DECISION

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

John Illingworth
v
Futuris Automotive Interiors Pty Ltd T/A Futuris Automotive
(C2017/1163)

FUTURIS AUTOMOTIVE INTERIORS (SOUTH AUSTRALIA) WORKPLACE AGREEMENT 2013

[AE406657]

Dispute about matters arising under an enterprise agreement and the NES – agreed power to arbitrate – notice and redundancy provisions – whether actual notice taken into account when applying the package of redundancy entitlements – approach to proper construction considered – common objective intention to be ascertained – previous practice not relevant in this case – intention arises from the particular and contrasting approach in relevant provisions when read in context – proper application of agreement determined.

1. The dispute

[1] This decision concerns the determination of a dispute about the proper application of the Futuris Automotive Interiors (South Australia) Workplace Agreement 2013 (the Enterprise Agreement). That instrument is an enterprise agreement approved by the Commission under the Fair Work Act 2009 (the FW Act). The matter is before the Commission as a result of an application by Mr John Illingworth under s.739 of the FW Act and relies upon clause 7.4 Dispute/Grievance Resolution of the Enterprise Agreement.

[2] Mr Illingworth is an employee of Futuris Automotive Interiors Pty Ltd (Futuris) and both of these parties are covered by the Enterprise Agreement. Mr Illingworth, along with some 116 of his colleagues, will become redundant in October 2017 when the South Australian operations of Futuris close down as part of the loss of the motor vehicle manufacturing industry in Australia.

[3] The dispute arises from these redundancies and concerns the impact of a formal period of notice, which Futuris will provide to the employees concerned, upon the total redundancy entitlements. In particular, whether the period of notice, which the employees will work, is included within the combined notice and severance payments package that is set out for redundancies, or alternatively, operates separately to retain the full package entitlement. This does not involve the determination as to whether generally, notice in a redundancy situation may be given or must be paid in lieu. Rather, the matter involves consideration of the particular provisions of clauses 3.4 and 3.5 of this Enterprise Agreement, when considered in context. In that regard, I observe that in terms of the interaction between the various provisions, the instrument is not, for the most part, clearly drafted.

[4] Following a process in line with clause 7.4 of the Enterprise Agreement, the parties have agreed that the Commission has the jurisdiction to determine the dispute and I accept that this is so. In that light, the parties have filed a statement of agreed facts and written submissions, and the Commission has conducted a brief hearing. In addition, some supplementary documentary evidence has been provided to clarify one aspect of the agreed facts and parties were given an opportunity to file additional submissions about that aspect.

[5] The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), which is also covered by the Enterprise Agreement, also made submissions in support of Mr Illingworth’s position.

2. The relevant terms of the Enterprise Agreement

[6] Without detracting from the terms of the Enterprise Agreement more generally, the following elements are relied upon by the parties and are apposite for present purposes:

“1.6 RELATIONSHIP TO NATIONAL EMPLOYMENT STANDARDS AND PARENT AWARD
This agreement incorporates and shall be read and interpreted wholly in conjunction with the National Employment Standards and Vehicle Manufacturing, Repair, Services and Retail Award 2010 (hereby referred to as “the Award”) as in operation just before the making of the Agreement provided that where there is any inconsistency between the NES, this Agreement and the Award, the more beneficial provision to an employee shall take precedence.
Accordingly all awards that may otherwise apply (except the Vehicle Manufacturing, Repair, Services and Retail Award 2010) are displaced by the operation of this agreement.

… …

“3.4 TERMINATION OF EMPLOYMENT

Where the employee’s employment is terminated either by the company or the employee, each must give the other the following notice:

Employee’s period of continuous service with the employer	Period of notice
Not more than 1 year	At least 1 week
More than 1 years but not more than 3 years	At least 2 weeks
More than 3 years but not more than 5 years	At least 3 weeks
More than 5 years	At least 4 weeks

The company may elect to make payment in lieu of notice where it does not require an employee to work out a period of notice.
Where the company terminates the employment of an employee who is over 45 years old and has completed at least two years continuous service the employer will give one week additional notice.
Notwithstanding the provisions of the Probationary periods and this clause (Termination of employment), the period of notice shall not apply in the case of dismissal of an employee by the employer for serious misconduct, neglect or refusal of duty in which case the employee shall be paid up to the time of dismissal only.

3.4.1 SEPARATION OPTION
Where an employee finds themselves in an exceptional circumstance, they can approach the company via the Product Group Manager to request a separation option. In complete confidentiality, the company will assess the employees exceptional circumstances via the Senior Management group in consultation with the Human Resources department, and may at it’s absolute discretion offer a separation package which may include the applicable notice period and accrued statutory entitlements (annual leave and long service leave).
In the event that the company announces a closure due to a significant event (eg Holden closure), the separation packages that will be considered for employees are classified as follows:

a) Employees with less than 10 years length of service:
The payment will be aligned to the National Employment Standards (NES) 2013 redundancy pay (as per below) but does not include payment for notice period or payout of personal leave. In addition to the NES redundancy pay, pro-rata long service leave payments will be paid for all service over five (5) years.

Length of Service	Payment
1 year but less than 2 years	4 weeks
2 years but less than 3 years	6 weeks
3 years but less than 4 years	7 weeks
4 years but less than 5 years	8 weeks
5 years but less than 6 years	10 weeks
6 years but less than 7 years	11 weeks
7 years but less than 8 years	13 weeks
8 years but less than 9 years	14 weeks
9 years but less than 10 years	16 weeks

b) Employees with 10 years length of service or more:
The payment will be calculated as a percentage of the redundancy severance payment as per clause 3.5.6 but does not include any payment of notice period or payout of personal leave.

2014	2015	2016
60%	70%	80%

For example:
A CSTM with 10 years of service who applies for a separation option on 2 December 2015 may consider a 26.6 week payment (calculated at 70% of the redundancy severance payment of 38 weeks, and paid at the base rate of $25.0888 per hour).
The employee is under no obligation to accept the offer.

3.5 VOLUNTARY SEPARATION/REDUNDANCY ARRANGEMENTS
3.5.1 Application

These arrangements apply to situations where the forecast number of employees of an operation exceeds the actual employment requirements for that operation.

3.5.2 Definitions

Redundancy occurs when the Company has made a definite decision that it no longer requires the position the employee has been engaged in done by anyone and that decision leads to the termination of employment of the employee, except where this is due to the ordinary and customary turnover of labour.
Business includes trade, process, business or occupation and includes part of any such business.
Transmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transmitted has a corresponding meaning.

3.5.3 Notification

The Company undertakes to arrange discussions with employees and where requested by employees, their representatives as soon as practicable after it has made a final decision that there is a requirement to reduce the number of employees.
These discussions will include the reasons for the required reductions, the sections or departments affected, the number and categories of employees likely to be affected and the period over which the reductions likely to take place.

3.5.4 Voluntary Separation / Redundancy Procedure

In a particular redundancy situation the Company will seek expressions of interest from employees from the affected area in the first instance. Where there are more expressions of than required, the Company will select employees for voluntary separation at its discretion.
Where there are insufficient volunteers from the affected area, the Company may seek expressions of interest from employees from other areas of the business. For an expression of interest to be considered by the Company, an employee must be competent to perform similar duties to the affected positions in the affected area in accordance with the position description for that role.
Provided that the Company at all times maintains the right to retain skills and knowledge it deems necessary to ensure the effective and efficient operation of its business. As such it is not obliged to accept any expression of interest for voluntary separation or redundancy but will take into consideration employees with the longest amount of service.
In the event that the Company deems that there are insufficient suitable volunteers, the company will select employees for redundancy based on set criteria as specified by the company. The Company at all times maintains the right to retain the competencies, skills and knowledge it deems necessary to ensure the effective and efficient operation of its business, however will take into consideration employees with the shortest amount of service.

3.5.5 Notice of Termination

Where an employee receives a separation package four (4) weeks’ notice shall be payable.
Where an employee is over the age of forty, an additional two (2) weeks notice shall be payable. This is in addition to the notice and separation payment outlined above and increases the cap on the total payment amount by two (2) weeks for such an employee.

3.5.6 Severance Payment

In addition to the period of notice prescribed in clause 3.5.5 above, an employee whose employment is terminated by reason of voluntary separation or redundancy shall receive a severance payment in respect of their continuous service with the Company. For the purpose of calculating this payment an employee shall be entitled to receive pro-rata payments for each completed month of service.
That payment shall be four (4) week’s pay for each year of service up to a maximum of eight (8) years of service. Employees over eight (8) years of service shall receive three (3) week’s pay for each additional year of service. Severance payments are calculated at the employee’s rostered rate of pay.
The total payment of notice plus the severance payment shall not exceed forty five (45) weeks pay.
Employees will be paid accrued annual leave, including loading at the applicable rate.
Personal leave entitlement will be paid out to a maximum of fifteen full days (114hrs) and, 50% of any additional remaining time in excess of 15 days.
The balance of hours remaining in an employee’s Voluntary Time Bank (see clause 6.9) shall be paid out at ordinary time.

3.5.7 Job Seeking

During the period of notice of termination given by the company an employee shall be allowed up to three days time off without loss of pay for the purpose of seeking other employment. Job seeking activities must be approved by the company.

3.5.8 Outplacement

Outplacement services to the value of $2000 per employee will be provided by an agreed provider.

3.5.9 Long Service Leave

Employees falling within the scope of this clause pro-rata long service leave payments will be paid for all service over five (5) years. For the purpose of calculating this payment the employees affected shall be entitled to receive pro-rata payments for each completed month of service.

3.5.10 Suitable Alternative Employment

The provisions of this clause are not applicable where an employee rejects or accepts an offer of suitable alternative employment.
Suitable Alternative Employment means employment, with the Company or any other employer , on no less favourable terms and conditions than the Employee received with the Company, with recognition of all:

• Unused accrued entitlements previously owed by the Company; and

• Prior service with the Company.

3.5.11 Transmission of Business

The provisions of this clause are not applicable where a business is before or after the date of this agreement, transmitted from an employer (in this sub clause called the transmittor) to another employer (in this sub clause called the transmittee), in any of the following circumstances:

1) Where the employee accepts employment with the transmittee which recognises the period of continuous service which the employee had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee; or

2) Where the employee rejects an offer of employment with the transmittee:

• In which the terms and conditions are substantially similar and no less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmittor; and

• Which recognises the period of continuous service which the employee had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee.

3.5.12 Employees Exempted

This clause does not apply to:

• employees terminated as a consequence of serious misconduct that justifies dismissal without notice;

• probationary employees;

• employees engaged under Commonwealth based traineeships;

• employees engaged for a specific period of time or for a specified task or tasks; or

• casual employees

… …”

3. The statement of agreed facts

[7] The following facts have been agreed:

“Facts
1. Futuris Automotive Interiors (the respondent), their production employees (the parties), including Mr John Francis Illingworth (the applicant), and the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union South Australian Branch (the AMWU) are bound by the Futuris Automotive Interiors (South Australia) Workplace Agreement 2013 (the agreement).

2. On 13 January 2017, the respondent was advised by their primary customer, Holden, that they would cease manufacturing operations in Australia on October 20, 2017.

3. Holden’s closure date confirmed that all of the respondent’s employees’ roles would become redundant on, or around 20 October, 2017.

4. On 23 February 2017, the respondent verbally advised its 117 employees’ party to the agreement that all roles would become redundant around the Holden closure date. The respondent confirmed:

• All employees’ would be required to work their notice period



• It would provide written notice to each employee detailing their termination date



• Employees under forty (40) years of age would be provided with four (4) weeks’ written notice



• Employees over 40 (forty) years of age would receive six (6) weeks’ written notice



• Per agreement Clause 3.5.6, the total severance payment cap (based on years of service) as



• under 40 years – capped at 45 weeks



• over 40 years – capped at 47 weeks



• That it would comply with all provisions of the Agreement

5. On 1 March 2017, the applicant notified Mr Dale Golding (the Respondent’s HR Manager) that he does not accept the respondent’s position that it required employees to work their Notice Period and considered that it breached Clauses 3.5.5 and 3.5.6 of the agreement. The applicant’s position is based on a view that the respondent would not be paying the prescribed notice period as part of the severance payment. Mr Golding explained to the applicant that under the relevant provisions of the agreement and s117 of the NES, the respondent had the option to pay in lieu of notice where it did not require employees to work out their notice period. The applicant does not accept that explanation. The applicant references former employees of the respondent who have taken voluntary redundancy packages and were paid their notice period. The applicant advised Mr Golding that he would lodge an application with the Fair Work Commission to Arbitrate on the matter.

6. On Thursday 2 March 2017, the parties received notice that the matter was listed for Conciliation with the Fair Work Commission.

7. On Tuesday 14 March 2017, the parties attended the Fair Work Commission Conciliation hearing. It was agreed by the respondent and the applicant during the hearing that whilst both parties agreed on the principle facts of the matter, they had differing interpretations about the relevant provisions of the Agreement. It was clear that the parties respective positions had not changed and both parties asked for Fair Work to Arbitrate on the matter.

Decision Sought

8. The parties request that the Fair Work Commission determines the proper application of clause 3.5 of the 2013 Agreement (and in particular sub-clauses 3.5.5 and 3.5.6) when the agreement is read as a whole in the context of the respondents intention to provide actual notice of the impending redundancies – rather than pay in lieu of notice as part of the separation package.” 1

[8] In terms of the practice adopted in relation to previous redundancy situations, 2 it is agreed that these involved voluntary redundancies and that the employees were paid the whole package including the relevant period of notice. It is also the case that whilst these employees had nominated to be considered for voluntary redundancies, they were not advised of their actual redundancy until the effective date of termination.3 This means that they were not given formal notice of their redundancy and were paid in lieu thereof.

4. The positions of the parties

4.1 Mr Illingworth

[9] Mr Illingworth contends that clauses 3.4 and 3.5 should be read as two separate and distinct clauses. In that regard, he points to a series of differences between the notice provisions under the two clauses. Mr Illingworth submits that his employment will come to an end as a result of voluntary separation or redundancy and therefore his termination is governed by clause 3.5 of the Enterprise Agreement.

[10] Mr Illingworth further contends that the words “notice shall be payable” as appear in subclause 3.5.5 are used deliberately to indicate that the notice period is to be paid, in addition to any period worked, and included as part of the severance payment. He also contends that as the entitlements set out in clause 3.5 are more favourable than those provided by clause 3.4, it is this clause that should be applied.

4.2 The AMWU

[11] The AMWU contends that the entitlement set out in subclause 3.5.5 remains payable, where an employee receives a separation package, even if the Company provides notice. It submits that this is because the entitlement in clause 3.5 is a separate and distinct entitlement to that set out in clause 3.4.

[12] In contrast to clause 3.4, the AMWU submits that, a plain reading of the words “shall be payable” in subclause 3.5.5 mean that the entitlement cannot be substituted by notice from the Company. It does not dispute that the Company ordinarily has the right to give notice in lieu of payment under clause 3.4. However, the AMWU contends that, where an employee receives a separation package upon termination, subclause 3.5.5 provides for an additional entitlement to that of clause 3.4. Further, the Enterprise Agreement was drafted so that subclause 3.5.5 does not form part of the clause governing termination, including that it provides for different parameters around notice payments and therefore should be read as intending to exist as a separate and distinct clause.

[13] The AMWU also refers to the previous practice of employees having been paid the full notice and severance entitlements under clause 3.5, even where they would have been aware that the redundancy and associated termination was going to occur. In that regard, it also noted that the employees concerned with this dispute were going to be working until the close of operations and the associated motor vehicle manufacturing industry, and that the full value of the redundancy package was particularly important in that context. I will later refer to this element of the AMWU’s case as the merit proposition.

4.3 Futuris

[14] Futuris initially contended that while an employee's payment of notice and redundancy pay are often treated together to arrive at a 'total' severance payment, the separate nature and purpose of the two entitlements remains. That is, under the relevant provisions of the Enterprise Agreement, FW Act and the National Employment Standards (NES), Futuris is required to provide both the appropriate minimum period of notice of termination to an employee, as well as payment of the relevant redundancy pay when an employee's position becomes redundant. The two entitlements are mutually exclusive and must be treated and recognised separately.

[15] Futuris also contended that clause 3.4 of the Enterprise Agreement states 'the company may elect to make payment in lieu of notice where it does not require an employee to work out a period of notice.' Clause 3.4 clarifies that the company may make payment in lieu of notice where it does not require an employee to work out a notice period. In that regard, it submitted that there are remaining production commitments with its client until 20 October 2017.

[16] In final submissions, Futuris contended that clause 3.5.5 of the Enterprise Agreement should not be read in isolation and that clause 3.4 applies in the case of redundancy. Further, it contended that there is nothing within the terms of clause 3.4 or 3.5 that suggest that the employer has relinquished its ability to provide actual notice in cases of voluntary separation or redundancy.

[17] Futuris submits that it will be “paying” the required notice when that notice is worked and considers that its decision to provide the formal notice, rather than pay the notice in clause 3.5.5 as an additional payment, is lawful and complies with the relevant provisions of the Enterprise Agreement, FW Act and NES.

5. The proper application of the Enterprise Agreement

5.1 The approach to be applied

[18] A Full Bench of the Commission has outlined the approach that should be adopted in considering the construction and meaning of an enterprise agreement. In Golden Cockeral the Full Bench summarised the position in the following terms:

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act. ⁴

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.”

[19] This is a non-exhaustive statement of the principles to be adopted 5 and I have applied this approach in determining this dispute.

[20] In Geo A Bond & Co Ltd (In Liq) v McKenzie,⁶ (Geo A Bond) Street J said:

"...it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore, in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award."

[21] In Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005 Lacy SDP observed that:

“It is a widely accepted principle of statutory interpretation that the rules of construction are rules of common sense. Where the choice is between an interpretation that will result in inconvenience, injustice or absurdity and another which avoids such a result, then the latter ought to be adopted.”⁷

[22] The importance of context was emphasised by Burchett J in Short v Hercus Pty Ltd⁸ in the following terms:

“6. No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia [1913] HCA 41; (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: "The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.

… …

8. That much is fairly clear. Where there is seen to be a difficulty, the court can often go to the history of the matter. A number of illustrations will be found in Nurses (South Australia) Award (Interpretation) Case (ubi supra). But an ambiguity or obscurity may not be immediately seen on the face of a document. Both the problem and its solution may appear only when the wider context from which an expression first sprang is brought to notice. Is the court then forbidden to look past the document itself that is before it? The respondent says the instant award is clear, and we must shut our eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent's contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently. (Cf. Pickard v. John Heine and Son Limited [1924] HCA 38; (1924) 35 CLR 1 at 9, per Isaacs A.C.J.) That is certainly sufficient to justify a reference to its source. Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R [1991] HCA 21; (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.”

[23] The nature of the present task has also been emphasised by the Full Bench in DP World Brisbane Pty Ltd v The Maritime Union of Australia 9 in the following terms:

“[31] Importantly, the task of interpreting an enterprise agreement does not involve re-writing a provision in order to give effect to the Commission’s view of what would be fair and just, without regard to the terms of the agreement. As Madgwick J observed in Kucks v CSR Limited:

‘But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’”

[24] All of the above observations are consistent with the approach taken in Golden Cockeral. In the end result, my present task is to ascertain the common objective intention based upon the language and terms of the Enterprise Agreement, when read as a whole, and considered having regard to its context and purpose.

5.2 The context

[25] The practical context is set out in the statement of agreed facts.

[26] The legal context for the Enterprise Agreement is established in part by the NES, which provides a series of minimum conditions that apply to all national system employees including to the parties that are subject to this Enterprise Agreement. 10 Sections 117, 118 and 119 of the FW Act provide 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.

(3) Work out the minimum period of notice as follows:

(a) first, work out the period using the following table:

 

Period
	Employee’s period of continuous service with the employer at the end of the day the notice is given	Period
1	Not more than 1 year	1 week
2	More than 1 year but not more than 3 years	2 weeks
3	More than 3 years but not more than 5 years	3 weeks
4	More than 5 years	4 weeks

(b) then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.

118 Modern awards and enterprise agreements may provide for notice of termination by employees
A modern award or enterprise agreement may include terms specifying the period of notice an employee must give in order to terminate his or her employment.

Subdivision B—Redundancy pay

119 Redundancy pay
Entitlement to redundancy pay
(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.
Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

Amount of redundancy pay
(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:

Redundancy pay period
	Employee’s period of continuous service with the employer on termination	Redundancy pay period
1	At least 1 year but less than 2 years	4 weeks
2	At least 2 years but less than 3 years	6 weeks
3	At least 3 years but less than 4 years	7 weeks
4	At least 4 years but less than 5 years	8 weeks
5	At least 5 years but less than 6 years	10 weeks
6	At least 6 years but less than 7 years	11 weeks
7	At least 7 years but less than 8 years	13 weeks
8	At least 8 years but less than 9 years	14 weeks
9	At least 9 years but less than 10 years	16 weeks
10	At least 10 years	12 weeks

… …”

[27] Section 55 of the FW Act provides, in effect, that an enterprise agreement may replicate or supplement the terms of the NES, but may not contravene the standard or contain an inferior condition.

[28] This means that the Enterprise Agreement must at least meet the relevant terms of the NES. Notice in that respect may be given or paid in lieu. The redundancy payments must also meet or exceed the NES provisions. The provisions of the Enterprise Agreement, applied under either approach contended here, do so in all respects.

[29] I have earlier set out the approach that Futuris has adopted to previous redundancy rounds. Mr Illingworth and the AMWU rely upon that approach as supporting their view as to the proper construction of the Enterprise Agreement. Given that notice was not given to the employees on those occasions, the circumstances here are different. Further, and in any event, the use of previous practice is generally of limited value in determining the proper application of the instrument. 11

[30] I have considered the broader provisions of the Enterprise Agreement, including its continuing reliance upon the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the modern award) set out in clause 1.6. The stated relationship with the NES is consistent with the FW Act. The notice provisions in clause 3.4 are consistent with the NES and the modern award. The redundancy benefits in the Enterprise Agreement are more beneficial to the employees than those contained in the NES and that award. I do note that the modern award, along with the NES, provides for separate notice provisions, which apply in the case of all relevant terminations, including redundancies, and redundancy payments that expressly apply in addition to that notice.

5.3 The relationship between clause 3.4 and 3.5

[31] All parties initially contended, in effect, that the notice provisions in clauses 3.4 and 3.5 should be considered separately. However, as I put to them during the hearing of this matter, where the employer did not provide actual notice (as on previous occasions) the payment of the notice as part of the redundancy package would appear to comply with the notice provisions of both clause 3.4 of the Enterprise Agreement and the NES. This was accepted by the parties.

[32] I have considered the approach adopted in clause 3.4.1 Separation Option as it may shed some light upon the intention of the Enterprise Agreement more generally. The provision applies to optional separations and although it refers to the potential closure of the company’s operations, all parties have accept that it is the provisions of clause 3.5 which are to be applied here given that forced redundancies are now being made. This is reflected in the agreed statement of facts and scope of this arbitration. Further, the terms of sub-clause 3.4.1 reinforce that its provisions are intended to operate where both the employer and the employee have a choice to elect for redundancy, 12 which is not the case here.

[33] Sub-clause 3.4.1 creates severance entitlements based upon service (with more beneficial entitlements for those with over 10 years of service) and the entitlements expressly do not include any payment of notice. That is, the parties in drafting this sub-clause have considered only the severance (or redundancy) payment and expressly left the question of notice entirely to the broad application of the notice provisions in clause 3.4.

[34] I turn now to the approach adopted within the Enterprise Agreement to notice in clauses 3.4 and 3.5. There are differences in the notice provisions within the two clauses and these are relevant to the extent that they may cast some light on the intention of the Enterprise Agreement. Clause 3.4 relevantly provides as follows:

• Notice periods based upon the period of continuous service in line with the NES – up to 4 weeks for employees with 5 or more years of service, with an additional week for an employee over 45 years of age (with at least 2 years of service);
• The express option for Futuris to make payment in lieu of notice where it does not require an employee to work out that period; and
• The exclusion (from the notice provisions) in the case of serious misconduct and neglect of duty.

[35] There is no exclusion for redundancy related dismissals in clause 3.4.

[36] Clause 3.5 relevantly provides:

• Notice periods, for all employees receiving a separation package, is four weeks (irrespective of the length of service) and this is described as “being payable”;
• An additional two weeks’ notice is payable where the employee is over the age of 40; and
• There is no express mention of the capacity for Futuris to pay in lieu of this notice.

[37] The severance payment in sub-clause 3.5.6 deals with the notice provision to the following extent:

• The severance payment (which is based upon years of service) applies in addition to the notice set out in sub-clause 3.5.5; and
• The total payment of notice and severance payment is not to exceed 45 weeks pay, except in the case of an employee who is over the age of 40, when the cap becomes 47 weeks pay.

[38] Clause 3.5 also provides a series of additional benefits that include job seeking and outplacement provisions, and more favourable long service leave entitlements than would operate in other circumstances.

5.4 The application of clause 3.5 when formal notice of termination is to be given

[39] I start this aspect of the analysis by reflecting upon the need to read the Enterprise Agreement as a whole. This means, that unless a contrary indication is given, the two clauses dealing with related subject matters, being clause 3.4 and 3.5, should be read together. Wherever possible, all of the terms of the Enterprise Agreement should be given meaning. For reasons outlined earlier, this approach would include the fact that the notice, which is due under clause 3.4, if paid in lieu as part of a redundancy package, would be taken to meet the obligation in clause 3.4 to provide notice of termination. It has not been suggested that additional notice beyond the severance package is due.

[40] It is also evident that Futuris has the right to either give the notice set out in clause 3.4, or pay in lieu thereof, and this would represent the norm. However, the two implications set out above inform, but do not resolve, the present dispute.

[41] In general terms, two options emerge from the competing propositions advanced in this matter. Firstly, the approach that arises from the view proposed by Mr Illingworth and further articulated by the AMWU. That is, clause 3.5 is a self-contained package of entitlements that arise in the event of a relevant redundancy and the more beneficial terms of that provision override and supersede the more general and lesser requirements in clause 3.4. Under this approach, although Futuris may give notice, clause 3.5 requires that a package of notice and severance payments up to the maximum, must be paid. The absence of any reference to the capacity to give the notice, rather than pay it as part of the package, is indicative of an intention that this was not intended.

[42] Secondly, the approach that arises from the position taken by Futuris; namely, that there is no barrier to the employer giving the notice required by clause 3.5 (and clause 3.4) and that the giving (and payment in the normal course) of the actual notice in clause 3.5 will still mean that the notice is being paid to the employees concerned.

[43] In essence, the dispute becomes whether it is the intention of the Enterprise Agreement that the notice component of the redundancy package in clause 3.5 must be paid out as part of each package, rather than be given and paid in the normal course as it is worked, if the employer chooses to give the actual notice. In approaching this task, I consider that the terms of the Enterprise Agreement are ambiguous and susceptible to more than one meaning. In that light, the surrounding circumstances, including the approach that has been adopted by the parties in the context of the NES and the relevant modern award, are relevant. In particular, the different approach to establishing the various entitlements within the Enterprise Agreement, in contrast to that adopted within those other instruments, would appear to be insightful.

[44] I am also mindful of the caution provided in Geo A Bond that the Commission should be careful to avoid a too literal adherence to the strict technical meaning of the words and that the entirety of the instrument should be considered to garner the intention. In that light, the reference to the notice “being payable” in clause 3.5 and to the “period of notice” in sub-clause 3.5.6 are not, absent other factors, to be given a particular narrow meaning.

[45] When considered as a whole, it is evident to me that the parties have chosen to use a different form of expression for the notice entitlements in clause 3.5. The reference to notice being payable is to be contrasted with clause 3.4 which provides that the notice is to be given. Although clause 3.4 provides for the option to pay out that notice in lieu, there is no express option within clause 3.5 other than for the notice to be payable as part of the package. Indeed, the concept of the package of entitlements is more consistent with the notion that payment is to be made upon the redundancy, rather than having the notice provided and paid in the lead up to that redundancy. Further, clause 3.5 provides that additional notice is payable to the employees who are over 40 years of age. In the context of the redundancies here where notice is being given to all employees well in advance of the termination date, an approach that does not lead to any actual additional benefit to those employees is not to be preferred.

[46] In the context of forced redundancies, an approach that permits the extended notice to be paid as part of the overall redundancy package (and the NES entitlements to be paid in lieu as part of that same package), is clearly open on the words of the Enterprise Agreement. Further, unlike the modern award and the NES (and sub-clause 4.4.1), in clause 3.5 the parties have chosen to create an additional and integrated package of entitlements to be paid when an employee is terminated on the basis of a redundancy. When considered as a whole, the apparent intention of clause 3.5 is that a package would in fact be paid to each employee upon the redundancy.

6. Conclusions

[47] For reasons outlined earlier, this matter involves the determination of the particular provisions of this Enterprise Agreement and not the general approach to be adopted to the treatment of notice. Further, the Commission’s present role is to determine the proper application of the Enterprise Agreement as agreed by the parties and it is not an “arbitration at large”. In that light, I have not sought to determine whether the approach to actually provide the notice, rather than separately make the payment, is itself the appropriate outcome. Further, I have not had regard to the AMWU’s merit proposition about the desirability of maximising the benefits to the employees given that they will now all be made redundant at the same time as their colleagues, and many others from the motor vehicle manufacturing industry in Australia.

[48] Rather, I have determined the common objective intention based upon the language and terms of the Enterprise Agreement, when read as a whole, and considered having regard to its context and purpose.

[49] It is apparent from the terms of clause 3.5 of the Enterprise Agreement, when read in context, that the parties intended particular arrangements to apply where a redundancy of the nature present here was to apply. This involves particular notice and other provisions, and unlike the other provisions dealing with similar circumstances, the parties have chosen to refer expressly to the notice being paid as part of a package that is to be paid to the relevant employees. Further, the Enterprise Agreement does not contemplate that notice being given in this particular circumstance so as to reduce the package that is payable upon the redundancy.

[50] I consider this to be the objective meaning of the Enterprise Agreement and I determine accordingly.

COMMISSIONER

Appearances:

J Illingworth on his own behalf.

S Batchelor of the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

D Golding for Futuris Automotive Interiors Pty Ltd T/A Futuris Automotive.

Hearing details:

2017

Adelaide

28 April.

Final written submissions/supplementary material:

1 and 3 May 2017.

 1   Statement of Agreed Facts – Exhibit CM.

 2   Referenced in point 5 of the Statement of Agreed Facts – Exhibit CM.

 3   Confirmed by the redundancy/termination documents and associated payment details provided by Futuris following the hearing. All parties were given an opportunity to provide additional submissions on that material.

4 Reference to the AI Act is to the Acts Interpretation Act 1901.

 5   See also Paper Australia Pty Ltd t/a Australian Paper v Australian Manufacturing Workers’ Union [2017] FECFB 1621 at [21].

6 [1929] AR (NSW) 498 at 503; See also City of Wanneroo v Holmes (1989) 30 IR 362 (at 378-379) and Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [2].

7 Re Aurora Energy Enterprise Partnership Agreement 2002 – 2005, [2008] AIRC 1074, at para 17; See also National Union of Workers v Plexicor Australia [2008] AIRC 1134.

8 (1993) 40 FCR 511.

 9   [2013] FWCFB 8557.

 10   Ss.61 and 55 of the FW Act.

 11   ALS Industrial Pty Ltd v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) [2014] FWCFB 3491 at [18].

 12   Including that an employee may elect whether to accept any offer made under the provision.

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