of judicial power. The Commission cannot exercise judicial power.

[56] In the judgment of the High Court of Australia in Re Ranger Uranium Mines Proprietary Limited and Ors; Ex parte Federated Miscellaneous Workers’ Union of Australia (1987) 163 CLR 656, the High Court held that:

In our view the fact that the Commission is involved in making a determination of matters that could have been made by a court in the course of proceedings instituted under s 119 of the Act does not ipso facto mean that the Commission has usurped judicial power, for the purpose of inquiry and determination is necessarily different depending on whether the task is undertaken by the Commission or by a court. The purpose of the Commission's inquiry is to determine whether rights and obligations should be created. The purpose of a court's inquiry and determination is to decide whether a pre-existing legal obligation has been breached, and if so, what penalty should attach to the breach. The power of inquiry and determination is a power which properly takes its legal character from the purpose for which it is undertaken. Thus inquiry into and determination of matters in issue is a judicial function if its object is the ascertainment of legal rights and obligations. But if its object is to ascertain what rights and obligations should exist, it is properly characterized as an arbitral function when performed by a body charged with the resolution of disputes by arbitration. 2

[57] It is true that the power of private arbitration vested in the Commission (or any nominated third party) by virtue of a disputes clause is not judicial power as considered by the courts. The judgment of the High Court in Re: CFMEU was to this point: a power of private arbitration reasonably may provide for a third party to determine legal rights between parties as they may arise from past events or actions. 3

[58] But even if I take this into account, difficulties arise as to the actual nature of the determinative power the Commission is being asked to exercise in the context of the particular factual circumstances now before it.

[59] As I mentioned above, given there are no employees to whom the Agreement any longer applies and there will be no employees employed under the Agreement as the purpose for the operation of the Agreement has concluded, the determination before me concerns an effective declaration of a contravention of the Act, which is an inquiry of a legal character and for a legal purpose (ultimately enforcement). Furthermore, the context to which the disputes clause was to apply has fundamentally altered - the application clause no longer applies and the scope of works has concluded.

[60] Perhaps also pertinent to this matter, therefore, is the judgment in Precision Data Holdings Ltd v Wills (1991) 173 CLR 167, in which the Full Court, concerned as it was with the distinction between judicial and administrative power, found that:

[T]he making of binding declarations of right by way of adjudication of disputes about rights and obligations arising from the operation of the law upon past events or conduct is a classical (sic) instance of the exercise of judicial power. 4 [My emphasis]

[61] In essence then, an arbitral outcome in the context of this particular dispute, regardless of the origin of the dispute settling power itself, would amount to a determination or declaration as to whether in respect of past employees there had been a contravention for the purposes of Part 4-1 of the Act in relation to an enterprise agreement and the National Employment Standards, which unequivocally is a judicial function. This is so for the purposes of dispute set out above, and in respect of any other asserted breaches of the Agreement.

Conclusion

[62] In my view then, I would be acting beyond power if I were to make the determination sought by the CEPU, and I must therefore dismiss the application, the subject of which is rightly the province of the courts.

SENIOR DEPUTY PRESIDENT

Appearances:

Ms P. Rogers, of the CEPU

Mr M. Osborne, of Norton Rose Fulbright, for the Respondent

Hearing details:

Brisbane

2014

27 November

 1   ING Administration Pty Ltd v Ramsin Jajoo PR974301, 4 December 2006 at PN54.

 2   Re Ranger Uranium Mines Proprietary Limited and Ors; Ex parte Federated Miscellaneous Workers’ Union of Australia (1987) 163 CLR 656 at 666.

 3   See also University of Western Sydney v Prof Richard Fletcher [2009] AIRCFB 368 at PN24.

 4   Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188.

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