5

[Extract from Queensland Government Industrial Gazette,

dated 4 February, 2005, Vol. 178, No.5, pages 114-118]

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1999 – s. 74 – application for reinstatement

The Australian Workers’ Union of Employees, Queensland (for Darryl Moate and

Kenneth Allison) AND James Hardie Australia Pty Ltd (No. 2) (Nos. B1087 and B1088 of 2004)

COMMISSIONER THOMPSON 24 January 2005

Unfair dismissal applications – Decision released 29 October 2004 – Failure to agree on remuneration ordered –Arguments over Gainsharing – Custom and Practice – Application for the payment of the Gainsharing arrangement dismissed.

DECISION
Background

On 29 October 2004 a decision was released by the Commission in which Darryl Moate (Moate) and Kenneth Allison (Allison) were found to have been terminated by James Hardie Australia Pty Ltd (respondent) in a harsh, unjust and unreasonable manner.

Having made the finding, the Commission ordered the reinstatement of Moate and Allison and further ordered, in accordance with s. 78(a) of the Industrial Relations Act 1999 their continuity of service be maintained and that the respondent pay remuneration lost, or likely to have been lost, due to the dismissal.

The parties were directed to take into account any monies or benefit received by Moate and Allison in the period between their termination and reinstatement.

Note: In the case of Allison, he was, as a result of the decision, demoted from the position of Team Leader to a position at pay level 3 and such payment was to be made at the new rate.

On 1 December 2004 correspondence was received from The Australian Workers’ Union of Employees, Queensland (the Union) in which they advised that the parties had failed to reach agreement on the quantum of monies which was to be paid to Moate and Allison as a result of their unfair dismissals.

The Commission was requested to re-list the matters at the earliest convenience.

The parties were brought back to the Commission on 6 December 2004 where the Union was advised the point of contention that existed between the parties went to the non-payment of a Gainsharing arrangement.

At the conclusion of the hearing, a further directions order was issued requiring the parties to present arguments to the Commission on 14 January 2005.

Applicant

The applicant called evidence from Wayne Mills and Ian Finemore in support of their case.

Mills

Mr Mills, an organiser with the Union, gave evidence that he had been involved in negotiations for a number of certified agreements covering employees of the respondent at both the Meanndah and Carole Park sites.

Whilst he was now the dedicated organiser for the Carole Park site, he had, for a time, been responsible for both sites.

Some five years ago, at the conclusion of enterprise bargaining negotiations, the Joint Consultative Committee (JCC) had, following a number of meetings, introduced a Gainsharing system.

The arrangement was to lead to an improvement in future results (productivity) and whilst not seen as a part of the Certified Agreement, the process was undertaken through an attachment to the Certified Agreement.

As an attachment to his affidavit, Mr Mills provided a document (on a James Hardie Building Products letterhead) that was headed:

“Rules for Gainsharing Strategy for Carole Park Manufacturing and Distribution – September 2001”.

The document, of some 10 paragraphs, set out the details of how the Gainsharing arrangement would operate.

There was an acknowledgement of a guarantee to employees to maintain all their existing entitlements and a commitment to the preservation of existing health, welfare and safety standards.

At paragraph 6 of the document, those eligible to participate in the scheme were identified:

“Eligible participants are, ALL James Hardie Employees who have worked at Carole Park on a permanent basis for one month, and Casual Employees who have worked for James Hardie at Carole Park for a continuous period of 6 months and casuals who complete 90 twelve hour shifts over a nine month period (or equivalent on another roster) any causal who satisfies the above eligibility rules will be deemed an Eligible Participant during future employment periods with the company as long as the period between ceasing and restarting employment is not greater than 6 months.

Eligible participants who cease or commence employment with the Company during the quarter, will be eligible for a payment on a pro rata basis for any dividend achieved. Participants on Workers’ Compensation for more than 20 working days, cease to be eligible for the duration of their absence.”.

In terms of the distribution of Gainsharing dividends, paragraph 8 of the document stated:

“Gains/losses resulting from the month’s performances will be accumulated on a quarterly basis to determine an overall Gain or loss result. Any quarterly gain will be split 50/50 between the Company and the eligible participants. Quarterly losses will be borne by the Company. All eligible participants (with the exception of any Employee affected by rule 6) will be paid an equal share.”.

Note: The position advanced in the proceedings was that the employees of the Meeandah Plant were also participants in the Gainsharing arrangement.

Finemore

The witness, an employee of the respondent since September 1999, gave evidence of receiving the Gainsharing payment every three months since commencing employment at the Meanndah site, except for the first six months of employment.

As the union delegate on site, he was aware of the persons who received payments and of the amounts paid.

For the quarter ended June 2004, the amount paid to each employee was $1,114.00, with a further amount of $1,708.00 being distributed for the quarter ending September 2004.

Respondent

The respondent chose not to call witness evidence in the proceedings, and simply relied upon submissions.

Submissions

Applicant

Mr James Martin, for the applicant, firstly went to the decision of the Commission to reinstate both Moate and Allison and the order for the respondent to pay remuneration lost or likely to have been lost.

The parties had successfully negotiated the return to work and the matter of remuneration with the exception of the Gainsharing arrangement for which the Union argued that Moate and Allison were entitled to receive the amounts of $1,114.00 and $1,708.00 for the quarters ending June and September 2004.

Mr Martin submitted that had the employees not been terminated they would have received all payments subject of the claim.

In support of the claim, he placed reliance upon a decision of Fisher C in BFUE v Darling Downs Foods Limited (B773 of 2002) 172 QGIG 1043 in which it was stated:

“Had the dismissal not occurred and Mr Smith remained in employment beyond the 1st of May 2002, then the fact of the matter is that Mr Smith would have continued to work the afternoon shift and be – be in receipt of 15 per cent shift loading.”.

Additionally, he relied upon a decision of the Industrial Court of Australia in Benson v Premist Constructions (NI 2264 of 1995) Madgwick J.

The decision of the respondent not to include the Gainsharing in the total amount seemed to be based on a position that the payment was a discretionary bonus which formed no part of the Certified Agreement and the respondent therefore had no legal obligation to make the payment.

The position of the Union was that the Gainsharing payment was not an arbitrary entitlement paid to employees that could be withheld at the “whim” of the employer.

The payments in question are entitlements paid to all eligible employees and such arrangements are clearly set out in the rules of the scheme.

The Commission should come to the conclusion that Moate and Allison would have received this payment had they not been dismissed and the Commission should use its discretion to include the Gainsharing amount in any remuneration ordered.

Mr Martin explored the origins of the Gainsharing arrangement and the role of the JCC in the process.

Direct negotiations between the employer and the employees had set up the arrangement and the recruitment material relied upon by the respondent included a reference to the Gainsharing arrangement.

The Union further argued that the Gainsharing arrangement was now custom and practice at the work site and on this point relied upon a decision Commonwealth Foremans’ Association of Australia v Australian National Airline Commission TAA (C No. 1747 of 1977) Print D7440 Paine C in which it was found that the employer had obligations by reason of custom and practice.

The Commission, in that matter, found:

“While I am unable to find on the evidence a firm written contractual commitment to afford the benefit which may be now denied, I am of the opinion that where obligations exist by reason of custom and practice which would have justified a different approach from that which is adopted in this case it is common knowledge that an employee retiring on medical grounds would be granted accumulated sick leave before retirement.”.

Mr Martin submitted that even if the Commission was of the opinion that Gainsharing is not an express term of the employment contract, it is at the very least an implied term as a result of custom and practice in place prior to the certification of the current Certified Agreement.

The submissions went to the superannuation guarantee ruling on salary and wages where bonuses are defined at page 3, paragraphs 11 and 12:

“A bonus will form part of an employee’s salary or wages with the bonuses paid in respect of ordinary hours of work. For the definition of salary and wages, a bonus that is an ex gratia payment, including payments in respect of overtime will be part of an employee’s salary or wages if that payment is made in an employment context and not in a personal basis.”.

If the Commission was to form the view that the applicants are not entitled to the Gainsharing arrangements for the period between their dismissal and reinstatement, the Union submitted that an entitlement existed for the time they were at work immediately prior to the termination.

In conclusion, Mr Martin stated that the withholding of the Gainsharing entitlements was a gross injustice.

Respondent

Mr Matthew Payten, on behalf of the respondent, at the outset indicated that their position was essentially two-fold.

Firstly, it was contended that the bonus was not remuneration and secondly, as a matter of law, the issue of whether or not to pay the Gainshare to the two employees was an issue of discretion for the Commission.

In submissions to the issue of whether a bonus was remuneration, Mr Payten took to the Commission to two authorities, those being:

·  Hitchcock v Beverage Industry Environment Council (U2003/6134) (2004) 133 IR 393.

·  Sawiris v BMS Entertainment Pty Ltd (U2004/2039) (2004) PR953325.


In respect of the Hitchcock matter, the Commission’s attention was drawn to paragraph 25 of that decision:

“In our view, Williams SDP correctly interpreted and applied s.170CC(3)(b) in finding that the rate of remuneration applicable to the appellant immediately before the termination of his employment was that specified within the appellant’s ‘salary package’ as approved by the Board of the respondent and as applicable to the employment of the appellant at the date of termination. Williams SDP was right to focus upon the liability under the contract of employment governing the employment which was terminated.”.

In the matter of Sawiris there was a reference at paragraph 14 where it stated:

“It is well established that to ascertain the rate of remuneration pursuant to section 170 CBA, (5)(b) it is necessary to look at the legal obligation of the employer pursuant to the contract of employment.”.

Further, at paragraph 18 of the same decision, it said:

“It was common ground that in order for the bonus to be part of Ms Sawiris’ remuneration there would need to be a legal obligation on BMS to pay her the bonus. Counsel for BMS suggested that a contractual liability arose because Mr Berman had promised to pay the bonus and Ms Sawiris performed work under the contract by way of consideration. We can find nothing in the evidence to support such a proposition. It is clear that the bonus was not part of the written contract of employment. There is no evidence that it became a term of the contract subsequently. Mr Berman’s corrrespondence made it clear that the bonus was in the nature of a gratuity and it was in part intended to induce employees to stay with the firm. On this point Ms Sawiris’ evidence does not conflict with Mr Berman’s in any significant respect. No attempt was made to make out a claim in Quasi contract or estoppel and we do not think there is a proper foundation in the evidence for any conclusion along those lines. Accordingly we find that the bonus was at all relevant times a matter for BMS’ discretion as was not part of remuneration for the purpose of s.170CBA(5)(b).”.

Mr Payton submitted that it should be accepted that bonuses, as a generalised topic, are not subject to the contract of employment and by their very nature within the discretion of the relevant employer.

In this particular instance, the wages and other entitlements of the employees are set out clearly in the Certified Agreement which must be the basis upon which the obligations of the parties must be measured.

The JCC does not have the power to bind the company with their role being to simply determine how to regulate and distribute the money that has been made available.