//
[2006] AIRC 737
General information, not legal advice.
Australian Industrial Relations Commission
2006-11-21
Original judgment source is linked above.
s.170LW pre-reform Act - application for settlement of dispute
Textile, Clothing and Footwear Union of Australia
Terms and conditions of employment - redundancy - whether offer of employment constitutes acceptable alternative employment.
[1] This is an application by Feltex Australia Pty Ltd (Feltex Australia), pursuant to s.170LW of the Workplace Relations Act 1996 (the Act), as it operated prior to the Workplace Relations Amendment (Work Choices) Act 2005, in respect of a dispute with the Textile, Clothing and Footwear Union of Australia (TCFUA) in relation to the Feltex Australia Enterprise Agreement 2004 (the Feltex Agreement) [AG838522��PR955364]. The dispute relates to the operation of the redundancy provision - clause 26 - of the Feltex Agreement.
[2] The dispute arises in the following context:
On 30 October 2006, Feltex Australia lodged the s.170LW application in the Australian Industrial Relations Commission (AIRC). Following a brief initial hearing before me on 1 November 2006, the matter was referred to Commissioner Whelan for conciliation on the same day. In the absence of any agreed resolution of the dispute, Feltex Australia asked that the matter be listed for arbitration. The arbitration proceeded on 10, 13 and 14 November 2006.
[3] The Australian Council of Trade Unions, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia all sought, and were granted, leave to intervene. Ultimately, each of the interveners chose to put brief written submissions adopting and supporting the submissions of the TCFUA.
[4] Feltex Australia described the matters in dispute as relating to the operation of the redundancy provisions (clause 26) of the Feltex Agreement and whether Feltex Australia is required to make redundancy payments where it has obtained offers of acceptable alternative employment.
"(i) a determination or order that employees of Feltex Australia employed under the Agreement who are offered employment by Feltex Carpets Pty Ltd in the general terms of the draft AWA provided to the TCFUA on 26 October 2006, whether or not they accept that offer of employment shall be excluded from any entitlements to severance pay under the terms of Clause 26 of the Agreement;
(ii) a determination or order that the said offer of employment constitutes acceptable alternative employment within the terms of Clause 48(e) of the Textile Industry Award 1994;
(iii) further or in the alternative, a determination or order that the said offer is on terms substantially similar and no less favourable, considered on an overall basis to the terms and conditions applicable to the employees at the time of ceasing employment with the transmittor within the terms of Clause 22.7 of the Textile Industry Award 2000."
[6] The parties to the Feltex Agreement are Feltex Australia and the TCFUA (clause 4).
[7] The Feltex Agreement commenced operation from certification on 14 January 2005 and remains in force until 31 August 2007 (clause 6.1).
[8] The relationship to other awards and agreements is expressed as follows:
"3.0 RELATIONSHIP TO OTHER AWARDS AND OTHER AGREEMENTS
3.1 This agreement will be read in conjunction with the Textile Industry Award 2000. In the event of any inconsistency, the terms of this Agreement will prevail over the Award to the extent of any inconsistency.
3.2 It is agreed between the parties that the existing Award provisions as they stood at 30 June 1998 under the Textile Industry Award 1994 ('the Award') (Attachment�A), except for clause 45, will be the minimum conditions to apply to all employees (and future employees) employed by the Employer.
3.3 Any Award variations that increase provisions will be payable to an employee during the life of this Agreement.
3.4 Attachment A will form part of this Agreement and will operate in conjunction with other provisions of this Agreement. To the extent that the terms of Attachment�A is inconsistent with any other provision of this Agreement then that other provision will prevail over Attachment A to the extent of the inconsistency.
3.5 Every reference in Attachment A to 'an employer' or to a 'respondent to this Award' or to a 'respondent employer' shall be construed as a reference to the Employer.
3.6 This Agreement operates to the exclusion of all other agreements under the Workplace Relations Act 1996 (as amended). The Employer agrees not to enter into, offer or negotiate any Australian Workplace Agreements during the life of this Agreement."
[9] The disputes procedure in the Feltex Agreement is as follows:
(a) A positive working relationship between employees and supervisors is critical to ensure that concerns can be dealt with in a prompt and positive manner.
(b) To foster this working relationship the following basic objectives are agreed:
(c) If a matter has been raised and not resolved it will be raised by the employee and/or the union representative with the Department Manager.
(d) If the matter is not settled it will be referred to the appropriate union official and the Human Resources Manager.
(e) If the matter is not resolved it may be referred by either party to the Australian Industrial Relations Commission for settlement by conciliation and/or arbitration in accordance with the Australian Workplace Relations Act 1996.
(f) In order to prevent disputes the parties agree to re-establish a Feltex Australia Corporate Consultative Committee. The Committee will meet at least four times a year. The Committee will operate in accordance with Schedule C of the Award."
[10] In respect of redundancy, the Feltex Agreement incorporates the terms of the Capital Carpet Industries Pty. Limited Enterprise Agreement - Redundancy 1996 (the Capital Agreement) [AG773183��Doc N0442], save that an additional loading to redundancy benefits of 15% is prescribed for employees over 45 years of age (clause 26).
[11] The Capital Agreement commences with a preamble, which describes the purpose of the agreement as ensuring "the best interest[s] of employees are met and to enhance good industrial relations by establishing an environment and programme which shall enable the orderly introduction of change", requires notification to the TCFUA and the Australian Industrial Relations Commission (AIRC) of any definite decision to introduce change and requires the company to explain and justify to the AIRC any circumstances which may result in redundancies before they are implemented and accords the AIRC a role in the overseeing of the proposed changes.
"Where an employee has been notified of his/her impending retrenchment and an alternative position is available offering a reduced rate of pay or materially different conditions of employment, the employee involved shall have the choice of accepting transfer into such alternative position or opting for redundancy in lieu";
[13] The present terms and conditions of the employees of Feltex Australia are governed by the Feltex Agreement, which incorporates the provisions as they stood at 30 June 1998 under the Textile Industry Award 1994 [AW817520] (the 1994 Award) except for clause 45 and provides also that the agreement will be read in conjunction with the Textile Industry Award 2000 [AW799036CRV] (the 2000 Award), with the agreement prevailing over the Award to the extent of any inconsistency. The alternative employment offered is to be governed entirely by AWAs - in the form of Exhibits F5 and F6 - subject to Deeds in relation to union representation and protection of entitlements (see paragraph 43, below).
[14] In the proceedings, there was considerable attention given to the terms of the competing instruments. There was much evidence from Michele O'Neil, [1] State Secretary of the TCFUA, and Susan Anne Rechenberg-Dupe,[2] Company Secretary of Godfrey Hirst, in relation to the effect of the competing instruments. Their evidence extended beyond that issue in each case. In addition, evidence was given by Jennifer Louise Anderson,[3] Human Resources Manager of Feltex Australia, and Peter McKenzie Anderson,[4] a partner of the receivers, McGrath Nichol and Partners. Each party put extensive written[5] and oral submissions.
[15] Given the desirability, to provide greater certainty to the companies and to the employees, of a prompt decision, I have not attempted to summarise the submissions and evidence for the purpose of this decision, but have considered all of the material before me.
[16] Section 170LW of the Act as it operated prior to the Workplace Relations Amendment (Work Choices) Act 2005 is preserved by paragraph 2(1)(e), Part 2 of Schedule 7 of the Act in its current form. Subject to s.170LW of the pre-Work Choices Act, the parties in subclause 24(e) - Issue resolution procedure - of the Feltex Agreement authorise the Commission to make a binding determination to settle a dispute about whether or not redundancy payments are payable. The terms of the Capital Agreement, incorporated into the Feltex Agreement in respect of redundancy, apply the disputes procedure within Appendix C of the Capital 1994 Agreement, which also provided by reference to notification of disputes under "Section 99 of the Australian Industrial Relations Act 1904", a power of arbitration then available to the Commission. Whether clause 24 of the Feltex agreement applies or Appendix C of the Capital 1994 Agreement applies, I am satisfied that jurisdiction exists for the Commission to determine the issue in dispute.
The question for determination arising out of the Feltex Agreement
[17] In respect of redundancy, the Feltex Agreement clearly incorporates the terms of the Capital Agreement, save for the additional loading in respect of employees aged 45 years or more. Subclause 2(a) of the Capital Agreement provides that:
"In the event that changes lead to a reduction in the number of employees required, this shall be achieved in accordance with the provisions of this agreement."
[18] The Capital Agreement further provides, in subclause 2(c), that:
"The provisions of the Textile Industry Award 1994 and the Metal Industry Award 1984 apply where this agreement is silent."
[19] In the context whereby the Capital Agreement applied in respect of both production employees and maintenance employees, the 1994 Award is the relevant award applying to the employees subject of the current proceedings.
[20] It is necessary to interpret the Feltex Agreement and the incorporated Capital Agreement to establish the question to be determined in the present arbitration.
[21] The Capital Agreement does contain a provision - clause 6 - headed "Alternative employment and other support". Properly read, the clause deals entirely with measures to assist employees given notice of termination to obtain alternative employment. It does not in any way deal with the issue of relief for the employer from the making of redundancy payments in the event that the employer obtains alternative employment for employees selected for redundancy.
[22] The TCFUA contended that clause 5 of the Capital Agreement is a provision dealing with the provision of alternative employment by the employer instituting redundancies. Specifically, reliance was placed on subclause 5(a) of the Capital Agreement, which provides:
"(W)here an employee has been notified of his/her impending retrenchment and an alternative position is available offering a reduced rate of pay or materially different conditions of employment, the employee involved shall have the choice of accepting transfer into such alternative position or opting for redundancy in lieu."
[23] The TCFUA contended that this was the appropriate test, arising from the Feltex and Capital Agreements, to be applied in assessing the offer of employment at Feltex Carpets, subject to the terms of the AWA. In this respect, the TCFUA relied upon the context of the negotiation of the Capital Agreement [6] and the approach to the interpretation of industrial instruments reflected in Australian Municipal, Administrative, Clerical and Services Union v Australian Tax Office[7] and the authorities cited therein.
[24] Whilst I accept the context of regular acquisition of carpet companies by other employers in which the provision was developed, the terms of subclause 5(a) of the Capital Agreement in my view are directed to the situation of an employer offering alternative positions within the same employer, as an alternative to redundancy, rather than the obtaining of alternative employment with an external employer. The terminology of "transfer into such alternative position" contemplates a very different effect to the commonly understood provisions of industrial instruments, which provide a capacity for employers to moderate or remove an obligation in respect of redundancy payments in the event that they obtain acceptable alternative employment for a redundant employee.
[25] It follows that the Capital Agreement does not contain a provision dealing with the effect on the obligations in respect of redundancy payments in circumstances where the employer obtains alternative employment for a redundant employee with another employer (as distinct from providing an alternative position with the same employer).
[26] In the absence of a provision in the incorporated Capital Agreement dealing with the obtaining of alternative employment by the employer instituting redundancies, clause 3 of the Feltex Agreement comes into play. It provides, in subclause 3.2, that:
"It is agreed between the parties that the existing Award provisions as they stood at 30�June 1998 under the Textile Industry Award 1994 ('the Award') (Attachment A), except for clause 45, will be the minimum conditions to apply to all employees (and future employees) employed by the Employer."
[27] Relevantly, paragraph 48(2)(e) of the 1994 Award provides:
"An employer in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he or she obtains acceptable alternative employment for the employee."
[28] The TFCUA contended that subclause 3.1 of the Feltex Agreement also has application. Subclause 3.1 provides:
"This agreement will be read in conjunction with the Textile Industry Award 2000. In the event of any inconsistency, the terms of this Agreement will prevail over the Award to the extent of any inconsistency."
[29] The TCFUA submitted that paragraph 48(2)(e) of the 1994 Award must be read in conjunction with subclause 22.7 of the 2000 Award. The subclause provides:
22.7.1 The provisions of this clause are not applicable where a business is before or after the date of this award, transmitted from an employer (in this subclause called the transmittor) to another employer (in this subclause called the transmittee), in any of the following circumstances:
22.7.1(a) 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
22.7.1(b) 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.
22.7.2 The Commission may vary 22.7.1(b) if it is satisfied that this provision would operate unfairly in a particular case."
[30] The TCFUA submitted that a test of substantially similar and no less favourable terms and conditions, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmittor is to be read in conjunction with the acceptable alternative employment test in paragraph 48(2)(e) of the 1994 Award.
[31] In my view, there is an inconsistency between the terms of paragraph 48(2)(e) of the 1994 Award and subclause 22.7 of the 2000 Award, with the incorporation of the frozen 1994 provision intended to operate. However, to the extent that the 2000 Award provision reflects the consent variation of the TCR new transmission of business clause [8] to give certainty to the operation of the 1984 TCR provision,[9] as reflected in the 1994 award, it does provide some guidance as to the application of the acceptable alternative employment test within paragraph 48(2)(e) of the 1994 Award, together with that guidance provided by other relevant authority. Nonetheless, I am satisfied that the relevant test is the acceptable alternative employment test within paragraph 48(2)(e) of the 1994 Award.
[32] I have considered the range of authorities put more generally by the parties as to the application of the acceptable alternative employment test. I accept, as do both parties, that the test is to be applied objectively [10] and not subjectively from the perspective of the employer and employees.
[33] The parties accept, as do I, that matters to be considered in assessing whether alternative acceptable employment has been obtained include matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security, the location of work, continuity of service and accruals and the application of probationary periods. The relevant authorities also demonstrate that this listing of matters is not exhaustive and the question of whether an employment is acceptable alternative employment will be decided on the peculiar facts of a matter. Further, the authorities suggest that acceptable employment is not synonymous with identical employment, although the basis of the 2004 variation of the TCR test case provision suggests that, whilst not identical, terms and conditions should be substantially similar and no less favourable, overall, than the terms and conditions applicable to the employee at the time of the redundancy.
Application of the acceptable alternative employment test in the circumstances of the present matter.
[34] In this matter the alternative employment being proposed is for the same work with a new employer, involving no evident change in the location of work, fringe benefits associated with the work, workload and speed, or probationary arrangements. Such issues, which sometimes arise in matters of this kind, have no relevant practical effect in the circumstances of the present matter. Further, the employment is to be offered with continuity of service and accruals.
[35] The focus of the evidence and submissions in the present matter has been upon the terms and conditions on which the alternative employment is to be offered and the extent and effect of deviation from the terms and conditions of employment presently available to the Feltex Australia employees. The parties' cases, and the determination of the present matter, will necessarily require a consideration of the competing terms and conditions of employment, which are:
1. the present terms and conditions under the Feltex Agreement (including incorporated or applicable Award provisions) and other terms of the employment contract not reflected in formal industrial instruments; and
2. the terms and conditions contained within the AWAs to be offered in the form of Exhibits F5 and F6, together with associated Deed of Guarantee in relation to recognition of prior service and the security of accrued entitlements and Deed of Confirmation of Employee Representation.
[36] The operation of these competing terms and conditions of employment also requires some consideration of the effect of the Act upon them.
[37] The present terms arise from the Feltex Agreement.
[38] In its submissions, Feltex Australia contended that the Feltex Agreement was potentially invalid, as a result of clauses 7.5 and 7.6, which, it argued, provided a specific benefit to TCFUA members. Those provisions are:
"7.5 Over the period of this Agreement the quantum percentage paid to all TCFUA members across all sites will at least equal the quantum percentage paid to AMWU and ETU members at the Tottenham site over the same period.
7.6 In the period of this Agreement if necessary an adjustment will be made to the final payment (01/06/2007) to align the total quantum payments made to TCFUA, AMWU and ETU members at the Tottenham site to the same percentage increase over the three year period of the Agreement."
[39] In assessing the potential invalidity of the Feltex Agreement, consequent upon these provisions, it is necessary to focus on the actual terms of the agreement in question. [11] The relevant terms of the agreement do oblige the employer to pay a particular quantum percentage wage increase to all TCFUA members. It does not, however, require that this benefit be restricted to TCFUA members or be denied to non-TCFUA members. It does not require or permit, or have the effect of requiring or permitting, conduct in contravention of Part 16 of the Act (Part XA of the pre-Work Choices Act). As such, it represents an entirely different circumstance from that considered by Justice Marshall in Health Services Union of Australia and Others v Tasmania,[12] in which his Honour dealt with a situation in which it was alleged that the employer had withheld a wage increase from members of the HSUA, singling out HSUA members for denial of the wage increase.[13]
[40] Accordingly, my consideration of the current terms and conditions of the employees proceeds on the basis that the Feltex Agreement has been validly certified.
[41] The Feltex Agreement operated from certification on 14 January 2005 and remains in force until 31 August 2007 (clause 6.1). The Feltex Agreement is a pre-reform certified agreement, within the meaning of s.1 of Schedule 7 - Transitional arrangements for existing pre-reform federal agreements etc - of the Act. If the terms of the Feltex Agreement were transmitted from Feltex Australia to Feltex Carpets, Feltex Carpets would be bound by its terms. [14] Feltex Carpets would be bound until the transmission period of 12 months after the time of transmission[15] or at an earlier time as prescribed in Schedule 9, s.10(4)(a), (b), (c) or (e) of the Act. Upon termination in accordance with s.10(4) of Schedule 9, the applicable Australian Fair Pay and Conditions Standard (AFPCS) and the presently allowable and preserved terms of the 2000 Award, subject to the effect of any award rationalisation and/or simplification, would operate in respect of the employees.
[42] It is a matter of speculation as to what alternate arrangements, if any, might be agreed between Feltex Carpets and the TCFUA or the employees at the expiry of the current Feltex Agreement on 31 August 2007.
The terms of employment proposed by Feltex Carpets
[43] The terms of employment proposed by Feltex Carpets are those within the AWAs to be offered in the form of Exhibits F5 and F6, together with associated Deed of Guarantee in relation to recognition of prior service and the security of accrued entitlements and Deed of Confirmation of Employee Representation. The AWA is expressed to operate to the exclusion of any other awards or agreements, except to the extent specifically acknowledged in it. [16]
[44] The AWA will operate until 31 May 2009, [17] subject to the operation of s.347 of the Act, which continues the agreement in operation until terminated in accordance with Division�9 of Part 8 of the Act, or it is replaced by another AWA or it is declared void by a Court.[18] The AWA can be unilaterally terminated with 90 days notice, following the expiry of its nominal expiry date,[19] with the effect that the employees would revert to the AFPCS and any "protected award conditions",[20] rather than allowable and preserved terms of the 2000 Award, subject to the effect of any award rationalisation and/or simplification.
[45] It is a matter of speculation as to what alternate arrangements, if any, might be agreed between Feltex Carpets and the TCFUA or the employees at the expiry of the proposed AWA on 31 May 2009.
[46] It seems to me that the form of industrial regulation applicable to the relevant employees, in itself, is not a material consideration in determining whether the employment proposed, on the basis proposed, constitutes acceptable alternative employment. The Act provides for a range of forms of workplace agreements, and does not elevate one form over another. However, there is a relevance of the form of instrument to the extent that it affects the terms and conditions contained within the instruments. That consideration will be undertaken by reference to the immediately operative terms and conditions within the competing instruments. There would seem to be little utility in speculating as to the operation of the Act upon the terms and conditions at future points of time, given the uncertainty as to the terms of future instruments, if any, the utilisation of statutory options in relation to an AWA upon the passing of the nominal expiry date and terms of instruments - statutory, award or agreement, which could apply upon the expiry or termination of the competing instruments, given the possibility of statutory changes enacted by the Parliament and/or by the Minister by Regulation. [21]
Assessment of the competing Terms and Conditions of Employment
[47] The wage rates proposed in the AWAs are no less than those currently paid to each employee, both immediately and as at 1 June 2007 when increases will arise under both the Feltex Agreement and the proposed AWAs (the final increase in the case of the Feltex Agreement), even assuming, as seems reasonable having regard to the evidence of Ms O'Neil, that an additional wage rise will result from the effect of subclauses 7.5 and 7.6 of the Feltex Agreement. There is no evidence of any material effect of the expression of the wage rate as being exclusive of all allowances and penalties, unless otherwise provided in the AWA. [22]
[48] Consideration of likely further wage rises under a replacement instrument to the Feltex Agreement, for the purpose of comparing increases proposed in the AWAs, would be largely speculative and of little utility for the purpose of assessing whether the proposed terms and conditions of the employment with Feltex Carpets substantiates a finding as to suitable acceptable employment.
[49] The AWA expressly binds employees to "any policy and procedures formulated by Feltex, or by Godfrey Hirst for application at Feltex", [23] current or future. In addition it creates enforceable obligations, within the AWA, upon employees in respect of time recording,[24] compliance with OHS requirements,[25] policies and procedures,[26] confidentiality,[27] agreement to be suspended during investigation of a complaint,[28] provision of proof of birth,[29] operation of company vehicles,[30] use of company tools,[31] and adherence to restrictions on smoking.[32]
[50] None of these matters is required by the terms of the Feltex Agreement. I accept that these requirements substantially, if not wholly, reflect current practice and are reflected in Feltex Australia policies, which expressly or impliedly form part of the employees contract of employment. However, their inclusion within the AWA, making any breach susceptible to civil penalty of up to $6,600 under Part 14 of the Act, creates less favourable terms and conditions than apply within the Feltex Agreement, in conjunction with policies applying within the contract of employment, subject to potential action for damages for breach or disciplinary action.
(c) National Code of Practice for the Construction Industry and the Australian Government Implementation Guidelines (National Building Code)
[51] Compliance with the National Building Code is a pre-condition of eligibility for companies to tender or lodge an expression of interest for work to tender for construction projects directly and indirectly funded by the Australian Government. Feltex Carpets foresees a commercial necessity to seek out work based upon the supply of carpet to Federal Government projects [33] and, whilst the application of the National Building Code to Feltex Carpets in such circumstances is uncertain,[34] it foresees a commercial need to offer employment to Feltex Australia employees on a basis which allows it to ensure code compliance in the event that such compliance is required.
[52] The terms of the AWA and associated Deeds are expressed in terms of employees losing the benefit of the Deed of Confirmation of Employee Representation [35] if code compliance as a condition of tender or supply on a particular project or job is confirmed and the curtailment of the operation of the disputes procedure.[36]
[53] The terms of the AWA presuppose an outcome if the National Building Code is found to apply - i.e. that the operation of the disputes procedure will be diminished and enforceable representation rights will be lost, to the detriment of employees, without any negotiation or opportunity to pursue alternative protections or compensating benefits. This situation is exacerbated by the fact that the requirements of the National Building Code may change from time to time, with unknown consequences on the terms and conditions of Feltex employees. There are no such provisions in the Feltex Agreement.
[54] I am of the view that the terms of the AWA in respect of the National Building Code do constitute a material detriment to employees, of indefinite effect. In my view, a better provision would be one committing the parties to negotiations directed to variation of the AWA [37] in the event that the National Building Code was found to operate in respect of Feltex Carpets, existing industrial arrangements prevent compliance and there was a commercial imperative to achieve code compliance. In such circumstances, similar negotiations in respect of the terms of the Feltex Agreement would seem likely.
[55] The TCFUA submitted that the Feltex Agreement incorporates the 1994 Award and is read in conjunction with the 2000 Award, whereas the AWA excludes the operation of these instruments, expressly excluding or modifying specified protected award conditions. [38] It contends that this has the effect of diminishing the terms and conditions of relevant award provisions. This contention is addressed below in respect of specific award entitlements said by the TCFUA to be removed from the terms and conditions of employees under the AWA, to the detriment of employees.
(e) The effect of an AWA and collective agreement on the parties to the agreement, the basis of negotiation and rights of representation
[56] I am not satisfied that the TCFUA submissions on these matters establish a material difference to the terms and conditions of employees, save that I will later address the TCFUA's broader submissions in relation to the effect on union representation.
[57] The TCFUA contends that the omission from the AWA of an introductory statement similar to that contained in the Feltex Agreement to develop and maintain a relationship based on full and open communication and prompt resolution of disputes through the disputes procedure diminishes the terms and conditions of employees. I am not satisfied that the removal of this joint statement of mutual intent materially affects the rights and obligations of employees.
[58] Clause 8 of the Feltex Agreement provides a commitment to work to establish an appropriate mechanism for securing employee entitlements and additional superannuation contributions as an interim measure. The AWA contains, in subclause 15.3, a provision for additional superannuation entitlements but not to the fund nominated in the agreement. However, in practice, the default fund, in the absence of employee nomination, is the same fund as specified in the Feltex Agreement. The Deed of Guarantee provides a guarantee by Godfrey Hirst of employee entitlements. Overall the proposed arrangements do not seem to diminish the protection of employee entitlements.
[59] No material alteration of the terms of employment of the new employment is evident.
[60] The Feltex Agreement provides for a quarterly calendar of RDOs, made available one month in advance. The AWA provides for a minimum one month's notice of RDOs and where possible two months. The AWA results in some reduction in the period of prior notice of some RDOs. In addition, the AWA permits departure from RDOs on Mondays and Fridays in special circumstances.
[61] The 1994 and 2000 Awards provide for the transfer of shifts on two days notice. This provision is moderated by clause 12 of the Feltex Agreement in circumstances of shift changes required to meet increased demand and operations, in which circumstances consultation is required and agreement is required with affected employees as to the most appropriate method of implementation. Other than in these circumstances, the AWA reflects the award position of change of shifts with two days' notice in respect of temporary change and provides greater notice of two weeks of permanent change. The AWA also sets out a process of calling for volunteers and provides for short-term maintenance of higher shift loadings. Read overall the proposed arrangements in respect of shift changes are at least no less favourable than current arrangements.
[62] The AWA and 2000 Award provisions for jury service are differently expressed, although Feltex Australia intends no different effect and is, if required, prepared to recast the AWA to reflect the expression within the 2000 Award. To avoid any unintended change in the effect of the provision, it should be cast in terms which clearly reflect the 2000 Award.
[63] The TCFUA raises concerns about the absence in the AWA of currently operative incorporated award provisions in relation to a range of matters, including seven day shifts, casual employment, trainees and apprentices, payment by results, 12 hour shifts, outdoor work, supported wage provisions and part-time employment. Feltex Australia argues that these provisions have no practical application and, if required, would result in negotiation of new agreements to meet such circumstances. Although not a current practical issue, the AWA does remove the certainty of what terms and conditions would apply, under present arrangements, if such arrangements were introduced.
[64] Clause 14 of the Feltex Agreement provides that Feltex Australia may institute an annual Christmas close down of a minimum period of 15 days. The clause is to be read, as expressed, as a dispensation from the otherwise applied provisions of clause 30 of the 1994 Award, providing an option for the company to institute a minimum Christmas close down of at least 15 days, in lieu of a minimum 21 day period where two separate close-down periods are instituted. [39] The AWA provides for a 14 day close down in the December-January period and a capacity for Feltex Australia to over-ride the arrangement in the case of exceptional circumstances or by agreement with a majority of employees. The AWA also provides for the option of "buying-out" excess leave accruals. Overall the proposed leave arrangements appear less beneficial to employees than those prescribed in current instruments.
[65] The AWA removes the requirement, within the Feltex Agreement, for consultation and mutual agreement prior to any permanent transfer. Whilst both the AWA and the Feltex Agreement provide for access to the disputes procedure, such access and the determination of any dispute would occur against differing substantive provisions. The AWA removes transfer to or from Hallam from the scope of possible transfer. Overall, the AWA provisions lessen the terms and conditions of employees.
[66] The AWA provides for the cashing out of 80% of long service leave, at the election of employees, on the basis that such leave could be later taken without pay. Whilst I share concerns about the undesirability of providing an option to employees to cash out leave entitlements intended, in part, to provide periods of leave from arduous work, the option, available only at the election of employees, does not diminish employee entitlements.
[67] Materially, the AWA removes a current Feltex Agreement entitlement to five days leave on the death of a sibling.
[68] The AWA does not provide for paid maternity leave for persons employed after 1�December 2006. This does not, however, affect the terms and conditions of employment of current employees being offered alternative employment. The AWA requirement [40] for consent to deduct paid maternity leave from accrued entitlements in the event that an employee on paid maternity leave does not return to work does, however, constitute a lesser position for employees in that situation.
[69] The AWA provision removes Feltex Agreement requirements for notification to the AIRC and the TCFUA of change likely to significantly affect employees, other than when a redundancy dispute arises, and removes the requirement to provide TCFUA information sessions, concerning the TCF labour adjustment program. This diminishes the purpose and effect of the redundancy provisions of the Capital Agreement incorporated into the Feltex Agreement. In addition, the AWA introduces a cap on redundancy entitlements of 60 weeks, or such higher amount as is accrued at the second anniversary of the AWA. This change in terms and conditions has no immediate effect, but does diminish entitlements for a large percentage of employees from the second anniversary of the AWA. The reduced entitlement to pro-rata long service leave and leave loading for employees engaged after 1 December 2006 does not affect the suitability of employment being offered to current employees. The limitation introduced in the AWA on the pay out of sick leave diminishes entitlements.
[70] The AWA removes Feltex Agreement/Award provisions for union representation, consultation (including the Consultative Committee) and agreement in relation to a number of provisions. Feltex Australia contends that this is necessary to avoid prohibited matters in the AWAs and such rights are maintained by the Deed of Confirmation of Union Representation. Against that, the TCFUA argues that the Deed is not enforceable by the union, enforceability by employees is conjectural, the Deed in any case does not fully replicate rights within the Feltex Agreement and incorporated awards and is terminable in the event that compliance with the National Building Code is required. Given the fact that employees have, in approving by valid majority the Feltex Agreement and incorporated awards, endorsed these provisions, their absence from the AWA materially alters the terms and conditions of employment. Whilst the Deed of Confirmation of Union Representation to a large extent maintains the benefit to employees of such provisions, it does not do so in full and the Deed is capable of termination in specified circumstances, although the relevant terms and conditions would cease to apply in any case upon the passing of the 12 month transitional period or earlier in a replacement agreement made under the new Act. Nonetheless, there is for a period of time a material detrimental change in the terms and conditions proposed in respect of these matters, when compared to the operation of the current instruments.
[71] I am not satisfied that a material change in terms and conditions of employees arises in respect of classification levels. All employees are offered employment at their current classification, with rights to dispute their classification level. Whilst the AWA removes the 1994 Award translation procedure, the right of any current employees to have outstanding matters previously raised under that translation process remains. In my view, Schedule L to the 1994 Award is a translation process specifically for the translation of employees from the old award structure to the new skilled based award structure introduced under the structural efficiency process. It is not a general process for the determination of classification disputes or re-classification claims. The ability to raise such disputes and/or claims remains under the proposed alternative employment, with access to the disputes resolution provision. Whilst not translation issues to be dealt with under Schedule L, any principles relevant to the determination of classification disputes could be raised in the process of the determination of such disputes or claims.
[72] The Feltex Agreement requires contributions to be made to the Australian Retirement Fund (now the AustralianSuper Fund (ASF)). The AWA provides for such contributions to be made to a fund of the employees choosing, in circumstances, according to the uncontested evidence of Ms�Rechenberg-Dupe, [41] that the ASF is the default fund in the absence of an employee election. The superannuation provision provides no basis for suggesting that the proposed employment is not suitable alternative employment.
[73] The terms of the AWA do remove some entitlements within the current agreement/award.
[74] The AWA does provide for a reduction in the current Feltex Agreement entitlement to a ten hour break (down to eight), with specified conditions.
[75] Termination provisions within the Feltex Agreement incorporate paragraph 22(c)(vii) of the 1994 Award, providing that "Termination of employment by an employer shall not be harsh, unjust or unreasonable." The AWA removes this provision, being prohibited content. The effect is to apply the termination of employment provisions of the Act, [42] with its more limited application, exclusions and limitations.[43] This plainly diminishes the current award protection against unfair termination.
[76] The AWA, in clause 22, expands the circumstances in which stand-downs can be effected, when compared with subclause 22(d) of the 1994 Award.
[77] The AWA removes Feltex Agreement provisions guaranteeing the provision of specified facilities.
[78] The AWA replaces the taking of meal breaks at a mutually convenient time with determination by Feltex and allows for two paid 20 minute and two paid 10 minute breaks to be replaced by two 30 minute breaks.
[79] The AWA introduces unilateral determination of starting and finishing times and rosters, subject to notice, in place of the Feltex Agreement provisions requiring change by agreement and a capacity for unilateral temporary transfer to another premise.
(ac) Other "detrimental" terms and conditions raised by the TCFUA
[80] Without going to each of them, I am not satisfied that any of the other changed terms and conditions raised by the TFCUA establishes material detriments which would support a finding that the employment proposed is not suitable alternative employment. This includes elements of some provisions dealt with above, which are not specifically addressed in the reasoning above.
[81] Feltex Australia submitted that job security is a relevant consideration, contending that at Feltex Australia now there is no job security. In contrast, it submits, the employment with Feltex Carpets offers a continuing employment with a major group in the carpet industry. Mr�Anderson gave evidence, uncontradicted by the TCFUA, that Feltex Australia is insolvent [44] and that the receivers had obtained no other offer to buy the business of Feltex Australia as a whole and as an ongoing operation.[45] Against this, Ms O'Neil gave evidence, uncontradicted by Feltex Australia, that in discussions which occurred between her and Ms�Rechenberg-Dupe on 27 September 2006, Ms Rechenberg-Dupe stated that some job losses were likely within Feltex Carpets but indicated that Godfrey Hirst would be unlikely to do anything for at least six months.[46] Accordingly, the extent of job security with Feltex Carpets would in all probability be time limited for some undisclosed number of employees. This raises a dilemma in assessing the role of job security as a consideration in assessing suitable alternative employment given the focus in past determinations upon the particular circumstances of the employment for particular employees. It would seem that enhanced job security might be a relevant favourable factor in relation to the employment proposed with Feltex Carpets for some employees, but it is not possible to determine which employees.
[82] The alternative employment offered is subject to a Deed to protect employees' entitlements, which was signed by the TCFUA, through a guarantee by the parent company of the proposed employer.
[83] The AWA recognises prior service with Feltex Australia for the purpose of calculating service based entitlements within the AWA. [47] This provision maintains the value of the prior service with Feltex Australia currently enjoyed by the employees.
(d) Legal enforceability of the terms of employment offered
[84] The terms of employment within the AWA are legally enforceable. This position is no different in respect of the present enforceability of the terms and conditions within the Feltex Agreement.
[85] It is necessary to weigh up material variations in the terms and conditions of the proposed employment against those to which employees are currently entitled, together with the other considerations raised by the parties and set out above, to determine whether the proposed employment constitutes acceptable alternative employment, which would justify relief for Feltex Australia from payment of redundancy entitlements under the Feltex Agreement, upon the obtaining of the alternative employment. As noted above, guidance to determining whether the proposed employment is acceptable alternative employment is gained from the various authorities put before me and considered and such guidance as arises from the reformulated TCR provision in terms of substantially similar and no less favourable terms and conditions, considered on an overall basis.
[86] The task is made more difficult by the different statutory requirements upon a new agreement as against those applying to the pre-Work Choices agreement which currently applies and the transient nature of some of the existing agreement provisions in terms of the different statutory provisions applying to any replacement agreement which may be negotiated and the impact upon the legally applicable entitlements of the employees in the event that the current agreement ceases to have effect by virtue of ss.4(4) and 10(4)(d) of Schedule 9 of the Act.
[87] As noted above, there are factors which support a finding that the employment offered does constitute acceptable alternative employment:
[88] Against this, there are factors which do support a finding that the employment offered does not constitute acceptable alternative employment:
[89] I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.
[90] However, on balance, weighing up all of the relevant matters identified above, I am not satisfied that the employment offered in the AWAs, in the form of Exhibits F5 and F6, supported by relevant Deeds, when considered as a whole, constitutes acceptable alternative employment within the meaning of paragraph 48(2)(e) of the 1994 Award.
[91] Modification of the terms and conditions of the alternative employment offered, and the basis upon which it is offered, could conceivably bring the alternative employment within the scope of acceptable alternative employment. Some modifications might be readily achieved. For example, excision of the obligations within the AWAs to apply Feltex Carpets policy, thus removing the consequence of civil penalties in respect of breach, with policy incorporated into the contract of employment in the more usual way (permitting challenge to the reasonableness of any future policy requirements through the dispute resolution procedure) might be achievable, without undermining the application of those policies. As a further example, the uncertainty attending the rights relating to union representation might be reduced by the maintenance within the AWA of continuing rights to notice and consultation with affected employees, and their nominated representative, with provision for employees to nominate their chosen representative. Other modifications might be made.
[92] Having found that the employment offered in the AWAs, in the form of Exhibits F5 and F6, supported by relevant Deeds, does not constitute acceptable alternative employment, I have considered whether I should indicate modifications to the terms and conditions offered which would result in the offering of employment on a basis which did constitute acceptable alternative employment. However, before considering and undertaking that course, it is preferable that Feltex Australia, Godfrey Hirst and the TCFUA be afforded an opportunity to themselves consider and negotiate an alternative basis of employment which might be acceptable to them and which might be found to constitute acceptable alternative employment, within the meaning of paragraph 48(2)(e) of the 1994 Award, having regard to the terms of my decision. The applicant is at liberty to reapply in relation to an amended offer of employment to obtain access to the AIRC for further conciliation and/or determination.
F Parry S.C. with J Snaden, of counsel, for Feltex Australia Pty Ltd.
H Borenstein S.C. with P Rozen, of counsel, for the Textile, Clothing and Footwear Union of Australia.
D Andrews for Messes Humphris and Fitzgerald (administrators of the applicant).
R Watts for the Australian Council of Trade Unions (intervening).
G Borenstein for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (intervening).
R De Paz for the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (intervening).
Printed by authority of the Commonwealth Government Printer
[6] Evidence of Ms O'Neil, Exhibit TCFUA7 at paras 80-88.
[7] (2005) 144 IR 85 at 99.
[8] Redundancy Case - Supplementary Decision (2004) 134 IR 57 at 70.
[9] Transcript from 2004 TCR Test Case, at para 8284.
[10] Australian Chamber of Manufacturers v Derole Nominees Pty Ltd, Print J4414, at p. 3.
[11] Accurate Factory Maintenance Labor Hire Agreements 2000-2003 and other agreements, PR910205, at para�31.
[14] Schedule 9, s.10(1) of the Act.
[15] Schedule 9, s.4(4) and paragraph 10(4)(d) of the Act.
[18] Subsection 347(4) of the Act.
[20] Sections 354 and 399 of the Act.
[21] For example, s.356 of the Act, in relation to the content of workplace agreements.
[33] Evidence of Ms Rechenberg-Dupe, transcript at para 695.
[34] Evidence of Ms Rechenberg-Dupe, transcript at para 695.
[35] Deed attached in SRD 3 to Exhibit F7, p. 3.
[36] Exhibit F5, paragraph 23.3(d).
[37] Sections 368 and 372 of the Act.
[39] Paragraph 30(m)(ii) of the 1994 Award.
[40] Exhibit F5, paragraph 18.7(c).
[42] Part 12, Division 4 of the Act.
[47] Exhibit F5, further provision 4, p. 25.
Feltex Australia Pty Ltd
Textile, Clothing and Footwear Union of Australia - PR974699 [2006] AIRC 737;
(2005) 144 IR 85
(2004) 134 IR 57
(1996) 73 IR 140