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T9238

 

TASMANIAN INDUSTRIAL COMMISSION

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

The Australian Workers' Union, Tasmania Branch
(T9238 of 2000)

and

Macmahon Underground Pty Ltd

 

COMMISSIONER P A IMLACH

HOBART, 28 February 2001

Industrial dispute - termination - changeover of employment - national law and practice - severance pay - seniority of employment - compensation ordered

REASONS FOR DECISION

This was an application for a dispute hearing made under section 29(1) of the Industrial Relations Act 1984 (the Act) by The Australian Workers' Union, Tasmania Branch (the Union).

The Union was in dispute with Macmahon Underground Pty Ltd (the Company), a mining contractor, formerly of Queenstown, over redundancy payments for certain salaried employees, that is, Messrs Keith Crosswell, Anthony Coulson, Kerry Bryan and Patrick Bosworth (the four employees).

The Union sought an order from the Commission that each of the four employees be paid an amount equivalent to two weeks' pay for each year of service based upon their actual earnings as salaried employees.

At the hearing of this application the Company was represented by the Australian Mines and Metals Association (Incorporated) (the Association).

Prior to Saturday, 30 September 2000, the Company was contracted to carry out mining work at the Mount Lyell Copper Mine in Queenstown, however, the contract was not renewed after that date. As a result, the greater part of the Company's employees at the Mount Lyell Mine had been made redundant from that date.

A dispute over the amount of redundancy settlement for "wages" employees of the Company, brought before this Commission in matter T9174 of 2000 1, had been settled previously. The Company subsequently refused to make redundancy payments to the four employees, hence this dispute.

Barminco Pty Ltd (Barminco) successfully tendered over the company for the contract at Mt Lyell Mine. Prior to taking over operations, Barminco advised 15 employees of the Company (including the four employees) that they would be required to remain unemployed for two months prior to taking up their new appointments. This period of unemployment would have negated any pro rata long service leave entitlements under State legislation.

It appeared the Company was not prepared to make a payment to Barminco equivalent to the value of the pro rata long service leave entitlements for the 15 employees.

A dispute arose over this last predicament and it was not resolved until the eleventh hour (that is, at about midday on the day before the actual changeover of the contracts). As a result of the settlement, three of the four employees were able to change over their employment without interruption.

The fourth employee, Mr Crosswell, said that because of the threatened delay in his employment by Barminco, he had accepted a position as a diesel mechanic with another company, Gaspersic Contracting. He had been employed as a maintenance co-ordinator with the Company.

Although the changeover of contractors was uninterrupted, the Company did not arrange transfer of employment and most of its employees had their employment terminated.

The Company paid out all outstanding annual leave entitlements to its employees (who were to have their employment terminated by the Company). Sick leave credits were not paid out and were lost.

The incoming contractor, Barminco, came onto the mine site some months prior to the changeover date and each of the Company's employees seeking to continue employment was required to apply to Barminco for a new job.

The Company claimed that it had satisfied its requirements in relation to the termination of the employment of its employees, it handed over to Barminco all training records (which, the Commission was advised, is vital in a mine workforce changeover). The Company also claimed it facilitated Barminco's presence on site prior to the changeover, gave access to the positive records of its employees and withheld any negative records.

The Company's site manager, Mr Robert James Humphryson, said in evidence that he had done everything he could to notify all employees of the circumstances surrounding the changeover of contractors. He said:

"Every time something definite developed we kept the workforce informed."2

He explained in detail the Company's efforts to keep all employees aware as circumstances developed: this included the four employees, about whom specific discussions between the Company and Barminco were held.

Mr Humphryson enunciated the Company's attitude to the redundancy claims when he said:

" ... it was our opinion legally and philosophically that we didn't believe people would be entitled to redundancy if they don't skip a beat in terms of losing a day's pay."3

He considered that the four employees, being supervisory staff, were not entitled to redundancy payments such as those paid to the wages or award employees following the previously negotiated settlement of their dispute over redundancy4.

Mr Humphryson said he viewed the claims of the four employees as opportunistic5. He also said it was impractical to transfer employee entitlements from one company to the other at the contract changeover time, hence the appropriate payouts to the Company's employees at the time. He said about 97% of the Company's employees at Queenstown successfully gained employment with Barminco and changed over without loss of continuous employment6.

Mr Humphryson said that after detailed discussions with Barminco about the four employees, he was confident they would obtain jobs with that company7.

The Union, in its final submissions, reminded the Commission that it had the power under Section 31(1A) of the Act to deal with redundancy payments in severance situations. The Union also claimed that, when dealing with severance matters, the Commission was bound to take into consideration the standards of general application contained in Part II of the International Labour Organisation's Convention Concerning the Termination of Employment at the Initiative of the Employer (the ILO Convention)8. The Union submitted that the four employees satisfied the criteria of the ILO Convention and were therefore entitled to a severance allowance.

The Union canvassed the present circumstances of each of the four employees and, upon that basis, submitted that they had suffered hardship as a result of the contract changeover and their loss of jobs with the Company. Consequently, the Union said, the four employees were entitled to compensation.

The Union referred to the Commission's precedent Full Bench decision, T125 of 1985 9, concerning redundancy (the original State decision) and, in particular, pointed out that this case was one which should be considered on its own individual merits.

The Association, relying on references in the ILO Convention to "national law and practice" foreshadowed that it would be quoting from a number of interstate cases which demonstrated clearly that employees, such as in this case, who, through the efforts of their previous employer, were able to obtain alternative work without loss of a day's pay, should not be permitted to "double dip" and obtain a redundancy payment as well. The Association said this would be an unjust enrichment not in accord with the terms of the ILO Convention.

The Association further submitted that the four employees had not suffered any hardship10. It was also pointed out, by the Association, that the four employees only made their application through the Union after having learnt of the settlement payment to the wages employees, and after they were assured of their on-going employment with Barminco.

The Association submitted that the Company did all it could to assist the four employees and had specific company to company discussions about their prospects. It was said the key was not a matter of transfer, but, what the Company did to assist the four employees, which could not be discounted:

" ... in this case because of the lack of privity of contract, it's not possible to simply transfer those employees."11

The Association quoted from and relied on:

  • R Lawson and Others v Joyce Australia Pty Ltd [1995] WAIR Com 24;

  • Graphic Arts Services Association of Australia to vary Graphic Arts Award (1999) 45 AILR 3-949: an application by the Graphic Art Services Association of Australia to vary the Graphic Arts Award in which a redundancy payment claim was rejected on the grounds that the applicant association had assisted the employee to gain other employment with little inconvenience or hardship;

  • Tortolani and Others v Group 4 Securities [1997] 987 FCA;

  • Steppes Pty Ltd t/a The Beaufort Hotel (1998) 44 AILR 3-892: an appeal to the Full Bench of the AIRC to vary award, and

  • Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2000] 108 FCA.

These cases were quoted by the Association in support of its contention that there should be no "double-dipping", that is, an employee who is assisted by his or her employer in gaining immediate employment upon being made redundant should not be granted a redundancy payment as well because he or she has suffered no hardship.

The Association said that these interstate decisions complied with the "national law and practice" reference in the ILO Convention and hence they should be followed in this case.

The Union, in final submissions, rejected the notion that the Company had done everything it could to assist the redundant employees of the Company to gain employment with Barminco. The Union said that by refusing to co-operate in the long service leave area, the Company had jeopardised new employment opportunities for the four employees, and had actually prevented Mr Crosswell from gaining employment with Barminco.

The Union also submitted that there was no real evidence to show that Mr Bryan did not avail himself of the Western Australian mining certificate training opportunity.

The Union claimed the four employees had suffered hardship over the termination of their employment12.

FINDINGS

I believe this case truly confirms the wisdom of the original State decision that each case would be judged on its merits.

The arguments for and against the making of a redundancy payment to each of the four employees in this case were persuasive.

I find the four employees' employment with the Company was terminated and not transferred. There was an annual leave payout, sick leave credits were lost and it appears pro rata long service leave entitlements were only paid by the Company (to whomever) under duress at the eleventh hour. Moreover, the changeover of employment that did take place was not caused because of a sale. In each case, the employees had to run the gauntlet of applying for a job with Barminco without guarantee of employment, and even when they did obtain employment, it was on the basis of a three months' probationary period. The fact that about 97% of the Company's employees did obtain a new job immediately did not mean their employment had been transferred.

On the other hand, it was true that, as a result of the changeover, nearly all the Company's employees obtained an equivalent job with Barminco immediately and suffered no loss of pay. There was no evidence to show that all the other employees of the Company, apart from the four employees, suffered significant loss or hardship as a result of the changeover in their employment. On its own, this last factor could well have caused the Commission to reject the claims of the four employees, consistent with the interstate cases quoted by the Association, but there were other significant factors in this case.

During the course of the hearing, including the examination of the witnesses, much was said about the losses and disadvantages incurred, or not incurred, by the four employees as a result of their employment changeover. Overall, I suspect the four employees were not as well off with the new contractor(s) in regard to wages.

On the evidence, and in the light of the senior nature of the employment of the four employees with the Company, the Commission is satisfied they suffered some hardship in the changeover of their employment in addition to the claimed reductions in wages or salary. Mr Coulson lost the financial advantage of a salary sacrifice arrangement, he had to work more hours to obtain an equivalent wage and his status was reduced; Mr Bosworth was reduced in status from a shift foreman position to that of a leading hand type position and Mr Crosswell, who reverted to a base tradesman's position after being employed as a maintenance co-ordinator by the Company, also had to work longer hours to gain an equivalent pay.

It was submitted by the Union that the Company did nothing to assist its employees to gain new employment. In the circumstances, putting aside the long service leave dispute, I am satisfied that the Company did what it could to assist and I do not criticise it in that regard.

Another factor going against the Company was the settlement reached in matter T9174 of 2000 (supra), which resulted in all the other employees made redundant, except the four employees, receiving a redundancy payment. It is unfair that the four employees should be denied redundancy payments simply because their applications were late (whether opportunistic or not).

There was some discussion also about opportunities for interstate transfers provided by the Company to two at least of the four employees, Messrs Crosswell and Bryan. The Company submitted that the two employees concerned should have taken up those opportunities, but, because they did not, they should not be granted a redundancy payment. The Union, by means of witness evidence, sought to show that the alleged "offers" were either made before the loss of contract became known, or they were not reasonable or acceptable propositions for those concerned anyway. I was not satisfied on the evidence that the transfer proposals were properly and formally put in the context of the impending job losses. In all this context, I think the employees were not bound to accept the proposed transfer away from their established homes.

The Association referred to the "national law and practice" standard mentioned in the ILO Convention and relied on a number of interstate precedent cases to establish that "double dipping" was not available.

I am satisfied that, by relying on the facts and merits of this particular case and the original State decision, the Commission is within the "national law and practice" standard and is not bound by the interstate decisions quoted. In any case, a study of those interstate references reveals in the case of:

  • R Lawson and Others v Joyce Australia Pty Ltd (supra) - alternative employment was arranged by the respondent and found to be suitable in all the circumstances.

  • Graphic Arts Services Association of Australia (supra) - suitable alternative employment was obtained by the employer, but, there was no transfer of accrued entitlements and a part redundancy payment was ordered.

  • Tortolani & Ors v Group 4 Securities (supra) - the original employment was not terminated, but, an opportunity to changeover to another employer was mooted.

  • Steppes Pty Ltd t/a The Beaufort Hotel (supra) - the new employer gave the redundant employees credit for their accrued entitlements.

  • Construction, Forestry, Mining and Energy Union, Tasmanian Branch v BHP Steel (AIS) Pty Ltd (supra) - the employee was offered a redundancy or a transfer; he sought both. (In the present case, the employment was terminated and likely employment with the new employer indicated.)

The above cases were not on all fours with this case as to the facts and are therefore not persuasive ultimately.

In all the circumstances of this case, and on balance, I am satisfied that the four employees were entitled to severance payments from the Company.

It is quite probable that, due to his distinct circumstances, Mr Crosswell would have been entitled to a severance payment anyway, but, because of my overall decision in this case, I do not propose to go further into that.

ORDER

In accordance with the power vested in me under Section 31(1) of the Industrial Relations Act 1984, in settlement of this dispute, I hereby order that Macmahon Underground Pty Ltd pay to each of:

    Keith Ray Crosswell of 8 Darling Street, Queenstown;

    Anthony Paul Coulson of 16 Alfred Street, Queenstown;

    Kerry Stanley Bryan of 88 Little Orr Street, Queenstown, and

    Patrick David Bosworth of 6 Nankivell Street, Queenstown

an amount equal to one week's salary for each completed year of their service or part thereof with Macmahon Underground Pty Ltd during its operations in Queenstown, being severance payments due on the termination of their employment, such payments to be made within 21 days of the date of this decision.

 

P A Imlach
COMMISSIONER

Appearances:
Mr R Flanagan (18/10/00, 28/11/00, 29/11/00) with Mr I Wakefield (18/10/00, 28/11/00, 29/11/00), The Australian Workers' Union, Tasmania Branch.
Mrs A Murfet (18/10/00), Australian Mines and Metals Association (Incorporated) with Mr R Humphryson (18/10/00, 28/11/00, 29/11/00) for Macmahon Underground Pty Ltd.
Mr R FitzGerald (28/11/00, 29/11/00), Australian Mines and Metals Association (Incorporated), for Macmahon Underground Pty Ltd.

Date and place of hearing:
2000
18 October
Hobart
28 and 29 November
Queenstown

1 The Australian Workers' Union, Tasmania Branch v Macmahons Contracting
2 Transcript, p96, 29/11/00
3 Transcript, p106, 29/11/00
4 T9174 of 2000 (supra)
5 Transcript, p109, 29/11/00
6 Transcript, p100, 29/11/00
7 Transcript, p104, 29/11/00
8 Convention 158
9 Tasmanian Trades and Labor Council - application to vary the Retail Trades Award
10 Transcript, p177, 29/11/00
11 Transcript, p177, 29/11/00
12 Transcript, p190, 29/11/00