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Decision Appealed - See T11126 TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 The Australasian Meat Industry Employees Union, Tasmania Branch and Newemploy Pty Ltd
Industrial dispute - alleged unfair termination of employment of named employees - reasonable expectation of continuing employment - effect of training contract on contract of employment - whether valid reason based on operational requirements - whether genuine independent contractor arrangements - whether labour hire company at arm's length from client company - whether order can be made against third party - orders issued REASONS FOR DECISION [1] On 4 April 2003, The Australasian Meat Industry Employees Union, Tasmania Branch ("the union"), applied to the President, pursuant to s.29(1) of the Industrial Relations Act 1984 ("the Act"), for a hearing before a Commissioner in respect of an industrial dispute with Newemploy Pty Ltd, arising out of the alleged unfair termination of employment of nineteen named employees ("the employees"). [2] On 4 April 2003, the President convened a hearing at the Supreme Court, Cameron Street, Launceston, Tasmania, before myself, to commence on Tuesday 8 April 2003. There were a further eight hearing days. Mr Courtney and Mr Norris appeared for the applicant union. Mr Law and Mr McDermott were granted leave to appear for Newemploy Pty Ltd ("Newemploy"). Ms Fitzgerald and Mr Tullgren appeared on behalf of the Tasmanian Trades and Labor Council ("Unions Tasmania".) Mr Willingham appeared, pursuant to section 27 of the Act, on behalf of the Minister for Justice and Industrial Relations. The final hearing day was 18 August 2003. [3] On 2 June 2003, Mr L Sealy appeared on behalf on Blue Ribbon Products Pty Ltd ("Blue Ribbon Products"). On 3 June 2003 notice was served upon Blue Ribbon Products to attend, pursuant to section 29(2)(b) of the Act. On 30 June 2003 Mr Sealy formally sought and was granted leave to appear on behalf of Blue Ribbon Products. Parties to the Proceedings [4] By correspondence, on 22 May 2003, the union foreshadowed that they might be seeking orders against Blue Ribbon Products. [5] During proceedings on 2 June 2003 the union said that Blue Ribbon Products should become a party to the dispute on the basis that there is an obligation on the Commission, in terms of natural justice, to give any party against whom orders might be sought the opportunity to be heard. [6] Mr Sealy, for Blue Ribbon Products objected on the grounds that there is no power to join a party contained within the Act, and that the proceedings were so far advanced that the position of Blue Ribbon Products would be prejudiced. [7] After a consideration of the issues I issued Directions that the matter be adjourned for 28 days; that notice be served on Blue Ribbon Products to attend on the next hearing day; that if Blue Ribbon Products wished to have any witnesses recalled for the purposes of cross-examination they give seven days' notice; that Blue Ribbon Products file witness statements if they intended to call witnesses; and that Blue Ribbon Products be provided with copies of all transcript, witness statements and exhibits. In the event, Blue Ribbon Products were provided with all the documents, but chose not to present evidence or to cross-examine witnesses, although they did provide written submissions. I now set out the reasons behind the Directions: [8] Where there is an industrial dispute, the President, pursuant to s.29(2)(b) must:
[9] Section 31(1) provides:
[10] As can be seen, the powers in relation to the making of orders are broad, and notice to attend is also broad, being persons or organisations the President considers able to assist in the settlement or prevention of the industrial dispute. Attendance is not compulsory. Before making a decision, the Commissioner must give the parties at the hearing a reasonable opportunity to be heard, this might, for example, include interveners, those persons who, pursuant to s.27(5), have direct interest in the proceedings, or those persons or organisation who have been given notice to attend. [11] Given that it was foreshadowed that orders might be sought against Blue Ribbon Products then, in the interests of natural justice, I was of the view that Blue Ribbon Products should be given the opportunity to be heard and to participate in the proceedings. [12] It should be noted that there is no definition of "party" or "parties" in the Act. [13] For many years an abattoir and meat processing facility has operated at Killafaddy Road, Launceston, known, in all its various guises, to the general community and to its employees as "Blue Ribbon". In recent years a number of changes have taken place in relation to the ownership and operation of the facility. Relevantly to this dispute, Blue Ribbon Meat Products Pty Ltd was placed into administration late in 2001. [14] The employees concerned in this dispute were production workers at the Killafaddy site. Their duties included packing, labouring, pork boning, rendering and dispatching. At the time of the cessation of their employment, the employees had worked at the Killafaddy site for Blue Ribbon in its various manifestations for periods ranging from six months to 32 years. [15] When the administrators were appointed, the production workers were dismissed, their entitlements were paid out, and then they were immediately rehired on what was described as a "daily hire basis". In fact, the employees continued to turn up for work each day, as they always had, but it seems that they were paid at casual rates during that period and were not paid for any leave periods. [16] On 17 December 2001 three new companies were registered: Blue Ribbon Products Pty Ltd, Newemploy Pty Ltd and Working Investments Pty Ltd. Blue Ribbon Products is a subsidiary of Working Investments Pty Ltd. The shareholders of Working Investments Pty Ltd are two other companies, of which the directors and shareholders are Darren Vincent and Jake Vincent. [17] Newemploy was established for the purpose of supplying labour to Blue Ribbon Products. [18] Blue Ribbon Meat Products was purchased. No specific date was given in evidence, but it appears likely that it would have been at the end of 2001. Newemploy provided the labour to Blue Ribbon Products, the new company, hiring the existing production work force and production continued in the smallgoods section. [19] Newemploy commenced employing the employees on 7 January 2002. The employees, excepting for four who were termed "casual", were offered a contract with Newemploy for three months from 7 January 2002 to 7 April 2002. The employees were employed under the terms of the Meat Processing Industry Award of the Tasmanian Industrial Commission ("the award"). [20] The employees claim that their understanding, based on what they were told, was that the three months contracts were probationary or "trial" contracts, and, when completed, they would become "full time" employees. The contract itself does not include the words "probation" or "trial". It was apparent that the employees understood "full time" employment to mean ongoing employment under the terms and conditions of the award. Newemploy claims that the contracts were fixed term contracts with no expectation of ongoing employment and that the three month period was for the purpose of establishing whether the operation was going to be viable. [21] The casual employees signed similar contracts on different dates. Three of these were of three months duration: 3 June 2002 to 3 September 2002; October 2002 to 18 January 2003; and 3 June 2002 to September 2002. [22] On 3 April 2002, all the employees, apart from the four employees described as casuals, were taken in groups of about eight to a series of meetings at which two representatives of Northern Group Training, a group training company, were present. Also present was John Price, of Training and Quality Management Services Pty Ltd, a registered training organisation. There is considerable dispute and differing evidence as to whether John Larsen of Newemploy was present and as to what was said at those meetings regarding the future employment of the employees. [23] The employees, who had no prior knowledge of the meetings, were given training agreements to sign. The agreements were for twelve months, and the employees were told that upon successful completion of the training they would receive the Certificate II Meat Processing (Smallgoods) qualification. [24] Newemploy contends that, as a result of signing the training agreements, the employees entered into a contract that meant that their employment would come to an end upon the completion of the training. Mr Larsen, of Newemploy, gave evidence that he believed he had told the employees that they had employment for the duration of the traineeships. The evidence of all of the employees is that they had no knowledge that their employment would cease upon the expiration of the training contracts, and the evidence of a number of employees was that Mr Larsen was not present at the meeting when they entered into the agreements. [25] Newemploy says that it was informed by Blue Ribbon Products that, in the future, all labour supplied through Newemploy was to be supplied by independent contractors. As a result of this Newemploy was unable to continue to directly employ the employees. [26] At some stage, the evidence differs as to when, but certainly well in advance of the completion date of the training agreements, or even before the signing of them, Blue Ribbon Products and Newemploy entered into a verbal agreement to the effect that, following the completion of the traineeships, labour supplied by Newemploy to Blue Ribbon Products would be on the basis of independent contractors only. This arrangement was reflected in a written agreement made on 31 March 2003. [27] John Price, the training provider, handed copies of the following letter, on Newemploy letterhead, to the employees:
John Larsen"1 [28] The employees claim that this was the first indication they had that their employment was going to be terminated. [29] Between the date of the issuing of the letters on 3 March and 2 April 2003, the last day of employment, the employees were given a number of documents setting out the terms of the independent contractor arrangements, which included registering with Newemploy as independent contractors and signing an agreement to that effect. It was made clear to the employees that if they did not sign the independent contractor contracts, they would not have jobs. The casuals were offered contracts on the same terms. [30] The employees the subject of this dispute either did not sign the independent contractor agreements, or signed them and subsequently changed their minds. On 3 April 2003 the employees arrived at the Killafaddy plant to find the gates locked, and a police and security guard presence. Only those employees who had agreed to become independent contractors were allowed on site. Those employees who have not agreed to work on the basis of the independent contractor contracts claim that they have been unfairly dismissed. [31] Newemploy contends that there was no termination of employment at the initiative of the employer, instead, they say, the contract of employment had come to an end through the effluxion of time, in that, at the time of the signing of the training agreements the only employment offered was employment for the duration of the training agreement. In the alternative, they say, the operational requirements, imposed upon them by their major client, Blue Ribbon Products, were such that there were no longer any positions available for directly employed employees. [32] The union seeks an Order, in the following terms:
[33] Section 30(3) of the Act provides:
[34] The questions to be determined are: whether the employees had a reasonable expectation of continuing employment; if so, were the terminations for a valid reason; and, if not, what is the appropriate remedy? Witnesses for the applicant were: Gene Geoffrey Dwyer, full time, employed at the Blue Ribbon site for 6 years Witnesses for Newemploy were: Ian John (John) Larsen, Owner/Director, Newemploy Pty Ltd, [35] All witnesses, with the exception of John Hadden, Director of Blue Ribbon Products, provided witness statements. Initially, it had appeared that Mr Hadden would be a witness for the respondent. When it became apparent that would not be occurring, the union requested, by correspondence, that the Commission issue a summons for Mr Hadden to attend. A summons was issued requiring Mr Hadden to attend "to assist the Commission in dealing with an industrial dispute." There was considerable resistance, on the part of Mr Sealy for Blue Ribbon Products, to Mr Hadden giving evidence. There is no doubt that, as a witness, Mr Hadden was not in the union's "camp". I determined that Mr Hadden's evidence could be verbal only. There is no requirement in this jurisdiction for such statements to be provided. The Companies and the Roles of John Hadden, John Larsen and Darren Vincent[36] In early December 2001 John Hadden, Darren Vincent and John Larsen (and possibly some other people) had discussions concerning the acquisition of Blue Ribbon Meat Products Pty Ltd. Mr Hadden's evidence was that the three of them (Hadden, Vincent and Larsen) "put a package together to have a go at it."2 [37] Mr Larsen's evidence was that he was first introduced to John Hadden at a meeting in December 2001, also attended by Darren Vincent, and at which they discussed potential business arrangements. [38] He said: "We went through the pros and cons of what could happen and what possible way it would happen."3 [39] Subsequent to that meeting, Blue Ribbon Meat Products Pty Ltd was purchased. [40] Newemploy Pty Ltd is a labour hire company, set up for the purpose of supplying labour to Blue Ribbon Products. It was registered on 17 December 2001. Its registered address is C/- Pitcher Partners, Level 6, 161 Collins Street, Melbourne. [41] John Larsen is the sole director and shareholder of Newemploy. He was, until at least mid-December 2001, an employee of Perfect Pork Group Pty Ltd, having worked for them for five years. [42] Blue Ribbon Products has the same registration date and registered address as Newemploy. Blue Ribbon Products' sole director is John Hadden and the sole shareholder is Working Investments Pty Ltd. [43] Working Investments Pty Ltd was registered on the same day as Newemploy and Blue Ribbon Products and has the same registered address. The sole director of Working Investments Pty Ltd is Darren Vincent, and the shareholders are Smine Pty Ltd and Twenty First Picnic Pty Ltd. [44] The director of Smine Pty Ltd is Darren Vincent and the shareholders are Darren Vincent and Jake Vincent. The director of Twenty First Picnic Pty Ltd is Jake Vincent and the shareholders are Darren Vincent and Jake Vincent. [45] Darren Vincent and Jake Vincent are also the shareholders and directors of Perfect Pork Group Pty Ltd ("Perfect Pork"). [46] John Larsen's evidence was that in early December he was still employed by Perfect Pork and was introduced to John Hadden. In his witness statement he said:
[47] He said that it was agreed that he would provide the work force for Blue Ribbon Products through establishing his own company. Blue Ribbon Products would provide him with office space, telephone facilities and shared administrative staff, for which he would be charged, and freedom of the work area. [48] In early January 2001 some of the employees attended a meeting in the lunch room at the Blue Ribbon plant, present at which were Darren Vincent, John Hadden and John Larsen. At that meeting Darren Vincent spoke of the history of the Perfect Pork group of companies, and said that all the employees would be offered employment. [49] The evidence of Grant Courtney, of the union, was that in February 2002 he met with John Hadden, who introduced himself as the General Manager of Blue Ribbon, and also Darren Vincent who introduced himself as the Executive Director of the Perfect Pork Group. From that time forward, any dealings that Mr Courtney had with management at the plant would normally involve Darren Vincent, John Larsen and John Hadden.5 [50] Brian Wood recalled being approached in the first week of January 2002 to go to the "smoko room" to have a meeting with management representatives of the new owner.
[51] John Hadden was asked about the discussions with John Larsen and Darren Vincent leading to the purchase of Blue Ribbon Meat Products.
[52] Mr Larsen's evidence in relation to the setting up of a separate labour hire company was:
[53] In addition to being the Director of Newemploy, John Larsen also performed duties for Blue Ribbon Products including in relation to a major client, Woolworths. [54] Mr Larsen had a business card on which he represented himself as the National Operations Manager of Blue Ribbon Products.12 [55] Mr Hadden was asked if Mr Larsen held any positions with Blue Ribbon.
[56] Mr Larsen said that from the beginning he had been present at the Blue Ribbon site two days a week, which had increased to three, then to five days a week. [57] The only other company that Mr Larsen had supplied labour to was Perfect Pork in Melbourne in 2002. He had not taken out any advertisements promoting his services. He said that he had canvassed other employers in Longford and Devonport. [58] Mr Larsen said that all administrative work for Newemploy (apart from the payroll), including the writing of letters, was done by Pitcher Partners. [59] He was not aware whether Newemploy had made a profit or not. [60] Mr Larsen's evidence was that the title "National Operations Manager" was not given to him by Blue Ribbon Products, but had been given to him by Woolworths. He said:
[61] Mr Larsen said that role commenced in June or July of 2002 and that was all he had done on behalf of Blue Ribbon.
[62] Mr Hadden's evidence was:
[63] At some stage employees from another labour hire firm, Techforce, commenced duties at the Blue Ribbon site. [64] Brendon Scales' evidence was:
[65] Graham Davis said in his witness statement that:
[66] When cross-examined Mr Larsen said that Mr Davis' evidence was wrong.
[67] The evidence was that Mr Larsen shared the services of the person responsible for Blue Ribbon Products' payroll. [68] In the case of at least one employee, Matthew Houston, his wages were paid out of a Blue Ribbon Products account and, on other occasions, out of the account of another company - Newter. Mr Larsen said that, to the best of his knowledge, Newter was a Blue Ribbon Products company. Mr Houston's wages were paid by Newter on 23 occasions, and by Blue Ribbon Products on 23 occasions. Mr Larsen said that was the result of a "software problem". He said that he had obtained the banking details from the employees and had given them to the "Blue Ribbon payroll lady...and she did the rest of the arrangements."21 [69] Mr Hadden's evidence was that the payment of Mr Houston's wages by Blue Ribbon Products was the result of a clerical error on the part of Matilda Fritz, the paymistress. [70] The evidence was that John Hadden had provided Matthew Houston with a reference for his bank, which said:
[71] Mr Hadden said that he had provided that letter so that Mr Houston could get a loan from his bank, but was having trouble because he worked at the Blue Ribbon site and the bank manager couldn't see the difference between Newemploy and Blue Ribbon. [72] The Training Contract Application forms (proforma documents with details to be filled in by the employer and the employees), shows the employer details as: "29. Legal name of employer... 30. Australian Business Number (ABN) 42 099 079 688 (typed) 31. Trading Name 32. Postal address 33. Telephone number ..."23 [73] The ABN, the address and the telephone number are those for Blue Ribbon Products. [74] John Larsen said that the training agreements were filled in by Northern Group Training, and that the employer details had been filled in after he signed the agreements. [75] Under further cross-examination he said that it was the previous "payroll lady" who had filled in the details on the contracts, including the wrong ABN. [76] The evidence of Vicki Maree Casey, Field Officer for Northern Group Training, was that at the meeting where the employees signed the training contracts the typed details had already been filled in. Northern Group Training had inserted the typed employer details on the contracts. She said that they were the details given to her by "Matilda in the office and I thought they were correct."24 [77] Mr Larsen said that he made unsuccessful attempts to have the incorrect details changed by the training authority, and that he wrote a letter seeking the changes.25 That letter was written on 16 April 2003, more than twelve months after the event and after the date of the lodging of this dispute. The Three Month Contracts [78] When Blue Ribbon Meat Products Pty Ltd was sold and Newemploy began providing the labour force to Blue Ribbon Products, the existing production workforce entered into employment contracts with Newemploy. These contracts ran from 7 January to 7 April 2002. [79] Nathan Long's unchallenged evidence was that:
[80] Other employees recall representatives of the purchaser being present at the plant that week, and being individually approached by John Larsen to sign the contracts. [81] Robert Selby's evidence was that Mr Larsen told him that he was on a probationary period of three months.27 [82] He said that at the end of that period,Kurt Maeder, the "number one" supervisor:
[83] Mr Selby said that Mr Maeder had:
[84] Andrew Tyson, Jason Gastin and James Reynolds all said that John Larsen told them that the contract was for an initial three month trial period.30 [85] When cross-examined, Mr Gastin repeated that he was told that it was a trial period of three months, that had been said to him by Mr Larsen in the office and Kurt Maeder was also present. [86] The evidence of Gregory Boon was that John Larsen had said at a meeting that they would all be employed on a three month trial basis.31 [87] Brendon Scales said in his statement that he attended a meeting in the office of Kurt Maeder, at which John Larsen was present. Mr Maeder had stated that everyone signing the contract was on a three months trial basis.32 [88] When cross-examined, Mr Scales said that it was his understanding that although the contract had a start and finish date, it was a trial period. The basis of that was:
[89] Mr Scales said that he assumed that a trial period would lead to full time employment.
[90] Brian Wood's statement said that John Larsen had stated that they would be on a three month probationary period, and after that they would be full time.35 [91] During cross-examination Mr Wood said:
[92] John Larsen's witness statement said that at no stage had he advised the employees that the contract was for a probationary or a trial period.
[93] Mr Larsen was asked why he thought the employees got the impression that they were employed on trial or probationary contracts:
The Training Agreements [94] On 3 April 2002 all employees, excepting for those designated as casuals, were, without notice and in separate small groups, called in to a series of meetings. At those meetings were two women from Northern Group Training, Vicki Casey and Kim Barker. Also at the meeting was John Price, of Training & Quality Management Services, a registered training organisation. There is conflicting evidence about John Larsen's presence. The training contracts show that they were signed by the employees on 3 April 2002, witnessed by Northern Group Training personnel, and signed by John Larsen on 4 April 2002. The Employees' Witness Statements[95] The evidence of the employees is that the meetings lasted twenty minutes to half an hour and most of the discussion was about how to complete the necessary documentation. Successful completion of the traineeship, which was to last a year, would result in the attainment of the Certificate II in Meat Processing (Smallgoods). [96] The employees said that nothing was said about their employment. It was their understanding that, having completed the three months "trial" period, they had now become "full time" employees. They were not told anything other than that they were signing up for a traineeship. Nothing of that nature was said to them at any time subsequent to the meeting. [97] None of the employee statements definitely place John Larsen at any of the meetings of 3 April 2002 at which the employees signed the training contracts. Oral Evidence - the Employees [98] Gene Dwyer's evidence was:
[99] Mr Dwyer agreed that the training contract had a start and finish date.
[100] He was asked if he had entered into the traineeship with his "eyes wide open and quite willingly?" He said:
[101] Mr Dwyer said that after the three month probationary contract, the employer obviously had no problems with the employees and their employment would just continue on full time. By "full time", he meant:
[102] Mr Dwyer said that the discussion he had at that time with Grant Courtney of the union, was that he had been quite impressed that:
[103] Mr Dwyer recalled being alerted by John Price in January 2003 to the fact that the traineeships were going to come to an end. He said that they already knew that. He did not recall Mr Price saying they should approach John Larsen with respect to future employment arrangements. He said that if Mr Price had said that he would have approached Mr Larsen straight away, he would not have left it. [104] Nathan Long's evidence was similar in relation to the training agreements and his expectations of continuing employment. He said that he did not believe that John Larsen had been in attendance at the meeting. [105] Nothing was said at that meeting about the period of employment. If someone had said that his employment was coming to an end he would have remembered it. He agreed that nothing had been said about it continuing. [106] The first he knew his employment was coming to an end was when John Price gave him the letter in early March 2003.46 He had been under the impression that after the completion of the traineeship he would be a full time employee. [107] Robert Selby's evidence was that he could not remember John Larsen being there. After he had signed on to the traineeship he had no concerns at all that he would not have a job. He was 60 years of age and had supposed that he had a job for life:
[108] He agreed that there was nothing in any agreement to make him draw that conclusion. [109] Lawrence Lewis said that it had been explained to him that the traineeship was for twelve months and was so that he could learn different skills throughout the factory. [110] Graham Davis said that he had voluntarily signed for the traineeship. Jim Smith (a supervisor) had told him that it was nothing to worry about, it was just to better his skills in the job. He did not recall John Larsen being there.
Forever, until you drop?......Well, until I can retire."48 [111] Matthew Houston said his understanding was that it was just a training agreement and was to improve their knowledge of their work. He thought that from that period on, it was "just normal employment".49 [112] Jason Gastin's evidence was that he recalled getting called to the office by Jimmy Smith and meeting with John Price and two ladies, who told him that they had to do a traineeship for twelve months. He was not told that he had a choice.
[113] James Reynolds said that, at the meeting John Price may have been there, the two women were there, and John Larsen was not there.
[114] Gregory Boon`s evidence was that it was possible that John Larsen had been there, but he could not recall exactly. He said that he was not given a choice as to whether he signed the agreement or not.
[115] Brendon Scales said two women were present who explained that the employees were to sign onto a twelve month traineeship to provide them with a Certificate II in smallgoods. The only people he recalled were the two women and Jim Smith. When asked whether there was any suggestion that the training contract was in any way connected with his employment, Mr Scales said:
[116] Mr Larsen's witness statement said:
[117] Mr Larsen was questioned about his presence at the meetings:
[118] He said that the employees signed the training contracts on that day, but was less sure when he had signed them. Mr Larsen agreed that the date next to his signature on the agreements was the day after the meeting. He said that if that was the date, then that was the day that he actually signed them.
[119] Mr Larsen said that he believed he had told each group that they had employment for the duration of the traineeship.
[120] Mr Larsen said that it was his belief that the training contract superseded the employment contract and that the training contract was also an employment contract. [121] He said that section C(d) of the training contract read, as he saw it, to mean:
[122] He said that the same advice had been given by Vicki Casey of Northern Group Training. [123] Mr Larsen was asked when Vicki Casey and John Price gave him that advice. He said:
[124] Vicki Casey said in her witness statement that:
[125] In oral evidence, Ms Casey said that at the meeting of 3 April 2002 she could recall John Larsen being present.
[126] Ms Casey could not recall how many meetings there had been on that day.
[127] Ms Casey said that the typed parts of the training contract forms were already filled in before the meeting. The hand written parts (employee details) were completed by employees, with some help provided. [128] She said that Mr Larsen had signed the agreements that day and agreed that he would have seen the completed forms with both the employer and employee details filled in. [129] John Price said he recalled giving John Larsen advice that upon the expiration of a traineeship the relevant trainee's employment would end as well. [130] His witness statement said that he had approached John Larsen in February 2002 and suggested the traineeship program to him. Mr Price negotiated an agreement with the Office of Post Compulsory Education and Training that meant that his company would provide the training to the trainees. [131] His statement said:
[132] In his oral evidence, Mr Price agreed that this was discussed in February 2002. [133] Mr Price said that John Larsen was present at the meetings of 3 April 2002.
[134] Mr Price said that on 24 January 2003 he advised the trainees that their training contracts were coming to an end and that they should contact John Larsen to clarify the arrangements for future employment. In his statement he said:
[135] He was asked whether he thought that might be because the employees did not see that there would be any particular change occurring.
Operational Requirements [136] Mr Larsen's statement said:
[137] John Hadden's oral evidence was that he was the person who decided that Blue Ribbon Products would not directly employ a workforce at the site because:
[138] He was asked when the possibility of moving to a workforce of independent contractors was first discussed:
...
[139] Blue Ribbon Products and Newemploy entered into a written agreement, titled "Labour Services Agreement", which says within its body that it was made on 31 March 2003, although the date on which it was signed by the parties is unclear.71 The agreement says that Newemploy will provide independent contractors to Blue Ribbon for a period of one year. [140] Mr Hadden agreed that there were a number of workers from a labour hire firm called Techforce at the plant, the mean average of which was: "maybe 13 a day."72 He said that he had "no idea" whether the arrangement between those workers and Techforce was one of employer and employee.
[141] Mr Hadden said that interest was based upon [the fact that] there is a tried and true group of people performing the work and they are qualified workers who have the "meat qualification for class 2".74 [142] John Larsen said in his witness statement:
[143] His oral evidence was that, at that stage it was just discussion and that there was no verbal agreement.
[144] He said that when the verbal agreement was made he had not told his employees that employing them on an independent contractor basis was being seriously considered, because nothing was finalised. He had told them four weeks prior to the finalisation of training, which was after he had made a final decision. He had not told them any earlier because:
[145] Mr Larsen said that the flexibility of independent contractor arrangements suited the highs and the lows of the business, but this was not necessarily an advantage to Newemploy, because, as it worked out, there were now less people on site and his income was reduced. [146] He had not tried to explore any alternatives to independent contracting that might have addressed Mr Hadden's requirements for flexibility. It had not occurred to him to talk with his employees to see if they could deliver that flexibility, and he had only told them after the decision had been made. He had made no efforts to place his employees with other clients.
[147] The evidence of John Price was that he was aware in February 2002 of the plans to move to independent contractors.
The Casuals [148] Phillip Dean's written statement said that he was employed on a casual basis from on or about 25 September 2002 until 2 April 2003. [149] He recalled John Larsen stating that he would be employed on a probationary period of three months. [150] He was paid $600 per week. He did not receive any paid leave. He said that he was required to notify the company if he could not attend for work on any day. He had three days off due to illness and notified the company on each occasion. [151] He was never instructed to confirm each day whether he should attend the next day. He understood from Jim Smith that he was required to turn up for work each day. [152] He said that on or about 27 January 2003, he asked Mr Larsen when he would become "full time" and was told that decisions regarding the casuals would be made in March 2003 and that his job was safe. [153] Mr Dean said that he was offered an independent contractor contract on or about Monday 24 March 2003. John Larsen told him it was going to be a "contract shed" instead of being a "union shed". He did not sign the contract. On 2 April 2003 he turned up for work at the usual time, the plant was locked and he could not enter. A security guard was present, who checked his name against a list and told him that he could not enter the plant.81 [154] When cross-examined, Mr Dean said that he worked every day excepting for public holidays and three days when he was sick. Some weeks he worked six days. He agreed that he was paid at a higher rate [than non-casuals].
[155] David Horder said that he regularly worked for eight hours per day. He was paid $120 per day gross. He worked every normal working day from 17 October 2002 to 2 April 2003, excepting for three days off due to illness. [156] An independent contractor contract was offered to him and was refused. On 2 April 2003 John Larsen told him that as he had not signed the contract then from the end of that day there would be no more work for him.84 [157] When cross-examined Mr Horder said that he was not paid for public holidays, annual leave, sick leave and that if he did not work he was not paid. [158] Theo Rhettas' evidence was that he commenced as a casual in the early part of October 2002. He signed a document to the effect that he was employed as a casual. After the first day he was asked by Jim Smith to come in the next day. The same enquiries were made for a couple of days; thereafter he understood that he was required to turn up unless told otherwise. He was never again asked about his availability. From the time of commencement until 2 April 2003, he regularly worked eight hours on each normal working day. He was paid $120 per day gross. [159] Mr Rhettas said that in mid March 2003 John Larsen gave him a copy of the proposed independent contractor contract. On 26 March he met with Mr Larsen who said that he could go on the dole or sign the contract. On 2 April 2003 Mr Larsen spoke to him again about his intentions; upon confirming that he would not be signing the contract, Mr Larsen told Mr Rhettas that he was finishing that night.85 [160] During cross-examination Mr Rhettas agreed that when he started he signed a document that said that he was to be employed as a casual worker with Newemploy.
[161] He was asked how his employer recorded his hours of work.
[162] Desmond McGrath was employed as a casual from 10 July 2002 to 2 April 2003. All the dealings in relation to his appointment were with John Hadden, who interviewed him and gave him forms to fill in. At no stage did John Hadden tell him that his employment would cease on 2 April 2003. [163] Mr McGrath said that he worked every normal working day from Monday to Friday. He was paid a flat rate of $192 per day. He worked 60-70 hours a week. Mr Hadden told him that he was to notify the company if he could not attend for work on any day. He had one day off work due to illness, for which he was paid. He was never instructed to confirm with a supervisor that he was required for work the next day. [164] In March 2003 he had a discussion with John Hadden in which he asked if he could become full time, given that he had been there for six months. Mr Hadden told him that there would be changes in April. Later in March John Larsen gave him a contract, which he did not agree to. A few days later Mr Hadden asked him if was going to sign it. On 2 April Mr Hadden and Mr Larsen came to his workstation and asked if he had signed the contract. Mr Larsen said: "you might as well go now".88 Termination of Employment [165] The employees were given a letter dated 4 March 2003, which said that the training contract would expire on 2 April 2003 and that as from that date they would no longer be employed by Newemploy. They were invited to register as independent contractors with Newemploy. [166] Mr Dwyer said he raised the fact that the employees were on traineeships and that there was a dispute in relation to those that was being dealt with by the relevant authorities. Mr Larsen's response was that both the traineeship and the employment would come to an end on 2 April 2003. [167] He said he subsequently received advice from Grant Courtney that the training agreements had been extended by four weeks. On 2 April he spoke again to John Larsen, asking him what would happen the next day, to which he replied with words to the effect that, as Mr Dwyer had not signed the contract he was finishing up. Mr Dwyer informed him that the training agreement had been extended, to which Mr Larsen responded that he did not need them there in order to be trained, that he could train them "down the fucking road". [168] That was Mr Dwyer's last day of work at the plant. [169] Matthew Houston, James Reynolds, Gregory Boon and Brendon Scales all said that they attended a meeting with John Larsen and John Hadden after they became concerned about the presence of Techforce workers in their area. An employee had been instructed to teach two workers from Techforce how to do the job in the loadout area. They made an attempt to negotiate a change in the contract offered from a daily rate to an hourly rate. Mr Larsen said "No". He said they could sign the contract, or not, but that if they did not sign they would not have a job. [170] According to James Reynolds, Mr Hadden said that Mr Larsen had to supply a workforce to him to do the job and he "did not give a fuck" where they came from. Gregory Boon said that Mr Hadden said he had to have a guaranteed workforce to ensure that the product went out and Mr Larsen had to supply a workforce to him and he (Mr Hadden) did not care where they came from. Brendon Scales said that Mr Larsen said that he had to have a trained workforce to meet Blue Ribbon's requirements. [171] The evidence of Graham Davis, Craig Barron, Gregory Boon and Andrew Tyson was that they performed their normal duties until 2 April 2003. They attended for work on 3 April 2003 and were denied access to the plant because they had not signed contracts. [172] Robert Selby, Matthew Houston, Jason Gastin, James Reynold and Brendon Scales all signed the contracts, but subsequently changed their minds when they became aware that those employees who had not signed the contracts were being denied access to the plant. [173] Brian Woods said in his statement that he was on annual leave from 10 March to 28 March 2003. On 2 April 2003 he was asked what his decision was and he replied that he was not going to sign the contract. Mr Larsen then told him that he would not be required to come in tomorrow. [174] On 3 April 2003 he arrived for work at the normal time and went up to the gate. There were two police officers, two security guards and four supervisors, including Mr Larsen. In the light of his discussion with Mr Larsen the day before, he considered that he had been locked out. [175] Mr Larsen's witness statement said:
The Independent Contractor Arrangements [176] Following the giving of notice that direct employment was to end on 2 April 2003, there were a number of discussions between the employees and John Larsen, John Price, John Hadden and Darren Vincent about the nature of the proposed new independent contractor arrangements. [177] Gene Dwyer's statement said that there was a lot of confusion amongst employees who were being told different things by management representatives on issues such as taxation and superannuation. [178] Craig Barron, Graham Davis and David Horder's evidence was that John Larsen had told them that nothing would change under the contract system. [179] Brendon Scales and Greg Boon said that John Larsen had said they would be better off under the new system. [180] Lawrence Lewis, Brian Wood and Desmond McGrath all said that Mr Vincent had been involved in discussions with them about the detail of the independent contractor arrangements. [181] Lawrence Lewis' evidence was:
[182] Desmond McGrath's evidence was that Mr Vincent was involved in the discussions. "The next approach was made in or about Monday 17 March 2003. I was approached by Darren Vincent, whom I understand to be the owner of the plant and Mr Hadden. Mr Vincent opened the discussion by making a statement to the effect that nothing would change in respect of my employment if I signed the contract..."91 [183] Brian Wood's witness statement said that on 27 March 2003 John Larsen indicated to him that the company would cover workers compensation and would deduct the minimum amount of taxation. [184] At some stage after 3 March 2003 the employees, including the casuals, were given a number of documents, these were headed: "Contracting Services Agreement", "The Contractors Information Book", "Notice to Newemploy Employees" and "Terms of Placement". [185] The "Contractors Information Book" sets out general policies and procedures, including the requirement to provide Newemploy with details of hours or days worked. It says that Newemploy will maintain a workers' compensation policy. It instructs individual contractors not to make any provision for GST in their pay rate; and to obtain a tax file number. It states that Newemploy will remit superannuation contributions to a complying fund. [186] The "Notice to Newemploy Employees" has a subheading "Registration as Independent Contractors" and advises that current employees who wish to become registered as independent contractors effective from 3 April 2003 must register no later than 5.00 pm Wednesday 26 march 2003. [187] The "Terms of Placement" document given to employees said:
[188] A number of the "Terms of Placement" documents given to the employees had a figure inserted at Item 4 "Hourly Rate or Agreed Job Price", examples of rates being $125 daily.92 [189] In relation to those employees who elected to sign the contracts and work under the new arrangements, John Larsen's oral evidence was that Newemploy: determines the hours of work; deducts PAYG taxation; provides all materials and tools; provides workers' compensation cover; and pays superannuation. It is up to John Larsen whether another worker is able to substitute for them, and the workers are not able to introduce new methods of work unless approved by a Blue Ribbon Products supervisor. [190] Mr Norris, for the union, made written extensive submissions, the substance of which is as follows: [191] The applicant submitted that there are three major questions to be determined: were the employees terminated; were the terminations unfair under the terms of the Act; and what is the appropriate remedy? Question 1 - Were the employees terminated? [192] The termination notice seems to assume that as the training contract was coming to an end, so was the employees' employment. [193] The union submitted that a contract of training and a contract of employment are not synonymous. In Curran v Thomas Jewellers Pty Ltd (AIRC Print P6275, 28 October 1997) ("Curran") Williams SDP of the Australian Industrial Relations Commission ("AIRC") said:
[194] Williams SDP reaffirmed this point in Kinniburgh v Printers Press Pty Ltd (AIRC Print 6340, 30 October 1997) ("Kinniburgh"), where he said:
[195] The union cited a number of other cases where the proposition established in Curran has been followed. [196] Unless the employees were told that their employment was limited to the duration of the training agreement, the nature of their employment became that of indefinite hiring on or after 7 April 2003. [197] The only evidence of such a nature comes from Mr Larsen's witness statement. Mr Larsen put it no higher than a "belief" that this was said. None of the employee witnesses were shaken at all from their consistent evidence that nothing at all was said about their employment. The Casuals [198] Section 30(3) of the Act provides that:
[199] Mr Norris said that the distinction between truly casual and full time employment turns on whether there is one ongoing engagement or a series of separate engagements, and cited a number of authorities in support of that proposition. He said that the approach adopted by various Tribunals is consistent and is usefully summarised in "Ryde-Eastwood Leagues Club v Taylor (1994) 56 IR 385 at 401 ("Ryde-Eastwood"):
[200] The union lists a number of indicia that, they say, assist in making the determination as to whether the relationship is continuous and ongoing. [201] The evidence of the employees was that all presented for employment each normal working day without being required to contact any supervisor about the availability of work; each employee worked every normal operational working day at the plant. [202] A relevant consideration is the award, which has no definition of a casual employee, however sub-clause 13(d)(ii) (casual employment) provides:
[203] None of the four employees could fairly be described as being employed on an irregular basis. Question 2 - Were the terminations unfair? The "Two Companies" Structure [204] The union submitted that the Commission is able to make orders against a third party who is not the direct employer. The basis of this argument is to be found in Re AMWU; Ex Parte Shell Co of Australia Ltd (1992) 42 IR 453 ("Shell"). The High Court, when considering the provisions of the definition of "industrial dispute" in Industrial Relations Act 1988 (Cth) said:
[205] That passage was relied upon by the AIRC in making dispute findings against parties who were not the direct employer in AMACSU & TWU v Ansett Australian Limited & Ors (2001) 50 AILR 4-495 ("Ansett"). [206] In the union's submission, although those cases dealt with the definition of "industrial dispute" in the federal Act, the Tasmanian Act is not materially distinguishable and is more expansive. [207] Under the terms of the Act, a dispute about termination of employment may involve the employer, the employee and a third party who has some direct influence over any matter pertaining to the relations of the employer and employee. [208] There is a sound basis in the evidence to conclude that there is a close business relationship between Newemploy and Blue Ribbon Products and that the two entities do not stand at arm's length. [209] Mr Norris said that Mr Hadden, as a witness, gave consistently evasive answers and his demeanour was aggressively uncooperative. He deliberately sought to prevent information on the relationship between Newemploy and Blue Ribbon from coming to light. [210] However, within the testimony of Mr Hadden and Mr Larsen there is evidence which does reveal the close nature of the relationship between the two entities, casting significant doubt on the proposition that Newemploy and Blue Ribbon are truly "arm's length" entities. [211] The creation of Newemploy was part of a business venture involving Mr Larsen, Mr Hadden and Mr Vincent to acquire and operate the plant at Killafaddy Road in Launceston. Blue Ribbon Products was also created out of this business venture. [212] The union said Mr Larsen took a far greater role in the operation of the business than just the supply of labour. It was said that he was involved "on and off from the beginning" in performing duties for Blue Ribbon and at some stage he was appointed National Operations Manager. Mr Larsen has had an almost full time presence on site since the business began. [213] The "two company" structure that was agreed upon by Messrs Larsen, Vincent and Hadden gives rise to the question: for what purpose is a separate company created in order to employ a workforce to work in a business operated by a different company? When asked, Mr Hadden's primary position was that it allowed for more flexibility, but later conceded that one of the "small advantages" of the system is that Blue Ribbon could make decisions regarding its workforce and avoid potential challenges to such decisions. [214] The union submitted that the Commission should find that Newemploy was not created as an independent company in business on its own account, but was created as part of an overall business plan involving Blue Ribbon; that the two company structure was created as a means of insulating Blue Ribbon from any implications of decisions it made concerning its workforce; that Mr Larsen, the sole director of Newemploy, has taken a substantial role in the business operations of Blue Ribbon; that Blue Ribbon and Newemploy are not and never have been, at arm's length to each other; and that Blue Ribbon stand in a position where they are able to influence and direct Newemploy, particularly in relations pertaining to Newemploy's workforce. Operational requirements [215] A key issue, according to the union, is: what were the reasons for Blue Ribbon seeking the change? If those reasons are discriminatory or unlawful then the changes cannot be said to be for a valid reason. [216] John Hadden gave "flexibility" as the reason for the change to independent contractors. This begs the question: flexibility from what? The only logical answer is more flexibility than the award based system. Mr Hadden confirmed that was the case. [217] Section 86(1) of the Act provides:
[218] The union submitted that the employees were all terminated due to the fact that they were entitled to the benefit of an award; a status that they refused to change. [219] The union contends that the independent contracting system has been unfairly imposed on a "take it or leave it" basis and is merely a contrivance; the workers alleged to be independent contractors are in fact employees. [220] The Full Bench of the Commission in ALHMWU (Tas Branch) v P & O Services TIC T8234 of 1999 ("P & O Services"), in a case where the employer sought to change the status of existing employees to independent contractors, said:
[221] The reason why the employees were terminated was simply due to the fact that they did not agree to become independent contractors. Mr Larsen in his evidence said that the proposal was made on a "sign the contract or NO JOB" basis with no opportunity to negotiate. [222] The union submitted that the arrangements that Newemploy sought to impose were a sham and the true nature of the relationship has remained that of employer and employee. [223] The principles to be applied in determining whether a worker is an employee or an independent contractor are collected in a series of authoritative High Court decisions, the most recent being Hollis v Vabu (2001) 207 CLR 21 ("Hollis"). [224] The ultimate question will always be: whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business on his or her own behalf - Marshall v Whittaker's Building Supply Co. (1963) 109 CLR 210. That question is answered by considering the totality of the relationship - Stevens v Broadribb (1986) 160 CLR 16 and considering all the relevant indicia which give guidance on the question. [225] The union said that the control exercised over workers when they were employees is still being exercised. Mr Larsen told several employees that nothing would change with the new arrangements. The same number of Blue Ribbon supervisors delegated to supervise Newemploy workers were in place. [226] The so-called "independent contractors" are not required to provide any tools or equipment let alone undertake a capital investment. Hollis indicates the importance of this indicium. [227] Mr Larsen gave evidence that it was up to Newemploy whether they would accept a "substitute" contractor and the so-called "independent contractors" have no ability or discretion in the matter. This is an important indicium. The inability to delegate is consistently viewed in the authorities as indicative of a contract of personal service. [228] Newemploy deducts taxation under the PAYG system - a system available to employees only. Newemploy pays the superannuation of its workers, a liability that only arises in respect of the employees of an employer. Newemploy provides workers compensation insurance for the "independent contractors". This is more consistent with a dependent relationship of employment. [229] The work performed is of a semi-skilled labouring nature. The qualification they received was Meat Certificate II - Smallgoods, for which the practical skills required do not approach anything analogous to trade or professional skills. [230] In Hollis it was said:
[231] Against independent contractor status, is the fact that there is no paid leave, but it should be borne in mind that the rates were arrived at by striking an "all up" rate approximately encompassing all previous entitlements. [232] The terms of the contract are a relevant consideration. They expressly disavow the creation of the relationship of employer and employee and explicitly state that the relationship is one of independent contractor and principal. However, the authorities have consistently maintained that this is but one of the relevant indicia. If the preponderance of evidence is one of employer and employee, then the parties cannot change that by describing it as something else, or, in the words of Gray J: "The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck." Re Porter (1989) 34 IR 179 at p.184. The union cited a number of other cases in support of this proposition. [233] The changes sought were not to achieve efficiencies but merely contrivances aimed at avoiding, in a superficial way, the relationship of employer and employee. This is at odds with P & O Services and establishes that no valid reason existed for the terminations. [234] The unfairness of the terminations is established by Blue Ribbon requiring Newemploy to supply independent contractors, but then engaging a body of workers from another labour hire company without any regard to the nature of the relationship between those workers and their principal. Procedural fairness [235] The union submitted that all of the employees were denied procedural fairness in a substantial way. [236] The evidence was that both John Hadden and John Larsen reached a verbal agreement between Blue Ribbon and Newemploy that the workforce would receive a period of training for twelve months and thereafter Newemploy would provide Blue Ribbon with independent contractors. Over that period of time nothing changed other than to firm up the verbal agreement. The immediate question is: why weren't the employees informed of the plans? Mr Larsen's unconvincing answer was that nothing definite had been decided. No other options were discussed either at that time or at any time during the twelve months. The only rational and reasonable inference to be drawn is that the plans were deliberately kept from the employees for strategic purposes, so that no serious challenge could be made to the plans and so that the employees would not seek alternative employment. [237] This has resulted in substantial unfairness to the affected employees, who were denied the benefit of several options: perhaps seeking negotiations for an enterprise agreement to address the "flexibility" concerns of the employer; perhaps seeking alternative employment; and perhaps making better arrangements to deal with the loss of their employment. Remedy [238] Section 30(9) of the Act provides:
[239] If the Commission is of the view that reinstatement or re-employment is "impracticable" then the alternative remedy is compensation. [240] Operational requirements appear to be the only ground relied upon, should that fail, then reinstatement should follow as a matter of course. [241] Blue Ribbon was primarily responsible for a decision resulting in the termination of employment of a group of employees for the reason that they were entitled to the benefit of an industrial award and they refused to change this status. [242] The union submitted that orders should be made against Blue Ribbon to ensure the effectiveness of any reinstatement order made against Newemploy. The union sought the orders as set out earlier in this Decision. Unions Tasmania [243] Unions Tasmania endorsed and supported the submissions made by the union, and confined their submission to dealing with the specific matter of the operation of the Vocational Education and Training Act 1994 ("the VET Act") as it relates to and impacts on the employees. [244] Unions Tasmania submitted that the VET Act provides for employment-based training and is structured in such a way that discrete training contracts will be underpinned by an employment relationship. It does not treat the training contract and the employment contract as though they were one agreement. There cannot be a training contract in the absence of an employment contract. [245] Unions Tasmania relies upon the provisions of the VET ACT, in particular sections 2, 35(2), 36(3), 37, 42, 46 and 51. [246] In their submission, the cancellation or ending of a training agreement does not mean the ending of the contract of employment. [247] The training contract contemplates that the rights and obligations in the training contract exist in parallel with those in a co-existing contract of employment by stipulating that the employer "provide the relevant wages and conditions...". This stipulation allows the rights and obligations of the parties as employer and employee to be governed by a separate contract. [248] The employment of the employees was not limited to the period of training because the employment commenced in advance of the entering into of the training agreements. The employees continued to perform the same work, at the same place, for the same rate of pay, from 1 January 2001 until the date of termination. [249] Unions Tasmania say that, whilst there is conflicting evidence whether the employees were informed that their employment was for a specified time or that it would end when the training was completed, the evidence of the employees should be preferred because their understanding and behaviour is consistent with them not having been told that their employment would terminate on a particular date. [250] It is improbable that the employees would have willingly forsaken the safety of their employment to enter into a training agreement knowing that at the end of it they would not have a job. [251] The employment was not terminated by the effluxion of time or by agreement between the employer and the employees, the employment was terminated by the unilateral act of the employer. The Minister for Justice and Industrial Relations [252] Mr Willingham, for the Minister for Justice and Industrial Relations, adopted and supported the submissions of the applicant union. Newemploy's Submissions [253] Mr McDermott, for Newemploy, provided the Commission with over fifty pages of detailed written submissions, the essence of which is as follows: [254] If it is found that there has been a termination then it must be demonstrated that the employees had a reasonable expectation of continuing employment. [255] He submitted that, if there has been a termination, which is denied, there is a valid reason connected with operational requirements. [256] The employees were all told by John Larsen prior to signing the agreements that they would be for three months and no more. The employees' rights pursuant to the three month contracts had expired. The "reasonable expectation" has to be seen in the context of the commercial arrangements that made it possible for there to be employment. "Reasonable expectation" is not a hope or a wish, there must be an actual capacity to be employed. [257] The employees entered into a new arrangement with Newemploy, separate and distinct to the three months contracts. The training agreement was for a twelve month period as defined by the instrument. The Training Agreements [258] In Newemploy's submission, the employees were employed only for the duration of the training period. The former employees could have no reasonable expectation of continuing employment beyond that period. [259] In support of this is the evidence of John Price who told the trainees that their training was coming to an end and they should speak to John Larsen about employment beyond that date, and the distribution of the termination letter. [260] The case of Curran relied upon by the applicant was concerned with the exclusion provisions of the Workplace Relations Act 1996 insofar as they apply to trainees. In that case the agreement had been backdated and did not comply with the National Training Wage Interim Award 1984. [261] In the current case the position is very different. The employer relies upon the arrangement that Newemploy would provide employees for Blue Ribbon for a period of twelve months. [262] John Larsen's evidence was that at the signing of the training agreements employees were alerted to the fact that the training agreements and the employment were for a period of twelve months. The Casuals [263] Mr McDermott said that in the matter of Ryde-Eastwood the question was whether or not the employee concerned had a "continuing contract of employment". The exclusion of casual employees from the capacity to bring an action for unfair dismissal is based on the notion that casual employment comes to an end after each period of engagement. [264] The Commissioner in that case pointed out that employment is a relationship of contract and there are terms of that contract that do not depend upon any award. Latham CJ in Amalgamated Collieries of WA Limited v True ("Amalgamated Collieries") (1938) 59 CLR 417 at 423 said:
[265] In this case one must look at the contracts drawn up between Newemploy and Phillip Dean, Theo Rhettas and David Horder. [266] The award is also instructive in determining the status. Clause 13 Contract of Employment:
[267] The award provisions have been complied with and the notice given of the reasons for the termination was adequate. [268] Mr McDermott submitted that assistance is to be gained in the interpretation of a casual employee by reference to the federal legislation. A casual employee engaged by a particular employer for a short period is excluded by the regulations unless they have been employed for more than twelve months. None of the casuals employed by Newemploy were employed for a period in excess of twelve months. [269] In Perea v RVB products & Teleki v RVB Products Print S4623 2000, Whelan C considered the indicia characteristic of a "casual employee" or "one engaged on a casual basis" and was guided by Ross v Court Recording Services New South Wales Pty Print 8524 1999 ("Ross"). The employee was told on a daily basis if she was required to work the next day and never turned up for work unless so told. The parties characterised the employment as casual and the hourly rate was intended to cover sick pay and holidays. She was a casual employee for the purpose of the award. She was only paid for actual hours worked. She worked varying hours during the course of her employment. [270] In the instant case each employee received a rate which incorporated annual leave and sick leave; each employee worked when told to work; each employee worked in varying locations; there was an agreement between the parties that the nature of the employment was casual; and each employee was a casual for the purposes of the award. [271] Employment Contracts [272] Mr McDermott submitted that because the employees were advised at the commencement of the training agreement that their employment was for a twelve month period there could be no expectation of continuing employment. The employment came to an end through the effluxion of time and there was no termination of employment at the initiative of the employer. He cited the case of The Australian Workers Union Tasmanian Branch and Tasmanian Alkaloids Pty Ltd T10381 of 2002 ("Tasmanian Alkaloids"). [273] In the alternative, he submitted that there was a valid reason connected to operational requirements. The reason is that Newemploy was compelled by the conclusion of one contract with Blue Ribbon and the entry into the Labour Services Agreement. [274] The majority of the workforce signed on as contractors. The employees the subject of this dispute, in contradistinction to those who elected to sign up, chose not to have their expectation altered. The expectations are not reasonable given the evidence of witnesses who stated that they were aware of the situation that Blue Ribbon had created for Newemploy. [275] Further, if there has been a termination by Newemploy, it took place according to the terms of the award, which provides for the termination of employment by the giving of one week's notice by either party. The employees were given formal notice in writing on 5 March 2003 and informal notice verbally on 24 January 2003. [276] The applicant has submitted that the employment was for an indefinite period. If so, the Commission ought to have regard for the common law position. The High Court in Byrne v Australian Airlines Ltd 1995 185 CLR 410, found that in the absence of anything to the contrary, at common law a contract of employment for no set term is to be regarded as containing an implied term that the employer give reasonable notice of termination except in circumstances justifying summary dismissal. Responses to Applicant Submissions [277] Newemploy Pty Ltd and Blue Ribbon Products Pty Ltd are corporations with separate directors and shareholders with different client bases. The establishment of a system based on the provision of independent contractors is within their legal and commercial province. There is no relationship between Blue Ribbon and Newemploy save a commercial one. [278] The Commission has no power to made orders against non-parties. There is a requirement in the definition of "industrial matter" that the matter pertain to the relations of employers and employees and Blue Ribbon is not an employer of the employees. [279] Mr McDermott submitted that Shell is not authority for the Commission to make orders against a third party who is not the direct employer. [280] The applicant relied on the Ansett case. In that case the ACTU submitted that whilst Air New Zealand Ltd was not the employer, because of the corporate structure it was in a position to directly affect the relationship between the employer and employees. It was said that Air New Zealand Ltd was the holding company for all the employing entities with respect to redundancy entitlements and that there had been a commonality of senior office bearers between the employing entities and Air New Zealand Ltd. [281] There is no basis in fact or law for presuming that Blue Ribbon had any power or control over Newemploy by virtue of any corporate nexus for there was none in the form of office bearers, shareholders or controlling ability under the Corporations Act. The theme, as demonstrated in Shell and Ansett is that there must be a related company. Valid Reason [282] In the case of Cosco Holdings Pty Ltd v THU & Ors ("Cosco") 1997 79 FCR 586, the provisions of s.170DE(1) of the Industrial Relations Act 1988 Cwth were analysed. It was held that a reason for termination may be valid even if the termination may be regarded as unfair. Fairness, reasonableness or justice is not the realm of discourse with which the word `valid' as it appears in that section is concerned. [283] The valid reason is the fact that Newemploy did not have any employment to offer after 2 April 2003 by virtue of a commercial arrangement imposed on it by Blue Ribbon. [284] The Full Court of the Federal Court in Department of Justice - Office of Corrections v Valerie Hepburn ("Hepburn") 1999 FCA 114, applied Cosco and Qantas Airlines Limited v Cornwall ("Cornwall") 1998 83 IR 103. Their Honours cited Cornwall where the Full Court followed Cosco and stated:
[285] In Hepburn the Full Court followed Northrop J in Selvachandran v Peteron Plastics Pty Ltd 1995 62 IR 371 ("Selvachandran"), where he examined the meaning of `valid'.
[286] In Newemploy's submission the word `valid' in s.30(3) of the Act has the same meaning as set out in the above authorities. Further Responses [287] Mr McDermott said that John Hadden was not a party to the proceedings, he was called as a witness for the applicant. He was not required to provide a witness statement. This prejudiced the respondent, because Mr Hadden is the director of a company with who the respondent was in commercial relations and the evidence travelled into areas beyond the province of the industrial dispute. [288] Mr McDermott submitted that the cross-examination was contrary to well established Court and Industrial Tribunal practice that provides for parties leading evidence rather than being cross-examined. The cross examination was manifestly unfair. Mr Hadden was called with a view to impugning the evidence of Mr Larsen, which was also unfair. [289] In the "two company" hypothesis the applicant has ignored the significant fact that Newemploy and Blue Ribbon have different reasons for existing. The uncontradicted evidence of Mr Larsen is that Newemploy was charged for use of the office, telephone and payroll facilities. The arrangement is commercial and not unusual. [290] The suggestion that employees refusing to become independent contractors were terminated is chronologically incorrect. On 5 March 2003 the employees were notified that their training and employment were coming to an end on 2 April 2003. Shortly thereafter they were offered the opportunity of becoming independent contractors. The terminations, whilst not conceded that they can be categorised as such, preceded the new system. [291] The applicant's submission that the change to an independent contractor system is unlawful is misconceived. Section 86 of the Act - Prohibition on Victimisation, is not the subject of the proceedings. The words of the legislation are directed at the employer yet the substance of the argument is directed at Blue Ribbon, which is not the employer. It is not an unlawful act for a party to enter into an commercial arrangement with another party as to how to source and supply a workforce. [292] The submission of the applicant that the workers alleged to be independent contractors are actually employees ignores the contractual relationship between Newemploy and Blue Ribbon. The circumstances are different from those in P & O Services, where the direct employer made a decision to terminate based upon operational requirements. In the present matter the party requiring the change is not the employer. [293] In the matter of Hawkins v Ingham Enterprises 2001 QIR 180 ("Hawkins"), the Queensland Industrial Relations Commission considered the situation where there was no position for the applicant after an independent contractor system was introduced by the employer. Bloomfield C was of the view that the employer was free to determine how it would staff a facility. He referred to a decision of Murphy JR in Lovell v Commonwealth Bank of Australia T196/1022, 1 November 1996 (unreported), which listed a number of decisions in the Industrial Court of Australia.
[294] Newemploy submitted that there was nothing capricious about the decision to comply with the demands of an unrelated third party in order to ensure that it was able to continue trading. [295] Newemploy did not impose any arrangement on its former employees. Their entry into the new arrangement was entirely voluntary. To label it a sham ignores the only option to Newemploy. Remedy [296] The applicant is seeking the reinstatement of the employees. Newemploy submitted that reinstatement presupposes that the positions held by the employees are still available. The evidence is that Newemploy does not have that capacity as it has no contract with Blue Ribbon to provide employees. [297] Mr McDermott submitted that if the Commission were to order reinstatement that would cause Newemploy to be in breach of the Labour Services Agreement, making them liable to legal proceedings. The Commission is unable to make such orders under the provisions of section 31(4) of the Act. Blue Ribbon Products' Submission [298] Mr Sealy, for Blue Ribbon Products Pty Ltd provided lengthy and detailed written submissions, summarised as follows: [299] Blue Ribbon Products is not a party to any industrial dispute and consequently the Commission has no jurisdiction to make any order against it. [300] Even assuming that the term "industrial dispute" as defined in the Act is wide enough, in some circumstances, to encompass a dispute with a person who is not an employer, those circumstances do not exist in the present case. [301] The sole director of Blue Ribbon Products is John Hadden and the sole shareholder is Working Investments Pty Ltd. The sole director and shareholder of Newemploy is John Larsen. There is no evidence that Blue Ribbon Products, Newemploy or Working Investments share any common directors or officers. [302] Section 19 of the Act confers jurisdiction to "hear and determine any matter arising from, or relating to, an industrial matter. An "industrial dispute" means a dispute in relation to an industrial matter. "Industrial matter" means any matter pertaining to the relations of employers and employees. [303] It is implicit that any such dispute must be a dispute between employers and employees (and possibly, persons in a position to directly affect the relationship between employers and employees). [304] Properly understood, Shell is not authority for the proposition that a non-employer or non-employee can be a party to an industrial dispute. The question of whether a person who is not an employer may be a party to an industrial dispute was not decided. The majority in Shell said that the definition of industrial dispute appears to be wide enough to encompass a dispute with a company that is not an employer but is in a position, because of the corporate structure, to directly affect the relationship between an employer and its employees. Then they said that it is not necessary to consider whether, and if so, in what circumstances, a person or company who is not an employer may be a party to a dispute with an organisation of employees. The majority, having expressed what "appeared" to be a possible construction, expressly declined to make a decision on the matter, because it was not necessary to do so. [305] Although obiter dictum, the judgment of Brennan J in the Shell case favours the well-settled orthodox view that the parties to an industrial dispute are the relevant employers and employees. [306] In Blue Ribbon Products' submission there is nothing in s29(2)(b) of the Act that alters that position. That section authorises the President to "cause notice of the time and place of the hearing to be given to a person who, or an organisation which, the President considers is able to assist in the settlement or prevention of the industrial dispute". It is not a power to join as a party to a dispute a person who, as a matter of law, is not a party to the dispute. [307] Blue Ribbon Products is not and has never been the employer of the putative employees and is not a party to any industrial dispute between Newemploy and the employees. The Commission has no jurisdiction to make any orders that impose any obligations upon Blue Ribbon Products. [308] If, contrary to the above submission, it is, as a matter of law, possible for a person who is not the employer but who is in a position to be able to directly affect the relationship between an employer and employees and so become a party to an industrial dispute, then the required circumstances are not present in this case. [309] In Shell it was clear that it in the view of the majority it was at least necessary that the person or company be in a position to directly affect the relationship. They referred to the holding company's "rights and powers" with respect to a superannuation fund. [310] In the Shell case the holding company, being the sole shareholder, had the unfettered legal right to appoint directors of each of the subsidiaries and thereby directly control the actions of each of them. No such rights or powers are enjoyed by Blue Ribbon Products in relation to Newemploy. [311] It may be the case that decisions made by Blue Ribbon Products will affect or influence some decisions made by Newemploy. The same is true of all commercial relationships, for example, if a major customer ceases purchasing products from a supplier, thus causing the supplier to lay off workers it could hardly be said that the customer had exercised a legal power that directly affected the relationship between the supplier and its employees. If it were otherwise it would follow that the Commission would have jurisdiction to order the customer to purchase its products from the supplier. This appears to be precisely what the applicant is seeking in terms of the draft orders. [312] Whilst Blue Ribbon Products repudiates the suggestion that the request to Newemploy for the provision of labour through independent contractors is "capricious" and a "sham", those suggestions are nothing to the point. The company is entitled to conduct its business as it sees fit, according to law. There is nothing unlawful in stipulating that those who provide labour for Blue Ribbon Products should do so through the form of independent contractors. If it is a legal right, then the motive for exercising that legal right is irrelevant. [313] The applicant relies upon Ansett in support of the proposition that a non-employer can be a party to an industrial dispute. This was a claim for redundancy entitlements by former employees against Ansett Australia Ltd and other companies in the Ansett group. There was a degree of urgency about the proceedings and they were considered to be of national importance. Boulton J observed that the majority in the Shell case had "suggested" that the definition of industrial dispute was wide enough to encompass a dispute "with a holding company that was not an employer". The urgent and interlocutory nature of that decision means that it is of very little authority. His Honour was clearly influenced by the fact that the Ansett companies were wholly-owned subsidiaries and therefore were likely to have the power to directly affect the relationship between the Ansett companies and their employees. Remedy [314] If, contrary to the foregoing submissions, Blue Ribbon Products is a party to an industrial dispute, then the order sought in paragraph 2 of the draft order cannot lawfully be made by the Commission, or alternatively, ought not be made by the Commission. [315] What is being sought is that Blue Ribbon Products be compelled to enter into an agreement with Newemploy under which Blue Ribbon Products agrees to pay Newemploy for the provision of the labour of the persons named. An alternative interpretation is that Blue Ribbon Products be compelled to enter into some form of agency agreement under which Blue Ribbon Products itself engages the persons named. However, given that Blue Ribbon Products has never been the employer of any of the named persons, this could not amount to either reinstatement or re-employment and would thus be beyond the powers of the Commission. [316] An order in the form sought would expose Blue Ribbon Products and/or Newemploy to legal proceedings each at the suit of the other in relation to the existing contractual relations between them. [317] Courts have been reluctant to pronounce final mandatory injunctions, especially those which have continuing effect and may therefore require supervision by the Court. A limited form of interlocutory mandatory injunction was approved by the High Court in Patricks Stevedores Operations No 2 Pty Ltd v MUA (1998-9) 194 CLR 1. In doing so the majority made it plain that in granting relief which required "constant supervision" discretion to grant such relief should be exercised with due regard to the involvement of the court in constant supervision of continued conduct. It is notable that that order merely sought to preserve the status quo pending the trial of the action and not indefinitely. [318] By contrast, the order sought by the union seeks to bring an entirely new contractual relationship into existence. [319] Even if the Commission had the jurisdiction to make orders in the terms sought, then the Commission ought to decline as a matter of discretion, it being impracticable for the reasons advanced. The union made oral submissions in response. Reasonable Expectation of Continuing Employment. [320] Newemploy made certain points regarding "reasonable expectation of continuing employment". In the union's submission that expectation is subjective and as such is referring to a state of mind, but that state of mind must be objectively based, by virtue of the fact that it is expressed in terms of a reasonable expectation. Therefore, if there are undisclosed reasons for a termination they can't be relied upon to ground an argument that the employee had no reasonable expectation of continuing employment. [321] Similarly, an employer cannot give notice of termination, and then argue that, in the light of that, an employee has no reasonable expectation of continuing employment. That phrase must be read as meaning, but for the termination, otherwise no termination could be challenged. The Casuals [322] Submissions were made on behalf of Newemploy that employees were engaged as casuals. That may be so but is not the point. The point made in the authorities is that the question is whether or not the relationship is continuous or is one that ends with each separate engagement. Issue is taken with the following assertions of Newemploy: [323] "Each employee worked when told to work". The evidence does not support that. "Each employee worked in various locations." There is scant evidence to support this. The key determination is whether or not the relationship was continuous. The Shell Case [324] It was put, correctly, that what was said by the majority of judges in that case was mere obiter. It was not necessary for the judges to make a determination on that matter. But, in the union's submission, the Commissioner should not ignore a clear view that has been expressed by four judges of the High Court as to the proper construction of certain legislation. [325] The legislation was not materially distinguishable from the provisions of the Tasmanian Act. If there is a distinction it lies in the point that the Tasmanian provisions are wider. The federal provisions examined in Shell define an industrial dispute as being "about matters pertaining to the relationship between employers and employees." The definition in the Tasmanian Act is "any matter pertaining to the relations of employers and employees". [326] Newemploy and Blue Ribbon argued that a distinguishing feature between the Shell case and its progeny and the current situation is that there is no ability for Blue Ribbon to directly affect the relationship of employer and employee because there is no relevant controlling shareholding. [327] The union's response is that in Shell the High Court merely said that because of the shareholding situation the company had an ability to directly affect the relationship. It was not said that shareholding was a requirement. [328] In the union's submission it is very clear that whether or not a third party has the ability to directly affect the relationship of an employer and an employee is a matter of fact and degree, and there is no prerequisite that there be a controlling shareholding interest. When a company such as Blue Ribbon enters into an agreement with Newemploy stipulating what the legal relationship shall be between Newemploy and its workers, thereby bringing about the cessation the relationship of employer and employee, that is a situation where there has been an action that has directly affected the relationship of the employer and the employee. Remedy [329] Mr Norris submitted that section 31 confers very broad powers to make orders and is not limited to an employer and an employee. Section 31(4A) of that section sets out that:
[330] There is no definition of the concept of a "party" in the Act, nor is there any formal requirement for a recording of a dispute finding. There is no requirement for the concept of joinder, known to other jurisdictions, to be imported into a jurisdiction where it is not known or required. [331] The union said that there was an attempt by Newemploy to distinguish this case from P & O Services on the basis that it was not Newemploy who made the decision to move to a system of independent contractors. The reality is that it was Newemploy who made that decision. When they signed the agreement with Blue Ribbon, they chose to move to that system. [332] Another theme was that because the Labour Services Agreement is in place the Commission cannot make orders that would place the parties in breach of that agreement. Mr Norris said if two parties have entered into a transaction and the Commission finds that the result of that transaction is to visit an unfair termination upon an employee then those two parties must bear the consequences of their actions. The Commission should not be deterred from acting. [333] The orders sought are not ambiguous and do no more than seek to restore the status quo as it existed prior to 2 April 2003. The questions raised by Blue Ribbon in relation to reinstatement are no different to the questions that might ordinarily be posed. Such orders are always understood to do no more than restore the situation that existed prior to the termination. The orders sought can be quite properly made. FINDINGS [334] I have considered all of the evidence, the submissions presented, and the authorities referred to, and make the following findings: Was there a Reasonable Expectation of Continuing Employment? [335] As set out earlier in this Decision, s.30(3) of the Act provides that the employment of an employee who has a reasonable expectation of continuing employment must not be terminated unless there is a valid reason connected with the capacity, performance or conduct of the employee or the operational requirements of the employer's business. [336] It was never suggested that there were any issues with the capacity or conduct of any of the employees. The Three Month Contracts [337] The employees (excepting for the casuals) signed agreements with Newemploy that had a start date of 7 January 2002 and a finish date of 7 April 2002. What is in dispute is whether they were fixed term contracts, at the end of which the employees would have no reasonable expectation of continuing employment, or whether the three months was a probationary or trial period, in which case, provided their performance was satisfactory, the employees would have had an expectation that their employment would continue. [338] Newemploy sumitted that when the employees signed the contracts all that was on offer was three months' employment, and, at the end of that period the contract came to an end. [339] The evidence of a number of the employees is that John Larsen and Kurt Maeder told them that they were on "trial" or on "probation". They believed that after the three months they would become "full-time", or ongoing, employees under the terms of the award. This evidence was not shaken in cross-examination. Against this is John Larsen's evidence that he had not, at any stage, said to his employees that they were on trial or probation. He said that the only trial was a trial to evaluate the business and the viability of moving to a new structure. [340] A recurring theme throughout this case has been differences between the evidence given by the employees and that given by John Larsen in relation to the same events. Some of these differences are critical to the determination of the question of whether the employees had a reasonable expectation of continuing employment. Where the evidence is in conflict, I prefer the evidence of the employees, who were, on the whole, not sophisticated or articulate witnesses, but their evidence remained consistent despite vigorous, extensive and able cross-examination. By contrast, Mr Larsen's evidence was often inconsistent, sometimes evasive, and, at times, misleading. [341] In the event, the employees did continue after 7 April 2002 and I accept their evidence that it was their belief, at that time, that they had become ongoing employees under the terms of the award. [342] The wording of the Act "...the employment of an employee who has a reasonable expectation..."(my emphasis) makes it clear that it is the expectation of the employee that is the relevant consideration. That expectation must, however, be reasonable, and, as said by Mr McDermott for Newemploy, not just a wish or a hope. In this case, that expectation was based upon what the employees were told by their employer and their supervisor, and was therefore, entirely reasonable. [343] I find that the employees held a reasonable expectation of continuing employment following the expiry of the three months contracts. After 7 April 2002, it was their belief, reasonably held, that they had continuing employment. [344] An event that Newemploy contends created a new employment contract, was the signing of training agreements on 3 April 2002. Two points arise: is the contract of training an employment contract? And were the employees told that their employment would cease at the end of the training period, as Newemploy claims? The Training Agreements[345] Newemploy contends that when a contract of training comes to an end, so too does the contract of employment and therefore there was no termination at the initiative of the employer because the employment contract had ended through the effluxion of time. [346] In the alternative, they say that the employees were only offered twelve months employment and at the end of that period the contract of employment ended and there is no termination of employment at the initiative of the employer. Tasmanian Alkaloids was cited in support of that proposition. In that case it was said, correctly:
[347] The applicant, in submissions endorsed by the Minister for Justice and Industrial Relations, says that a contract of training is not a contract of employment. If this is correct, therefore, unless the parties have agreed otherwise, the entering into a contract of training for existing employees does not mean that the contract of employment ends when the contract of training ends. [348] The evidence shows that the employment of the employees did not materially change as a result of entering into a training agreement. The nature of the work did not change, their classifications did not change, their hours of work did not change and their rate of pay did not change. The only change was that, during working hours, they would attend between seven and eight (according to John Price) off-the-job training sessions over the next twelve months. This suggests that the contract of employment already in place was not so significantly changed that a new contract of employment had been entered into. [349] Section 3 of the VET Act defines a "trainee" as:
[350] A training agreement is:
[351] Section 37 provides:
[352] Section 40 (1) allows for agreements to be amended:
[353] Section 42(1) allows for agreements to be cancelled
[354] In my view the fact that the training agreement can be amended or cancelled by a third party, ie the Training Agreements Committee, supports the view that a training contract is not an employment contract, which would ordinarily only be able to be terminated by the parties to it, not by a third party. [355] Unions Tasmania submitted that a training contract co-exists with an employment contract and that the rights and obligations that pertain to the employment relationship are governed by a separate contract to the training contract. [356] I agree that a training contract and an employment contract can co-exist. The VET Act makes it clear that a training agreement is employment-based. A contract of employment can exist independently of a contract of training, but a contract of training cannot exist independently of a contract of employment. [357] The applicant union submitted that a contract of training and a contract of employment are not synonymous, citing Curran, where it was said that, in that case, there was no evidence that the applicant's employment, as distinct from the training, was to be limited to the same period. [358] Newemploy relies upon their claim that John Larsen told the trainees that their employment would come to an end at the completion of the training contracts. [359] John Larsen, Vicki Casey and John Price all expressed their belief that when a training contract comes to an end, so too, does the employment contract. John Larsen said he based his belief on advice given by Vicki Casey and John Price and upon Section C(d) of the training contract itself. In brief, that section says that the training contract expires at the nominal duration of the contract; or by mutual agreement by the parties; or on application to the relevant Training Authority; or if the trainee ceases to be employed; or if the employer ceases to conduct the business; or upon order of the relevant government department. Nowhere does that section of the training agreement state that the employment comes to an end when the training contract ends. [360] The section of the training agreements upon which Mr Larsen said he relied does not support his expressed belief that a contract of training is a contract of employment. [361] I agree with the view expressed in Kinniburgh where it was said that a distinction may be drawn between a contract of employment and a contract of training.
[362] I find that the contracts of training are separate to the contracts of employment. [363] In the instant case the two contracts, whilst they operated in tandem, did not coincide; the employees were employed in advance of the training agreement being entered into. They were still employed under the terms of the three month contract which did not expire until 7 April 2002. I have already found that the employees had a reasonable expectation of continuing employment after 7 April 2002. [364] The only circumstance in which the contract of employment and the contract of training would end at the same time would be where the parties agreed that would be the case. If John Larsen had informed the employees that their employment would end at the time the training agreement ended, and they had then entered into the agreements on that basis, then they would have no reasonable expectation of employment continuing beyond that date. [365] The employees' unshaken evidence is that they were not told that their employment would end once the training was completed. They did not see it as a twelve month employment contract, but, as said by Gene Dwyer: "...not only were we - we kept our jobs at Blue Ribbon, and we'd gone past probation, and we were going permanent, and on top of that they were going to train us..."93 [366] Mr Larsen said in his statement that he informed the workers that they had employment for the duration of the traineeship. In his oral evidence he could put it no higher than a belief that he had said that. Ms Vicki Price of Northern Group Training said that Mr Larsen had responded to questions about employment. [367] The evidence shows the employees had no knowledge or warning of the mass sign-up that was to take place on 3 April 2002. Their evidence casts serious doubts as to whether Mr Larsen was even present at the series of meetings. Gene Dwyer said that Mr Larsen was not there, Nathan Long did not believe that he was there, Robert Selby and Jason Gastin could not remember him being there, Lawrence Lewis, Brendon Scales, Gregory Boon and Matthew Houston could not recall him being there, James Reynolds was "quite certain" that he was not there. Not one employee could say positively that he was there. [368] John Larsen, Vicki Casey and John Price say that Mr Larsen was at the meetings, however, their evidence is contradictory in some respects. [369] In his statement Mr Larsen said that the prospective trainees "were brought into the office and introduced to John Price....I was in attendance". Vicki Casey said in her statement that John Price introduced her and Kylie Barker (from Northern Group Training), which she confirmed in her oral evidence. Whereas John Price said in his statement that Mr Larsen was "there to introduce myself and the ladies from NGT." [370] There were also discrepancies in the evidence in relation to the filling in of the forms (training contracts) and when Mr Larsen signed them. Mr Larsen said that the employer details were filled in after he had signed the forms. Vicki Casey's evidence was that they were already filled in and that Mr Larsen had signed them that day. After changing his evidence several times, Mr Larsen agreed that he had signed them the day after, which is the date shown. The significance of this evidence is that if they were signed the following day it adds weight to the proposition that he may not have been at the meetings at all. Ms Casey's recollections of the day were hazy, she said, because she signs up trainees every day and it was so long ago. [371] In reviewing and considering the evidence, I think that, even if he was present, it is highly unlikely that Mr Larsen played the role in the meetings that he claims he did. There is conflicting evidence about who introduced who. If he had any role at all it would have to have been a peripheral one, not significant enough to be recalled by any of the employees. It may be that he played a brief introductory role in some of the meetings. It may be that he was at some of the meetings but not at others. From the evidence, I have concluded that his role did not include the provision of information about their employment to the employees. If he had done as Newemploy claims, and told the employees that their employment would come to an end at the completion of the traineeship, it is likely that they would have remembered and taken notice of something so significant. I think it unlikely that the employees would have signed on to the agreements willingly and happily, as the evidence shows they did, had they known or believed that their employment would end as a result. [372] I find that John Larsen did not inform the employees that their employment would come to an end at the expiration of the training contracts and further, that he did not discuss that issue with them at that time. [373] As in the case of Curran, the evidence does not support the proposition that the employment, as distinct from the training, was to be limited to the same period. [374] There is nothing in the evidence, nor was it suggested, that John Larsen at any time between the meetings of 4 April 2002 and the giving of notice of termination of employment in March 2003 told the employees that their employment was to end. [375] Newemploy submitted that the employees were given informal notice of the termination of their employment on 24 January 2003, on which date John Price claimed that he alerted the trainees to the fact that their traineeships were coming to an end and that they should contact John Larsen to clarify arrangements for future employment. His evidence was that he was surprised that there had not been a greater response and a more robust discussion. I do not think that surprising. The employees knew that the training contracts were coming to an end, but, as I have already found, they did not take that to mean that their employment was also ending. Their consistent evidence was that the first they knew of the termination of their employment was when they were given the termination notices. John Price, as his evidence showed, was of the firm (but erroneous) belief that when the training agreement ended, so too did the employment contract. They were synonymous in his mind. I think it likely that he reminded them the training contract was ending and that he assumed the employees would take that to mean that their employment was ending. [376] Given the consternation and activity generated at the site when the employees were given notice in March 2003, it is very unlikely, given the lack of response on the part of the employees on 24 January 2003, that what Mr Price said was taken to be notice of termination of employment. The message he thought that he was sending was not the message received by the employees. Notice, even general notice, must be unequivocal and unambiguous, and capable of being understood to be notice. I reject Newemploy's submission that the employees were given informal notice on 24 January 2003. [377] I find that the employees who had entered into training agreements had a reasonable expectation of continuing employment following the expiration of those agreements and that the employees had no knowledge prior to being given notice in early March 2003 that their employment was to be terminated. The Casuals [378] The Act does not make any distinction between classes of employees in its termination of employment provisions, for example it does not use the terms "casual" or "ongoing" employee. The test is simply whether the employee has a reasonable expectation of continuing employment. [379] I reject at the outset Newemploy's submission that the Commission ought to be guided in the interpretation of what is a casual employee by the provisions of the federal act and its exclusion by regulation of casual employees with less than twelve months' service from access to remedies for unfair dismissal. This case is to be determined according to the provisions of the Tasmanian Industrial Relations Act 1984, which has no such exclusions. [380] The question is whether the employees had a continuous contract of employment or a series of separate engagements. Mr McDermott, for Newemploy, said that the exclusion of casual employees from the capacity to bring an action for unfair dismissal is based on the notion that casual employment ends after each engagement. In my view that is a proper description of a casual worker. Under the terms of the Act, such a worker would have no reasonable expectation of continuing employment. The question to be addressed is whether there was a continuing engagement of such a nature as to give rise to a reasonable expectation of continuing employment. [381] The evidence is clear that all of the casual employees were not notified when or whether they were required to work, they just turned up for work each day for the whole of their period of employment. The only absences were in the case of sick leave or public holidays. They were required to notify their supervisor if they were going to be absent. On a normal working day their hours did not vary, apart from one employee who consistently worked between 60-70 hours a week. The work pattern of the employees has the characteristics of a continuing engagement. [382] The parties said that the award is relevant consideration, and I agree with them. The award refers to a requirement to advise casual employees of the period over which they expect to be able to offer ongoing work on an irregular basis. The work patterns of the four casual employees were not irregular. Newemploy argued that the contracts issued to the employees complied with the award requirements in terms of giving advice. The contracts did not advise the period of time over which the employees would be offered ongoing work on an irregular basis as required by the award, instead they advised of a period of time during which work was offered on a regular basis. In any event, the employees' employment continued beyond the periods stipulated in the contracts and no subsequent written advice, as provided for in the award, was ever issued. [383] Newemploy submitted that the employment relationship is a relationship of contract and includes terms that are not derived from the award, and quoted Amalgamated Collieries in support. I concur. Mr McDermott said that it is necessary to examine the contracts drawn up between Newemploy and the casuals. Phillip Dean's,94 Desmond McGrath's95, and David Horder's96 contracts are on exactly the same form and terms (excepting for pay rates which differ from employee to employee) as that of the non-casual employees' initial three month contracts, for example, Brian Woods97. There is no mention of "casual" on the contracts of David Horder or Desmond McGrath. Phillip Dean's contract has a hand-written reference to a rate that includes a 20% loading "as a casual". [384] Apart from the rate of pay, which incorporates a loading in lieu of paid leave, there appears to be no difference whatsoever between the casuals and the non-casuals, in terms of the initial contracts and the hours and the regularity of work. [385] The parties made reference to signed statements acknowledging casual status, eg that of Phillip Dean (on Blue Ribbon Products letterhead) dated 30 September 200298, which says that he fully understands that his employment is as a casual worker and there is no implied continuation of his previous full time position with Newemploy. Whilst the employment contract under which he was working at the time of the termination of his employment may not have been a continuation of his previous employment with Newemploy (from which he was made redundant), that is not relevant to the question to be decided. It is the circumstances of the new appointment that determine whether or not Mr Dean had a reasonable expectation of continuing employment. In any event, signing a document avowing that the employment relationship is of a particular nature does not make it so, if it is not so in fact. [386] Newemploy cited the case of Ross. In the present case the situation of the employees differs in some significant respects. In Ross, the employee was told on a daily basis whether she was to turn up or not. That was not the case for Newemploy's employees, apart from the first few days in the case of Theo Rhettas. In Ross the employee worked varying hours, in the instant case the employees worked regular hours. In Ross the employee was a casual for the purposes of the award, which, in my view, is not the case here. The similarities are that she was only paid for actual hours worked and the hourly rate was intended to cover sick leave etc, as is the case with the Newemploy's employees termed casual. However, as already stated, the test is a reasonable expectation of continuing employment, ie, whether there was a continuing engagement, and the fact that a rate of pay is loaded in lieu of paid leave is not determinative of that question. [387] On the basis of the evidence, which was that the casual employees were not called in on an irregular "as needed" basis, but turned up to work on every normal working day, I find that their employment was not based on a series of separate engagements, but was a continuing engagement. [388] I find that the four employees who have been termed "casual" had a reasonable expectation of continuing employment. Was there a Valid Reason for the Termination of Employment? [389] Newemploy contends that there was a valid reason for the terminations, based on operational requirements, imposed upon them by their client, Blue Ribbon Products. [390] The union contends that Newemploy was not created as an independent company in business on its own account, but was created as part of an overall business plan involving Blue Ribbon Products, created for the purpose of insulating Blue Ribbon Products from the implications of decisions made about its workforce, relevantly, the termination of the directly employed workforce and its replacement with independent contractors. [391] Blue Ribbon Products submitted that Newemploy and Blue Ribbon Products are corporations with separate directors and shareholders with different client bases, established for different purposes. Whilst the former is undoubtedly the case, the latter needs to be examined against the evidence in order to determine whether there was genuinely a valid reason based on the operational requirements of Newemploy. [392] Prior to the acquisition of Blue Ribbon Meat Products Pty Ltd, John Larsen, Darren Vincent and John Hadden were involved in discussions about how the business would be operated. They "put a package together to have a go at it."99 "We went through the pros and cons of what could happen and what possible way it could happen."100 It was agreed that John Larsen would set up a company to provide the labour to Blue Ribbon Products. At the time of the discussions John Larsen was an employee Perfect Pork, a company in which Darren Vincent has a significant interest. It is apparent that three new companies were created as a result of these discussions - Working Investments and its subsidiary company Blue Ribbon Products, and Newemploy. Darren Vincent is a major shareholder in Blue Ribbon Products through a trail of companies, including Working Investments. [393] It was never revealed how John Larsen was remunerated for the work that he performed for Blue Ribbon Products, eg as National Operations Manager, which John Hadden agreed that he was. The unchallenged evidence of Brian Wood was that Darren Vincent was introduced to the workforce at Killafaddy as the new owner, John Larsen introduced himself as being in charge of both the Melbourne plant (presumably Perfect Pork) and the Launceston plant, with John Hadden in charge of the Launceston plant on a day to day basis.101 The meeting referred to by Brian Wood took place in the first week of January, two weeks after the registration of the three new companies - Blue Ribbon Products, Newemploy and Working Investments. [394] It is not disputed that John Larsen, director of Newemploy, also performed duties for Blue Ribbon Products that were unrelated to employment matters. It is the range and extent of these duties that is not clear. The evidence given by John Larsen and John Hadden in relation to the extent of John Larsen's involvement in Blue Ribbon Products' affairs was generally evasive. [395] There is a discrepancy in the evidence of John Price and John Larsen in relation to the genesis of the decision to sign the workforce onto traineeships. John Larsen's statement said that during the first three months Blue Ribbon Products made it a requirement that Newemploy employees had to be certified at the Meat Certificate II level. He then goes on to say that John Price spoke to him about how the training program could be implemented. The way in which John Larsen's evidence is set out makes it appear, certainly at first reading, that the decision was made by Blue Ribbon Products and imposed as a requirement upon Newemploy. [396] John Price's statement says quite clearly that he approached Mr Larsen and suggested that the traineeship program to him. Mr Price said that he said to John Larsen that it would be a major benefit to his company, as a new player in the small goods industry in Tasmania, and adding value to his employees and increasing demand from clients such as Woolworths. Woolworths, of course, was not Newemploy's client, but Blue Ribbon Product's client. John Price said "John [Larsen] and I agreed that training was essential". Despite Mr Larsen's denial of any part in the decision to implement the traineeships, in the light of John Price's evidence it seems more likely that John Larsen was at least involved in the decision, if not the person who actually made it. [397] This much is clear from the evidence: John Larsen's role in Blue Ribbon Products' activities included managing the Woolworths account, travelling to Sydney on their business on several occasions, dealing with supermarkets, sales, acting as National Operations Manager, at least in regard to a major client, Woolworths, and, according to John Hadden's evidence, overseeing the production area. [398] John Hadden's evidence was that they needed John Larsen because they required someone involved with supermarkets and who knew how to deal with smallgoods;102 and to control labour and look after Blue Ribbon Products' "needs and requirements in regard to manufacturing smallgoods"103 [399] These roles are very much broader than just the provision of labour through a separate labour hire company. Although Mr Larsen said it was not the case, I prefer the evidence of the employees which shows him having a role in the provision of labour generally, not just through Newemploy. [400] John Larsen was present at the Blue Ribbon Products site for a considerable time, eventually five days a week. I accept that the sharing of office, administrative, telephone and facsimile facilities between Newemploy and Blue Ribbon Products was a commercial arrangement. The fact of a Newemploy employee's wages being paid on 46 occasions out of Blue Ribbon Products accounts, described by John Larsen as "a software problem" and by John Hadden "a clerical error", may have been because the Blue Ribbon Products' paymistress was administering both Newemploy and Blue Ribbon Products payrolls. She was the person who gave Northern Group Training the employer information which appears on the training agreements, showing the employer as Newemploy trading as Blue Ribbon Products. It may be that she was extremely inefficient or it may be that she was unable to distinguish between the two companies. In the absence of direct evidence from the (ex) paymistress, I make no finding in this respect. [401] An examination of the evidence shows that John Hadden, Darren Vincent and John Larsen were involved in the operations of both Newemploy and Blue Ribbon Products, and, at times, the lines between the two companies becomes blurred, as does the roles of the three men. As will be shown, all three men had dealings with Newemploy employees in relation to employment issues. [402] John Hadden engaged Desmond McGrath as a Newemploy employee. All of the dealings in relation to his appointment were with John Hadden. Mr Hadden was involved in discussions with Mr McGrath regarding the independent contractor contract with Newemploy. Darren Vincent and John Hadden both were involved in a discussion at which Mr Vincent told Mr McGrath that nothing would change in respect of his employment if he signed the contract. [403] Both John Hadden and John Larsen took part in a discussion with a group of workers about the use of Techforce workers on site, and negotiations in relation to the independent contractor contracts. [404] Darren Vincent took part in a meeting with Lawence Lewis at which John Larsen was also present. The uncontested evidence was that Mr Vincent said that "the company" could look at taking tax out (as part of the independent contractor arrangements). [405] It is apparent that Blue Ribbon Products (Hadden as director, and Vincent as major shareholder) were deeply involved in the discussions and negotiations with Newemploy employees in relation to the independent contractor arrangements. Lawrence Lewis' evidence suggests that Darren Vincent was able to at least influence, if not make a decision, in relation to the way Newemploy would deal with the taxation arrangements under the contracting system. [406] John Larsen claimed that John Hadden had mandated that the only labour that Blue Ribbon would have on site was independent contract labour, therefore in order to remain viable, Newemploy had no option but to comply, and accordingly there were no positions available within Newemploy for directly employed workers. [407] It seems, from John Price's evidence, likely that if not always the intention, it was the intention from very early on to convert the workforce to independent contractors. [408] It is evident that the conversion was delayed in order for the traineeships to be completed. It is a matter of public record that there are significant financial incentives for companies to engage trainees. In this case, the existing workforce was signed on as trainees, with the intention of later converting them to independent contractors. [409] John Price's evidence was that he had investigated whether or not the traineeships were able to apply to independent contractors and he ascertained that they could not be. The discussion in relation to independent contractors was, he said, "most probably" initiated by John Larsen and it was not something that John Price would normally raise in such discussions. This was in February 2002. [410] Mr Hadden's evidence was that it was he who made the independent contractor decision. In discussing the reasons, he sometimes used the pronoun "we" eg "we needed to be very clever about the way we controlled our workforce."104 When asked who "we" was, he replied: "Blue Ribbon". I think, in the light of all the evidence regarding how John Larsen and John Hadden operated in relation to employment matters, it is likely that the "we" referred to was himself and John Larsen. [411] John Hadden said that John Larsen's reaction to the proposed change was: "he agreed that's the direction we need to travel in."105 [412] John Larsen said in his oral evidence that he saw the advantage of an independent contractor system as having the flexibility to use staff "to suit the highs and lows of the business". Clearly, in financial terms, this is an advantage if "the business" is Blue Ribbon Products, but a disadvantage if "the business" is Newemploy. [413] A number of employee witnesses said that John Larsen told them that the new system was about flexibility. When cross-examined about the flexibility of independent contractors his comments seem to be from the perspective of production manager, rather than those of a provider of labour: Well, I had a base number of people there and if I wanted to increase production I could use casuals."106 [414] Some of the actions of John Larsen appear to be against the interests of Newemploy and in the interests of Blue Ribbon Products. John Larsen's role in procuring labour for Blue Ribbon Products from another, and presumably rival, labour hire company was against the interests of Newemploy. The move toward independent contractors resulted in a reduction of income for Newemploy, but was never resisted by John Larsen. There was no evidence to show that John Larsen ever attempted to recruit anyone other than the existing workforce into Newemploy, instead it appears that he acquired labour from another labour hire firm for Blue Ribbon Products. [415] In my view, the evidence does not support the argument that the requirement to have independent contractors was imposed by Blue Ribbon Products upon Newemploy. I think it probable that the decision to move to independent contractors was part of an overall plan devised by John Larsen, John Hadden and, possibly, Darren Vincent. [416] Under the Corporations Law, the two companies are separate entities, but in terms of industrial relations, the two companies were heavily involved in each other's activities. The evidence supports the contention of the union that Newemploy was not created as a business on its own account, but it was part of an overall business plan, with the two company structure intended to cushion Blue Ribbon Products from any consequences arising from the employment practices at the Blue Ribbon plant. [417] After considering the evidence, particularly the activities of John Hadden, John Larsen and Darren Vincent referred to above, I find that the two companies, far from being at "arm's length", in relation to employment issues at least, were closely involved in each other's operations. [418] Having made the above findings, the professed reason for the termination of Newemploy's employees by Newemploy becomes untenable, ie that it was imposed upon Newemploy by Blue Ribbon Products. [419] If the decision was not imposed upon Newemploy then the reason for the dismissals was not valid. I say this for the following reasons: [420] In Selverchandran, cited by Newemploy, it was said that to be valid a reason must be "sound, defensible and well-founded." The decision was defended on the basis of it having been imposed by an unrelated third party. I have found that this was not the case. [421] Newemploy referred to a Queensland Industrial Relations Commission decision in the case of Hawkins where it was said that an employer was free to determine how to staff a facility. I am guided by a decision of the Full Bench of this Commission in P & O Services, in which it was said that an employer is entitled to restructure its operations to allow work to be performed by independent contractors "provided that all the relevant tests for distinguishing between employees and independent contractors are properly and fairly met, and there is genuine agreement between the parties." [422] One of those tests has clearly not been met, there was no genuine agreement between the parties, Newemploy and the employees. The reason the employees are not still employed by Newemploy is that they have not agreed to change their employment status from that of employee to that of independent contractor. [423] The second test relates to the question of whether or not the operational requirements are genuine, ie, whether there is genuinely a change from employee to independent contractor. As shall be seen, this test has not been met either. [424] A consideration of the arrangements that Newemploy has put in place reveals that the contracts are contracts of service, not contracts for service. The union has listed a number of indicia, which I do not repeat here, but which I accept are the relevant indicia to be applied when determining this question and which demonstrate that in this case the relationship is that of employer and employee rather than that of independent contractor. Apart from the superannuation, taxation and workers' compensation arrangements that are in place, all of which are based on the employer/employee model, the most telling points are the degree of control exercised and the nature of the work performed. Production workers in the meat industry are most unlikely to be able to make independent freelance careers. As said by the High Court in Hollis: "The notion that the couriers were somehow running their enterprise is intuitively unsound, and denied by the facts disclosed in the record." If the words "meat process workers" were substituted for the word "couriers", then that is clearly the situation in the instant case. [425] The fact that the parties, in all of the documentation tendered in evidence, have called the arrangement independent contracting, does not make it so. You can dress a pig in a calico frock and call her Florence, but Florence is still a pig. Or, as said more elegantly in Re Porter cited by the union: "The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck." [426] I find that the arrangements offered to the employees termed "independent contractor" contracts, were not genuine independent contractor arrangements. If they had been accepted by the employees, then the parties would have been agreeing to act outside of the award, which would, if the arrangements were less favourable than those in the award, be in contravention of the Act (s.85). The question of whether the terms of the "independent contractor contracts" were more or less favourable was not addressed. However, the employees had a right to refuse to sign the contracts and to remain under the terms and conditions of the award. Section 86(1) of the Act expressly provides that "An employer shall not dismiss or threaten with dismissal an employee from his employment...because the employee is entitled to the benefits of an award. The employees were dismissed because of their refusal to change their status from that of employees employed under the terms of the award. [427] Newemploy submitted that it is chronologically incorrect that the employees refusing to become independent contractors were terminated because they were notified on 5 March 2003 that their employment was coming to an end on 2 April 2003 and it was after that they were offered the opportunity of becoming independent contractors and the terminations preceded the new system. This is argument is clearly wrong. The notice signalled that the employment would come to an end, but notice of termination is not the same as the termination itself. The employment did not end until 3 April 2003. The evidence shows that between the giving of notice and the final day of employment the employees were told that if they did not sign the contracts they would have no job. John Larsen's statement says: "The employees realized that it was `sign the contract' or NO JOB." This ultimatum or "offer" was made before the date of termination. [428] Newemploy submitted that fairness, reasonableness and justice are not the realm of discourse with which the word `valid' is concerned. That may be so, but, under the provisions of the Act, the employment of an employee must not be terminated unless there is a valid reason connected with the capacity, performance or conduct of the employee or the operational requirements of the employer's business. It was claimed by Newemploy that the reason for the terminations was operational requirements as a result of the imposition on Newemploy of a requirement that there only be independent contractors on site. I have found (a) that there was no such imposition and (b) the new arrangements on site in respect of workers supplied by Newemploy are not independent contractor arrangements. [429] The union submitted that the change to an "independent contracting" system was a contrivance. That is clearly the case. It is reasonable to conclude that the contrivance was intended to avoid the rights and obligations attendant upon the employer/employee relationship, eg the requirement to apply the terms and conditions of the award and claims for unfair dismissal, such as this one. [430] I find that there was no valid reason for the termination of employment of the employees. OTHER ISSUES Procedural Fairness [431] Newemploy submitted that if there has been a termination of employment, it took place according to the terms of the award, which provides for the termination of employment by the giving of one week's notice by either party. That is certainly the case, but employment must not be terminated unless there is a valid reason. I make the same point in relation to the common law position and Byrne v Australian Airlines, also referred to by Newemploy. I have found that there is no valid reason. [432] The union submitted that the employees were denied procedural fairness because Newemploy deliberately concealed their intentions from the employees, thus denying them the opportunity of exploring other employment options. [433] Discussions with John Price in relation to independent contractors took place in February 2002. Therefore, the independent contractor option must have already been considered before the February discussions. [434] John Larsen's evidence as to when that decision was made was revised several times. [435] Mr Hadden's evidence was that there was a verbal agreement to that effect in place in April 2002. He said that his position had remained unchanged since February 2002. John Larsen said there was no verbal agreement, and that it was just discussions at that stage. [436] John Larsen's statement said that approximately six months into training, ie approximately October 2002, he was asked how he could accommodate Blue Ribbon's requirements, and that, in meeting those, he had no option but to go with independent labour as discussed with John Hadden in February 2002. He said that the decision was not finalised in October 2002. [437] Mr Larsen said that a firm decision was reached "a month or two" before the Contracting Services Agreement, which would be approximately February 2003. [438] Later, he said that a final decision was made on 31 March 2003, which was after the date of the notices of termination of employment of the employees. [439] There was a written agreement to that effect, which has as its date of operation 31 March 2003 (after the notices of termination), although from the evidence it seems likely that it was not executed until after 31 March 2003. [440] I accept Mr Hadden's evidence that there was a verbal agreement made in April 2002 and that it did not change. This is consistent with a considerable amount of evidence which points to a decision to delay the introduction of the "independent contractor" system to allow the traineeship system to be put in place. [441] Therefore, I find that a firm decision was made no later than April 2002 that the employment of the employees would be terminated in April 2003. [442] I think it likely that the plan that was made included deliberately keeping the employees unaware of what was intended. The evidence is that John Price, John Larsen and John Hadden were all aware of the "independent contractor" plan for more than a year, yet there is no evidence whatsoever that any of the employees knew what was planned for them until they received the notices of termination in March 2003. [443] It is well-established that an employer should give an employee the maximum amount of notice possible when a change is proposed which will result in the termination of employment. [444] I find this aspect of the terminations to be unfair. Training [445] There was a significant amount of evidence presented regarding training issues, including the standard of training delivered to the trainees. Representations were made to the relevant authority, including a petition; in which it was alleged that the standard of the training delivered was poor. Subsequently, the training agreements of a number of employees were extended to dates later than the date of the terminations. It is my understanding that the decision to extend the traineeships has been challenged by Newemploy in another place. [446] It is not up to the Commission to determine whether or not the training was delivered to an acceptable standard. That is a matter for the relevant training authority. [447] The significance of the extensions to the training contracts, in the context of the questions to be determined in this jurisdiction, is that, as already noted, a training contract cannot exist independently of an employment contract, and, therefore, if the training contract is still in existence, then it must it follow that the employment contract is still in place. If so, that raises the question of how the extensions of the training contract would affect the termination of employment of the employees. [448] Given the Order that follows, it is not necessary for me to address that question. [449] The training provider John Price, of Training and Quality Management Services, was aware of the contemplated change to "independent contractor" status for the whole of the period of training, indeed, even before the training agreements were entered into, but did not to tell the trainees, who thought that they were being trained for employment, not unemployment. John Price was the person who handed out the notices of termination of employment to the employees, and he was also involved in promoting the "independent contractor" arrangements to the employees. This does not sit well with his role as the provider of training in an employment-based training regime. Again, this is not a matter for the Commission, but for the relevant training authority. [450] Northern Group Training, who brokered the traineeships, and John Price both gave Newemploy advice to the effect that the employment could be terminated at the conclusion of the training, based on their apparent belief that the training contract and the employment contract were one and the same thing. As I have found, this is not so. If it were so, then the effect would be that an employer would be able to enter into training agreements with existing employees and then terminate their employment at the end of that period with impunity. Just as has been attempted by Newemploy. The consequences of such wrong advice are significant. Again, this a matter for the relevant training authority. Prejudice [451] It was submitted by Newemploy that the respondent was prejudiced because John Hadden was called to give evidence that travelled into areas beyond the province of the industrial dispute and he was a person with whom Newemploy was in commercial relations. I reject that on the basis that the relations between Newemploy and Blue Ribbon Products were critical to the determination of the industrial issues in dispute. [452] Newemploy also claimed that they were prejudiced because Mr Hadden was not required to provide a witness statement. At the beginning of this Decision I gave reasons why that was so, and I do not repeat them here apart from to say that Mr Hadden was summonsed to give evidence, which summons was resisted. I observe that the manner in which Mr Hadden gave his evidence supports my view that the union would have had very little chance of success were they to have attempted to obtain a witness statement from him. The union described his demeanour when giving evidence as "aggressively uncooperative". I think that is a fair description. [453] Newemploy said that Mr Hadden was cross-examined contrary to well established Court and Tribunal practices that provide for parties leading evidence rather than being cross-examined and that the cross-examination was manifestly unfair. I make two points: [454] Firstly, Mr Norris of the union clearly indicated that the nature of his examination of Mr Hadden would be that of cross-examination: "...the nature of the evidence that we will be seeking from Mr Hadden will be very much in the nature of cross-examination and we make no inhibitions about that point."107 Mr McDermott did not object at the time. He said: "If my friend is proposing to cross-examine I wish him all the luck in the world"108. [455] Secondly, the Commission is not a Court; it "is not bound by the rules of evidence but may inform itself on any matter in such as way as it thinks just" (s.20(1)(c), and it shall act "without regard to technicalities or legal forms" (s.20(1)(a). [456] I consider the submission to be without merit. [457] I have found that the employees had a reasonable expectation of continuing employment and that there was no valid reason for the termination of employment of the employees and that the terminations were procedurally unfair. [458] The union has sought orders against Newemploy and Blue Ribbon Products who have both argued against the making of such orders. [459] Section 30(9) provides:
[460] If, in the Commission's opinion, reinstatement or re-employment is impracticable, then compensation may be ordered. [461] In my view, the appropriate remedy in this case is reinstatement. The employees' performance and conduct is not in question. [462] Newemploy submitted that if the Commission were to order reinstatement, that would cause Newemploy to be in breach of the Labour Services Agreement109 making them liable to legal proceedings, and that the Commission is unable to make such orders under the provisions of section 31(4). The independent contractor arrangements referred to in that agreement have been shown to be a sham, designed for the purpose of defeating the jurisdiction of this Commission and cannot and should not be used as a reason not to make orders giving effect to the principal remedy of the Commission in the case of unfair dismissals. [463] Submissions were made regarding whether the Commission can or should make orders against a third party. [464] The case of Shell was extensively referred to by the union and the companies, in which the majority of the High Court, whilst not making a finding because it was not necessary to do so, observed that the definition of industrial dispute in the federal act "appears quite wide enough to encompass a dispute with a company that it not an employer but, like Shell Australia, is in a position, because of the relevant corporate structure and because of its powers and rights with respect to a superannuation fund, directly to affect the relations between an employer and its employees with respect to their superannuation entitlements." [465] It was submitted, and I agree, that the definition of "industrial dispute" in the Act is broader than that in the federal act. Although obiter the comments of the majority of the High Court are of assistance in this case. The essential point is whether a company who is not a employer is in a position to directly affect the relations between an employer and its employees. [466] Blue Ribbon Products said that in order for a company to be able to directly affect the relationship between an employer and an employee, that company would need to have legal rights and powers, or other elements of control in relation to the employer, eg through a corporate structure, deed or agreement, and that no such rights or powers are enjoyed by Blue Ribbon Products in relation to Newemploy. I reject that argument because it fails to take account of the distinction between arbitral power and judicial power. The Commission exercises arbitral power for the purposes of settling industrial disputes, not judicial power. Judicial power is concerned with ascertainment, declaration and enforcement of the rights and liabilities of the parties as they exist. It is not for the Commission to determine the parties' rights at law. Section 20 (1) provides that the Commission:
[467] In any event, I consider that is the fact of the relevant power, not the source of the power, that is the important factor. The proper consideration is whether a company is able to exercise such power, not why they are able to exercise it, and if, having such power, they exercise it in such a manner as to directly affect the relationship of employer and employee. [468] The question is: was Blue Ribbon Products in a position such as to enable them to directly affect the relations between the employer and employee? Blue Ribbon Products did have the capacity to influence outcomes. In this case the relationship between Newemploy and its employees was affected by the agreement entered into between Newemploy and Blue Ribbon to move the employees onto the "independent contractor" system. In doing so, Blue Ribbon directly affected the relations between Newemploy and its employees in such a significant way as to bring about the end of the employment relationship. It was more than just an agreement about the provision of labour, it was an agreement to change the existing employment relationship between Newemploy and its employees. I have found that the arrangements were agreed between Newemploy and Blue Ribbon Products as a contrivance to avoid award obligations and industrial consequences. [469] I have found that there were no genuine operational requirements that grounded the dismissals, but that the "independent contractor" arrangements were a contrivance designed to avoid employment obligations and that both Newemploy and Blue Ribbon Products were involved in creating the contrivance. Having made the findings that I have, then the principal remedy should not be able to be avoided precisely because of that contrivance, ie a claim that the employees cannot be reinstated to their position with Newemploy because their principal client will only have independent contractors on site. Accordingly, in order to give effect to the principal remedy I intend to make orders against Newemploy and Blue Ribbon Products. [470] The draft order sought by the union required verification by the employees by way of statutory declaration of their income beween the date of termination and the date of reinstatement. I propose to amend that so as to exclude any government benefits received during that time. That is a matter between the employees and the relevant government departments. What is of interest is any monies earned from the performance of paid work during the period of time. [471] There is some merit in the submissions of Blue Ribbon Products in relation to ambiguity in the wording of the draft order. I intend to issues orders which do no more than restore the status quo in relation to the employment arrangements which existed in relation to the named employees prior to 2 April 2003. [472] I do not consider the Order which follows to be incapable of implementation. ORDER I hereby order, pursuant to the provisions of section 31 of the Industrial Relations Act 1984, that Newemploy Pty Ltd, 29 Killafaddy Road, Launceston, Tasmania, 7250, (registered office c/o Pitcher Partners, Level 6, 161 Collins St, Melbourne, Victoria, 3000) and Blue Ribbon Products Pty Ltd, 29 Killafaddy Road, Launceston, Tasmania, 7250 (registered office c/o Pitcher Partners, Level 6, 161 Collins St, Melbourne, Victoria, 3000) reinstate the employment arrangements which existed immediately prior to 2 April 2003 in respect of the persons named below: Craig John Barron FURTHER that Newemploy Pty Ltd pay to the employees the amount of wages they would have received from 2 April 2003 to the date of the implementation of these Orders, less any income from paid work performed during that period, but not including any government benefits received during that period, such details to be confirmed by statutory declaration; and FURTHER that the terms of these orders be complied with by no later than the close of business on 22 October 2003. P C Shelley Appearances: Dates and places of hearing: 1 Exhibit R1 |
