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Introduction

This is the first appeal of a decision by the FWC in relation to the new Jobkeeper dispute provisions in the Fair Work Act. This decision also makes some interesting observations on overtime, casual employment and what does “unreasonable” really mean?

Background

The Transport Workers’ Union of Australia (TWU) has lodged an appeal against a decision of Deputy President Sams published on 17 June 2020 1 (decision) concerning a “jobkeeper enabling direction” (direction) issued by Prosegur Australia Pty Limited (Prosegur).

Prosegur is a cash in transit business that performs a combination of armoured car and covert cash transportation operations. The COVID-19 pandemic and its economic effects have caused a serious reduction in Prosegur’s work and revenue.

The gist of the appeal is that the TWU wants preferential treatment provided for full-time employees over that of part-time and casuals. Put another way, instead of Prosegur cutting hours to all employment types (ie full-time, part-time, and casuals), it wanted the axe to fall on part-timers and casuals only.

The Full Bench of the Fair Work Commission firstly allowed the appeal because:

“Because the appeal raises an issue concerning the proper interpretation and application of s 789GK which is new and of general importance, permission to appeal is granted”.

The new provisions

The statutory framework is as follows:

In response to the current COVID-19 epidemic, the FW Act has been amended by the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Amending Act) to insert a new Part 6-4C, Coronavirus economic response. The object of the Part is set out in s 789GB, which provides:

789GB Object

The object of this Part is to:

(a)  make temporary changes to assist the Australian people to keep their jobs, and maintain their connection to their employers, during the unprecedented economic downturn and work restrictions arising from:

(i)  the COVID-19 pandemic; and

(ii)  government initiatives to slow the transmission of COVID-19; and

(b)  help sustain the viability of Australian businesses during the COVID-19 pandemic, including by preparing the Australian economy to recover with speed and strength after a period of hibernation; and

(c)  continue the employment of employees; and

(d)  ensure the continued effective operation of occupational health and safety laws during the COVID-19 pandemic; and

(e)  help ensure that, where reasonably possible, employees:

(i)  remain productively employed during the COVID-19 pandemic; and

(ii)  continue to contribute to the business of their employer where it is safe and possible for the business to continue operating.

Part 6-4C authorises employers to give “jobkeeper enabling directions” to employees in respect of whom it is entitled to receive the wage subsidies provided for in the Amending Act. Relevant to this matter, s 789GDC(1) provides as follows:

(1)  If:

(a)  after the commencement of this section, an employer of an employee gave the employee a direction (the jobkeeper enabling stand down direction) to:

(i)  not work on a day or days on which the employee would usually work; or

(ii)  work for a lesser period than the period which the employee would ordinarily work on a particular day or days; or

(iii)  work a reduced number of hours (compared with the employee’s ordinary hours of work);

during a period (the jobkeeper enabling stand down period); and

(b)  when the jobkeeper enabling stand down direction was given, the employer qualified for the jobkeeper scheme; and

(c)  the employee cannot be usefully employed for the employee’s normal days or hours during the jobkeeper enabling stand down period because of changes to business attributable to:

(i)  the COVID-19 pandemic; or

(ii)  government initiatives to slow the transmission of COVID-19; and

(d)  the implementation of the jobkeeper enabling stand down direction is safe, having regard to (without limitation) the nature and spread of COVID-19; and

(e)  the employer becomes entitled to one or more jobkeeper payments for the employee:

(i)  for a period that consists of or includes the jobkeeper enabling stand down period; or

(ii)  for periods that, when considered together, consist of or include the jobkeeper enabling stand down period;

the jobkeeper enabling stand down direction is authorised by this section.

The Full Bench explaining that:

“Section 789GG(1) separately requires an employee to consider and not unreasonably refuse a request made by their employer, where the employer qualifies for the jobkeeper scheme in respect of the employee, to make an agreement under s 789GG(2) to perform duties on different days or at different times. Under s 789GG(2), such an agreement must satisfy a number of conditions, including (in s 789GG(2)(d)) that ‘the agreement does not have the effect of reducing the employee’s number of hours of work (compared with the employee’s ordinary hours of work)’.

“Section 789GG(3) provides that “This section has effect despite a designated employment provision”. The expression “designated employment provision” is defined in s 789 to include a provision of the FW Act (other than a provision in Pt 6-4C or mentioned in s 789GZ), a fair work instrument, a contract of employment or a transitional instrument).

“The authorisation of a direction of the type to which s 789GDC(1) is subject to compliance with the payment conditions in ss 789GD, 789GDA and 789GDB. It is not necessary to reproduce these provisions since no issue has been raised concerning Prosegur’s compliance with these obligations. There are also relevant requirements concerning prior consultation (s 789GM) and the form of the direction (s 789GN) about which there is no issue arising in this appeal. The critical requirement for the purpose of this appeal is s 789GK, which provides:

‘789GK Reasonableness

A jobkeeper enabling direction given by an employer to an employee of the employer does not apply to the employee if the direction is unreasonable in all of the circumstances.

‘Note: A direction may be unreasonable depending on the impact of the direction on any caring responsibilities the employee may have’.

“Section 789GV provides that the Commission may deal with a dispute about the operation of Part 6-4C in the following terms:

789GV FWC may deal with a dispute about the operation of this Part

(1) The FWC may deal with a dispute about the operation of this Part.

(2) The FWC may deal with a dispute by arbitration. Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(3) The FWC may deal with a dispute only on application by any of the following:

(a) an employee;

(b) an employer;

(c) an employee organisation;

(d) an employer organisation.

(4) The FWC may make any of the following orders:

(a) an order that the FWC considers desirable to give effect to a jobkeeper enabling direction;

(b) an order setting aside a jobkeeper enabling direction;

(c) an order:

(i) setting aside a jobkeeper enabling direction; and

(ii) substituting a different jobkeeper enabling direction;

(d) any other order that the FWC considers appropriate.

(5) The FWC must not make an order under paragraph (4)(a) or (c) on or after 28 September 2020.

(6) An order made by the FWC under paragraph (4)(a) ceases to have effect at the start of 28 September 2020.

(7) In dealing with the dispute, the FWC must take into account fairness between the parties concerned.

“Section 789GW provides that a person must not contravene a term of an order made by the Commission pursuant to s 789GV”.

Casual employment

In the DP’s decision, reference was made to casual employment:

“…employees can accept offers of casual engagements and that the employer can choose not to make such offers. For the employees, such arrangements can allow the type of flexibility … and for the loss of permanent entitlements is compensated by a 25% loading.

“For the employer, a cohort of casual employees is useful to manage business needs and is necessary to cater for the peaks and troughs of work in a business”.

“Nevertheless, I apprehend the Union’s submission is that the employee’s request to require an employee to work extra hours is unreasonable in accordance with JobKeeper rules, and as the hours of some casual employees have increased, not by consent, then this may not be permitted by these rules. This submission raises a general question as to whether an employer’s request to an employee is unreasonable, if it requires an employee to agree to an increase in their hours of work ‘on different days or at different times’, compared with the employee’s ordinary days or times of work.”

The FB concluding:

“There is no need for any direction to be issued to reduce the ordinary hours of work of casual employees, since casual employees ordinarily do not have any defined number of ordinary hours but are engaged to perform work as required. However it may be accepted that, for long-term regular casual employees, it is reasonable for them to be provided with some guarantee of hours in order to maintain their connection with the workplace and for Prosegur to derive commercial value from the jobkeeper subsidy it is receiving in respect of them…” [My emphasis].

“Unreasonable in all of the circumstances”

The FB rejected the DP’s interpretation of the term “unreasonable in all of the circumstances” and substituted its own meaning:

“In AEU v State of Victoria, the Federal Court of Australia (Bromberg J) considered the meaning of “unreasonable” in s 326(1) of the FW Act. In his consideration, Bromberg J first stated the uncontroversial proposition that what is “unreasonable in the circumstances calls for an evaluative judgment in which competing consideration need to be assessed”, and then said:

‘Relevantly, the Oxford English Dictionary contains the following definitions of “unreasonable:”

  1. Not within the limits of what would be rational or sensible to expect; excessive in amount or degree.

3.a. Of an idea, attitude, action, etc.: not guided by, or based upon, reason, good sense, or sound judgement; illogical.

  1. Inequitable, unfair; unjustifiable. Obs

“Of the three senses of the word “unreasonable” there identified, it is the third (“inequitable, unfair; unjustifiable”) that best captures the use made by s 326(1)(c) of the word “unreasonable”. Beyond that observation, as Stroud’s Judicial Dictionary of Words and Phrases…says in its definition for the word “reasonable” – “it would be unreasonable to expect an exact definition of the word ‘reasonable.’” Whilst the word “unreasonable” is used in various provisions of the FW Act, the context is different to that of s 326(1)(c) and no useful guidance can be drawn from cases where the term has been judicially considered. It is the genesis of the scheme established by Division 2 and the origin of s 326(1)(c) itself that shed greater light on the mischief being addressed and the considerations that are likely to be of greatest relevance in an assessment of whether a deduction is “unreasonable in the circumstances”.

The Full Bench’s observation on the Jobkeeper provisions

“(1) The object of Part 6-4C in s 789GB, which has earlier been set out, balances a number of objectives which pertain to the interests of employers and employees respectively. The employer interests referred to include the sustenance of the viability of businesses and the maintenance of the contribution of employees to their employer’s business. The employee interests include the maintenance of employment and the continuation of productive employment during the pandemic.

(2) The power to make jobkeeper enabling directions in Part 6-4C is an extraordinary one, since it authorises the employer to take action which has the effect of modifying or removing entitlements which the employee has under the FW Act, modern awards, enterprise agreements, or their contract of employment. The most significant restraint placed upon the exercise of this power is that, under s 789GK, a jobkeeper enabling direction will not apply to an employee if the direction is unreasonable in all the circumstances. It is apparent that this provision is directed to the protection of the interests of the employee from unreasonable use of the jobkeeper direction power, and therefore directs attention to the interests of the employee in an assessment of what is unreasonable.

(3) The restraint in s 789GK is that the direction is unreasonable in all of the circumstances. These circumstances necessarily include the relevant circumstances of the employee. (It may be noted, as an aside, that in paragraph [20] of the decision, the Deputy President appears on one view to have regarded “all the circumstances” as referring only “the context of the unparalleled circumstances (COVID-19)”. If the expression was read in this confined way, we would consider this to be a separate instance of error).

(4) The position in the above respect is confirmed by the statutory note to s 789GK, which gives as an example the impact on an employee’s caring responsibilities as rendering a jobkeeper direction unreasonable. That is, this is an example of a way in which the employee’s particular interests may render a jobkeeper direction to be non-applicable to the employee because it is unreasonable”.

Returning to “unreasonable in all the circumstances”

According to the FB:

“The above contextual considerations support a construction of the expression in s 789GK as meaning or at least encompassing a direction that is inequitable, unfair or unjustifiable having regard to the object in s 789GB and the respective circumstances of the employer and the employee. [My emphasis].

The FB commentary on employment

“The assessment of the reasonableness or otherwise of the direction must take into account in a significant way the statutory, award, agreement and contractual entitlements of the employees which are affected by the direction…It can safely be said that the full-time employees have an entitlement to 38 paid ordinary hours per week and that part-time employees have an entitlement to a fixed number of ordinary hours per week which is less than 38…The long-term regular casual employees have no entitlement to a fixed number of ordinary hours, but merely an expectation of ongoing work, and the 25 percent casual loading which they receive compensates, in part, for this lack of guaranteed hours. We consider that the assessment of the reasonableness of the direction must take into account whether the deprivation or reduction of pre-existing entitlements to hours of work disproportionately and unfairly affects one category of employee over another…”

Further stating:

“It is relevant that full-time employees and part-time employees may, depending on the extent of their accruals, have the capacity to access leave entitlements if necessary to supplement their income in the face of reduced hours of work, and full-time employees may also have access to accrued RDOs”.

Overtime payments, stating:

The FB agreed with the DP’s assessment of overtime payments

“…There is (in the absence of a specified enterprise agreement or contractual provision otherwise) no entitlement to overtime, so that a jobkeeper direction is not necessary to reduce overtime hours. Similarly, as earlier stated, a jobkeeper direction is not necessary to reduce the hours that a casual employee might have enjoyed prior to the pandemic”.

TWU proposal “unworkable”

“The alternative direction proposed by the TWU at first instance is plainly unworkable. Prosegur cannot reasonably be expected to operate a system of allocating work which requires them to ensure that every employee is receiving the same proportionate reduction in hours as compared to the position prior to the pandemic and at the same time properly service their clients’ needs. If there is to be any alternative direction, it must be administratively workable and allow Prosegur to conduct its operations efficiently”.

Where to from here?

In upholding the appeal, the FB gave the parties a further chance:

“…to confer having regard to the propositions above as a matter of urgency. Should the dispute not be resolved, the parties may file further written submissions…”