Industrial Relations Commission of New South Wales CITATION: Transport Workers' Union of New South Wales v. Post Logistics Australasia Pty Limited [2010] NSWIRComm 1030 APPLICANT Post Logistics Australasia Pty Limited PARTIES: RESPONDENT Transport Workers' Union of New South Wales FILE NUMBER(S): IRC 112 of 2010 CORAM: Connor C CATCHWORDS: industrial dispute - transport industry - retrenchment of contract carriers - efforts to find alternative employment - application by principal contractor to avoid the necessity of paying severance pay - entitlement of retrenched contract carriers to severance pay - decision made - direction to parties to confer LEGISLATION CITED: Industrial Relations Act 1996 Moonlighting Transport Pty Limited Dispute Case - unreported CASES CITED: Sigma Pharmaceuticals Redundancy Case [2009] NSWIRComm 1036 Redundancy Award Case (1994) 53 IR 419 Transport Industry - Redundancy (State) Contract Determination Case [2007] NSWIRComm 183 HEARING DATES: 26/05/2010 DATE OF JUDGMENT: 24 June 2010 APPLICANT Rachel Bernasconi Blake Dawson LEGAL REPRESENTATIVES: RESPONDENT Stephen Bull Transport Workers' Union of New South Wales DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Thursday, 24 June, 2010 Matter No IRC 112 of 2010 Transport Workers' Union of New South Wales and Post Logistics Australasia Pty Limited Notification under S.332 of the Industrial Relations Act, 1996 re entitlements of contract carriers to severance pay DECISION [2010] NSWIRComm 1030 Introduction 1 The Transport Workers' Union of New South Wales lodged a notification of an industrial dispute with Post Logistics Australasia Pty Limited pursuant to the provisions of Part 4, Dispute Resolution, of Chapter 6, Public Vehicles and Carriers [S.332] of the 1996 Industrial Relations Act. On Thursday, 28 January, 2010 Post Logistics, a wholly owned subsidiary of Australia Post, informed nine contract carriers engaged by it under the terms of the Transport Industry General Carriers Contract Determination and the Transport Industry (State) Redundancy Contract Determination that it intended to terminate their services effective from Sunday, 28 February, 2010. The contract carriers were offered alternative engagements with Messenger Post, a division of the Australian Postal Corporation, with effect from Monday, 1 March, 2010. However, the TWU argued that the alternative arrangements were not suitable ones, or at least did not preserve all of the existing entitlements that the contract drivers had previously received whilst engaged directly by Post Logistics. 2 In his unreported decision of Thursday, 2 August, 2007 in the Transport Industry - Redundancy (State) Contract Determination Case [Matter No.IRC 7121 of 2003] Sams DP established a new contract determination which, among other things, granted redundancy payments generally to contract drivers in this State effective from Thursday, 2 August, 2007. Consistent with the decision of the Full Bench of the Commission (Fisher J - President, Glynn and Peterson JJ and Buckley CC) in the Redundancy Award Case (1994) 53 IR 419 for retrenched employees, Sams DP determined a scale of severance payments to contract drivers, viz: Years of Engagement Under 45 years of age 45 years of age and over Less than 1 year Nil Nil 1 year but less than 2 years 4 weeks 5 weeks 2 years but less than 3 years 7 weeks 8.75 weeks 3 years but less than 4 years 10 weeks 12.5 weeks 4 years but less than 5 years 12 weeks 15 weeks 5 years but less than 6 years 14 weeks 17.5 weeks 6 years or more 16 weeks 20 weeks That scale was incorporated in subclause (i) of Clause 6, Severance Pay, of the Redundancy Contract Determination. But Clause 6(iii) also provides: "Subject to an application by the principal contractor and further order of the Commission, a principal contractor may pay a lesser amount (or no amount) of severance pay than that contained in subclause (i) of this clause if the principal contractor obtains acceptable alternate work for the carrier. 3 The S.332 notification by the TWU was set down before me for the conference required by S.315 on Monday, 22 February, 2010 and Thursday, 4 March, 2010. In the proceedings on Thursday, 4 March, 2010 Post Logistics lodged an application under Clause 6(iii) of the Redundancy Contract Determination, seeking to exempt it from the severance payments to the retrenched contract drivers or, alternatively, reduce the amount of severance pay due to the contract drivers it had retrenched. I adjourned the matter for further mention and programming on Thursday, 11 March, 2010. I set the matter down for hearing on Wednesday, 26 May, 2010 and Thursday, 27 May, 2010 but found it necessary to vacate Thursday, 27 May, 2010 due to my commitments in Fair Work Australia. The matter proceeded to conclusion on Wednesday, 26 May, 2010. 4 Ms Bernasconi represented Post Logistics in the hearing, calling Mr Patrick Ryan, a consultant for Post Logistics, as a witness in the hearing. Ms Bernasconi does not dispute that Post Logistics was a principal contractor bound by the provisions of the Redundancy Contract Determination with respect to the nine contract carriers it retrenched but she claimed that they were provided with "...acceptable alternate work..." in terms of Clause 6(iii), which either exempted them from paying severance pay or, alternatively, reduced the amount they should receive. Mr Bull represented the TWU in the hearing. He called Mr Ken Hurst, a TWU organiser, Mr Greg Selig, a former TWU organiser, and two of the retrenched drivers - Mr Tony Murphy and Mr John Kostrubiec - to give evidence in the hearing. Mr Bull argued that the alternate work which Post Logistics arranged for the nine retrenched contract couriers was not "...acceptable alternate work..." in terms of Clause 6(iii). The Issue 5 On Monday, 22 January, 2007 Post Logistics took over the business of J R Haulage Pty Limited, trading as State Warehousing and Distribution Services [SWADS] in the transporting of white goods customarily in the Sydney metropolitan area. There were 17 contract carriers at that time and they were covered by a contract agreement with SWADS which they retained whilst they worked for Post Logistics. However, in the middle of 2009 Post Logistics sought to convert its contract drivers from the SWADS agreement to a new contract agreement. I accept from the evidence before me in this hearing that, among other things, the SWADS agreement contained a provision recognising goodwill in the event of the sale of the vehicle [Clause 23, Sale of Vehicle with a Work Component]: the Post Logistic agreement which was purportedly to replace it did not recognise goodwill. 6 As far as is relevant for current purposes, three of the contract drivers who were subsequently retrenched - Mr Sam Paulus, Mr Duc Kim and Mr Vasko Bosevski - were prepared to enter into the new contract agreement with Post Logistics. Mr Murphy, Mr Kostrubiec and four other of the retrenched contract carriers - Mr Andrew Kulibab, Mr Garry Walsh, Mr Gus Santos and Mr Tam Nguyen - declined to do so. There was some suggestion by Mr Bull that those contract carriers who refused to work under the new contract agreement with Post Logistics would have the allocation of work to them reduced and that those contract carriers who moved over to the Post Logistics contract did so under duress. The evidence to support such a claim is not convincing and it appears that there was no reduction in the work of the contract carriers who refused to move from the SWADS agreement. 7 However, subsequently Post Logistics decided to bring its contract carrier operations to a close and it negotiated with Messenger Post for the nine contract carriers it engaged to be taken over by it. Those negotiations resulted in Messenger Post agreeing to offer contracts to each of the nine contract drivers engaged by Post Logistics whose contracts of carriage were being terminated. Messenger Post indicated that it would pay the contract carriers for the existing Post Logistics work at current rates, ie those contract drivers on the SWADS contract agreement would retain their existing level of remuneration and those on the Post Logistics contract agreement would be paid accordingly. Also Messenger Post would recognise the prior service of the contract carriers with respect to any future redundancy situations. 8 On the strength of that agreement, Post Logistics gave notice of the termination of the contracts of carriage effective from Saturday, 28 February, 2010 and Messenger Post offered each of the contract carriers a contract commencing on Monday, 1 March, 2010. Five contract carriers - Mr Murphy, Mr Paulus, Mr Kim, Mr Santos and Mr Bosevski - accepted that offer and are presently working for Messenger Post performing the type of work that they originally performed for Post Logistics, albeit without prejudice to the TWU claim made on their behalf in this hearing. Four contract carriers - Mr Kostrubiec, Mr Kulibab, Mr Walsh and Mr Nguyen - declined the offer. Mr Hurst indicated in his evidence that he had informed the nine contract drivers that they should all take up the positions offered by Messenger Post, whilst reserving their position with respect to these proceedings, but four contract carriers declined to do so. 9 Apart from the concessions made by it with respect to the Post Logistics contract carriers, the contracts offered by Messenger Post were its standard form of contract. It is Messenger Post policy that all of its contract drivers trade as corporations and it insisted that the contract drivers it adopted from Post Logistics also trade as corporations. The benefits of Chapter 6 apply whether the contract carrier is a sole trader [S.309(1)(a)], in a partnerships [S.309(1)(b)] or trades as a corporate entity [S.309(1)(c)]. Mr Kostrubiec was the only one of the nine retrenched contract drivers who did not trade as a corporate entity and, although Mr Hurst encouraged him to form himself as a corporation he has refused to do so. 10 Mr Ryan has estimated the potential severance pay of the nine contract carriers who are the subject of the TWU claim in this hearing if the TWU claim is successful. Mr Bull has not had the opportunity to check those figures but I have no reason to doubt Mr Ryan's calculations and I believe I am entitled to rely on them in this hearing. I summarise the position with each of the contract carriers as follows: (i) Mr Kulibab trades as A S and E A Kulibab Pty Limited. He was engaged on the SWADS contract and refused to convert to the Post Logistics contract in the middle of 2009. He declined to accept the offer to work with Messenger Post. If he is entitled to severance pay, it has been estimated at $29,741.99. (ii) Mr Walsh trades as Gazmac Transport Pty Limited. He was also engaged on the SWADS contract. He refused to convert to the Post Logistics contract in the middle of 2009 and declined to accept work with Messenger Post. If he is entitled to severance pay, it has been estimated at $23,183.77. (iii) Mr Kostrubiec is a sole trader who refuses to form his business as a corporate entity. He was originally engaged under the SWADS contract and in 2009 refused to convert it to the Post Logistics contract. He declined to accept work with Messenger Post. His severance pay has been estimated as $33,630.27. (iv) Mr Murphy trades as Jacklin Consulting Pty Limited. He was engaged under the SWADS contract and refused to convert to the Post Logistics contract in the middle of 2009. He accepted work with Messenger Post and is working for it performing the work he originally carried out for Post Logistics. His severance pay has been estimated at $26,741.63. (v) Mr Paulis trades as Pony Transport Pty Limited. He accepted work under the Post Logistics contract from the middle of 2009 and accepted work with Messenger Post. His severance pay has been estimated at $13,951.26. (vi) Mr Kim trades as Quang Thanh Transport Pty Limited. He also agreed to work under the Post Logistics contract when it was given to him in the middle of 2009. He accepted work with Messenger Post. His severance pay entitlements have been estimated as $22,581.61. (vii) Mr Santos trades as S G Santos Pty Limited. He was engaged under the SWADS contract and refused to work under the Post Logistics contract when it was offered to him in the middle of 2009. He subsequently accepted work with Messenger Post. His severance pay has been estimated as $30,808.06. (viii) Mr Nguyen trades as Tan Transport and Removal Pty Limited. He was also engaged under the SWADS contract and refused to work under the Post Logistics contract. He declined work with Messenger Post. His severance pay has been estimated as $28,537.58. (ix) Mr Bosevski trades as VAS Transport Pty Limited. He worked under the Post Logistics contract and accepted work with Messenger Post. His severance pay was estimated as $19,080.80. Considerations 11 In the Transport Industry - Redundancy (State) Contract Determination Case Sams DP relied, as do I in this hearing, to a large extent from conclusions flowing from the 1970 inquiry conducted by the Full Bench of the former State Industrial Commission (Beattie J - President, Sheehy and Sheldon JJ) - the so-called Beattie Report - which emphasised the links between work by contract drivers and employees. It is in that light that the question of redundancy for contract drivers has its justification. Sams DP had this to say (at p.103): "...There are elements of hardship and inconvenience experienced by carriers who are made redundant. While some factors which cause the hardship and inconvenience faced by redundant carriers are different to redundant employees, there is no reasonable basis to conclude that redundant carriers do not suffer the same degree of hardship and inconvenience as redundant employees..." 12 An employer or principal contractor who arranges for suitable alternative employment is released from the obligation to pay any severance pay. But there must be some positive steps by the employer or principal contractor to negate that obligation. In my unreported decision of Wednesday, 12 June, 2003 in the Moonlighting Transport Pty Limited Dispute Case [Matter No.IRC 1286 of 2002] I dealt with a provision in a State transport award consistent with Clause 6(iii), commenting (at pp.5 and 6) that: "...it has to be said immediately that (the provision) acts to exempt severance payments on application and order of the Commission only. No such application, and no subsequent order was made in this case... Furthermore, the evidence...was that on Monday, 3 March, 2002 when (the wife of the owner of the business)...informed (the retrenched worker) that he had been retrenched, she spoke to him in the following terms: 'If you still want employment, go and see Towers.' That comment falls far short of any real effort on Moonlighting Transport's part to find (the employee) suitable alternative employment..." 13 There is no doubt that Post Logistics have made efforts to arrange for alternative engagements for its retrenched contract carriers - and five of them actually took up the offer made to them in that respect. I would not wish to in any way suggest in this decision that it should be in the same position as a principal contractor who made no efforts at all in that respect. To do so would discourage a principal contractor from making any efforts to find its retrenched contract drivers alternative work, which is clearly a desirable thing for him to do and something that it would be appropriate for me to have regard. Consequently, I reject Mr Bull's primary submission that the retrenched contract carriers should receive the redundancy pay prescribed in Clause 6(i) without any discounting at all. 14 But the question remains whether the arrangements which Post Logistics actually did put in place was "...suitable alternative work..." in terms of Clause 6(iii) for the retrenched contract carriers - see, for instance, the unreported decision of McKenna C on Friday, 10 July, 2009 in the Sigma Pharmaceuticals Redundancy Case [Matter Nos.IRC 628 and 884 of 2008]. That is an objective test on my part and I am not concerned to distinguish between those contract drivers who accepted work with Messenger Post and those that did not. If the offer made by Messenger Post was not for "...suitable alternative work..." then whether the contract couriers accepted it or not is irrelevant for the purposes of determining the dispute before me. 15 Mr Bull suggested in his submissions that, since Post Logistics was motivated by cost savings in retrenching its contract carriers, it must naturally follow that the cost savings achieved were at the expense of the contract carriers, ie the Messenger Post contract was not as beneficial to them as the arrangements in place for them in Post Logistics, particularly those contract carriers still covered by the SWADS agreement. Mr Bull commented in written submissions: "....The only inference is that Australia Post, as a global entity, expected to achieve financial savings from the review that saw the contract carriers terminated from Post Logistics and offered positions at Messenger Post. The only logical way that such savings can be achieved is if the remuneration and other costs associated with the contract carriers engaged by Post Logistics are reduced. The union says that this reduction in costs was achieved in three ways. First, the workforce was reduced: a number of the carriers engaged by Post Logistics did not accept engagement with Messenger Post. Second, non-transferable credits were lost; on the face of it rights to redundancy are purportedly being extinguished and ability to be paid consistently at the higher SWADS rate. Thirdly, the carriers who did accept engagements have done so on terms that are financially advantageous to Australia Post..." 16 There are, indeed some differences between the contractual relationship which the nine contract carriers had with Post Logistics (or more particularly the SWADS agreement which still applied to some of them) and the offer made to them by Messenger Post. Mr Selig outlined in a the written statement which formed the basis of his evidence a range of benefits in the SWADS agreement that have been lost in the Messenger Post contract, eg a guarantee of a minimum start of four hours each day, recognition of goodwill, higher insurance payments, provision of uniforms and footwear free of charge, some payment for damage to freight in transit, etc. 17 However, Ms Bernisconi submitted that in considering whether Post Logistics had obtained "...acceptable alternate work..." for the retrenched contract carriers within the meaning of Clause 6(iii) it was not appropriate to examine each change in the working relationship individually but to approach the issue looked at globally. I agree. It is a question of evaluating the arrangements the contract carriers had with Post Logistics and comparing it with the Messenger Post offer as a package. And I note that the contract carriers who did take up work for Messenger Post are continuing to receive remuneration generally comparable to what they were earning when working for Post Logistics. 18 Nevertheless, to my mind, there are sufficient differences in the previous arrangements under which the contract couriers worked under the SWADS agreement for Post Logistics and the offer made for work with Messenger Post to justify some payment in the nature of severance payment to them. As far as Mr Kostrubiec is concerned, a higher level of severance pay would be appropriate, in my opinion, having regard to his decision not to form himself as a corporation - something he had every right to do, but which then limited his ability to take up work for Messenger Post. There is no convincing evidence before me in this hearing that those contract carriers who moved over to the Post Logistics contract in the middle of 2009 suffered sufficiently to warrant severance payments. I accept for them that the offer made by Messenger Post was "...acceptable alternative work..." for the purposes of Clause 6(iii). 19 In the circumstances, I have assessed the entitlements of the following contract drivers to a reduced level of severance payments as follows: * Mr Kulibab should receive the sum of $9,500.00; * Mr Walsh should receive the sum of $7,700.00; . * Mr Kostrubiec should receive the sum of 15,400.00; * Mr Murphy should receive the sum of $8,900.00; * Mr Santos should receive the sum of $10,300.00;. * Mr Nguyen should receive the sum of $9,200.00; 20 I acknowledge that those figures represents fairly rough calculations on my part but I consider them to be fair in all the circumstances. I direct the parties into further discussions concerning this matter. It would be open to me to make orders under the small claims jurisdiction provided by Ss.379 and 380 should such an application be necessary. I reserve the rights of the TWU in that respect. P J CONNOR Commissioner 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.