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Voluntary redundancy scheme not required: FWC

THE Federal Court has dismissed an application for civil penalty after a former mining supervisor was unable to prove his employer had contravened a workplace agreement by failing to ‘avert’ his redundancy after an organisational restructure.

Acting under section 50 of the Fair Work Act 2009, the Association of Professional Engineers, Scientists and Managers Australia (APESMA) alleged that Dendrobium Coal had contravened a clause which stipulated that:

…If your position is made redundant the Company will take steps to avert or mitigate the effect upon your employment. The Company may take such measures as introducing a Voluntary Redundancy Scheme or consider alternative employment as a Mining Supervisor within Illawarra Coal, if available.

Following an organisational restructure, the company argued it had considered a series of measures to meet its obligations under the clause, including offers of alternate employment for affected workers.

However, the Association said that in failing to implement a voluntary redundancy scheme before the mining supervisor was made redundant, it had contravened the agreement.

Heard by Justice Anna Katzman in the Federal Court, Dendrobium successfully argued that interpretation of the clause indicated a voluntary redundancy scheme was optional, not mandatory.

“Prima facie, the auxiliary verb ‘may’ reposes a discretion, not a duty, in a decision-maker. Of course, in some circumstances ‘may’ can mean ‘shall’ or vice versa,” Justice Katzman said.

“Here, however, there is nothing in the language of the Agreement, the context of the relevant provision or the legislative background which supports the conclusion that the effect of the new provision is to impose an obligation to take any particular steps.

“The immediate context points in the opposite direction. The words ‘such … as signify that the steps nominated in the clause are merely illustrative.

“In my view it is unarguable that the two steps mentioned in the second sentence are examples of the steps that Dendrobium could choose, but was not bound, to take in order to discharge the obligation reposed in the company by the first sentence.”

Both parties acknowledged the organisation’s efforts to mitigate the effect of redundancy on the employee, and Justice Katzman dismissed the application.

Click here to read the full decision.

Implications for Employers

Forming an articulate and clear enterprise agreement with employees is a crucial foundation for avoiding complications in future, including potential contravention claims resulting from agreement interpretation.

In this particular case, Justice Katzman noted that while the argument of APESMA was unsuccessful, she agreed there was some ambiguity around use of the term ‘shall’ in the enterprise agreement for Dendrobium employees.

As such, AREEA members are encouraged to speak to one of AREEA’s workplace relations experts to get information, advice and guidance on negotiating enterprise agreements to ensure such ambiguities are avoided.

Contact your local AREEA office for more information.

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