T11850
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Drew Maurice Wilson and Link National Transport Pty Ltd
Long service leave dispute - pro rata entitlement - transmission of business - continuous service - effect of termination of employment at point of transmission - deeming provisions - order issued REASONS FOR DECISION [1] This application was made pursuant to s13 of the Long Service Leave Act 1976 ("the Act") for a hearing to settle a dispute concerning the alleged non-payment of pro rata long service leave. [2] The dispute was between Drew Maurice Wilson ("the employee") and Link National Transport Pty Ltd ("Link National"). At the time of the hearing Link National was in administration; the administrators are Devries Tayeh. [3] The matter came on for hearing on 22 February 2005 at the Supreme Court in Launceston. Mr Bill Bolitho of the National Union of Workers appeared for the employee. Mr G Thomas appeared for Department of Infrastructure, Energy and Resources, Workplace Standards Tasmania ("the Department"). No appearance was entered on behalf of the employer. I was satisfied that the employer and the administrators of the employer were served with notices of the hearing and with a copy of a report prepared by the Department. Accordingly, I determined that the matter would proceed and that the employer would be provided with a copy of transcript and given the opportunity to make written submissions. [4] On 3 March 2005 copies of transcript and all relevant documents were forwarded to Link National and to DeVries Tayeh, the administrators, who were given until 21 March 2005 to respond. No such response has been received. BACKGROUND [5] This is an application for the payment of pro rata long service leave against Link National, pursuant to s8(2) of the Act, which provides for the payment of pro rata long services leave after seven years' of service. [6] Mr Wilson was employed as a full time truck driver and his employment was governed by the terms and conditions of the Federal Transport Workers Award 1998, which has no provision for long service leave. [7] Freight Management Services ("Freight Management") employed Mr Wilson as a full time truck driver from 1 July 1994 until 6 December 2002 when his employment was transmitted to Link National on 9 December 2002. At the time of the transmission he had eight and a half years service. All entitlements were transferred to Link National. [8] Mr Wilson's employment with Link National was terminated on 30 April 2004, the reason given being shortage of work or redundancy. By that time he had completed nine years and 10 months service. [9] Link National made no payment for long service leave on the termination of employment, subsequently claiming that there was another transmission of business, this time to C J & R S Kelly Pty Ltd, trading as Chas Kelly Transport ("Chas Kelly"). Chas Kelly has disputed that there was a transmission of business to them. [10] Section 5 of the Act deals with the nature of continuous employment and transmission of business. At ss5(4) it prescribes:
EVIDENCE [11] Mr Thomas tendered a report, prepared by Mr Ian Graham, Senior Inspector with Workplace Standards Tasmania, Department of Infrastructure, Energy and Resources.1 The following information was contained within it: [12] Freight Management advised the Department by correspondence dated 23 June 2004 that:
[13] On 30 April 2004 Link National terminated Mr Wilson's employment. On 18 May 2004 Link National completed a Separation Certificate in which they ticked the box saying "shortage of work or redundancy" as the reason for the termination of Mr Wilson's employment. The certificate showed his commencement date as 1 July 1994 and his last day of work as being 30 April 2004.3 [14] DeVries Tayeh advised the Department that Link National went into voluntary administration on 16 June 2004.4 [15] In a letter dated 23 June 2004, Chas Kelly advised the Department that:
[16] Mr Wilson's signed statement to the Department, dated 4 June 2004, said inter alia:
Mr Ian Graham [17] Mr Graham, Senior Inspector with the Department gave oral evidence about the preparation of the report. [18] Mr Graham said that Chas Kelly no longer employed Mr Wilson, who had since obtained a new job. [19] Mr Graham's evidence was that Link National had their main office in St Leonard's Road, Launceston and Chas Kelly's address is Invermay Road, Launceston. SUBMISSION Mr G Thomas for the Department [20] Mr Thomas said that there was no dispute that Freight Management Services was sold to Link National Transport on 5 December 2002, with employees and their entitlements transferred to Link National. The basis of the dispute is that the respondent believed that there was a transmission from Link National to Chas Kelly. [21] Link National lost the [One Steel] contract and closed down in Tasmania. Chas Kelly picked up the contract and, with it, Mr Wilson as a truck driver for the contract. [22] Mr Thomas submitted that there was no transmission because of ss2(2) of the Act:
[23] Link National closed down and Chas Kelly had a separate address and was a separate business to Link National. Mr Wilson therefore was not employed in or about "that place" in the business of some other employer. [24] Mr Thomas referred to the decision of the Commission as currently constituted in The Australian Workers Union and Barminco Pty Ltd7 ("AWU and Barminco"), saying that it dealt directly with the same matter as in the instant case. In that decision, at para 28, section 2(2) of the Act is cited and at para 30 reference is made to Lynette Anne Marney and Croucher Pty Ltd8 ("Croucher"). In AWU and Barminco there is a quote from Croucher at para 30:
[25] In that case, the employee satisfied the criteria because she remained employed in or about that place, Mr Thomas said. [26] At para 31 of AWU and Barminco the Commission again cites Croucher:
[27] At para 44 reference was made to another case, also involving Barminco: Scott Andrew Elkin v Barminco ("Elkin")9. In that case Abey C found that, in circumstances where an employee had accrued an entitlement to pro rata long service leave by the time of the transmission, that obligation should be met by the transmittor and not transferred to the transmittee. [28] In Mr Thomas's submission, the proper authority to be followed is James Owen v Joan Irene Davis and Ors10 ("Owens"). In that case, Mr Owens, who had been the owner of the St Mary's Bakery, sold the bakery to Mr Spriggs. The Secretary for Labour decided that Mr Owens was responsible for the payment of long service leave. On appeal, that decision was dismissed. At the time of the sale of the business the employees had more than seven years' of service. At page 2 of that decision it was said:
[29] That decision found that an employee could decide whether or not to work for the new employer. If the employee decides not to, then the old employer is liable. If they decide to work for the new employer, then everything is transferred to the new employer [including liability for payment for the entire period]. [30] At the time of the decision in Owens the Secretary for Labour was charged with making decisions as to the entitlement to long service leave. Appeals against such decisions had to be brought before a magistrate. Mr Thomas said that the decision of a magistrate then equated to an appeal before a Full Bench of the Commission now because that was the then appeal process [and the present appeal process is to a Full Bench.] [31] Mr Thomas said that the Department was unaware of whether Abey C had taken Owens into account when he reached his decision in Elkin. The findings in Elkin are directly opposite to the findings in Owens. [32] Mr Thomas said that the Department was seeking an order against Link National Transport Pty Ltd, on the basis that there had been no transmission of business to Chas Kelly, pursuant to ss2(2), because the premises of Link National and Chas Kelly were at separate addresses. That is consistent with the decision in Croucher, he said. FINDINGS [33] I note that neither Link Transport, nor the Administrators, DeVries Tayeh, availed themselves of the opportunity to make submissions, despite being provided with transcript, all relevant documents, and ample time to respond. [34] There are a number of matters of fact that do not appear to be in dispute and which are supported by documentary evidence, going to the nature of the work, periods of employment and rates of pay. [35] Questions to be decided when determining which employer is liable for the payment of long service leave are: whether there was a transmission of business; whether the employee has an entitlement to pro rata long service leave at the time of the transmission; and whether the employee's employment was terminated at the time of the transmission. [36] There is no doubt that there was a transmission of business from Freight Management to Link National, in that the business was sold as a going concern and arrangements were made for the transfer of employee entitlements to the new owner, Link National. At the time of the transmission Mr Wilson had eight years and four months service. I find that Mr Wilson's employment transmitted to Link National Transport Pty Ltd without continuity of employment being broken, pursuant to ss5(4)(a) of the Act. All of the period of employment with Link National (the transmittee) and Freight Management (the transmittor) is to be counted for the purposes of long service leave (ss5(4)(b)). [37] Importantly, there was no termination of Mr Wilson's employment at that stage. His written statement said: "I was told my entitlements floated over to Link. I wasn't paid out anything."11 He continued doing the work that he was previously doing and nothing materially altered for him. There are many examples where businesses change hands but the employees' employment is not terminated, for example, mergers, corporate takeovers and sales of going concerns, such as in this case. I find that Mr Wilson's employment was not terminated at the time of the transmission of business from Freight Management Services to Link National Transport. [38] There are some similarities between the instant case and the case of Elkin; in which case the employee had also accrued an entitlement to pro rata long service leave at the time of a transmission of business. The difference between the present case and Elkin is that Mr Wilson's employment was not terminated at the time of the transmission, whereas Mr Elkin's was. It is this factor that also distinguishes the instant case from the case of Owens. In Owens, the employees' employment was terminated when the business was sold. [39] Mr Thomas said that the findings in Owens are opposite to the findings in Elkin, where, in both cases, the employees had an entitlement to pro rata long service leave at the time of the transmission and their employment was terminated by the transmittors. He is right; in Owens it was determined that the transmittee had to pay, whereas in Elkin it was found that it was the transmittor who had to pay. [40] In Elkin, Abey C considered the fact of the termination of employment and the effect of ss12(4) of the Act. For whatever reason, this subsection was not addressed in the case of Owens. It provides:
[41] Section 8(2) establishes the period of long service to which an employee is entitled; ss8(3)(d) provides for an entitlement when an employee is dismissed (unless for serious and wilful misconduct); and ss12(4) deems the leave to be taken at the time of dismissal. [42] In my opinion, the approach in Elkin is the correct one. If the employee is dismissed and has an entitlement to long service leave, leave is deemed to be taken at that point and the employee must be paid. If for no other reason, the provision makes sense because of the fact that a deemed transmission may take place up to two months after the termination of employment. Clearly, the provision has no application where there is an actual transmission of business and there is no termination of employment. [43] Mr Thomas suggested that the decision of the Magistrate in Owens should have the same status as a decision of the Full Bench of the Commission, and presumably therefore, should be binding upon the Commission. I reject that proposition. When Parliament conferred upon the Commission the responsibility for hearing and determining long service leave disputes, the hierarchy of decisions became that of this Commission. It was not put to me that there is a decision of a Full Bench of this Commission in which the findings in Owens have been endorsed. [44] In the cases of AWU and Barminco, Elkin and Croucher there were no direct transmissions of business. There were, however, deemed transmissions of business pursuant to ss2(2). [45] The transmittor in Elkin was liable for the payment of long service leave because there was an entitlement to pro rata long service leave at the time of the deemed transmission of business and there was a termination of employment. In AWU and Barminco it was found that ss12(4) did not apply by virtue of the fact that there was no accrued entitlement to pro rata long service leave at the time of the deemed transmissions of business. [46] In the instant case, even though Mr Wilson had accrued an entitlement to long service leave at the time of the transmission of business, he had no entitlement to take leave at that time because his employment was not terminated. There is no provision in the Act for the taking of long service leave before 15 years of service, except in the circumstances set out in ss8(3). [47] When Link National subsequently dismissed Mr Wilson they became liable for payment for pro rata long service leave for all of the years of service with both employers. This is because: Mr Wilson had an entitlement to pro rata long service leave (ss8(2)(3)) and he had not yet accessed any of his long service leave entitlement and all of his service was transmitted (ss5(4)(b)) and his employment was terminated (ss12(4)). Whilst it is not strictly relevant under the terms of the Act, I note that provision was made for the transfer of employees and their entitlements from Freight Management Services to Link at the time of the sale of the business. [48] In Elkin and Kelly and Link National Transport Pty Ltd12 (a case involving the same employer as in the instant case) reference is made to the fact that the transmittee is only liable for the balance of any entitlement to long service leave in circumstances where an employee has been paid for or taken some of their long service leave at the time of transmission. This is because, as addressed in some detail in Kelly, the Act provides for an entitlement to long service leave of 13 weeks of leave for 15 years of service, regardless of whether taken in one period, or not. [49] Link National has claimed that there was a further transmission of business, that is, from Link National to Chas Kelly. That assertion is not relevant to the claim before me, which is only a claim in relation to an entitlement to long service leave that crystallised at the time Link National terminated Mr Wilson's employment. It may be that there is a further claim that Mr Wilson could pursue in relation to the time he was employed by Chas Kelly, given that if there were a transmission to Chas Kelly then all of Mr Wilson's service with the two previous employers (Freight Management Services and Link National) would have transmitted to Chas Kelly. Chas Kelly would then be liable for the proportion of long service leave that related to Mr Wilson's service with Chas Kelly only. [50] Whilst that claim is not before me, I will address the arguments put by the Department, in which it was submitted that there was no transmission to Chas Kelly pursuant to section 2(2) because, Mr Thomas said, Chas Kelly and Link National Transport were separate companies operating out of different addresses and, therefore, Mr Wilson's employment was not transmitted because it did not meet the requirement of being employed in or about "that place in the business of some other employer". [51] Whilst not making any findings of fact as to whether or not there was a deemed transmission from Link National to Chas Kelly, in my view the Department's argument is misconceived. The instant case is almost identical to that of Kelly's case, in which I said at para 35:
[52] In summary, even though Mr Wilson had more than seven years' service at the time of the transmission of business from Freight Management to Link National there was no termination of his employment at that stage, therefore he was not entitled to be paid. All of his service transmitted to Link National. When Link National subsequently terminated his employment he was entitled to be paid because he had an entitlement and his employment was terminated. Whether or not all of his service then transmitted to Chas Kelly is another matter. If it did, and I make no such finding, then he would have a further entitlement because, in that circumstance, he would have accrued more long service leave. [53] For the reasons given above, I find that Mr Wilson had an entitlement to the payment of pro rata long service leave at the time of the termination of his employment by Link National Transport Pty. Ltd. ORDER Given the foregoing, I hereby Order in accordance with the provisions of section 13(3) of the Long Service Leave Act 1976 that Link National Transport Pty Ltd ACN 097 618 329 pay to Drew Maurice Wilson the sum of Five Thousand Two Hundred and Sixty Eight Dollars and Eighty One Cents being for pro rata long service leave entitlements, such sum to be paid close of business on 6 June 2005.
P C Shelley Appearances: Date and place of hearing: 1 Exhibit WST 1 |