AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
C2002/4087, 4088, 4091, 4097,
4099 and 4178
C2002/4089, 4090, 4092, 4098,
4100, 4179
STORAGE SERVICES - GENERAL - AWARD 1999
RUBBER, PLASTIC AND CABLE MAKING INDUSTRY - GENERAL AWARD 1998
RETAIL AND WHOLESALE INDUSTRY - SHOP EMPLOYEES - ACT AWARD 2000
METAL, ENGINEERING AND ASSOCIATED INDUSTRIES AWARD, 1998 PART 1
GRAPHIC ARTS - GENERAL - AWARD 2000
CLERICAL AND ADMINISTRATIVE EMPLOYEES (VICTORIA) AWARD
1999
Applications under section 113 of the Act
by the National Union of Workers and Others
to vary awards re redundancy
APPLICATIONS FOR EMPLOYMENT
TERMINATION ORDERS
Application under section 170FB of the Act
by the National Union of Workers and Others
for orders giving effect to Article 13 of
the Termination of Employment Convention
Application for Leave to Intervene by State of New South Wales
The State of New South Wales seeks leave to intervene in these proceedings pursuant
to s. 470 of the Workplace Relations Act 1996. The State has an interest in this case.
Its interest arises from the principal object in s.3 of the Workplace Relations Act 1996,
in particular, the following subsections:
“3. Principal object of this Act
The principal object of this Act is to provide a framework for
cooperative workplace relations which promotes the economic
prosperity and welfare of the people of Australia by:
(a) ………
(aa) ………
(b) ……….
(c) ……….
(d)
providing the means:
(i) for wages and conditions of employment to be determined
as far as possible by the agreement of employers and
employees at the workplace or enterprise level, upon a
foundation of minimum standards; and
(ii) to ensure the maintenance of an effective award safety net
of fair and enforceable minimum wages and conditions of
employment; and
(e) providing a framework of rights and responsibilities for
employers and employees, and their organisations, which
supports fair and effective agreement-making and ensures that
they abide by awards and agreements applying to them; and …
(f) …….
(g) …….
(h) enabling the Commission to prevent and settle industrial
disputes as far as possible by conciliation and, where
appropriate and within specified limits, by arbitration; and …
(i)-(j) …….
(k) assisting in giving effect to Australia's international obligations
in relation to labour standards.”
The State also has an interest in ensuring comity with the underlying principle of the
IRA 1996, particularly s.10 which empowers the NSW Industrial Relation
Commission to set fair and reasonable conditions of employment for NSW
employees.
The State of New South Wales, if intervention is granted, will not seek to duplicate
the submissions of the parties to the proceedings.
DRAFT OUTLINE OF CONTENTIONS
This outline of contentions is filed on behalf of the State of New South Wales in
accordance with directions made by the Commission on 13 September 2002.
1.
SYNOPSIS OF NSW POSITION
1.1
The State of New South Wales supports the elements of the ACTU claim which
would achieve comity between the redundancy provisions which apply to NSW
workers who are covered by Federal industrial instruments and those NSW
workers covered by NSW legislation and industrial instruments. To the extent
that the elements of the ACTU claim would not result in comity with the level
of entitlements available under the relevant New South Wales legislation and
industrial instruments, the State of New South Wales makes no submissions
either in support of, or in opposition to, the claims.
1.2
In so far as the counter-applications made by the employer associations are
concerned, the State of New South Wales opposes all elements of the
counter-claims that would result in a reduction of the standards presently
provided for in the Federal jurisdiction and in particular to those applicable to
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New South Wales workers covered by Federal industrial instruments and
legislation.
2.
HISTORY OF REDUNDANCY PROVISIONS IN NSW
2.1
The first time that general redundancy provisions were introduced in New South
Wales was in 1982 with the introduction of the Employment Protection Act
1982 (“EPA”). Prior to this time, redundancy awards or orders were made on
an ad hoc basis according to the specific circumstances of a particular case.
Since 1983 there have been a number of important test case decisions which
determined minimum redundancy provisions and which, by virtue of s. 19 of the
Industrial Relations Act 1986 (“IRA 1996”) and the Principles for Review of
Awards (1998) 85 IR 38 can be included within all awards in New South Wales.
2.2
Shortly after the commencement of the EPA, the Labor Council of New South
Wales initiated proceedings before the Industrial Commission under the EPA
and the Industrial Arbitration Act 1940 in order to obtain a declaration of
general standards in respect of redundancy.
2.3
The recommended scale of severance payments established by Fisher P in
Distributive and Allied Employees’ Association (New South Wales) and Ors v
Countdown (1983), 7 IR 273 (Crocker’s case) was incorporated by the New
South Wales Government into the Employment Protection Regulation 1983
(“EPR 1983”). It was also later adopted by the Federal Commission in the
Termination, Change and Redundancy Case (1984) 8 IR 34 (“TCR case 1984”)
as the appropriate level of severance payments to be prescribed in Federal
awards dealing with redundancy.
2.4
The NSW test case decision of Re: Clerks (State) Award and other awards
(1987) 21 IR 29, allowed the principles which were determined in the TCR case
1984 to flow on to clerks, electricians and plant operators in New South Wales
with the exception that the scale of severance payments with respect to
redundancy due to technological change was determined to be higher than the
scale provided in relation to retrenchment because of economic recession. The
New South Wales Commission decided that the federal provisions relating to
technological change, termination and redundancy should be adopted into State
awards.
2.5
The EPR 1983 was replaced by the Employment Protection Regulation 1995
(“EPR 1995”) followed by the Employment Protection Regulation 2001
(“EPR 2001”). The current scale set out in the EPR 2001 is not in accordance
with the Fisher formula, but is in line with the new scale of severance payments
established by the Commission in Re: Application for Redundancy Awards
(1994) 53 IR 419. (“NSW Redundancy Test Case 1994”) The scale of payments
is a minimum scale and may be departed from in individual cases.
2.6
New South Wales was the first State to introduce specific employment
protection provisions into its principal industrial statute (s. 88G of the former
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Industrial Arbitration Act 1940). Those provisions were inserted in 1986 and
conferred jurisdiction upon the New South Wales Industrial Commission to
insert employment protection provisions into industrial awards or agreements
upon application to the Commission. The provisions have been carried over
into subsequent industrial statutes and are contained in the IRA 1996 (ss. 21-25).
2.7
In 1994, a Full Bench of the NSW Industrial Relations Commission considered
the Commission’s standard redundancy clause. In the NSW Redundancy Test
Case 1994, the Full Commission granted an increase in the standard scale of
severance payments and determined that the same scale of payment should
apply to all redundancies regardless of the cause. The new level of severance
payments determined by the Full Commission was significantly higher than the
level set in the Crocker’s case. However, the Full Commission determined to
continue the exclusion of terminations due to the ordinary and customary
turnover of labour, despite the fact that this was not adopted by the Federal
Commission in the TCR case 1984. In addition, an ‘incapacity to pay’ clause
was included in the same form as s. 14(5) of the EPA and the exception for
enterprises employing fewer than 15 employees was maintained.
2.8
The EPA has limited application for a number of reasons. Firstly, the EPA has
no application to an employee who is not covered by an award or industrial
agreement. Where an employee is covered by an industrial instrument, the EPA
has no application where that instrument contains a clause dealing with
employment protection. As employment protection clauses are now common in
State awards the EPA only has limited application. Furthermore, the EPA does
not apply to employees of the Crown nor does it apply to Federal award
employees (see Metal Trades Industry Association of Australia & Ors v The
Amalgamated Metal Workers’ and Shipwrights’ Union & Ors (1983)
152 CLR 632).
3.
COMPARATIVE ANALYSIS OF KEY ACTU CLAIMS WITH NSW
STANDARD
3.1
Claims consistent with NSW Standard
3.1.1 Dispute Settlement Procedure
The proposed dispute settlement procedure is supported. The requirement that
employers provide unions and affected employees with information in relation
to the proposed redundancies is consistent with the New South Wales notice
provisions contained in the EPA which require employers to notify the
Industrial Registrar of proposed terminations and provide particulars in relation
to the proposed terminations. Under s. 10 of the EPA, it is the duty of the
Registrar to notify the unions as appropriate.
The requirement that employers consult with employees to resolve redundancy
disputes is consistent with the requirement under Chapter 3 of the IRA 1996 that
parties to an industrial dispute confer to attempt to resolve disputes. In NSW
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any dispute not resolved by this process can be referred for determination to the
Industrial Relations Commission.
The requirement that the employer discuss the proposed changes with affected
employees and discuss measures to avert or minimise redundancies and mitigate
the adverse effects is also consistent with major industrial awards such as the
Printing Industries (State) Award, the Shop Employees (State) Award, the Club
Employees (State) Award, the Social and Community Services Employees
(State) Award and the Transport Industry – Redundancy (State) Award.
3.1.2 Severance Pay
The State of New South Wales supports the increase in severance payments
proposed by the ACTU. The scale of severance payments proposed is
consistent with Schedule 1 of the EPR 2001 and with the New South Wales
standard as established by the Commission in the NSW Redundancy Test Case
1994.
As to the calculation of severance payments proposed, “weeks’ pay” was
defined in the NSW Redundancy Test Case 1994 to mean “the ordinary-time
gross all purpose rate of pay for the employee”. The definition of “weeks’ pay”
as proposed by the unions is consistent with major industry awards such as the
Clerical and Administrative Employees (State) Consolidated Award, the Club
Employees (State) Award, the Printing Industry (State) Award, the Restaurants,
and c., Employees (State) Award, the Shop Employees (State) Award, the Social
and Community Services Employees (State) Award and the Transport Industry –
Redundancy (State) Award. Those awards define “weeks’ pay” to mean “the
all-purpose rate of pay for the employee concerned at the date of termination
and shall include in addition to the ordinary-rate of pay, overaward payments,
shift penalties and allowances provided for in the relevant award”. However,
there may be some limited exceptions in individual awards such as the Building
and Construction Industry (State) Award.
3.1.3 Limit of severance payments
The proposal to remove the provision limiting severance payments to the
amount the employee would have earned if employment had proceeded to the
employee’s “normal retirement date” is supported.
Compulsory retirement has been unlawful in New South Wales since 1991 by
virtue of Part 4E of the Anti-Discrimination Act 1977 (as amended). It would be
impracticable to calculate an employee’s “normal retirement date”.
3.1.4 Notice of Termination by Employer
It is noted that the ACTU seeks that any payment made in lieu of notice should
be calculated on the same basis as the definition of “week’s pay” which is
discussed at para 3.1.2. The State of New South Wales makes the same
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submissions as contained in para 3.1.2 above in relation to that method of
calculation.
3.2
Claims inconsistent with NSW Standard
3.2.1 Professional Services Allowance
This type of allowance is not available under New South Wales industrial
instruments or legislation. The State of New South Wales makes no submission
in support of, or in opposition to, this claim. Whether such an allowance is fair
and reasonable in the circumstances is a matter to be determined by the
Commission on the available evidence.
3.2.2 Exempted Employees
The proposal by the ACTU that redundancy provisions also apply to long-term
casuals is inconsistent with the current standard in New South Wales. The EPA
excludes casuals (and employees with less than 12 months continuous service)
from the notice provisions in that Act. Similarly, the major industry awards are
expressed only to apply to full-time and part-time employees. The State of New
South Wales makes no submission in support of, or in opposition to, this claim.
Whether this claim is fair and reasonable in the circumstances is a matter to be
determined by the Commission on the available evidence.
3.2.3 Employers exempted
The proposal that employers who employ less than 15 employees should no
longer be exempt from redundancy provisions is inconsistent with the New
South Wales standard as provided for in the NSW Redundancy Test Case 1994,
which maintains the exemption. It is also inconsistent with s. 9 of the EPA
which exempts employers of fewer than 15 employees from the notice
provisions in ss. 7 and 8 of the EPA.
Furthermore, it is inconsistent with major industry awards under which
redundancy provisions are only applicable to employers who employ 15 or more
employees.
The State of New South Wales draws the Commission’s attention to the
Commission’s decision in Application by Clothing and Allied Trades Union of
Australia to vary the Clothing Trades Award 1982 (1993) AILR ¶121 in which
the exemption for employers who employ less than 15 employees was deleted.
However, the Commission noted that this would not affect the right of an
employer to apply to be exempted on the basis of incapacity to pay. The State of
New South Wales makes no submission in support of, or in opposition to, this
claim. Whether this claim is fair and reasonable in the circumstances is a matter
to be determined by the Commission on the available evidence.
3.2.4 Summary dismissal
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The notice provisions in the EPA do not apply in relation to the termination of
an employee’s employment if the termination is made in consequence of
misconduct on the part of the employee. Several of the major industry awards,
such as the Printing Industries (State) Award, Clerical and Administrative
Employees (State) Consolidated Award , the Restaurants, and c., Employees
(State) Award, Shop Employees (State) Award, Social and Community Services
Employees (State) Award provide that the employer shall have the right to
dismiss an employee without notice for conduct that justifies instant dismissal,
including malingering, inefficiency or neglect of duty. The State of New South
Wales makes no submission in support of, or in opposition to, this claim but
notes that it is inconsistent with the NSW standard.
3.3
Claims of “hybrid” nature
3.3.1 Alternative Employment
This aspect of the ACTU’s claim partially reflects the position in NSW and to
that extent is supported. The major industrial awards such as the Shop
Employees (State) Award and the Clerical and Administrative Employees (State)
Consolidated Award are consistent with the ACTU’s claim in so far as they
provide that, subject to an application by the employer and further order of the
Industrial Relations Commission, an employer may pay a lesser amount (or no
amount) of severance pay than the amount payable under the scale if the
employer obtains acceptable alternative employment for an employee.
However, “acceptable alternative employment” is not defined and there is no
requirement in the awards that there be no reduction in the overall terms and
conditions of employment of the employee for such an application to be made.
Sections 102-104 of the IRA 1996 provide that where a business is transferred
and an employee of the former employer becomes an employee of the new
employer, the employee’s continuity of employment is taken not to have been
broken and a period of service with the former employer is taken to be a period
of service with the new employer for the purposes of determining entitlements.
Clause 8 of the EPR 2001 provides that where a business is transmitted and a
person becomes an employee of the transmittee the notice provisions contained
in ss. 7 and 8 of the EPA do not apply.
3.3.2 Superannuation Benefits
The ACTU’s claim that there should be no offset of any superannuation benefits
(attributable to employer contributions) against the amount payable for
severance pay is supported by the State of New South Wales in so far as it is
consistent with the New South Wales position. In this regard, the Commission
is referred to the decision of Fisher P in Lend Lease Investments Pty Limited v
Cannon (1985) 14 IR 301 which was upheld by the NSW Industrial
Commission in Court Session in Re: Appeal by Johns Perry Limited, Edmunds
Muir Division and Ors (1986) 14 IR 322. Those decisions confirm that
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superannuation and severance pay are aimed at achieving separate objectives. It
is only when the nature and purpose of payments of retrenchment pay under a
superannuation deed can be seen to be in their essentials similarly definable, or
are directed to similar relief of the same kind of hardship as severance pay, that
the prospect of double counting can arise and an offset may be available. This
is to be determined on a case by case basis.
STANFORD B BENSON
Dated:
December 2002
.......................................................
I V Knight
Solicitor for the Applicant
Signed in my capacity as a solicitor
employed in the office of the said
I V Knight
.......................................................
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