Hitchin v Labourforce Solutions Pty Ltd - [2009] SASC 85

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
HITCHIN v LABOURFORCE SOLUTIONS PTY LTD
[2009] SASC 85
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice David)
1 April 2009
INDUSTRIAL LAW - SOUTH AUSTRALIA - REGULATION OF PARTICULAR MATTERS UNDER PARTICULAR STATUTES - LONG SERVICE LEAVE
Appeal from a decision of the Full Industrial Relations Court - whether an employer Labourforce Solutions Pty Ltd took over or otherwise acquired part of business of another employer, Rexco Pty Ltd, also a labour hire company - whether definition of related employer set out in section 3(3) of the Long Service Leave Act satisfied - whether former employee of Labourforce Solutions entitled to pro-rata long service leave having completed seven years' continuous service with related employers.
Held: appeal allowed - Labourforce Solutions acquired a part of the business of Rexco in accordance with section 3(3) of the Long Service Leave Act - Rexco and Labourforce were related employers within the meaning of that section - Labourforce Solutions to pay pro-rate long service leave of $10,304.84.
Long Service Leave Act 1987 (SA) s 3(3) and s 5, referred to.
Action Engineering v Press [2006] SASC 207; Yule v WorkCover (Rexco) [2003] SAWCT 66; Trinne v WorkCover (Rexco) [1999] SAWCT 57; Snell v WorkCover (Rexco) [1999] SAWCT 126; Johnson v Johnson (2000) 201 CLR 488; PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 201 CLR 648; Smith v Anderson (1880) 15 Ch D 247; White v Federal Commissioner of Taxation (1968) 120 CLR 191; Thomas v Federal Commissioner of Taxation (1972) 46 ALJR 397; Ferguson v Federal Commissioner of Taxation (1979) 37 FLR 310; Tweddle v Federal Commissioner of Taxation (1942) 180 CLR 1; Minister of Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194; Dougal v Ribbon Nominees Pty Ltd (1992) 59 SAIR 750; K-Generation Pty Ltd & Anor v Liquor Licensing Court & Anor [2009] HCA 4, considered.

HITCHIN v LABOURFORCE SOLUTIONS PTY LTD
[2009] SASC 85
GRAY J.

This is an appeal from a decision of the Full Court of the Industrial Relations Court.[1]
[1] Permission to appeal was granted. See Hitchin v Labourforce Solutions Pty Ltd [2008] SASC 278.
The Full Court dismissed an appeal from a Judge of the Industrial Relations Court who had in turn allowed an appeal from an Industrial Magistrate. The appeal raises questions concerning the scope of the “related employer” provisions of the Long Service Leave Act 1987 (SA). More particularly, the question that arises is whether an employer, Labourforce Solutions Pty Ltd, a labour hire company, took over or otherwise acquired part of the business of another employer, Rexco Pty Ltd, also a labour hire company. If it is determined that Labourforce Solutions took over or otherwise acquired part of the business of Rexco, then the definition of related employer set out in section 3(3) of the Long Service Leave…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] SASC 85
Decision Date: 1 April 2009

CaseChat Overview and Summary

The case of Hitchin v Labourforce Solutions Pty Ltd involves a dispute concerning long service leave entitlements under the Long Service Leave Act 1987 (SA). The appellant, George Mettyear, a qualified electrician, worked for Rexco Pty Ltd and later for Labourforce Solutions Pty Ltd, both labour hire companies. The central issue is whether Labourforce Solutions Pty Ltd acquired part of the business of Rexco Pty Ltd, thereby making them related employers under the Long Service Leave Act. If so, Mettyear would be entitled to pro-rata long service leave for his continuous service with both companies, which amounts to seven years.

The legal issues before the court were whether Labourforce Solutions Pty Ltd acquired part of the business of Rexco Pty Ltd and if this acquisition made them related employers under section 3(3) of the Long Service Leave Act. The determination hinged on interpreting the statutory language and the factual circumstances surrounding the transition of employment from Rexco Pty Ltd to Labourforce Solutions Pty Ltd. The court examined the nature of the businesses, the continuity of employment, and the statutory provisions regarding related employers.

The court held that Labourforce Solutions Pty Ltd did acquire part of the business of Rexco Pty Ltd, making them related employers within the meaning of the Long Service Leave Act. The court found that the acquisition occurred when Labourforce Solutions Pty Ltd became the sole labour hire company for Iplex, replacing Rexco Pty Ltd. This transition constituted an acquisition of part of the business, satisfying the statutory requirement for related employers. Consequently, Mettyear’s continuous employment with both companies entitled him to pro-rata long service leave. The court ordered Labourforce Solutions Pty Ltd to pay Mettyear the sum of $10,304.84 in lieu of pro-rata long service leave. The court also indicated that it would hear the parties on the matter of interest and costs.

Orders

Orders of the court

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Background

Background to the litigation

The Full Court dismissed an appeal from a Judge of the Industrial Relations Court who had in turn allowed an appeal from an Industrial Magistrate. The appeal raises questions concerning the scope of the “related employer” provisions of the Long Service Leave Act 1987 (SA). More particularly, the question that arises is whether an employer, Labourforce Solutions Pty Ltd, a labour hire company, took over or otherwise acquired part of the business of another employer, Rexco Pty Ltd, also a labour hire company. If it is determined that Labourforce Solutions took over or otherwise acquired part of the business of Rexco, then the definition of related employer set out in section 3(3) of the Long Service Leave Act will be satisfied and a former employee of Labourforce Solutions, George Mettyear, will be entitled to pro rata long service leave having completed seven years of continuous service with related employers. The Facts Mr Mettyear is a qualified special class electrician. Between October 1999 and December 2006, Mr Mettyear worked full time maintaining the electrical plant and equipment at the Elizabeth plant of Iplex Pipelines of Australia Pty Ltd. Both Rexco and Labourforce Solutions were the labour hire companies that, at different times, provided Iplex with skilled maintenance workers. Mr Mettyear was first employed by Rexco Ltd. Rexco hired the labour of Mr Mettyear to Iplex from October 1999 until June 2002. In June 2002, Labourforce Solutions became the sole labour hire company to Iplex and became Mr Mettyear’s employer. Mr Mettyear continued with the same maintenance duties at Iplex. Labourforce Solutions terminated Mr Mettyear’s employment when Iplex ceased using Labourforce Solutions’ labour hire services in December 2006. Mr Mettyear was not paid any redundancy entitlements. He then sought payment in lieu of pro rata long service leave from Labourforce Solutions. In rejecting this request it was said that Labourforce Solutions had been Mr Mettyear’s direct employer for only about four and a half years and denied that Mr Mettyear’s previous service with Rexco could be counted for the purposes of providing long service leave. Labourforce Solutions later sought the review by the Industrial Magistrate of a formal notice issued by SafeWork SA’s inspector for it to pay Mr Mettyear an entitlement of $10,304.84. Long service leave entitlements are not the product of the contract of employment, but a statutory benefit provided by the Long Service Leave Act. Under this Act, an employee is entitled to receive pay in lieu of pro rata long service leave upon termination after a minimum period of seven years “continuous service” with the same or “related employers”. Section 3 defines employers to be related if one “takes over or otherwise acquires the business or part of the business of the other”. An entitlement to long service leave derives from service to a business rather than to an individual employer. The entitlement focuses on the business for which a worker has continuously worked over a number of years, rather than on the legal identity of the owner of that business.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GRAY J DAVID J

As a consequence of this analysis, Labourforce Solutions acquired a part of the business of Rexco in accordance with section 3(3) of the Long Service Leave Act, and consequently, Rexco and Labourforce Solutions were related employers within the meaning of that section. Conclusion I would allow this appeal. I would order that Labourforce Solutions pay pro rata long service leave of $10,304.84 to Mr Mettyear. I would hear the parties as to interest and costs. SULAN J: I would allow the appeal. I agree with the reasons of Gray J and the orders that he proposes. For the reasons given by Gray J, I would allow the appeal. I agree with the orders he proposes.

Ratio Decidendi

Legal Principle Established

Established by: GRAY J, DAVID J

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