TASMANIAN INDUSTRIAL COMMISSION

Decision Appealed - See T12125

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

Liquor, Hospitality and Miscellaneous Union - Tasmanian Branch
(T11893 of 2005)

and

Tempo Services Limited, ABN 87 001 827 041 and AM Services Pty Ltd

 

COMMISSIONER JP McALPINE

HOBART, 27 May 2005

 

Industrial dispute - severance pay in respect of termination of employment as a result of redundancy - alleged breach of award or registered agreement regarding sick leave - long service leave, or payment instead of any such leave, or the rate of ordinary pay at which any such leave or payment is to be paid - Order issued

REASONS FOR DECISION

[1] On 12 January 2005, the Liquor, Hospitality and Miscellaneous Union - Tasmanian Branch (LHMU), applied to the President, pursuant to s.29(1) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of a dispute with Tempo Services Limited, ABN 87 001 827 041 (Tempo Services) and AM Services Pty Ltd (AM Services) relating to severance pay in respect of termination of employment as a result of redundancy; alleged breach of award or registered agreement - sick leave; and, a dispute over the entitlement to long service leave (LSL), or payment instead of any such leave, or the rate of ordinary pay at which any such leave or payment is to be paid.

[2] On 14 January 2005 the President convened a hearing (Conciliation Conference) at the Commonwealth Law Courts, 39-41 Davey Street, Hobart, Tasmania on Wednesday, 2 February 2005 at 11.30 am. The matter was set down for further hearing on 5 and 6 April 2005.

CHRONOLOGY OF THE APPLICATION

[3] Tempo Services held the contract to provide cleaning services at the Sandy Bay campus of the University of Tasmania (University) where it employed around 40 people. The contract was due to expire at the end of December 2004.

[4] Tempo Services was unsuccessful in retaining the contract, which was won by AM Services. Included in the terms of contract provided by the University, the successful tenderer was to employ as many of those employees whose employment ceased because of the loss of the contract from the previous contractor as they deemed they would require to perform the duties. Almost all of the Tempo Services employees were offered and accepted work with AM Services.

[5] As a consequence of the change of contractor, the LHMU sought, on behalf of the past Tempo Services employees, an undertaking from AM Services in relation to a variety of issues which included the liability for LSL.

[6] A stalemate developed between the LHMU, the outgoing contractor, Tempo Services, and the new contractor, AM Services, with respect to the LSL liability.

[7] As a result of the stalemate, the matter was brought before this Commission by the LHMU with Tempo Services and AM Services as respondents.

[8] The University sought leave to intervene in the application. The LHMU, Tempo Services and AM Services did not raise any objection to intervention. Leave to intervene was granted.

[9] There is no dispute that:

Table A

Glenda Cowen
Beverly Clark

Table B

Davis Despard
Rodney Graham
Jan Voss
Lyn Davie
Kaye Bailey
Sharon Cane
Christine Myers
Kerry Bowerman
Debbie Carpenter
Kaye Dazza
Pamela Clark
Mary Simpson
Linda Clark

(the named employees) were employed by Tempo Services until the 31 December 2004. Nor is it disputed they commenced employment with AM Services within two calendar months from 31 December 2004.

[10] Tempo Services did not offer the named employees ongoing employment, but did pay out accrued annual leave.

[11] Tempo Services disputed the named employees were terminated and claim they took up alternative employment of their own volition with AM Services.

[12] Tempo Services disputed any liability for LSL or for pro rata LSL accrued by the named employees.

[13] AM Services disputed any liability for LSL for the named employees.

[14] The University asserted a sympathetic position to the LHMU and AM Services on the matters of LSL liability and the interpretation of the relevant sections of the Long Service Leave Act 1976 (LSL Act).

LIST OF WITNESSES WHO GAVE EVIDENCE

[15] Oral evidence was not directly given to the Commission. The LHMU, Tempo Services and AM Services, as well as the University who intervened, relied on submissions from the bar table and cited both documentation and authorities.

THRESHOLD MATTER

[16] During the initial conference a threshold matter was raised by AM Services and the University with regard to the process to be adopted for this Commission to hear the instant application.

[17] In a letter sent to all of the parties, dated 3 February 2005, I outlined my reasons for proceeding directly with the matter without initial reference to the Secretary of the Department of Infrastructure, Energy and Resources. There was no further challenge to the matter being proceeded with in the manner I proposed.

BACKGROUND

[18] At the outset of the hearing, Mr Tullgren, for the LHMU, requested this matter and matter T11988 of 2005 be heard together. His reasoning being, the bulk of the evidence would be the same in both cases.

[19] Mr Readett, Clerk Walker, Lawyers, for Tempo Services objected. I upheld his objection in as much as the subject of T11988 of 2005 is also named in the instant application. I concluded the outcome of the instant application could, prima facie, be applied to matter T11988 of 2005.

DETAILS OF THE CASE PUT BY THE LHMU

[20] It was asserted by Mr Tullgren that Tempo Services terminated the employment of the named employees on the 31 December 2004. It was also asserted those employees were all entitled to the payment of LSL or pro rata LSL by dint of their length of unbroken service at the University site.

[21] Mr Tullgren cited s.8(3)(d) of the LSL Act, as a general trigger for LSL entitlement, where eligible:

"an employee whose employment is terminated by his employer for any reason other than the serious and wilful misconduct of an employee."

[22] It is asserted that Tempo Services sent a standard letter, signed by the company's Tasmanian Operations Manager, to all employees affected by the loss of the University contract. Two letters, identical in content, sent under the Tempo Services authority to two of the employees were cited as proof of Tempo Services' intent to terminate their employment at the cessation of the contract. It was confirmed that the LMHU also received a copy of a letter identical in content to those cited.

[23]

In part the letter reads:

"Please be advised that Tempo Services will pay all entitlements to staff that they are entitled to. At this stage the last day of work will be Friday 31-12-04 ..."¹

[24] Mr Tullgren asserted the employment relationship had been severed at the behest of the then employer, Tempo Services.

[25] The LHMU asserted 19 of the employees of Tempo Services at the University had less than seven years' service, 13 had between seven and 15 years' service, and two had in excess of 15 years' service. Both of the longer serving employees had accessed some LSL but, Mr Tullgren claimed, were still entitled to the outstanding balance.

[26] The LHMU cited s.8(2)(a)(i), (ii) and (iii) of the LSL Act with reference to entitlements of 13 weeks LSL for those employees who had attained 15 years with a business.

[27] The LHMU also cited s.8(2)(b) of the LSL Act, with reference to those employees who had reached seven, but not 15 years of continuous service.

[28] The LHMU asserted according to s.2(2) of the LSL Act, with respect to deemed transmission of business, that the business of Tempo Services had been deemed to be transmitted to AM Services.

[29] Mr Tullgren expressed his interpretation of the deeming provision:

"The deeming provision is expressly based on there being a termination of employment and a re-employment and makes a clear distinction between this situation and other termination provisions in the Act. It is designed to avoid arguments on questions of continuity of employment." ²

[30] Mr Tullgren also cited a decision by Kirby J in the Commonwealth v CI Operations Pty Limited with regard to interpreting "deeming provisions".

"Conventionally a deeming provision being inherently artificial is confined to the achievement for the purpose for which Parliament has enacted it."

[31] He also informed the Commission, in his view the LSL legislation was beneficial legislation and, as such, was to be interpreted sympathetically to the benefit of employees.

"... we also say that the Long Service Leave Act is beneficial legislation, that is that it is legislation that gives the benefit of leave after the required period of service to employees in Tasmania. The method of interpreting this type of legislation is set out in chapter 9 of Statutory Interpretation in Australia, Third Edition at 9.2. Where the authors say:

A remedial beneficial provision is one that gives some benefit to a person and thereby remedies some injustice." ³

[32] Mr Tullgren, in correspondence dated 4 March 2005, informed the Commission, Tempo Services, AM Services and the University of Tasmania, that he was seeking the following remedy for this application;

 

"1. The Applicant seeks an order that the First Employer (Tempo Services) pay each former employee, set out in Table A, working at the University of Tasmania, Sandy Bay campus, who had, as at 31 December 2004, completed at least 15 years continuous employment with the First Employer, a payment calculated in accordance with section 8(2) of the Long Service Leave Act 1976, within 21 days of making the order.

2. The Applicant seeks an order that the First Employer (Tempo Services) pay each former employee, set out in Table B, working at the University of Tasmania, Sandy Bay campus, who had, as at 31 December 2004, completed 7 years, but not completed 15 years continuous employment with the First Employer, a payment calculated in accordance with section 8(2)(b) and (3) of the Long Service Leave Act 1976, within 21 days of making the order." ⁴

[34] Those employees listed in Tables A and B have been named at paragraph 9 hereof.

DETAILS OF THE CASE PUT BY THE FIRST RESPONDENT - TEMPO SERVICES

[35] Mr Readett did not concede that Tempo Services terminated the employment of the named employees on the 31 December 2004. He asserted that proof of termination of employment lies with the employees.

[36] Mr Readett reiterated, with reference to s.8(3)(d) of the LSL Act, termination must be at the instigation of the employer for claims on LSL entitlements to be valid.

[37] He cited an authority supporting his submission the employees were not terminated, but left employment of their own accord. In the authority, Ronald Tortolani & Ors v Group 4 Securitas, there are some similarities with the instant application. A contract was lost and there was uncertainty regarding future employment with the transmittor.

[38] Mr Readett argued, by nature of the contract issued by the University, specifically Clause B(31) - Continuity of Employment⁴, the then employees of Tempo Services sought employment with AM Services, making the choice to leave Tempo theirs and not Tempo Services.

"Where a person whose employment with the previous cleaning contractor will cease -" ⁵

"... because of the termination of the previous contract, where that person notifies the contractor in writing within seven days after the date of the notice referred to in subclause (i) that he or she wishes to be employed by the contractor, the contractor must subject to clause 3 employ any such person." ⁶

[39] Mr Readett further asserts that Clause A(26) - Continuity of Employment⁷ vindicates his position:

"It was their action in taking up alternative employment ... that brought that relationship to an end. Clause A(26) is also apposite, in my submission, that says that AM Services will employ all persons." ⁸

[40] Mr Readett confirmed none of the named employees had been offered ongoing employment with Tempo Services.

[41] Mr Readett objected to the letters presented by the LHMU as confirmation of Tempo Services intent to terminate the recipients' employment, being accepted as evidence by the Commission. He argued they had to be tested under cross-examination.

"MR READETT: Well, my friend has - evidence has now been given which we would seek to test and to expand upon in due course. So I am content that it be taken as an indication of the evidence that may be part of the applicant's case, but I would seek that it be proved in the ordinary way." ⁹

[42] In support of his position, that the transmittee and not the transmittor was liable for any accrued entitlements, Mr Readett cited a series of authorities. In my view the application of these authorities to the instant case is the cornerstone of Tempo Services' argument, and I will deal with them in detail in my findings.

[43] In summary however, the authorities¹⁰ are listed below.

T1087 of 1989, Lynette Anne Marney v Croucher Pty Ltd

This is a similar situation to the instant application in that a cleaning contract was lost and the transmittee was faced with paying accrued LSL. The final employer, Croucher Pty Ltd was found liable to pay pro rata LSL.

T1840 of 1989, Lynette May Brennan v The Kingborough Nursing Home Pty Limited

In this application the business, as a whole, had been purchased over the years by a number of owners. In this instance, the transmittee claimed impropriety on the part of a pervious owner in that they had not granted LSL when it was due. The Commissioner deemed the transmittee liable for the totality of the LSL.

T2109 of 1989, The Kingborough Nursing Home - appeal against decision in matter T1840 of 1989

The Full Bench dismissed all grounds of appeal.

T3881 of 1992, Mrs Patricia Colleen Stingle v David Ray Wagner & Mrs Vicki Mary Wagner trading as Fingal Hotel

In this application a series of owners conducted the same business on the same premises. The continuity of Mrs Stingle's employment was deemed. The last employer was judged liable for all the LSL.

T8443 of 1999, William George Smith v Bestpac Pastoral Pty Ltd ACN 007 092 926

In this application a series of similar businesses were conducted on the same premises. Mr Smith's continuity of employment was deemed. The last employer was judged liable for all the LSL.

T8444 of 1999, Barry James Downham v Bestpac Pastoral Pty Ltd ACN 007 092 926

The same situation and outcome as for T8443 of 1999.

T8520 of 1999, Mrs Glenda Patricia Slater v Brecaryan Pty Ltd ACN 009 549 375

In this application a series of owners conducted the same business on the same premises. The continuity of Mrs Slater's employment was deemed. The last employer was judged liable for all the LSL.

T9639 of 2001, Lorraine Susan McDermott v John Robert Thomas Pty Ltd trading as Rutherglen Holiday Village

In this application a series of owners conducted the same business on the same premises. The continuity of Mrs McDermott's employment was deemed. The last employer was judged liable for all the LSL.

T10085 of 2002, Rina Howard v Silver Sands Services Pty Ltd, trading as Silver Sands Resort Hotel Motel

In this application a series of owners conducted the same business on the same premises. The continuity of Mrs Howard's employment was deemed. The last employer was judged liable for all the LSL.

[44] Mr Readett submitted that this Commission should be bound by the Full Bench decision (T2109 of 1989 in The Kingborough Nursing Home appeal against decision in matter T1840 of 1989) with respect to finding the latest employer liable for LSL payments.

[45] Mr Readett cited, T9238 of 2000, The Australian Workers' Union, Tasmania Branch v Macmahon Underground Pty Ltd¹¹, as an example of where he says the mining industry as a whole reflects an understanding of the LSL "system" in that obligations can be erased should an employee not be re-engaged before two months by the transmittee.

"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." ¹²

"So what you have is an all pervading understanding in the industrial community that that is how these long service leave entitlements are applied. That is how the system works. That where there is a transmission of employment the subsequent employer acquires the responsibility. ..." ¹³

[46] In essence, Mr Readett challenged the interpretation and application of the LSL Act in the findings of Abey C in T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd. He attacked a number of aspects of the findings by Abey C, in his view, pertinent to the instant application. It is appropriate I deal with his argument in my findings, along with the other authorities.

DETAILS OF THE CASE PUT BY THE SECOND RESPONDENT - AM SERVICES

[47] Mr M Daly, for AM Services, cited Ronald Tortolani & Ors v Group 4 Securitas with reference to Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154, contained therein, with respect to actioning termination of employment.

"Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would on any reasonable view probably have that effect." ¹⁴

[48] Mr Daly took the opportunity to refute the assertions of the Tempo Services by highlighting the different circumstances prevalent in Ronald Tortolani & Ors v Group 4 Securitas to the instant application. He specifically drew the Commission's attention to the clear expressed intent of the employer to re-deploy staff where possible.

[49] Mr Daly turned to the letters from Tempo Services to the employees informing them of their impending situation, referring to the letters as formal advice. He went on to ask the question:

"... what earthly reason would Tempo have to be saying words like that unless this was news that the employment of the employees was at an end by virtue of the news that they had delivered in the earlier paragraph. ..." ¹⁵

[50] He further asserted the LSL Act operates to oblige Tempo Services to pay the entitlements. He supported this assertion with reference to the LSL Act.

"... unqualified entitlement to be paid by Tempo on the pro rata basis because of the happening of the trigger event, which is the termination. The deeming provision in section 2(2), it is submitted, has no impact on the contract of employment. It was still terminated.

Section 2(2) clearly contemplates that there is a termination. ... Section 2(2) operates to bring about a situation where there is no break in the continuity of the employment for the purposes of the Act." ¹⁶

[51] Mr Daly verified there was no contractual arrangements between AM Services and Tempo Services. He asserted, therefore, there was no commercial transmission of business.

"... no contract of any description was ever entered into between Tempo and AM Services. There has been no conveyance of anything between the two. No transmission in the legal sense of the word. No legal nexus between the two. No privity of contact (sic) between the two. Section 2(2) is a clear application and has work to do in this case. It is not a normal section 5 transmission for the reasons I have said." ¹⁷

[52] Mr Daly proceeded to elaborate on his reading of the various sections of the LSL Act triggered by the instant application.

[53] Mr Daly then turned to the issue of this Commission being bound by the Full Bench decision in T2109 of 1989, The Kingborough Nursing Home - appeal against decision in matter T1840 of 1989.

"... section 12, particularly 12(4), provides the clearest possible answer, ... Section 12(4) has not been the subject of any consideration by this Commission other than in the case of Elkin. In the Full Bench decision that Mr Readett referred to you as authoritative, there is not a mention of it.

It has not been considered by the Commission. There is no indication that that issue was put before the Commission at first instance and there is certainly no indication that it was before the Full Bench. So it doesn't bind you, it is a decision - it is an issue that was not before obviously either of those Tribunals.

... section 12(4) ... has not fallen for determination. Certainly not in the Full Bench, so doesn't have any binding precedent value on you, ..." ¹⁸

[54] Mr Daly supported Mr Tullgren's interpretation of "deeming", consistent with Statutory Interpretation of Australia 5^th Edition, the decision of Muller v Dalgety & Co Ltd (1909) 9 CLR 693. He also agrees the LSL Act was intended to be beneficial legislation.

[55] Mr Daly then turned to Tempo Services rejection of the findings of Abey C in T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd.

"It deems that the employee's entitlement due to him from the employer in whose service the period of time was accrued is the employer who pays the leave and it is submitted that that final limb of section 12(4) is very, very clear, and so in the case of a deemed transmission pursuant to section 2(2), this construction I would submit is clearly the correct one. The approach is essentially that as adopted by Commissioner Abey in Scott Elkin v Barminco, referenced before T9906 of 2002. Commissioner, at paragraph 39 of that case, Commissioner Abey held that:

Section 12[4] quite clearly states that the leave is deemed to commence on the date of termination and the employee is entitled to be paid by his employer for that period of leave. It is simply not open for the former employer to wait 2 months to see what might happen. To do so would, in my view, be contrary to the obligation to make payment and would constitute a breach of the Act.

He goes on to paragraph 40:

It follows that Macmahon -

who was the transmittor -

was obliged to make a pro rata payment to Mr Elkin on 30 September 2000. ... ... Failure to make such a payment (as in this case) when it fell due does not in some way transfer that obligation to Barminco.

the transmittee." ¹⁹

[56] Mr Daly referred to the requirements in the University contract, Clause B(31)(ii) and (iii) and made it clear in his view that "... is not a continuing employment relationship set in cement ..." ²⁰

DETAILS OF THE CASE PUT BY THE INTERVENOR - UNIVERSITY

[57] Ms Trevaskis supported the intent of the arguments set out by Mr Tullgren and Mr Daly, on behalf of the University.

[58] She also took the Commission through each of the sections in the LSL Act triggered by the instant application. Again, her interpretations were in concert with the views of Mr Tullgren and Mr Daly.

[59] Ms Trevaskis summed up the University's view with respect to its insistence in the tender document, the successful tenderer engage employees of the previous incumbent:

At 492, Ms Trevaskis summed up the University's view with respect it's insistance in the tender document the successful tenderer engage employees of the previous incumbent;

"... .......the conditions the University imposed on the contract on MAM included an obligation that AM employ the employees that asked to be employed, would have absolutely no effect on the relationship between those employees and Tempo. That employment has terminated" ²¹

FINDINGS

TERMINATION

[60] The first point to be determined is, whether or not the employment of the named employees was terminated by Tempo Services at the cessation of its contract with the University.

[61] Evidence was tendered by Mr Tullgren citing letters allegedly sent to every employee and to the LHMU specifying a final workday and a commitment to pay out entitlements. The letter did not suggest or offer ongoing employment, nor suggest further communication could be expected. The letters were issued in sufficient time before the cessation of the contract to satisfy notice requirements. At no time from when the letters were issued until cessation of business on 31 December 2004, was the content of the letter modified, qualified or withdrawn.

[62] Mr Readett challenged the acceptance of these letters as evidence. However, he did not take the opportunity to challenge, refute, explain or justify their content or intent during his deliberations.

[63] Under s.20(1)(a) and (c) of the Industrial Relations Act 1984 which states - the Commission;

"(a) shall act according to equity, good conscience, and the merits of the case without regard to technicalities or legal forms;

(c) is not bound by any rules of evidence, but may inform itself on any matter in such a way as it thinks just;"

[64] I chose to accept the letters as evidence.

[65] In a counter assertion, Mr Readett alleged the employees abandoned their employment for another employer, AM Services. He cited an authority, Ronald Tortolani & Ors v Group 4 Securitas to support his assertion.

[66] In the cited authority, the employer, after the loss of a contract, made positive moves to show the employees they were, where possible, to be kept in employment with the employer. According to the decision, the employer communicated with its staff on a number of occasions with respect to employment options. It was found the employees were made aware of the employer's intent with regard to maintaining their employment with Group 4. Mr Tortolani, the subject of the decision, chose to leave his position with Group 4 on the offer of a position with another employer. It was deemed he was not terminated but made an independent choice to leave his employment. I concur with this finding.

[67] In the instant case, the evidence indicates the only formal communication from the employer to its employees was a standardised letter notifying the impending loss of contract, the last working day and the indication that entitlements will be paid out.

[68] From evidence, no employee was offered ongoing employment. There was no evidence of employees being given assurances of ongoing employment. Indeed, there was no evidence of any other communication, formal or otherwise, which may have lead to the employees believing they would have an employment future with Tempo Services. Tempo Services took the opportunity to pay out only the accrued annual leave entitlement. It did not pay out time in lieu of notice. It did not demand reparation for time in lieu of notice for those employees who were employed by AM Services after 31 December 2004, as would be expected had these employees ongoing employment with Tempo Services.

[69] Mr Daly, for AM Services, argued that a termination did take place and referred to an authority within Ronald Tortolani & Ors v Group 4 Securitas:

"Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would on any reasonable view probably have that effect." ²²

[70] Mr Daly supported a single interpretation of the "letters", in that they signal the employment with Tempo Services is coming to an end. He also referred to Ronald Tortolani & Ors v Group 4 Securitas, where it is evident the employer tried to retain staff by continually advising them of alternatives.

[71] I see no other interpretation to that of the employment of the named employees being terminated by Tempo Services on or about 31 December 2004 as a consequence of the loss of the University contract. I so find.

[72] As a result of my finding the employment of the named employees was terminated by Tempo Services, and referring to the LSL Act, at s.8A(3)(d), it states:

"an employee whose employment is terminated by his employer for any reason other than the serious and wilful misconduct of the employee."

[73] Prima facie there would be entitlements to LSL should the relevant parameters of the LSL Act be satisfied.

DEEMED TRANSMISSION OF BUSINESS

[74] Before I test the various parameters of the LSL Act with respect to employee entitlements, it is important to address the issue of "deemed" transmission of business.

[75] The term "deeming", its meaning and application in the instant case were well argued by Mr Tullgren and Mr Daly, both citing the publication Statutory Interpretation In Australia, Butterworths, 4th and 5th Editions.

[76] It clearly states:

 

"This use of the expression "deemed" was described by Griffith CJ in Muller v Dalgety & Co Ltd (1909) 9 CLR 693 at 696 as a `statutory fiction', a device for extending the meaning of a term to a subject matter which it properly does not designate. When `deemed' is used in this way, Griffith CJ pointed out that it is important to consider the purpose for which the fiction has been introduced."

[78] Transmission of business in the everyday sense, in my view, is where a commercial decision is made between at least two parties to sell and buy a venture, the nature of the venture, location and staff in the main remain unchanged. This implies the transmittor has knowingly put a value on the venture and the transmittee has the opportunity to gain an acceptable understanding of the risks, assets and liabilities of the venture, to which he puts a worth, inclusive of accrued employee entitlement liability.

[79] In the instant application, as with the cited authorities of Scott Andrew Elkin v Barminco Pty Ltd and The Australian Workers' Union, Tasmania Branch v Macmahon Underground Pty Ltd, a commercial business transmission was not the case. In these instances an element of the transmittor's business was lost to the transmittee as a result of a competitive tender process by a third party. In such a situation, the transmittee does not have the opportunity to evaluate the risk, assets or liabilities of that segment of the transmittor's business for which he tenders. The transmittee only has a tender document common for all tenderers, from which to develop a "price".

[80] It follows, in these instances, a "statutory fiction" with respect to the transmission of business was created. It is evident the "statutory fiction" of a transmission was created to facilitate the equitable treatment of employee entitlements with respect to the operation of the LSL Act.

[81] Tempo Services argued transmission and deemed transmission should not be distinguished, I reject this position for the reasons given in the preceding paragraphs.

INTERPRETATION OF THE ACT

[82] Much of the Tempo Services case hinged on their interpretation of the LSL Act. Mr Tullgren for the LHMU, Mr Daly for AM Services and Ms Trevaskis for the University gave their concordant interpretation of the various sections of the LSL Act in play in the instant application. Their interpretation was in harmony with that of Abey C in T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd.

[83] As Ms Trevaskis opined, with which I agree:

"... different sections of the Tasmanian Long Service Act deal with distinct but interacting obligations and entitlements, and it has been said here that it is important that that Act be read as a whole." ²³

[84] Section 2 of the LSL Act deals with the interpretation of the LSL Act.

[85] Section 2(2) of the LSL Act defines when an employee's employment will be deemed to have transmitted to an employer:

"Where an employee is employed in or about any place in the business of an employer and the employment of the employee with that employer is terminated, and, not later than the expiration of a period of 2 months from the date on which that employment was so terminated, the employee becomes employed in or about that place in the business of some other employer, the business of the employer by whom his employment has been terminated shall, for the purposes of this Act, be deemed to have been transmitted to the employer by whom he so becomes employed if the business in which he so becomes employed is of the same, or substantially the same, kind as the business in which he was employed in the employment that has terminated."

[86] In the instant case, this section would apply to those past employees of Tempo Services who have been engaged by AM Services. Their employment was terminated, they were engaged by AM Services within 2 months, the business activity is ostensibly the same and the employees are doing the same type of work as before in the same location.

[87] Section 5 of the LSL Act deals with the nature of continuous employment.

[88] Section 5(4) of the LSL Act confirms that an employee's continuity of employment will be deemed not to have been broken by reason of transmission of business:

"Where a business is, whether before or after the commencement of this Act, transmitted from an employer ( ... ) to another employer ( ... ) and a person who at the time of transmission was an employee of the transmittor in that business becomes an employee of the transmittee - "

[89] Sections 5(4)(a) and (b) read:

"(a) the continuity of the employment of that employee shall be deemed not to have been broken by reason of the transmission; and

(b) the period of employment of the employee with the transmittee shall be deemed to include the period of his employment, and any period deemed to be a period of his employment, with the transmittor."

[90] Mr Readett, in his challenge to the decision of Abey C in T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd, asserts s.5(4) is disjunctive.

and that the learned Commissioner only considered section 5(4)(b), "completely ignoring" 5(4)(a).

[91] From the Concise Oxford Dictionary, Seventh Edition:

"Disjunctive (n). disjointed, separation, expressing an alternative, expressing choice between two words etc"

[92] I do not accept Tempo Services interpretation of s.5(4). Section 5(4) is not expressing alternatives, or choice, with respect to service of employment.

[93] It is clear ss.5(4)(a) and (b) are the cumulative effects on employment service as a result of transmission and deemed transmission of business.

[94] It is also clear the intent of ss.5(4)(a) is to ensure the continuity of employment service is recognised for the purposes of the LSL Act.

[95] Subsection 5(4)(b) indicates that which should be taken into account when quantifying the service of employment in the situation where a business has been transmitted or deemed to have been transmitted.

 

[97] Section 8 outlines the service qualifications required to be eligible for LSL and the quantum of such leave.

[98] Subsection 8(2)(b) specifies the criteria required for those who have attained seven, but not 15 years' service to access pro rata LSL and applies in the instant case.

[99] Subsection 8(2)(a) specifies the criteria required for those who have attained 15 years' service to access LSL and applies in the instant case.

[100] Subsection 8(3)(d) has been relied on in the instant application as the trigger for payment of LSL:

"(d) an employee whose employment is terminated by his employer for any reason other than serious or wilful misconduct of the employee."

[101] Section 12 expresses the mechanism of when and how to take LSL.

[102] Subsection 12(4) has been relied on in the instant application, it outlines at what point LSL is due when employment is terminated.

"Notwithstanding anything in this section, where the employment of an employee is for any reason terminated before he takes any long service leave to which he is entitled, or where any long service leave entitlement accrues to an employee because of the termination of his employment, the employee shall be deemed to have commenced to take his leave on the date of the termination of employment and to be entitled to be paid by his employer ordinary pay in respect of that leave accordingly."

[103] The application of s.12(4) is the hub around which the instant case revolves.

AUTHORITIES

[104] Mr Readett, for Tempo Services, drew from a number of authorities to support his assertion that AM Services should be liable for any LSL entitlements.

[105] T1087 of 1989, Lynette Anne Marney v Croucher Pty Ltd. ²⁴ This is a similar situation to the instant application in that a cleaning contract was lost and the transmittee was faced with paying accrued LSL. The final employer, Croucher Pty Ltd was found liable to pay pro rata LSL.

[106] The difference between this situation and the instant application is, Mrs Marney did not qualify for LSL in February 1985 when Croucher became the transmittee. She had only six years and six months of service, not seven years as is required by the LSL Act, s.8(1)(b). Consistent with the LSL Act, s.5(4)(a) and (b) and Abey C in T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd, that service Mrs Marney accrued prior to taking up a position with Croucher was recognised for LSL accrual purposes.

 

[108] In Scott Andrew Elkin v Barminco Pty Ltd at paragraph 41, it states:

"What does transfer to Barminco is an obligation to recognize previous service... "

[109] Tempo Services argued that:

"... In our submission ... we would argue that Commissioner Abey wrongly sought to distinguish the decision of Commissioner Gozzi in Croucher on the basis that, ..." ²⁵

[110] And:

"The applicant in Croucher did not have sufficient continuous service for a pro rata entitlement at the time of the final deemed transmission. As such the questions before Commissioner Gozzi were different to the questions in the instant case." ²⁶

[111] I do not accept Tempo Services argument, t. The attainment of the basic seven years' service is a hurdle which must be cleared before LSL is recognised. In my view, Abey C was faithfully following the letter and intent of ss.8(2) and (3) of the LSL Act by illustrating the different circumstances in Scott Andrew Elkin v Barminco Pty Ltd to those of Croucher.

[112] T1840 of 1989, Lynette May Brennan v The Kingborough Nursing Home Pty Limited. In this application the business, as a whole, had been purchased over the years by a number of owners. In this instance the transmittee claimed impropriety on the part of a previous owner in that it had not granted LSL when it was due. The Commissioner deemed the transmittee liable for the totality of the LSL. It is important to note, other than for Mrs Brennan, LSL liability had been accrued for the other employees into a trust.

[113] In this case, there was an actual transmission of business. There had been a commercial contract between the transmittee and the transmittor, as is evidenced in the knowledge of the partial accrual of funds for LSL liabilities.

[114] The instant case, where the application of ss.12(4) is in contention, was not a matter raised in T2109.

[115] T2109 of 1989, The Kingborough Nursing Home - appeal against decision in matter T1840 of 1989. Mr Daly states:

"Now, it is my submission that section 12, particularly 12(4), provides the clearest possible answer, and if I could just pause for a moment, Commissioner? Section 12(4) has not been the subject of any consideration by this Commission other than in the case of Elkin. In the Full Bench decision that Mr Readett referred to you as authoritative, there is not a mention of it." ²⁷

[116] And further:

"It has not been considered by the Commission. There is no indication that that issue was put before the Commission at first instance and there is certainly no indication that it was before the Full Bench. So it doesn't bind you, it is a decision - it is an issue that was not before obviously either of those Tribunals." ²⁸

[117] I accept Mr Daly's reading of the Full Bench decision.

I accept Mr Daly's reading of the full bench decision.

[118] In T2109 of 1989, The Kingborough Nursing Home - appeal against decision in matter T1840 of 1989, all grounds of appeal were dismissed by the Full Bench.

[119] They were as follows - Ground 1:

"... Ebony Bay Pty Ltd had practicable opportunities to grant Mrs Brennan long service leave of 13 weeks and failed to do so. At the time that Kingborough Nursing Home Pty Ltd took over from Ebony Bay Pty Ltd., Ebony Bay Pty Ltd accordingly already committed a breach of the Long Service Leave Act and were liable to prosecution and liable to immediately give the Employee her long service leave."

[120] This was not an issue in the instant application.

[121] Ground 2:

"(ii) The words "period of employment" in Section 5(4) of the Act are to be interpreted strictly also. Applying the strict interpretation the period of employment of the Employee for the purposes of the Act expired at the time of her entitlement to long service leave accrued, ..."

[122] This was not an issue in the instant application.

[123] Ground 3:

"(iii) The term "business" in Section 5(4) of the Act does not apply to Corporations. Business is defined in Section 2 as including any trade, process, profession or occupation and any part thereof. In general terms the word business is not a term used to describe a Corporation. Section 5(5) of the Act applies to Corporations. However there is only deemed to be continuity of service where the Corporation accepting the transfer of employment is associated with the original Corporation. There is no association between Kingborough Nursing Home Pty Ltd and Ebony Bay Pty Ltd."

[124] This was not an issue in the instant application.

[125] Ground 4:

"(iv) The Commissioner erred in Law in not dismissing the Employee's claim against Kingborough Nursing Home Pty Ltd for long service leave."

[126] Again, this was not an issue in the instant application.

[127] I do not believe in this case I am bound by the Full Bench decision.

 

[128] The following six authorities have a similar structure, the issues are common and the outcomes are consistent:

T3881 of 1992, Mrs Patricia Colleen Stingle v David Ray Wagner & Mrs Vicki Mary Wagner trading as Fingal Hotel

T8443 of 1999, William George Smith v Bestpac Pastoral Pty Ltd ACN 007 092 926

T8444 of 1999, Barry James Downham v Bestpac Pastoral Pty Ltd ACN 007 092 926

T8520 of 1999, Mrs Glenda Patricia Slater v Brecaryan Pty Ltd ACN 009 549 375

T9639 of 2001, Lorraine Susan McDermott v John Robert Thomas Pty Ltd trading as Rutherglen Holiday Village

T10085 of 2002, Rina Howard v Silver Sands Services Pty Ltd, trading as Silver Sands Resort Hotel Motel

[129] The important element to note is, each succession of business transmittal was of a commercial nature, they were actual transmissions, not deemed. As such, as illustrated in The Kingborough Nursing Home case, the liabilities taken on by the transmittee should have been dealt with in the commercial negotiations.

"MR READETT: I was informed by Mr Brotherson, representing the Kingborough Nursing Home Pty Limited that whilst they conceded that Mrs Brennan had the requisite period of service to satisfy the requirements for a full entitlement of long service leave, they were only prepared to pay the proportionate amount of that entitlement which she served in their employ and I can only take it from the employee's group certificate that that means from 13 April to 17 April 1988.

Mr Brotherson said that it was his client's view:-

"...that they should not be required to pay the balance of the entitlement which is by far the substantial amount of the entitlement which was served with previous owners of the Sunnyside Nursing Home.

They have taken steps to contact the previous owners and suggest that they should make contributions along that basis and that request has been denied.

My client is in a position where, at the time that the business was purchased and moved down to Kingborough, long service leave entitlement were paid into a trust account for a number of employees who had achieved pro rata entitlements or full entitlements.

Mrs Brennan was not on that list and therefore, the owners of the Kingborough Nursing Home face a substantial cost which was not taken into account at the time of the sale." ²⁹

[130] Unlike Tempo Services who, in the reference to T10085 of 2002, Rina Howard v Silver Sands Services Pty Ltd, trading as Silver Sands Resort Hotel Motel, suggested:

"... Against that absolutely consistent background Commissioner Abey was required to determine the matter again in Elkin v Barminco on 19 July 2002 and that is T9906 of 2002." ³⁰

[131] I do not see the circumstances in this authority at all reflect "absolute consistent background" to either the instant application, or T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd, for the reasons I have outlined earlier.

[132] T9238 of 2000, The Australian Workers' Union, Tasmania Branch v Macmahon Underground Pty Ltd. This case had a similar situation to the instant application in that, a contract was lost exposing the transmittor's employees to loss of employment. Although this case revolves around the payment of redundancy for employees where their employment ceased with the transmittor and re-commenced with the transmittee, the principal is the same as the instant application.

[133] The findings of Imlach C adjudge the transmittor to be liable for redundancy. However, and more to the point of the instant application, the Commissioner found the employment of the employees to have been terminated by the transmittor. Although not part of Imlach C's findings, Macmahon's, the transmittor, saw fit, albeit "under duress" to honour the outgoing employee's LSL.

"... There was an annual leave payout, sick leave credits were lost and it appears pro rata long service leave entitlements were only paid out by the Company (to whomever) under duress at the eleventh hour. ..."

CHALLENGE TO ABEY C'S FINDINGS IN MATTER T9906 OF 2002, SCOTT ANDREW ELKIN v BARMINCO PTY LTD

[134] I draw now to the decision of Abey C in matter T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd. I signalled to the parties I would make reference to this authority in my consideration of the instant application. Not surprisingly, Mr Readett focused much of his argument on, in his view, the errors made by Abey C in coming to the conclusions he did.

[135] I have already rejected Mr Readett's view that s.5(4) of the LSL Act is disjunctive.

and as such supports the claim of no termination therefore no entitlement to LSL.

[136] He further argued:

"... Now, with great respect to the Commissioner that deals with subsection (b) of section 5 subsection (4), but completely ignores 5(4)(a). Interpreting the matter as Commissioner Gozzi [ABEY] did, in our respectful submission, render section 5(4)(a) entirely meaningless. That is of fundamental importance in our submission. It is only by ignoring 5(4)(a) that the main argument relied upon by Commissioner Gozzi [ABEY] to support his interpretation arises." ³¹

[137] Abey C, in my view, did consider both s.5(4)(a) and (b) in his decision as outlined earlier.

[138] Mr Readett next expressed his interpretation and interaction between s.12(4) and s.5(4)(a) in a bid to show the employment of the named employees could not have been terminated:

"Commissioner Gozzi [ABEY] argues that 12(4) quite clearly states that the leave is deemed to commence at the date of termination. What section 5(4)(a) provides is of course that the employment is deemed not to have been terminated, so that the operation of 12(4) does not arise." ... ³²

[139] I reject this argument. The subsection does not say "employment is deemed not to have been terminated" It says " continuity of employment ... shall be deemed not to have been broken ..." The distinction is evident. For the purposes of the LSL Act with regards to continuity of service, a fiction has been created to prevent the employee from being disadvantaged.

[140] Mr Readett argues, Abey C was not warranted in drawing a distinction between "Transmission" and "Deemed Transmission". As I indicated earlier, I reject this notion. In the earlier discussion on the deeming provision, the distinction is quite clear. It is appropriate in the instant application, as with T9906 of 2002, Scott Andrew Elkin v Barminco Pty Ltd, we do draw that distinction.

[141] Mr Readett suggests Abey C's decision would give unfair benefit to those whose employment had been terminated over those whose employment "simply continued" with the transmittor. His argument being, those whose employment had been transmitted would gain a windfall lump-sum payment and still draw wages from the transmittee.

[142] In my view, this is an irrelevant argument. Whether the employees take time off work to expend their entitlement or chose to become re-employed is not a matter for our consideration.

. The issue does not impact on the instant application since none of the past Tempo Services employees employed at the University up until 31 December 2004 had their employment "simply continued".

[143] Mr Readett outlined a situation:

"... The other scenario that is simply not dealt with in Commissioner Gozzi's [ABEY] determination is the situation where the employee does not make a claim against the transmittor business ... In that situation, that I pose rhetorically, is the subsequent employer entitled to a credit for what should have been paid by the former employer or only for what was actually paid? ..."³³

[144] This scenario was not raised in Scott Andrew Elkin v Barminco Pty Ltd and is not raised in the instant application. I chose not to commment.

[145] In summary, I conclude the employment of the named employees was terminated by Tempo Services on or about 31 December 2004. As a consequence, I find that Tempo Services are liable for the payment of LSL and pro rata LSL accrued by the named employees up to and including 31 December 2004.

 

 

 

ORDER

Pursuant to section 31(1) of the Industrial Relations Act 1984, I hereby order that Tempo Services Limited, ABN 87 001 827 041 pay to:

(1) Glenda Cowen

(2) Davis Despard
Rodney Graham
Jan Voss
Lyn Davie
Kaye Bailey
Sharon Cane
Christine Myers
Kerry Bowerman
Debbie Carpenter
Kaye Dazza
Pamela Clark
Mary Simpson
Linda Clark

James P McAlpine
COMMISSIONER

Appearances:
Mr Peter Tullgren (2.2.05 and 5.4.05) for the Liquor, Hospitality and Miscellaneous Union - Tasmanian Branch
Mr Neil Readett (5.4.05), Clerk Walker, Lawyers, with Mr Neil Barwise (2.2.05 and 5.4.05) for Tempo Services Limited, ABN 87 001 827 041
Mr Michael F Daly (2.2.05 and 5.4.05), Barrister-at-Law, with Mr Wei Huang (2.2.05) for AM Services Pty Ltd
Mr Stuart Andrews (2.2.05) and Ms Robyn Trevaskis (5.4.05) intervening on behalf of the University of Tasmania

Date and place of hearing:
2005
February 2
April 5
Hobart

1 Exhibit A.2
2 Transcript, para 227
3 Transcript, paras 228 to 229
4 Exhibit R.3
5 Transcript, para 365
6 Transcript, para 367
7 Exhibit R.2
8 Transcript, para 368
9 Transcript, para 252
10 Exhibit R.1
11 Exhibit R.1
12 Transcript, para 339
13 Transcript, para 340
14 Transcript, para 404
15 Transcript, para 411
16 Transcript, paras 421 to 422
17 Transcript, para 424
18 Transcript, paras 442 to 444
19 Transcript, paras 460 to 465
20 Transcript, para 480
21 Transcript, para 492
22 Transcript, para 404
23 Transcript, para 486
24 Exhibit R.1
25 Transcript, para 322
26 Transcript, para 323
27 Transcript, para 442
28 Transcript, para 443
29 Transcript, para 297
30 Transcript, para 322
31 Transcript, para 328
32 Transcript, para 329
33 Transcript, para 335