Unilever Australia Ltd, AP Foods (Sydney) Pty Ltd, AWU and TWU - various proceedings re Proposed Sale of Marrickville Site, Re [2005] NSWIRComm 3

Award - Redundancies - Award replacing enterprise agreement - Change in ownership of manufacturing site - Dispute as to redundancy entitlements - Whether new award should be interim award - Term of award - Statutory construction - Whether interim award continues in force by virtue of Industrial Relations Act after specified expiry date - Law reform - Whether relevant authorities should consider legislative change to resolve doubt as to the proper construction of s 16 of Industrial Relations Act 1996 - Award made. CATCHWORDS:

Industrial Relations Act 1996 s 16 s 17 LEGISLATION CITED:

HEARING DATES: 12/17/2004; 12/21/2004; 12/22/2004; 12/30/2004

UNILEVER AUSTRALIA LTD Mr P M Kite SC and Mr S B Benson of counsel Solicitors: Baker & McKenzie (Mr P Brown/Ms P Thew)

AP FOODS (SYDNEY) PTY LTD Mr A R Moses of counsel LEGAL REPRESENTATIVES: Solicitors: Kemp Strang (Mr P Frazer)

THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES TRANSPORT WORKERS' UNION OF NEW SOUTH WALES Mr A A Hatcher of counsel Solicitors: Jones Staff & Co (Mr A Howell)

CORAM: WRIGHT J, President Monday 31 January 2005

NOTIFICATION UNDER SECTION 130 BY UNILEVER AUSTRALIA LIMITED OF A DISPUTE WITH THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES AND ANOTHER RE PROPOSAL TO SELL MARRICKVILLE SITE

UNILEVER AUSTRALIA LIMITED AND THE AUSTRALIAN WORKERS' UNION, NEW SOUTH WALES AND ANOTHER

Application by Unilever Australia Limited for an order pursuant to clause 18(5)(iii) of the Margarine Makers (State) Award

APF (SYDNEY) PTY LIMITED (SPREADS & BAKERY MARRICKVILLE) ENTERPRISE INTERIM AWARD 2004

Application by A P Foods (Sydney) Pty Limited as trustee of the A P Foods (Sydney) Trust for an interim award

AP FOODS /UNILEVER (SPREADS & BAKERY - MARRICKVILLE) ENTERPRISE AWARD 2004

Application by The Australian Workers' Union, New South Wales and another for a new award DECISION [2005] NSWIRComm 3

1 This decision in these matters is being delivered immediately after the judgment of the Commission in Court Session in Unilever Australia Limited v The Australian Workers' Union, New South Wales [2005] NSWIRComm 2 is handed down.

2 The background to these proceedings is set out in that judgment, as are details of certain pertinent evidence and related matters. This decision is to be read, as, in effect, a continuation of the judgment in the sense that it will be necessary to read the earlier determination to understand certain aspects of the present one.

Not necessary to deal with Unilever's application for order pursuant to clause 18(5)(iii) of the Award

3 During the course of submissions, senior counsel for Unilever advised the Commission that it was his client's considered position that, should its contentions in the declaratory relief proceedings not be substantially accepted by the Court Session, it would be then inappropriate for the Commission to determine Matter No IRC2004/6510 being the proceedings in which an order was sought pursuant to clause 18(5)(iii) of the Margarine Makers (State) Award. No substantive opposition was placed before the Commission by the Unions as to this submission and I therefore consider it appropriate to act in accordance with Unilever's submissions in this respect.

4 Accordingly, because I have not accepted that the declaratory relief sought by Unilever should be granted, I will not at this stage determine the application for an order under clause 18(5)(iii). The application will be stood over for the present and may be relisted by any party on seven days notice. If no application is made within eight weeks of today, the proceedings will be terminated.

Construction of Section 16 of the Industrial Relations Act

5 As earlier noted, one of the important issues between the parties is exemplified by the APF's application for an interim award in Matter No IRC2004/6518 and the Unions' counter application for a "normal" award ("normal" in the sense of not being an interim award). An important consideration in the issues between the parties is the view expressed on behalf of the Unions that the proper interpretation of s 16 of the Industrial Relations Act results in an interim award having no legal effect when the termination date specified in the interim award is reached. Although there was some discussion during the proceedings as to whether that was the correct construction of s 16, no detailed or considered submission was put by the other parties which took issue with the construction the Unions contended was correct.

6 It is therefore necessary to consider the proper construction of s 16 in relevant respects. Section 16 is entitled "Term of Award" and is in the following terms: (1) An award applies for the period specified in it as its nominal term and, after that period, until rescinded by the Commission. (2) The nominal term of an award must not be less than 12 months nor more than 3 years. (3) However, an award that sets conditions of employment in connection with a project may have a specified nominal term that does not exceed the expected duration of the project. (4) An award may in special circumstances be made on an interim basis. Any such award is to be expressed to be an interim award and applies only for the period (not exceeding 12 months) specified in it. It will be noted that s 16(4) permits an interim award only to be made in special circumstances and that any such award must be expressed to be an interim award and that it "applies only for the period (not exceeding 12 months) specified in it". This situation is to be contrasted with the usual form of award which, as required by s 16(2), must have a nominal term of not less than 12 months nor more than three years. It is plain that, by virtue of s 16(1), the usual kind of award (that is, a non-interim award) applies for the period specified as its nominal term and, after that period, until rescinded by the Commission.

7 Accordingly, the question which requires decision is whether that part of s 16(1) which provides that an award continues to have legal effect after its nominal term has expired until it is actually rescinded by the Commission, applies to an interim award. It can be readily seen why the Unions have taken the view they have as to the limitation on the continuing effect of interim awards. On a very literal reading of s 16 it would appear that only non-interim awards have a "nominal term" since s 16(2) which uses the expression "nominal term" applies only to usual or non-interim awards.

8 Reference to The Macquarie Dictionary, Third Edition, (1997) shows a number of potentially relevant definitions for the word "nominal", as follows: 1. being such in name only; so-called: nominal peace . 2. (of a price, consideration, etc.) named as a mere matter of form, being trifling in comparison with the actual value. ... In normal speech the expression "nominal" also has a meaning akin to the notion of something which is nominated. Applying these definitions to the construction of s 16, while accepting that the construction of the section is far from clear, nevertheless I consider that the preferable construction is one which, notwithstanding that an interim award does not specifically have a term which is called a "nominal term", involves the terms of s 16(1) of the Act applying to interim awards, so that after the term specified or nominated in the interim award (that is, its "nominal term") the award still has legal effect until it is rescinded by the Commission.

9 I have reached this conclusion for a number of reasons. First, it is necessary to look to the purpose of s 16 and the way, in that context, in which the phrase "nominal term" is used. Obviously, the "drafter" of the statute would have preferred a short phrase which described the notion encompassed by the expression "nominal term" rather than a more unwieldy expression such as "the period during which an award is intended to be in force". In discerning the purpose of a statutory provision it is of course relevant to look to the object of the statute particularly where such objects are expressly stated. The object in s 3(a) is "to provide a framework for the conduct of industrial relations that is fair and just" and it is doubtful whether an award (even an interim award) which was at risk of ceasing to have legal effect in a short period when the steps necessary to replace an interim award by a substantive award may be protracted because of, for example, disagreement between the parties, would be unlikely to provide any reasonable framework for the conduct of industrial relations and certainly not be one that could be described as appropriate or fair or just.

10 In any event, the use of the expression or phrase "nominal term" seems to have another particular purpose. That purpose is set out in s 17(3) of the Act which is in the following terms: (3) An award may be varied or rescinded in any of the following circumstances only: (a) at any time with the mutual consent of all the parties to the making of the original award, (b) at any time to give effect to a decision of the Full Bench of the Commission under section 50 or 51 (National and State decisions), (c) during its nominal term if the Commission considers that it is not contrary to the public interest to do so and that there is a substantial reason to do so, (d) after its nominal term if the Commission considers that it is not contrary to the public interest to do so. It will be noted that certain restrictions are placed on the variation or rescission of an award during its "nominal term" unless there is the consent of all parties to the making of the original award or the variation is to give effect to Full Bench decisions under s 50 or s 51. Even in circumstances where the Commission has power to vary or rescind awards during their nominal term, the Commission may only do so if the relevant statutory criteria (see in particular s 17(3)(c) and (d) are satisfied).

11 If the proper construction of s 16 was that an interim award did not have a nominal term that would mean that the strictures on the variation or rescission of awards during or after their nominal terms as laid down in s 17(3) would not apply to interim awards. That might, in turn, mean that there was no power to vary or rescind an interim award at all. Those consequences, in my view, are most unlikely. It is for these reasons that I consider that interim awards made under s 16(4) have a nominal term although s 16(4) does not use that phrase. The nominal term of an interim award is the term expressed in the award as commencing on the award's date of operation and ending on the date at the end of the period of operation of the award. Accordingly, the ameliorative effect of s 16(1) applies to interim awards in the same way as it applies to awards of the usual kind so an interim award continues to have legal effect notwithstanding that its nominal term may have concluded.

Consideration and conclusions re applications for a new APF award

12 I now turn to deal more specifically with the competing applications made by APF and the Unions for awards; in the case of APF for an interim award and in the case of the Unions for a three year award. Notwithstanding the significant differences between the parties on crucial parts of these proceedings it is relevant to note the substantial common ground represented by the fact that both parties accept that any award made should have as its content the substantive provisions of the enterprise agreement in force at the Marrickville plant between Unilever and the relevant Unions. The Commission has some concerns as to the appropriateness of determining to make an award in a situation where the making of the award is contingent upon a number of factors which are entirely beyond the Commission's control and also subject to discretions of the relevant companies which could well be exercised, in light of the terms of the sale agreement, on bases which have little to do with the merits of the various applications.

13 I have earlier referred to the concerns of the Unions in the event that the Commission determines to make an award to replace the current enterprise agreement on an interim basis. Although I have not accepted those concerns to the extent that they depend on their views as to the correct interpretation of s 16 of the Industrial Relations Act, I nevertheless have indicated that the view I have reached is what I consider the better view of the section although it is not in accordance with the literal words of the section and that one can readily understand why the Unions have concluded what they have as to the proper construction of s 16. Similarly, I can well understand the genuine concerns the employees have if they are put in a position where the instrument that governs their employment is an interim award and where there is at least some doubt whether the award will continue to have legal effect after the date of expiry of the interim award in November 2005. Security of employment and entitlements are very sensitive issues in present day Australia. Since the events in 2001 now referred to generally as "September 11" and the subsequent major corporate collapses such as those of Ansett and HIH in Australia and Enron and Worldcom overseas, average citizens have come to have increasing concerns as to their security both personal and financial.

14 On a number of occasions I raised with counsel for APF what difficulty would his client suffer if, instead of making the interim award sought by it, the Commission in an attempt to allay the concerns of the Unions' members made a non-interim award with a nominal term of one year subject to leave reserved provisions being inserted in the award which required the Unions to negotiate for a new award or enterprise agreement to replace the award and such negotiations being timed to commence well before November 2005 so that there was a proper opportunity for a new instrument to be in place by the relevant time. In that context the award would make clear that the assistance of the Commission would be available to facilitate such processes at relevant times during 2005. It is regrettable that those enquiries of APF were not met with any positive response or movement in its position. It is also of regret that no rational explanation was given by APF for its apparent intransigence in that regard.

15 In the circumstances, I consider the appropriate course is to make an award and in view of the degree of uncertainty in the proper construction of s 16, small though it may be, I consider it is appropriate to make an "ordinary" award which has safeguards in favour of APF in terms of leave reserved provisions and other provisions which would require early negotiations in 2005 by the respective Unions and to ensure that there will be proper opportunities for APF to have replacement instruments in force which pay due regard to the reasonable exigencies of its business after it has taken over the business at Marrickville, should that occur.

16 I do not consider that the Union claim for a three year award should be granted. APF has a reasonable claim that a short term award be made at the time it may take over the Marrickville business. It should have an opportunity of considering what award changes may be reasonably appropriate for its running of the business and a one year award with suitable leave reserved and related provisions should be suitable for the purpose.

17 In addition, while there remains a doubt as to the proper construction of s 16 of the Industrial Relations Act, a very important provision of the statute, the relevant authorities should consider amending the statute to remove the doubt. The Industrial Registrar will be directed to bring a copy of this decision to the attention of the relevant Minister so that an appropriate statutory amendment may be considered.

18 The Commission makes the following orders: 1. Unilever's application in Matter No IRC2004/6510 is stood over and may be relisted by any party on seven days' notice. If no application for relisting is made within eight weeks of today, the proceedings will be terminated. 2. A new award will be made in Matters Nos IRC2004/6518 and IRC2004/7263. The award will be of 12 months' duration with leave reserved and associated provisions in favour of APF which will enable it to ensure it has a proper opportunity and the assistance of the Commission to have a new award or enterprise agreement in place at the Marrickville site in November 2005. The award shall otherwise replicate so far as practicable the terms of the current enterprise agreement in operation at the site. 3. APF, the AWU and the TWU shall within seven days confer as to the terms of the award referred to in order 2 and within a further seven days file and serve a document or documents setting out the draft award they propose. In the event of disagreement the matter will be relisted for determination. 4. The Industrial Registrar is directed to provide a copy of this decision to the relevant Minister so that consideration may be given to whether an amendment is appropriate to s 16 of the Industrial Relations Act to place beyond doubt that s 16(1) applies to an interim award made pursuant to s 16(4) of the Act. 5. Liberty to apply on reasonable notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.