Short v. FW Hercus Pty Ltd, Re
40 FCR 5111993 - 0223A - FCA; No. S I3 of 1992 Fed No. 72
(Judgment by: Keely J)
Between: Short
And: FW Hercus Pty Ltd
Judges:
Keely JBurchett J
Drummond J
Subject References:
Industrial Law
Judgment date: 23 February 1993
Adelaide
Judgment by:
Keely J
The Industrial Court of South Australia ("the Industrial Court") ordered on 15 November 1991 that F.W. Hercus Pty Ltd. ("the respondent") pay to Mr. A.J. Short ("the appellant") the sum of $3376 for severance pay. The respondent appealed to the Federal Court and on 29 May 1992 a judge gave judgment allowing the appeal and setting aside the order of the Industrial Court. The present appeal is from his Honour's judgment.
The Minister, on behalf of the Commonwealth, intervened in the appeal under s 60 of the Industrial Relations Act 1988 (Clth) ("the Act") in the public interest.
The issue on the hearing of the appeal was whether the appellant was entitled to severance pay under clause 31 of the Metal Industry Award 1984 - Part 11 - Draughtsmen, Production Planners and Technical Officers ("the award"), which is an award within the meaning of the Act. It was not contended that the amount ordered by the Industrial Court was incorrect if this Court found that the appellant was entitled to severance pay.
The reasons for judgment of the Industrial Court included the following:-
"I now turn to the third ground of defence which is that the applicant was not made redundant within the meaning of the award and therefore has no entitlement.
There is little dispute on the facts which are as follows; The respondent operates a business manufacturing machine parts. The applicant was employed by the respondent from approximately January 1985 as a trainee draftsman. ... I find that in late 1990 his employment was terminated by the respondent. ... it is clear that whatever the precise date of termination the applicant had been in full time employment with the respondent for four or more years. The duties which the applicant performed were those of a detail draftsman as provided by the award. The circumstances of termination were that in approximately October 1990 the applicant was approached by the work's manager and informed that the respondent would have to let him go because the respondent was experiencing a downturn in trade. ...
At the time of the applicant's termination he was one of two full time drafting employees. Mr. Hercus also performed drafting work. The applicant's drafting position was not filled after his termination. The respondent continued to require drafting work to be performed as it forms a fundamental part of its production of machine items. After the applicant's termination any drafting was performed by the remaining draftsman or Mr. Hercus. The termination was not associated with any technological change. The applicant was terminated at about the same time as various other employees in various sections of the respondent's workplace who were also terminated because there was a downturn of trade. Due to a reduction in orders the whole enterprise operated at a reduced level of output. Approximately one to two weeks after the respondent terminated the applicant's employment it contacted the applicant to offer him some casual work as a draftsman but he declined.
It was Mr. Hercus' evidence that the applicant was terminated along with other employees in other sections of the workplace in the following context:-'I must refer to the fact that it has - basically the practice of taking people on when we're busy and putting them off when we're slack is something that we've been doing as long as I can remember, but we are working in an economy which is cyclical in nature so that we expect every 7-8 years to have a boom followed by a bust and that we have always used this as the means of turning over our labour force. To that end we don't follow a practice of first on last off, we take on according to what we need and when we have to put people off we try and retain those that are most suited to the work that we have and the work that we see immediately coming and likewise, if we have to reemploy, those that were laid off do not have an automatic first choice, they are considered along with any other applicants and we select those who are most suited to the work we have at the time.' (Transcript p 20-21)
Mr. Hercus explained the respondent's decision to reduce its employees including the applicant as being imposed upon it. At p 24 of the transcript he described the respondent's predicament thus:-'... Our company is still in the same line of business, making the same products by substantially the same methods. We are tendering for the same type of work. There is just not enough of it and we are not winning a big enough share of it to keep the same number of people gainfully employed. The drawing office is still there, the drawing board and the related equipment is still there, we still want the work done, we just have not got it to be done and this was not due to any decision made by us. This was a retrenchment due to our having insufficient work to do and not a redundancy through our not wanting it done. We do want it done and we are using all of our efforts to gain the necessary orders in order that it can be done again.'"
Clause 31 of the award relevantly provided as follows:-
- "31
- REDUNDANCY
- Discussions before termination
- (a)
-
- (i)
- 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 this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the employer shall hold discussions with the employees directly affected and with their union.
- (ii)
- The discussions shall take place as soon as is practicable after the employer has made a definite decision which will invoke the provisions of paragraph 31(a)(i) hereof and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.
- (iii)
- For the purposes of the discussion the employer shall, as soon as is practicable, provide in writing to the employees concerned and their union all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information the disclosure of which would be inimical to the employer's interests.
- Transfer to lower paid duties
- (b)
- Where an employee is transferred to lower paid duties for reasons set out in paragraph 31(a)(i) hereof the employee shall be entitled to the same period of notice of transfer as he would have been entitled to if his 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 time rate of pay and the new lower ordinary time rates for the number of weeks of notice still owing. Severance pay
- (c)
- In addition to the period of notice prescribed for ordinary termination in subclause 9(d) and subject to further order of the Commission, an employee whose employment is terminated for reasons set out in paragraph 31(a)(i) hereof shall be entitled to the following amount of severance pay in respect of a continuous period of service.
Period of continuous service Severance Pay 1 year or less nil 1 year and up to the completion of 2 years 4 weeks pay 2 years and up to the completion of 3 years 6 weeks pay 3 years and up to the completion of 4 years 7 week pay 4 years and over 8 weeks pay - "Week's pay" means the ordinary time rate of pay for the employee concerned.
- ...
- Incapacity to pay
- (n)
- An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied on the basis of the employer's incapacity to pay."
It was submitted by counsel for the appellant and by counsel for the Minister that the appeal should be allowed. The respondent's counsel submitted that his Honour was correct in deciding that clause 31 did not apply to the termination of the appellant and that the appeal should be dismissed.
It was not disputed that the appellant's employment was terminated due to a shortage of work arising from economic difficulties being experienced by the respondent. The respondent's counsel proceeded from that step to argue that on the evidence it could not be held that at the time of the termination "... the employer no longer (wished) the job the employee (had) been doing done by anyone" within the meaning of those words in subclause 31(a)(i) of the award, which is set out earlier in these reasons. It was submitted that the crucial word in subclause 31(a)(i) was the word "wishes" and that it drew "a distinction between a pro-active decision by the employer to terminate and a reactive decision forced on it by economic circumstances."
In my opinion no such distinction is drawn in the subclause. The respondent's submission gives undue emphasis to the word "wishes" and insufficient weight to the opening words of the subclause. Those words are "Where an employer has made a definite decision ..." and they are immediately followed by the words "that the employer no longer wishes the job the employee has been doing done by anyone ...".
The respondent's works manager informed the appellant "that the respondent would have to let him go because the respondent was experiencing a downturn in trade". In my opinion the respondent had made a "definite decision" that it "no longer (wished) the job ... done by anyone ..." It is not to the point that, before making that decision, the respondent "wished" that it was not experiencing a downturn in trade and wished that it did not have to let the appellant go because of that downturn in trade. It plainly no longer required the job done and the reason for that decision was that, as a result of the downturn in trade, "we just have not got it to be done" .
The "definite decision" to which the subclause refers is a "decision that the employer no longer wishes the job ... done by anyone ...". In my opinion the words "employer no longer wishes" mean that the employer no longer "wants" or "requires" or "desires" the job done. That wish is formed after considering the matter and making a definite decision as to what it "wishes". The word "wishes" in the subclause is not referring to the "wish" of the employer that it had sufficient orders so that it would not "have to let him (the employee) go".
The respondent's counsel submitted that, on the evidence, the respondent wished "to maintain the employee in that employment" but subsequently came "to a decision that (it) must dismiss the employee concerned" . In my opinion on that evidence the appellant was entitled to severance pay under subclause 31(c) of the award because the respondent had "made a definite decision that the employer no longer wishe(d) the job ... done by anyone ... and that decision may lead to termination of employment ..." (subclause 31(a)(i)) and it did so lead.
Counsel for the appellant, counsel for the Minister, and counsel for the respondent each submitted that there was no ambiguity and relied upon the plain meaning of the words, given their natural and ordinary meaning, read as a whole and in context. I agree with them that there is no ambiguity but, for the reasons set out above, I accept the submissions of the appellant and of the Minister as to what that meaning is.
It follows that in my opinion the appeal should be allowed and the orders made by his Honour on 29 May 1992 should be set aside.