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T9906

 

TASMANIAN INDUSTRIAL COMMISSION

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

Scott Andrew Elkin
(T9906 of 2002)

and

Barminco Pty Ltd

 

COMMISSIONER T J ABEY

HOBART, 19 July 2002

Industrial dispute - entitlement to long service leave - deemed transmission of business - pro rata entitlement on termination by transmittor - previous service to be recognised - proceedings discontinued

REASONS FOR DECISION

(1) On 15 November 2001, Scott Andrew Elkin (the applicant) applied to the President, pursuant to Section 29(1) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Barminco Pty Ltd.

[2] The matter was set down for hearing (conciliation conference) at "Lyndhurst", 448 Elizabeth Street, North Hobart at 1.00pm Thursday 29 November 2001. Mr R Flanagan appeared for The Australian Workers Union, Tasmania Branch on behalf of the applicant and Mr W J Fitzgerald, of the Australian Mines and Metals Association Inc. appeared for the employer.

[3] When the matter resumed on 6 March 2002, Mr R Collinson sought leave to appear for the applicant. Mr V Gostencnik sought leave to appear for the employer. Leave was granted in both cases.

[4] This application concerns a claim for an entitlement to Long Service Leave pursuant to the provisions of the Long Service Leave Act 1976.

[5] The largely uncontested facts are as follows:

  • Mr Elkin was employed by the Mt Lyell Mining and Railway Company Ltd [Mt Lyell] from 6 August 1991 until either 25 or 26 November 1994. The location of the employment was the Mt Lyell copper mine at Queenstown. The mine under its then ownership closed at or around this date.

  • On 23 January 1995 Mr Elkin was employed by National Mine Management Pty Ltd [NMM] as a truck driver at the Mt Lyell site.

  • On 1 July 1999 NMM changed to MacMahon Underground Pty Ltd [MacMahon]. This was a change in name only and not a change in legal entity.

  • By letter dated 31 August 2000 MacMahon advised Mr Elkin that the company had not been successful in regaining the Mt Lyell contract and confirmed, "that you will be terminated on the 30th of September 2000"1. The termination took effect from that day and Mr Elkin was paid all accrued entitlements other than long service leave.

  • Assuming there was continuity of service since August 1991, Mr Elkin had approximately 9 years 2 months service as of date of termination with MacMahon. Alternatively, if the service with Mt Lyell was found not to count, the relevant service would be 5 years and 8 months. Either way, the relevant service at the time of termination was more than 5 years but less than 10 years.

  • On 1 October 2000 Mr Elkin commenced employment at the Mt Lyell site with Barminco, the successful tenderer for the Mt Lyell contract. Mr Elkin was still employed by Barminco at the time of the hearing, at which time his total service, assuming continuity, was in excess of 10 years.

  • It is agreed that Mr Elkin is a "mining employee" within the meaning of the Act.

  • Apart from a "short term" internal transfer of 6 weeks' duration to the Henty site in early 1999, Mr Elkin has always been employed on the Mt Lyell site.

  • There was evidence given of a number of "strikes" in which Mr Elkin participated during the relevant period. There was, however, no contest offered to the contention that Mr Elkin always returned to work "in accordance with the terms of settlement of the dispute" [see s.5(1)(e)]. It follows that, whilst these absences may be relevant in the calculation of the period of continuous employment, they would not break the continuity of service.

When did Mr Elkin's employment with Mt Lyell terminate?

[6] A letter from Mt Lyell to Mr Elkin dated 22 April 1994 reads in part:2

"You are no doubt aware that our mine will cease production on 15th December this year. Regrettably this means that all of us as employees must seek our futures elsewhere after then.

Unfortunately I must inform you that your position is not required after 15th December, 1994 and you will be retrenched on that date. As you are aware circumstances can change so we will give further notification one month before that date, or earlier if things change significantly. You are required until then but if for your own reasons you wish to leave earlier please see your department head and discuss the matter with him."

[7] A document on Mt Lyell letterhead clearly indicates that Mr Elkin finished on 25 November 1994.3 This appears to be confirmed by a difficult to read 1995 ATO Group Certificate.4

[8] Mr Gostencnik submitted that the applicant bears the onus on proving when termination actually occurred. In this case the date is critical given the proximity of the date of employment with NMM [23 January 1995].

[9] Mr Gostencnik cross-examined Mr Elkin as to the apparent discrepancy between 15 December 1994 [see letter from Mt Lyell dated 22 April 1994] and 25 November 1994. Mr Elkin denied that he had resigned before the mine closed.5

[10] In relation to the finish date of other employees, Mr Elkin said:6

"Well they were finishing all over the place, like me, sort of, to get out of the place".7

[11] And later:8

"I mean, the day I terminated, I mean, the only other time I went to the mine was to pick up my final payment because they had, I mean, they had 200-and-something employees and everyone had a day and a time they had to turn up for their entitlements."

[12] There can be no dispute that mine closed on or around December 1994. The nominated date of 15 December was subject to change. An orderly shutdown of a large mine would inevitably necessitate a phased reduction of employment levels over the last few weeks and on Mr Elkin's evidence, this is what actually occurred.

[13] I am satisfied on the evidence that Mr Elkin did not resign and that Mt Lyell terminated him on 25 November 1994.

The Long Service Leave Act 1976

[14] An entitlement to a period of long service leave arises pursuant to s.8A of the Act.

[15] In summary, an absolute entitlement arises when an employee has completed "at least 10 years continuous employment with his employer" [s.8A(2)(a)].

[16] A pro rata entitlement arises when an employee has completed 5 years, but has not completed 10 years' continuous service, and his employment is terminated in certain defined circumstances [s.8A(2)(b)].

[17] Relevantly, one of those circumstances is where the employment is terminated by the employer "for any reason other than the serious and wilful misconduct of the employee" [s.8A(3)(d)].

[18] At the time of hearing Mr Elkin had served approximately 10 years and 7 months at the Mt Lyell site. This employment was, however, with four separate employers. It is common ground that NMM and MacMahon are one and the same and hence the period from 23 January 1995 to 30 September 2000 shall be treated as one continuous period of employment.

[19] The first question to be determined is whether there was a transmission of business between Mt Lyell and NMM, and then between MacMahon and Barminco.

[20] Section 5[4] states:

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

    (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."

[21] Certainly there has not been a transmission of business in the legal sense of the word. However, this must be read subject to the deeming provision in s.2[2], which states:

"(2) 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."

[22] Based on the evidence I make the following findings:

  • At all material times Mr Elkin was employed on the Mt Lyell site.

  • The businesses of Mt Lyell, NMM/McMahon and Barminco are the same or substantially the same, within the meaning of the Act.

  • In both instances Mr Elkin was employed by the transmittee not later than the expiration of 2 months of the date of termination by the transmittor.

[23] It follows that there has been two deemed transmissions of business and, for the purposes of the Act, Mr Elkin has been continuously employed from 6 August 1991 until the date of hearing.

[24] This period of continuous employment exceeds 10 years and it is contended by Mr Collinson that Mr Elkin now has an unqualified entitlement to a period of 13 weeks' long service leave.

[25] Further, Mr Collinson contends that because s.5[4] states that a period of employment with the transmittee is deemed to include a period of employment with the transmittor, the responsibility for payment rests with Barminco. He submitted that the deeming provisions are "designed to have one employer liable to one employee for a period of long service leave".9

[26] Mr Collinson referred to the decision of Gozzi C in Croucher 10 which he said "was identical in form to the facts of this case"11. Whilst there are numerous parallels in the two cases, there is one important difference. 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 Gozzi C were different to the questions in the instant case.

[27] Mr Gostencnik submitted that it is fundamental to any statutory construction that the Act is read as a whole.

[28] In the context of this Act Mr Gostencnik said that first part [sections 3 and 5] establishes definitions and criteria for continuous employment.

[29] The second part of the legislative scheme [s.8A] states, that where a requisite period of employment has been served, certain entitlements to either long service leave or a long service leave payment crystallise.

[30] The third element of the legislation is the circumstances under which an employee is entitled to claim and an employer is obliged to grant or pay leave. Mr Gostencnik said that this third element could be found in s.12 of the Act.

[31] Mr Gostencnik contended that when MacMahon terminated Mr Elkin on 30 September 2000, a pro rata long service leave entitlement crystallised at that point. Mr Elkin had been employed for 5, but less than 10 years, the employment had been continuous and his employer, for reason other than serious and wilful misconduct, had terminated him.

[32] In such circumstances, Mr Gostencnik contends, s.12 comes into play. Section 12[4] reads:

"(4) 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."

[33] As an entitlement, albeit a pro rata entitlement, accrued to Mr Elkin "because of the termination of his employment", Mr Gostencnik submitted that s.12[4] deems that the leave commenced on the date of termination and Mr Elkin was "entitled to be paid by his employer ordinary pay in respect of that leave ...".

[34] Mr Collinson submitted that "where section 5 of the Act, how so ever arising, creates a transmission and therefore a continuous period of employment, there is no termination for the purposes of Section 8A of the Act for the purposes of pro rata long service leave."12

[35] He went on to submit that whilst there is clearly a termination at common law, there is no entitlement to pro rata long service leave because the deeming provision says the period of employment is unbroken and the period of service is continuous.

[36] Mr Collinson acknowledged that employees of MacMahon who, at the time of termination, had 5 but less than 10 years' continuous service, and who were not subsequently employed by Barminco, would have a pro rata entitlement at the time of termination. He said that in such circumstances a prudent employer would simply "wait out the eight weeks to see which workers got picked up and which workers didn't".

[37] I accept that Mr Collinson is probably correct in the case of a transmission, other than a deemed transmission. There are many instances where a business changes hands and continues as a going concern with employees continuing as if nothing had happened. No accrued entitlements are paid out and continue to accrue with the new owner. Indeed in some instances the employees might not even be aware that there had been a change in ownership, notwithstanding that at common law, there is arguably a termination.

[38] However in the case of a deemed transmission pursuant to s.2[2] of the Act, Mr Gostencnik's position is, I think, the correct one.

[39] 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.

[40] It follows that MacMahon was obliged to make a pro rata payment to Mr Elkin on 30 September 2000. That obligation remains on foot. Failure to make such a payment [as in this case] when it fell due does not in some way transfer that obligation to Barminco.

[41] What does transfer to Barminco is an obligation to recognise previous service with MacMahon, NMM and Mt Lyell, a point readily conceded by Mr Gostencnik. This obligation to recognise previous service is, however, quite different to an obligation to make a payment for a pro rata entitlement which crystallised on 30 September 2000 as a consequence of an action taken by another employer.

[42] Contrary to the submission of Mr Collinson, this does not mean that the clock starts afresh when Mr Elkin commenced with Barminco. For the purpose of long service leave, when Mr Elkin commenced with Barminco on 1 October 2000, he was effectively an employee with approximately 9 years and 2 months' continuous employment. He has [or should have] been paid for this by MacMahon and therefore it is not open for him to effectively "double dip".

[43] What it does mean is that after 10 months' employment with Barminco he would be entitled to take as leave the balance between 13 weeks and the leave equivalent of the pro rata payment. This equates to approximately 1.08 weeks leave.

[44] It also means that, should Mr Elkin's employment terminate for any reason at any time after the first 10 months [approx.] referred to above, he would automatically be entitled to a payment proportionate to length of service. This can be contrasted with an employee commencing with Barminco without prior recognition of service. In such a circumstance an entitlement would not arise until all necessary criteria were met.

[45] Under this construction of the Act, Mr Elkin suffers no disadvantage apart from the opportunity to physically take leave for the first pro rata component. In this respect he is in no worse position than any other employee terminated when the Mt Lyell contract was not renewed.

[46] I do not accept Mr Collinson's contention that this inability to take leave is contrary to the intention of the Act. Apart from anything else, such an assertion does not sit comfortably with the ability to accept payment in lieu of leave in accordance with s.10 of the Act.

[47] Whilst this question was not before me, I would observe that had Mr Elkin had less than 5 years' continuous service with MacMahon/Mt Lyell, then such service would count as service with Barminco, and Barminco would in turn be obligated to grant leave or make a payment if and when an entitlement crystallised.

[48] The application of the Act to Mr Elkin's circumstances is not without its difficulties. In my view, however, the above construction is the only one that allows each section to operate as the plain meaning of the words suggest and, at the same time, not disadvantage the employee concerned. Hopefully this decision will bring some certainty as to how obligations should be satisfied when similar circumstances arise in the future.

[49] I decline to make an order against Barminco.

[50] As MacMahon was not a direct party to this application [although a MacMahon official did give evidence] it is not open for the Commission to make an order against that employer. As this issue was the catalyst for industrial action on the site, I strongly recommend that MacMahon Underground Pty Ltd recognise this decision and make a payment to Mr Elkin accordingly. In the event that this does not occur it is of course open to the applicant to make further application to the Commission.

[51] Pursuant to s.21[2][c] of the Industrial Relations Act 1984, these proceedings are discontinued.

 

Tim Abey
COMMISSIONER

Appearances:
Mr R Flanagan (29/11/2001), of The Australian Workers' Union, Tasmania Branch and Mr R Collinson (6/3/2002), a solicitor, for Mr S A Elkin.
Mr W J Fitzgerald (29/11/2001), of the Australian Mines and Metals Association Inc., and Mr V Gostencnik (6/3/2002), a solicitor, with Ms M Kossenas, for Barminco Pty Ltd.

Date and Place of Hearing:
2001
November 29
2002
March 6
Hobart

1 Exhibit A8
2 Exhibit R1
3 Exhibit R2
4 Exhibit R2
5 Transcript p. 21 line 650
6 Transcript p. 21
7 Transcript p. 21
8 Transcript p. 24
9 Transcript p. 57
10 T1807 of 1989
11 Transcript p. 53
12 Transcript p. 59