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

Alleged dispute regarding the meaning of ‘redundancy’ in an enterprise agreement - the concept of ‘ordinary and customary turnover of labour’ not relevant to the entitlement to redundancy under the agreement.

[1] The issue before the Commission is the proper construction of clause 6.3 of the Spotless National Maintenance Enterprise Agreement 2014 (the Agreement) and, specifically, whether the concept of ‘ordinary and customary turnover of labour’ is relevant to the entitlement to redundancy pay under clause 6.3.

[2] Before turning to the terms of clause 6.3 of the Agreement and the parties’ contentions we propose to briefly set out the background to this matter.

[3] Spotless Facility Services Pty Ltd (Spotless) is in the business of providing facility management services, including property management, maintenance, waste management, grounds maintenance, security, catering/food services, and cleaning services, through commercial contracts, to a diverse base of customers which have outsourced such services including corporations, government departments, public entities and municipal councils. Spotless provides these services in a range of industries across Australia, including health, education, leisure, sport, entertainment and defence.

[4] Since 2000, Spotless has held various contracts with the Australian Government (Department of Defence) under which it has provided services, such as garrison support and/or comprehensive maintenance services, at several Australian Defence Force (ADF) sites across Australia. Historically the duration of these contracts has varied from 6 years to 10 years, after which time Spotless must re-tender for work.

[5] Following a tender process, Spotless was appointed to provide maintenance services to the Commonwealth Government (Department of Defence) at the following sites:

● RAAF Base Pearce, Bullsbrook, Western Australia;


● Campbell Barracks, Swanbourne, Western Australia;


● Fleet Base West, Garden Island, Western Australia;


● RAAF Base, Darwin, Northern Territory;


● Larrakeyah Barracks, Northern Territory;


● Robertson Barracks, Northern Territory;


● RAAF Base, Curtin, Western Australia; and


● RAAF Base, Tindal, Northern Territory.

[6] Spotless was contracted to provide maintenance services at these sites until 30 September 2014 (the Contract).

[7] Prior to the expiration of the Contract, Spotless tendered for a new contract to provide the services to the Department of Defence for a 6 year period (with an option for a further 4 years) commencing from 1 October 2014, but was unsuccessful in obtaining the new contract. As a result of the expiry of the Contract, Spotless terminated the employment of its 78 employees who were providing maintenance services at the Western Australian and Northern Territory ADF sites, with effect from 30 September 2014. These 78 Spotless employees were covered by the Agreement.

[8] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Electrical Division) (CEPU) and Construction, Forestry, Mining, and Energy Union (Construction and General) (CFMEU) are covered by the Agreement. On 2 September 2014 the AMWU and the CFMEU lodged a s.739 Dispute Application in which they contend that the 78 employees are entitled to a redundancy payment pursuant to clause 6.3 of the Agreement. On 11 September 2014, Spotless lodged a s.739 Dispute Application in which it contends that it is not required to make a redundancy payment to any of the 78 employees because the termination of their employment, as a result of the expiration of the Contract, was due to the ordinary and customary turnover of labour. On 11 September 2014 Spotless also lodged a s.120 Variation of Redundancy Pay Application. The s.120 application will only be agitated if the Full Bench were to determine, contrary to the submissions of Spotless, that the termination of employment by reason of the expiration of the Contract constituted a ‘redundancy’ for the purpose of clause 6.3 of the Agreement.

[9] It is common ground that the Commission is empowered to determine the disputed question by arbitration, pursuant to clause 3.1.2(c) of the Agreement and s.739(4) of the Fair Work Act 2009 (Cth) (the FW Act).

[10] On 8 October 2014, the parties lodged a joint document setting out the proposed question for arbitration by the Commission, namely whether the concept of ‘ordinary and customary turnover of labour’ is relevant to the entitlement to redundancy pay under clause 6.3 of the Agreement.

[11] The resolution of the controversy before the Commission depends upon the meaning to be attributed to clause 6.3 of the Agreement, specifically, the meaning of the term ‘redundancy’.

[12] The principles relating to the construction of enterprise agreements have recently been the subject of consideration by a Full Bench of the Commission in The Australasian Meat Industry Employees Unions v Golden Cockerel Pty Limited 1 (Golden Cockerel). In that matter the Full Bench distilled the following principles for the decided cases:2

“1. The Acts Interpretation Act 1901 (Cth) does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[13] No party took issue with the principles set out in Golden Cockerel.

[14] Before turning to the parties’ contentions we propose to say something about the legislative context.

[15] Spotless submits that the objects of the FW Act and of Part 2.4 favour a construction of industrial instruments that will operate fairly to both sides and foster a co-operative workplace environment. 3 We accept that this is so. The Agreement was made pursuant to s.182 of the FW Act and was approved by the Commission pursuant to s.186. This is a relevant contextual consideration, as Kirby J observed in Amcor Limited v Construction, Forestry, Mining and Energy Union & ors (Amcor) (omitting footnotes):4

“[64] Also set out in other reasons, or described there, are the provisions of the Act that constitute the legislative background against which the Agreement was made and certified. It was a background that would have been in the minds of both parties (Amcor and its agent on the one side and the Union on the other) who negotiated the Agreement and hammered out its terms. The legislative background is therefore part of the common knowledge attributable to the parties to the Agreement. So far as it is relevant, it would ordinarily be assumed that, in agreeing as they did, the parties intended the Agreement to take its place within the industrial setting created by the Act.

[65] To some extent, that industrial setting also incorporates not only the provisions of the Act dealing with the special problem of redundancy in employment under federal awards and certified agreements but also consideration by courts and industrial tribunals during the past three decades of the issue of redundancy in employment.”

[16] It is also relevant to observe that the scheme of the FW Act encourages enterprise bargaining underpinned by a guaranteed safety net of minimum terms and conditions established by the National Employment Standards (the NES), modern awards and modern minimum wage orders (see generally ss3(b) and (f); s55; s56; s61; s134(1)(b); s186(2)(c) and (d); and s193).

[17] The NES is set out in Part 2-2 of the FW Act. ‘Redundancy pay’ forms part of the NES (ss119-123) and s.119 defines the circumstances in which an employee is entitled to redundancy pay. Section 119 relevantly provides:

1. An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer. (emphasis added)

[18] Sub-section (2) of s.119 sets out a table specifying the amount of redundancy pay, calculated by reference to the employee’s period of service.

[19] Section 55 of the FW Act governs the interaction between the NES and a modern award or enterprise agreement, it provides as follows:

Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56).

[20] Section 55 provides that an enterprise agreement must not exclude any provision of the NES 5 but it may include terms that are ancillary to or incidental to the operation of an entitlement of an employee under the NES or a term that supplements the NES.6

[21] We now turn to the parties’ contentions.

[22] The CEPU and the AMWU contend that the answer to the disputed issue is no, because:

(i) the Agreement does not distinguish between redundancies on the basis they are the result of the ordinary and customary turnover of labour; and

(ii) the NES exclusion of redundancies which are the product of the ‘ordinary and customary turnover of labour’ does not operate in respect of entitlements under the Agreement.

[23] The primary submission advanced on behalf of the CEPU and the AMWU is encapsulated at paragraphs [7] and [8] of their written submissions:

“Construction is an exercise confined by the text of the instrument. It is wrong in principle to commence the task of construction by reference to some a priori standard of proper industrial practice or other extrinsic matters. In other words, the present case does not involve any inquiry as to whether redundancies which result from the loss of contract should be treated differently to other redundancies or whether other instruments draw a distinction. The question is whether this Agreement in fact distinguishes between redundancies on that basis.

The words “customary and ordinary turnover of labour” do not appear in the Agreement. If the parties had intended to exclude from the redundancy provisions retrenchments resulting from the customary and ordinary turnover of labour it would have been a simple matter for them to do so. They did not. The parties’ manifest intention, as recorded in the text of the Agreement, was to apply severance pay benefits to all redundancies without distinction. That manifest intention must be vindicated.”

[24] The CFMEU in its response submissions advanced similar propositions to those advanced by the other unions. The CFMEU’s argument is summarised at paragraph [5] of its response submissions as follows:

“5 The CFMEU submits that the concept of “ordinary and customary turnover of labour” is not relevant to the entitlement to redundancy pay under clause 6.3 of the Spotless National Maintenance Enterprise Agreement 2014 because:

5.1 the ordinary meaning of “redundancy” does not exclude terminations by reason of
“ordinary and customary turnover of labour”;

5.2 the Agreement does not contain any words corresponding to such an exclusion;

5.3 the Agreement incorporates by reference the definitions of “redundancy” from 2 modern awards that are inconsistent with an exclusion of terminations due to ordinary and customary turnover of labour;

5.4 the legislative framework established by the Act favours a construction of the
Agreement that is not encumbered by such an exclusion;

5.5 the other provisions of the Agreement that utilise the term “redundancy” are inconsistent with that term being limited in the way suggested;

5.6 the existence of Modern Awards that provide redundancy payments that are inconsistent with such an exclusion establish that there could be no common understanding of “redundancy” being limited by those circumstance.”

[25] Spotless contends that the term ‘redundancy’ in clause 6.3 takes its meaning from s.119 of the FW Act and from the interpretation of that term by Australian industrial tribunals so as to exclude a termination of employment arising from the ‘ordinary and customary turnover of labour’. Spotless concludes its submissions as follows, at paragraph [79],:

“The nature of the 2014 Enterprise Agreement, the manner of its expression (in particular, the absence of a definition of “redundancy”), the incorporation of the modern awards, the legislative context in which it operates and the industrial purpose it serves, combine to suggest that the meaning of “redundancy” in clause 6.3 should be construed to exclude the ordinary and customary turnover of labour.”

[26] We now turn to the proper construction of the Agreement. For the reasons which follow we reject Spotless’ contention as to the proper construction of clause 6.3 and have concluded that the concept of the ‘ordinary and customary turnover of labour’ is not relevant to the entitlement to redundancy pay under clause 6.3. We begin with the terms of the provision in contention. Clause 6.3 of the Agreement provides as follows:

6.3 Redundancy

6.3.1 For any employee whose employment with the Company commenced prior to 1 November 2005 the following severance pay scale shall apply.

6.3.2 An employee whose employment is terminated by reason of redundancy shall be entitled to the following amounts of severance pay in respect of a continuous period of service:

Less than 3 months = Nil

3 to 6 months = 1 week’s pay

More than 6 months = 3 weeks’ pro-rata per year of service

Severance pay under this clause shall be capped at 33 weeks’ pay.

6.3.3 For any employee whose employment with the Company commences after 1 November 2005 the following severance pay scale shall apply.

6.3.4 Severance

An employee whose employment is terminated by reason of redundancy shall be entitled to the following amounts of severance pay in respect of a continuous period of service:

Period of Continuous Service Severance Pay

1 year and less than 2 years 4 weeks’ pay

2 years and less than 3 years 6 weeks’ pay

3 years and less than 4 years 7 weeks’ pay

4 years and less than 5 years 8 weeks’ pay

5 years and less than 6 years 10 weeks’ pay

6 years and less than 7 years 11 weeks’ pay

7 years and less than 8 years 13weeks’ pay

8 years and less than 9 years 14 weeks’ pay

9 years and less than 10 years 16 weeks’ pay

10 years and over 12 weeks’ pay

6.3.5 In order to avoid retrenchments, the Company may, on the giving of 4 weeks’ notice to an employee, reasonably relocate the employee to another work location. Reasonable relocation is relocation that does not require a change of residence or more than an additional hour of total travel time to and from work. Any disputes that arise in relation to the reasonableness of a requirement to relocate will be resolved through the dispute resolution procedure in clause 1.9 of this agreement.

6.3.6 Alternative Employment

The Company in a particular redundancy case may make application to the Commission to have the severance pay prescription varied if the Company obtains acceptable alternative employment for an employee.

6.3.7 Transfer to Lower Paid Duties

An employee whose job has become redundant may apply for any alternative job with the Company. Where an employee whose job has become redundant accepts an offer of an alternative job by the Company the rate of pay for which is less than the rate of pay for the former position, the employee shall be entitled to the same period of notice of the date of commencement of work in the new position as if the employees employment had been terminated, and the Company may opt to make payment in lieu thereof of an amount equal to the difference between the former rate of pay and the new lower rate for the number of weeks of notice still owing.

[27] Clause 6.3 is headed ‘Redundancy’. Clause 6.3.2 and 6.3.4 provide for the payment of severance pay to ‘an employee whose employment is terminated by reason of redundancy’. Clause 6.3.6 provides that ‘the Company in a particular redundancy case may make application to the Commission to have the severance pay prescription varied if the Company obtains acceptable alternative employment for an employee’ and clause 6.3.7 provides that ‘an employee whose job has become redundant may apply for any alternative job with the Company.’

[28] Importantly, clause 6.3 does not contain a provision that excludes the entitlement to redundancy pay in circumstances where an employee’s employment is terminated due to ‘the ordinary and customary turnover of labour’.

[29] Clause 1.5 of the Agreement is also relevant, it provides as follows:

1.5 Awards and Appendices

1.5.1 This Agreement is underpinned by the following Awards to the extent of the scope of work and geographical area covered in each:

Manufacturing and Associated Industries and Occupations Award 2010

Electrical, Electronic and Communications Contracting Award 2010

Plumbing and Fire Sprinklers Award 2010

Building and Construction General On-site Award 2010

Joinery and Building Trades Award 2010

1.5.2 It is intended by the parties that the terms of the awards described in clause 1.5.1 be incorporated into the agreement, having regard to the scope of those awards. The terms of this Agreement and Appendices shall prevail over the terms of the Award(s) to the extent of any express inconsistency. The appendices to this agreement which prescribe conditions of employment for work performed in the areas within the scope of those appendices shall prevail over the agreement and the awards to the extent of any inconsistency. (emphasis added)

[30] Subclause 1.5.2 incorporates the terms of the 5 awards (the Awards) specified in clause 1.5.1 into the Agreement. That subclause also provides that the terms of the Agreement prevail over the terms of the Awards ‘to the extent of any express inconsistency’. It is not entirely clear what ‘express inconsistency’ is intended to mean though it plainly is a different concept to ‘inconsistency’ simplicitor as that word is used later in subclause 1.5.2, without the descriptor ‘express’.

[31] The evidence surrounding the negotiation of the Agreement is of little assistance. Negotiations for the current Agreement commenced in October 2013. The negotiations were protracted. The Agreement was approved by employees in approximately April 2014 and approved by the Commission on 6 May 2014. In the course of negotiating the Agreement there was no discussion between the parties in relation to the meaning of the term ‘redundancy’. 7 The only discussion about redundancy, in the course of negotiating the Agreement, was that the Unions made a claim for severance pay entitlements to be paid to industry funds. This claim was rejected by Spotless. In that context there was also discussion about acceptable, alternative employment, but the parties did not discuss the definition of ‘redundancy’ in the course of the negotiations.

[32] We also note that previous industrial agreements contain a term substantially the same as clause 6.3 of the Agreement: see the Spotless P&F Pty Ltd (Maintenance) Enterprise Agreement 2005 (certified on 23 February 2006 PR968706), Spotless P&F Pty Ltd (Maintenance) Enterprise Agreement 2005- as varied in 2008 (18 March 2009, PR98614) and the Spotless National Maintenance Enterprise Agreement 2012-2013 (certified on 18 January 2006 [2013] FWCA 434). As is the case in the Agreement, there was no definition of the term ‘redundancy’ in any of these previous enterprise agreements.

[33] There are four broad limbs to Spotless’ contention as to the proper construction of clause 6.3,:

• the Agreement context;



• the legislative context;



• the industrial context; and



• the commercial context.

[34] We propose to deal with each of these submissions in turn.

(i) The Agreement context

[35] Spotless relies on the terms of clause 1.5 of the Agreement and the incorporation of particular provisions from the Awards into the Agreement in support of its contention as to the proper construction of clause 6.3.

[36] As we have noted, clause 1.5 incorporates the terms of 5 awards into the Agreement.

[37] Clause 23 of the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing Award) deals with redundancy in the following terms:

“Redundancy pay is provided for in the NES.”

[38] The Electrical, Electronic and Communications Contracting Award 2010 and the Joinery and Building Trades Award 2010 contain a provision in similar terms (at clauses 15.1 and 17.1 respectively).

[39] It is convenient to deal with these three awards first, before turning to the redundancy provisions in the other two incorporated awards.

[40] Spotless relies on the incorporated redundancy term in the Manufacturing Award, set out above, in support of its proposed construction of clause 6.3. Two points are advanced in this regard.

[41] First, it is submitted that having regard to clause 1.5.2 of the Agreement the redundancy term in the three awards are incorporated into the Agreement and hence NES redundancy provisions are incorporated into the Agreement.

[42] We reject this submission. It is predicated on the erroneous assumption that the redundancy term in the three Awards incorporates the NES redundancy provisions into the relevant awards. On its face the provision in question is simply a notation to the effect that the NES makes provision for redundancy pay. It is not intended to create any award obligation in relation to redundancy pay.

[43] The second point advanced by Spotless is that by virtue of the incorporated term clause 6.3 of the Agreement must be read consistent with s.119 of the FW Act. We reject this submission also.

[44] As we have already pointed out, the NES redundancy provisions are not incorporated into the three awards. Therefore, the NES redundancy provisions are not incorporated by reference into the Agreement by operation of clause 1.5. As the NES redundancy provisions are not terms of the Agreement through incorporation and for the reasons given later, there is no basis for reading clause 6.3 of the Agreement consistently with (or subject to the limitation in) s.119 of the FW Act.

[45] The other two awards incorporated into the Agreement deal with redundancy differently. Clause 17 of the Building and Construction General On-site Award 2010 (the Building On-site Award) provides as follows:

[46] Clause 18 of the Plumbing and Fire Sprinkler Award 2010 (the Plumbing Award) is in similar terms.

[47] Spotless submits that insofar as the Building On-Site Award and the Plumbing Award contain an industry specific redundancy clause, such a clause cannot operate alongside clause 6.3 in the Agreement as they are inconsistent with clause 6.3. On this basis it is submitted that these award clauses cannot affect the construction argument.

[48] The alleged inconsistency between the two award provisions and clause 6.3 is said to be because the award provisions establish an industry specific redundancy scheme which deals with employers paying into a fund whereas clause 6.3 provides for the employer to make payment to redundant employees. Further, it is asserted that the parties to the Agreement intended that there would be one redundancy scheme flowing across the operations of Spotless, that is the scheme set out in clause 6.3.

[49] We are not persuaded that the redundancy term in these two awards are expressly inconsistent with the terms of clause 6.3. Contrary to the submission advanced on behalf of Spotless the award clauses do not require the employer to make contributions to a redundancy pay scheme. Clause 17.4(a) of the provision in the Building On-site Award makes it clear that ‘[a]n employer may offset an employee’s redundancy pay entitlement in whole or in part by contributions to a redundancy pay scheme’. Hence the making of contributions to a redundancy pay scheme is merely one way that an employer may choose to meet its redundancy pay obligations. It seems to us that Spotless may also meet its obligations by making the severance payments to employees covered by that award.

[50] Nor are we persuaded by the assertion that the parties to the Agreement intended that there would only be one redundancy scheme across Spotless, namely the scheme set out in clause 6.3 of the Agreement. No substantive argument was advanced in support of this assertion and it is inconsistent with the terms of clause 1.5 of the Agreement. It is clear from subclause 1.5.2 that the parties intended that ‘the terms of the awards ... be incorporated into the agreement, having regard to the scope of those awards’ (emphasis added). The expression ‘having regard to the scope’ of the relevant awards clearly means that the operation of the incorporated award terms will be confined by the scope of the relevant award. Such a provision necessarily means that different terms may apply to different sections of the Spotless workforce.

[51] Contrary to Spotless’ submission the redundancy clause in these two awards is relevant to the construction argument. This is so because, as each clause makes clear, the clause includes a definition of redundancy (at cl 17.2), which does not include the exclusion for which Spotless contends, and the clause is an industry specific redundancy scheme (within the meaning of s.12 of the FW Act) hence the NES redundancy pay provisions do not apply (see s.123(4)(b)). There is no ‘express inconsistency’ (within the meaning of clause 1.52 of the Agreement) between the definition of redundancy in the incorporated awards and the terms of the Agreement - because clause 6.3 of the Agreement does not contain a definition of redundancy. In these circumstances the definition of redundancy in the incorporated awards applies to the employees covered by the Agreement who fall within the scope of those awards.

[52] The effect of clause 1.5 of the Agreement is to incorporate by reference the redundancy provisions found in the Building On-Site Award and the Plumbing Award into the Agreement and employees to whom the Agreement applies who also fall within the scope of those awards are thereby covered by those provisions.

[53] Consequently s.119 of the FW Act does not apply to those employees and is not relevant to determining the redundancy entitlement of those employees under clause 6.3 of the Agreement.

[54] It follows that at least in relation to employees with the scope of the Building On-site Award and the Plumbing Award are concerned the concept of ‘ordinary and customary turnover of labour’ derived from the NES is irrelevant to their entitlement to redundancy pay under the Agreement.

(ii) The legislative context

[55] Spotless submits that the redundancy provisions in the NES provide a further contextual consideration which supports the construction for which it contends.

[56] By virtue of s.55 the parties to an enterprise agreement cannot exclude the operation of the redundancy provisions in s.119. The parties are permitted to include ancillary or supplementary terms in their enterprise agreement. Spotless submits that in the present case the parties have done so, but only to the extent that they have made provision for employees who commenced employment prior to 1 November 2005 (cl.6.3.1), re-location of employees in order to avoid ‘retrenchments’ (cl.6.3.5), alternative employment (cl.6.3.6) and transfer to lower paid duties (cl.6.3.7).

[57] Specifically, Spotless contends that the Agreement does not displace the meaning of ‘redundancy’ in s.119 of the FW Act. That is to say, the parties have not provided a ‘supplementary’ or ‘ancillary’ definition of ‘redundancy’ in the Agreement and nor have they excluded the concept of ‘redundancy’ in s.119(1) of the FW Act, which, it is submitted, continues to apply by virtue of s.55 of the FW Act.

[58] We do not find this submission persuasive. As we have mentioned, the scheme of the FW Act encourages enterprise bargaining underpinned by a guaranteed safety net of minimum terms and conditions established by, among other things, the NES. We see no warrant for implying into the Agreement the terms of s.119(1)(a) which limit an employee’s entitlement to redundancy pay to situations where the termination of their employment is not ‘due to the ordinary and customary turnover of labour’.

[59] The NES set a minimum standard, they are not a code. It is clearly contemplated that enterprise agreements may supplement the NES in the manner contemplated by s.55(4). In this instance the parties have supplemented the NES provision by providing that all employees ‘whose employment is terminated by reason of redundancy’ are entitled to the payment of severance pay as prescribed in subclauses 6.3.2 and 6.3.4 depending on the commencement date of their employment. The structure of clause 6.3 is quite different to the terms of s.119 of the FW Act. Subclauses 6.3.2 and 6.3.4 set out the severance payments to which an employee who has been terminated by reason of redundancy are entitled. In other words, the entitlement to severance pay and the quantum of that entitlement are dealt with in the same subclauses. Section 119 is quite different. The entitlement to redundancy pay is dealt within s.119(1) whereas the quantum of the entitlement is dealt with in s.119(2).

[60] Further, s.119(1) does not define ‘redundancy’, rather it sets out the limited circumstances in which an employee becomes entitled to redundancy pay under the NES. Clause 6.3 of the Agreement also does not set out a definition of ‘redundancy’ but rather sets out the levels of severance entitlement to which an employee becomes entitled if that employee’s employment is terminated by reason of redundancy. Both the quantum of the entitlement and the class of persons to whom the entitlement is payable is expanded by clause 6.3 of the Agreement when compared to the NES, but neither provision defines redundancy.

[61] Definitions of redundancy are to be found in two of the incorporated instruments discussed earlier. Those definitions are not limited to the circumstances in which a redundancy pay entitlement will arise under the NES.

[62] We therefore see no persuasive reason to reading down the phrase ‘whose employment is terminated by reason of redundancy’ in clause 6.3 of the Agreement by limiting the entitlement only to the class of persons entitled to redundancy pay found in s.119(1)(a). As we have already indicated the latter does no more than scope out the class of persons to whom redundancy pay under the NES must be made. It does not define ‘redundancy’ and is therefore of little assistance in identifying a person ‘whose employment is terminated by reason of redundancy’ within the meaning of clause 6.3 of the Agreement.

(iii) The Industrial context

[63] The meaning of ‘redundancy’ in s.119 of the FW Act is also submitted to be consistent with the redundancy standard set by the Commission in the Termination, Change and Redundancy Case 8 (‘TCR Case’) and the Supplementary TCR Case (‘Supplementary TCR Case’). The redundancy standard set down by the Full Bench in the TCR Case is that redundancy provisions do not apply to termination of employment due to the ordinary and customary turnover of labour. In the Supplementary TCR Case the Full Bench of the Commission stated:9

“The employers submitted that the redundancy provisions should not apply to termination of employment “associated with the general turnover of labour or a seasonal downturn within the industry or reclassification or alteration of working conditions”…

...it was not our intention that the redundancy provisions should apply to the “ordinary and customary turnover of labour”; an expression used by Mr Justice Fisher in his decision related to the Employment Protection Act in New South Wales.

….we did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of business. ….In the circumstances, we are prepared to provide that the redundancy provisions shall not apply where the termination of employment is “due to the ordinary and customary turnover of labour...”

[64] Spotless submits that the term ‘redundancy’, in the present case, arises in an industrial instrument and it must take its colour from that industrial context. It is submitted that the term ‘redundancy’ is understood in the industrial context as excluding termination of employment based on the ‘ordinary and customary turnover of labour’ and that the circumstances of the present case accord with Amcor in which the High Court approached the meaning of a clause in an industrial agreement by reference to the provisions in the FW Act and the industrial context, including the TCR Case. 10

[65] We accept the proposition that in Amcor the High Court had regard to the industrial context, including the TCR Case, in construing the industrial instrument which was the subject of those proceedings. It also had regard to the legislative context. However it must also be accepted that Amcor turned ultimately on the meaning of the phrase ‘should a position become redundant and an employee subsequently retrenched’ contained in the relevant industrial instrument understood against that context. The language used in the Agreement at issue in this dispute is in material respects different to that employed in the industrial instrument the subject of the decision in Amcor. Elements of the context considered in Amcor are also different to that which currently pertains, notably the legislative context, and the rules relating to when a business is ‘transmitted or transferred’ have altered in some significant respects. It is clear from the joint judgement of Gummow, Hayne and Haydon JJ and from the judgement of Kirby J that the transmission of business regime then in place was an important contextual consideration in construing the meaning of ‘business’ and ‘position’ in deciding, on the facts in Amcor that the positions in the business conducted by Amcor and continued to be conducted by PaperlinX Ltd were not redundant. 11

[66] The meaning of the word ‘redundancy’ is not fixed and the term will take colour from its context. 12 However, in any relevant context it is the abolition of a position which leads to that position being redundant. The cause of the abolition of the position – whether business restructure, technological advance, loss of contract/ordinary turnover or otherwise – is a separate matter, albeit one which may determine the entitlements of the redundant employee. Indeed the presence of the express exclusion in s.119 (and in the predecessor TCR case) demonstrates that the abolition of a position as a result of ordinary and customary turnover is a redundancy; albeit one that does not give rise to an entitlement to redundancy pay. The exclusion would otherwise be entirely otiose. As we have earlier indicated, s.119 does not define ‘redundancy’. It merely sets out the circumstances in which an employee will or will not have an entitlement to redundancy pay under the NES. Doubtless employees who fall within the class have been dismissed by reason of redundancy, but ‘redundancy’ is not thereby so narrowly confined. Further, although we accept that the industrial contextual considerations identified by Spotless lend some support to its contention, other industrial contextual considerations cannot be ignored. There is firstly the incorporation of the redundancy provisions of the Building On-Site Award and the Plumbing Award which each carry a definition of redundancy which is contrary to the meaning of redundancy contended for by Spotless.

[67] Secondly, as has been pointed out by the AMWU and the CEPU, Spotless (in its various iterations including the corporate entity involved in this dispute) has made a number of agreements, some under the FW Act, which contain provisions relating to redundancy and which expressly exclude severance pay entitlements in the case of ‘ordinary and customary turnover of labour’ including loss of contract. 13

[68] These contextual considerations diminish the force the general TCR formulation as a contextual consideration might otherwise have in construing clause 6.3 of the Agreement.

[69] In the circumstances we are not persuaded that the industrial context mandates the result that the phrase ‘an employee whose employment is terminated by reason of redundancy’ in clause 6.3 of the Agreement should be read down by reference to the unexpressed exclusion of ordinary and customary turnover of labour.

(iv) Commercial context

[70] Spotless also points to the fact that at the time the Agreement was made, the parties knew that Spotless’ business was dependent upon limited term commercial contracts with third parties. This is said to be an objective fact to which the Full Bench can have regard in construing the meaning of clause 6.3. 14

[71] That the parties were aware of the commercial context and yet did not take the step of expressly excluding the ending of a commercial contract from the entitlement to severance pay under the Agreement tells against the narrow construction of the Agreement contended for by Spotless.

Conclusion

[72] For the reasons given above the answer to the question referred to us for consideration is no. The dispute will otherwise be dealt with by Commissioner Blair.

PRESIDENT

Appearances:

Mr Fagir of Counsel and Mr Nguyen for the AMWU and CEPU, Mr Borg for the CFMEU

Mr Parry QC with Ms Siemensma of Counsel and Ms Caylock for Spotless Facility Services Pty Ltd

Hearing details:

Melbourne

22 December 2014

 1   [2014] FWCFB 7447

 2   Ibid at [41]

 3   Amcor v CFMEU (2005) 222 CLR 241 at 273 [103] per Kirby J.

 4   Amcor at 261-262

 5   Section 55(1) of the FW Act.

 6   Section 55(4) of the FW Act.

 7   Witness Statement of John Daniel Douglas, Exhibit Spotless 1 at paragraphs 23-24

 8   (1984) 8 IR 34

 9   (1984) 9 IR 115

 10   The approach in Amcor was also adopted by the Full Bench in Svitzer Australia Pty Ltd v Maritime Union of Australia, The Northern New South Wales Branch [2011] FWAFB 7947. In that case the Full Bench concluded at [70] that the relevant redundancy clause must be read in the context of the Act.

 11   See (2005) 222 CLR 241at [56] - [57] per Gummow, Hayne and Heydon JJ and at [111] - [113] per Kirby J.

 12   Amcor Limited v CFMEU (2005) 222 CLR 241.

 13   See Outline of Submission in Reply for the AMWU and CEPU at [5] and schedule A

 14   In the Award Simplification Decision – Nationwide/AWU and LHMU Australian Defence Forces Services Consent Award 1992 (PR904940, Senior Deputy President Cartwright) the Commission varied the award to replace the words “arising from the loss or termination of a contract held by the employer” with the test case standard, “due to the ordinary and customary turnover of labour” and observed at [27] that “it may be that Spotless can demonstrate that, in the context of its business, dismissals arising from the loss of a contract are, in fact, dismissals due to the ordinary and customary turnover of labour.”

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