T12125
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Tempo Services Limited and AM Services Pty Ltd and Liquor, Hospitality and Miscellaneous Union, Tasmanian Branch
Appeal against a decision handed down by Commissioner McAlpine arising out of T11893 of 2005 - Appeal rejected - Decision and Order confirmed REASONS FOR DECISION [1] In a decision issued by Commissioner McAlpine in Matter T11893 of 2005 he determined that a number of former employees of Tempo Services Limited (the appellant), represented by the Liquor, Hospitality and Miscellaneous Union (the Union), had an entitlement to long service leave. Two named employees had an entitlement in recognition of their 15 or more years of continuous service with the appellant and a further 13 employees, who had completed seven years but not 15 years service with the appellant, had accrued a pro-rata entitlement. We summarise the issues [2] The appellant lost a contract to AM Services for cleaning services at the University. The commercial contract stipulated that AM Services employ those employees of the appellant it determined it would require to perform the work. The employees were advised, by the appellant, of the loss of contract and informed that 31 December, 2004, would, at that stage, be their last day of work with the appellant. The date remained unchanged and the terminations were effected. The letter did not offer continuing employment with the appellant after 31 December, 2004, nor did it inform the employees that employment would be offered with the new contractor. [3] The employees were paid all entitlements, other than any long service leave entitlements, that claim being the subject of the dispute heard by the Commissioner below. Application of the Long service Leave Act [4] S.8(3)(d) of the LSL Act prescribes the entitlement due to an employee "whose employment is terminated by his employer for any reason other than the serious and wilful misconduct of the employee." [5] S.2(2) protects the continuity of service for employees whose employment is terminated but who may, not later than the expiration of a period of 2 months, be re-employed in or about that same place of business by some other employer. S.2(2) cannot be invoked unless there is a termination of employment and applies, in respect to continuity of service, to those employees of the appellant who accepted employment with AM Services and continued to work at the University. That protection is invoked by deeming the circumstances to be a transmission of business. S.5(4) prescribes the entitlement and recognizes continuity of employment when a transmission of business is effected. [6] S.12(4) prescribes that when a termination takes place the employee is deemed to have commenced leave and is entitled to be paid accordingly for that leave. Whether the employee takes the leave or takes payment for that accrued leave is a decision for the employee. The matter before the Commissioner [7] Before the Commissioner the appellant disputed that the named employees had been terminated claiming that they took up alternative employment with AM Services at their own volition. They were paid accumulated annual leave but the appellant disputed any entitlement to long service leave. [8] The employees were not offered employment by the appellant after 31 December, 2004. [9] The University and AM Services agreed with the Union that the appellant was liable for accrued long service entitlements or payment for long service leave to the named employees. [10] The grounds of appeal are as follow:
[11] The appellant did not address each of the grounds of appeal but dealt with all of the appeal grounds in one submission and we adopt the same approach. [12] The appellant submitted that there were four issues to be addressed, these were:
[13] We have considered the issues the appellant submitted required address in our resolution of the grounds of appeal. Were the employees terminated by the appellant? Submissions of the Appellant [14] The appellant argued that the employees were not terminated but left of their own accord. It submitted that employment with the appellant was consensually discharged and the employees took up employment with AM Services. The employees were each provided with a letter, signed by the Operations Manager, Tasmania, which said:
[15] It was argued by the appellant that the letters did not constitute notice of termination but was advice that the appellant did not have the University contract after 31 December, 2004. The appellant said that the letters should have been considered in the context of the contractual obligation on AM Services as the new contractor, to provide continuity of employment. [16] Further it was argued that the fact the appellant did not offer the employees any alternative employment was not a relevant consideration as the appellant was aware that the new contractor was obliged to offer the employees employment after 31 December, 2004. It said "...the action of each of the three players was dependant on the other. And we say that it is an unrealistic characterization of the whole transaction to see it as a termination of employment by the appellant."1 [17] In its written submission the appellant contends that it did not terminate the employment of the employees "for the purposes of the LSL Act." It said that the change of contract is a `deemed' transmission of business and as such the provisions of s.8(3)(d) of the LSL Act do not apply. Further it was submitted that to pay the employees a pro rata long service payment whilst they continued to be employed by the new contractor will put them in a "windfall position by receiving double remuneration to the extent of their entitlement. Rather than being provided with a period of leave they will be being paid double rates." [18] The appellant submitted that it is now "being emphatically said that where there is a transmission of business there is no payment of severance pay, and one of the key things in redundancy pay was to in fact address the loss of accrued credits like long service leave..."2 Further it was submitted that "...we don't say they get the money twice but they get their money earlier than they would otherwise be entitled..."3 [19] In arguing that there had been no termination of employment the appellant submitted that "...in a sense the word termination that is used in this, in sections 8.3 and 12.4 must be given sort of a shifting meaning rather than a strict meaning as to whether or not the employment was terminated."4 [20] Further it was submitted that "The real reason why their employment terminated was that they notified the incoming contractor under clause B(31) [of the commercial contract] that they wished to take up employment with it. There was no need in those circumstances for the appellant to terminate their employment. They terminated it themselves." Submissions of the Union (Second Respondent) [21] The Union submitted that the appellant had sought in its appeal to "...argue backwards from it sense of grievance as what the Act ought to provide rather than really look at the Act in its unadorned and obvious structure, and endeavour to ascertain from that where the legal liabilities fall."5 [22] In the hearing below the Union submitted that "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." [23] There has been no identification of any error by the Commissioner below, the Union said that the appellant had failed to identify any event or occurrence which has turned what is prima facie a termination of employment into something different. The Union submitted that there was no relationship between the University and the employees or between AM Services and the employees at the time of termination, likewise the employees were not obliged to accept any offer made by the new contractor and no benefit was conferred on those employees by the coming into existence of the contract between AM Services and the University. [24] Further the Union said that once it was determined that the employees were terminated by the appellant it was then necessary to apply the relevant provisions of the LSL Act. Submissions of AM Services (First Respondent) [25] AM Services submitted that the proposition of the appellant that there was no termination of employment could not be sustained and that the appellant's submissions were a contradiction. The letter from the appellant to its employees stated that (at this stage) the last day of work would be 31 December, 2004, and could not be construed as anything other than advice of termination. Further AM Services submitted that there was no evidence put to the Commissioner below that the employees were aware of the contractual arrangements between the three parties so the submission that "everybody knew what was required of everybody under the new contractual arrangements" was not the evidence before the Commissioner. Submissions of the University (Intervenor) [26] The University submitted that the terms of the contract between it and AM Services did not guarantee employment for all of those employees of the appellant. The Commissioner has recorded in his decision the submission of the University which states:
[27] The employment of the appellant's employees was subject to the requirements of AM Services so at the time of the employees being advised of their termination it was not known whether they would be offered employment with AM Services or not. It was also noted by AM Services that there was no suggestion that employees not engaged by AM Services would continue in employment with the appellant. Further, a transmission of business, in the usual sense, would result in employee entitlements being transferred to the new employer, in this case the appellant paid out all entitlements other than the disputed entitlement to long service leave. Findings [28] We reject the submission of the appellant that the Commissioner was required to consider the position of the three players in the matter, the appellant, the University and AM Services and take into account the contractual requirement of the University that AM Services offer employment to the employees of the appellant such that "there was a simultaneous discharge of employment with the appellant and the substitution of a new employment agreement" with AM Services7. [29] The Commissioner considered the content of the letters which were forwarded to the named employees by the appellant which said in part:
[30] He found at para 71 that:
[31] The letters did not contain any offer of ongoing employment with the appellant or any offer of employment with the new contractor. [32] The Commissioner found that the named employees had in fact been terminated by the appellant and as such were entitled to long service leave in accord with s.8(3)(d) of the LSL Act which provides an entitlement when:
[33] We agree with the finding of the Commissioner that the letters were notification of termination. It is generally accepted that for a termination to be effected a final working date is notified to an employee, in this case that was done and the employees were advised that they would receive "all entitlements...they are entitled to." In our view there could be no misunderstanding that the employment with the appellant was to cease on the prescribed day. We disagree with the submission of the appellant that the employment of the employees was "consensually discharged and they took up employment with ..." the new contractor.8 Likewise there was no contractual relationship between the appellant and AM Services such that could cause a transmission of business. [34] We find no error in the Commissioner's finding that the employees of the appellant were terminated by the appellant and reject the grounds of appeal. It is a curiosity that the appellant paid out pro rata annual leave to the employees on termination yet denies that termination. The construction of ss 2(2), 5(4), 8(3) and 12(4) of the LSL Act [35] Section 2(2) provides:
[36] Section 12(4) prescribes:
Submissions of the Appellant [37] The appellant submitted that the purpose of the LSL Act " ...is to provide a period of leave as a reward for an employee who has accumulated the relevant service. By various provisions the Act seeks to ensure that the basic leave entitlement is available notwithstanding changes to the identity of the employer, and breaks in the continuity of service which otherwise would lead to the loss of the entitlement. It also provides for the payment in lieu of the taking of the leave where the entitlement cannot be enjoyed." [38] Further it argued that in giving effect to the provisions of the LSL Act the Commission should have regard to its dominant purpose being to provide a period of leave for employees who achieve an entitlement. Accordingly s.12(4) provides for the taking of leave and the appellant argued that "It is not credible that they (the employees) could have said to the First Respondent, that, before, they commence their service, they needed to acquit the accrued or pro-rata leave that the loss of contract had triggered..." [39] The appellant said that "...the Act can be seen as providing for a period of leave for a person engaged in the same business even though the legal identity of the employer may have changed." It was submitted that s.2(2) of the LSL Act "is the critical provision in this proceeding." [40] The effect of the `change of contracts,' in the context of s.2(2) meant that there was no termination of employment by the appellant and no entitlement to long service leave for the employees. The appellant also argued that those organizations undertaking to tender for the University contract "ought to be held to have known of, and contracted within, the provisions of ss.5(4), 2(2) and 17 of the LSL Act."9 [41] The intent of the LSL Act is to provide leave rather than make a payment in lieu of that leave, albeit there exists provision to do so in a narrow range of circumstances, but not in the circumstance of this application.10 [42] In respect to s.12(4) it was submitted that "by reason of the provisions of 2(2) and 5(4) the provisions of 12(4) must be subordinate to, and read down by, the former position." [43] In discussing s.2(2) of the LSL Act the appellant submitted that "...ít is designed that where a person happens to be employed in a motel or some location, the business changes hands, they are still turning up there every day, but it is a different body corporate within two months of the changeover. And the provision provides that they are deemed to have been - the employment - the business is deemed to have been transmitted from the first employer to the second - it is a deemed transmission."11 [44] As such s.2(2) is the appropriate provision to be applied in this matter. The employees continued in the same location performing the same work for the University. The appellant submitted that s.2(2) provides for circumstances not covered by s.5(4) which prescribes:
(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." Submissions of the Union (Second respondent) [45] The Union argued that as the employees were terminated by the appellant, s.8(3)(d) applies which provides that "an employee whose employment is terminated by his employer for any reason other than the serious and wilful misconduct of the employee" has an entitlement to long service leave and continuity of service is recognised. [46] It was the Union's submission that in this case there was no transmission of business but a change of contract. Further it was submitted that the process to determine whether an entitlement to long service leave existed was a simple process. Once it was decided that a termination of employment had been effected it was then necessary to refer to the appropriate section of the LSL Act which in this case is s.8(3)(d). Submissions of AM Services (First respondent) [47] AM Services in general supported the submissions of the Union. It submitted that all that s.2(2) of the LSL Act does is deem a transmission of business under certain conditions and when those conditions have been met s.5(4) applies. Submissions of the University (Intervenor) [48] The University also supported the submissions of the Union and AM Services and noted that the appellant had not suggested that those employees not engaged by the new contractor would continue in employment with the appellant. That situation distinguishes this matter from the cases referred to by the appellant. It was also noted that had there been a transmission of business all of the employee entitlements would have transferred to the new employer, in this matter the appellant terminated the employees by paying out their entitlements (other than long service leave). Findings [49] We agree with the submission of the Union that the change of contract did not involve any "transfer, conveyance, assignment or succession, whether by agreement or operation of law" which could be identified as a transmission of the business of the appellant to the business of AM Services as prescribed by s.5(4) of the LSL Act. [50] It is our view that s.2(2), which is found in the definitions section of the LSL Act, does no more than prescribe, by a deeming provision, an entitlement to continuity of service for long service leave purposes under certain circumstances and provided certain conditions apply. It is not relevant to this matter as it is our view that a termination of employment was effected by the applicant and as such it is only necessary to consider s.8(3)(d). [51] In practical terms employees subject to s.2(2), could have their service with a number of employees count as continuous service for the purpose of long service leave entitlements. Where a termination of employment has been effected in accord with s.8(3)(d), and a payment made, such amount is to be deducted from any final payment. The provisions of the LSL Act do not create any double counting and as such appropriate administration and record keeping is required by employers and individual employees. This, it seems, although in a different context, has been acknowledged by the appellant who submitted that "...we don't say they get the money twice ..."12 [52] We reject the appellant's submissions claiming that the Commissioner has misapplied the provisions of the LSL Act. We detect no error and agree with the Commissioner's approach and findings. How does the construction of the relevant sections relate to the facts as found by the Commissioner below? [53] It is our view that the matter before the Commissioner was a much simpler exercise than the appellant suggests. We have agreed with the Commissioner that the employees' employment was terminated by the appellant therefore the only relevant and appropriate section of the LSL Act is s8(3)(d). [54] We reject the submission of the appellant that the dominant purpose of the LSL Act is to provide a period of leave; the LSL Act provides the benefit of long service leave and provides, in a number of circumstances, that payment in lieu of the leave can be made. [55] The Commissioner noted at paragraph 81 the submission of the University, with which he agreed, that:
[56] We also agree with that submission and reject the argument of the appellant that any one particular section of the legislation should be given `primacy.' [57] The matter in dispute which was argued before the Commissioner below was whether those employees who were terminated by the appellant and accepted an offer of employment from AM Services had an entitlement at the time of termination to continuity of service for the purpose of long service leave or to a period of long service leave. Relevant cases [58] The appellant referred to a decision of the Federal Court in Ronald Tortolani & Ors v Group 4 Securitas [1997] 987 FCA (19 September, 1997) (Tortolani) which, it said, was a claim for severance payments for employees involved in similar circumstances relating to a change of contract. We do not agree that any findings in that decision are relevant to this application, the decision in Tortolani relied on different legislation, on provisions found in an award of the Australian Industrial Relations Commission (AIRC) and entitlements to severance payments. [59] In respect to whether a termination has taken place or not the decision in Tortolani quotes Moore J in Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 at 160, (Rheinberger) where he says: "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." The letters to the employees advising them of a finishing date of 31 December, 2004 would satisfy the view expressed in Rheinberger. [60] This application relates to the provisions of the LSL Act and the particular circumstances surrounding the University contract and does not consider severance payments or award entitlements. [61] In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v United Milk Tasmania Ltd [Print S7351] the Full Bench upheld a decision to reject payment of redundancy entitlements where there had been a transmission of business. That matter also relied on the provisions of an award and agreement of the AIRC. The circumstances of that matter are distinguishable and have little bearing on the application before the Commissioner. [62] The decision of the High Court in Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9 (9 March, 2005) is an appeal from a decision of the Federal Court and deals with sections of the Workplace Relations Act, 1996, and in particular questions relating to the transmission of business provisions. The matter we are required to determine deals with sections of the LSL Act in Tasmania. The appellant conceded that the High Court had found that there needed to be a nexus between the transmittor and the transmittee as a matter of law, and that in this case no such nexus existed, but submitted the s.2(2) deemed such nexus by deeming the action to be a transmission of business. S.2(2) deems a transmission of business for the purpose of continuity of service, in this matter we are not only concerned with s.2(2) but with s.8(3)(d) which is enacted due to the termination of employment by the appellant. [63] In Amcor Limited v Construction, Forestry, Mining and Energy Union; Minister for Employment and Workplace Relations [2005] HCA 10 (9 March 2005) the High Court was considering a decision of the Federal Court about a claim for redundancy entitlements following a transmission of business. Again, the subject matter of the decision is not relevant to the matter before us. It may well be that comments found in the decisions can be relied upon but they need to be considered in the context of the specifics of the matter being determined. [64] The matter we are considering is about long service leave entitlements provided by legislation, not redundancy entitlements prescribed in an agreement or an award of the AIRC. The appellant relied on its argument that there was a similarity of circumstance and asks why should employees, at a change of contract, be entitled to pro-rata long service leave when the purpose of the LSL Act is to give leave, not payment. We reject the argument that the purpose of the LSL Act is only to provide leave, it provides a benefit for which payment can be made under certain circumstances. [65] The appellant referred to a number of decisions of single members of this Commission. In Scott Elkin v Barminco Pty Ltd the Commission found an entitlement for the applicant in circumstances similar to this matter. We are of the view that Commissioner McAlpine correctly applied that decision. [66] He has addressed all of the decisions relied on by all of the parties and we see no need to reiterate here his commentary in respect to those decisions. We agree with his summary of each of them. [67] Whilst the appellant argued that there was no entitlement to long service leave it seems to us that the argument is more about who should pay any entitlement that may have existed at termination. In fact in the hearing below the appellant submitted that "...the transmittee [AM Services] and not the transmittor [the appellant] was liable for any accrued entitlements..."13 If that were to be the case there is no explanation as to why the appellant paid out accrued entitlements in respect to annual leave. The appellant also submitted that "...we don't say they get the money twice but they get their money earlier than they would otherwise be entitled..." which seems to imply an entitlement exists.14 That submission is a variation to the written submission which claims that payment of a pro-rata entitlement would provide a "...windfall position by receiving double remuneration to the extent of their entitlement. Rather than being provided with a period of leave they will be being paid double rates." Again it is possible to read into that submission that an entitlement exists but the liability rests with the final employer. [68] It seems to us that the appellant has argued the appeal by applying the provisions of the LSL Act as they would prefer it to operate rather than dealing with the facts of the matter before the Commissioner and then applying the relevant provisions of the LSL where appropriate. [69] We reject the appeal and confirm the decision and order of Commissioner McAlpine.
P L Leary Appearances: Date and place of hearing: 1 Transcript PN28
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