Visy's deductions after industrial action constituted adverse action: Court

A court has found a manufacturing company took unlawful adverse action against employees when it made unauthorised deductions after they took protected industrial action.

Federal Magistrate Sylvia Emmett rebuffed Visy Paper Ltd’s argument that the “sole reason” for the deductions was to comply with the s470 prohibition on paying employees for industrial action.

She cited the Federal Court full court’s reasoning in Barclay v The Board of Bendigo Regional Institute of Technical and Further Education (see Related Article), saying there “was no evidence before the Court of the subjective intention of [Visy]" - apart from that of the company's manager of production, Eildert Kingma - for making the unauthorised deductions.

Federal Magistrate Emmett highlighted the absence of any “evidence of the line of authority” from Visy to Kingma, indicating that he had failed to obtain proper advice about complying with the Act before authorising the deductions.

She said it would be "curious" if Kingma's decision to direct his production manager to make the deductions "was found to be determinative of the real reason for the conduct" and capable of meeting the reverse onus of proof.

“But for the protected industrial action, no such deductions would have been made from the relevant employees by the respondent.

"In the circumstances, I am satisfied that, the protected industrial action was, at least, an operative reason for the making of the illegal deductions.”

"There was plainly an 'objective connection' (see Barclay) between the respondent’s decision to make the deductions and the protected industrial action.”

Federal Magistrate Emmett found that Visy had contravened the enterprise agreement by making the unauthorised deductions.

Furthermore, Visy had taken adverse action against the employees who had exercised their workplace rights and taken part in the protected industrial action and by making the deductions in their pay for the period.

Pay deduction followed industrial action

The AMWU claimed in its adverse action case that Visy Paper Pty Ltd had underpaid machine operators at its Smithfield paper mill who had twice taken protected industrial action in late 2010.

The employees had been employed under the terms of the Visy (Smithfield, Warwick Farm, Dandenong, O’Connor FAG Carole Park) Enterprise Agreement 2007, which nominally expired on September 30, 2010.

Visy and the AMWU commenced bargaining for a new enterprise agreement in July 2010.

In 1999 Visy and its Smithfield employees agreed to a wage averaging agreement that introduced a new rostering system.

The averaging deal converted penalties, overtime, allowances and leave loading and other entitlements into an hourly figure of 17.95 hours and added it to the 35 ordinary weekly hours - bringing a total of 52.95 hours a week,

Under the arrangement, the company paid the workers for the 52.95 hours whether or not they worked those hours. The employees worked 12-hour shifts, which attracted double time on weekends.

Under the averaging agreement, if a Smithfield employee took a day of annual leave during a weekend shift, they would forfeit two days annual leave. This was designed to deter employees from taking leave during weekend shifts. However, this arrangement did not expressly extend to absences due to protected industrial action.

After the employees took protected action, senior Visy manager Eildert Kingma - who was responsible for the management of production at the Smithfield site - told his production manager, Paul Malone, to calculate “negative hours” that employees had failed to work during the strike so that “[Visy] could identify any of the shifts not worked attracted more than the average weekly pay”. These were weekend shifts that attracted double time rates.

Visy, in a letter to the Smithfield employees, said it would deduct money from their wages in the next pay cycle because of the strike. It told them it was required to make the deductions to comply with s470(1) of the Fair Work Act.

The AMWU responded by launching the adverse action case in February last year.

Magistrate criticises poor wording of pay averaging agreement

Federal Magistrate Emmett refused to accept that the 2007 enterprise agreement or the averaging agreement entitled Visy to offset “negative hours” the employees didn't work when they took protected action.

She also rejected Visy’s argument that s324 authorised the deductions.

She criticised the poor wording of the averaging agreement, saying: “It is profoundly unsatisfactory that the issue that has arisen before this Court arises because the wage agreement between the parties was not expressed clearly in writing. It does neither party any credit.”

The AMWU had sought penalties in addition to compensation for the affected employees. The parties have been ordered to attend conciliation meeting at a later undisclosed date.

AMWU NSW branch legal officer Joseph Kennedy told Workplace Express the decision is significant because of the application of the “objective decision” in Barclay.

Kennedy continued that the Visy averaging agreement was both verbal and written and has - not surprisingly - been the subject of a Fair Work Australia decision this month in Visy Paper Pty Ltd T/A Visy Recycling v AMWU.

AFMEU v Visy Paper Pty Ltd [2012] FMCA 407 (15 May 2012)