WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION  2011 WAIRC 01098

DELIVERED  Wednesday, 9 November 2011

CLAIM NO.  M 29 OF 2011

CLAIMANT

AND

Allstate Plumbing Pty Ltd

RESPONDENT

CatchWords : Alleged breach of the Plumbing and Fire Sprinklers Award 2010 [MA000036] constituted by the failure to make redundancy payment; Meaning of “redundancy” in industry specific award; Whether service prior to the commencement of a modern award can be considered part of continuous service; Consideration of decision of Fair Work Australia in of Master Builders Association of New South Wales Fair Work Australia (AM2010/257); Imposition of penalty; Turns on it own facts.

Legislation  : Fair Work Act 2009, s539, 545(3), 547 [MA000036]

Industrial   : Plumbing and Fire Sprinklers Award 2010, [MA000036], cl 18.3

Instruments 

Cases Cited :  Nil

Cases Referred to  : Master Builders Association of New South Wales (Fair Work

in Judgment  Australia      (AM2010/257))

Result : Claim upheld and Orders made.

Representation  : Ms N Ireland of the Communications, Electrical, Electronic, Energy,       Information, Postal, Plumbing, and Allied Workers Union of Australia appeared for the Claimant

REASONS FOR DECISION

(Given extemporaneously at the conclusion of the Hearing, extracted from the transcript and edited by His Honour)

1         The Claimant alleges that the Respondent has failed to comply with clause 18.3 of the Plumbing and Fire Sprinklers Award 2010 [MA000036] (the Award) by failing to pay Mr Lilburne a redundancy payment. There is no dispute about the fact that when Mr Lilburne’s employment with the Respondent ended he did not receive a redundancy payment.

2         Mr Lilburne was in continuous employment with the Respondent from 7 January 2008 until 1 February 2011 when he resigned.  He had also worked for the Respondent for 25 years in a previous period of employment.

3         During his last period of employment with the Respondent, Mr Lilburne worked as a plumber, in the construction of small commercial premises, schools and hospitals.  He was paid an hourly rate of $40.00.  That rate was well above the Award rate.  Mr Lilburne and the Respondent, through its Director Mr Beal, did not at any stage contemplate the Award when reaching their agreement with respect to the hourly rate.  Notwithstanding that it is obvious that the Award applied to them in their employment relationship having regard to the nature of work done by Mr Lilburne and the nature of the business carried out by the Respondent.  It follows that the redundancy provision in the Award applied. 

4         The definition of “redundancy”, for the purposes of the Award is found in clause 18.2. Definition of the Award.  It provides:

“…redundancy means a situation where an employee ceases to be employed by an employer, other than for reasons of misconduct or refusal of duty.   Redundant has a corresponding meaning.”

5         It will be obvious that for the purpose of the industry specific redundancy scheme contained in clause 18 of the Award that Mr Lilburne’s resignation led to him becoming redundant. That may well be inconsistent with what the Respondent understands.  It may be inconsistent with is what is generally understood.  It may also be inconsistent with other awards and further may not be in keeping with the definition given to the meaning of redundancy by other legislation.  However that is its meaning for the purpose of this Award.  Mr Lilburne was therefore entitled to receive a redundancy payment. His entitlement was at his current rate of pay at termination.

6         The Respondent says that it paid Mr Lilburne at a rate above that provided by the Award and therefore the over award payments made to him extinguish or set off any entitlement to a redundancy payment.   In that regard although clause 7. of the Award enables a variation of certain terms of the Award by agreement between an employer and employee, it is doubtful whether on its proper construction it can apply to the redundancy provision in clause 18.  Even if it does, an express agreement between the parties is required to enliven it.  The Claimant and Respondent would have necessarily had to turn their mind to the fact that the over award payment was being made with a view to extinguishing or setting off the redundancy entitlement.  Clearly that was not the case in this instance.  Neither party turned their mind to the matter.  I accept that there was payment made in excess of that required by the Award however that payment was not in contemplation of the redundancy entitlement.  The parties did not turn their mind to it because they did not even contemplate the Award.  It follows that there was no agreement extinguishing the Respondent’s liability with respect to redundancy.

7         In his submissions, Mr Beal for the Respondent raised an issue of whether service prior to 1 January 2010 (when the Award commenced) could be counted when calculating an employee’s continuous service. His internet research revealed that there was ambiguity about that issue which was the subject of proceedings before Fair Work Australia.  The Claimant did not respond to that submission given that he was taken by surprise in relation to it.  Following the receipt of submissions I had the opportunity to research the matter and found that on 9 May 2011, Senior Deputy President Acton, delivered a decision in Master Builders Association of New South Wales (AM2010/257), in which he concluded that:

“Continuous service is not restricted to service from 1 January 2010 and can include prior service.”

8         There is now no ambiguity.  Mr Lilburne’s service prior to January 2010 is to be included in my consideration for the purposes of this Industry Award. 

9         Finally, for Mr Beal’s benefit I point out that any prior conduct or lack thereof by Mr Lilburne with respect to his previous employment with the Respondent is immaterial to my considerations and cannot be taken into account.  His alleged previous failures to invoke award provisions are an irrelevant consideration.

10      There has been a clear failure by the Respondent to comply with the Award in that it failed to pay the redundancy payment prescribed by the Award.  It follows that the Claim has been made out and that orders will be made.

11      For the reasons given I make the following Orders:

1)  That the Respondent pay to the Claimant $10,640.00.

2)  That the Respondent shall also pay to the Claimant interest on $10,640.00, calculated from 2 February 2011 to Judgment on the 9 November 2011, at the rate of six per cent per annum, which is calculated to be, and fixed at $491.48; and

3)  The Respondent shall also pay the Claimant Disbursements in bringing the Claim fixed at $40.00.

(After having heard from Mr Beal in mitigation His Honour said :)

12      The final issue that I am required to address is that of penalty.  The Respondent could have paid $10,640.00 but failed to do so.  The need for strict compliance with awards has been often repeated. It is important that this Court impose sufficient a penalty to indicate, not only to the Respondent but also to others the importance of strict compliance with the award. 

13      In arriving at the appropriate penalty I must and do take into account the circumstances of the Respondent company.  Mr Beal has told me that the company is in a situation where it will cease to operate.  It does not have any new jobs.  It has debts and its capacity to pay any significant penalty is significantly diminished.  I must take those factors into account in imposing a penalty.

14      The maximum penalty in this matter is $6,600.00.  I take into account that the Respondent’s failure to pay has not resulted from a wilful defiance of the law but rather a misunderstanding of the Award.  I also take into account the Respondent’s limited capacity to pay a substantial penalty.  Taking those matters into account I conclude that an appropriate penalty is $400.00.  I Order that the Respondent shall also pay a penalty which shall be payable to the CEPU Western Australian Branch fixed at $400.00.

G. CICCHINI

INDUSTRIAL MAGISTRATE

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