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Published: 12 Sep 2019
In a decision clarifying the interplay between model terms and agreement clauses, a shipping company facing multiple challenges to alleged redundancies has failed to convince an FWC full bench that a model clause cancels out consultation requirements in its agreement.
Vessel management and technical services provider Teekay Shipping (Australia) Pty Ltd is defending claims by about 20 former employees that their redundancies, carried out after BHP terminated a contract to ship coal and iron ore in January, are in fact unfair dismissals.
When BHP announced its decision to terminate arrangements involving Teekay's MV Mariloula and MV Lowlands Brilliance vessels, both were at sea in Asia and the seafarers take issue with the nature of consultations with those who were either on board or on shore awaiting changeover.
They claim the dismissals are not genuine redundancies within the meaning of s389 of the Fair Work Act on the basis that Teekay did not comply with consultation obligations under the agreement and did not redeploy them when it was allegedly reasonable to do so.
Supported in their case by the CFMMEU's maritime division, the seafarers say consultation requirements at clause 9 of the deal obliges Teekay to notify, provide information about and discuss significant changes with workers and the MUA as soon as it determines that they are likely.
If the union still disagrees with a decision to implement a major change following the consultation process, the clause says the union "shall refer the matter" to the FWC for conciliation or arbitration, with work to continue under pre-existing arrangements while the tribunal deals with it.
Competing terms "highly undesirable": Employer
When Deputy President John Kovacic approved Teekay's agreement in 2017, he was not satisfied clause 9 was a "consultation term" within the meaning of s205, as it appeared to only allow the union to represent workers during consultation and did not require the employer to consult ahead of changes to regular rosters or ordinary hours.
The deputy president therefore stated that "pursuant to s205(2) of the Act, the model consultation term … is taken to be a term of the agreement".
The seafarers contended in their unfair dismissal claim that the company was therefore bound to meet obligations under the model consultation term as well as those set out in the agreement.
However, Teekay argued that the only applicable consultation term contained in the agreement was the model term.
To find otherwise would have a "number of significant implications in relation to the operation of enterprise agreements generally", according to Teekay.
If the two separate clauses contained consultation obligations, the company said the parties would be left to debate which precise obligations applied where clauses overlapped or required different steps to be taken.
This would be "highly undesirable" given the uncertainty created and the parties' consequent exposure to allegations of breaches and penalties, Teekay argued.
The approach is also "directly contrary to the scheme established by the Act for the operation of agreements and inclusion of certain mandatory terms", the company said.
No displacement by model term
As part of a s615A(2) application for a full bench to determine the question, FWC President Iain Ross, Deputy President Val Gostencnik and Commissioner Tim Lee have held that the model consultation term and the agreement clause apply in conjunction.
While s205(2) says the model consultation term is "taken to be a term of the agreement" if it does not already have one or is an "objectionable emergency management term", the bench said it "does not have the effect of displacing and rendering inoperative" the deal's existing consultation provisions.
Rather, where an agreement is deficient, such as by not requiring consultation with employees about changes to their regular roster or ordinary hours, the bench said a model consultation term "operating as a term of the agreement would cure these deficiencies".
It therefore followed that clause 9 and the model consultation term both operated as terms of the deal and "any conflict between the two provisions may be resolved through the usual means of interpreting agreements", the bench said.
Incorporated award term not inconsistent
In a further twist raised during the hearing, the full bench noted that clause 5.3 of agreement incorporates terms of the Seagoing Industry Award and states that, in the event of inconsistency, the agreement provisions prevail.
With clause 8 of that award setting out consultation requirements, the bench was satisfied that "read together, clause 9 of the agreement and clause 8 of the award would comply with the content requirements in s205".
Teekay maintained that the award consultation provisions were inconsistent with the agreement and the latter's terms therefore prevailed but were knocked out by the model award clause.
However, the bench held that there was no inconsistency as the agreement was silent on issues such consultation prior to changes to regular rosters and hours.
The bench concluded that Teekay could comply with all consultation requirements at clause 9 of the agreement, clause 8 of the award and in the model term.
The FWC will now consider the seafarers' substantive unfair dismissal claims.