T11851
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Anthony Terrence Kelly and Link National Transport Pty Ltd
Long service leave dispute - pro rata entitlement - transmission of business - continuous service - deeming provisions - order issued REASONS FOR DECISION [1] This application was made pursuant to s.13 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 Anthony Terrence Kelly ("the employee") and Link National Transport Pty Ltd ("Link"). Link is in administration. The administrators are DeVries Tayeh. [3] The matter came on for hearing on 21 February 2005 at the Magistrates Court in Ulverstone. The employee represented himself. 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 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 the employer and to 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, pursuant to section 8(2) of the Act, which provides for the payment of pro rata long service leave after seven years' of service. [6] Mr Kelly 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 employed Mr Kelly as a full time truck driver from 23 April 1996 until 9 December 2002 when his employment was transmitted to Link. At the time of the transmission he had approximately six years and eight months of service, therefore he had not yet qualified for pro rata long service leave. [8] Mr Kelly's employment with Link was terminated on 30 April 2004, the reason given being shortage of work or redundancy. By that time he had completed eight years' service, sufficient to accrue an entitlement to pro rata long service leave. [9] Link 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 this in correspondence to the Department. [10] Section 5 of the Act deals with the nature of continuous employment and transmission of business. At section 5(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 Services advised the Department by correspondence dated 23 June 2004 that:
[13] On 30 April 2004 Link terminated Mr Kelly's employment. On 28 May 2004 Link completed a Separation Certificate in which they ticked the box saying "shortage of work or redundancy" as the reason for the termination of Mr Kelly's employment. The certificate showed his commencement date as 9 December 2002 and his last day of work as being 30 April 2004.3 [14] DeVries Tayeh advised the Department that Link went into voluntary administration on 16 June 2004.4 [15] In a letter dated 23 June 2004, Chas Kelly advised the Department that:
Mr Ian Graham [16] Mr Graham, Senior Inspector with the Department gave oral evidence about the preparation of the report. [17] Mr Graham's evidence was that although Mr Kelly is continuing to perform the same work for Chas Kelly [as he did for Link], he is working from a different location. Link had their main office in St Leonard's Road, Launceston and Chas Kelly's address is Invermay Road, Launceston. Mr Anthony Kelly [18] Mr Kelly's signed statement to the Department, dated 3 June 2004, said inter alia:
[19] In his oral evidence, Mr Kelly said that all of his entitlements had been transferred from Freight Management Services to Link, including holiday entitlements. [20] Mr Kelly's job was to transport steel and he continued to work on the One Steel contract. That was what he had done throughout his entire period of employment and he was continuing to do it. Up until that point he had only ever worked on the One Steel contract. [21] On Friday 30 April 2004 his employment with Link was terminated. That same day the manager from One Steel informed him that Chas Kelly had the contract and they had recommended him for the job. He commenced work with Chas Kelly the following Monday. He said:
SUBMISSION Mr G Thomas for the Department [22] Mr Thomas submitted that the employment of the employee was transmitted from Freight Management Services to Link under the provisions of section 5(4) of the Act. The business was sold to Link, who continued its operations. [23] He said that there are two ways a transmission can take place under the Act, the second being pursuant to section 2(2):
[24] Mr Thomas referred to the case of Lynette Anne Marney and Croucher Pty Ltd ("Croucher").8 He cited as an example an employee of a contract cleaning company who cleaned the premises of a bank and whose original employer lost the contract. If the employee was taken up by the new contractor then there would be a transmission under section 2(2) because the employee worked on the same premises and because the business was substantially the same, that is, it was a cleaning contract. [25] In relation to the instant case, the employee was transmitted to Link, pursuant to section 5(4). Link [subsequently] terminated his employment. They operated from different premises to Link, and therefore Mr Kelly's new employment with Chas Kelly was not "in or about that place in the business of some other employer" [s2(2)]. They are a separate company at a separate address and they did not buy Link out. [26] Mr Thomas said that the Department was asking on behalf of the applicant that an order be made against Link National Transport Pty Ltd pursuant to section 13(3) of the Act, and that a copy be sent to the administrator. FINDINGS [27] I note that neither Link Transport Pty Ltd, 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. [28] 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 periods of employment and rates of pay. [29] Freight Management Services employed Anthony Terrence Kelly as a full time truck driver from 23 April 1996 until 9 December 2002. [30] There is no doubt that there was a transmission of business from Freight Management Services to Link, pursuant to section 5(4), in that the business was sold, and arrangements were made for the transfer of employee entitlements to the new owner, Link. I find that his employment then transmitted to Link National Transport Pty Ltd, pursuant to section 5(4) of the Act. [31] The evidence shows that Mr Kelly continued in his employment with Link until 30 April 2004. [32] Mr Thomas, for the Department, said that at issue is whether or not the employment of Mr Kelly then transmitted to C J & R S Kelly Pty Ltd, t/a Chas Kelly Transport. In his view, it did not, and he submitted that an order should therefore be made against Link. [33] I intend to make such an order, but not for the reasons advanced by Mr Thomas. [34] Mr Thomas argued that Mr Kelly's employment did not transmit from Link to Chas Kelly pursuant to section 2(2) because, he said, they were separate companies operating out of different addresses and therefore Mr Kelly's employment was not transmitted because it did not meet the requirement of being employed in or about the same place of business. [35] In my view, that argument is wrong. [36] "Deemed" is a legal fiction in which, although there may have been no actual or commercial transmission of business, for the purposes of the Act it is to be treated as though the business has been transmitted. [37] Under the provisions of the Act, there are there are two types of transmission, an actual transmission, that is, where there is a commercial transmission. In that case, the transmission is based on what happens to the business. Then there is deemed transmission, provided for in section 2(2), which is based on what happens to the employee. If, within two months after the termination of their employment the employee is then employed by another employer and provided that they are employed in essentially the same work in the same place as they were employed before, then the business is deemed to have been transmitted to the new employer (for the purposes of the Act). [38] When establishing whether or not there has been a deemed transmission pursuant to section 2(2) the address out of which the business operates is immaterial to the proper questions to be decided, which are: is the work of the employee being performed in or about the same place as it was before; and, is the work undertaken work of the same nature as that performed previously? [39] Mr Kelly was employed to drive trucks to transport steel in fulfilment of the One Steel contract, which was originally held by Freight Management Services, then by Link, and, finally, by Chas Kelly. Mr Kelly's work did not change when the One Steel contract changed hands. [40] Mr Thomas has confused "employed in or about any place in the business of an employer" with the premises of the employer. I take the words to mean work in any place undertaken by the employee in performance of their duties with their employer. The "place" in which Mr Kelly was employed in "the business of the employer" was in a truck on a highway moving freight. He was not employed to perform work at the premises of any of the three companies who employed him. As in many other types of employment, the work performed was not performed on the premises of the employer, but elsewhere. Therefore, as earlier stated, the fact that Link and Chas Kelly have different addresses is immaterial. [41] In Croucher, Gozzi C examined the application of section 2(2) when contracts change hands. In that case, the employee was employed by a contract cleaner to clean a particular building (which was not the registered premises of the contract cleaning company). The contract for cleaning the building changed hands on a number of occasions. On each occasion the employee was employed by the new contractor to continue cleaning that building. In his decision, the Commissioner said:
[42] There are clearly a number of parallels between the instant case and Croucher. The evidence was that Mr Kelly's work was solely to fulfil the employers' contracts with One Steel. The nature of the work and the place in which that work was undertaken did not change when the contract changed hands. [43] However, in the circumstances of the present case it is not necessary for me to make a finding as to whether there was a deemed transmission from Link to Chas Kelly pursuant to section 2(2). The reason for this is the length of Mr Kelly's service at the time of the termination of his employment by Link. In addition, Mr Kelly was, at the time of hearing, still employed by Chas Kelly and there is no claim before me in relation to his employment with that company. [44] Mr Kelly had completed eight years of service at the time his employment was terminated by Link (approximately six and a half of which were transmitted from Freight Management Services). He had, therefore, accumulated an entitlement to pro rata long service leave on termination of employment pursuant to section 8(2)(b), which provides for a pro rata entitlement after seven years' service. [45] During the hearing, I referred Mr Thomas to the case of Scott Andrew Elkin and Barminco Pty Ltd ("Elkin")9 and indicated that I would be taking that decision into account in my deliberations. [46] That case concerned a mining employee, employed by a series of contractors to work on one site. He was made redundant by the last of those contractors. One of the questions to be determined was: which employer was responsible for the payment of long service leave? [47] In Elkin the relevance of s12(4) was considered, which provides:
[48] Abey C found, in effect, that when an employee's employment is terminated and there is an accrued entitlement to long service leave, then it becomes due at that point. I agree with him. That is the situation regardless of whether the employment is deemed to be transmitted to a subsequent employer or not. In this case, at the time that Link terminated the employment of Mr Kelly, he had an accumulated entitlement to pro rata long service leave. Therefore it is Link who must pay him. [49] In the case of Elkin Abey C observed that the clock does not start afresh for the employee. The period of service to date must still be counted in the future. What the transmittee must provide when leave again becomes due is the proportion of leave for the period of time that the employee was employed with that employer. I agree with Commissioner Abey. This becomes clear when the Act is read as a whole. [50] Section 5 deals with the nature of continuous service. Section 5(4) ensures that continuity of service is not broken when an employee's years of service are transmitted. Section 5(4(b) ensures that all service with transmittees and transmittors is included in the length of service of the employee. [51] Section 7(A) establishes an entitlement to long service leave based on continuous service. [52] Section 8 establishes the period of long service leave an employee is entitled to. Section 8(2) prescribes the entitlement as being 13 weeks leave in respect of the first 15 years of continuous service with an employer. [53] Section 8(2)(b) entitles the employee to pro rata long service leave after seven years and section 8(3) sets out the circumstances in which pro rata long service leave applies, including at 8(3)(d) where an employee is dismissed for any reason other than serious and wilful misconduct. [54] Section 12 establishes how and when long service leave shall be taken. Section 12(4) deems that leave is taken from the date of termination of the employee, provided that there is an entitlement to leave. [55] Whilst the Act does not specify in precise terms what subsequently happens in circumstances where pro rata long service leave has been taken or been paid out at the time of transmission, the following is clear: [56] An employee in such a situation has an entitlement under the Act to 13 weeks' leave for 15 years' of continuous service with an employer (whether deemed service or actual service). Therefore, the employee must receive 13 weeks leave (or payment in lieu thereof) after 15 years' of service (or pro rata on termination of employment). They are not required to work for more than 15 years in order to qualify for 13 weeks' leave; accordingly, the clock does not start afresh when their service is transmitted. They are not entitled to receive more than 13 weeks' long service leave in any 15 year period; therefore it follows that any payment previously made or leave previously taken (or deemed to have been taken) should be deducted from the 13 weeks, with the balance then taken or paid. [57] For the reasons given above, I find that Mr Kelly had an entitlement to 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 Anthony Terrence Kelly the sum of Four Thousand Two Hundred and Ninety Eight Dollars and Fourteen Cents being for pro rata long service leave entitlements, such sum to be paid by close of business on 31 May 2005.
P C Shelley Appearances: Date and place of hearing: 1 Exhibit WST 1 | ||