Amcor Limited v Construction, Forestry, Mining and Energy Union

Federal Court of Australia (Full Court)|2003-03-28|Before: Merkel JJ, Moore J

MOORE J 1 I have read the reasons of Marshall and Merkel JJ in a draft form. I agree with the orders their Honours propose and generally with their Honours' reasons. However, I would wish to add some observations of my own. 2 Ultimately, the principal issue raised in this appeal turns on the proper construction of the Australian Paper/Amcor Fibre Packaging Agreement 1997 ("the Agreement"). The employer party to the Agreement is identified in cl 3 as Amcor Ltd ("Amcor") though Australian Paper Ltd is named as a person bound by the agreement but as agent for Amcor in relation to four mills. In that clause, Amcor is identified as "the Company". At many points in the Agreement the word "Company" is used in a context where the "Company" is obviously a reference to the employer. Somewhat obscurely, the word "Company" is also defined in cl 9 as meaning "Australian Paper or Amcor Paper Australia". The Agreement creates rights and imposes obligations in an employment context on both an employer (or conceivably employers) and its (or conceivably their) employees. However read as a whole, it is tolerably clear that the Agreement confers those rights and imposes those obligations on one employer, Amcor. 3 The relevant terms of the Agreement of central importance are set out in the judgment of Marshall and Merkel JJ. Having regard to its terms, cl 55 serves a number of purposes. Several arise when an employee is redundant (others such as cl 55.4.1 concern a point in time before redundancies occur or might occur). The notion of an employee being redundant is expressed, in one instance, as being when a position becomes redundant (cl 55.1.1) and in another as being when an employee becomes redundant (cl 55.2). Probably nothing turns on the different ways it is expressed. 4 One purpose which is served by the clause is to make special provision for situations when the redundant employee is provided with work in another position (when it is lower paid work: see cl 55.2) or provided with work at another location (cl 55.5). In context, this relates to employment with Amcor. Another purpose is to create an entitlement in an employee to special payments, severance payments, when the employee is retrenched. Consistent with what I understand to be its ordinary meaning, the word "retrenched" is a reference to termination by Amcor of the employment of a redundant employee (where the termination arises through no fault of the employee) for whom Amcor can no longer provide employment: as to the meaning of "retrenched" see, for example, Hawkins v Commonwealth Bank of Australia (1996) 66 IR 322 at 340 and Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213. 5 The severance payments have four possible components. Of significance, in my opinion, is that three of the components (identified in pars (a), (b) and (c) of cl 55.1.1) relate to what might be described as unrealised benefits that the employee has accumulated in his or her employment with Amcor. What is contemplated is that when an employee is retrenched the employee is paid an amount reflecting the loss of unrealised benefits the employee may otherwise have enjoyed if employment had continued (sick leave, annual leave and long service leave). When I speak of unrealised benefits I am referring to one of two things. The first concerns entitlements which arise after a period of qualifying service (and is dependent on past service) but which cannot immediately be enjoyed or paid out because the employee has not served for the whole qualifying period (par (b) - annual leave credits (though this may also be payable on termination under cl 31.7) and par (c) - long service leave credits). The second concerns an entitlement to periods of paid sick leave (but which should not be taken) when the amount of paid leave that can be taken increases and accumulates over the period of employment (par (a) - sick leave credits (in limited circumstances this entitlement is also payable on termination: see cl 32.3)). These unrealised benefits are based on prior service with Amcor. In my opinion, the fact that three of the components of the severance payments are of this character point strongly to the parties intending that the clause would operate when employment with Amcor came to an end with the proviso, of course, that it was when the employee was redundant. 6 Central to the submission of Amcor in the appeal is the fact that the employees who claim the benefit of cl 55.1.1 continued in their employment in the sense that, though employed by different employer, they continued working in the same position at the same location doing the same work. However what is not suggested by Amcor, is that the employees would, in the employment of the new employer, be able to assert, under the Agreement, a right to enjoy in due course the unrealised benefits conferred by the Agreement based on past service with Amcor together with any service with the new employer. The fact that the new employer may have, in the present case, offered (at the time of employing Amcor's former employees) to recognise past service does not, in my opinion, bear upon what the parties intended when they entered the Agreement in 1997. The severance payments were intended, in substantial part, to compensate employees when their employment with Amcor came to an end through no fault of theirs and these unrealised benefits were lost (apart from annual leave and, in certain circumstances, sick leave). 7 I would dismiss the appeal.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate: Dated: 27 March 2003 IN THE FEDERAL COURT OF AUSTRALIA

AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

AND: MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Introduction 8 The appellant Amcor Limited ("Amcor") has appealed against the order by the primary judge, Finkelstein J, that Amcor pay the second respondent, Mr Anderson, the sum of $88,677.30. That sum was found by his Honour to be Mr Anderson's net entitlement in respect of accrued sick leave, accrued annual leave, accrued long service leave and three weeks' pay for each year of service. The Commonwealth Minister for Employment and Workplace Relations intervened in the appeal pursuant to s 471 of the Workplace Relations Act 1996 (Cth) ("the Act"). 9 The order of the primary judge was made pursuant to s 178(6) of the Act on the basis that the sum ordered to be paid was an amount that Amcor was bound by a certified agreement to pay to Mr Anderson upon his retrenchment after his position with Amcor became redundant.

Background Facts 10 The first respondent, the Construction, Forestry, Mining and Energy Union ("the Union"), is an organisation of employees registered pursuant to the Act. The Union had as members, as at 31 March 2000, persons employed by Amcor whose terms and conditions of employment were regulated by a certified agreement called the Australian Paper/Amcor Fibre Packaging Agreement 1997 ("the Agreement"). One such person was Mr Anderson. 11 Amcor conducted a paper manufacturing business at a number of mills in New South Wales, Queensland and Tasmania. 12 The terms and conditions of employment of Amcor's employees at the mills were regulated by the Agreement from 9 June 1998, the date of its certification by the Australian Industrial Relations Commission ("the Commission"). 13 On 26 June 1998, Amcor sold the mills on the Australian mainland to its wholly owned subsidiary, Paper Australia Pty Ltd ("Paper Australia"). On 20 March 2000 Amcor sold the mills in Tasmania to Paper Australia. By an agreement made on 14 December 1998, Amcor and Paper Australia agreed that Paper Australia would discharge all the obligations of Amcor in respect of the remuneration and other entitlements of employees at the mills with effect from 1 July 1998. However, Amcor remained the employer of persons employed at the mills, notwithstanding that Paper Australia operated the mills upon acquiring them from Amcor. 14 At [4] of his reasons for judgment the primary judge recounted Amcor's corporate restructure in respect of Amcor's paper mills: "In February 2000 Amcor announced its intention to separate the packaging business from the fine paper manufacturing business. In broad outline, the separation was affected by a reduction of capital and a scheme of arrangement. For present purposes it is necessary to note only the following steps that took place. Amcor transferred its shares in Paper Australia to PaperlinX Limited. Newly created shares in PaperlinX were allotted to existing Amcor shareholders. In due course the shares in PaperlinX were listed on the Australian Stock Exchange. The result was that the packaging business remained with Amcor and the fine paper manufacturing business was owned by a company that was now a subsidiary of PaperlinX." 15 At [5] the primary judge said that: "To complete the separation, it was also necessary to move the employees who worked at the mills to Paper Australia. The proposal was that Amcor terminate their employment and Paper Australia offer to engage their services. Accordingly, on 21 February 2000 Amcor wrote to all affected employees advising them that their employment would come to an end on 31 March 2000. Enclosed with the letter of termination was an offer of employment from Paper Australia. The offer was made by the managing director of Amcor Printing Papers Group Limited, but nothing turns on this. The relevant parts of the letter of offer read: 'I am writing to offer you employment with the operating company of your business, Paper Australia Pty Ltd (trading as Australian Paper), on the same terms and conditions as you currently enjoy. All benefits will be preserved, including continuity of service for all employment-related purposes, salary/wage, superannuation and accrued leave entitlements. We encourage you to accept this offer of employment effective 1st April, 2000. Your acceptance of this offer will be confirmed by you reporting for duty at your usual workplace on your first normal working day on or after 1st April 2000 or, if you are on approved leave, on the first working day following the end of that leave.'" 16 At [6] his Honour noted that almost all Amcor employees at the mills accepted Paper Australia's offer by presenting themselves for work in April 2000. The primary judge said that: "In their new employment the employees performed tasks identical to those they had performed while employed by Amcor. The terms and conditions of their employment, including rates of pay, leave entitlements and the like, were also identical, that being the effect of their new contracts of employment."

The Agreement 17 The parties that were expressed to be bound by the Agreement were Australian Paper Limited as agent for Amcor in respect of certain mills; Amcor trading as Amcor Fibre Packaging in respect of other mills; the Union; and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, Printing Division: see cl 3. 18 Clause 55 of the Agreement is entitled "REDUNDANCY" and provides as follows: "55.1 Severance Payments 55.1.1 Should a position become redundant and an employee subsequently be retrenched, the employee shall be entitled to the following payments:

(a) All accumulated sick leave credits; (b) All accumulated annual leave credits; (c) Pro-rata long service leave if the employee concerned has five or more year's continuous service with the Company; (d) Three weeks' pay at the employee's ordinary weekly wage rate for each full year of service and pro-rata for part years provided that this amount does not exceed the amount the employee would have received up to nominal retirement age. 55.1.2 The minimum payment for an employee with up to and including one year of service shall be three weeks' pay and the minimum payment for an employee with more than one year and up to and including two years' of service shall be six weeks' pay. 55.1.3 The ordinary weekly wage rate is defined as the rate paid for the employee's normal classification, excluding overtime, but including (as applicable) shift allowance, skill and supervisory allowances, personal rates and all-purpose over-award payments. 55.1.4 These payments are subject to the employee concerned continuing in employment to a date notified by the Company to the union. An individual employee's special circumstances may be taken into account provided this does not prevent production continuing to the agreed date. 55.2 Transfer to Lower Paid Job

Should an employee become redundant and be transferred to a lower paid job, the employee concerned shall: (a) retain the hourly rate applicable to the redundant position on the basis of five weeks for each year of service and pro-rata for part years, up to a maximum of twelve months. Except for National Wage Case decisions or other increases based on the maintenance of the real value of wages, increases which occur after transfer will be absorbed up to the extent of the make-up. (b) forfeit the right to retain the higher hourly rate of a redundant position if they refuse appointment to a higher paid position. (c) shall have accrued entitlements for long service leave, annual leave and sick leave up to the date of transfer calculated at the higher hourly rate applicable to the particular employee's classification immediately prior to transfer, and a letter detailing the calculation and guaranteeing the amount calculated as a minimum payment if they subsequently become eligible for such a payment will be given to the employee concerned. 55.3 General Option

An employee who has opted for transfer to another classification in lieu of retrenchment shall have three months in which to change their mind and accept retrenchment terms which were available at the time of transfer. 55.4 Undertakings By The Parties 55.4.1 The Company undertakes to give the maximum possible notice to the union of any permanent change affecting employment, and not less than one month to each person whose employment is to be affected. It is understood by the parties that: (a) the aim is to ensure that one month's notice does not become the standard period of notice; (b) long term notice may create unnecessary concern unless there is a high degree of certainty that an individual will be affected by the change. 55.4.2 The union and employees on their part, in the light of undertakings by the Company, undertake to ensure that: (a) During the period of notice given by the Company, operations will continue as normal; (b) With the aim of minimising retrenchments, they will accept employment of fixed-term labour and the working of overtime after consultation with management to avoid replacement of people voluntarily leaving during the notice period. 55.5 Transfer to Another Location

Where an employee accepts an offer to transfer to another location, and this necessitates selling their home and buying a home in another locality, they will be reimbursed the selling and legal costs for the two transactions, including removal costs and fares for themselves and their family, plus two weeks pay toward incidental expenses. In such cases no redundancy payments will apply to the employee. 55.6 Re-employment

In the event that the retrenched employee responds within fourteen days to an offer of re-employment, it is understood that the Company will maintain continuous service and preserve benefits relating to accumulated long service leave at the date of retrenchment. 55.7 General

55.7.1 In terminating the employment of an employee on account of redundancy, the Company will comply with the requirements of Subdivision C of Division 3 of Part VIA of the Act. 55.7.2 The Company and the union will co-operate:

(a) to assist retrenched employees to obtain Government compensation as applicable;

(b) to try to find alternative employment for retrenched employees outside the Company; and

These retrenchment conditions do not apply where an employee retires due to age or ill-health or elects to retire early for personal reasons." 19 By reason of the definitions in cl 3, references in the Agreement to "the Company" were to be taken to be references to Amcor. The new employer, Paper Australia, was not a party to the Agreement and was not expressed to be bound by it.

The primary judge's reasons 20 The primary judge described the competing contentions at [8]: "The union contends that the employees who were given notice that their employment with Amcor was terminated, had their respective positions made redundant within the meaning of cl 55 and so became entitled to severance payments. It says that the fact that most employees took up employment with Paper Australia with the same jobs and on the same terms and conditions of employment, does not deny the proposition that they had been made redundant. For its part, Amcor denies that, in the circumstances which occurred, the positions of its former employees had become redundant. It says that, having regard to the reality of the situation (that is, that all employees continued to work as usual with no diminution in their rights), there had been no redundancy." 21 His Honour then considered the meaning of the word "redundant". The primary judge said at [9] that, "[i]n the context of employment law it is generally accepted that becoming redundant means that the employee is no longer required by his (or her) employer because the employer no longer has a need for the work that the employee was performing." 22 In support of that approach his Honour relied upon the judgments of the Full Court of the Supreme Court of South Australia in R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Limited (1977) 16 SASR 6 and to its application subsequently in cases such as Short v FW Hercus Pty Ltd (1993) 40 FCR 511. 23 At [12] the primary judge said that: "It has always been assumed that an employee has been made redundant if his employment is terminated because the employer has sold the business in which the employee was working. That the employer has been able to arrange for the new owner to engage the employee is beside the point." His Honour referred to the judgment of Schmidt J in the New South Wales Industrial Relations Commission in Re Government Cleaning Services (Privatisation) Award No 2 (1994) 55 IR 199 in support of that view. 24 The primary judge acknowledged that in the Termination, Change and Redundancy Case (1984) 8 IR 34 ("Termination, Change and Redundancy Case") the Australian Conciliation and Arbitration Commission decided that awards containing the test case standard redundancy provision should include a proviso that severance payments not be made in cases of succession, assignment or transmission of a business. However, the primary judge concluded that a redundancy situation had arisen notwithstanding the employee's employment with Paper Australia. In substance, his Honour was of the view that redundancy involved loss of the employee's position with his or her employer, rather than the loss of the employee's position as such. His Honour relied upon three factors for that conclusion: (1) the authorities to which he referred established that the word "redundant" refers to the situation where an employee has been dismissed for a particular reason; they do not suggest there will be no redundancy if the employee's position established by the employer is continued by another employer; (2) the Agreement requires that two conditions, redundancy and retrenchment, be satisfied. The second condition, retrenchment, means "dismissed". In that regard the primary judge stated at [16]: "This confirms that the question whether or not an employee has been made redundant is to be determined at the point of dismissal. If the employer no longer requires the work previously carried out by the employee to be performed and dismisses that employee for that reason, both conditions are satisfied and the employee has been retrenched for reasons of redundancy.";

(3) Clause 55 assumes "that the dismissal (or retrenchment) will be by the employer who is bound by the certified agreement." His Honour added at [16] that: "when one reads cl 55 in the context of the certified agreement as a whole, the 'position' to which reference is made in cl 55.1.1 is a position maintained by 'the Company' and does not refer to a position that may be established by another employer."

25 At [17] and [18] of his reasons the primary judge acknowledged that the contentions of Amcor had a practical attraction given that the positions of the employees at their workplaces remained unchanged despite their change of employer. But his Honour observed that a proper construction of cl 55 could not support the outcome sought by Amcor. 26 At [19] his Honour considered a submission made by counsel for Amcor that the relevant employees had "elected" to allow Paper Australia to assume Amcor's obligation to make the severance payments and it was inconsistent with that election for such payments now to be claimed against Amcor. The primary judge found the argument difficult to follow but stated at [19] that the case is not one that involves "inconsistent rights". 27 After further submissions by the parties the primary judge decided to make an order in respect of one employee, Mr Anderson, rather than to proceed with a further hearing in order to determine the final orders that should be made under s 178 of the Act. The primary judge took that course to enable his construction of cl 55 to be the subject of an appeal by Amcor. Consequently, the redundancy entitlements of Mr Anderson were calculated to be $88,677.30 which his Honour ordered was to be paid by Amcor.

Transmission of business 28 Counsel for Amcor contended, and counsel for the Union did not relevantly dispute, that from April 2000 Paper Australia became a transmittee of the business of Amcor at the relevant mills. It must follow that as from April 2000 the Agreement became binding upon Paper Australia pursuant to s 170MB of the Act 29 Section 170MB of the Act provides as follows: "(1) If:

(a) an employer is bound by a certified agreement; and

(b) the application for certification of the agreement stated that it was made under Division 3; and

(c) at a later time, a new employer becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned;

(d) the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(e) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(a) an employer is bound by a certified agreement; and

(b) the application for certification of the agreement stated that it was made under Division 2; and

(c) at a later time, a new employer that is a constitutional corporation or the Commonwealth becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned;

(d) the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(e) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(f) a reference in this Part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business. (3) This section does not affect the rights and obligations of the previous employer that arose before the later time." 30 The primary judge made no finding in respect of the transmission of part of Amcor's business to Paper Australia. Amcor contended that his Honour ought to have made a finding on that matter as the effect of s 170MB, which transfers obligations arising under the Agreement to the new employer, forms part of the relevant statutory context in which the Agreement was made and is therefore relevant to the proper interpretation of cl 55. 31 The primary judge was correct in concluding that the effect of s170MB "need not be dealt with to resolve the current dispute". That dispute related to whether, under the terms of the Agreement, Amcor was obliged to make severance payments to employees upon terminating their employment. In determining whether that obligation arose at that time it would not be of assistance for his Honour to consider whether:

the new employer commenced to employ the employees and was bound by the Agreement under s 170MB(3) on and from the commencement of the new employment relationship;
from the commencement of the new employment relationship Amcor ceased to be bound by the Agreement (s 170MB(1)(e)). 32 The reason why those matters need not be considered is that Amcor's severance pay obligations to its employees under the Agreement crystallized upon the employees' dismissal by Amcor on the ground of redundancy, which necessarily occurred prior to Paper Australia becoming the new employer. Our view is fortified by the provisions of s170MB(3) of the Act which make it plain that the obligations of the former employer that arose prior to the transmission are not affected by the fact of the transmission of business. 33 Further, in the context of cl 55 (which did not deal with what is to occur upon a succession, transmission or assignment) Amcor's obligations to its employees in respect of their employees' entitlements under the Agreement crystallized upon their dismissal. Section 170MB is concerned with obligations arising upon a new employer's succession, transmission or assignment. In that regard, as explained above, Amcor's obligations ceased, and Paper Australia's obligations commenced, in respect of entitlements arising after the commencement of employment with the new employer, Paper Australia. Thus, the operation of s 170MB does not assist Amcor's case on the appeal.

Election 34 Allied to their submissions concerning transmission of business was the contention of Amcor that, upon accepting offers of employment with Paper Australia, the relevant employees elected not to pursue a claim against Amcor in respect of any accrued entitlements. The submission sits uncomfortably with a concession by Amcor that it is not possible to contract out of an obligation imposed by the Agreement: see Gapes v Commercial Bank of Australia Ltd (1979) 41 FLR 27 at 29 (per Smithers and Evatt JJ) and at 34 (per Deane J) and Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at 104 [20] per French J. The submission may also require the Court to make an order that is inconsistent with the obligation imposed by the Act on parties bound by a certified agreement to comply with its terms: see ss 170MA and 178; Formosa v Secretary, Department of Social Security (1988) 46 FCR 117 at 124-125; Minister for Immigration and Ethnic Affairs v Polat (1995) 57 FCR 98 at 104-107. 35 We need not pursue the above issues further as we agree with the primary judge that no question of estoppel arises. The offer of employment by Paper Australia was stated to be on the same terms and conditions as the employees currently enjoyed with all benefits preserved. The offer stated that upon the new employment commencing the offer, which was made by Paper Australia, would be taken to have been accepted by the employee. The offer was silent on an employee's right to claim his or her existing entitlements under the Agreement from Amcor. It is difficult to see how an employee's agreement concerning his or her employment with Paper Australia, which contains no provision in relation to Amcor, can afford a ground to Amcor to claim that its employees engaged in conduct that estopped them, as against it, from claiming their statutory entitlements under the Agreement. 36 Further, no question of inconsistent rights arises. Paper Australia's offer to preserve benefits implicitly, if not explicitly, relates to the benefits that are preserved, which would not include benefits claimed from and paid by Amcor. Our view in that regard is reinforced by the absence of any reference in the offer to the employees agreeing not to claim their accrued entitlements from Amcor. Thus, the Union is correct in its contention that there can be no "double-dipping". 37 We would add that even if it were open to the employees to agree not to enforce their entitlements under the Agreement, the Union, as a party principal to the Agreement, is not estopped from bringing proceedings for its enforcement. However, if such an agreement were enforceable, which is a matter upon which we express no view, that matter is likely to be relevant to the discretion of the Court to grant relief under s 178 of the Act.

"Should a position become redundant" 38 The real issue on the appeal relates to the operation of cl 55. The opening words of the clause are "should a position become redundant". It was submitted on behalf of Amcor that no position became redundant. It was contended that the position of each employee was expressly preserved by Paper Australia and that the duties attaching to each position in April 2000 were the same as those that applied on 31 March 2000. 39 We agree with the primary judge that, properly interpreted, the word "position" in cl 55 should be construed as referable to "a job that an employee is performing for a particular employer". When cl 55 is considered as a whole it is apparent that the expressions "should a position become redundant" and "should an employee become redundant" are used interchangeably. In that regard cl 55.1.1 which refers to a position becoming redundant, may be compared to cl 55.2, which refers to an employee becoming redundant. 40 The heading to cl 55 is "Redundancy". The sub-heading to cl 55.1 is "Severance Payments". A severance payment is made to an employee who is dismissed by an employer because the employer no longer requires any person to perform the work which the employee had been doing for that employer. Such an employee is redundant in the sense that he or she is no longer required by that employer to do the job that he or she had been doing. 41 Clause 55 of the Agreement, envisages that an employer bound by it may come to the view that an employee may be redundant and that the job that person is doing is no longer required to be done for that employer. It then provides for the following possibilities: · the employee may be retrenched, ie. dismissed as a consequence of the redundancy (cl 55.1.1); · the employee may be transferred to a lower paid job (cl 55.2); · the employee may be transferred to another classification (cl 55.3); or · the employee may be transferred to another location (cl 55.5).

42 It is possible that the second, third and fourth scenarios may overlap. But the various possibilities serve to emphasise that the instigating factor, or trigger, for the operation of cl 55 is that the employer bound by the Agreement has decided that it no longer requires anyone to perform the work carried out, or to occupy the position held, by an employee. 43 It is beside the point that upon being made redundant and subsequently retrenched by one employer, an employee is immediately employed by a new employer which is a transmittee of the business of the first employer. The Agreement obliges the first employer to make severance payments to the employee upon him or her being retrenched by it as a consequence of being made redundant, in the sense described in the immediately preceding paragraph. 44 We would add that the above approach to the construction of cl 55 is consistent with the authorities in relation to the meaning of redundancy, to which the primary judge referred.

"And an employee subsequently be retrenched" 45 It is not in dispute that Amcor dismissed the relevant employees on 31 March 2000. It is also not in dispute that Amcor did so because it did not require them or anyone else to perform the jobs in which they had been engaged. In other words, they became redundant or surplus to Amcor's needs. 46 Counsel for the Minister submitted, on the assumption that the relevant employees had become redundant, there was no subsequent retrenchment of them by Amcor. We do not accept that submission. If an employee's position becomes redundant, under the Agreement he or she may be transferred to another position, classification or location or may be dismissed. If a dismissal occurs it is a retrenchment consequent upon a redundancy arising. The dismissals in this matter were "retrenchments": see R v Industrial Court (SA); Ex parte General Motors-Holden's Ltd (1983) 35 SASR 161 at 187; 6 IR 394 at 413; Morris v O'Grady; Re Application of Raffa (1991) 37 IR 196 at 208-209 and Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 at 222. A retrenchment by one employer cannot cease to be recognised as such simply because the employee is immediately employed by another employer after being retrenched.

The Test Case standard 47 Counsel for Amcor submitted that it was not intended by the Termination, Change and Redundancy Case that severance payments be made after a transmission of business. It was contended that the test case explains the purpose of cl 55 of the Agreement and provides part of the context to be considered when construing that clause. 48 There are three answers to those contentions. First, there was evidence before the primary judge that prior to the test case decision, employees engaged by Amcor (or its predecessors) to work at the mills received more generous entitlements than the test case standard. Thus, the test case standard may not explain the purpose of cl 55. Further, there is nothing in the Agreement itself that indicates that it was seeking to apply the test case standard. Second, the absence of a proviso in cl 55 making severance payments inapplicable if an employee's employment with a new employer occurs in the context of a transmission of the old employer's business, suggests that it was not the intention of the parties to the Agreement that severance payments were not to be payable in that event. Clause 55.8 is headed "Exclusion" and provides for circumstances which will not attract payments under cl 55.1. None of the named circumstances relate to any issue regarding transmission of business. Had there been an intention to create an exclusion in respect of transmission we would have expected it to have been found in cl 55.8. Third, cl 55 concerns past entitlements in relation to benefits payable by Amcor that do not become liabilities of Paper Australia under s 170MB. The fact that in the present case Amcor may have agreed with Paper Australia that it assume Amcor's liabilities cannot assist in the proper construction of cl 55. In that context to have regard to the conduct of persons bound by the Agreement after its making for the purpose of discerning its proper interpretation is impermissible: see Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444 at 445 ("Seaman's Union of Australia"); Printing and Kindred Industries Union v Davies Bros Ltd (1986) 18 IR 444 at 452; Actors' Equity of Australia v Australian Broadcasting Corporation (1986) 17 IR 393 at 397 and City of Wanneroo v Holmes (1989) 30 IR 362 at 378. Of course, the present case is even further removed from any post-contractual conduct issue as it involves the conduct of only one party bound by the Agreement.

Consideration of fairness 49 Pursuant to s 178 of the Act the Court is required to ascertain the proper meaning of the Agreement having regard to any relevant context, whilst not offending any pertinent principle of construction, such as that referred to in Seamen's Union of Australia. It is not to the point that some people may consider it to be unfair to allow employees to receive severance payments whilst they continue to be employed, albeit by another employer. It is equally not to the point that others may consider it not unfair for such payments to be made, given that in the Amcor reconstruction the employees were given no real choice in relation to the cessation of their employment. Further, in some cases there may be no guarantee of the solvency of the new employer in years to come. 50 It may have been open to Amcor and the Union to attempt to approach the Commission prior to 31 March 2000 to vary the Agreement to obviate the need for severance payments to be made on the termination by Amcor of its employees at the mills, but no such attempt was made. Under s170MD(1) of the Act, Amcor, the Union, and the additional union party bound by the Agreement, were able to vary the Agreement, subject to Commission approval under s170MD(2) and (3). Alternatively, Amcor had standing to approach the Commission under s170MD(6) to remove any ambiguity or uncertainty in the Agreement. The existence of those possibilities for variation of the Agreement tends against the contention of counsel for Amcor that the outcome of the proceeding before the primary judge visited unfairness upon Amcor. 51 It was submitted by counsel for Amcor that the judgment of the primary judge allowed former employees of Amcor to receive entitlements from Paper Australia and Amcor in respect of their employment with Amcor. As explained above we do not agree that "double-dipping" can occur. However, if we were wrong in that conclusion that would merely indicate a hazard involved in an employer restructuring its business without consulting and reaching agreement with its employees in relation to the consequences of the restructure. 52 Finally, observations were made, with which we agree, in Commonwealth Bank of Australia v Finance Sector Union of Australia [2002] FCAFC 193 at [30] regarding the undesirability of a purely result-oriented approach to interpretation of agreements to strive to secure a "better bargain" than that agreed upon.

Conclusion 53 The primary judge's task was to construe the Agreement and determine whether Amcor had failed to meet its obligations under the Agreement. In our view his Honour performed that task and in so doing correctly interpreted the Agreement. 54 The amount awarded to Mr Anderson by his Honour's order of 12 July 2002 was not in dispute between the parties and, consequently, there is no appeal against the primary judge's order in respect of quantum. If there is a problem with the calculation of amounts payable to Mr Anderson the parties can ensure that any error in that calculation, if there be one, is not repeated with respect to other employees. Any other problems or issues relating to calculation of entitlements can be resolved by the primary judge who has yet to make any order with respect to employees other than Mr Anderson. 55 For the foregoing reasons the appeal should be dismissed. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Marshall and Merkel

Counsel for the Appellant: Mr R Buchanan QC with Mr M Wheelahan

Solicitor for the Appellant Allens Arthur Robinson

Counsel for the Respondents: Mr S Rothman SC with Mr S Howells

Solicitor for the Respondents: Ryan Carlisle Thomas

Workplace Relations Act 1996(Cth)ss 170MB, 178(6)

At a glance

Court

Decision date

Before

Source

Judgment (45 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (18)