FEDERAL COURT OF AUSTRALIA

Maribyrnong City Council v Australian Municipal, Administrative, Clerical and Services Union [2019] FCA 773

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

1    The applicant, the Maribyrnong City Council, currently provides services in the form of personal care, home care, and respite care to persons aged over 65. For that purpose, the applicant directly employs home support officers to deliver those services. The applicant proposes to engage, jointly with the Hobsons Bay City Council, an external service provider, Uniting Age Well, as a sub-contractor to provide the services. The applicant intends that the external service provider, as a condition of its engagement, will agree to employ those employees of the applicant who are currently engaged in the provision of the services on similar terms and conditions that are no less favourable than those they enjoy under their employment by the applicant. The applicant expects that the transfer of responsibility for the provisions services to Uniting Age Well will be completed by 30 June 2019. In the context of this proposal, questions have arisen as to the proper construction and operation of the redundancy provisions of the Maribyrnong City Council Enterprise Agreement 2016 (Agreement). The applicant submits that a transmission of business clause in the Agreement is applicable, and seeks a declaration. The respondents to this proceeding are the three industrial associations that are identified as being bound by the Agreement, and they submit that the transmission of business clause is inapplicable. There was no dispute between the parties that a justiciable controversy thus arose, and I accept that there is a genuine dispute between the parties as to the meaning and effect of the Agreement which attracts the jurisdiction of the Court: see, Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245 at [56]-[57] (Bromberg J).

The Enterprise Agreement

2    The Agreement is a single enterprise agreement that is expressed to be binding on the applicant and its employees who are covered by the classifications in the Agreement. Those classifications include, in Appendix 8, home support officers who work in the applicant’s Community Care Team.

3    The Agreement is divided into three parts: Part A, Part B, and Part C. Part A of the Agreement contains a number of operative provisions. Part B of the Agreement is titled “Victorian Local Authorities Award 2001” and contains a table of provisions of the old Award, most of which are reproduced. Part C of the Agreement is titled “Nurses (ANF – Victorian Local Government) Award 2002” and follows a similar form to Part B. Neither Award has any remaining force independently of the terms of the Agreement.

4    The relationship between Parts A, B, and C of the Agreement is the subject of clause 3 of Part A, which provides (emphasis added) –

3.    RELATIONSHIP WITH OTHER AWARDS/AGREEMENTS

3.1.1    The terms and conditions of Part A of this agreement shall be read and interpreted in conjunction with Part B (the Victorian Local Authorities Award 2001) and Part C (the Nurses [ANF Victorian Local Government] Award 2002).

3.1.2    The National Employment Standards will be read in conjunction with this agreement. Where there are matters in the National Employment Standards which are not specifically included in this agreement then they shall apply to all employees covered by this agreement. Where the National Employment Standards provide entitlements to employees which are more beneficial than those provided for in this agreement then the provisions of the National Employment Standards shall apply to the extent of any inconsistency. No aspect of the National Employment Standards will be reduced by this agreement.

3.1.3    In relation to employees whose employment is covered by the Victorian Local Authorities Award 2001, the provisions of Part A of this Agreement shall be read and applied in conjunction with the provisions of Part B. Where there is any inconsistency between Part A and Part B, the provisions of Part A shall prevail.

3.1.4    In relation to employees whose employment is covered by the Nurses (ANF Victorian Local Government) Award 2002, the provisions of Part A of this Agreement shall be read and applied in conjunction with the provisions of Part C. Where there is any inconsistency between Part A and Part C, the provisions of Part A shall prevail.

3.1.5    This agreement supersedes all previous Maribyrnong City Council Enterprise Agreements and their attached appendices.

3.1.6    In relation to employees who would have been covered by the Victorian Local Authorities Award 2001 as if it had continued to apply after its termination on 20 July 2015, the provisions of Part A shall be read in conjunction with the provisions of Part B. To avoid doubt, this includes employees that were employed on and after 20 July 2015. Where there is any inconsistency between Part A and Part B, the provisions of Part A shall prevail.

5    The Agreement is the successor of two previous industrial instruments: the Maribyrnong City Council No 5 Enterprise Agreement 2005, which was a certified agreement made under the Workplace Relations Act 1996 (Cth), and the Maribyrnong City Council Enterprise Agreement 2010, which was an enterprise agreement made under the Fair Work Act 2009 (Cth). The 2005 Agreement had provided that it was to be read in conjunction with the Awards –

3.    RELATIONSHIP WITH OTHER AWARDS/AGREEMENTS

This Agreement shall be read and interpreted in conjunction with the Victorian Local Authorities 2001 and the Nurses (ANF – Victorian Local Government 2002) Award.

In the event of an inconsistency between this Agreement and the above Awards, this Agreement shall prevail to the extent of the inconsistency.

6    The 2010 Agreement followed a similar form to the current Agreement, in that it reproduced substantial components of the Awards as Parts B and C, and contained terms similar to those in the current Agreement set out under [4] above, but with no term that corresponded to sub-clause 3.1.6.

7    Part A of the Agreement contains a number of terms that are relevant to circumstances of redundancy, and the entitlement of employees to severance payments. Clause 11.1 of Part A provides (emphasis added) –

11    EMPLOYMENT SECURITY

11.1    It is a principle of this Agreement that there is a commitment to employment security. Employment security refers to secure and continuous employment with Maribyrnong City Council, as distinct from job security that refers to secure and continuous employment in a specific position and classification.

Although community expectations and needs may change over time with subsequent effects on service provision and therefore the duties of a position, MCC gives a further commitment that there will be no systematic downsizing of the organisation as a result of a work re design process. Where changes to work, service provision and programs occur, the opening up of career paths, retraining and redeployment, as prescribed in Clause 13, will be the primary strategies used to ensure employment security. Career counselling will be available as part of the transitional process.

The parties further agree that there shall be no forced reduction in workforce size, and any reduction to workforce size shall be by natural attrition or voluntary departure packages. An exception to this is positions which are externally funded. Where there is a departure from this approach the parties will agree to an alternative outcome.

Where any factors result in changes to staffing levels, consultation with employees, and/or their appointed representatives will be undertaken at the earliest possible time.

The Parties agree that in the case of a redundancy occurring as a result of the circumstances described herein, Council’s redeployment program as prescribed in clause 13 will be used to endeavour to provide secure employment opportunities for the affected staff. Where a satisfactory redeployment position cannot be identified, the provisions of Clause 26 to this Agreement shall apply.

11.2    Council is committed to being fully compliant with all Best Value Principles as contained in the Victorian Local Government Act (1989) (or successor).

8    Clause 12 of Part A of the Agreement is titled “Introduction of Change (Consultation)”, and contains the following sub-clause –

12.5    Council commits to genuine consultation with its employees in the event there is significant additional new contracting out of services.

9    Clause 13 of Part A of the Agreement is material to the circumstances of redundancy, and provides –

13    REDEPLOYMENT

The following details the procedures to be followed should a potential redundancy situation arise.

13.1    An employee will be given notice of a potential redundancy in writing, stating:

•    The reason their position is no longer required;

•    The reason the duties of their position have been substantially altered;

•    The procedures that will apply under this Agreement;

•    The rights and entitlements that will apply under this Agreement.

13.2    Consultation will commence immediately with the affected employee and their authorised representative. The aim of such consultation will be to make reasonable efforts to redeploy the affected employee to an appropriate vacancy at the same classification level for which the employee has the skills and abilities.

13.3    Where an employee agrees and is redeployed to a position at a lower wage, the maintenance of their previous wage shall apply for a 12 month period or two weeks of each year of service, whichever is greater.

13.4    During the redeployment period the affected employee shall also be advised of any available positions within the organisation.

13.5    The affected employee shall be given preference of appointment to vacant positions of the same classification where they meet the selection criteria or may be capable of performing with appropriate and agreed upon retraining. An employee shall not unreasonably refuse an offer of redeployment.

13.6    If two or more affected employees apply for the one vacant position, then the usual selection procedures of Council shall apply.

13.7    An employee who is redeployed to a position will be given a six month trial period during which both parties will be able to decide if the new position is suitable. The trial period for any employee will commence from the first day of duty in the redeployment position.

13.8    Notwithstanding the provisions of clause 13.7, the parties may agree at any time during the trial or extended trial period to cease the trial and proceed to other redeployment action or the provisions of the redundancy clause.

13.9    Provided that Council complies with the provisions of the redeployment process, then in the event that an employee affected by the matters referred to in sub clause 13.1 does not accept any reasonable offer of redeployment or no reasonable offer is able to be made to the employee after an 8 week period (or other period to be agreed) from the commencement of the process then the employee may be retrenched by Council and shall be entitled to the severance payments set out in this Agreement.

10    Clause 27 of Part A of the Agreement contains the following terms in relation to severance entitlements –

27.    REDUNDANCY AND SEVERANCE ENTITLEMENTS

27.1.1    An employee whose position becomes redundant shall be entitled to a severance package as outlined below. Redundancy may occur where an employee’s position is no longer required by the Council and there is no other suitable employment within Council aligned to the employee’s skills and capabilities. In addition an employee’s position may be declared redundant due to municipal boundary changes and/or dis-amalgamations. An employee shall not be entitled to a severance package if the employee is redeployed to a suitable and acceptable position within the Council. Casual, temporary and/or contract employees are not entitled to severance payments or packages.

27.1.2    Employees who transferred from the City of Brimbank to the Maribyrnong City Council as part of the Local Government municipal boundary restructure shall have their service with the City of Brimbank recognised as though it was service with the Maribyrnong City Council.

27.1.3    The following redundancy and/or severance payments package applies:-

27.1.4    Four weeks pay in lieu of notice.

27.1.5    One additional weeks notice for employees who are over 45 years of age.

27.1.6    Three weeks pay for each completed year of service with the Maribyrnong City Council, plus one week’s pay for each completed year of service with other Victorian municipalities, up to a maximum of 48 weeks pay. Provided that the payment of one weeks pay for each year of service with another Victorian municipality shall only apply if the service between the Maribyrnong City Council and other Victorian municipalities is continuous.

27.1.7    Lump sump [sic] payment of $6,000 for full time employees, pro-rata for part-time employees.

27.1.8    Lump sum payment for loss of motor vehicle usage as follows:-

a.    $5,000 for employee’s [sic] whose employment arrangements include the provision of a motor vehicle, where a cash-out provision does not apply, pro-rata for part-time employees.

b.    $2,000 for commuter use only arrangements. Commuter use refers to an arrangement where the employee is allowed to use a vehicle for transportation between home and work only.

27.1.9    For each employee a lump sum payment of $2,000 will be paid directly to the employee for outplacement services and/or training. In addition to this lump sum payment of $2,000, Council will pay an additional $3,000 upon being invoiced within two months of the date of the employee being retrenched, to a training/outplacement provider that is agreed to between the Council and the employee.

27.1.10    A lump sum payment equal to two weeks pay for employees who regularly perform scheduled overtime.

27.1.11    An ex-gratia payment equivalent to pro-rata long service leave, calculated in accordance with the Long Service Leave Act and Regulations.

27.1.12    For participating members, an ex-gratia payment equivalent to pro-rata retiring gratuity, calculated in accordance with the City of Footscray Retiring Allowance Scheme 1958.

27.1.13    All calculations shall be made on the normal rate of pay (see definitions at Appendix 11).

11    Part B of the Agreement, which reproduces the old Victorian Local Authorities Award 2001, contains separate provisions in relation to redundancy, in the following terms –

17.    REDUNDANCY

17.1    Definitions

17.1.1    Business includes trade, process, business or occupation and includes part of any such business.

17.1.2    Redundancy occurs where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and that decision leads to the termination of employment of the employee, except where this is due to the ordinary and customary turnover of labour.

17.1.3    Small employer means an employer who employs fewer than fifteen employees.

17.1.4    Transmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transmitted has a corresponding meaning.

17.1.5    Week’s pay means the ordinary time rate of pay for the employee concerned. Provided that such rate shall exclude:

•    overtime;

•    penalty rates;

•    disability allowances;

•    shift allowances;

•    special rates;

•    fares and travelling time allowances;

•    bonuses; and

•    any other ancillary payments of a like nature.

17.2    Transfer to lower paid duties

Where an employee is transferred to lower paid duties by reason of redundancy, the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may, at the employer’s option, make payment in lieu thereof of an amount equal to the difference between the former ordinary rate of pay and the new ordinary time rate for the number of weeks of notice still owing.

17.3    Severance pay

17.3.1    Severance pay

An employee, other than an employee of a small employer as defined in clause 17.1.3 hereof, whose employment is terminated by reason of redundancy is entitled to the following amount of severance pay in respect of a period of continuous service.

Period of continuous service            Severance Pay

Less than 1 year                                    Nil

1 years less than 2 years                      4 weeks pay

2 years and less than 3 years                6 weeks pay

3 years and less than 4 years                7 weeks pay

4 years and less than 5 years                8 weeks pay

5 years and less than 6 years                10 weeks pay

6 years and less than 7 years                11 weeks pay

7 years and less than 8 years                13 weeks pay

8 years and less than 9 years                14 weeks pay

10 years and over                                12 weeks pay

*Week’s pay is defined in clause 17.1 hereof.

17.3.2    Severance pay – employees of a small employer

An employee of a small employer as defined in clause 17.1.3 hereof whose employment is terminated by reason of redundancy is entitled to the following amount of severance pay in respect of a period of continuous service.

Period of continuous service            Severance Pay

Less than 1 year                                  Nil

1 years less than 2 years                      4 weeks’ pay

2 years and less than 3 years                6 weeks’ pay

3 years and less than 4 years                7 weeks’ pay

4 years and over                                  8 weeks’ pay

*Week’s pay is defined in clause 17.1 hereof.

17.3.3    Provided that the severance payments shall not exceed the amount which the employee would have earned if employment with the employer had proceeded to the employee’s normal retirement date.

17.3.4    Continuous service does not include any period during which the employee was absent for any of the reasons described in clause 41.4 of this award.

17.3.5    Application may be made for variation of the severance pay provided for in this clause in a particular redundancy situation in accordance with the redundancy case decision [PR032004, 26 March 2004] and the redundancy case supplementary decision [PR062004, 8 June 2004].

17.4    Employee leaving during notice period

An employee given notice of termination in circumstances of redundancy may terminate his/her employment during the period of notice set out in clause 18 of this award. In this circumstance, the employee will be entitled to receive the benefits and payments they would have received under this clause had they remained with the employer until the expiry of the notice, but will not be entitled to payment in lieu of notice.

17.5    Alternative employment

17.5.1    An employer, in a particular redundancy case, may make application to Fair Work Commission to have the general severance pay prescription varied if the employer obtains acceptable alternative employment for an employee.

17.5.2    This provision does not apply in circumstances involving transmission of business as set out in clause 17.7 hereof.

17.6    Job search entitlement

17.6.1    During the period of notice of termination given by the employer in accordance with clause 18.1 of this award, an employee shall be allowed up to one day’s time off without loss of pay during each week of notice for the purpose of seeking other employment.

17.6.2    If the employee has been allowed paid leave for more than one day during the notice period for the purpose of seeking other employment, the employee shall, at the request of the employer, be required to produce proof of attendance at an interview or he/she shall not receive payment for the time absent. For this purpose, a statutory declaration will be sufficient.

17.6.3    The job search entitlements under this clause apply in lieu of the provisions of clause 18.3 of this award.

17.7    Transmission of business

17.7.1    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 clause called the transmittor) to another employer (in this clause called the transmittee), in any of the following circumstances:

17.7.1(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

17.1.1(b)    where the employee rejects an offer of employment with the transmittee:

(1)    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

(2)    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.

17.7.2    Fair Work Commission may vary clause 17.7.1(b) hereof if it is satisfied that this provision would operate unfairly in a particular case.

17.8    Employees exempted

This clause does not apply to:

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

•    probationary employees;

•    apprentices;

•    trainees;

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

•    casual employees.

17.9    Incapacity to pay

Fair Work Commission may vary the severance pay prescription on the basis of an employer’s incapacity to pay. An application for variation may be made by an employer or a group of employers.

17A.    REDUNDANCY DISPUTES PROCEDURE

17A.1    Clauses 17A.2 and 17A.3 hereof impose additional obligations on an employer where an employer contemplates termination of employment due to redundancy and a dispute arises (‘a redundancy dispute’).

171.2    Where a redundancy dispute arises, and if it has not already done so, an employer must provide affected employees and the relevant union or unions (if requested by an affected employee) in good time, with relevant information including:

17A.2.1    the reasons for any proposed redundancy;

17A.2.2    the number of categories of workers likely to be affected; and

17A.2.3    the period over which any proposed redundancies are intended to be carried out.

17A.3    Where a redundancy dispute arises and discussions occur in accordance with this clause, the employer will, as early as possible, consult on measures taken to avert or to minimise any proposed redundancies and measures to mitigate the adverse affects [sic] of any proposed redundancies on the employees concerned.

12    Clause 10 of Part C of the Agreement, which relates to employees whose employment would have been covered by the Nurses (ANF Victorian Local Government) Award 2001, is in substantially the same terms as clause 17 of Part B. Because the applicant sought adjudication only in relation to Part B, I shall focus on Part B, but the same issues arise in relation to Part C.

13    In issue in the present case is clause 17.7 of Part B set out above, which is titled “Transmission of business”. The applicant’s case is that, for the purposes of sub-clause 3.1.3 of Part A of the Agreement, there is no inconsistency between clause 27 of Part A, and clause 17.7 of Part B, and because the Agreement provides that Part A is to be read and interpreted in conjunction with Part B (sub-clause 3.1.1), and read and applied in conjunction with the provisions of Part B (sub-clause 3.1.3), and read in conjunction with Part B (sub-clause 3.1.6), the transmission of business clause in Part B has effect so as to qualify clause 27 of Part A.

14    The applicant sought a declaration in the following terms –

There is no “inconsistency” within the meaning of that term in sub-clause 3.1.3 of the Maribyrnong City Council Enterprise Agreement 2016 (the 2016 Agreement) between clause 27 of Part A of the 2016 Agreement and sub-clause 17.7 of Part B of the 2016 Agreement.

Submissions of the applicant

15    The applicant’s submissions advocated a practical approach to construction that avoided technicalities. The applicant emphasised that there was a presumption that the Agreement had been drafted by lay people, it had been voted on by lay people, and was to be implemented by lay people. The applicant submitted that, recognising the latitude which is given to the construction of industrial instruments, effect is to be given to clause 3.1.3 by striving as much as possible to give effect to all the provisions of the Agreement, and that this was the context in which “inconsistency” is to be evaluated.

16    The applicant submitted that the transmission of business clause in clause 17.7 of Part B was unremarkable, which was illustrated by the fact that nearly all awards since the decision of the Full Bench of the Industrial Relations Commission in The Redundancy Case (2004) 129 IR 155 have had such a clause, and that the National Employment Standards under s 122(2) of the Fair Work Act had similar effect where there was a transfer of employment in circumstances where service with the first employer was recognised by the second employer. The applicant submitted that there would be no inconsistency if clause 17.7 had its place within Part A, and that it would be compatible with Part A.

17    In relation to the point that clause 17.7 is in terms expressed to be an exception to the application of clause 17 of Part B, the applicant submitted that when read and applied in conjunction with Part A, clause 17.7 should not be treated as being confined in its scope to what would otherwise be captured by clause 17 of Part B, but should be construed so that it is directed to the subject-matter of redundancy dealt with by Part A. The applicant submitted that to limit clause 17.7 to any potential operation of clause 17 of Part B would amount to a technical construction that was to be eschewed. In this regard, the applicant submitted that the parties had chosen, in terms of the bargaining process, to not open up line by line how Parts A and B were to fit together, but, on a fair, industrial, practical reading it was to be accepted that the parties recognised that the transmission of business provisions would operate in conjunction with the redundancy provisions of Part A.

18    The applicant submitted that authorities that were relied upon by the respondents by which they sought to marshal principles developed for the purposes of inconsistency arising in the context of s 109 of the Constitution were inapt. The applicant submitted that the fact that the terms of the old Awards were reproduced as parts of the Agreement was significant, and strengthened the force of the applicant’s argument that relevant provisions of the old Awards should be given force.

19    The applicant accepted that the benefits under the severance pay provisions in clause 27 of Part A were superior to those for which clause 17.3 in Part B provided, and that therefore clause 17.3 had no work to do. The applicant also accepted that clause 17.5 of Part B, which contemplates variation of severance pay prescription by the Fair Work Commission, has no work to do under the current legislation.

20    As to the absence of a transmission of business clause in Part A, the applicant submitted that the drafters of the Agreement must be taken to have deliberately not included a transmission of business clause, because one was already contained in Parts B and C. This was because Part A provides expressly that it is to be read and interpreted (cl 3.1.1), or read and applied (cl 3.1.3, 3.1.4) in conjunction with Parts B and C. The applicant submitted that if the transmission of business clauses in Parts B and C were engaged, then neither clause 27 or clause 11 of Part A would operate.

Submissions of the respondents

Submissions of the first respondent

21    The first respondent accepted that the relevant words were to be read in the context of the Agreement, and referred to clauses 11 and 13 to give context to the operation of clause 27 of Part A. In relation to clause 11, which is set out at [7] above, the first respondent pointed to the commitment to employment security, being employment with the Council as distinct from job security. The first respondent submitted that there was a consistency between clause 11.1 and clause 27.1 which provides that redundancy may occur where an employee’s position is no longer required by the Council and there is no other suitable employment within Council aligned to the employee’s skills and capabilities, and that clause 11.1 at least informs the construction of clause 27.

22    The first respondent also accepted that, in relation to clause 17.5 of Part B of the Agreement, which contemplates applications to the Fair Work Commission to vary entitlements to severance payments, the Commission has no jurisdiction to reduce such entitlements under an enterprise agreement. The first respondent accepted that clause 17.5 therefore has no work to do, and for the same reason, clause 17.9 has no scope in which to operate.

23    The first respondent fastened upon the acceptance that clauses 17.3 and 17.5 of Part B had no work to do as a consideration that made it easier to conclude that clause 17.7 had no operation. However, the first respondent submitted that not all of clause 17 may have no work to do, and that clause 17.6, which provided for time off work without loss of pay for the purpose of seeking other employment, may continue to operate in conjunction with Part A.

24    The first respondent sought to rely upon extrinsic material in the nature of documents filed with the Fair Work Commission as part of the application to approve the Agreement that indicated that the parties considered that the terms of the Agreement, including specifically clause 27 of Part A, were more beneficial than the corresponding modern awards and the two old Awards that were substantially reproduced as Parts B and C of the Agreement. However, the fact that the benefits under clause 27 are more beneficial was not in issue between the parties, and therefore I do not consider that these materials have any bearing on the resolution of the questions raised in this proceeding.

25    One of the ways in which the first respondent put its submissions in relation to inconsistency was that Part A of the Agreement covers the field on the topic of redundancy, and that therefore the whole of clause 17 of Part B was inapplicable. The first respondent pointed to some differences between clause 27 of Part A, and clause 17 of Part B. Those differences related to the express exclusions to clause 27.1.1 of Part A, which were engaged where the employee is redeployed to a suitable position within the Council, and for casual, temporary or contract employees. The terms of the corresponding exclusions under clause 17 of Part B were different, and clause 17.8, for instance, extended the exclusion to apprentices. The first respondent submitted that these features either supported its submission that clause 27 covered the field, or alternatively, that where clause 27 contains express exclusions, it should not be construed as picking up an additional exclusion by reference to clause 17.7 of Part B.

26    The first respondent submitted that the terms of clause 17.7.1 of Part B made the clause inapt for application to clause 27 of Part A. That is because clause 17.7.1 (which is set out in full under [11] above) commences with the words –

The provisions of this clause are not applicable …

27    In response to the applicant’s submission that there would be no inconsistency if clause 17.7 of Part B had its place within Part A, the first respondent submitted that the obvious problem was that it had not been included or reproduced in Part A, and that the exclusions to the redundancy provisions in Part A were express, and were limited.

28    The first respondent relied on the breadth of meaning of the word “inconsistent” in the Oxford English Dictionary in the second category of meaning, being without agreement or harmony –

Not consisting; not agreeing in substance, spirit, or form; not in keeping; not consonant or in accordance; at variance, discordant, incompatible, incongruous.

29    The first respondent submitted that on the assumption that clause 27 of Part A establishes an entitlement, then clause 17.7 of Part B meets any of those definitions of “inconsistent”.

30    The first respondent also submitted that Clause 3.1.3 had the consequence that Part A of the Agreement was always paramount to Part B, in the same way that s 170LY of the Workplace Relations Act which was in force at the time the 2005 Agreement commenced, provided that a certified agreement prevailed over an award to the extent of any inconsistency with the award. The first respondent submitted that it was therefore incorrect to suggest that the term “in conjunction with” meant that one had to strain to read Parts A and B of the Agreement together, when there was a mechanism to resolve any inconsistency.

Submissions of the second respondent

31    The interest of the second respondent in this proceeding was that, although the declaration sought by the applicant related only to the inter-relationship between Part A and Part B, substantially the same issues arose in relation to the inter-relationship between Part A and Part C. The second respondent submitted that there were two problems with the terms of the declaratory relief sought by the applicant –

(1)    First, in the absence of agreed facts, or facts as found by the Court, it involved a hypothetical consideration.

(2)    Second, even if the Court were to make a declaration in the terms sought by the applicant, the underlying dispute would remain unresolved. If the applicant were to proceed with a proposal to engage a subcontractor to deliver its home care operations, the question whether employees who accepted employment with the relevant sub-contractor would be entitled to redundancy and severance entitlements in accordance with clause 27 of Part A of the Agreement involved the determination of a series of additional issues that were not before the Court.

32    In the alternative, the second respondent submitted that there was an inconsistency that arose between clause 27 of Part A, and clause 17 of Part B. The second respondent submitted that while clause 3.1.1 provided that the terms of Part A should be read in conjunction with Parts B and C, the primary terms of the Agreement were in Part A, because it was those terms which record the product of the negotiations that occurred over the bargaining period, and which were to prevail where there was any inconsistency. In considering the application of those clauses that referred to “inconsistency”, the second respondent submitted that to the extent that previous judicial consideration was of assistance, cases concerning the interpretation of contracts provided an inappropriate analogy, and that reliance on cases concerning contracts was of little utility, citing Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152 at [88]. The second respondent submitted that a more useful analogy was the identification of inconsistency for the purposes of s 109 of the Constitution.

33    The second respondent submitted that, in relation to clause 27.1.1 of Part A of the Agreement, its intention was to cover the field. The second respondent pointed to the opening sentence which provided that, “An employee whose position becomes redundant shall be entitled to a severance package …”, and submitted that “redundant” has a notorious industrial meaning, which was also reflected in the terms of clause 13.1 of Part A. The second respondent submitted that the two instances of redundancy specified in clause 27.1.1 were examples, of circumstances that may give rise to redundancy. This submission was made to meet the applicant’s submission to the contrary, which was that clause 27.1.1 of Part A was drafted so as not to cover the field, thereby making it amenable to a qualification such as the transmission of business clause in clause 17.7 of Part B.

34    The second respondent also pointed to the fact that clause 27.1.1 included one specific exception to the entitlement to a severance package, which was if the employee was redeployed within the Council. The second respondent submitted that this was consistent with the terms of clause 11, and its reference to employment security, being secure and continuous employment with the Council, and to the redeployment provisions in clause 13, to which I have referred.

35    The second respondent submitted that the provisions of clause 27.1.1 were the product of a negotiation process for the 2016 Agreement, which disclose an intent that the entitlements on redundancy were to be more beneficial than those which had existed under the old Awards as reproduced in Parts B and C.

36    The second respondent characterised the terms of clause 17 of Part B as being an alternative set of provisions dealing with redundancy which had been imported into the Victorian Local Authorities Award 2001 in 2004 as a variation following the Redundancy Case. The second respondent submitted that the existence of some terms within clause 17 of Part B that could have no operation under current legislation indicated that the clause is obsolete. Whereas clause 17 of Part B contained generic provisions following the Redundancy Case, clause 27 of Part A provided for comprehensive terms as to redundancy, which had been negotiated to suit the specific interests of those covered by the Agreement.

37    The second respondent submitted that clause 27 of Part A and clause 17 of Part B are directly inconsistent because clause 17.7 of Part B purports to take away or modify a right or privilege conferred by clause 27 of Part A, and that the clauses are indirectly inconsistent because clause 17.7 of Part B intrudes upon the subject matter of clause 27 of Part A, namely redundancy and severance entitlements, in circumstances where clause 27 of Part A covers the field.

Submissions of the third respondent

38    The third respondent adopted the submissions of the first and second respondents and opposed the declaration that was sought by the applicant.

Consideration

Principles of construction

39    The principles applicable to the construction of an enterprise agreement are well-known, and were not in substantial dispute. The parties referred to the principles applicable to the interpretation of awards identified by French J in City of Wanneroo v Holmes (1989) 30 IR 362 at 378-380, to the summary of principles by the Full Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131; 362 ALR 311 at [197], and to the decision of the Full Court in Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Nine Brisbane Sites Appeal) [2019] FCAFC 59, where at [5] Allsop CJ stated –

The approach to the proper construction of enterprise agreements is the subject of many cases. The industrial context and purpose is relevant to the ascription of meaning. That is one that takes account of the statutory context and that contributes to a sensible and practical industrial result, shorn of narrow legalism and pedantry: Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10; 222 CLR 241 at 246–247 [2]; 270–271 [96]; and 282–283 [129]–[130]; Kucks v CSR Ltd (1996) 66 IR 182 at 184; and Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [16].

40    In an often-cited passage in Kucks v CSR Ltd (1996) 66 IR 182 at 184, Madgwick J stated –

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

41    The above passage was cited in Amcor Ltd v Construction Forestry Mining and Energy Union (2005) 222 CLR 241 at [96] (Kirby J), and at [129]-[130] (Callinan J).

42    The applicant placed reliance on these authorities to support a submission that there should not be an overly legalistic approach to the construction of the Agreement. I accept that submission, and I will approach the construction of the Agreement having regard to the principles referred to in the above-cited authorities.

Inconsistency

43    The parties referred to dictionary definitions of “inconsistency” and ““inconsistent”, and to authorities that have considered the resolution of inconsistencies in different contexts. Those contexts included: inconsistency between the terms of a standard-form agreement and rules that were incorporated by reference into the agreement (Leonies Travel Pty Limited v International Air Transport Association [2009] FCA 280; 255 ALR 89, which I note was reversed on appeal, but not on the conclusion that there was no inconsistency: [2010] FCAFC 37; 183 FCR 246); an inconsistency clause in a contract for sale of goods that incorporated standard terms, and which provided that special terms and conditions were to prevail over standard terms and conditions (Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565); inconsistency between the terms of an enterprise agreement and the provisions of the Fair Work Act (Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152); and the resolution of inconsistency between Commonwealth and State laws for the purposes of s 109 of the Constitution (Jemena Asset Management (3) Pty Ltd v Coinvest Limited (2011) 244 CLR 508). The parties appeared to accept, however, that resolution of the issues in this case requires that the Court consider the term “inconsistency” in the context of, and for the purposes of the Agreement. In this regard, in Luxor (Eastborne) v Cooper [1941] AC 108 at p 130 Lord Wright stated in relation to the interpretation of a contract –

I deprecate in general the attempt to enunciate decisions on the construction of agreements as if they embodied rules of law. To some extent decisions on one contract may help by way of analogy and illustration in the decision of another contract. But however similar the contracts may appear, the decision as to each must depend on the consideration of the language of the particular contract, read in the light of the material circumstances of the parties in view of which the contract is made.

44    Similar considerations apply in relation to the construction of statutory provisions: Ogden Industries Pty Ltd v Lucas [1970] AC 113 at 127; Brennan v Comcare (1994) 50 FCR 555 at 572; McNamara v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 646 at [40]. However, for two reasons, I consider that there is utility in making reference to some authorities that have considered the reconciliation of different legal obligations through the lens of whether, by reason of inconsistency, one set of obligations prevails over the other. The first is that, as Rix LJ stated in Scott v The Copenhagen Reinsurance Company (UK) Ltd [2003] EWCA Civ 688; [2003] 2 All ER (Comm) 190 at [33], it is the insight of the common law that wisdom can be drawn from previous examinations of similar problems. The second and related reason is that while the process of construction in this case should focus on the text of the Agreement, the text is to be construed in its context and having regard to its industrial purpose: Amcor Ltd v Construction, Forestry, Mining and Energy Union at [2] (Gleeson CJ and McHugh J). The context here is an industrial instrument where, in the event of inconsistency, the terms of Part A are to prevail over Part B, where Part B contains substantially the terms of an old award which previously had statutory force. Similar issues have been considered in other contexts, and it is desirable to identify and recognise those different contexts.

45    Section 109 of the Constitution provides –

When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

46    There are two types of inconsistency that have been recognised for the purposes of s 109: direct inconsistency, and “covering the field” or indirect inconsistency. Direct inconsistency occurs where a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, and indirect inconsistency occurs if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties: Victoria v Commonwealth (1937) 58 CLR 618 at p 630 (Dixon J); Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at [28]; Dickson v The Queen (2010) 241 CLR 491 at [13]-[14]; Jemena Asset Management (3) Pty Ltd v Coinvest Limited (2011) 244 CLR 508 at [39]-[40]. In Ex parte McLean (1930) 43 CLR 472 at p 483 Dixon J stated in relation to indirect inconsistency –

The inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience. It depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed. When a Federal statute discloses such an intention, it is inconsistent with it for the law of a State to govern the same conduct or matter.

47    The paramount nature of the laws of the Commonwealth Parliament, to which effect is given by s 109 of the Constitution, also underlies the judicial formulations of direct inconsistency. Similar principles are applicable to the question whether subordinate legislation, such as a regulation, or an instrument made pursuant to a statute, such as an enterprise agreement, is repugnant to a law of the Parliament: Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152 at [94]–[97].

48    The application of inconsistency clauses in contracts involves different considerations. In cases involving the construction of contracts, the issue is the interaction of the terms of the contract rather than any question of laws having a paramount operation such that any alteration, impairment or detraction by a subordinate provision might amount to inconsistency. Rather, in the case of a contract, the source of obligations will be the agreement of the parties, and the starting point is usually to construe the contract as a whole.

49    In Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565, there was an inconsistency clause in the following terms –

Special terms and conditions contained herein and/or attached hereto shall be treated as if written on such contract form and shall prevail in so far as they may be inconsistent with the printed clauses of such Contract Form.

50    Bingham LJ observed at p 574 that it is wrong to approach the contract on the assumption that there is no inconsistency, because by including the inconsistency clause, the parties have acknowledged that there may be. Bingham LJ then stated –

It is a commonplace of documentary construction that an apparently wide and absolute provision is subject to limitation, modification or qualification by other provisions. That does not make the later provisions inconsistent or repugnant.

51     After reviewing some authorities, at p 575 Bingham LJ stated –

These cases are only of significance as helping to define inconsistency and illustrating how courts have approached that question in the past. It is not enough if one term qualifies or modifies the effect of another; to be inconsistent a term must contradict another term or be in conflict with it, such that effect cannot fairly be given to both clauses.

52    An example given by each of Bingham LJ (at p 575) and Dillon LJ (at p 578) was the operation of a force majeure clause where, although an obligation might be qualified by such a clause, it was not inconsistent with the obligation. Dillon LJ at p 578 also stated –

In my judgment the first task is to see if the clauses can sensibly be read together. If they cannot, there is inconsistency and the special condition is to prevail over the other clause in the printed form. But, if they can be read together, they should be and there is no inconsistency.

53    In relation to the application of clause 3.1.3 of the Agreement in the present case, the Agreement is not a contract: Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152 at [88]. The Agreement is an instrument that has statutory force by reason of having been approved by the Commission under s 186 of the Fair Work Act. The obligation to comply with the Agreement is in the statute: Fair Work Act, s 50. Although Part B of the Agreement reproduces substantial parts of the old Award, the Award has no independent force. The source of all obligations under the Agreement is the same, namely the terms of the Agreement as given force by the Fair Work Act. These features distinguish the application and reconciliation of the terms of Part A and Part B of the Agreement from questions of inconsistency that arise in other contexts, such as under s 109 of the Constitution. That is because clause 3.1.3 of the Agreement provides – as a commencing point – that Part A shall be read and applied in conjunction with Part B. This mandate tells against construing any terms of Part B that merely qualify Part A as being inconsistent with Part A. In my view, in order that there be inconsistency between the terms of Part A and Part B, the terms must be such that they cannot sensibly or fairly be read together. Within this concept, there may be terms of Part A which demonstrate an intent to cover a particular subject-matter to the exclusion of corresponding terms in Part B. In these events, the terms of Part A prevail.

The Agreement

54    Part A of the Agreement does not cover the entire range of subject matter that was covered by the old Awards. The device that is employed by the Agreement to incorporate terms that cover such subject-matter is the substantial reproduction of the old Awards in Parts B and C of the Agreement, and the terms of clause 3 of Part A, which are set out under [4] above. There is a relatively small number of clauses of the old Awards that are not reproduced in the Agreement, such as the introductory clauses 3, 4, 5, 8, and 12, and some definitions in clause 7. But subject to this, the reproduction of the terms of the old Awards is wholesale, and indiscriminate. That is demonstrated by the inclusion of some clauses that are not capable of having practical effect under the current legislation. Examples include clauses 17.5, 17.7.2, and 17.8, which contemplate applications to the Fair Work Commission to vary severance pay entitlements. The parties accepted that the Commission does not have power to vary entitlements under enterprise agreements in the same way award entitlements might have been varied under previous legislation, as illustrated by cases such as Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226. Variations of enterprise agreements generally require approval of a majority of affected employees before the Commission can approve the variation: Fair Work Act, ss 207-211. One exception to this general position is an application to vary an enterprise agreement to remove ambiguity or uncertainty: s 217.

55    The substantial reproduction of the old Award in Part B, with apparent inattention to the applicability and appropriateness of individual clauses, has the consequence that in relation to Part B, I do not place much weight on the linguistic rule of construction that every word of an instrument is to be given meaning: see, Bennion on Statutory Interpretation, (5th ed, LexisNexis, 2008) at p 1157. This consideration affects the weight to be given to Part B in evaluating whether Part A is to be construed as covering the field and therefore prevails.

56    In relation to the topic of redundancy, there are the following differences between the provisions in Part A of the Agreement, and the old Award provisions in Part B –

(1)    Clause 13 of Part A contains more extensive provisions in relation to consultation and redeployment in the event of a potential redundancy than those appearing in Part B. Clause 17A of Part B imposes obligations of consultation, but does not contain provisions about redeployment like those that appear in clause 13.

(2)    A significant feature of clause 13 of Part A is the obligation on the parties to consult with a view to redeployment to an appropriate vacancy. Clause 13.5 provides that an affected employee shall be given preference of appointment to vacant positions of the same classification. Clause 13.5 also provides that an employee shall not unreasonably refuse an offer of redeployment. Clause 13.9 provides that in the event that the applicant complies with the redeployment process, then in the event that an affected employee does not accept a reasonable offer of redeployment, or no reasonable offer is able to be made, then the employee may be retrenched, and is entitled to the severance payments provided for in the Agreement. There may be some tension between clauses 13.5 and 13.9 about which I say nothing further, because it is not a principal subject of dispute, and was not the subject of argument.

(3)    The entitlement to payments under clause 27 of Part A is more beneficial than the entitlements under clause 17.3 of Part B.

(4)    The concept of redundancy is expressed differently. Clause 27.1.1 of Part A refers to “[a]n employee whose position becomes redundant” and provides -

Redundancy may occur where an employee’s position is no longer required by the Council and there is no other suitable employment within Council aligned to the employee’s skills and capabilities.

           Clause 17.1.2 of Part B defines redundancy as follows –

Redundancy occurs where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and that decision leads to the termination of employment of the employee, except where this is due to the ordinary and customary turnover of labour.

 One difference between the two expressions is that clause 27.1.1 of Part A brings within it the unavailability of other suitable employment within the Council. In clause 17 of Part B, that issue is accommodated by the very different mechanism provided for by clause 17.5, which contemplates that application be made to the Commission for variation of the severance pay prescription, but noting that this is not possible under the current legislation, and further noting that clause 17.5.2 excludes circumstances involving a transmission of business.

(5)    The persons excluded from entitlement to severance payments are expressed differently. Under clause 27.1 of Part A, the persons who are excluded are –

(a)    employees who are redeployed to a suitable and acceptable position within the Council;

(b)    casual employees;

(c)    temporary employees; and

(d)    contract employees.

(6)    Under clause 17.8 of Part B, the persons who are excluded are –

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

(b)    probationary employees;

(c)    apprentices;

(d)    trainees;

(e)    employees engaged for a specific period of time or for a specified task or tasks; or

(f)    casual employees.

(7)    Finally, there is no transmission of business exception in Part A to either the consultation and redeployment provisions in clause 13, or the provisions relating to severance entitlements in clause 27.

57    I have come to the view that clause 17.7 of Part B of the Agreement cannot sensibly work together with Part A. There are three main reasons for this conclusion. The first is that Part A of the Agreement is concerned not only with severance payments in the event of redundancy, but also with the obligations of consultation and redeployment within the Council that are the subject of clause 13. Clause 27 of Part A is to be construed harmoniously with clause 13, and in the context of the applicant’s commitment to employment security in clause 11.1, which is expressed to be continuous employment with the Council. Clause 17.7 does not address the subject of clause 13, but is inconsistent with it.

58    The second reason is concerned with the text of clause 17.7. It was accepted by the parties that at least clause 17.3 of Part B is inconsistent with clause 27 of Part A, because the severance benefits under clause 27 are superior. As I have observed, clause 17.7.1 commences with the words –

The provisions of this clause are not applicable…

[Emphasis added]

59    In the events that are proposed in this case, the relevant part of clause 17 concerning severance payments, namely clause 17.3, will not applicable because clause 27 of Part A will prevail. I am mindful of the principles to which I have referred at [39]-[42], and the need in appropriate cases to overlook infelicities of language in industrial instruments. However, I consider that it requires some looseness of thinking to construe “[t]he provisions of this clause” in clause 17.7.1 of Part B as referring to clause 13 and clause 27 of Part A. The Agreement in this case was the product of negotiation and compromise during the bargaining period, and its purpose was to give effect to that compromise. The product of that negotiation is found in the words of the Agreement. To interpret clause 17.7 of Part B as applying also to clauses 13 and 27 of Part A would be a significant departure from the text of clause 17.7.1 in order to give effect to a supposed intention that, notwithstanding the statements of principle in clause 11 of Part A concerning security and continuity of employment with the Council, clause 17.7 of Part B would also qualify the redundancy provisions in Part A. In my opinion, such a departure from the text would involve error.

60    The third reason, which builds upon the first two reasons, is that I consider that clauses 11.1, 13, and 27 of Part A evince an intention that the provisions of Part A are to cover the field in relation to the topic of redundancy. My reasons for this conclusion are –

(1)    the fact that Part A was the subject of specific negotiation whereas the provisions of the old Awards have been reproduced in a largely indiscriminate way;

(2)    the presence of clauses 3.1.1 and 3.1.3 of Part A demonstrate an assumption that there may be inconsistencies, in which case Part A is to prevail;

(3)    as I have indicated at [55] above, the wholesale and largely indiscriminate reproduction of the old Award in Part B does not lead me to think that effect must be given to clause 17 of Part B in circumstances where there are elaborate provisions in clauses 13 and 27 of Part A concerned with the topic of redundancy;

(4)    the old Award provisions concerning redundancy contain clauses that are themselves redundant in the context of the current legislation, thereby giving support to the idea that the redundancy provisions in clauses 13 and 27 of Part A are to take the place of those in Part B;

(5)    the transmission of business exceptions in clause 17 of Part B are expressly tied to that clause;

(6)    clause 27.1.1 itself addresses the circumstances in which an employee is not entitled to a severance package, including where there is redeployment to a suitable and acceptable position within Council;

(7)    the context of the redundancy provisions in clauses 13 and 27 of Part A is different, and in particular, I refer to the statements of principle in clause 11.1 of Part A concerning secure and continuous employment by the Council, as distinct from job security; and

(8)    the several differences that I have identified in [56] above.

Conclusions

61    For the above reasons, I am not persuaded that there is no inconsistency within the meaning of that term in clause 3.1.3 of the Agreement between clause 27 of Part A of the Agreement, and clause 17.7 of Part B. Accordingly, I decline to make the declaration sought by the applicant and which I set out at [14] above.

62    I am also of the view that there is inconsistency between clause 17.3 of Part B of the Agreement, and clause 27 of Part A such that the latter prevails, and that for the reasons set out at [58] and [59] above, clause 17.7 applies only to the redundancy provisions in clause 17 of Part B. Viewed in this way, ostensibly there may not be any inconsistency between clause 17.7 of Part B and clause 27 of Part A, because clause 17.7 would not on its terms apply. On this alternative view, I would decline as a matter of discretion to make the declaration sought by the applicant because it would not accurately reflect the resolution of the real issue in dispute between the parties, and would therefore lack utility.

63    The application will be dismissed.

Associate:

Dated:    28 May 2019