IN THE TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984

REASONS FOR DECISION

This matter concerns a notification by the Tasmanian Confederation of Industries (TCI) pursuant to Section 29 of the Act for a hearing to settle an industrial dispute.

The dispute is between the Cascade Brewery Company Ltd (Cascade) and the Transport Workers' Union of Australia, Tasmanian Branch (TWU) and concerns a claim for redundancy payments for four men.

Cascade has taken a decision to shed itself of the distribution function of products from Cascade Cordials and has made arrangements with a transport company (Hazell Pty Ltd) for the transfer of all four Cascade employees who will be affected by this decision to its employ, concurrent with the letting of the contract.

Some two months ago the transport and distribution facet of the brewery sector was also contracted out, and this was achieved with no apparent industrial disharmony.

In the present dispute the TWU rely upon the existence of an agreement titled the "Cascade Brewery Co Ltd Redundancy Agreement" to justify its claim for severance payments to be made to all four employees.

The TWU, with others, is a party to such agreement which received certification pursuant to Section 32 of the Industrial Relations Act 1975. Transitional provisions of the 1984 Act gave this agreement continued registration status with the present Commission.

In his submissions opposing the claim Mr Abey argued that the definition of "redundancy" contained in the agreement does not fit the circumstances of the present case and does not therefore apply. He relied also upon the fact that:

• The total ordinary wage presently paid to the four TWU employees of Cascade is virtually the same as is to be paid by Hazell Pty Ltd. However, although it is conceded that present overtime payments are not likely to be achieved with Hazell Pty Ltd.

• Cascade propose to offer pay out of all unused sick leave credits to the four men, amounting to around $20,000 in total.

• Annual leave may be either paid out or continuity of existing credits with the new employer permitted as an option.

• There will be no loss of service for long service leave purposes as a result of the transfer of employment to Hazell Pty Ltd.

Evidence was presented through the sworn testimony of the Managing Director of Cascade to the fact that:

• There were sound practical reasons for deciding to contract out the distribution function.

• Such decision is necessary to improve the efficiency of the overall operation of the cordial sector, and follows a similar change in the brewery sector of the same company.

• Cascade sought a suitable contractor and ascertained that Hazell Pty Ltd was acceptable to the TWU.

• Cascade properly consulted the TWU concerning the various aspects of contracting out the distribution function, and also discussed the matter with the employees concerned.

• When the claim for redundancy payments was made known Cascade contacted TCI to notify a dispute and seek a hearing.

• The aim of Cascade is to have the four employees transfer to Hazel Pty Ltd by 1 June or 1 July 1990.

• If my decision supports the TWU claim then redundancy payments would total approximately $100,000 based upon the terms of the registered agreement and having regard for the years of service of the four men.

• The findings of an independent evaluation of the cordial production section, which will form part of a "part D" report to shareholders, has shown that only a 5% return on funds has been achieved in the past year. This is clearly an unsatisfactory result and nothing should be done to exacerbate the situation.

• Directors of Cascade could, in the worst case scenario, decide to shed itself of the cordial factory because of a combination of negative cost factors, including the present claim. And the cordial operation employs 55-60 employees.

Mr Abey quoted the definition of "redundancy" contained in the Cascade Brewery Co Ltd Redundancy Agreement, which is worded as follows:

"For the purpose of this Agreement `Redundancy' means an employment situation arising as a consequence of:-

(i) the application of technological changes,

(ii) rationalisation of the Company's existing operations,

(iii) significant changes in the work methods within existing divisions resulting in the number of employees exceeding the number required for the performance of available work.

Redundancy shall not include circumstances where the work available for employees is reduced due to circumstances attributable to seasonal or other unusual demands for products of the industry.

A "Redundant Employee" shall mean a person who is employed by the Company on a full time, continuous basis or a person who is a regular casual employee and whose services will become redundant as a result of a redundancy situation (as defined). This definition shall not include employees who are specifically told they are employed on a casual (other than a regular casual), temporary or short term basis.

A `regular casual employee' shall mean an employee who is regularly employed by the Company for not less than thirty two hours in each consecutive period of four weeks."

He argued that:

(a) There is no question that technological changes have occurred.

(b) That there had been no rationalisation of the Company's operations because Cascade has been and still is engaged in the fundamental business of brewing of beer, the conducting of hotels, and the manufacture of cordial. Whilst distribution of products is an allied function Cascade is not a transport specialist like Hazell Pty Ltd.

(c) There has been no change in work methods and the number of workers employed does not exceed the number required.

Mr Abey said that the conditions of the agreement had not been met to justify the claim, and there is no basis for assuming an automatic entitlement.

Whilst the four employees may be placed in a less comfortable position in the future in comparison to the present generous conditions which apply, they will nevertheless still have full-time employment without loss of entitlements dependent upon continuity.

Currently Cascade pay a Christmas bonus of two weeks pay and 50% annual leave loading, which is outside the normal standard. And the four men now only work approximately 25 or 26 hours per week but receive a set "overtime" allowance of $36.80 per week. In addition there are other privileges such as free beer.

Mr Abey also addressed that section of the redundancy agreement which falls under the heading of "Transfer to Alternative Positions".

Reliance was also placed upon a decision of the Tasmanian Industrial Boards dated 2 December 1982 (C.C. No. 50 of 1982, Holden D.). That matter concerned a claim for retrenchment payment by the AMWU against Tasmanian Breweries Pty Ltd. In that instance the President of the compulsory conference rejected the claim after deciding that the employee had not lost employment, but had been found alternative work.

Mr Abey also relied upon a decision of the Australian Conciliation and Arbitration Commission in relation to the general severance pay prescription of the Metal Industry Award 1984 - Part 11.

In that matter Commissioner Walker handed down his decision in Melbourne on 8 May 1986, following the receipt of a report from the Tasmanian Industrial Commission acting as a Local Industrial Board, pursuant to Section 44 of the Act.

The claim for severance pay was rejected and an Order issued varying the general severance pay prescription.

In his decision Commissioner Walker commented, inter alia, as follows:

"The dispute involves an application, pursuant to clause 42(e) (Redundancy) of the Metal Industry Award Part 1, lodged by the Tasmanian Chamber of Industries to have the general severance pay prescription set aside in respect to Johnson and Wells Pty Ltd Hobart on the grounds that the company had arranged alternative employment for one of four employees whose positions had become redundant. The Amalgamated Metal Workers' Union opposed the application and sought to have the member, Mr Stephen Bennett, paid under the provisions of clause 42 - Redundancy - which had been paid to the other three employees for whom alternative employment had not been found.

Having read the transcript of the proceedings in Hobart and considered the report of Deputy President Robinson I am satisfied that Johnson and Wells Pty Ltd did find acceptable alternative employment for Mr Stephen Bennett at the time of his redundancy and that the company has established a case to have the general severance pay prescriptions varied accordingly in respect of Mr Bennett.

The clear intention of the Full Bench in providing clause 42(e) was to encourage companies to take all possible steps to avoid individuals being out of work and regard severance paid as a compensation when it was not possible to assist the individual in obtaining suitable alternative employment.

An order will be issued varying clause 42 - Redundancy - accordingly."

Mr Hansch, for the TWU, provided the Commission with the ages and years of service of each of the four men, and relied upon the terms of the redundancy agreement to support the union's claim.

The oldest employee is 52 years of age and the youngest 33, and the years of service range from 4 years to 23 years.

Mr Hansch submitted that each of the men regarded their jobs with Cascade as a career. They were given no choice in their changed circumstances, and were not offered alternative work with the same employer.

He queried the right of Cascade to transfer its employees to another employer.

The four men concerned are now faced with working under an entirely different award, with longer hours and less pay.

Whilst Cascade alleged the employees were being transferred, the fact is they are to be sacked.

He said that whilst Cascade claim credit for finding the four men new jobs, the fact is the TWU would have ensured Hazell Pty Ltd engated their members when the Cascade contract was let out.

One serious disadvantage the four will suffer is that their future will be less secure if Hazells have to later retrench drivers. Obviously under the "last on, first off" rule they will be the first to go.

Whilst Cascade claim that they are not in the transport industry, it was pointed out that it has been using drivers for about 140 years.

In explaining the history of the "overtime" allowance, Mr Hansch said it was introduced in 1956 as a convenience measure, but since drivers only now work about 25 or 26 ordinary hours at the present time the $36.80 allowance is merely part of the overaward structure.

The TWU argued that within the terms of the definitions of "redundancy" contained within the registered agreement the four employees have been made redundant and are entitled to the payments stipulated in the same document.

During the course of proceedings I advised both parties concerned that in deciding this dispute I would be taking into consideration the Full Bench decision of this Commission issued on 13 September 1985 in the Termination, Change and Redundancy Case2. In that significant matter the Full Bench decided against adopting any award prescription relating to redundancy payments, but opted instead for a case by case approach.

That Full Bench also laid down a number of general principles which are to apply in deciding future cases involving unexpected loss of employment by more or less permanent employees.

Broadly stated the Full Bench said employees who had a reasonably based expectancy of permanent employment after establishing themselves should be fairly treated. And where job loss was unavoidable and occasioned through no fault of the employee, then the employer should make every endeavour to cushion the effect of such job loss through such measures as:

(a) Giving long notice to employees of the possibility of job loss.

(b) Counselling employees in relation to the possible alternatives available.

(c) Retraining or relocating employees.

(d) Assisting in finding alternative employment.

(e) Granting time off for job search and job interviews where necessary.

(f) Providing references.

It has been clearly established in this instance that Cascade has acted responsibly in cushioning the effects of job loss consequent upon contracting out the distribution side of its business. And in this regard it has met the most important requirement contained in the Full Bench3 decision. In fact no job loss has yet occurred, and new jobs for all are assured.

The guarantee of continued employment, albeit with another employer, is the singular most important and persuasive aspect of this particular case.

If the converse had applied, and the four men now faced the bleak prospect of unemployment in a depressed job market there would be a strong case to justify a payout by the employer. And if the employer had acted capriciously and failed to do anything to minimise the trauma of unexpected and unjustified job loss, then it would be an entirely different matter.

My view in this regard is not only consistent with the Full Bench's decision of 13 September 19854, but consistent with the two cases cited in evidence by Cascade and earlier identified.

In the past this Commission has shown its preparedness to criticise employers if they were found to have treated employees in a manner which was "harsh, unjust and unreasonable", and where dismissal was also involved severance payments, sometimes in excess of the Metal Industry Award standard, have been awarded.

In the alternative when instances are found, as in this case, where the employer has complied with both the spirit and intent of this Commission's Full Bench decision5, then in my view full credit is properly due and should be given. After all the industrial community, involving as it does, trade unions, employees, private employers and Governments (as employers) needs to be encouraged to observe sound personnel and industrial practices.

In this matter the TWU has been somewhat dismissive of the fact that the employees concerned have another job to go to and rely upon their interpretation of the terms of a registered agreement to which they and Cascade are a party.

The TWU rely also upon the perceived relative benefits of conditions applying between employees of Cascade as opposed to those working for Hazell Pty Ltd.

The Cascade Brewery Company Redundancy Agreement has registered status even though it was registered prior to the formation of the present Commission. It is binding upon the parties to it, but where they cannot agree on any matter such disputes are to be referred to the appropriate State or Federal industrial tribunal whose decision shall be accepted.

I have had regard for both the terms of the agreement and the Full Bench decision of 13 September 1985 in matter T.125 of 1985, and have reached the conclusion that the circumstances as a whole do not justify a claim for severance payment over and beyond those items already promised by Cascade.

I stress that this ruling sets no precedent so far as the agreement is concerned on the basis that each case needs to be examined on individual merit, and the present set of circumstances are unique to themselves.

As to the question of less favourable conditions of employment, I can readily sympathise with the employees loss of a regular supply of free beer, and particularly since Tasmania's beer is of such excellent quality. However the "loss" of not having to work a full week, being paid for "overtime" not worked, and other extraneous payments which are in excess of community standards do not constitute persuasive material.

Undoubtedly the new conditions may, by comparison, be more onerous but Hazell Pty Ltd is a well respected employer of long standing in Tasmania and it should not be even remotely imputed otherwise.

The important fact is that the ordinary wage rates will not be significantly different in the future and job security has been maintained.

For all of these reasons the claim for severance payment is refused.

A. Robinson
DEPUTY PRESIDENT

1 C No. 8524 of 1986 - Print G3179
2 T.125 of 1985, Retail Trades Award
3 Ibid
4 Ibid
5 Ibid