Industrial Relations Commission New South Wales Medium Neutral Citation: Transport Workers' Union v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIRComm 22 Hearing dates: 3 September 2012; Oral submissions 12 March 2013 Decision date: 27 March 2013 Jurisdiction: Industrial Court of NSW Before: Haylen J Decision: Having regard to the determination of Mr Latai's entitlement to redundancy pay under the preserved award, the Court makes the following orders: (i) the respondent is to pay Mr Latai the equivalent of 20 weeks' pay, being severance pay due to redundancy under the provisions of the preserved collective State agreement, namely, the Collex Pty Ltd Domestic Waste Collection Divisional Agreement 2005/2008 and the incorporated terms of the Transport Industry - Redundancy (State) Award applying at 27 March 2006. (ii) in accordance with the provisions of s 547(2) of the Fair Work Act 2009, interest is to be paid in an amount agreed to by the parties and in the absence of agreement, as ordered by the Court. Catchwords: FAIR WORK ACT 2009 - s 44(i), s 119 - alleged redundancy in domestic waste collection industry - breach of preserved collective State Agreement by failure to pay redundancy - alternatively, failure to pay redundancy in accordance with Act - whether employee terminated due to the ordinary and customary turnover of labour - employer's contract with Local Council reaches term and not renewed - waste collection contracts in Local Government regularly turned over - employers practice to find other work within the business for employees when contract not renewed - no evidence of dismissal of employees in such circumstances - employee had reasonable and settled expectation of continuing work - employment not for fixed term or particular task or restricted to a particular Council contract - work not intermittent - termination of employment not due to ordinary and customary turnover of labour - employment governed by preserved collective agreement - employee entitled to 20 weeks redundancy pay Legislation Cited: Employment Protection Act 1982 (NSW) Fair Work Act 2009 Cases Cited: Briginshaw and Briginshaw (1938) 60 CLR 335 Crooks Michell Peacock Stewart Pty Ltd & ors v Watkins and ors (1984) 9 IR 182 Fashion Fair Pty Ltd v The Department of Industrial Relations (Inspector Rouse) (1999) 92 IR 271. Northwest Exports Pty Ltd v Coxon (1986) 15 IR 166 Norwest Beef Industries v Holsworth (1986) 15 IR 373 Re Application for Redundancy Awards re Transport Industry Mixed Enterprises Redundancy (State) Award; Re Clerks Redundancy (State) Award; Re Electricians etc State Redundancy Award (1994) 53 IR 419 Shop Distributive and Allied Employees' Association (NSW) and ors v Countdown Stores and Ors (1983) 7 IR 273 Tempo Services Ltd and T M Klooger and ors (Sydney, 19 November 2004. Australian Industrial Relations Commission, unreported Print PR953337). Termination, Change and Redundancy Case (1984) 8 IR 34 Termination, Change and Redundancy Case (1984) 9 IR 115 Category: Principal judgment Parties: Transport Workers' Union of New South Wales (Applicant) Veolia Environmental Service (Australia) Pty Ltd (Respondent) Representation: Mr A Hatcher SC (Applicant) Mr I Taylor SC (Respondent) Transport Workers ' Union of New South Wales (Applicant) M+K Lawyers(Respondent) File Number(s): IRC 423 of 2012 Judgment BACKGROUND 1Mr Aneterea Latai ("Mr Latai") was employed by Veolia Environmental Service (Australia) Pty Ltd ("Veolia") from approximately June 1996 until 9 March 2010 as the driver of a side loader vehicle engaged in waste removal services supplied to Local Government bodies. Veolia supplied those services under contracts with individual Local Government bodies. In order to continue providing those services Veolia was required to re-tender for provision of the services at the conclusion of each contract. 2On 9 March 2010, Mr Latai was working for Veolia at Alexandria in relation to Veolia's contract with the Sydney City Council ("SCC") to provide waste removal services. On that day Veolia's contract with Sydney City Council concluded: Veolia had not been successful in tendering for the new contract. On the same day Mr Latai's employment with Veolia was terminated. Mr Latai was not given written notice of the day of termination of his employment and was not paid any sum for redundancy. 3It is in these circumstances that the Transport Workers' Union ("TWU") commenced proceedings in this Court against Veolia seeking a pecuniary penalty order under the provisions of Pt 4.1 of Fair Work Act 2009 ("the Act") and also seeking orders that Veolia make payments in lieu of notice as well as making redundancy payments to Mr Latai as required respectively by s 117 and s 119 of the Act. 4At the commencement of the hearing the TWU indicated that it was thought necessary to amend the Application to make specific reference to a contravention of s 44 of the Act and to allege a breach of a preserved collective State Agreement. That foreshadowed amendment, with the concurrence of Veolia, did not prevent the evidence filed from being dealt with on the first day that the matter was listed for hearing but did require a timetable to be established for the filing and serving of the proposed amendment and the possibility that further evidence would be required by the parties. The matter proceeded on the basis that, at the resumed hearing, the question of amendment would be dealt with and if allowed, any further evidence would then be received and the parties would conclude their submissions on the same day. At the resumed hearing the Amended Application was not opposed and no further oral evidence was called. The Amended Application sought as the priority remedy the payment of redundancy in accordance with the provisions of a preserved collective State agreement, namely, the Transport Industry - Redundancy (State) Award. In the alternative, a claim was made for the payment of a redundancy in accordance with the provisions of s 119 of the Fair Work Act. Under the Amended Application no penalty was sought against Veolia. STRUCTURE OF THE FAIR WORK ACT 5Chapter 4 of the Act deals with compliance and enforcement provisions. Under s 539(2) a contravention of s 44(1) is described as a civil remedy provision with a maximum penalty of 60 penalty units. Section 44(1) provides that an employer must not contravene a provision of the National Employment Standards. Proceedings for a civil remedy may be brought, inter alia, by an employee organisation and those proceedings may be, amongst others, brought in "an eligible State" court. Section 12 defines an "eligible State court" to include the Industrial Court of New South Wales. 6By s 43 (1) the main terms and conditions of employment provided under the Act are those set out in the National Employment Standards. Those standards are set out in Pt 2.2 of the Act. As already noted, by s 44(1) an employer must not contravene a provision of the National Employment Standard. Under Pt 2.2 of the Act, Div 11 deals with notice of termination and redundancy pay. In this Div, s117(1) provides that an employer must not terminate an employee's employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given). Sub-section 3 sets out the minimum period of notice and having regard to Mr Latai's employment history, if eligible, he was entitled to four weeks' notice. Section 119 of the Act deals with entitlement to redundancy pay and provides as follows: (1) An employee is entitled to be paid redundancy pay by the employer if the employee's employment is terminated: (a) at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to ordinary and customary turnover of labour; or (b) because of the insolvency or bankruptcy of the employer. If Mr Latai was able to make out his case for redundancy pay under the Act he would qualify for a redundancy payment equal to 12 weeks at his base rate of pay for his ordinary hours of work. If the primary claim was successful, redundancy pay of 20 weeks' salary was payable. THE EVIDENCE 7Mr Latai provided a statement and also gave oral evidence. Since the commencement of his employment with Veolia and previously when the company was known as Collex Waste Management ("Collex") he stated that he had obtained a full-time position as a driver, initially driving a one-armed side loader waste vehicle. Throughout his employment with Veolia he was always "a full-time permanent driver." He usually worked within the Warringah Council area as Veolia had a contract with that Council to provide waste disposal services. Mr Latai said that he took as much overtime as he could to support his family and frequently was directed to work additional hours within the boundaries of Ku-ring-gai Council and at Hornsby Shire Council. It was common practice to be directed to assist other employees of Veolia working in Ku-ring-gai and around Hornsby. He regularly transported vehicles between different yards as directed by managers of the Veolia: he had all the necessary licenses and was experienced in handling the various types of vehicles used by Veolia in waste work across Sydney. 8There was no restriction placed on Mr Latai requiring him to work only within the Warringah Council area and he was never instructed that he could not work outside that area which fell under the company's contract with Warringah Council. He was not aware of the boundaries within which that contract was carried out by Veolia. In fact he was frequently directed to perform other general waste work in areas other than Warringah, pointing to the work he performed at Ku-ring-gai and Hornsby. 9In early 2008, Mr Latai and other workers became aware that Veolia had lost the Warringah contract to United Resource Management Group Pty Ltd ("URM"). He attended a few union meetings where he was told that there would be no work for those working under the Warringah contract but there may be jobs available with URM. He believed that some of the employees obtained positions with URM but Veolia did not provide him with much information about that work. Mr Latai did not wish to take a job with URM because he regarded the money as being inferior and the starting points for work would have been remote from his home. Mr Latai noted that most of the workers who took positions with URM lived on the northern beaches. 10At that time Mr Latai told his then supervisor and Mr Greg Roberts, the area manager for Veolia, that he wished to stay with the company and would work wherever he was directed to perform duties. In approximately July 2009 Veolia ceased to provide waste services to Warringah Council. Mr Latai was part of a small group of Veolia employees who were called upon to clean the Cromer depot yard, work that lasted approximately one week. He was then involved in transporting trucks to Enfield, Alexandria and Hornsby and on approximately 9 July 2009 he started work as a driver at the Veolia Hornsby yard. He was then directed to perform work mainly within the Hornsby Shire Council area. 11In early 2010, Veolia lost the Hornsby Shire Council contract to Cleanaway. Mr Latai said he did not receive much information about what would occur after Veolia lost the contract but there were union meetings held to discuss the matter. A number of Viola workers who lived in the local area sought jobs with Cleanaway but Mr Latai did not live locally and he did not wish to have a permanent job with Cleanaway at Hornsby but wanted to stay with Veolia. 12Following Veolia's loss of the Hornsby contract, Mr Latai said that he was told to work out of the Borrow Road depot in Alexandria. This was a yard maintained by Veolia and provided waste services to the SCC. He said he had no choice about this work because if he wanted to stay with Veolia that was the only place where the company had work available: Mr Latai, therefore, worked on the company's contract with the SCC at Alexandria. 13Mr Latai then became aware that the company was unlikely to retain the contract with the SCC and it was probable that URM would take over the contract. He said there were a number of union meetings but he did not recall any formal staff meetings being conducted by Veolia in relation to the possible closure of the Borrow Road depot. He did not recall receiving any notices or correspondence from Veolia concerning his future employment or possible termination. He wished to stay with Veolia as he was used to doing the work and he regarded himself as being treated quite well and well paid - therefore, he wanted to remain with the company doing his job. He recalled that there was some discussion about obtaining employment with URM and the union organiser at one of the meetings had indicated that URM had the SCC contract and may be employing drivers. There was no formal process concerning this work and the only information Mr Latai had received from Veolia was that employees at Borrow Road should approach URM to continue to do waste work for the SCC. In addition, Mr Latai heard from co-workers and union representatives that, under URM, the hours of work were to be changed and the days would be longer and the pay would be less. The terms and conditions of the URM work were discussed at union meetings. Mr Latai did not wish to work for URM but wished to stay with Veolia, mainly because of the better terms and conditions of employment. He therefore did not seek to obtain work with URM after that company commenced performing the SCC waste work. 14Mr Latai said he returned to work on 9 March 2010 after being absent on sick leave for one day. He was working the 1.00 am shift and returned to the yard at the usual time of approximately 10 am and commenced filling out the normal paper work. At approximately 10.30 am, Mr Roberts informed him that this was his last shift and thanked him for his service with the company. Mr Roberts, who was then Mr Latai's supervisor, wished him the best for his future and told him not to hesitate to call him if he wanted to work again for the company. Mr Roberts gave him a copy of his card and an employment separation certificate from the company. 15Mr Latai said that, until 9 March 2010, although he knew that Veolia's contract with the SCC was coming to an end, he did not know the precise date in which the Borrrow Road yard would cease to operate. He was hopeful that he would be transferred within the company and was unaware that his employment with Veolia was coming to an end. He did not receive any further correspondence from Veolia concerning his termination and did not receive any redundancy payment. He did not receive written notice of his termination from the company or payment in lieu of notice. After 9 March 2010 Mr Latai was unemployed for approximately eight weeks and was unable to obtain unemployment benefits as he had money in the bank and his wife worked. By May 2010 he had obtained a position driving a waste truck with Blacktown Council, a position he has held to the present time. That position, however, was not a permanent position but was a casual position. 16In cross-examination it was put to Mr Latai that he began initially as a casual but by October 1997 "became a permanent employee." Mr Latai did not accept that proposition and regarded himself as being permanently employed from the beginning of his engagement in June 1997. He accepted that his work at that time was on the Collex Warringah Council contract. When he heard that Veolia may lose the Warringhah Council contract Mr Latai denied he understood that, if the contract was lost, jobs on that contract and his job would no longer exist. He accepted that, when the new contractor was engaged, all employees working for Veolia on the Warringah contract were offered an opportunity to work for the new contractor. There were meetings of Veolia employees where they were encouraged to apply for work with the new contractor. At those meetings the employees were told that the new contractor had jobs for all Veolia employees who had been working on the Warringah contract. Mr Latai applied to the new contractor for work and was offered employment but he rejected that offer. 17It was accepted by Mr Latai that when the Warringah contract ended he was "moved to work on the Hornsby contract" and worked out of a depot at Mount Kur-ring-gai. In the second half of 2009 Mr Roberts, at a meeting of employees, told them that the Hornsby contract had been lost and the contract would conclude at the end of January 2010. All Veolia employees performing work on the Hornsby contract were encouraged to apply for work with the new contractor. Mr Latai accepted the proposition that, for those who did not go to the new contractor, "Veolia would try to re-deploy them but Veolia's capacity to do so was becoming less and less." Mr Latai did not take a job with the new Hornsby contractor because he did not regard the conditions as being as good and they were paying less but the real reason for not taking that job was the long hours with the runs becoming longer. This was something he was told in interviews with the new contractor. Mr Latai accepted the proposition that, when the Hornsby contract came to an end, there were a small number of employees who continued to work with Veolia and the remainder of the employees stopped working for the company. 18From his experience with other companies and with Veolia, Mr Latai understood that companies had contracts with Councils for a set period of time and at the end of that time there was a tender process where the company may win or lose the tender. He understood that if the tender was lost, all jobs on that contract would no longer exist but he did not know that they were going to have to leave the company. When the Hornsby contract was lost there were three options available that Mr Roberts spoke about in meetings: to go to the new contractor, to find other employment or if possible, obtain re-deployment with Veolia. There was no discussion about Veolia making redundancy payments. 19When Mr Latai was working on the Warringah and Hornsby contracts he and other workers had been told that they were working on either the Warringah or Hornsby contract. In relation to the SCC contract Mr Latai said he was told to go to Alexandria and was not told to go to a particular place but he knew he was working on the SCC contract. Mr Latai denied that Mr Roberts told him that Alexandria was the only position available - he was simply told to go to Alexandria. He was told that it would not be long before the contract at Alexandria would be terminated. It was put to Mr Latai that Mr Roberts said he would see if there were positions available for him with Veolia's bulk operations but Mr Latai denied such a conversation took place. Mr Latai said that, in their conversations, Mr Roberts did not mention any bulk work. He said that when he commenced at Alexandria he knew the contract was about to come to an end. He did not know when that would occur but he knew he was going to work at Alexandria and was told by someone else that the contract was coming to an end. A week before the contract ended, Mr Latai knew that the contract was to end on 9 March 2010. When pressed on the matter Mr Latai stated that he had read Mr Robert's evidence about being offered a bulk operations job but denied that he was made such an offer and stated that he had not had any correspondence with Mr Roberts about any bulk jobs. Mr Latai said that, if he had been offered the bulk operations position, he would have turned it down because of the hours of work. Mr Latai agreed that, when his employment was terminated, Mr Roberts said that the reason was that Veolia had lost the contract with SCC and there was no more work available for him. When Mr Latai commenced work with Veolia he was given information about the work to be performed but when he was sent to perform other work, he was not given a new letter or a letter of appointment. 20In cross-examination Mr Latai denied that, when he became aware that the Warringah contract had been lost by Veolia, his job therefore no longer existed. He recalled that in February 2009 there was a meeting at the Cromer Depot where Mr Roberts spoke of the loss of the Warringah contract. At that meeting all employees were encouraged to apply for new positions with URM and that it was understood that URM had jobs for all of the Veolia employees who had worked on the Warringah contract. Mr Latai did apply to URM and was offered employment but rejected that offer. He was aware that in the first half of 2009 Veolia had lost other contracts. 21In the second half of 2009 Mr Latai accepted that he had been told that Veolia had been unsuccessful in retaining the Hornsby contract. Mr Roberts attended meetings with the Hornsby drivers and told them the contract would end in January 2010. Cleanaway had obtained that contract and the drivers were encouraged to apply for work with Cleanaway. Mr Roberts said that if they did not obtain work with Cleanaway he would try to re-deploy them but Veolia's capacity to re-deploy people was diminishing with the loss of other contracts. 22Mr Latai accepted that he understood that Veolia had contracts with Councils and they could be won or lost by the company. He knew that if a contract was lost, jobs were lost but he did not know that he would lose his job with Veolia in those circumstances and that was not his experience. After the Warringah contract was lost he worked at Hornsby and after Hornsby he worked at Alexandria. In relation to the loss of the Hornsby contract he agreed that there were meetings about the availability of work with Cleanaway with the option of going elsewhere or being re-deployed with Veolia. There had not been any discussion about redundancy payments. Mr Latai denied that, towards the end of his employment at Borrow Road, Mr Roberts had offered him different work, namely, working on Veolia's bulk operations. Mr Latai said that, if such work had been offered, he would not have accepted it because of the different nature of the work. 23Mr Gregory Roberts, at all relevant times, was the manager of municipal contracts for Veolia. He provided a statement and gave sworn evidence in the proceedings. Mr Roberts spoke of the industry as being "highly competitive" noting that domestic waste collection contracts for various Councils within the Sydney region were put out for tender on a regular basis. The usual contract periods were for five, seven or ten years with, in some cases, options to extend that period if so desired by the Council. Mr Roberts identified Veolia's five major competitors during this period. 24Speaking from his experience Mr Roberts outlined the elements necessary to be able to successfully tender for this work, including the necessary infrastructure involving, amongst other things, maintenance capacity and supervisors, an ability to effectively respond to ratepayers' concerns in the management of the contract and the ability to operate a range of vehicles to meet the varying requirements of Councils. He spoke of the relatively low margins available to successful tenderers and the fact that, in re-tendering, a Council's requirements may have altered leaving the tender process, in effect, addressing a new contract arrangement. This combination of variables meant that a company could not be confident that its contract would be renewed at the expiry of the term and it was common experience to have a regular change in the companies providing waste services to Councils. 25When Mr Roberts assumed the role of manager of municipal contracts in June 2007 there were a number of contracts with different expiry dates: three contracts were due to expire between February and June 2009, two were to expire between January and March 2010 and two were to expire from mid-to-late 2014 while Botany's contract operated from year-to-year. Veolia operated out of a central depot, preferably located within the geographic area of the particular Council, although this was not always possible. Sometimes it was a requirement of the contract. 26The business of Veolia was organised having to regard to the specific requirements of the contract with each Council. Employees were allocated to a specific Council contract although, from time-to-time, a supervisor would direct an employee to assist in an adjacent Council area but Mr Roberts did not regard such work as forming part of the essential duties of the employees. Another exception was establishing a small number of "floater" positions who could work in either Ku-ring-gai or Hornsby areas after the Warringah Council contract was terminated. Those positions were dependent on having sufficient work for each of the contracts. 27Mr Roberts referred to arrangements made with the TWU leading to higher wages and conditions that caused difficulties for Veolia in tendering competitively for Council contracts. In 2006 the company tendered for the renewal of the Leichhardt Council contract but was unsuccessful while in 2008/2009 its tender for the renewal of the Randwick Council contract was also unsuccessful. Further, in 2009 the tender for the renewal of the Hornsby and SCC contracts were lost. 28In relation to Mr Latai, his employment with Veolia commenced in approximately June 1997. He was engaged as a driver of a side loader vehicle working out of the Cromer depot and was to work on the Warringah Council contract. Mr Roberts said that, in performing this work, Mr Latai was engaged under the terms of the Transport Industry - Waste Collection and Recycling (State) Award as varied by the VES Warringah Domestic Waste and Recycling Services EBA 2008. 29The Warringah contract expired on 30 June 2009 and the company did not re-tender for the work because it did not believe that it would be able to lodge a competitive and profitable tender. All employees engaged in connection with the Warringah contract were informed of the company's decision not to re-tender for the contract and Mr Roberts attended a number of meetings at the Cromer depot commencing in February 2009 in relation to the termination of the contract. Mr Latai was present at several such meetings. At these meetings all employees were encouraged to apply to the new contractor for work. The company assisted its employees in seeking alternative employment with a new contractor by arranging discussions between that contractor and its employees concerning the terms and conditions being offered and arranging for job interviews. It appeared that the new contractor potentially had jobs for all of the company's employees who had been working on the Warringah contract and there were certain benefits in picking up those experienced people recognised by both the new contractor and the Council. 30In relation to the employees who did not gain alternative new employment with the new contractor or arranged for other employment, Veolia sought to re-deploy such employees in its remaining domestic waste operations having regard to, amongst other things, the employees' preferred work location and the company's operational needs for the remaining contracts. At Warringah, between 15 and 20 employees took employment with the new contractor, 6 obtained employment elsewhere and the remainder (between 9 and 14) were re-deployed to other Veolia contracts in domestic waste. 31After the Warringah contract concluded, Mr Latai accepted work as a "floater" driver in connection with the Hornsby and Ku-ring-gai Council contracts from July 2009. In this work Mr Latai was covered by the VES Hornsby Domestic Recycling and Clean Waste Services EBA 2009. In this role Mr Latai performed driving tasks in connection with both Councils. Mr Latai had a preference for Ku-ring-gai work because it was closer to his residence. The Hornsby contract was to conclude in 2010. Veolia tendered for renewal of the contract in the second half of 2009 but was informed that it had been unsuccessful and that Cleanaway had been awarded the contract. Again, all employees engaged by the company in connection with the Hornsby contract were informed that Veolia had been unsuccessful in retaining the contract, that Cleanaway had been awarded the contract and this occurred at a series of meetings held in the Mt Ku-ring-gai depot commencing from approximately October 2009. Mr Latai was present at several such meetings. At these meetings the employees were told that they should consider applying for positions with Cleanaway and that Veolia would try to re-deploy those who did not gain alternative employment with Cleanaway but noting that Veolia's ability to re-deploy was reducing because it had lost several other contracts, including the Warringah contract. 32Veolia assisted its employees to seek alternative employment with Cleanaway by arranging discussions between that company and its employees concerning the terms and conditions being offered and also arranging job interviews. The offers made by Cleanaway were broadly equivalent to the conditions available to Veolia employees although there was a $1 or $1.50 lower hourly rate and prior service with Veolia would not be counted as service with Cleanaway. That work was covered by a 2009 enterprise agreement. Mr Roberts understood that Cleanaway potentially had jobs for those Veolia employees who had previously worked on the Hornsby contract. A number of employees were concerned that living on the Central Coast they would not be well suited by Cleanaway basing its operations at Blacktown rather than at Mt Kur-ing-gai where Veolia had operated. This was thought not to be of great concern to Mr Latai who lived much closer to Blacktown. 33The Veolia employees who did not gain alternative employment with the new contractor or obtain other employment were sought to be re-deployed in Veolia's remaining domestic waste operations having regard to the employee's preferred work location and the company's operational needs. There were approximately 24 full-time employees at Hornsby of whom nine took alternative employment with Cleanaway and a number of others were able to obtain employment in the Hunter Valley. Mr Latai apparently applied for alternative employment and was made an offer by Cleanaway but declined to accept that offer. 34While Veolia was managing the Hornsby situation, the SCC contract was due to terminate on 9 March 2010. Veolia had tendered for renewal of the contract in late 2009 but in December 2009 had been informed by the Council that its tender had been unsuccessful. In early December 2009 Mr Roberts called a meeting of all employees, held at the Alexandria depot. He informed them that the company had been unsuccessful in re-tendering for the SCC contract and stated that the URM group had been awarded the contract. He told employees that they should consider applying for a position with URM and that Veolia would try to re-deploy those who did not gain employment with URM although re-deployments would be difficult because of the number of contracts lost by Veolia in recent times. 35In late December 2009 URM posted a notice to Veolia employees inviting them to apply for positions with URM. Again, Veolia assisted its employees to seek employment with URM by arranging discussions with the new contractor about the terms and conditions to be offered and arranging job interviews. Mr Roberts spoke at further meetings with employees engaged under the SCC contract and at a January 2010 meeting urged all Veolia employees to consider applying for a job with URM as the company contract would end on 9 March 2010. 36In mid-January 2010 the TWU had written to Mr Roberts stating that its primary aim was to facilitate suitable alternative employment for members affected by Veolia's loss of the contract to URM. The letter indicated that the union considered "that suitable alternative employment" had to involve terms and conditions "no less favourable" than those currently enjoyed by employees along with preserving accrued entitlements and recognition of employees' continuity of service with Veolia. The union understood that the terms and conditions offered by URM were significantly inferior to those available with Veolia and that URM was, at that stage, refusing to recognise employees' prior service or the maintenance of accrued entitlements. 37In early February 2010, Mr Roberts recalled having a conversation with Mr Latai in the context of the Hornsby contract ending and what would happen to him. In that conversation Mr Roberts said all that was available was work at Alexandria and that would not be available for long because the company's contract was about to end. He told Mr Latai that he should have taken a job with Cleanaway or URM but that he would see if there were any available positions "in our bulk operations." Following that conversation Mr Latai commenced work as a driver working out of the Borrow Road depot, Alexandria under the SCC contract. In that employment Mr Latai was covered by the Collex Pty Ltd Domestic Waste Collection Divisional Agreement 2005/2008. 38On 19 February 2010, Mr Roberts attended another meeting of employees working on the SCC contract and again urged Veolia employees to apply for a position with URM, repeating that the SCC contract would end on 9 March 2010. By reference to records, Mr Roberts was able to say that there were 18 full-time employees remaining who had not been re-deployed by Veolia into its bulk or remaining domestic operations or had resigned prior to that time. Of those, thirteen had applied for positions with URM and three had accepted those positions with the remainder declining employment if offered or not attending for an interview. Mr Latai did not apply to URM but applied for work at Blacktown Council. He was offered two days per week but declined that work. 39A further conversation occurred between Mr Roberts and Mr Latai prior to 10 March 2010. Mr Latai was informed that a driver's position was available with Veolia's bulk operations. Mr Roberts said that the duties were similar to a driving role on domestic waste with Mr Latai being required to drive a truck to various locations to either deliver or empty large skip bins. There was less looking and moving around as there were no runners involved in this work. The rates of pay were less than for the Veolia domestic work but involved more hours compared to the domestic work of job and finish. With regular overtime that was available to bulk drivers, gross earnings were potentially comparable to domestic waste drivers. The other terms and conditions of employment were substantially similar to those of domestic waste drivers. Mr Latai subsequently informed him that he was not interested in the position as a bulk driver. 40Mr Roberts spoke of Veolia taking all reasonable steps to procure alternative employment for employees affected by any loss of contract but stated that those circumstances were not due to any restructuring by the company, nor were they due to the impact of adverse economic circumstances resulting in collective redundancies. When Veolia had a number of domestic contracts it had the capacity to offer re-deployment to employees or other contacted work and this could be accommodated by using less casual labour. Mr Latai would not have been employed initially had the company not been successful in obtaining the Warringah contract. He would not have subsequently been offered work on the Hornsby contract and briefly on the SCC contract if Veolia did not have some work that needed to be done in connection with those contracts over the remainder of their terms. 41In cross-examination, Mr Roberts stated that Mr Latai started with Collex in June 1997 as a casual employee and became a permanent employee later that year. Collex later became known as Veolia. In the company a permanent driver was an employee who had a permanent job to do five days per week on a certain run while a casual would be used when permanent employees were absent or where extra runs were to be completed on a particular day. A casual may have been used two, three or four times per week and very rarely, five times per week. When contracts came to an end the casual employees were no longer required. The company's view was that it would be "in the best interests to look after the permanent employees" and the company tried to re-deploy them into other contracts. If there were casuals working on the other contracts they would be replaced by re-deploying a permanent employee. The company looked after its permanent employees. The other contracts were with various Councils and often of a lengthy period of five or sometimes seven years and could be extended for up to ten years. They would not all end on the same day or year and therefore some contracts would cease prior to others ending. 42In relation to bulk work operations, Mr Roberts recalled that within the last week of Mr Latai's employment at Alexandria he offered the bulk operation position but Mr Latai was not interested. The company was trying to re-deploy as many permanents as possible and was trying to use any positions that were available. 43In relation to the Warringah contract, Mr Roberts advised employees that it was in their best interests to look for employment elsewhere and apply to the new contractor. Veolia realised that there were not enough positions for re-deployment but were doing their best to re-deploy those who could not get other employment. Some employees left prior to the contract concluding and applied for employment elsewhere because they knew the contract was coming to an end. 44Mr Roberts was unable to say how other companies operated penalty provisions or to indicate why penalties were more of an issue with Veolia than other companies. He accepted that labour price was an issue beyond the Warringah contract and applied to all municipal contracts in Sydney. At one stage, in 2008, Randwick employees agreed to take a pay cut to help the company gain the contract, nevertheless, the company was priced out of that contract and it was awarded to a competitor. In relation to two contracts, the wage levels were not an issue and were similar thus allowing a transfer of the company's employees to the new contractor. In relation to the Hornsby contract, many of the drivers wanted to commute from the Central Coast and therefore chose to go with the new contractor because wages and conditions were similar. Ten years ago Veolia had eight contracts and now had three. The contracts now held by Veolia were Woollahra, where the contract would expire in 2014 and the Ku-ring-gai contract, having a possibility of going through to 2016. Botany was a year-to-year proposition. The last time the company won a tender for a municipal contract was in 2004. 45The company had done everything possible to ensure Mr Latai's employment, including offering him a job in the bulk operations but he declined that position. Mr Roberts said he could not make a position available to save existing employees or to keep someone employed "if there is no position available." He could only offer what was available and Mr Latai declined that position and another employee took up that role. At that time, if the company had eight contracts or won other contracts, there was more opportunity for re-deployment and Mr Latai would still be employed. 46Mr Roberts confirmed that the company's approach was that, when a contract was either lost or not tendered for again at its expiration, employees were encouraged to obtain positions with the new contractor or to obtain other employment. Those who were left were re-deployed within the company if the company had positions available. The company would do what they could to re-deploy persons who had not obtained other employment. At Warringah some employees joined the new contractor, some left the company and everyone that remained was re-deployed within Veolia. No employee was dismissed as a result of the loss of the Warringah contract. The same approach was taken when the Hornsby contract was lost. 47In relation to the SCC contract and the meetings the company held with employees, Mr Roberts accepted that he did not tell the employees that if they did not apply for a job with the new contractor, they would be dismissed. It was put to Mr Roberts that the loss of a contract was not necessarily the end of the line for the employees: he replied that the contract did not necessarily mean the end of Mr Latai's employment and he had been offered a position in bulk operations. There was no position in the Ku-ring-gai or Botany contracts to offer him as they were filled with permanents. Each yard had their own union and policy and no permanent employees were to be sacrificed for other permanent employees who did not work in that yard and it did not matter how long the person had been employed. The company would not employ a casual in a permanent position if there were permanents that wanted the job. 48After Mr Latai finished work on the Hornsby contract, Mr Roberts accepted that he said to him words to the effect "You will be going to Alexandria." He did not say to Mr Latai that he would be going to work on the SCC contract. He accepted that the Alexandria depot included the SCC contract but also included two other contracts. The other contracts "were fully complemented with permanents." 49Mr Tony Khoury, executive director of Waste Contractors and Recyclers Association of New South Wales, provided a statement. After objections, the remainder of his statement was tendered: he was not required to give sworn evidence and was not cross-examined. Mr Khoury spoke of the Association as being a registered industrial body of employers concerned with business issues arising in the waste and recycling industry. It had been a registered body since 1948 and was registered under both New South Wales legislation and Fair Work Australia. The Association provided members with advice and support on a broad range of employment and industrial matters. The Association had 146 members who owned, operated and controlled an estimated 95 per cent of the commercial waste and recycling collection vehicles in New South Wales. A Council contract for waste or recycling collection was usually obtained by a member of the Association. 50Within the Sydney metropolitan region there were 40 Councils of which approximately two-thirds currently contracted out the provision of waste and recycling collection to specialist companies, being members of the Association. Councils who did not contract out their waste and recycling collection operated on a "day labour" basis, directly employing drivers to operate the vehicle owned or leased by the Council and operating from a Council depot, 51The tender process for a Council contract was described as "highly competitive." Mr Khoury accepted that at least four or five members of the Association put forward expressions of interest for such contracts. There were nine major waste and recycling companies operating in the Sydney region, including Veolia. Contracts were generally offered for five, seven or ten years. The most usual contract was for a term of seven years. The competitive nature of the industry and the relatively tight margins involved meant that an incumbent service provider could not be confident that its contract would be renewed upon expiry. There were regular changes in the companies providing contract services and this was a feature of the industry. Mr Khoury referred to information that indicated that a minimum of 18 Council contracts had changed hands in the Sydney metropolitan region over the past ten years. In some cases Council contracts had changed hands on more than one occasion during that period. 52Mr Khoury described three broad categories of employment arrangements existing in the industry amongst Association members: some member companies were relatively highly unionised and were the subject of enterprise bargaining arrangements with the union; some member companies were less unionised and operated on terms and conditions laid down by award, plus over-award payments and discretionary bonuses; some member companies strictly paid under and applied the terms of the industry award, including transitional amounts from the pre-modern award to the modern award. One pressure on member companies resulted from operations under enterprise bargaining agreements, arrangements that had increasingly being paying higher rates of pay than those operating under the other two broad categories, thus finding themselves in a less competitive position. 53It was Mr Khoury's experience in this industry that the vast majority of employees of a contractor who had been unsuccessful in renewing a contract would be offered employment by the incoming contractor. There was a long history of groups of employees surviving a number of different contractors operating waste and collection services for a particular Council. This occurred because both Council and the incoming contractor saw the benefit in having continuity of experienced drivers who had knowledge of particular runs in the Council area. Mr Khoury believed that most employees for an incoming contractor would come from the workforce of the outgoing contractor with the remaining positions being sourced through job agencies, advertisements and through the incoming contractor using any surplus existing employees. More recently, the disparity between pay and conditions between members of the Association had led to a reluctance in employees of an unsuccessful tender enjoying higher EBA rates, to accept employment with a new contractor operating strictly on award rates. 54When there was a change of contractor the Association had urged its members to make arrangements with the incoming contractor for the employment of existing employees and to encourage the outgoing contractor to have its existing employees engaged in connection with the new contractor. Association members were also encouraged to assist their employees to improve skills, including interviewing skills and preparation of a CV. 55In evidence in reply, Mr Latai said that he did not know of a system nor did he have an expectation that when Veolia lost a contract that employees, including himself, would lose their job. His understanding was that when a contract concluded the company gave employees a job somewhere else. No one had ever told him that his job would finish if the contract finished. No other employee had ever told him that would occur or was expected to occur. 56While at Alexandria, Mr Latai had little contact with Mr Roberts. He believed that Mr Roberts was mistaken about offering him the bulk operations position but he knew that job had been offered to a Mr John Azzapardi. Mr Azzapardi had told Mr Latai that he had been offered the position as a bulk driver but that it did not sound very good. He was unhappy about accepting it because he felt he was being forced into the job by Mr Roberts. DELIBERATION 57At the heart of the issues raised by the parties is the meaning and application of the exception appearing in s 119(1)(a) of the Act, namely, where redundancy is "due to the ordinary and customary turnover of labour." The same issue arises in relation to the operation of the State award. In short, the case for Veolia was that its whole business was arranged around contracts and where a contract was lost or not tendered for, those employees who remained unemployed did so because that was the result of the ordinary and customary turnover of labour. The scope and reach of this phrase is not without its difficulties. The phrase appears to have originated in the seminal judgment of Fisher J, as President of the Industrial Commission of New South Wales in the test case dealing with the application of the Employment Protection Act 1982 (NSW) ("EPA"). His Honour's decision in the Shop Distributive and Allied Employees' Association (NSW) and ors v Countdown Stores and Ors (1983) 7 IR 273 (known as the "Crocker" case) was crafted to set the level of redundancy payments due to retrenchments on economic grounds and established the appropriate principles to be applied in such cases. In effect, his Honour set the standard of redundancy for the usual case. His Honour, however, was not addressing appropriate standards for every kind of redundancy but was approaching the task in the context of the enactment of the EPA, a statutory provision enacted in times of severe economic downturn resulting in widespread redundancies. Significantly, at p 273, his Honour stated that each type of retrenchment was to be determined on its separate merits and that there should not be a single "overall prescription or standard.' 58The following passages from his Honour's judgment are of significance in determining the present matter: . There is of course in industry and always has been a general turnover of labour. It has been customary for employees' services to be dispensed with because it is the view of management that they are in some way less than satisfactory employees, not appropriately skilled, not appropriately motivated, unreliable or exhibiting other forms of unhelpful conduct in an industrial context, but not amounting to misconduct. Many employees, in particular in the building construction, contracting and sub-contracting industries are employed in terms which contemplate intermittency in employment. Provisions for compensating for holidays and annual leave by making an allowance in the calculation of hourly or weekly rates of pay are often made. Many awards contain a specific factor to compensate for "following the job", ie for intermittency in employment when one job cuts out and another has to be obtained. Payments on severance would appear to be inappropriate to these circumstances and may contain an element of double counting (See Australian Workers' Union v Victorian Employers Federation (Print D6429). Similarly, employees have at the height of economic prosperity been dismissed because of seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession, changes in model or produce, shifts in marketing emphasis and many other day to day causes removed from the present recession and its mounting toll of unemployment. All these employees are dismissed, almost invariably upon notice. If redundancy or severance payments applied generally to them a significant charge would apply to the turnover of labour generally. This would involve a major shift in the principles normally applied by this and other industrial tribunals to retrenchment situations. These types of dismissals contrast with dismissals which do not arise in any way from the behaviour of the employee or from ordinary changes in the incidents of employment, but where the employee is dismissed on a collective basis along with others and where the reason for the dismissals lies in the force of adverse collective redundancies. Dismissals arising out of technological change or out of major company restructuring have similar characteristics (at p 277) . Although within the vast number of notices filed in this Commission under s 7 of the Act there may be a modest number that conform to such patterns, the cases before me concern industrial employees in ordinary weekly wage employment. They most certainly often have a settled expectation of continued employment, an expectation which perhaps increases with the length of employment. This is lost to them on retrenchment and it is something for which they should be compensated. Steel Industry Redundancy case at 64. But the comparative mobility of the industrial workforce ensures that this aspect of loss is nowhere as prominent as it would be in career employment or even as prominent as it might be in industrial employment as in the steel industry where a traditional and regional industry is dominated by one group of industrial enterprises and there is a community wide expectation of secure employment. It is clear that not everybody in employment has a reasonably based expectation of continued employment. It tends to be something that grows with time. While any decision about time must be arbitrary it seems to me that a reasonable provision would exempt from the provision of severance pay any conventional employment which had not continued for at least one year. (at p 290). ... My conclusion based on evidence and argument are as follows - (i) the primary intention of the Employment Protection Act is to provide machinery to compensate for hardship whereby severance payments can be directed to employees being dismissed because of circumstances beyond their control, predominantly the present economic recession, but including technological change and company reconstruction and takeover. ... (iv) the major application of severance pay where the dismissal relates to redundancy caused by the economic recession is likely to be directed towards the amelioration of social hardship by supplementing income from unemployment benefits and so prolonging the maintenance of living standards and extending the period during which the search for work can be conducted without the serious erosion of family assets and family stability. It would also help meet the absence of income which seems customary during the first three to four weeks of unemployment until receipt of unemployment benefits. ... (x) the outcome of these proceedings is strongly conditioned by the economic circumstances of these times. The claim of five weeks' severance pay and five weeks per year over the age of 35 is inappropriate, both as to quantum sought, length of scale and pattern of relief. Essentially, a severance pay claim should be forward looking and utilitarian with more emphasis on the needs of the retrenched than patterns of past employment. ... (xii) the remedy of severance pay will need to undergo the same evolutionary development as other forms of industrial amenity and compensation. The utmost that industry can accommodate in the current climate is a modest and limited scale of relief directed as far as possible to the precise areas of unemployment that stand most in need of support. . In relation to the submissions that all severance however caused should receive a common recommended level of severance pay, I find - The Commission should separately consider awards of severance pay upon retrenchment in relation to three different areas - * in the case of collective retrenchments on economic grounds due to the present recession. * in the case of retrenchment due to technological change. * in the case of retrenchments due to company reconstruction, mergers and takeovers. Each of these categories may display different characteristics ( pp 292 - 3) ... The major area for consideration relates to severance pay in the circumstances of collective dismissals by way of retrenchment on economic grounds. This area requires definition principally to mark it off from the ordinary turnover of labour not related to the pressure of present economic recession and to a lesser extent from cases concerning technological change and company reconstructions or merger. (p 294) 59The Australian Conciliation and Arbitration Commission took a different approach in the Termination, Change and Redundancy Case (1984) 8 IR 34 ("TCR case"). In that case a Full Bench was established to deal with a test case in the Federal jurisdiction dealing with, amongst other things, redundancy. In relation to the scope of a proposed redundancy clause in awards, the ACTU had argued that no distinction should be made between the cause of redundancy while the employers argued that a distinction should be made between cases of technological change and cases where redundancy occurred because of the employer's financial difficulties. While acknowledging some strengths in the employers' position, the Full Bench ultimately rejected that approach noting that the overwhelming majority of cases where redundancy had been awarded in individual industrial instruments resulted from economic downturn or some other "financial disaster" that had affected the industry and/or the employing company concerned. In the opinion of the Full Bench, that would be the situation in the overwhelming majority of cases where redundancy provisions had been awarded. The Full Bench then continued: Furthermore, there have only been a relatively small number of cases involving technological change. In view of this ingrained feature of existing redundancy provisions, we believe it would be too restrictive to limit our prescriptions to cases where redundancy is brought about by technological change or other circumstances within the control of the employer. Further, we believe that there are difficulties in attempting to isolate the influence of different factors acting on the number and nature of jobs and that to introduce definitional uncertainty into the resolution of redundancy disputes would have unfortunate consequences for industrial relations and the individual employees concerned. Moreover, the reason for the granting of additional notice to employees and the purpose of redundancy payments apply equally to redundant employees whatever be the cause of their termination. Employees, no matter what the reason for the redundancy, equally experience the inconvenience of hardship associated with searching for another job and/or the loss of compensation for non-transferable credits that have been built up such as sick leave and long service leave. In particular, to make a distinction granting severance pay only in cases of technological change, notwithstanding the equality of hardship on employees in all redundancy situations, would be to penalise an employer for introducing technological change. ... In these circumstances, we do not believe that there should be any fundamental distinction, in principle, based on the causes of redundancy. (at pp 61, 62) ... There is no doubt that there is hardship necessarily inherent in redundancy situations but we have provided for extended notice on termination of employment and we have imposed obligations on employers which will assist employees in finding alternate employment. In these circumstances, it is arguable that the employer should not be required to do more. Redundancy caused unemployment is no different from unemployment due to any other event and, through legislation, the community at large accepts the burden of paying unemployed persons amounts determined appropriate. However, the material examined by the Commission indicates that many different heads of loss or damage have been considered relevant in matters involving the assessment of redundancy pay (at p 71). 60The Full Bench in the TCR case then made specific reference to the decision of Fisher P concerning the EPA, at p 74 stating: The decision of Mr Justice Fisher was made in the context of the Employment Protection Act which requires notice and/or reasons for termination to be given to the Registrar in certain instances. In addition to an exemption from notification and the giving of reasons for termination where severance payments are made at the rate prescribed by Mr Justice Fisher in his decision of 29 July 1983, there are either exemptions from, or limitations on the Act's application to: (a) employers who employ less than fifteen employees; (b) terminations made in consequence of misconduct on the part of the employee; (c) casual employment; (d) employees not continually employed by the employer for at least twelve months; (e) persons who remain employees when a business undertaking or establishment, or part thereof, is transmitted from one employer to another; (f) employees covered by an award or agreement which already includes a provision for severance pay; (g) employees engaged for a specified period or task; (h) employees engaged for a trial period; and (i) where termination is pursuant to a policy which requires retirement at a specified date, where the policy has been in existence for at least twelve months and where the employee has been appropriately notified of the policy. Furthermore, the decision of Mr Justice Fisher applies only to terminations due to economic grounds. Terminations due to "seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession, changes in model or product, shifts in marketing emphasis" and the like are not included and cases involving "retrenchments due to technological change" and "retrenchments due to company reconstruction, mergers and takeovers" are expected to be dealt with "on the particular merits of the case rather than by way of broad prescription". Further, the decision would not automatically apply in industries which contemplate intermittency in employment where the rate includes a specific factor to compensate for following the job. ... At p 75 the Full Bench concluded: We have already decided that our decision will apply to redundancy, whatever be the cause, and we have decided that there should be a right to have the general prescription varied, by order of the Commission, where employers in particular cases argue that they do not have the capacity to pay. Our reasoning in these proceedings, other decisions of this Commission and various decisions of other industrial authorities, are also inconsistent with the general severance pay prescription being granted where termination is as a consequence of misconduct, where employees have been engaged for a specific job or contract, to seasonal and/or casual employees, or in cases where provision is contained in the calculation of the wage rates for the itinerant nature of the work. In addition, we are of the opinion that where termination is within the context of an employee's retirement, an employee should not be entitled to more than he/she would have earned if he/she had proceeded to normal retirement. 61The Full Bench of the Conciliation and Arbitration Commission returned to the detailed provisions to be ordered in the second Termination, Change and Redundancy case (1984) 9 IR 115. At p 128 the Full Bench dealt with redundancy and an employer's submission that redundancy should not be payable in circumstances where there was a general turnover of labour or a seasonal downturn within the industry. In relation to that matter, at p 128, the Full Bench stated: The employers submitted that the redundancy provisions should not apply to termination of employment "associated with the general turnover of labour or a seasonal downturn within the industry or reclassification or alteration of working conditions." All these expressions were opposed by the ACTU because they would cut down unreasonably the redundancy provisions, they were uncertain as to meaning and they were not justified by the argument. In our decision at 55-6 we made reference to a number of definitions of redundancy and our draft order was based on the definition of the Chief Justice, Mr Justice Bray, in the South Australian Supreme Court. Further, at page 33 of the decision we decided that there should not be any fundamental distinction, in principle, based on the causes of redundancy. Nevertheless, it was not our intention that the redundancy provisions should apply to the "ordinary and customary turnover of labour"; an expression used by Mr Justice Fisher in his decision related to the Employment Protection Act in New South Wales (1983) 7 IR 273 However, notwithstanding the helpful submissions of the parties in these proceedings, we have some difficulty in finding a suitable expression to make our intention clear. There is no doubt that we did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business. Furthermore, there is an overlap between the definition of redundancy for the purposes of any award and the categories of employees exempted from severance pay. To some extent the same can be said for the provisions relating to the introduction of change. In the circumstances, we are prepared to provide that the redundancy provisions shall not apply where the termination of employment is "due to the ordinary and customary turnover of labour" but we will not include the other categories referred to by the employers. 62Further, at p 135 the Full Bench stated: Exemption from redundancy clause The employers argued that the redundancy clause should not apply: Where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect of duty, or in the case of casual, part-time or seasonal employees, temporary employees, or employees on daily or hourly hire, or apprentices or trainee apprentices, employees who are terminated because of industrial action, and employees engaged for a specific period of time or for a specific task or tasks. They also argued that the clause should not apply to cases where provision is contained in the calculation of the wage rates for the itinerant nature of the work and to employees engaged on construction work. The decision of the Commission, so far as it is relevant to this question, states at 75: Our reasoning in these proceedings, other decisions of this Commission and various decisions of other industrial authorities, are also inconsistent with the general severance pay prescription being granted where termination is as a consequence of misconduct, where employees have been engaged for a specific job or contract, to seasonal and/or casual employees, or in cases where provision is contained in the calculation of the wage rates for the itinerant nature of the work. ... In relation to the categories of employees which should be exempt, we earlier decided that we were not prepared to exempt employees terminated because of industrial action or employees engaged on construction projects from extended notice, and we are not prepared to exempt employees in those categories from the redundancy pay provisions either. We emphasise, however, that employees in those categories may be exempt from the redundancy provisions on other grounds. Consistent with what we have said in relation to the period of notice, and because part-time employees were not excluded from the severance pay provisions in our decision, we shall not exclude part-time employees as requested by the employers. Further, the fact that seasonal employees, temporary employees and employees on daily or hourly hire or trainee apprentices do not appear in the clause we have drafted only means that those categories of employees are not provided for in the Metal Industry Award. The same can be said for the position of employees whose wage rates make provision for the itinerant nature of the work, in so far as Part I of the Metal Industry Award is concerned. The necessity for their exclusion, or otherwise, from any provisions in other awards will be a matter for consideration having regard to the terms of those other awards but clearly, having regard to our decision, their inclusion for the purposes of redundancy provisions would be unlikely. (p 136) 63It was not until some ten years after the Crocker case that the Industrial Commission was called upon to review the standard of the redundancy pay to be made available under State awards and the restrictions that might be applied to such payments. That review was conducted by a Full Bench in Re Application for Redundancy Awards re Transport Industry Mixed Enterprises Redundancy (State) Award; Re Clerks Redundancy (State) Award; Re Electricians etc State Redundancy Award (1994) 53 IR 419. In that case the Full Bench noted that in Crocker it had been anticipated that redundancy scales and eligibility for redundancy payment would evolve and develop over time. One of the claims agitated in this review was the removal of a limitation in relation to the ordinary and customary turnover of labour. Attention was drawn to differing views taken in the Federal Commission in the TCR cases: the Full Bench accepted that the Federal Commission's approach had been adopted generally throughout Australia and that the approach of the New South Wales Commission could be seen as being "out of step with other jurisdictions." 64The union's claim before the Full Bench was that any loss of employment other than for misconduct or like reasons should qualify for retrenchment pay. Circumstances were different to those existing at the time of Crocker. In particular, the exclusion for ordinary and customary turnover of labour had been the source of much disputation and adjudication with the Commission and three cases were identified as highlighting the often difficult task of defining what was ordinary, conventional or customary turnover of labour. The Full Bench accepted that the current economic circumstances were different to those existing at the time of the 1983 decision in Crocker and that the standards then adopted were appropriate for that particular economic period and were properly considered as "a true minima." The Full Bench accepted that the position was now different and that it was convinced that it should abandon different scales for redundancy and accept the union's submissions by providing one scale for all redundancy, however caused. 65In relation to the claim to delete the exception for the ordinary and customary turnover of labour, at p 443 the Full Bench referred to the discussion of that concept in Crocker and at p 444 noted that view had not been adopted by the Australian Commission in the 1984 TCR case which extended payments to redundancy, however caused. The Full Bench then continued, stating: Taking a balanced view of the case as a whole, it is appropriate that this aspect of termination, traditional as it is, be distinguished from redundancies arising from economic recession and financial stress, technological change and company reconstruction or restructuring. Terminations in the context of the general turnover of labour are the norm; they are expected: there is no basis for thinking that some "settled expectation' has been lost. The occurrence of the likely or expected event should not bring with it an unnecessary and unwarranted additional burden on the employer and a windfall gain for the employee. The application of this category has not been without difficulty and has needed resolution from time to time by judgments. This is not a reason for the abolition of the category: the cases on the issue have served to resolve the particular matters and stand as signposts to parties in relation to prospective matters. We retain this exclusion category. 66It is instructive to return to the cases identified by the unions in the 1994 review as demonstrating the difficulty of applying the ordinary and customary turnover of labour exemptions. In Norwest Beef Industries v Holsworth (1986) 15 IR 373, severance pay in the meat industry was contested by the employers when an abattoir had been closed. Bauer J held that the dismissals were not part of the normal turnover of labour, for which the industry was well known, because in this case there was a total closure and not because seasonal or other industry events that frequently resulted in the continuity of employment being interrupted. In this respect his Honour adopted findings made by Fisher P, in Northwest Exports Pty Ltd v Coxon (1986) 15 IR 166 that the meat industry was not one in which many of its employees could reasonably entertain a settled expectation of continued employment, with consequent intermittent employment showing up in reduced days or weeks or actual closure. 67Attention was also directed to an earlier decision of the Fisher P, in Crooks Michell Peacock Stewart Pty Ltd & ors v Watkins and ors (1984) 9 IR 182. In dealing with that case his Honour stated: The evidence presented on behalf of the employer does persuade me that there is an added cyclical element within the industry when compared to industry generally. It is of course notorious that there is a cyclical element in capitalist economies generally, often referred to as the business cycle and such variations can be minor, moderate or substantial. In some industries the termination of a contract can be the occasion upon which the effects of recession become apparent to both employer and employee and I accept that in accordance with the notices (par. 15(a)) that "retrenched due to downturn in business" means what is says. The practical questions seems to be this - is the cyclical nature of employment in this industry such that a person entering it and not caught by limiting regulations would assume that employment was to a major degree essentially a shorter term and less secure than in employment in industry generally and therefore should not expect severance pay? 68More recently, a Full Bench of the Commission considered the customary turnover of labour test in proceedings concerning an alleged award breach. In 1999 the Full Bench, in Fashion Fair Pty Ltd v The Department of Industrial Relations (Inspector Rouse) (1999) 92 IR 271 dealt with an appeal against the decision of the CIM relating to the exclusion contained in the Retail Industry (State) Redundancy Award 1995. In this case an employee had been dismissed following the termination of a retail lease agreement whereby premises were leased at the Maitland K-Mart Centre. The appellant had originally leased the premises in 1985 and had occupied them on a monthly basis since 1995. In 1996 negotiations concerning the continuation of the appellant's occupation proved unsuccessful and the appellant, unable to obtain a suitable alternative site, ceased operation in late October 1996 and the staff was terminated. In this situation, CIM stated: To establish that a termination did not take place in the ordinary and customary turnover of labour is a question of fact and is to be approached by having regard to the normal features of the business wherein the employee worked, and whether is was customary to dismiss employees regardless of their service history upon the loss of contracts. Conversely, an employee with a relatively long and faithful history of service has a reasonable expectation to continued employment where no such custom and customary turnover of labour. In conclusion, the employee had every expectation of continued employment in a business and in an industry not characterised by the ordinary and customary turnover of labour as I have set out in the examples above. Her employment was terminated because of a decision by the defendant to cease its retailing operations in the Maitland area. This marketing change was cost driven and meets the criteria for a severance payment under the Award and which remains unpaid. (at 272) 69The Full Bench considered the decision of Fisher P in Croker's case and the terms of the Employment Protection Act and also considered a number of cases dealt with by the Commission applying the Crocker tests. The parties have referred to some of these cases in this matter. In this context, the Full Bench stated: The concept of "the ordinary and customary turnover of labour" has been considered in subsequent cases. It has frequently been observed that whether an entitlement to redundancy or severance pay accrues upon termination depends upon whether there was "settled" expectation of continued employment or whether the employees were aware that their employment was for a specified period or task ... It is necessary to examine the circumstances of each case and the course of the dismissals (and also the cause of any loss of contract) to determine if the dismissals were truly part of the ordinary and customary turnover of labour. (at pp 280 - 281). 70The Full Bench rejected the appellant's submission that the loss or abandonment of a commercial premises, the need to shift premises or to move to more convenient premises may lead to staff adjustments which would be part of a general or customary turnover of labour which could occur from day-to-day in the course of the operation of a commercial or industrial undertaking. That argument was not accepted by the Full Bench and it was noted at p 283: The Commission on the evidence is considering a longstanding enterprise with sixteen branches, a warehouse and office which totally closed. Although it is true that the original cause was a failure to enter into new leases because of rising leasing costs, this decision had economic consequences for the whole chain whether the branches or any of them were profitable at that time or not. All employees lost their employment. This is not a conventional turnover of labour. (at p 283). In conclusion the Full Bench stated at p 285: The termination of employment in this matter resulted from a business re-construction. We consider that the appellant determined to withdraw from operations in the Maitland area due to its assessment of a variety of factors, including the failure of its negotiations with the lessor, its assessment of other premises in the area and the effect of new competition. The company re-structuring resulted in a loss of employment where there had existed a reasonably held and settled expectation of continuing employment. Those matters take the dismissal out of the ordinary and customary turnover of labour. 71In determining the appeal, the Full Bench held that the conclusions reached by the CIM were open to him: it therefore follows that the CIM had not erred in his approach. Although not specifically mentioned, the Full Bench did not depart from the analysis of the CIM at p 272 re-produced above. 72It is of some further interest for the present case that the terms of the Retail Industry Redundancy Award were in identical terms to the Transport Industry Redundancy (State) Award that is now the primary award provision relied upon by the TWU in this case. In what appears to be a standard award provision, cl 3 of the Retail Award, dealing with the employer's duty to notify, referred to the employer making a definite decision "to introduce major changes in production, programme, organisation, structure or technology" likely to have significant effects on employees. The term "significant effects" was to include termination of employment, major changes in the composition, operation or size of the employer's workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure, the alteration of hours of work, the need for re-training or transfer of employees to other work or locations and the re-structuring of jobs." 73The difficulty in applying the customary turnover of labour test was highlighted in a decision of a Full Bench of the Australian Industrial Relations Commission in Tempo Services Ltd and T M Klooger and ors (Sydney, 19 November 2004, Australian Industrial Relations Commission, unreported Print PR953337). In that case the Full Bench was dealing with a reinstatement application but came to consider whether the circumstances surrounding the termination called for the application of redundancy provisions and thus, the question arose as to whether the termination was the result of the usual turnover of labour. At [16], the Full Bench observed: For the purposes of this matter, it is neither necessary nor appropriate that we determine in any definitive way the meaning and effect of the expression "ordinary and customary turnover of labour." Each case depends upon its own circumstances. It is sufficient, that in the particular circumstances of these applications, this was not the cause of the termination. The terminations were due to the fact that the appellant handed in his cleaning contract. Bearing in mind the length of time that it had held that contract and the length of service of each of the respondents, we cannot agree that the Commissioner's conclusion was not one that was open to him. It follows that we are not able to discern any error in this respect that should be reviewed upon appeal. 74In many respects the term "ordinary and customary turnover of labour" is unsatisfactory - it is not a term of art but is amorphous in nature. Perhaps it falls into a similar class as the proof of adultery by circumstantial evidence dealt with in Briginshaw and Briginshaw (1938) 60 CLR 335: at pp 365 -6 Dixon J stated: Putting aside the line of authorities which deal with the special question of confessional evidence, no further attempt to formulate or define the measure of proof of adultery appears to be reported until Allen v Allen (5), when Lopes LJ, after setting out the statement of Lord Stowell in Loveden v Lovenden 6), dealt with proof by circumstantial evidence as follows: 'To lay down any general rule, to attempt to define what circumstances would be sufficient and what insufficient upon which to infer the fact of adultery, is impossible. Each case must depend on its own particular circumstances. It would be impracticable to enumerate the infinite variety of circumstantial evidentiary facts which of necessity are as various as the modification and combinations of events in actual life.' Despite the lack of precision, the decided cases have tended to define the term by reference to a known or understood lack of continuity of work. In some case the work will be intermittent but in others it will be a task taking some time to complete but all would understand that when the task is completed the job is finished. Where there is no finite task, length of employment will be regularly indicative of ongoing employment as opposed to regularly turned over employment. The cyclical nature of the employment has also been a relevant factor. 75A central plank in the respondent's argument was that, in the waste removal industry, the services provided to Local Councils were performed under term contracts of usually five, seven or ten years and that it was common place in the industry for contracts to be lost to competitors. These facts can be accepted on the evidence received by the Court. The respondent also accepted that it was the usual practice when a contract was lost for the incoming successful contractor to offer employment to those who had performed work for the previous contractor: this was commercially sensible because such employees had experience of the previous runs and did not have to be trained or familiarised with the operation. It is clear on the evidence that a number of employees would stay with the incoming contractor when their existing employer lost the contract and did so because the work was conveniently located or had some other advantage personal to the employee. In the present case the respondent had a further class of employees, namely, those employed on an ongoing contract rather than a fixed term contract although the evidence tends to suggest that term contracts were something approaching the norm. 76Against this background, the respondent's case focused upon the fact that contracts were turned over regularly. That fact alone cannot be determinative of the issue of whether there was a customary turnover of labour. In focusing upon the turnover of contracts rather than the turnover of labour, the respondent's submissions mis-apply the test and fail to focus on the composite nature of the test. The respondent's approach in this regard gives primacy to the loss of the contract rather than an analysis of the intermittency of work as opposed to a settled and reasonable expectation of continued employment. Further, the error of focusing upon the turnover of contracts (rather than the turnover of labour) is demonstrated by the fact that many businesses lose contracts but have permanent/salaried employees. Indeed, it is difficult to contemplate a business that does not rely on contracts for its operation: the loss of contracts during the life of the business may have no consequence whatsoever for the workforce. 77The collective agreements under which Mr Latai was engaged by the respondents were in evidence. In relation to the Warringah agreement, employees were paid a salary and by cl 6.2, the employer made a commitment to the full-time engagement of its transport workers and undertook to utilise full-time employees or internal sub-contractors before casual or part-time employees were engaged. By cl 9.9, provision was made for long service leave entitlements to be taken within a two-year period unless otherwise agreed with the respondent.). The last agreement applying to Mr Latai's employment, according to Mr Roberts, was the Coalex Pty Ltd Domestic Waste Collection Division 2008 Divisional Agreement. That agreement applied to employees of Veolia operating in Botany, Woollahra and the City of Sydney performing work under domestic waste collection contracts. Under cl 4, one of the intentions of the agreement was to provide security for the company and its employees. In cl 6.4, Veolia committed to full-time engagement of transport workers and to utilise full-time employees to their full capacity before casuals or part-time employees were engaged. The same provision was made as in other agreements as to the payment of long service leave within the period of two years of it becoming due. These provisions do not speak of intermittent employment or point to regularly turned over employment. 78It is to be noted that the 2009 Transpacific Cleanaway Blacktown (Municipal) Transport Drivers Enterprise Agreement approved by Fair Work Australia contained a redundancy provision with the usual exceptions. Mr Roberts referred to this agreement as covering the Blacktown work after the contract was lost by Veolia: it was said to provide "terms and conditions of employment ... substantially similar to those previously offered by the respondent." The Veolia agreement for Blacktown did not contain such a provision, however, the Cleanaway agreement is evidence of redundancy provisions being specifically made available in this industry. 79Other factors of relevance arise from Mr Roberts' evidence. He spoke frequently of drivers such as Mr Latai holding "permanent positions" or having a "permanent job." Under arrangements at the respondent's site, no "permanent employees" were to be sacrificed for other "permanent employees" in a yard when a contact was lost but permanent employees would be retained and casuals would be terminated. The respondent's approach was to find work within its other contracts for drivers who had been in a yard when the contract was lost or not renewed. This was the ongoing approach of the respondent - when it had a number of contracts it would offer work elsewhere and use fewer casuals. Indeed, Mr Roberts stated that, if the respondent had eight contracts or had succeeded in holding some of its lost contracts, Mr Latai would still be working for the company after the SCC contract was lost. He spoke of the company doing everything to ensure that these permanent drivers continued in employment. Importantly, Mr Roberts stated that during the 12 years' of Mr Latai's employment no drivers working on lost contracts were dismissed. There was no evidence of these "permanent" drivers ever being dismissed in these circumstances. 80Senior counsel for the respondent accepted that, generally, the contract of employment might be determinative of the issue of eligibility for redundancy. A contract that was for a specified term without any provision for renewal or a contract to perform work until a specific task was completed would not qualify. What then can be said about Mr Latai's contract? There was no written contract and on the evidence it cannot be accepted that the employment contract initially offered to him was limited to the time that the Warringah contract held by the respondent expired. It is significant that, during his employment, Mr Latai performed some work (although the extent of that work is difficult to establish from the evidence) on other contracts for Hornsby and Ku-ring-gai. The performance of that work undermines the respondent's contention that he was employed to work only on the Warringah contract and could not expect to have a job at the end of that contract. Indeed, the respondent's own policy was to place people in other work held by the company if they declined or were unsuccessful in obtaining employment with a successor to a contract they had previously held. These matters strongly suggest that the contract of employment taken up by Mr Latai was not one limited in its term to work on the Warringah contract or limited by any notion of the respondent successfully renewing that contract. Clearly, it was not a contract for the performance of a specific task. From the available evidence it was, therefore, a contract, ongoing in nature. Such a contract appears to be fundamentally inconsistent with the class of work excluded from redundancy pay. 81If the analysis looks more broadly and beyond establishing the terms of the contract of employment (as do the employment protection cases generally), there are aspects of Mr Roberts' evidence that are relevant as dealt with in [78].. It was the respondent's practice to offer whatever employment was available to employees. In Mr Latai's case that is exactly what happened with him performing work on the Warringah, then Hornsby and Ku-ring-gai and finally the Sydney City Council contracts. The reason he was terminated when the City of Sydney contract ceased was that, over a period of time, the company had experienced a falling away in the number of contracts it held: where it had once held eight contracts operating at the same time, when the Sydney City Council contract was lost the respondent company had only three remaining continuing contracts. Mr Roberts said that if this diminution in overall contracts had not occurred, Mr Latai would still be employed. 82From this history, the Court is satisfied that over a period of 12 years (itself a relevant and material consideration), Mr Latai was entitled to have a settled expectation that his employment would be continuing and he had no reason to believe that, simply because a Council contract was not renewed, he would thereby lose his position with the respondent if working under that contract. The nature of the industry, as demonstrated by the respondent's evidence, was that of gaining and losing contracts and when Mr Latai was employed there was every prospect that, although one contract may not be retained, other contracts may well be picked up in the tender process. Until the respondent company began to lose the total number of contracts it held over the entirety of Mr Latai's employment, there was always an ability to place an employee somewhere else within the respondent's business even though the contract on which that person was working had been lost. That history tells strongly against this employment being regarded as subject to a regular turnover such that an employee like Mr Latai could not have any reasonable or settled expectation of continuing employment. Indeed, in his working experience, it was quite to the contrary. Mr Latai's employment history does not establish cyclical employment - a person entering the employment of the respondent would not assume that employment was, to some major degree, essentially short term or less secure than employment in industry generally. Here, it was simply not customary to dismiss employees upon the loss of contracts having regard to their service history. To use another word adopted by Fisher P, here there was no obvious intermittency of employment. 83In short, the following conclusions may be reached: (a) Mr Latai was entitled to have a settled expectation of continuing employment and that expectation increased with the length of his employment and his engagement on other contract work held by the respondent; (b) Mr Latai's employment was not seasonal or casual and he was not engaged for a specific term or for a specific task. His rate of pay was not loaded for these elements or in recognition of the intermittency of the employment; (c) it was not customary for the respondent to dismiss people upon the loss of a contract - indeed, there was no evidence of employees being dismissed in such circumstances. 84Having regard to all the evidence, the Court determines that Mr Latai was entitled to retrenchment pay having been terminated in the circumstances outlined in the evidence. A question remains as to whether the Transport Industry Redundancy Award applies? If so, the parties agree that he would be entitled to 20 weeks' severance pay. Should only the provisions of the Fair Work Act apply, he would be entitled to 12 weeks' severance pay. 85In written submissions, senior counsel for the TWU submitted that Mr Latai's employment separation certificate was not accurate in stating that the reason for separation was "end of seasonal contract." It was submitted that, as Mr Latai's contract of employment did not have any fixed term, was not seasonal and was not fixed in duration by reference to any particular contract that the respondent had with any Council or other client, then it must follow that Mr Latai was terminated because the respondent no longer wished the work to be performed by anybody. Senior Counsel for the respondent accepted that, at termination, the respondent no longer wished to have Mr Latai's work performed by anybody. 86The respondent then posed the question: how could such a termination, on the evidence, in terms of the award clause relied upon, amount to a definite decision by the employer to introduce a major change that caused the dismissal? It was submitted that there was no evidentiary basis for such a submission. It is true that no direct examination was undertaken on behalf of the applicant when Mr Roberts gave evidence that did address this matter, although at that time it was proposed to amend the Statement of Claim so as to specify a breach of the award. The applicant submitted that the respondent lost a number of contracts culminating in the loss of the Sydney City Council contract and because of a lack of cost competiveness; it restructured its labour force in 2009 and 2010. This was said to satisfy the "major change" requirement of the award. The is force in that analysis. 87The terms of the award, as observed earlier in this judgment, appeared to adopt a common approach across State awards at the relevant time in relation to redundancy. On one view the need for a "major change" employs somewhat unusual language having regard to the general discussions about eligibility for redundancy. Bearing in mind the purpose of the award, the word "major" at least encompasses the adoption of a significantly different approach by the employer to its previous employment practices that has resulted in the termination. In the present case, that requirement is satisfied in circumstances where the respondent had long operated on the basis that it would rely upon its other existing contracts to place its full-time employees and keep them in work when a contract was lost. By the time the respondent company lost the Sydney City Council contract it had a significantly reduced capacity to offer employment on its other contracts - a reality emphasised by Mr Roberts in his evidence. It is apparent that the respondent then made a major change in its usual approach to seek continuing employment elsewhere amongst its continuing contracts and determined to terminate the employment of Mr Latai. These circumstances satisfy the requirement of a major change in organisation or, the elimination or diminution of job opportunities, job tenure or the restructuring of jobs. These broad requirements of the award are not to be applied with an eye to technicality but in recognition of the nature and operation of a redundancy award. The universal elimination of classes of redundancy and the recognition that all redundancy should be compensated demonstrates how such provisions have evolved and harmonised over time. Mr Latai is therefore entitled to the provisions of the Transport Industry Redundancy Award and under its provisions is to be paid the equivalent on 20 weeks' salary. ORDERS 88Having regard to the determination of Mr Latai's entitlement to redundancy pay under the preserved award, the Court makes the following orders: (i) the respondent is to pay Mr Latai the equivalent of 20 weeks' pay, being severance pay due to redundancy under the provisions of the preserved collective State agreement, namely, the Collex Pty Ltd Domestic Waste Collection Divisional Agreement 2005/2008 and the incorporated terms of the Transport Industry - Redundancy (State) Award applying at 27 March 2006. (ii) in accordance with the provisions of s 547(2) of the Fair Work Act 2009, interest is to be paid in an amount agreed to by the parties and in the absence of agreement, as ordered by the Court. 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. Decision last updated: 27 March 2013