National Union of Workers v United FM Pty Ltd trading as United KFPW [2008] NSWIRComm 1107 | Case summary

National Union of Workers v United FM Pty Ltd trading as United KFPW [2008] NSWIRComm 1107 | Case summary | Zoe

6 The proceedings initiated by the TWU in IRC 374 and 808 of 2008 referred also to alleged underpayments. However, the alleged underpayments were not pressed in these proceedings. In that respect, the parties submitted separate proceedings are listed for a forthcoming hearing before Marks J in IRC 1318 of 2008. Consideration - Application for a contract determination 7 The claim advanced by the TWU on behalf of Mr Bailey is not brought in the specific context of rights and obligations pursuant to the Determination itself. Rather, the TWU submitted the Commission should make a contract determination concerning notice and severance payments for Mr Bailey individually. The severance payment of twenty weeks' remuneration claimed for Mr Bailey is the same as the amount in the Determination, but with a calculation adjustment considered by the TWU to be appropriate. The Determination refers to reasonable notice, but does not specify what period of time should be regarded as reasonable. Mr M Aird of the TWU contended there is jurisdiction in Chapter 6 of the Act to make an individually-tailored contract determination concerning notice and severance payments. He further submitted it would be an appropriate course to make a contract determination specific to Mr Bailey, given that, for example, the application of the formula for calculating severance payments under the Determination may act in a way that is unfairly financially detrimental to Mr Bailey, given the reduction in his remuneration following the loss of the Hydro contract. 8 On the other hand, Mr M Byrnes, solicitor for Toll, submitted the Determination was made only comparatively recently (by Sams DP on 2 August 2007) following a process in which various competing industrial interests were carefully reconciled. Mr Byrnes submitted, against that background, the Commission should be loath to "step outside or beyond" the Determination by making a contract determination proposed by the TWU. 9 I accept there would be a proper jurisdictional foundation under Chapter 6 of the Act on which a contract determination could be made that is specific to Mr Bailey. In particular, in circumstances where the Determination is otherwise silent on the period of time that would constitute reasonable notice, I accept it would be open to make a contract determination to address that matter if, for example, the parties were in dispute about what constituted reasonable notice. While I accept it would be jurisdictionally open to me to make a contract determination for Mr Bailey concerning severance payments and notice, among other matters, I do not, for reasons outlined below, consider it would be appropriate to make such a determination in this matter. 10 The grounds and reasons in support of the respective applications each referred to public interest considerations. To my mind, the public interest is best served by having a reasonable level of certainty concerning the industrial arrangements that apply between parties. Here, the Determination specifies a range of rights and obligations in the event of redundancy; and I accept Mr Byrnes' submission the Commission should be cautious about making a contract determination in relation to redundancy specifically for Mr Bailey. 11 As things stand, the Determination specifies the industrial minima. If I were to accede to the TWU's application, it reasonably might be expected other contract carriers might consider that the Determination (or any contract determination for that matter) operates in a way that is unfair to them, given their own individual circumstances - and seek that the TWU initiate proceedings for personally-tailored contract determinations with individual improvements for them concerning redundancy-related entitlements (or other matters concerning remuneration and conditions). 12 If the Commission was prepared to customise contract determinations with arrangements more beneficial to a contract carrier than otherwise provided in the Determination, it might reasonably be expected that principal contractors, equally, may consider it appropriate to seek contract determinations concerning certain individuals to provide severance payments less than the scale contained in cl6 of the Determination. Presently, there are only two circumstances where a principal contractor may be relieved of the obligation to make scale severance payments. Those circumstances are specified at cl6(ii) (Incapacity to pay) and cl6(iii) (Alternative work) of the Determination itself. However, I consider it would be reasonable to expect principal contractors may apply for contract determinations to reduce scale payments other than in circumstances specified in cl6(ii) and cl(iii) if contract determinations were to be made for individual circumstances. For instance, a principal contractor might seek a contract determination to reduce scale severance payments because the individual concerned had arranged another, better-paying job to start immediately after the date of redundancy. Indeed, one such argument was run, albeit unsuccessfully, in National Union of Workers v United FM Pty Ltd trading as United KFPW [2006] NSWIRComm 1112. In that case, the employer contended, among other matters, that an employee's severance pay should be reduced or voided because that employee obtained a promotion to a better-paying job with a successor employer after his redundancy. 13 Having regard to the foregoing and what I regard as the overarching public interest in certainty concerning the application of the settled terms of the Determination, I am not prepared, in the exercise of discretion, to accede to the TWU's application to make a contract determination that is specific to Mr Bailey - even though I consider that course would be available jurisdictionally.

Consideration - reasonable notice 17 Clause 6(iv) of the Determination makes it clear the scale of severance payments in cl6(i)(b) should not be construed as satisfying, either in whole or in part, the principal contractor's obligation to provide reasonable notice of termination or payment in lieu thereof. The Determination is, however, silent on the question of the period of notice or payment in lieu of notice of termination. 18 The evidence indicated Mr Bailey first learned in early-January 2008 that Toll had lost the Hydro contract, and that another company would be undertaking the work from 1 April 2008. This information initially came informally from a forklift driver at Hydro and was also confirmed to him by a manager at Hydro. 19 Later in January 2008, Mr Bailey was officially advised by David Dickson, Toll's Area Manager, Southern Region, that Toll had lost the Hydro contract. According to Mr Bailey, the conversation occurred around mid-to-late January, whereas Mr Dickson's recollection was that the conversation occurred around late-January. The exact date of the telephone call was unclear on the evidence and there was dispute as to the content of the conversation. However, it is common ground Mr Dickson did not inform Mr Bailey of the date when work under the Hydro contract would terminate, as he did not then have that information. On one view of it, the fact that Mr Dickson did not convey the date of the proposed termination means the advice should not be construed as effective notice of termination. However, I think it may be accepted the advice from Mr Dickson, perfunctory though it was on whichever version of the evidence is accepted, amounted to notice from Toll in mid-to-late January 2008 that the Hydro contract was being terminated. As Mr Byrnes submitted, the question of whether notice was given by Toll and whether it was a reasonable period of notice is simply a function of time, rather than involving an examination of the quality of the notice. 20 Nonetheless, once Toll was aware of the impending termination of the Hydro contract, cl4 and cl5 of the Determination would have been engaged. Those clauses provide as follows: 4. Introduction of change

Provided that any principal contractor shall not be required to disclose confidential information, the disclosure of which would adversely affect the principal contractor. 21 One of the purposes of consultation requirements in industrial instruments such as those in cl4 and cl5 of the Determination is typically to attempt, as promptly as practicable, to allow the parties to explore ways to minimise adverse effects on individuals' livelihoods. Here, the evidence indicated that discussions of the type contemplated in cl4 and cl5 of the Determination occurred only a couple of days before Mr Bailey's work under the Hydro contract was about to terminate and, most likely, solely or principally because the TWU had by then filed a dispute notification. The evidence would not lead me to conclude Toll complied with the letter or spirit of the consultation requirements in cl4 and cl5 of the Determination in an acceptably timely fashion. 22 However, Toll's failure to meet its consultation obligations under cl4 and cl5 of the Determination, unsatisfactory though that was, is, I think, discrete and separate from the question of whether Toll had given Mr Bailey notice of the termination of the Hydro contract. In that respect, the evidence established that in mid-to-late January 2008, Toll, through Mr Dickson, officially notified Mr Bailey that the Hydro contract had been lost. As such, the effective period of notice ran from mid-to-late January 2008 until Mr Bailey performed his last work on the Hydro contract on 27 March 2008. The period of time from mid-to-late January 2008 to 27 March 2008 seems to me, in the circumstances of this case, to amount to reasonable notice within the meaning of cl6(iv) of the Determination. 23 It may be noted that the period of notice, in broad terms, accords with the period that otherwise was sought by the TWU in relation to the claim for a payment in lieu of notice for Mr Bailey. I should note also that, so far as the TWU's claim regarding notice is concerned, a period of ten weeks' notice or a payment in lieu of such notice for a contract carrier such as Mr Bailey seems unremarkable to me for the purposes of "reasonable notice" as contemplated in cl6(iv) of the Determination. However, on the facts of this matter, I am not satisfied the TWU has established a case that Mr Bailey should have a contract determination specifying ten weeks' remuneration in lieu of notice, in circumstances where he had been put on notice by Toll in mid-to-late January 2008 that the Hydro contract would be terminating. Consideration - acceptable alternative work

24 The evidence indicated that from around 25 March 2008, two days before Mr Bailey's last Hydro run, discussions ensued between the parties concerning alternative work for Mr Bailey. Despite suggestions in Toll's case that Mr Bailey was not really interested in alternative work, the evidence would lead me to conclude that he was, in fact, anxious to obtain alternative work so as to maintain his livelihood as a driver with Toll. Of the work that was discussed at this very late stage, Mr Bailey variously expressed concerns about pay, working conditions, and occupational health and safety ("OHS") issues. Those concerns, while no doubt genuinely, personally held by Mr Bailey, were, for the most part, hearsay and were not established on the evidence. However, the concerns that Mr Bailey had about incurring significant further expenditure in relation to undertaking another form of work were made out. I also considered as reasonable the concerns held by Mr Bailey about undertaking long distance work, given that it was so qualitatively different from the Hydro work - in that he expected he would have been away from home for five or six nights a week and given also the evidence about the lack of available backloads if he were to undertake such work. I do not consider it would be unreasonable for a driver in his or her sixties to have reservations about changing from local driving to long distance driving. In my view, the question of whether alternative work, such as long distance work involving extended periods away from home, is "acceptable" is to be viewed objectively, but, nonetheless, also with reasonable attention to matters including, but not limited to, age, health, domestic circumstances and family responsibilities. 25 A large part of the problem in relation to exploring options was that the discussions about alternative work were left to such a late stage. Toll was unable to provide firm details about the type or level of work that actually was available and, in a practical sense, there was no firm information about fairly basic matters such as hours of work and remuneration. In any event, as a result of these late discussions between the parties, Toll offered work at Tomago Aluminium. This was the concrete offer of alternative work that was put and accepted. Mr Bailey presented at Tomago for the first time for work on Monday, 31 March 2008. Mr Bailey recounted in his evidence the following: Throughout the next few weeks I continued to work out of Tomago. I never once knocked back work. Despite this my earnings dropped considerably. For the twelve months prior to the Hydro work finishing I made $186,196.04 at an average of $15,516.34 per month. … While working at Tomago for the month of April 2008 I made $6,150.98. … 26 Hence, in the month that Mr Bailey undertook the alternative work at Tomago following the loss of the Hydro contract, his remuneration dropped from an average of $15,516.34 a month to a monthly amount of $6,150.98. The magnitude of the reduction in Mr Bailey's monthly remuneration was such that he was earning less than forty per cent of his previous average remuneration. In these circumstances, I do not consider the respondent could be regarded as having obtained "acceptable alternative work for the carrier" as contemplated in cl6(iii) of the Determination, such as would wholly displace Mr Bailey's entitlement to scale severance payments. While the work of itself may have been acceptable, there simply was not enough of it to be regarded as acceptable alternative work. This much was clear by the end of the first month at Tomago. 27 It is possible Mr Bailey would have received more work through Toll after the first month, but it is equally possible that the workload would have remained static or reduced even further. One way or the other, it seems to me that work involving a reduction in earnings of around sixty per cent in a period of one month could not be regarded as "acceptable alternative work". While I think it is open to me to make an assessment based on that first month of reduced earnings, I would not be of the view that a carrier should be able, after a more significant or extended period of time performing alternative work, to claim that alternative work was, or became, unacceptable; but that was not the case here. The inadequacy of the alternative work was manifest over the course of just one month immediately following the loss of the Hydro contract - and in circumstances where Toll had left it so late in meeting its obligations under cl4 and cl5 of the Determination that its staff had not been in a position to provide constructive information about matters such as rates of pay and hours of work that would be available with the proposed alternative work. 28 I have given consideration to whether Toll should be allowed some reduction in the amount of twenty weeks' severance pay on the basis it arranged at least some alternative work for Mr Bailey. In that regard, I have given particular consideration to the terms of Toll's application and the submissions by Mr Byrne which were to the effect that carriers should be encouraged to find alternative work for displaced carriers. Mr Bailey continued to have his business overheads at a time when he had received neither the twenty weeks' severance pay under the Determination nor, on the other hand, alternative work at a level which reasonably could be regarded as sustainable or, in the terms of the Determination, acceptable. I do not consider, on balance, that in the circumstances of this matter a case has been established for a partial downward adjustment from the scale in the Determination.

29 Despite the significant reduction in remuneration, Mr Bailey continued to work at Tomago until early-May 2008, when an issue arose about the manner in which Mr Bailey performed his work. That is, Mr Bailey's practice is to throw chains over the loads to secure them rather than climbing up to the vehicle with the chains. There seems to have been an incident involving another driver who was concerned that he may have been put in some form of jeopardy when Mr Bailey was throwing chains. In response to a complaint from that driver and OHS concerns about the practice of throwing chains, Tomago issued new guidelines clarifying the way work with chains was to be undertaken. Relevantly, the guidelines prohibited throwing chains; instead, drivers were to climb to the load with the chains using mobile stairs. 30 The OHS guidelines seem to me entirely unremarkable, particularly when considered in the context of the complaint that gave rise to their promulgation. Unfortunately, however, Mr Bailey has a leg injury which means it is either medically inadvisable for him to climb stairs with the chains, or he is physically incapable of such climbing. There was a significant amount of evidence about Mr Bailey's capacity for work once it emerged he could not perform the work involving chains in the manner specified by Tomago due to his leg problem. Toll continued to offer Mr Bailey work at Tomago, although relevant staff members were aware he could not perform work there in accordance with the OHS measures that had been introduced. In the end, I do not consider much turned on that evidence as it concerned the competing claims before the Commission - because of my view that the drop in remuneration in the first month was of such significance that, demonstrably, Toll had not obtained acceptable alternative work for Mr Bailey. After the cessation of the work at Tomago, Mr Bailey received very little work through Toll apart from some runs from Kurri Kurri carting aluminium, which was paid only one way without backloads. 31 While it is not relevant to the question of determining the competing applications, I note, by way of post-script, that due to the insufficiency of work, Mr Bailey's financial situation deteriorated to the point where, among other matters, his vehicle eventually was repossessed.

32 I am satisfied, for the foregoing reasons, that Toll should pay to Mr Bailey an amount of twenty weeks' pay in accordance with cl6(i)(b) of the Determination, given he was engaged by Toll for more than six years and he is aged over 45 years. 33 Clause 6(i)(c) of the Determination provides that: "Weeks pay" means the weekly average gross remuneration the carrier received from the principal contractor for the previous twelve months for work performed by the carrier on behalf of the principal contractor, less the percentage amounts set out in schedule A to this contract determination on account of running costs". Mr Byrnes submitted that the effective period for calculating the weekly pay ran to the date Mr Bailey last worked for Toll. Mr Aird submitted if the meaning of Mr Bailey's "weeks pay" were determined on this basis so as to include the period after which the Hydro contract was terminated, the calculations would be distorted downwards in dollar terms. 34 Construed in its proper context under the Determination, it seems to me Mr Bailey's entitlement to a severance payment for reasons of redundancy crystallised at the time when the work under the Hydro contract ceased, which was on 27 March 2008. It was at that time Mr Bailey or his usual contract of carriage, or both, became, for the want of a better description, redundant. Although Mr Bailey performed some additional work at Tomago, the entitlement to a severance payment for reasons of redundancy did not arise when he ceased working there and nor did it arise when the Kurri Kurri work ceased. Rather, as I have said, the entitlement to a severance payment under the Determination crystallised when the work under the Hydro contract ceased. Toll was bound to pay Mr Bailey the scale severance payment around 27 March 2008 in accordance with what his weekly pay was at that time, as defined in cl6(i)(c) of the Determination - unless, for example, Toll made an application and received a further order from the Commission relieving it, in part or in whole, of the obligation to make the scale payment for reasons of incapacity to pay or because it obtained acceptable alternative employment. Toll did not, as I have concluded earlier, obtain acceptable alternative work for Mr Bailey and, as such, the scale severance payment properly should be calculated at the rate that applied when the redundancy occurred and the entitlement vested.

National Union of Workers v United FM Pty Ltd trading as United KFPW

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