Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Delta FM Australia Pty Ltd
[2020] FCCA 2939
•30 October 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA v DELTA FM AUSTRALIA PTY LTD | [2020] FCCA 2939 |
| Catchwords: INDUSTRIAL LAW – Termination of employment – whether redundancy payments were required to be made – whether the exception in s.119(1)(a) of the Fair Work Act 2009 (Cth) applied. |
| Legislation: Fair Work Act 2009 (Cth), s.119(1)(a), |
| Cases cited: Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113 |
| Applicant: | COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA |
| Respondent: | DELTA FM AUSTRALIA PTY LTD ACN 157 852 054 |
| File Number: | PEG 100 of 2019 |
| Judgment of: | Judge Vasta |
| Hearing date: | 14 October 2020 |
| Date of Last Submission: | 14 October 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 30 October 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Boncardo |
| Solicitors for the Applicant: | Electrical Trade Union Australia |
| Counsel for the Respondent: | Mr I. Neil SC and Ms H. Millar |
| Solicitors for the Respondent: | Herbert Smith Freehills |
ORDERS
That the Application filed 15 March 2019 is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
PEG100 of 2019
| COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA |
Applicant
And
| DELTA FM AUSTRALIA PTY LTD ACN 157 852 054 |
Respondent
REASONS FOR JUDGMENT
Introduction
Neil Cooper, Tim Redmond and Robert Dickson were all employees engaged by the Respondent, Delta FM, to work at the Wheatstone project. On 30 September 2018, the Respondent no longer required their jobs to be done by anyone and so their employment was terminated. They were not paid any redundancy payments.
Mr Cooper, Mr Redmond and Mr Dickson (“the employees”) are represented by the Applicant Union. The Applicant has brought the present action because the Respondent has not paid any redundancy payments to the employees. The Respondent asserts that they are not required to pay any redundancy because of the exception under s.119(1)(a) of the Fair Work Act 2009 (Cth) (“the FW Act”); namely that the termination “was due to the ordinary and customary turnover of labour”.
The Compass Group and the Major Contract
Compass Group Australia is a wholly owned subsidiary of Compass Group PLC, which is registered in the UK. Compass Group operates a number of business sector brands, which include the Respondent (Delta FM), ESS Thalanyji (“ESST”), Medirest, Delta Facilities Management, Chartwells and Omega Security Services.
Notwithstanding the separate company structure, the Compass Group, as a whole, is managed by Compass Group Management Services. The business of Compass Group is to bid for particular contracts in a number of industries.
In late October 2011, Bechtel (Western Australia) Pty Ltd and ESST entered into a contract for ESST to provide operations, catering and maintenance services during the construction phase of the Wheatstone project. The Wheatstone project involved the construction of an onshore facility that produces liquefied natural gas (“LNG”) near Onslow, in a remote part of Western Australia.
The contract between Bechtel and the ESST was worth $642,373,115.66. The work performed by ESST under this contract began on 8 May 2012.
Originally, ESST engaged Delta Facilities Management (another Compass Group company) to provide the maintenance services under this contract. In mid-2017, Delta FM took over the performance of the maintenance services under this contract. Any employment of employees of Delta Facilities Management was transferred to the Respondent, Delta FM.
The aspect of the contract that was to be fulfilled by the Respondent was worth around $12.4 million. The contract was for the construction phase of the Wheatstone project. When the construction phase was completed, the Wheatstone project would then begin the production phase of the project.
The contract between Bechtel and ESST had a number of completion dates. Originally the construction phase was to finish around 26 June 2017. On 6 October 2017, that contract was amended and the “demobilisation date” was extended to 31 December 2018.
Though not strictly relevant to this matter, it seems that, in February 2018, the Respondent, Delta FM, submitted a proposal for the provision of facilities maintenance services for the production phase of the project. The Respondent was not successful.
On 2 August 2018, ESST was notified in writing that the provision of maintenance services, under the contract, would conclude at midnight on Sunday, 30 September 2018. This meant that staff of the Respondent were no longer required at the site and so the site had to be “down-manned”.
On 31 December 2018, Bechtel issued a notice of final acceptance to ESST certifying that all maintenance services under the contract had been completed.
During the life of the contract, there had been 88 employees engaged by the Respondent; around 13 employees at the start of the project which rose to around 65 employees at the peak of the contract.
Neil Cooper
Mr Cooper testified that he commenced employment with the Respondent on 29 May 2013. He said that he was engaged as a plumber on a full-time basis and that his work was located at the Wheatstone project.
He said that he was not made aware that his employment was on a project basis and he was not provided with an end date for the project. He said that he was never made aware that his employment was temporary and believed that his employment was permanent because it was on a full-time basis. He said that he believed that if the project ended, the Respondent would redeploy him.
He said that he read his contract but didn’t really understand what the contract meant. He said that management staff attended site meetings and he recalls being told by management that the Respondent would always try securing him alternative employment.
He said (as a double negative) that he “did not think that I would not get a redundancy” if he were not re-deployed.
He conceded that whilst he was not informed as to how long the project would take to complete, he was given verbal progress updates by management. He said that, in July 2018, he and his crew were verbally advised that the project was winding up.
He said he was told that the Respondent was tendering to obtain a maintenance contract to take care of maintenance services directly for the contractor. He said that management seemed confident that they would win that tender and that, if they did, he and the crew would just continue working at the project.
Throughout all of this, he said that he was repeatedly assured that the Respondent would find him, and the others, alternative employment if the bid was unsuccessful.
Mr Cooper said that, at the end of July 2018, he and his crew were informed by management that the bid for maintenance services was unsuccessful. Management, he said, assured them that every step will be taken to find alternative employment.
He said that management explained what redundancy meant and that, if alternative employment could not be found, employees would be made redundant.
Mr Cooper said that on 3 August 2018, he received a letter from the Respondent advising that he was being provided with two months’ notice that the project was coming to an end. The letter also said that the Respondent would endeavour to find alternative employment if it were available, and if not, Mr Cooper’s employment would cease on 30 September 2018.
There was no alternative employment found for Mr Cooper. He was made redundant and was paid his final week’s pay and his outstanding accrued annual leave. Mr Cooper said that he expected to have received some form of redundancy payment.
In his evidence before me, Mr Cooper conceded that the letter, of 3 August 2018, was consistent with what he had been told by management. He said that he had been told that the Respondent would try and retain him.
Mr Cooper said that he had previously worked for a company called Otis. He said that he worked for Otis in the Pilbara area. He said when Otis lost their contract in the Pilbara, they found another position for him.
Tim Redmond
Mr Redmond began working for the Respondent on 2 February 2012. At this time he was engaged to work at the Citic Pacific mine project at Eramurra on a full-time basis. He said that when he signed this particular contract he did not understand this to mean he would lose any entitlements to redundancy upon his employment ending.
At the end of July 2013, before that project had finished, management of the Respondent informed Mr Redmond, and others, that the Respondent had been unsuccessful in renewing its contract at that project. Mr Redmond was advised that he would be redeployed to work at the Wheatstone project.
He said that in October 2013, he began working at the Wheatstone project. He was given a completely new contract which designated that his work would be at Wheatstone as a full-time Refrigeration Technician. He said that he was not told that his employment would cease at the completion of the project, nor was he provided with an expected timeframe as to when the project would be complete.
He said that he formed a view that, when the Wheatstone project would finish, he would transition to another position as had previously happened to him with regard to his work on the Citic project.
He said that he was told, in May 2018, that the Respondent was re-tendering to take care of all the maintenance services after the present contract would finish. He said that management had been relatively confident that they would be successful in this bid.
He said that he was not told, at that time, what would happen if the Respondent was not successful in its tender. But, he assumed that he would be sent to another project as had happened previously.
He said that, in July 2018, the crew, including himself, were informed by management that the Respondent had not won the tender to continue working on the project. He said that he then asked whether he would be receiving any form of redundancy and was told that he was not going to receive redundancy payments.
He said, in late July 2018, management informed the crew that the Respondent no longer had any work for any of the maintenance employees at the project and that it was working on redeploying people to other projects. He said that he believed that he would be redeployed.
On 3 August 2018, Mr Redmond received a letter from the Respondent in the very same terms given to Mr Cooper. The letter advised that he was being provided with two months’ notice that the project was coming to an end. The letter also stated that the Respondent would attempt to secure suitable alternative employment but, if this was unsuccessful, his employment would cease on 30 September 2018 and he would be paid his final pay and accrued leave entitlements.
The letter did not state that he would be receiving any redundancy pay.
There were no suitable redeployment options and Mr Redmond was made redundant. He was not paid any redundancy payments.
In his evidence before me, Mr Redmond reiterated that he thought he would get a redundancy payment.
Robert Dickson
Mr Dickson began working at the Wheatstone project in April 2014 as a casual electrician employed by another company. He said that he was told by that company that his contract of employment was project-based and that it was a temporary position.
Mr Dickson said that he was later engaged by the Respondent as a casual electrician on the same project. He said that, around early June 2015, he was offered a full-time contract of employment which he accepted.
Mr Dickson started as an electrician employed by the Respondent on the Wheatstone project on 1 July 2015.
Mr Dickson said that he glanced over his contract before signing but didn’t read it thoroughly. He said that no one explained anything in the contract to him and that he didn’t understand that he could be dismissed at the end of the project if there was no other work available and not paid redundancy pay.
Mr Dickson said that because the project involved the construction of a mine, he knew that it would end at some stage, but he didn’t know exactly when. He said that it was his experience that it was standard for redundancy payments to be paid to employees who stop working because the project had ended.
He said that he believed that he would be transferred elsewhere once the Wheatstone project had ended. He said that he was informed, around April 2018, that the project was winding up. He said that during site meetings, management from the Respondent had advised him, and others, that the Respondent was re-tendering to obtain the maintenance contract for when the project transitioned into the production phase.
He said that in the last week of July 2018, he and the others were informed that the Respondent had failed in their bid. This meant that he, and his crew, would finish up on the project on 30 September 2018. He said that he assumed that he would either receive a redundancy or he would be redeployed.
On 3 August 2018, Mr Dickson received a letter from the Respondent advising that he was being provided with notice that the project was coming to an end and that his employment would cease on 30 September 2018 if no alternative positions were found for him. The letter was in the exact same terms as was given to both Mr Cooper and Mr Redmond.
There was no alternative employment found for Mr Dickson and, when his employment ceased, he was paid his outstanding accrued entitlements and pay.
Mr Dickson said in evidence before me that he assumed that he would be receiving a redundancy payment if he were not redeployed.
The Evidence of the Respondent
The Respondent, through Ms Rosie Ann McArdle, gave evidence of the business model of the Compass Group. The Respondent claimed that the inherent feature of its business model is that contracts with clients regularly come to an end. Many contracts are for a specific task of limited duration.
The Respondent said that, inevitably, this means that the employment of employees is terminated at some point. In such situations, the Respondent makes every effort it can to redeploy employees to some other client contract. However, sometimes this is just not possible.
Ms McArdle said that the end of a contract is treated as part of the ordinary and customary turnover of labour within its business and that is why the Respondent does not make redundancy payments to employees in these circumstances.
The Respondent said that, where it is that they are able to offer an employee work on another contract, the consistent practice is to issue a new contract of employment to the employee. That contract may be in completely different terms and conditions and the employee is free to accept or reject the offer. Employees are free to amend or negotiate contracts according to Ms McArdle.
The Respondent said that any employee who accepts an offer of employment elsewhere receives a new employment contract. Even if the employee is taking on a new role for the same client contract, a new offer of employment is made on fresh terms and conditions.
Ms McArdle said that no person is merely informed of their new site and directed to attend work there under their existing contract of employment. The Respondent said its employees are told that their employment is inextricably connected to a particular contract.
The Respondent said that the only situation in which it makes redundancy payments to his employees is where the loss of employment is directly caused by it, rather than the client. An example of this is where the Respondent decides to restructure or exit a contract for financial reasons or to introduce some other aspect which results in fewer employees being required. Mr Farnfield, a witness for the Respondent, gave an example of this occurring.
The Contracts of the Employees and the letter sent to them
It is instructive to look at the contracts of the employees. The contract for Mr Cooper was one between Mr Cooper and Delta Facilities Management rather than the Respondent (as Mr Cooper had claimed). This is because, at the time that Mr Cooper began his employment, ESST had engaged Delta Facilities Management and not the Respondent.
On 15 June 2017, Mr Cooper was sent a letter by the Respondent advising a change to the employing entity. The letter was in these terms
Dear Neil
Change to Employing Entity
As part of our commitment to 'Agility' and the streamlining of administration processes across our business, Compass Group has recently reviewed the employing entities currently in use within the Delta FM business. As a result it will be necessary for your employment to transfer to a new legal entity.
As you know, your current employing entity is Delta Facilities Management Pty Ltd. Please be advised that your employment will transfer to Delta FM Australia Pty Ltd (ABN 64 157 852 054) effective from Monday, 19 June 2017.
Employment terms and conditions
Your ongoing employment with Delta FM is not affected by this administrative change to your employing entity. The terms and conditions of your employment, including the terms and conditions in your current Schedule A, will remain unchanged on 19 June 2017.
You will continue to be employed under the Compass Group (Delta FM) Enterprise Agreement 2014 to which Delta FM Australia Pty Ltd is also a party.
Continuous service and leave entitlements
Your service with Delta FM will be continuous. Leave entitlements or accruals (including long service leave, annual leave and personal/carers' leave) will automatically transfer across to your new employing entity.
It will be taken that you agree to the administrative change outlined in this letter unless you notify any objection, in writing, to your direct manager by Friday 16 June 2017.
Any questions in relation to this transfer of employing entity should be directed to your Site Manager or to the HR Services Team/HR Adviser.
Regards
Cathy Holmes
National Workplace Relations Manager
Compass Group (Australia) Pty Ltd
This meant that the contract signed in May 2013, by Mr Cooper, which is reproduced at Annexure RAM-20 to the affidavit of Ms McArdle, was the contract in force at the time of the employment of Mr Cooper by the Respondent.
The contract signed by Mr Redmond is found at Annexure RAM-15 to the affidavit of Ms McArdle. It was signed in October 2013. It, too, was a contract between Delta Facilities Management and Mr Redmond. It is not known whether Mr Redmond received a letter, similar to that which was sent to Mr Cooper, explaining the change of employment entity. Such a letter cannot be found by the Respondent and Mr Redmond cannot recall receiving such a letter.
Nevertheless, this contract was the one that was in operation regarding the employment of Mr Redmond for his time working at the Wheatstone project.
The contract signed by Mr Dickson is found at Annexure RAM-17 to the affidavit of Ms McArdle. This contract is between the Respondent and Mr Dickson. It was signed in July 2015.
What has occurred here is consistent with what Ms McArdle testified was the practice of the Respondent.
The Applicant made an issue of the fact that Mr Redmond and Mr Cooper signed contracts with Delta Facilities Management and not with the Respondent. If it were contended that the Respondent could not gain any comfort from the contracts of Mr Redmond and Mr Cooper, I would reject any such contention.
It is clear, from the manner in which Compass Group Australia has set up its operations, that the terms and conditions of employment, which both Mr Cooper and Mr Redmond had with Delta Facilities Management, are exactly the same as that which is had with the Respondent.
It is made clear in the letter sent to Mr Cooper on 15 June 2017 that “the terms and conditions of your employment, including the terms and conditions in your current Schedule A, will remain unchanged…”
The contracts and the employment of all three employees cannot be differentiated simply because the initial contract was between different entities under the Compass Group umbrella. They may be separate and distinct legal entities, however, when one looks at the structure as described by Ms McArdle, these entities are, in many respects, indistinguishable from each other.
Each contract has an acknowledgement that the employee has read, understood and accepted the contract of employment just above the place where the employee has signed the contract.
Each contract has the identical clause 9 which is headed “Continuing Employment” and reads as follows:
9. Continuing Employment
The Company operates on sites under contracts between the Company and its clients. Your continuing employment is subject to the operational requirements of the Company's business, which is directly affected by the needs of our clients. You understand that continuous employment and wages, working hours or other conditions of employment cannot be guaranteed.
As a result of changes in operational requirements, there may no longer be a position for you at your current site. If that occurs, you may be given the opportunity, or required, to transfer to another location on different wages or other terms and conditions of employment. Any such changes will be discussed with you and, if agreement is reached, you will be given a new contract of employment.
If an alternate position is offered and not accepted by you, or if there are no suitable alternative positions available for you, the Company may terminate your employment by giving you notice (or payment in lieu) in accordance with this contract.
Termination of employment due to a change or loss of contract between the Company and a client is a usual reason for a change in the Company's workforce and is part of the ordinary and customary turnover of labour within the Company.
Under contractual terms between the Company and its client, a client may, at their sole discretion, withdraw your site access. In such circumstances, wherever practicable, the Company may relocate you to another site on similar terms and conditions or subject to such variations as are agreed, in writing, with you. However, where site access is withdrawn as a result of your refusal or neglect of duty, or serious misconduct, this may lead to disciplinary action or termination of your employment.
The contracts of Mr Cooper and Mr Redmond stated that the employee was employed on a full-time basis under the classification “DeltaFM, ESS Maintenance – Collective Agmt 2009”. This agreement was superseded by the Compass Group (DeltaFM) Enterprise Agmt 2014. The contract of Mr Dickson was made in accordance with the latter agreement. The contracts all stated that a full copy of the agreement was available electronically on the company’s system.
Clause 17.1 of the agreement states the following:-
Redundancy pay is provided for in the NES, which provides that an employee (other than a casual employee) is entitled to be paid redundancy pay if the employee’s employment is terminated at the Company’s initiative because the Company no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour. To avoid doubt, termination of employment due to a change to or loss/end of contract between the Company and the client is a usual reason for a change in the Company’s workforce and is part of the ordinary and customary turnover of labour within the Company.
The letter that was sent to each of the employees in early August 2018, reads as follows:
Dear Neil (or Tim or Robert),
CONTRACT COMPLETION — TERMINATION OF EMPLOYMENT
As you are aware from our employee consultation over many months, the contract between ESS Thalanyji Pty Ltd and Bechtel Corporation will conclude on or about 31 August 2018 when the site moves into production. As you know, as the specialist FM company within Compass Group, DeltaFM provides village maintenance services at Wheatstone to meet the maintenance requirements under the Bechtel contract.
As discussed at the employee briefing this week, DeltaFM has recently been advised that our bid for the provision of maintenance services at Wheatstone directly for Chevron has been unsuccessful. As a result, DeltaFM will cease to provide maintenance services at Wheatstone on or about 30th September 2018.
As a result of the completion of the Bechtel contract, your employment with DeltaFM Australia Pty Ltd will cease. This letter provides you with the formal notice that is required by law to be given to you of the termination of your employment, with effect from the end of your shift on 30th September 2018.
Despite this formal notice of termination of employment, as a valued member of the DeltaFM team, we are keen to try and retain you within our business. During the notice period, we will look for suitable alternative employment for you at other DeltaFM and Compass operations and endeavour to redeploy you to another position, subject to the availability of roles for which you are qualified and able to fill. To assist us in our redeployment efforts, please complete the attached redeployment form with your role, state and roster preferences and return to your manager as soon as possible so that our recruitment team can contact you to discuss alternative employment options.
If we are unable to find a suitable role during the notice period, or if you are unwilling to accept an offer of an alternative position, your employment with DeltaFM will automatically terminate on 30th September 2018 due to the end of the client contract. Your final pay and accrued leave entitlements will usually be paid within a week of that date.
If the notice of your termination of employment has been less than the minimum notice we are required to give you by law, DeltaFM will pay you the remainder of the notice period as compensation in lieu of notice.
We thank you for your support and valuable contribution in the past at Wheatstone. If you have any questions concerning your employment, please contact me.
Dan Westin
Project Manager
ESST Wheatstone
The legislation and leading authorities
Section 119 (1) (a) of the FW Act reads as follows:
119 Redundancy pay
Entitlement to redundancy pay
(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 the ordinary and customary turnover of labour; or…
The effect of the section is that there is a prima facie right held by an employee to redundancy pay unless the termination of employment comes within the exception. The onus is on the Respondent to prove that the termination of employment was due to the ordinary and customary turnover of labour.
The leading authority on this exception is Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113. In understanding more fully the context of this decision, regard should be had to the first instance decision of Colvin J in Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9.
In Berkeley (Supra), the Full Court was dealing with two appeals simultaneously (including the Spotless decision (Supra) of Colvin J). The plurality of Collier and Rangiah JJ very helpfully enumerated and determined the issues that were raised in these appeals.
The Court reiterated the nexus between the termination and such termination is due to the ordinary and customary turnover of labour. The Court said that what constituted the ordinary and customary turnover of labour was a question of fact to be resolved according to the particular circumstances of each case. The Court said that all of the circumstances needed to be taken into consideration, and the question itself could not be resolved solely by looking at what practices a particular employer undertook.
The Court said that, historically, the phrase “ordinary and customary turnover of labour” in the context of redundancy, incorporated issues of reasonable expectation on the part of employees. This was because, historically, when employees were engaged unless there were reasons for them to expect otherwise, they expected to remain employed, in the absence of such factors as dismissal for misconduct or cessation of the employer (per paragraph [172]).
At paragraphs 177 - 179 the Court said
177 The reality is that the reasonable expectations of employees are relevant to inform the Court as to whether the Exception applies in cases where employees are terminated for redundancy. Such expectations cannot be coloured by facts that the employees neither knew, nor could have known, because (for example) those facts were known (or could be known) only to the employer as a “hidden” practice of that employer. Reasonable expectations of employees could derive from material provided to them by the employer, or facts generally known about an industry.
178 As the primary Judge correctly observed in [2019] FCA 9 at [141], employees’ reasonable expectations of ongoing employment (or otherwise) may arise from the nature of the work they were employed to do, the circumstances in which they came to be employed, or the circumstances in which their employment continued. Ultimately this will be a question of fact in any particular case, based on the evidence before the Court.
179 In summary, reasonable expectations of employees are relevant to inform the Court’s consideration of the application of the Exception, for reasons including:
·objective assessment of the employment relationship and whether the employee was entitled to be paid redundancy in accordance with s 119(1)(a) requires examination of the facts of the case;
·the facts of the case invariably include reference to the basis on which employees are engaged, and whether the employees were engaged on the basis that their employment was finite and/or dependent on external factors;
·the permanency or otherwise of employment, or the relationship between employment and contractual arrangements between the employer and third parties may not have been clarified at the time of engagement of the employee; and
·whether employees were engaged on the basis that their employment was finite and/or dependent on external factors, could be informed by their reasonable expectations arising from communications by or with the employer at the commencement of the employment or throughout the employment.
In the end, at paragraph 181, the Court said that “…the reasonable expectations of employees are a critical, but not the only, factor in determining whether the particular termination was due to the ordinary and customary turnover of labour”.
At paragraph 214, the Court said that they agreed with what Colvin J had said in Spotless (Supra) as to the meaning of “ordinary and customary turnover of labour”. The Court said that,
…‘ordinary and customary turnover of labour’ connotes a termination where the employer no longer requires the job to be performed because termination in the particular case is common or usual, both in the sense that it is commonly observed and in the sense that it is habitual or of long-standing practice.
Can the Respondent Discharge their Onus?
The Applicant contends that the onus has not been discharged. The Applicant submits that the employment arrangements between the Respondent and the employees were for ongoing full-time work.
The Applicant contends that this work was not conditional upon any contractual arrangement that the Respondent had with anyone else. Even if it were, the Applicant points out that Mr Cooper and Mr Redmond did not have a contract with the Respondent. There was no contract between the Respondent and Bechtel and no evidence of a contract between ESST and the Respondent.
The Applicant contends that there is no causal link between the termination and the ordinary and customary turnover of labour. The Applicant contends that the Respondent can have no comfort from either cl.17.1 of the enterprise agreement or from cl. 9 of the employment contract. In a nutshell, this is because neither of those clauses can trump the legislative effect of the exception in s.119(1)(a) of the FW Act.
The Applicant contends that the reasonable expectation of the employees is a significant factor in establishing whether there was an ordinary and customary turnover of labour. In this case, the Applicant contends that the expectations of the employees were that they would have either ongoing employment or a redundancy payment.
The Applicant contends that, on the facts of this case, the terminations have not come about due to the ordinary and customary turnover of labour.
Even though the Applicant has, very helpfully, raised these contentions for consideration by the Court, the Applicant has no onus. The onus remains on the Respondent to prove to the Court that the terminations have in fact occurred due to the ordinary and customary turnover of labour.
Nature of the Business
In Berkeley (Supra), the employers both had contracts to clean large premises; one had a contract to clean a shopping centre, and the other had a contract to clean the Perth airport. In both instances, the contracts between the owners of the premises and the employers had been long-standing and had been rolled over before.
In both cases, the premises ended up contracting with another party when the contract between them and the employers lapsed.
The circumstances, in this case, are markedly different. It is trite to say that large premises such as a shopping centre and an airport will always need cleaning. That will be so, no matter who does the cleaning. In this case, however, there was a construction of a mining facility. A construction project will, necessarily, have a beginning and will have an end.
The nature of the work that is conducted by the Respondent is such that there will be a beginning and an end. It may very well be that there will be quite an effluxion of time between the beginning and the end, but that does not derogate from the finite nature of the work.
In this case, the work was expected to begin in mid-2012 and conclude in mid-2017. That did not happen and the contract was extended. It was obvious to all concerned from the early part of 2018 that the construction project was winding down, and the employees, by their own evidence, were well aware of this. There was hope that there would be a new contract for the production phase of the project but this was never more than hope.
It seems to me that the work undertaken by the Respondent is such that there will be a turnover of employees. The Respondent operates in an environment where projects are begun and ended. As a project ends, there will be no need for there to be anyone doing particular tasks because the need for the work will have ended.
As the Respondent moves on to the next contract, there will be a need for employees to enable the Respondent to fulfil that contract. However, this will not necessarily mean that the same employees, either in number or in skills, will be needed to enable the Respondent to fulfil the next contract as was needed in fulfilling the last contract.
This is the inherent nature of the work that is undertaken by the Respondent. It is the recognition of such a nature of the work of the Respondent that, in my view, has caused the Applicant to make submissions regarding the contracts between the Respondent and the employees, as well as the Respondent and the main contractor.
For the reasons I have already given, I do not consider those issues to be relevant. It is clear that the Compass Group umbrella of companies are indistinguishable from each other for these purposes. It may be that Bechtel contracted with ESST but, realistically, Bechtel has contracted with the Compass Group of companies who have chosen to structure their entities in such a way that must be advantageous to the Compass Group as a whole.
But, for the employees of the Compass Group of companies, there is no difference as to which of the Compass Group companies employs them. They are subject to the same policies and overarching human resources structure.
The Reasonable Expectations of the Employees
The employees were engaged to work on the Wheatstone project. Their contracts are clearly referable only to the Wheatstone project. This is especially clear in the case of Mr Redmond who had previously been assigned to the Citec project. When he was “down-manned” from that project, his employment contract came to an end because it was referable only to the Citec project.
He was given a new contract as an Attendant-Utility on the Wheatstone project. When his duties changed to that of a refrigeration technician, he was given a new contract.
Whilst both the Applicant and the Respondent have talked about employees being “redeployed”, in reality, they are “re-employed”. Their employment contract comes to an end because there is no more work to do and they then enter into a new contract of employment when they go to work at a new site. Because they remain within the Compass umbrella, their entitlements and accruals remain with them.
Mr Dickson noted in his affidavit that he knew that he was working in a mine and that meant that the work at that particular site would eventually end.
The three employees realistically all knew that the work at the Wheatstone project would end. They were told this at regular site meetings by management. All of them accepted that they knew that the nature of the work was that they would work at a particular site, because of a contract between their employer and the main contractor; and when the work was completed, they would no longer be working at that site.
They have all said that their expectation was that they would either be redeployed or they would be given a redundancy. That concession, by the employees, speaks volumes. The employees could not have had a reasonable expectation of ongoing employment if it were that they were expecting that there was a realistic possibility that they would be getting a redundancy.
The effect of the evidence of the employees was that they expected one of two possibilities; either they would be redeployed or they would be given redundancy pay. As was made clear in Berkeley (supra) and in all of the previous cases referred to by the Full Court, it is the expectation of ongoing employment that is important. All things being equal, if an employee has an expectation of continued employment and that employment ceases, the employee should be compensated by way of redundancy.
But that is not the case here. The employees did not have an expectation of ongoing employment; they had an expectation that they would either be redeployed or compensated by way of redundancy payment. But the expectation of being compensated by way of redundancy payment is not an aspect that a Court must look at in deciding whether the termination is due to the ordinary and customary turnover of labour.
The reasonable expectation of the employees must also be looked at having regard to their employment contracts and the enterprise agreement.
The Applicant has submitted that the contracts, in the case of Mr Cooper and Mr Redmond, cannot be relied upon because they were not contracts between those two employees and the Respondent. I have already rejected that notion.
The Applicant has submitted that the enterprise agreement cannot be used by the Respondent to try and subvert their responsibilities under the FW Act and the National Employment Standards. The Applicant is quite right in this respect.
But that is not what is occurring in this instance. The fact that cl.9 is in all of the employees’ contracts and that cl.17.1 is in the enterprise agreement, is part of the whole circumstances that a Court must look at in deciding whether it is reasonable for the employees to have an expectation of ongoing employment.
The employees may have said that they did not read the contract; the employees may have said that they did not understand what the contract or the enterprise agreement meant; and, the employees may have said that no one explained the effect of these two clauses to them. None of that is particularly relevant. The employees signed their agreements and the employees were given notice that their employment was pursuant to an enterprise agreement.
As the High Court said in TOLL (FGCT) v Alphapharm and Ors [2004] HCA 52, at paragraph 45
It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they may be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
It is when one combines the effect of those clauses with the other circumstances that pertain to the nature of the work that the employees were undertaking, that the Court is informed as to the reasonableness of any expectation that the employees had of ongoing employment.
On the evidence before me, I am satisfied that the employees could not have had a reasonable expectation of ongoing employment.
Were the Terminations made due to the Exception?
Using the definition of “ordinary and customary turnover of labour” approved by the Full Court, it seems to me that the terminations, in this case, were commonplace in that such terminations occur when contracts have been fulfilled. It also seems to me that the terminations, in this case, were usual, in that terminations such as these were habitual and of long-standing practice.
In other words, the terminations came about because, in the business in which the Respondent operated, work is undertaken by the Respondent in accordance with contracts that are limited and finite. When those contracts have been fulfilled, there was no longer any requirement by the Respondent for the job, to be done by the employee, to be done by anyone. Because of this, the employment of the employees was terminated which is what occurs when these circumstances arise.
Conclusion
I am satisfied that the Respondent has discharged the onus. The nexus between termination and the exception is clear. I am satisfied that the termination of the employment of the employees was due to the ordinary and customary turnover of labour.
I dismiss the application.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of Judge Vasta
Date: 30 October 2020
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