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T8282, T8283, T8284, T8285

 

TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s.29 application for hearing of industrial dispute

Kirsten Kelly
(T8282 of 1999)
Gary O'Neil

(T8283 of 1999)
Andrew Ring

(T8284 of 1999)
Todd Hedge

(T8285 of 1999)

and

Chubb Protective Services Pty Ltd

 

DEPUTY PRESIDENT B R JOHNSON

HOBART, 14 May 1999

Industrial dispute - ordinary and customary turnover of labour - severance pay

REASONS FOR DECISION

Particulars of the Disputes According to the Applicants

The applicants in these proceedings are Ms Kirsten Kelly, Mr Gary O'Neil, Mr Andrew Ring and Mr Todd Hedge (the applicants). All of them are former employees of Chubb Protective Services Pty Ltd (Chubb), the respondent employer in this matter. The Company employed the applicants as Emergency Response Officers on the Pasminco Hobart Smelter (Pasminco) site at Lutana. In the course of their employment the applicants performed work in the nature of:

  • Security services, including control of personnel and vehicle access.

  • Maintaining a log of all vehicles and visitors.

  • Control of media access.

  • Monitoring surveillance cameras, fire alarms and equipment and other detection devices.

By letter dated 15 February,1 followed by a reminder letter dated 2 March 1999 in somewhat similar terms,2 Chubb informed the applicants that:

"As you are aware, the site you are currently employed at, Pasminco Hobart is about to make changes to the present level of service that we currently provide.

We have been advised by the client that this will occur on 1 March 1999 and after that time, there will be a reduced requirement for guards and the client has not selected you to remain on site.

We are endeavouring to find employment for each guard that is affected by this reduction, however, to date, we have not been successful.

To Manpower resourcing, we seek to know whether you wish to cease your employment with Chubb at the date of reduction 1 March 1999 or wish to remain as an officer of Chubb. If you agree to become a casual, this will revert your employment status with Chubb Protective Services to that of a casual, effective from the site's reduction in service, until such time when sufficient work is determined to review your status as we are able to offer you a permanent position.

Please sign and date this letter and return to this office as soon as possible, indicating whether you wish to change to a casual at the date of reduction, or tick the box which says you wish to cease your employment with Chubb Protective Services at the date of reduction."

The applicants refused to sign the letter of 15 February or either of the forms attached to the letter of 2 March 1999.

At the time of these events the employment history of each of the applicants-about which there was no dispute-was as follows:3

  • Applicant Kelly commenced casual employment with MSS (a security firm acquired by Chubb in June 1996) on 1 March 1996. Ms Kelly subsequently became a full-time employee of MSS on 26 April 1996 and with Chubb on 26 August 1996.

  • Applicant O'Neil commenced full-time employment with MSS on 14 March 1995 and with Chubb on 26 August 1996.

  • Applicant Ring commenced casual employment with MSS on 13 June 1996. Mr Ring became a casual employee of Chubb on 20 July 1996 and a full-time employee of the Company on 25 November 1996.

  • Applicant Hedge commenced employment with Chubb on 23 February 1997 and subsequently became a full-time employee on 16 May 1998.

Remedy Sought

The applicants asked the Commission to make orders in respect of severance pay for each of them pursuant to Section 31(1C) of the Industrial Relations Act 1984.

The Issues

V Kalamistrakis for the applicants:

(1) The Security Industry Award covers the work performed by the applicants and is binding on Chubb.

(2) The Security Industry Award does not provide for fixed term contract employees. The only employment relationships for which the Award makes provision are full-time, part-time or casual employment. Chubb employed each of the applicants-most of them for over two and a half years-in a stable work pattern that exceeded 40 hours per week. In the circumstances, the applicants were full-time permanent employees of Chubb engaged under the provisions of the Security Industry Award.

(3) If the Commission should find in favour of the applicants, it should make orders requiring Chubb to pay severance pay to each of them on the basis of two weeks for each year of service including, where relevant, service with MSS.

(4) If the Commission should find that the applicants are in fact fixed-term contract employees, it should make orders requiring Chubb to pay compensation equivalent to eight weeks' pay to each of them, because they can no longer work through to the end of the Pasminco contract in February 2001.

R Brown for the respondent:

(1) The circumstances surrounding Chubb's termination of the applicants' employment contracts do not give rise to any entitlement to redundancy payments.

(2) The applicants were well aware that their employment contracts related only to the duration of Chubb's contract with Pasminco. In all the circumstances the facts disclose nothing more than the ordinary and customary turnover of labour in the contract industry.

(3) If, contrary to the Company's primary submissions, the Commission should find that Chubb's termination of the applicants' employment was not occasioned by the ordinary and customary turnover of labour, it should only look at minimum TCR (Termination, Change and Redundancy) entitlements in respect of severance pay when considering remedy.

Procedural Aspects

(1) At the end of proceedings on 8 March 1999, having heard the parties' primary submissions concerning remedy, I concluded that the Commission should have access to available employment records, particularly in relation to the applicants' employment with MSS. In that context I also observed that:4

"Ms Kalamistrakis ... I've got to the stage now where it seems to me on the basis of what Mr Brown has to say and what you've said, that given that there's some commonality of opinion between your side and theirs in relation to minimum TCR requirements, it seems to me that perhaps I should in fact conclude my decision on the major point without going to remedy because if the major point, when it's resolved, requires the parties to actually negotiate a remedy, you may be able to do it yourselves."

There being no objection by either party to my proposition I told them, in effect, that if the matter ever got to the question of remedy, I would hear further submissions from them on the point. Accordingly, in this decision, I deal only with the issue of "ordinary and customary turnover of labour".

(2) After reserving my decision and adjourning the matter sine die on 8 March I received, on 12 March 1999, a written application from Mr Brown on behalf of Chubb seeking leave to re-open the case for the purpose of admitting fresh evidence.5 Mr Brown attached a copy of the particular evidentiary material to his application. That evidence, the application alleged, went to the matter of the applicants' understanding of the capacity of Pasminco to vary its contract with Chubb. Upon receiving a copy of the application Ms Kalamistrakis informed me that the applicants would oppose any re-opening of the matter.

On 24 March 1999 I heard the parties in relation to the application, which I determined in the following manner:6

"... in terms of the document that accompanies the application, I think a reason for its admission clearly appears in the transcript of the last proceedings-and I noted them at, in particular but not only, pages 85 and 91 to 93-I pressed very vigorously with questions of Mr Brown and earlier, in oral evidence, Mr Milling, about this question of the assertion, I think it was, that the capacity of a client company of Chubb to vary contracts in a way that affected the manning levels was common knowledge within the industry. Given the vigour with which I pressed those questions I think it's unarguable that in the interests of procedural fairness I should allow the document as evidence in these proceedings.

... [oral] notice was given to me within a very short time of the conclusion of proceedings and I think certainly within one day, so there was no delay on the employer's part in that regard."

I then granted the application to re-open proceedings, admitted the new evidence, and invited the parties to put submissions to me "in respect of what it means having regard to the balance of the evidence in these proceedings". The substance of those submissions appears in the recitals that follow.

Ordinary and Customary Turnover of Labour

V Kalamistrakis for the applicants:

In circumstances where an industrial award does not specifically contemplate a particular employment relationship, that particular relationship is not permissible. The characteristics of the employment relationship between the applicants and Chubb in the present case show that, because the Security Industry Award does not provide for fixed term employment, the applicants were permanent employees.

In May 1997, some months after the Company took over MSS, Chubb gave each of the applicants, except Mr Hedge, a contract to sign. Those contracts, each of which had a life of about ten months, expired during February 1998. Chubb never renewed the contracts following their expiry. However, the Company continued to employ the applicants, who thereafter became permanent employees.

In the circumstances, regarding the ordinary and customary turnover of labour, the Commission must determine:

    (i) Whether there was a settled expectation in the minds of the applicants that their employment would come to an end as a consequence of actions taken by Pasminco; or

    (ii) Whether the terminations were merely a unilateral action on the part of Chubb.

Pasminco's variation of its contract with Chubb was not a likely or expected event so far as it concerned the applicants. The applicants were not to know or expect that, as a consequence, Chubb would lose part of its contract and that they in turn would lose their employment. Indeed, if in terms of the decided cases the applicants had a "settled expectation" of any kind, it was an expectation that Chubb would continue to employ them until the expiry, in February 2001, of its contract with Pasminco.

In this context, however, Chubb seeks to rely on a proposed enterprise agreement (Exhibit B7) as evidencing awareness on the applicants' part that Pasminco could vary its contract with Chubb in such a way as to affect their employment. In the first place one of the applicants, Mr Hedge, never saw the document at all in any of its draft forms.

Secondly, while Mr O'Neil was the employee representative who attended the only meeting held to discuss the proposed agreement, his notes show that he said he did not understand what was meant by clause 3.3. He made that point plain at the meeting and asked for clarification. However, it was about this time that the negotiations apparently came to an end.

Chubb never explained to the applicants that they could lose their jobs as a result of Pasminco varying its contract. There was, to the contrary, a settled expectation in the minds of the applicants long before the enterprise agreement negotiations that they would remain in Chubb's employment at the Pasminco site until February 2001. Indeed, Clause 4 of the proposed agreement added to the applicants' expectations-other than those of Mr Hedge of course-in that it specified the proposed agreement would remain in force until 1 February 2001.

There is no argument from the applicants that from time to time Chubb will lose contracts and that such circumstances are a normal experience. In Re: Application for Redundancy Awards (1994) 53 IR 419 the Industrial Commission of New South Wales observed (at p. 444) that:

"Terminations in the context of that general turnover of labour are the norm; they are expected: there is no basis for thinking that some 'settled expectation' has been lost. The occurrence of the likely or expected event should not bring with it an unnecessary or unwarranted additional burden on the employer and a windfall gain to the employee."

The present case, however, is totally different from that norm. In the first place the particular event, in the applicants' view, was not likely or expected. Because the applicants' expectation was that their employment would continue until February 2001, the termination of their contracts was unilateral rather than bilateral. Second, a basic, minimum entitlement for workers made redundant is not, in the circumstances of this case, a windfall gain for employees.

In any event, Chubb still had work available. So much appears from the letters of 15 February and 2 March 1999, which clearly intimate a possibility of keeping the applicants in their employment. Instead of doing that, however, Chubb elected to issue the applicants with two cunningly worded letters that invited them, in effect, to terminate their own employment.

Chubb's actions display an attempt by the Company to import into its employment contracts with the applicants an issue that is essentially a commercial matter rather than the ordinary and customary turnover of labour. In effect, Chubb is attempting to assert that "every circumstance allows them to sack their workers without redundancy".7 However, merely because Chubb says that something is "custom and practice" does not necessarily mean that it is custom and practice.

The applicants do not dispute that the nature of the security industry is such that one would anticipate continued employment might be dependent upon a successful tender. However, in the current matter, Pasminco simply varied its contract with Chubb. In the circumstances, Chubb neither won nor lost a contract since the particular contract actually remains in place until February 2001.

In any event, the facts show that Chubb employed three of the applicants before it won the Pasminco contract. Although they were each initially given contracts in relation to Pasminco, Chubb continued to employ them after the contracts expired. The evidence is that three of the applicants have not worked under a fixed-term contract for over a year and one applicant (Hedge)8 never worked under such a contract.

There are no grounds for assuming that there was an implied term in the original contracts from which at least three of the applicants could know they were continuing their employment as fixed-term employees. Chubb is attempting to establish a new employment law by not extending a fixed-term contract but continuing to call the workers concerned fixed-term contract workers.

In Church & Others v Gold Coast City Council (1996) the former Industrial Relations Court of Australia (Madgwick J) observed in relation to short, fixed term contracts that:9

"The period of the contract must be specified and there must be a mutuality of obligation as to the period mentioned in the offer. Where there is no mutuality of contractual obligation as to a specified term there is no 'contract of employment for a specified term' within the meaning of Reg 30B of the Industrial relations regulations."

For reasons already mentioned, there was no mutuality of contractual obligations in relation to the applicants in the current proceedings.

R Brown for the respondent:

The Company disputes the applicants' contention that, merely because the Security Industry Award is silent on the question of fixed-term contracts, the award therefore prohibits such contracts. In those circumstances it is a matter of offer and acceptance as to what the terms and conditions of a fixed-term contract might contain. The only proviso is that such a contract must not be contrary to or provide benefits less favourable than those prescribed by the particular award. The engagement of employees on fixed-term contracts does not of itself disadvantage them in respect of their employment.

The observations of Madgwick J in Church & Others v Gold Coast City Council regarding mutuality of contractual obligations do not help the applicants. That is because they do not address Chubb's primary submission, ie the terminations occurred because of the ordinary and customary turnover of labour brought about by the changed requirements of Pasminco.

The Company also disputes the contention that the applicants were not aware of the direct link between their continued employment and Chubb's contract with Pasminco. The uncontested evidence is clear. The applicants either held an expectation or were aware as a matter of general knowledge within the security industry that, if the particular contract came to an end, their employment would also cease if Chubb could not find them alternative work.

The following circumstances demonstrate the applicants' level of awareness. During the latter part of 1997 and into early 1998, Chubb attempted to negotiate an enterprise agreement with those of its employees who worked at the Pasminco site. About mid-November 1997 Chubb made available a second draft of the proposed agreement to all "team leaders" who considered the proposal during the following two months before responding to Chubb in February 1998. Chubb is aware that each employee also received a copy of the document and assumes that they, too, considered the proposal and its suggested content.

Clause 3 of the document, which dealt with the scope of the proposed agreement, contained-so far as is relevant to the current proceedings-the following provisions:10

"3.1 This agreement applies to all persons employed in Tasmania by the employer who perform work at the location of or under the Contract between the employer and Pasminco E.Z. at Lutana Tasmania.

3.3 This Agreement shall continue in force automatically to renewals or modifications or alterations of the contract or location or manning requirements identified in 3.1."

Chubb admits that the proposed agreement never reached the certification or approval stage-in fact, it was never put to a ballot of employees. Nevertheless, Chubb contends that the content of the proposed document makes it clear that the applicants were aware, or should have been aware, that the contract between Chubb and Pasminco could be varied at any time.

The evidence also shows that Chubb terminated the applicants' employment because of the ordinary and customary turnover of labour. The Company's actions were not brought about by technological change, restructuring or as the result of any decision to change the focus of its business.

It is well known that both the federal and State Termination, Change and Redundancy (TCR) cases developed principles for compensating employees in relation to hardship caused by loss of employment associated with inter alia economic recession, technological change and company restructure or take-over. Each tribunal, however, excluded from those general principles employees terminated as a result of the ordinary and customary turnover of business.

Those are exactly the circumstances that obtain in the present case. The evidence shows that the variation or loss of a contract by Chubb, or any other security organisation, is customary. The winning, variation and loss of contracts are normal features of the security industry. In the New South Wales Employment Protection Act Case Fisher P remarked that:11

"... employees have at the height of economic prosperity been dismissed because of seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession, changes in model or product, shifts in marketing emphasis and many other day to day causes removed from the present recession and its mounting toll of unemployment. All these employees are dismissed, almost invariably upon notice. If redundancy or severance payments applied generally to them a significant charge would apply to the turnover of labour generally. This would involve a major shift in the principles normally applied by this and other industrial tribunals to retrenchment situations."

It is clear from His Honour's observations that where creation and termination of employment arises out of the making, variation and loss of contracts, no severance payment is due in respect of a termination.

This conclusion draws support from a judgment of the Chief Industrial Magistrate (NSW) in Spiljar v Chubb Security Australia Pty Ltd.12 In that case the complainant agreed that the termination of his employment arose solely from the failure of Chubb to maintain a particular security contract. Except for the fact that the award in question contained a redundancy provision that excluded terminations arising out of the ordinary and customary turnover of labour, the case is clearly on all fours with the facts of the present matter.

In finding against the complainant, the Chief Industrial Magistrate observed that:13

The complainant must have known that his continued employment was ... subject to the respondent successfully maintaining the contract to provide services at Delta Power. It seems clear that the circumstances of termination were related only to the contract and were unrelated to any general economic malaise.

The Chief Industrial Magistrate's judgment is supportive of the conclusion that employees in the security industry generally possess the knowledge that their employment relies on the retention of contracts at any given site or sites. That is the situation of the applicants in the current proceedings.

Alternatively, if the applicants did not have that understanding, Pasminco's variation of its initial contract with Chubb-effected in accordance with the terms of that contract14-was of such significance as to amount to a termination of the original contract and an offer to Chubb of a new contract with different service levels.

The circumstances make it plain that Chubb did not terminate the applicants' employment on the grounds of, for example, economic recession, technological change or company restructure. The terminations arose from nothing more than the ordinary and customary turnover of labour in a manner that reflected the general nature of the security industry.

In addition or alternatively, the applicant's original letters of appointment gave them a clear expectation that their employment depended upon there being a continuing role for them at the Pasminco site. Chubb's employment of persons at the various sites where the Company holds contracts ceases at the end of those contracts, or when they are varied if that variation affects the employees concerned. Any new employment arrangements must rely on moral as distinct from legal obligations, and Chubb's undertaking that it will attempt to find alternative employment.

Chubb did not inform the applicants of Pasminco's capacity to vary its contract with Chubb in a manner that might affect them. It is also the case that Chubb did not make the applicants aware of a number of other clauses in the contract that could bring the arrangements to an end at any time. Those clauses, too, had a potential to impact upon the applicants' employment. Such features are an ordinary and customary part of contractual arrangements entered into by an employer and client in the security industry business.

In summary, the evidence shows that what occurred in relation to Chubb's contract with Pasminco and its effect on the applicants falls within the meaning of the words "ordinary and customary turnover of labour". In the circumstances, there is no justification for the Commission to qualify or add an additional test to the exemption provisions of the TCR cases regarding the ordinary and customary turnover of labour. Furthermore, because the evidence also shows that Chubb terminated the applicants' employment in the course of the ordinary and customary turnover of business, it is not open to the Commission to make an order, or orders, requiring Chubb to make redundancy payments.

Findings

I begin with Chubb's engagement of the applicants and their initial contracts of employment. Chubb appointed applicant Kelly "to the position of Permanent Security Guard ... at Pasminco" on 26 August 1996.15 The Letter of Appointment expressed the duration of her appointment in the following terms:

"Your appointment with CHUBB PROTECTIVE SERVICES will be for a period of 10 months or until the end of the Company's contract for the provision of ERO [Emergency Response Officer] services with Pasminco, whichever is the shorter period."

The appointments and Letters of Appointment of applicants O'Neil (appointed 26 August 1996)16 and Ring (appointed 25 November 1996)17 are expressed in terms identical to those of applicant Kelly. Chubb never required applicant Hedge to execute a similar document.

The Letters of Appointment are comprehensive documents in that they deal with a wide range of terms and conditions that affected the applicants' appointments. Those terms and conditions, relevantly for present purposes, provided that all other aspects of the employment relationship would be subject to the Security and Watching Industry Award-now the Security Industry Award. They also included a capacity for each of the parties to terminate the contract of employment by giving seven days' notice.

The expiry dates of each of the three contracts also appear to be clear and free from ambiguity. That is to say, since Chubb's Pasminco contract obviously remained on foot after completion of the 10 months' period specified in the Letters of Appointment, the latter period must prevail because it was "the shorter period". In each case, therefore, the expiry date of the particular appointment was 10 months following the date of execution, ie approximately 26 June 1997 in respect of applicants Kelly and O'Neil and approximately 25 September 1997 for applicant Ring.

However, Mr D Milling (State Manager, Chubb Protective Services Manpower Tasmania) maintained in his evidence that Chubb believed the contracts were still on foot-in his words "we just roll on with them".18 Mr Milling's response moved me to suggest to him that the words "whichever is the shorter period", as they appear in each of the Letters of Appointment, might "indicate that this contract is exhausted, that the shorter period has expired, has it not?" Mr Milling's reply was that "we would see that as, we've still got a contract in place for the provision of services".19

I cannot agree with Mr Milling. The very comprehensive nature of the Letters of Appointment is evidence in itself that they were not casually written agreements, but documents prepared with some obvious forethought. The documents contain no specific provision to the contrary, or some provision from which one might reasonably imply a contrary intention, to that expressed in the "Duration of Appointment" clause. In the circumstances, it is my opinion that the construction of that clause must be such as to give the words used their plain English meaning.

The evidence before me in these proceedings is that Chubb's contract with Pasminco was in operation when the 10 months' period specified in each Letter of Appointment expired. Indeed, the particular contract remains in operation to this day. In the circumstances, therefore, the "shorter period" to which the Letters of Appointment refer can only be the specified 10 months period. Consequently, in my view, each of those Letters of Appointment lapsed at the end of that nominated period-on or about 26 June 1997 in the case of applicants Kelly and O'Neil and on or about 25 September 1997 in the case of applicant Ring.

The evidence is that Chubb did not renew those contracts or replace them with fresh fixed-term contracts. Furthermore, there was no dispute between the parties that, at the relevant time, the Security Industry Award bound Chubb as an employer and covered the work performed by the applicants in the course of their employment. In the circumstances I find that, after the fixed-term contracts expired, applicants Kelly, O'Neil and Ring became employees employed by Chubb pursuant to the terms and conditions of employment expressed in the Security Industry Award. Applicant Hedge of course, since he was never a fixed-term contract employee, was always an employee whose terms and conditions of employment derived from the same award.

Having regard to the above discussion I conclude and find that none of the applicants were fixed-term contract employees at the time their employment with Chubb came to an end. It remains for me to remark in this context that setting aside-where relevant-their periods of employment with MSS and their periods of casual employment with Chubb-about which I make no finding at this time-it seems to me on the evidence20 that the applicants, at the time their employment came to an end, were full-time employees of Chubb within the meaning of the Security Industry Award.

I now turn to the question of whether, as Chubb contends, there was a settled expectation in the minds of the applicants that their employment would come to an end as a consequence of actions taken by Pasminco in relation to its contract with Chubb. In this regard Chubb asserts with some vigour that:21

(1) The applicants either held an expectation or were aware as a matter of general knowledge within the security industry that, if Chubb's Pasminco contract came to an end, their employment would also cease if Chubb could not find them alternative work; and, consequently

(2) The terminations occurred because of the ordinary and customary turnover of labour brought about by the changed requirements of Pasminco.

In the first place it is apparent from a careful perusal of the Letters of Appointment that there was a clear and direct link between Chubb's employment of the applicants, or at least three of them, and the Company's contract with Pasminco. That is to say, the appointments were to a position of "Permanent Security Guard ... at Pasminco" and were "for a period of 10 months or until the end of the Company's contract for the provision of ERO services with Pasminco, whichever is the shorter period".22 Search as one might, however, there is no reference in the Letters of Appointment, either implied or direct, to the fact that the appointees' employment might come to an end after 10 months, but before the end of the Chubb's contract with Pasminco.

Mr Hedge's evidence-in-chief is that he accepted Chubb's offer of an Emergency Response Officer position at the Pasminco site, understanding that he would be there until at least the end of February 2001.23 He added, in re-direct examination, that no one ever made him aware that he might lose his job before that time as a consequence of Pasminco varying its contract with Chubb.24 Indeed, as Mr Brown fairly conceded on the evidence, Chubb did not inform any of the applicants that their continued employment might be at risk if those particular circumstances should prevail.25

The reason for Chubb taking such an approach appears in the thrust of the oral evidence of both Mr Milling and Mr S Gates (National Manager Personnel, Chubb Protective Services Division). In a general sense, without going into detail, it is the Company's strong belief that both Chubb employees and employees in the security industry generally are aware that the industry is wholly contract driven and that if a contract is lost or varied then the employees' employment is also lost-unless, of course, the employer can find alternative employment.

That belief, as I understand the evidence, is primarily what leads Chubb to assert in the current proceedings that the applicants knew, or should have known as a matter of general industry knowledge that, if a particular contract came to an end, their employment would also cease.26 That is to say, in terms of the decided cases and in relation to the present case, there is no basis for the applicants to believe that, in losing their employment, some "settled expectation" has been lost.

There is no reason for me to disbelieve Chubb's witnesses on this issue. Both of them, particularly Mr Milling, have wide experience in the security industry. However, the Commission's task in the present case, in my view, is to weigh that evidence against what the applicants' evidence discloses was their reasonably held state of mind on the same issue at the relevant time.

It is clear from submissions pressed on behalf of the applicants that none of them deny that from time to time Chubb will lose contracts and that such events are a normal experience in the security industry.27 It is also clear that none of the applicants dispute Chubb's contention that the nature of the security industry is such that employees might reasonably anticipate that their continued employment is dependent upon Chubb obtaining appropriate contracts.28 The real issue in this particular case however, from the applicants' point of view, is that they say they were not aware-because Chubb never told them-that they might lose their jobs, not through the loss by Chubb of its contract with Pasminco, but by Pasminco simply varying that contract.29

What, then, does the evidence disclose about the relevant state of mind of each of the applicants? Applicant Kelly's relevant evidence is that in the absence of a written contract to the contrary with Chubb she expected that, as a permanent employee, her employment would continue for the duration of Chubb's Pasminco contract.30 In further support of that expectation Ms Kelly relied on Chubb's Emergency Response Holiday Roster, which projected her continued participation up to February 200031 and observations allegedly made to her by a Mr N Hunt, apparently then one of Chubb's managers. Ms Kelly said her position with MSS and Chubb at Pasminco was the only position she had occupied in the security industry. In cross-examination, Mr Brown pressed Ms Kelly at some length on her knowledge and understanding of the possible effects on her employment of Pasminco varying its contract with Chubb. On every occasion that the question was put to her, Ms Kelly denied having such an awareness.32 In that regard Ms Kelly relied in particular on her Letter of Appointment and the words "or until the end of the Company's contract". She did agree that Chubb's position would have been reasonable had the Company set out in her Letter of Appointment the possible effects of Pasminco varying its contract. However, she again stated that "we were never made aware that it could be varied like that".33

I found applicant Kelly to be a convincing and believable witness. In the circumstances, given that she did not contradict herself in cross-examination, I accept her evidence that she was at all relevant times unaware of the possible effect on her employment that might arise from Pasminco's variation of its contract with Chubb.

Mr O'Neil, in his evidence on the point, said that because Chubb never told him Pasminco could vary its contract in a way that might affect his continued employment, his expectation was that he would remain at Pasminco until Chubb's contract ended in February 2001. He apparently took that view on the basis of his belief that, having regard to unspecified correspondence from Chubb and his pay slips, he was a permanent employee of Chubb.34 Those documents, if indeed relevant, were not tendered in evidence. In cross-examination Mr O'Neil conceded that, if Chubb lost the contract with Pasminco and had no other available and acceptable position to offer him, his assumption was that Chubb would dismiss him.35 However, when pressed by Mr Brown regarding his understanding of the effect for him of Pasminco merely varying its contract with Chubb, Mr O'Neil was unable to give a responsive answer to the question on every occasion it was put to him.36

Mr O'Neil's evidence is not without its worrying aspects. I did not form the opinion that, in responding to Mr Brown's questions, Mr O'Neil was deliberately uncooperative or obtuse. Indeed, I remarked at the time that I thought he was doing the best he could. In the end I concluded that he simply did not understand many of the questions put to him-by me as well as Mr Brown-concerning not only the variation issue, but other issues going generally to his relationship with his employer. For those reasons I cannot form the view that Mr O'Neil was positively attempting to frustrate Mr Brown's efforts or to deceive the Commission as to his true state of mind. Accordingly, I accept his evidence that he expected to remain an employee of Chubb until the Company's contract with Pasminco concluded in February 2001.

Mr Ring's evidence on the question is that he believed he was a permanent employee of Chubb because of his Letter of Appointment, his pay slips, and comments allegedly made to him by Mr Hunt at the time of his "transfer" from MSS, ie that if Chubb lost the Pasminco contract the company would find him another full-time position.37 The pay slips, if relevant, were not tendered in evidence. In cross-examination Mr Ring acknowledged that his Letter of Appointment was directly linked to Chubb's Pasminco contract. He did not agree, however, that his employment would cease if Chubb's contract came to an end after the initial 10 months' period, since he had not signed another Letter of Appointment to that effect. As far as he was aware, he was a permanent employee with Chubb.38 Mr Ring initially confirmed as accurate, to the best of his recollection, the comments he assigned to Mr Hunt.39 Later, however, he revised that recollection to a commitment by Chubb to "try to find" another position.40 He also said, regarding his understanding of what happened in the security industry when contracts were lost or varied, that "another position is found for those employees". Mr Ring based his understanding on his own experience in the security industry, which only began with MSS.41 He added that he would be surprised that an employer in the security industry would have to terminate employees consequent upon losing or varying a contract, saying he honestly thought the employer would have found something else for the employees.42

Mr Ring gave his evidence in a forthright and candid manner. In the circumstances, I have no reason to disbelieve what he had to say.

Mr Hedge was the only one of the applicants that Chubb did not ask to sign a Letter of Appointment. He said that Chubb, in offering him a position as Emergency Response Officer at the Pasminco site, asked him to make a commitment to the job-because he was looking to go interstate at the time-but did not put a time limit on his appointment. He said he was of the understanding that he would be at Pasminco until at least the end of February 2001.43 Mr Hedge also said he had no idea that Pasminco could vary its contract with Chubb in a way that might result in him losing his job.44 In cross-examination Mr Hedge said he got the impression his job was indefinite because he understood it was expensive for Chubb to train Emergency Response Officers and the Company did not want to lose them after six months service. Mr Hedge also said that Mr Milling told him he would be at Pasminco at least until February 2001.45

Mr Hedge, whose prior security experience was as a prison officer, was questioned at considerable length regarding his understanding of the effect on employment of security industry contracts being won, lost or varied.46 He said he did not understand the legalities but believed that in his case, which he said was unique because Chubb had not asked him to sign a contract, it was not reasonable and fair that he should be terminated.47 Mr Hedge added that, while he understood Chubb's work was contract-based, he did not necessarily accept that if a contract was lost employees should lose their employment. In explanation he said that, having been offered full-time employment, he (and the others) were of the view that they were there until the end of the Pasminco contract.48 Mr Hedge said his understanding was that if contracts are lost it is common in the security industry for the affected employees to be picked up by the successful tenderer.49

Mr Hedge gave his evidence confidently, without hesitation and was, in my opinion, candid in all his responses. There is no reason for me to disbelieve what he had to say.

In terms of the awareness it asserted of the applicants, Chubb also placed significant weight on the content of a failed enterprise agreement that it attempted to negotiate in 1997-1998 with those of its employees who worked on the Pasminco site. That content, Chubb contended, clearly demonstrated that the applicants were aware, or should have been aware, that the contract between Chubb and Pasminco could be varied at any time.50

I accept Ms Kalamistrakis' statement, since there is no reason for me not to do so, that applicants Kelly, O'Neil and Ring actually saw and were aware of the document whereas applicant Hedge never saw the document at all.51 Even if I allow full weight to Chubb's submission in this regard-that applicants Kelly, O'Neil and Ring should thereby have been aware that Pasminco could vary its contract with Chubb at any time-I do not see how the proposed agreement provision52 can reasonably be construed so as to convey to the applicants, or indeed any reader, that variation of the contract by Pasminco might cause their employment to come to an end.

In my view the particular provision is simply incapable of being so construed. To the contrary, the prescription that "this agreement shall continue in force automatically to renewals or modifications or alterations of the contract or location or manning requirements", when read in conjunction with Clause 4 of the proposed agreement, ie "this Agreement ... remains in force until 1 February 2001", in my opinion only serves to reinforce the applicants' contention that they believed they had employment with Chubb at Pasminco until February 2001. In the circumstances, for the reasons discussed, I do not accept Chubb's contention that the content of the proposed agreement was such that the applicants (or three of them) ought to have been aware from reading it that, if Pasminco varied its contract with Chubb, they might lose their jobs.

Having considered in some detail the applicants' oral evidence and the additional documentary evidence tendered by Chubb, I have come to the following conclusion. I am satisfied that each of the applicants simply had no idea that if Pasminco varied its contract with Chubb-as distinct from the contract being lost or merely coming to an end as a consequence of time passing-their employment might also come to an end. Indeed, I think they each believed their employment was secure until the Pasminco contract expired in February 2001. Those are the circumstances that, in my view, distinguish this case from that of Spiljar v Chubb Security Australia Pty Ltd. In my opinion the specific evidence of those three applicants rebuts the more general proposition advanced by Chubb that the applicants knew, or should have known as a matter of general industry knowledge or because of the failed enterprise agreement that, if a particular contract came to an end, their employment would also cease.53

In coming to my conclusion I have taken into account that each of the applicants has a fairly narrow range of work experience in the security industry. I have also placed weight on the fact-conceded by the Company-that Chubb never told them they might lose their jobs, not through the loss by Chubb of its contract with Pasminco, but by Pasminco simply varying that contract.54 It was always within Chubb's own power to alert its employees to the risk by including an appropriate statement in the Letters of Appointment or by giving appropriate oral advice at the time of their appointments. Chubb did not do that, evidently preferring to rely on the general proposition mentioned above.

I did not, however, give any weight to either the entirely unsubstantiated statements assigned to Mr Hunt and Mr Milling or to the pay slips upon which some of the applicants tended to rely. Furthermore, I could not see, in Ms Kelly's case, what assistance I could obtain from a holiday roster that Chubb clearly prepared before Pasminco gave notice that it intended to vary its contract.

It remains for me to formally find that, in the case of each of the applicants, the evidence shows they possessed a settled expectation that their employment with Chubb would continue until, at least, the expiry of Chubb's Pasminco contract in February 2001. In the circumstances, I find further that the applicants each have a sustainable claim for redundancy or severance pay.

I direct the applicants to confer for the purpose of endeavouring to settle the claims by way of negotiation and conciliation. I reserve leave to the parties, in the event that they cannot settle the disputes themselves, to have the applications restored to the list at a future date for the purpose of enabling me to hear submissions on the question of remedy.

 

B R Johnson
DEPUTY PRESIDENT

Appearances:
Ms V Kalamistrakis for Ms K Kelly, Mr G O'Neil, Mr A Ring and Mr T Hedge.
Mr R Brown of the Tasmanian Chamber of Commerce and Industry Limited with Mr D Milling for Chubb Protective Services Pty Ltd.

Date and Place of Hearing:
1999
March 2, 8, 24
Hobart

1 This letter accompanied each application.
2 Exhibit K2.
3 Statement of Agreed Facts.
4 Transcript 8/3/99, p. 97.
5 Exhibits B6 and B7.
6 Transcript 24/3/99, p. 103.
7 Transcript 8/3/99, p. 79.
8 Transcript 8/3/99, p. 37.
9 CCH Electronic Industrial Law Library.
10 Exhibit B7.
11 Shop Distributive and Allied Employees Association (NSW) & Othrs v Countdown Stores & Others (1983) 7 IR 273 at p. 277.
12 Matter No 98/853 (19 January 1999).
13 Supra, p. 8.
14 Exhibit B5.
15 Exhibit B2.
16 Exhibit B3.
17 Exhibit B1.
18 Transcript 8/3/99, p. 64.
19 Supra.
20 The "Statement of Agreed Facts".
21 Above, pp. 7-8.
22 Exhibit B1.
23 Transcript 8/3/99, pp. 37-38.
24 Supra, p. 46.
25 Above, p. 10.
26 Above, p. 7.
27 Above, p. 6.
28 Above, p. 6.
29 Supra.
30 Transcript 8/3/99, p. 36.
31 Exhibit K3.
32 Transcript 8/3/99, pp. 29-32 and pp. 34-35.
33 Supra, p. 32.
34 Supra, p. 57.
35 Supra, p. 50.
36 Supra, pp. 50-52.
37 Transcript 8/3/99, p. 16.
38 Supra, p. 22.
39 Supra, p. 17.
40 Supra, p. 18.
41 Supra.
42 Supra, p. 19.
43 Supra, pp. 37-39.
44 Supra, p. 46.
45 Supra, p. 40.
46 Supra, pp. 41-42 and 44-45.
47 Supra, p. 41.
48 Transcript 8/3/99, p. 42.
49 Supra, p. 44.
50 Above, p. 8.
51 Transcript 24/3/99, p. 109.
52 Above, p. 8.
53 Above, p. 13.
54 Above, p. 13.