T11109
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Aquatas Pty Ltd and Gregory Riley
Appeal against a decision handed down by Commissioner Abey arising out of T10796 of 2003 - Appeal dismissed - Order varied REASONS FOR DECISION [1] In matter T10796 of 2003, which was an application pursuant to s.29(1A) of the Industrial Relations Act, 1984 (the Act), Commissioner Abey determined that Aquatas Pty Ltd (the respondent in the proceedings below) pay Gregory Colin Riley (the applicant in the proceedings below) an amount of twenty four thousand, eight hundred and ten dollars ($24,810.00) "by way of a redundancy payment." [2] An appeal was lodged by Aquatas Pty Ltd (the appellant) against the order of the Commissioner. [3] In considering an appeal the Commission relies on the principles established in the decision of the High Court in House v The King (1936) [55 CLR 499, at 504-505 per Dixon, Evatt and McTiernan] which provides:
Background [4] The respondent to this appeal, Mr Riley, was employed by the appellant from August 1989 to the end of March 2003. He held a number of positions with the appellant and in 1999 signed an employment contract which provided six months notice in the event of termination, "such as redundancy." [5] In October 2002, Mr Riley was advised that his position was to be made redundant. On 21 November 2002, he was provided with written notice informing him that his employment would "cease as of 21 May 2003" and provided him with his six months notice as found in his employment contract. [6] On 21 February 2003, Mr Riley was told he would finish on 28 February 2003, Mr Riley elected to take four weeks long service leave and effectively "severed ties with Aquatas at the end of March, 2003." [7] The claim for determination before the Commissioner was for an entitlement to severance pay in respect to termination of employment due to redundancy. [8] Commissioner Abey summarised the positions of the parties in the following terms:
Appeal Ground 1 [9] Commissioner Abey erred in law in finding that it was not open for Aquatas to convert a portion of the period of notice pursuant to the contract of employment to a redundancy payment. [10] Commissioner Abey found that " ... the contract clearly allows the employer to convert part or all of the six months notice to a payment in lieu", but said that "It is simply not open however, for the employer to convert a component of a quite explicit period of notice to a redundancy payment." 2 [11] It was submitted by the appellant that the Commissioner had erred at law in so finding and that payments designated as reasonable notice and a sum for redundancy are able to be `set-off' one against the other, and accordingly it was open to Aquatas to convert a portion of the notice period to a redundancy payment [12] The appellant relied on the findings of the Supreme Court of Western Australia - Court of Appeal in Dellys v Elderslie Finance Corporation Ltd [2002] WASCA 161 (Dellys) where the Bench commented:
[13] The respondent to the appeal submitted that the Commissioner in the proceedings below was required to determine two main issues, being: 1. What was an appropriate period of notice. 2. What (if any) was an appropriate redundancy payment. [14] It was noted that the Commissioner had no power to enforce the agreement between the appellant and Mr Riley but was able to take into account the terms of the agreement when considering the claim before him. [15] The respondent to the appeal submitted that it was open to the appellant to immediately terminate Mr Riley's employment and pay him the notice prescribed in his employment contract. The respondent referred to a decision of a Full Bench of the Commission in Hughes v Tasman Group Services Pty Ltd trading as Longford Meat Works [T10741 and T10662 of 2003] (Hughes) where the bench upheld a decision to pay reasonable notice and a redundancy payment. [16] It was argued by the respondent that Dellys was dealing with a contractual issue and whether the right to reasonable notice should be implied into the contract of service and has little relevance to the matter for determination before the Commissioner at first instant. The respondent argued that the Commissioner properly made provision for both notice and redundancy pay. [17] We agree with the submission of the respondent that the circumstances in Dellys are different to those the subject of this appeal. [18] Mr Riley was entitled to six months notice of termination by reference to his employment contract. The giving of that period of notice was something which the contract required the appellant to provide, the provision "appears to be grafted onto a pre existing termination of Employment clause in the employment contract." The six months notice could be worked or paid in lieu and that was a choice open to the parties. The appellant chose to give Mr Riley six months notice by letter dated 21 November, 2002. [19] We are of the view that the appellant is not able at any time during that six month period to decide that some portion of that period of notice, to which Mr Riley was contractually entitled, should be considered as a redundancy payment. The payment made was an advance payment of wages to which Mr Riley was entitled and cannot be described as being anything other than wages paid in advance. [20] We reject appeal ground 1. Appeal ground 2 [21] Commissioner Abey erred in law in finding that the only component of the payment made to Mr Riley that could be considered a redundancy payment were payments made after 21 May 2003. [22] Commissioner Abey found that it was not open to Aquatas to convert a portion of the notice period to a redundancy payment, so it followed that he concluded that any payment which related to the period after 21 May 2003, could be considered as a redundancy entitlement, that being the date on which Mr Riley's written notice period expired. [23] This ground of appeal follows on from appeal ground 1 where the appellant argued that the Commissioner had erred by finding that it was not open to Aquatas to convert a portion of the notice period to redundancy pay. [24] The respondent to the appeal submitted that as the Commissioner had found that no portion of the notice should be considered as redundancy pay it was appropriate for him to have determined that the payment made for the period after 21 May 2003, was a redundancy payment was correct. [25] We reject this ground of appeal. We have already upheld the Commissioner's finding that the appellant was not able to designate portion of the notice to which Mr Riley had an entitlement as a redundancy payment so it would follow that any payment made after the expiry date of the six month notice period would be considered as an ex-gratia payment which could be deemed a redundancy payment. Appeal ground 3 [26] Commissioner Abey failed to give any sufficient weight to the fact that Mr Riley received payment of four months pay as a redundancy. [27] A payment equivalent to four months salary was made to Mr Riley which the appellant claimed to have been a redundancy payment. It was argued that the Commissioner did not place sufficient weight on this payment when considering the claim by the respondent. [28] The respondent submitted that Mr Riley did not accept the payment as a redundancy and the Commissioner found accordingly. Further, it was argued that it was not up to the appellant to determine how monies paid were to be classified. The four months payment was part of the six months notice entitlement. [29] We reject appeal ground 3. Our reasons for rejecting appeal grounds 1 and 2 are relevant to this ground and we do not need to address them further. Appeal ground 4 [30] Commissioner Abey failed to give sufficient weight to the period of notice of redundancy of approximately seven months provided to Mr Riley. [31] It was argued that the Commissioner failed to give sufficient weight to the period of notice given to Mr Riley and that it was accepted by the parties that in fact he had been given seven months notice. [32] The respondent argued that the contract of employment required six months notice and the advice given in October, 2002, was not proper notice but that Mr Riley was merely informed that his position would become redundant but he was not told when or given a specific period of notice. [33] There does not appear to be any acceptance, as submitted by the appellant, that Mr Riley had been provided with seven months notice. We disagree that Mr Riley was given seven months notice, his written notice, which included a date of termination, was not provided until 21 November, 2002. [34] Proper notice requires an employee to be informed of the period of that notice and a specific date of termination. Advice that an employee's position will become redundant is not notice of termination. The evidence of Mr Broad was that he advised Mr Riley of "... the fact that his position would no longer be a viable position into the future, he would be maintained until early 2003...", it may be that Mr Broad thought he was giving Mr Riley notice but he was doing no more than informing him that his position would be no longer viable at some future date. Mr Riley however testified that he was told he would "be finishing within a month - at the end of the month" but again no written notice or specific termination date was provided. [35] The employment contract itself requires "six months written notice." Accordingly the ground of appeal could not succeed by reference to the terms of the appellant's contract with Mr Riley. [36] We reject appeal ground 4. Appeal ground 5 [37] Commissioner Abey erred in finding that Aquatas could not rely upon a long period of notice to offset a redundancy claim. [38] It was argued by the appellant that the generous period of notice should have been offset against any claim for redundancy and that the Commissioner erred in not making such allowance. [39] The period of notice provided to Mr Riley nominated a finishing date of 21 May 2003, that notice did not contemplate or offer any payment in lieu and Mr Riley, it would seem, was expecting to work his period of notice. The contract did not provide any entitlement to a redundancy payment but did provide an entitlement for six months notice of termination, there is no reason why that entitlement should have been offset against a non existent entitlement for redundancy. If Mr Riley had worked his six months of notice it would be difficult to imagine any reason how that time worked could be considered a redundancy payment. The fact that the appellant elected to inform Mr Riley that there was no requirement for him to attend for work some three months after being given his notice was a decision of the appellant, it did not change the entitlement to the period of notice. [40] The Commissioner took into account all aspects of the application before him, including the period of notice and determined a redundancy payment of 1.75 weeks per year of service. He was entitled to do so and we detect no error. [41] We reject appeal ground 5. [42] In respect to our findings for appeal grounds 1 to 5 we note the following:
Appeal ground 6 [43] Commissioner Abey erred in law by failing to follow the authority of Lindgren J in Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193. [44] This ground of appeal was not pursued. [45] We are of the view that appeal grounds 7 to 14 are misconceived. Mr Riley was seeking the Commission exercise its discretion and grant him a severance payment following his position being made redundant. He was not seeking compensation for an alleged unfair termination. The appeal grounds in general terms mostly address the issues the Commission is required to take into account in considering a claim for unfair dismissal. Nevertheless we have addressed all of the grounds of appeal although we consider it unlikely that we need to do so. Appeal ground 7 [46] Commissioner Abey erred in law in failing to give adequate reasons why Aquatas were liable to compensate Mr Riley for the extent of the loss suffered by him following the termination of his employment. [47] The appellant claimed that the Commissioner had erred by failing to provide adequate reasons as to why Mr Riley was compensated for any loss suffered by him following his termination. [48] The respondent submitted that paragraphs 86 to 91 of the Commissioner's decision summarise the factors taken into account by the Commissioner as his assessment of the loss to Mr Riley. [49] The Commissioner has summarised in his decision the factors he considered contributed to the loss experienced by Mr Riley. As this ground of appeal is similar to appeal ground 16 we address it more fully later in this decision. However we note that the Commissioner was not assessing any loss to Mr Riley for the purpose of compensating him for such loss, he was taking into account all of the circumstances of the termination in respect to the claim for a redundancy payment. [50] We reject appeal ground 7. Appeal ground 8. [51] Commissioner Abey erred in finding that the eight hundred and seventy four hours of accumulated sick leave entitlements foregone by Mr Riley amounted to a loss upon termination of his employment. [52] Mr Riley had an entitlement to some 874 hours of untaken sick leave which the Commissioner took into account as one of the factors in assessing the loss experienced by Mr Riley when terminated. [53] The accumulated sick leave was one of a number of factors taken into account by the Commissioner, the respondent argued that sick leave was a non-transferable credit and as such was able to be taken into account when considering a claim for a redundancy payment. [54] The Australian Conciliation and Arbitration Commission (the Australian Commission) in the Termination Change and Redundancy case (the Federal TCR case) in 1984 said:
[55] We detect no error by the Commissioner in considering Mr Riley's accumulated sick leave as a factor. To do so is in accord with the TCR decision. [56] We reject appeal ground 8. Appeal ground 9 [57] Commissioner Abey erred in finding that Mr Riley suffered a loss due to two months unemployment prior to his contract position commencing in Whyalla when Aquatas in fact paid him his full entitlements during this period. [58] The Commissioner has referred to the two month period of unemployment between Mr Riley ceasing work for the appellant and commencing work in Whyalla and has recorded that " ... notionally, at least, he was still being paid by Aquatas at the time." [59] The respondent to the appeal submitted that had the appellant not given Mr Riley only seven days notice that he would no longer be required to attend for work he may have been able to arrange his affairs more effectively and would not have been placed in the circumstance of being without employment for the two month period. [60] It is one of a number of factors summarised by the Commissioner and he has noted that Mr Riley was being paid by the appellant as well as being in new employment. Mr Riley was no doubt `inconvenienced' by the appellant's decision to terminate his services some three months earlier than originally advised. We detect no error. [61] We reject appeal ground 9. Appeal ground 10 [62] Commissioner Abey in finding that Mr Riley's one month of unemployment between his contract position in Whyalla ceasing and his new position commencing in December 2003 is a loss to which Aquatas' obligations to compensate Mr Riley extends. [63] The Commissioner has included in his summary the period of one month when Mr Riley was unemployed at the end of his employment in Whyalla and commencing new employment in Tasmania in December, 2003. The appellant claims that there was no employment relationship between it and Mr Riley at that time and that the Commissioner erred by including the period. [64] The respondent argued that the period of unemployment referred to was a consequence of his termination by the appellant and it was proper for the Commissioner to make some reference to that period in his summary. [65] The position taken by Mr Riley in Whyalla was a consequence of his termination by the appellant and the period referred to was some time after the employment relationship ceased. The submission of the appellant infers that the Commissioner found that it is a loss for which the appellant must compensate Mr Riley. The Commissioner did little more than summarise a number of factors which he considered to be the extent of Mr Riley's loss due to the manner in which the termination was effected. [66] The period was well outside the employment relationship, nevertheless it was a consequence of the termination and more than likely a result of the appellant changing Mr Riley's date of termination with only seven days notice. This action by the appellant could well have caused some `hardship' to Mr Riley inasmuch as he was expecting his final day at work to be 21 May 2003, not 28 February, 2003. [67] Whether it should or should not have been a factor for consideration is not fatal to the Commissioner's decision. [68] We reject appeal ground 10. Appeal ground 11 [69] Commissioner Abey erred in finding that the costs maintaining accommodation in Tasmania is a loss that Aquatas are obliged to compensate Mr Riley for when Mr Riley himself is in a position to reduce the burden of this loss, and failed to do so. [70] This appeal ground considers another factor summarised by the Commissioner. [71] We think there is nothing inappropriate and we detect no error in the Commissioner referring to this factor, the need for Mr Riley to maintain the accommodation was a consequence of his termination. [72] We reject appeal ground 11. Appeal ground 12 [73] Commissioner Abey erred in finding that the dislocative impact of Mr Riley and his wife in re-locating to Whyalla is a loss that Aquatas is liable to compensate Mr Riley for. [74] The impact of re-locating to Whyalla was another consequence of the termination. The appellant argued that it was not a loss for which it should be liable to compensate Mr Riley. [75] The Commissioner did not determine that the appellant should compensate Mr Riley for the relocation, it was one of a number of factors he summarised as being the extent of Mr Riley's loss due to his termination. [76] We are of the view that the need to relocate was a result of the termination and as such we detect no error in the Commission recording it in the manner that he did. [77] We reject appeal ground 12. Appeal ground 13 [78] Commissioner Abey erred in failing to recognise and acknowledge that Mr Riley's position in Whyalla was more financially rewarding than his former position at Aquatas when making the assessment of an appropriate redundancy payment. [79] The appellant claimed that the Commissioner failed to acknowledge the position Mr Riley held in Whyalla as being more financially rewarding than his former position and as such should have been taken into account when assessing any entitlement. [80] It is argued by the respondent that the position is not more financially rewarding inasmuch as the monetary amount may be in excess of what was earned at Aquatas but that payment should be discounted by a reduction in or removal of a number of other conditions previously enjoyed. [81] The Whyalla position was a short term contracted position for six months with no tenure beyond that period. There were no provisions for any kind of leave. The monetary figure was more than he received with the appellant but by considering that figure only, fails to take into account the loss of previously enjoyed conditions and loss of tenure. [82] It is arguable whether Mr Riley was better off financially in his new employment, however this is a claim for a redundancy payment not a claim for compensation alleging unfair termination where the matter of earnings since termination would be a consideration. [83] We reject appeal ground 13. Appeal ground 14 [84] Commissioner Abey erred in finding that Mr Riley had fully satisfied the onus falling to him to mitigate his loss when Mr Riley:
to alleviate his loss. [85] The Commissioner found that Mr Riley had fully satisfied the onus falling to him to mitigate his loss on termination; this was an error according to the appellant. It was submitted that he had failed to pursue opportunities within Aquatas, although the Commissioner acknowledged the assistance provided by Aquatas in relation to the position on King Island. [86] The respondent argued that the finding of the Commissioner was open to him on the evidence and that Mr Riley had found a position without any assistance from the appellant within two months of termination. [87] Again this is generally a matter for consideration for a claim for compensation for alleged unfair termination. Nevertheless we are satisfied that the Commissioner did take into account the effort of the appellant in finding alternative employment; he has considered the issue and applied weight in accordance with the evidence before him. We note that the position on King Island was not offered to Mr Riley but that he was one of a number of applicants to apply for the position. It would seem that the only assistance the appellant afforded Mr Riley was to facilitate travel for Mr Riley and his wife to King Island for an interview. The details of the King Island position were not discussed before the Commissioner nor it would appear were they discussed with Mr Riley. [88] We reject appeal ground 14. Appeal ground 15 [89] Commissioner Abey erred in finding that a reduction to 0.25 weeks of salary for each year of completed service is an adequate reduction in redundancy payment in light of: (a) the efforts Aquatas went to in order to reduce the hardship faced by Mr Riley; (b) the actual loss suffered by Mr Riley was minimal, if in fact, any loss arose; (c) the period of notice provided by Aquatas was longer than the norm in relation to applications before the Tasmanian Industrial Commission; and (d) the payment of four months pay paid to Mr Riley as redundancy. [90] It was submitted by the appellant that the Commissioner erred in finding that a reduction of 0.25 weeks of salary per year in redundancy payment was adequate considering the evidence and the effect of the termination on Mr Riley. [91] The respondent submitted that each case is considered on its merits and on a case by case basis and it is only where the Full Bench identifies a clear error should it intervene. In respect to the aspects referred to by the appellant it was submitted that:
There was no error. [92] The determination of an entitlement to redundancy payment is a discretion and the Commissioner has exercised his discretion by taking into account all of the matters raised before him during the proceedings. He has applied the principles espoused in the Full Bench decision in Fosseys (Australia) Pty Ltd v Australian, Liquor, Hospitality and Miscellaneous Workers Union - Tasmanian Branch and the Shop Distributive and Allied Employees Association, Tasmanian Branch [T7168 of 1997] (Fosseys) and accordingly we find no error. It was found in Fosseys that the Commission adopts a "case by case approach to redundancy applications." Decisions of the Commission in respect to claims for a redundancy payment are confined to their own specific factual matrix. [93] We reject appeal ground 15. Appeal ground 16. [94] Commissioner Abey erred in failing to provide the methodology of his assessment of an appropriate redundancy payment. [95] The Commissioner said that "Determining a redundancy claim is not a precise science and there is invariably a range of factors to be taken into account in the mix."3 And further he said: " ... the assessment of an appropriate redundancy payment involves an assessment of a range of factors in a mix, rather than a simplistic arithmetic assessment of economic loss."4 [96] The appellant relied on the formula prescribed in Shorten v Australia Meat Holdings (1996) 70 IR 360 (Shorten) and whilst recognising that Shorten was not considering a redundancy entitlement, it was claimed that there is an analogy between a claim for unfair termination and redundancy. [97] Further the appellant said that in Sprigg v Paul's Licensed Festival Supermarket [Print R0235] (Sprigg) the Australian Commission commented:
[98] The respondent argued that the determination of the Commissioner was in accord with the decisions of the Commission in Hughes and Fosseys. Matters are to be determined on a case by case basis, a determination is an exercise of discretion and the Commission's power is to be exercised according to equity, good conscience and the merits of the case. [99] The appellant seems to have confused the exercise of a discretion to award a redundancy payment on a case by case basis with the requirement to provide some formulaic process when awarding compensation in respect to a successful claim for unfair termination. The Commissioner has explained that the methodology is inexact but has described all of the matters he has taken into account. We are satisfied he made no error and has exercised his discretion with fairness, equity and good conscience. [100] We reject appeal ground 16. Appeal ground 17. [101] Commissioner Abey erred in giving weight to an irrelevant matter, being Mr Riley's record of service, when such service was not relevant to the assessment of an appropriate redundancy payment." [102] The appellant argued that the Commissioner gave weight to Mr Riley's record of service which was not relevant to an assessment of a redundancy entitlement. [103] This ground of appeal, submitted the respondent, ignored findings of the Commission in Fosseys and Hughes where reference to length of service and good service were relied upon in assessing an entitlement for redundancy purposes. The respondent said that the Commissioner's approach was appropriate and in accord with Commission practice. [104] Length of service is an appropriate consideration for redundancy, likewise the work record of an employee can be taken into account. In Fosseys the Commission said:
[105] The Standards of General Application of the ILO Convention at Article 12 - Severance Allowance and Other Income Protection of the Convention provides:
[106] We record the comments of the Full Bench in the matter of an application by the Tasmanian Trades and Labor Council to vary the Retail Trades Award re job protection, termination and change [T125 of 1985] as to the approach to be adopted by this Commission in respect to claims for severance pay as a result of redundancy:
And further:
[107] We agree that notice is a relevant factor in considering a claim for redundancy pay, in this matter Mr Riley was provided written notice of six months as prescribed in his contract of employment, however some three months into that period of notice the appellant informed him that in seven days time his services were no longer required. [108] We reject appeal ground 17. [109] Other than his legal entitlement to six months notice, part of which was worked part which was not, the appellant has represented as part of the period of notice the period Mr Riley took as long service leave. We concede the matter was not dealt with before the Commissioner but it was raised by the Full Bench on appeal. We note also that the information provided to the Commissioner in respect to Mr Riley's entitlements is somewhat confusing however we are satisfied that Mr Riley is entitled to payment for his four weeks of long service leave taken from 28 February 2003 being of the view that the appellant has incorrectly represented that entitlement as part of his payment for his period of notice. The Commissioner should only have deducted one weeks pay from his award of redundancy. [110] We confirm the decision of Commissioner Abey but in light of our findings above we vary his order to include a further four weeks pay to which Mr Riley was entitled. [111] Accordingly we determine, pursuant to s.71(13)(a) of the Act, to vary the order of Commissioner Abey, arising out of application T10796 of 2003, by deleting all words appearing after "an amount of" and substituting in lieu thereof the following:- "thirty thousand four hundred and one dollars and twenty cents [$30,401.20] by way of a redundancy payment, such payment is to be made not later than 5.00pm on 5 February 2004".
P L Leary Appearances: Date and place of hearing: 1 Original decision para 13-14 |