T3561
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Shop Distributive and Allied Employees' Association - and J T Soundy Pty Ltd
Industrial dispute - redundancy payments - joint employee/employer funded superannuation scheme - offsetting of employer contributions against redundancy payment REASONS FOR DECISION This was an application for a dispute hearing by the Shop Distributive and Allied Employees' Association - Tasmanian Branch (the Union) made under Section 29 of the Act, after 14 employees of J T Soundy Pty Ltd of Hobart (the Company) were made redundant. The Union claimed the proposed redundancy payments were not adequate. The nub of the problem was that the Company had in the case of eleven of the employees involved offset any redundancy payments against its share of the monies paid to each eligible employee from its own in-house superannuation scheme. The Union claimed that the Company should not be allowed to make the offsets. At the main hearing the Union relied upon quite a number of previous redundancy decisions in the State jurisdiction going back as far as 1982, but unfortunately none of them could really have been taken as precedents or considered to be relevant to this case where the Company acknowledged the redundancy pay requirements, but claimed to be able to offset them with its superannuation scheme payouts (employer contributions only). The Company produced an exhibit which showed that, for all except one of the employees concerned, the payout from the employer's contributions (plus interest) to the superannuation scheme represented more than 2 weeks pay for each year of service. The Union sought redundancy payments of four weeks pay for each year of service separately from the superannuation scheme payments. Discussions between the parties had not been successful. The Union also argued that the New South Wales Protection Act 1982 served as a clear precedent in support of its claim in that it implied superannuation payments and redundancy payments ran parallel and it made no mention of offsetting one item against the other. The Tasmanian Confederation of Industries (the Confederation) on behalf of the Company acknowledged that the NSW Act was unclear, but submitted that no comfort could be drawn from it by either side in this case as the matter of offsetting superannuation and redundancy payments simply was not addressed in that Act. Finally, in response the Union submitted that the Company's employees had never been advised that the scheme was for redundancy purposes; the State TCR decision had made no mention of offsetting; some employees had already retired and availed of the Company's scheme in that context; retirement was the key factor in determining the purpose of the Company's scheme and the Commission was not bound by the Federal decision. The Confederation advised that the redundancies had only been decided upon as a last resort: the sale of the Elizabeth Street Store in Hobart had been undertaken as a means of securing the survival of the Company which would continue to operate from its Liverpool Street premises. The Company had done everything it could to assist the employees made redundant, this included 11 weeks notice of the Company's intentions. As to the amount of redundancy payment considered appropriate in this case (putting aside the offset factor), the Confederation relied upon Fotheringham's case which was an arbitrated Retail Trades Award redundancy decision made by the past President of the Commission, Mr L A Koerbin in March 19881. It would be fair to say that the standard set by that decision (if that was intended) would have been one weeks pay for each year of service. I do not accept, however, that the decision ought to be taken as a guide in this case mainly because the single employee involved in that case had obtained alternate employment almost immediately on being made redundant by Fotheringhams; in this case none of the employees have been able to gain other work and, for most of them, future employment prospects must be bleak. The Confederation turned to the Company's superannuation scheme and advised that it had been set up as long ago as 1947 specifically for the purpose of providing for an occasion such as these redundancies. The Company scheme was an accumulation scheme and under its terms an employee, on being made redundant, became entitled to 100% vesting which included the Company's contributions plus interest. All this was in addition to the 3% Award occupational superannuation scheme. The Confederation pointed out that the greater majority of retail employers did not make additional superannuation payments. As to the Company's offsetting of the superannuation payments the Confederation relied in particular on the 1984 decision of the Australian Conciliation and Arbitration Commission (now the Australian Industrial Relations Commission), known as the "termination, change and redundancy (TCR) decision: especially relied upon was the supplementary decision which confirmed that "...payments under such (superannuation) schemes cannot be ignored, especially in cases where a superannuation scheme has a specific provision whereby full payment is made on redundancy occurring." As a result of the Federal TCR decision the following provision is found (more or less) in the redundancy clause of a number of Federal Awards:
The Confederation submitted that although the Commission was not bound by the Federal TCR decision, it could not be ignored especially, as in this case, where in the words of that decision the "employer has voluntarily introduced a superannuation scheme." The Confederation further pointed out that the qualification of "further order of the Commission" mentioned in the Federal Awards provision, related only to special circumstances and the Union had not shown any such in this case: this it had a responsibility to do, if it wished to avoid the precedent of the TCR decision. The Confederation also submitted that a decision by the Commission in favour of the Union's application would kill private employer superannuation funds. As to the Union's quoted cases the Confederation submitted that most of them were no precedent at all in that some were decided by a chairman who had no choice under the system as it then was, but to rule either in favour or against and others were settled by agreement which was the case in this matter. Other cases were not relevant to this matter because the facts were entirely different. The Confederation also noted that the Union had not addressed the offset issue at all in its submissions. In answer to a question the Confederation acknowledged that the Company had gained a tax advantage of 39 cents in the dollar through its superannuation contributions, but in the last 5 years no advantage had been gained because of the poor financial performance of the Company. The main issue to be decided in this case is whether or not the Company ought to be free to decide for itself to offset against redundancy payments its accumulated payments plus interest into its own superannuation scheme. I note that interest on the Company's contributions was applied each year, but did not become vested in the employee until the time of redundancy. It seems that up until now, in the jurisdiction of this Commission, the subject of offsetting superannuation payments has not been tested. It is true also that no detailed reference was made to the subject during the hearing and in the decision in the State TCR case: in other words there are no precedents in this jurisdiction concerning the offsetting of superannuation payments against redundancy payments. I accept that there have been a great number of settlements in this State whereby employers have agreed to make both redundancy payments and superannuation payments, most notably the State Government, but that is not a persuasive argument in this case where there is no agreement. In the latter context I believe the Federal Full Bench decision in the 1984 TCR case cannot be disregarded: I accept that, where an employer had made separate superannuation arrangements and contributions voluntarily, in principle, that employer would be unfairly treated if the offsetting of those payments against redundancy payments was disallowed. Whilst this may be viewed as a minimum standard, I believe the employer would be discriminated against if the option was precluded. I therefore decline the Union's request for an order requiring both superannuation and redundancy payments to be made. As to the quantum of the redundancy payments against which I have decided the Company may offset its superannuation payments, I decided that a minimum of two weeks pay for each year of service should apply. I accept that adequate notice of redundancy was given by the Company. If it can be demonstrated by the Union that the two casual employees made redundant in fact worked regularly for the Company they also should receive redundancy payments on the basis I have decided.
P A Imlach Appearances: Dates and place of hearing: |