Industrial Relations Commission of New South Wales CITATION : Australian Workers' Union, NSW v Great Lakes Community Resources T/as Resource Recovery [2004] NSWIRComm 327 PARTIES : Australian Workers' Union, NSW Great Lakes Community Resources T/as Resource Recovery FILE NUMBER: IRC 4390 of 2004 CORAM: Harrison DP CATCHWORDS : Notification under s 130 of a dispute re non payment of redundancy and entitlements in accordance with award - Employer claim to obtaining suitable alternative employment - transmission of business - surrender of contract principle cause of redundancy. Held - employer did not obtain alternative employment - payment of redundancy entitlements ordered. LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : The Australian Chamber of Manufactures v Derole Nominees Pty Ltd [1990] 1029 IRCommA HEARING DATES: 10/27/2004 EXTEMPORE JUDGMENT DATE : 11/05/2004 Mr C Tate Australian Workers' Union, NSW LEGAL REPRESENTATIVES: Mr M Pegg Jobs Australia JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Friday, 5 November 2004 MATTER NO IRC 4390 OF 2004 Notification Under S 130 By The Australian Workers' Union, New South Wales Of A Dispute With Great Lakes Community Resources T/As Resource Recovery Re Non Payment Of Redundancies And Entitlements In Accordance With Award DECISION [2004] NSWIRComm 327 1 Great Lakes Community Resources trading as Resource Recovery ("Resource Recovery") is a not for profit organisation which has the creation of employment opportunity for disadvantaged persons as one of its primary functions. Resource Recovery held a contract with the Greater Taree City Council ("the Council") for waste collection from urban and rural areas and disposal by land fill. 2 Resource Recovery discharged this contract in what they described as a labour intensive manner, employing some 27 people. The terms of the contract did not provide for price increases to reflect an increase in labour costs by award movement. 3 Resource Recovery found the contract untenable. The evidence of Mr John Weate, Executive Officer, is that an approach to the Council for a price adjustment to reflect wage movements was refused and subsequently the contract was surrendered and put to tender by the Council. 4 Resource Recovery was unsuccessful in its bid to retain the work. The successful tenderer was J R Richards and Sons, whose tender was described by Mr Weate as of similar cost though equipment and machinery intensive compared to Resource Recovery's approach to the work. J R Richards and Sons took over the contract on 29 February 2004. 5 There was a deal of public interest and debate concerning the contract process, which led to a level of acrimony between Resource Recovery, the Council, and J R Richards and Sons. 6 On 6 February 2004 Mr Weate wrote to all employees detailing redundancy arrangements, advising that all outstanding hours, holiday pay and leave loading where applicable would be paid into the employee's bank account no later than one pay period after 29 February 2004; and that all redundancy payments would be paid within the following four weeks (by 7 April 2004). This correspondence (exhibit 4) further stated that Mr Weate could guarantee that all payments would be made, but could not guarantee that they would be paid any more quickly than the above schedule, undertaking to pay as soon as possible. 7 There was an arrangement subsequently entered into to defer redundancy payments until Resource Recovery effected sale of machinery no longer required. 8 The Australian Workers' Union, New South Wales ("the Union") seek payment of redundancy prescribed by the Transport Industry Redundancy (State) Award 318 IG 458 ("the Award") for Mr Daryl Kirkby and Mr Robert Sambell, former employees of Resource Recovery. 9 Mr Pegg of Jobs Australia, appearing on behalf of Resource Recovery, sought relief from payment of redundancy to Messrs Kirkby and Sambell on the basis that Resource Recovery had obtained suitable alternative employment for them. Mr Kirkby is currently employed by J R Richards and Sons driving a 15 tonne GMV garbage compactor. Mr Sambell is currently employed by Geoffrey Stewart Constructions Pty Ltd, a sub contractor to J R Richards and Sons, undertaking landfill activities. 10 The exception to payment of severance pay is prescribed in cl 7 of the Award in the following terms: (ii) Incapacity to pay –– Subject to an application by the employer and further order of the Industrial Relations Commission, an employer may pay a lesser amount (or no amount) of severance pay than that contained in subclause (i) of this clause. The Commission shall have regard to such financial and other resources of the employer concerned as the Commission thinks relevant, and the probable effect paying the amount of severance pay in subclause (i) of this clause will have on the employer. (iii) Alternative employment –– Subject to an application by the employer and further order of the Industrial Relations Commission, an employer may pay a lesser amount (or no amount) of severance pay than that contained in subclause (i) of this clause if the employer obtains acceptable alternative employment for an employee. 11 Mr Pegg argued that both Messrs Kirkby and Sambell are employed on work covered by the contract formerly held by Resource Recovery and now held by J R Richards and Sons. Mr Kirkby was engaged driving a seven tonne truck and Mr Sambell is engaged in land fill activities. Mr Pegg asserted that this constituted a transmission of business and a continuity of employment which negated redundancy payments. 12 Mr Weate deposed that he had pursued the prospect of employment of Resource Recovery personnel with Mr Turner, Contracts Manager of J R Richards and Sons, and with Mr Watman, Managing Director or Geoffrey Stewart Constructions Pty Ltd, at meetings convened by officers of the Council to arrange handover of the work. 13 Mr Turner's evidence is that he told Mr Weate all employees were welcome to apply, however, J R Richards and Sons would look internally for personnel to undertake the work. 14 Mr Weate also deposed that he was told by Mr Turner that three named employees would be engaged and he was asked to keep the information confidential. Mr Turner denies this conversation. Two of the three named persons were employed by J R Richards and Sons. Mr Kirkby was one of those named. 15 Mr Kirkby approached Mr Turner on his own volition, completing an application form for employment obtained from J R Richards and Sons in January 2004, and was subsequently advised that he would be employed subject to successfully completing a training program. Mr Kirkby sought time off from his employment with Resource Recovery to undertake training. He was paid one week from his annual leave for that purpose. 16 Mr Tate, appearing on behalf of the Union, asserted that the terms of the Award, which allow one day off a week to seek alternative employment, were not met and that Mr Kirkby should have been allowed time off without reduction of his annual leave entitlements. 17 The evidence of Mr Sambell is that he made his own representations to Geoffrey Stewart Constructions Pty Ltd and was subsequently employed as a result thereof. 18 The evidence of Mr Turner (exhibit 7) is that he received approaches from Mr Tate on behalf of all Resource Recovery employees prior to taking over the contract on 29 February 2004. Mr Tate was told to inform his members to fill in the standard application forms available and subsequently applications were received from a number of people, including Mr Kirkby. Mr Turner deposed that Resource Recovery was not involved in any way in the employment of Mr Kirkby. 19 A statutory declaration made by Mr Watman (exhibit 5) states that he was approached by Mr Tate and Mr Sambell concerning the employment of Mr Sambell and that neither he nor any other staff were approached by Mr Weate or any member of the Resource Recovery organisation concerning employment of Mr Sambell; adding that Mr Sambell was employed on his own merits. 20 Mr Pegg relied upon a decision of the Full Bench of the Australian Industrial Relations Commission in The Australian Chamber of Manufactures v Derole Nominees Pty Ltd [1990] 1029 IRCommA to support a submission that the overtures by Mr Weate in the handover meetings seeking employment for Resource Recovery employees to be made redundant satisfy the Award requirement to obtain suitable alternative employment. [Emphasis added] 21 In particular, Mr Pegg relied upon the following passage from Derole: "… one employer is incapable in law of effecting a contract of employment between his employee and another employer … …; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate. It follows that "obtain" must be given some lesser meaning. The Shorter Oxford Dictionary (third edition, revised) provides as its relevant meaning, the definition of "obtain" as "to procure or gain, as the result of purpose and effort". It seems to us that meaning is of assistance here; that is, the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind. 22 There was some argument in respect to the suitable and acceptable alternative employment. That issue does not arise here. The current employment of Messrs Kirkby and Sambell is certainly alternative to that held at Resource Recovery and is obviously suitable as they both continue happily in that employment. Issues - Transmission of Business - To Obtain 23 There can be no issue of transmission of business. The circumstances here do not involve a direct relationship between Resource Recovery and J R Richards and Sons. 24 The issue to arise here is whether the activities of Resource Recovery satisfy the requirement of the Award to obtain suitable alternative employment. The evidence is overwhelmingly against such finding. 25 In order to meet the requirement to obtain employment by the reduced standard discussed in Derole, the employer must be actively involved in such endeavour. The passive and incidental references to employment prospects by Mr Weate at Council meetings do not reach any standards of purpose and effort required by Derole. 26 Entitlement to redundancy payment is the primary right as prescribed by the Award. Relief from payment is an exception. The burden of proof is upon the former employer to establish that by purpose and effort that employer "obtained" suitable alternative employment. That burden has not been met in this matter. 27 I note further that neither Mr Kirkby, who had been employed with Resource Recovery for some 10 years, and Mr Sambell, for some three years, carried the benefit of any accrued entitlements to their new employment. 28 The application by Mr Pegg for relief from payment of severence pay is refused. 29 I direct payment to be made in accordance with the Award. I further direct that the annual leave payment made to Mr Kirkby to allow him to undertake training for further employment be converted to time off with pay pursuant to the provisions of the Award; and that Mr Kirkby be paid a further one week's pay in respect to the annual leave debit. 30 At the conclusion of proceedings on 27 October 2004 an ex tempore decision in the above terms was delivered in transcript requiring Resource Recovery to make payment within seven (7) days therefrom. oo0oo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.