T11315, T11321, T11322, T11326, T11328, T11329, T11330, T11331, T11332, T11333, T11334, T11335, T11336, T11337, T11338, T11339, T11340, T11341, T11342, T11390
TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Shane William Springer and Information Solution Works Pty Ltd
REASONS FOR DECISION [1] Between 11 February and 12 March 2004 Shane William Springer, Adam James Brown, Ryan James Ayers, Karen Jane Clifford, Sean Costain, Alexander Jeremy Taylor, Adriano Vivian Daros, Mathew Lindsay Newman, Nicholas Richard-Alexander Finlay, Michael Wilfred Kasteel, David Keith Newman, Deborah Maxine Jones, Avril Leah Mayne, Scott Jonathon Leis, Rebecca Jane Langdon, Jared Charles Matthew Hill, James Charles Richardson, Scott Douglas Headlam and Graeme Deane Smith (the applicants), applied, pursuant to s.29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Information Solution Works Pty Ltd (In Liquidation) (Receiver and Manager Appointed) (Receiver Appointed) ACN 074 036 810 (the respondent) ("Information Solution Works") arising out of severance pay in respect of termination of employment as a result of redundancy. [2] A hearing commenced at the Commonwealth Law Courts, 39-41 Davey Street, Hobart on Wednesday 3 March 2004 at 10.30 am. [3] At the hearing Mr R Benson sought and was granted leave to appear on behalf of Mr Springer and Ms Clifford. Mr Brown, Mr Ayers, Mr M Newman, Mr D Newman, Ms Jones, Ms Mayne, Mr Leis, Ms Langdon and Mr Headlam represented themselves. Mr B Hamilton, the receiver and manager, appeared for the respondent. No appearances were registered on behalf of the remaining applicants. [4] With the consent of the parties, it has been agreed that all applications be joined and the applications of those employees who did not appear be dealt with ex parte. [5] Mr R Ayres formally withdrew application T11328 of 2004. [6] The relevant awards of the Tasmanian Industrial Commission are the Business Services Award and the Clerical and Administrative Services Award. Information Solution Works had previously operated under the terms of an enterprise agreement, registered with the Commission, but the agreement had expired prior to the date of the terminations and therefore the provisions contained within that agreement no longer apply. I noted on the record that, whilst redundancy provisions are generally not included within awards of the Tasmanian Industrial Commission, the Full Bench had determined in T125 of 1985 that claims for redundancy payments would be determined by the Commission on a case-by-case basis. [7] Mr Benson said that the respondent employer went into voluntary administration on 19 January 2004, subsequently a receiver was appointed, and on 27 January 2004 the employment of each employee was terminated. A number of employees were re-employed on new employment contracts. The liquidator was appointed on 16 February 2004. [8] Mr Benson's understanding was that all entitlements, save and except for redundancy, have been paid, or at least agreed to with the administrator/receiver and payments will be arranged for through the GEER scheme, excepting for some outstanding claims in relation to superannuation. [9] No notice of termination of employment was given. It had been agreed that the employees Mr Benson represented would be paid one week's wages in lieu of notice, which was the provision under the terms of the relevant award, and which would be paid through the GEER scheme. [10] Mr Benson submitted that an extended period of notice should be payable, because of the fact that notice was not given and because of the failure [by the employer] to take any appropriate steps regarding finding alternative employment. Because of the seniority of the positions held by his clients, the salaries they were receiving, and the difficulty of finding alternative employment, payment should be made at a higher level than that generally awarded, and that the amount should be three weeks' pay for every year of service, plus pro rata for part years. [11] In the case of Ms Clifford, she was offered re-employment, which resulted in one additional week's work being performed. [12] Ms Clifford had been employed for seven and a half years on a full time basis, but in late December she was approached by management and requested to cut back her hours to a 60 per cent load. Mr Benson submitted that in terms of her entitlement, both to notice and redundancy, if the order was based on her ordinary rate of pay [at the time of the termination] she would lose 40 per cent of what would otherwise have been her entitlement. He said that therefore she should be paid an entitlement based on what she had been paid one month earlier, or, alternatively, the reduction in her pay should be taken into account when determining any award made in her favour. [13] Mr Adam Brown said that the employees had received a letter from BK Hamilton and Associates on the afternoon of 28 January1. It said, inter alia:
[14] Mr Brown said that they were retrenched at 8.00am on 27 January, re-employed under the same terms on 8.01am, told about it the next day, following which a number of employees were given a notice of termination, stating that they were not re-employed. He said that they were instructed that from that point on anybody may receive immediate notice that they are retrenched under the new contract. [15] According to Mr Brown, the practice at Information Solution Works had always been to pay two weeks pay per year of service for redundancy, and that was what the employees were expecting to receive. [16] He submitted that it would be reasonable for the company to pay a minimum of two weeks' [pay] per year of service for redundancy, and then a payment in lieu of notice. He said that it had been a shock when the company went into administration. To his knowledge, no steps had been taken, such as calling for voluntary redundancies, reduction in hours, or the like. When the company went into voluntary administration it had been indicated that the company was going to work to get through it, and it was quite possible to go out of voluntary administration and for the company to keep going, but then, a week later they were all called to a meeting at which they were told they were retrenched. That was the meeting at which they were given the letter previously referred to. [17] Mr Matthew Newman submitted that the fact that Ms [Deborah] Jones was on maternity leave at the time that most employees were notified of their termination, should be taken into account. Mr Newman had been working interstate at the relevant time, and neither he nor Ms Jones had received any formal notice of termination. [18] Mr Hamilton, for the respondent, submitted that Information Solution Works had a long history of trading at a loss, the effect of which flowed into unpaid superannuation [contributions], preliminary investigations revealing that there were several years of entitlements that needed to be paid. [19] The company was able to sell an important part of its business for approximately $3.5 million, however, that was not a cash sale but a debtor arrangement. That situation has become complicated, and, whilst $2.4 million is still outstanding, it may take many years to be resolved through the courts. [20] Mr Paul Cook, of Paul Cook and Associates, was appointed administrator of the company on 19 January [2004]. At that point the company went into voluntary administration, which gave secured creditors a period of 10 days in which to make a decision whether to appoint a receiver/manager. On 27 January 2004 Mr Hamilton was appointed to that position. [21] Mr Hamilton said that he had only two days in which to act, and that the lateness in meeting with the employees, and the fact that the dealings with the employees were not as precise as he would have liked was because of the amount of time spent attempting to come to grips with the situation. He said that the employees were entitled to adequate notice and adequate notice was not given. However, it was not able to be given because of the dire position the company was in. FINDINGS [22] I find that the applicants were terminated because their positions no longer exist and that therefore they are entitled to severance pay. [23] I consider that the appropriate payment in the circumstances is an amount equivalent to two weeks' wages for each completed year of service plus a pro rata amount for each completed month of service. [24] The employees were not provided with notice that their employment was to be terminated. In fact, they were informed of the termination of their employment by letter the day after it occurred. The employees' employment was terminated at 8.00am on 27 January 2004, they were informed of that fact in a letter dated and distributed on 28 January 2004. They were told that they were re-employed on a new contract as from 8.01 on 27 January 2004 and were instructed that from then on they could receive immediate notice of termination. As it happened, some employees worked for a very short time under the new contracts, apparently no more than a week. [25] I do not intend to take the existence the new contracts into account when determining the quantum of severance payment or payment in lieu of notice (even if it were possible to enter into a new contract of employment unilaterally). I am concerned only with the terminations that took effect, without notice, at 8.00am on 27 January 2004, because those were the positions which were brought to an end as the result of redundancy. The new "contracts" were of such short duration that I do not consider them to in any way equate to an offer of suitable alternative employment which might, in other circumstances, affect the quantum of any severance payment ordered. [26] I note that Mr Hamilton, for the respondent, said that it was not possible to give the employees adequate notice because of the dire position the company was in. When a company is in a "dire position" it is obligated to inform its employees of the likely outcomes in respect of their employment. It has been stated a number of times in decisions of this Commission that an employer should give the maximum amount of notice possible to employees so that they can take appropriate steps to lessen the negative impacts of redundancy. In this case the employees were given no notice at all. Mr Hamilton said that when the company went into voluntary administration on 19 January 2004 the secured creditors had 10 days in which to make a decision whether to appoint a receiver/manager. It seems that the employees were not told at that stage that a possible scenario was the immediate termination of their employment, instead, according to the unchallenged testimony of Mr Brown, there were indications that the company might keep operating and go out of voluntary administration. Instead, a week later they were dismissed without notice. It is unfair to the employees that they were not fully informed of the possible outcomes in relation to the future of their employment. In the circumstances, I have decided that an amount equivalent to four weeks' wages should be paid in lieu of notice. [27] In the case of Ms Clifford, who was approached by management approximately one month before the termination of her employment and asked to reduce her workload to 60 per cent of the hours she had previously been working, thus reducing the rate at which her entitlements are calculated, I have decided that she should receive an additional four weeks' severance pay. ORDER I hereby order pursuant to section 31 of the Industrial Relations Act 1984 that Information Solution Works Pty Ltd (In Liquidation) (Receiver and Manager Appointed) (Receiver Appointed) ACN 074 036 810, c/- BK Hamilton & Associates, Level 2/171 Macquarie Street, Hobart, Tasmania 7000, pay to each of the employees listed below the amounts specified below in full and final settlement of the industrial disputes referred to in T11315, T11321, T11322, T11326, T11329, T11330, T11331, T11332, T11333, T11334, T11345, T11336, T11337, T11338, T11339, T11340, T11341, T11342, T11390 of 2004.
P C Shelley Appearances: Date and place of hearing: 1 Exhibit AB1 |