Mr Edward Kilsby v MSS Security Pty Ltd T/A MSS Security

[2014] FWC 7475

[2014] FWC 7475

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Mr Edward Kilsby
v
MSS Security Pty Ltd T/A MSS Security
(C2014/1286)

COMMISSIONER SPENCER BRISBANE, 21 NOVEMBER 2014

Alleged dispute about any matters arising under the enterprise agreement and the NES; clause 2.7(b)(iii) and s.119(1)(a) - redundancy - loss of contract - when ordinary and customary turnover of labour - no redundancy payment

Introduction

[1] Mr Edward Kilsby (the Applicant) made an application pursuant to section 739 of the Fair Work Act2009 (the Act) claiming that he was entitled to redundancy payment (4 weeks severance) as a result of the termination of his employment by MSS Security Pty Ltd (the Respondent). The Applicant argued that his job had been made redundant and therefore he was entitled to redundancy pay.

[2] The Respondent relied on clause 2.7 - Change of Contract in the MSS Security Enterprise Agreement (QLD) 2011-2014 (the Agreement), clause 12.5 - Change of contract in the Security Services Industry Award 2010 MA000016 (the Award) and section 119(1)(a) of the Act, to argue that no redundancy payment was due, given that the Applicant’s termination of employment occurred as a result of the Respondent not being successful in attaining the new security contract at the Mackay Airport. The Respondent argued that the dismissal was due to the loss of the contract and therefore, the “ordinary and customary turnover of labour” as per the exception in s.119(1)(a) was applicable. The Respondent submitted it operated in an industry that relied upon periodically rotating contracts, and in such circumstances, the Respondent submitted, it was exempt from the obligation to make redundancy payments in relation to the Applicant’s case.

[3] A conference was held and the Applicant sought a determination of the matter. Directions were set for the provision of materials. A further conference was held and the parties consented to the matter being determined on the papers.

Relevant legislative and agreement provisions

[4] Section 739 of the Act is as follows:

“739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[5] Section 119 of the Act, relating to redundancy pay, is relevantly extracted 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

(b) because of the insolvency or bankruptcy of the employer.

Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

Amount of redundancy pay

(2) ...”

(emphasis added).

[6] Section 121 provides for situations where an employee is not entitled to redundancy pay as follows:

“121 Exclusions from obligation to pay redundancy pay

(1) Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):

(a) the employee’s period of continuous service with the employer is less than 12 months; or

(b) the employer is a small business employer.

(2) A modern award may include a term specifying other situations in which section 119 does not apply to the termination of an employee’s employment.

(3) If a modern award that is in operation includes such a term (the award term), an enterprise agreement may:

(a) incorporate the award term by reference (and as in force from time to time) into the enterprise agreement; and

(b) provide that the incorporated term covers some or all of the employees who are also covered by the award term.”

[7] Clause 2.7 of the Agreement, relating to changes of contract, is as follows:

“2.7 Change of Contract

(a) This clause applies in addition to clause 6.11 of this agreement and s.120(1)(b)(i) of the NES, and applies on the change of contractor who provides security services to a particular client from one security contractor (the outgoing contractor) to another (the incoming contractor).

(b) Section 119 of the NES does not apply to an employee of the outgoing contractor where;

i. The employee of the outgoing contractor agrees to other acceptable employment with the incoming contractor.

ii. The outgoing contractor has paid to the employee all the employee’s accrued statutory entitlements on termination of the employee’s employment.

iii. To avoid doubt, s.119 of the NES does not apply to an employee of an outgoing contractor where the employee is not offered acceptable employment with either the outgoing contractor or the incoming contractor,”

[8] The above clause was the subject of an undertaking for the approval of the agreement. Attached to the Agreement, in the form of a letter dated 29 July 2011, the relevant undertaking provides as follows:

“Clause 2.7(b)(iii) Change of Contract

To avoid doubt, s.119 of the NES does apply to an employee of an outgoing contractor where the employee is not offered acceptable employment with either the outgoing contractor or the incoming contractor.”

(emphasis added).

[9] The undertaking operates to provide clarity, such that clause 2.7 of the Agreement mirrors clause 12.5 of the Security Services Industry Award 2010 MA000016 (the Award) (via the addition in the undertaking of the same provision as clause 12.5(c)) as follows:

“12.5 Change of contract

[12.5 varied by PR994514 from 01Jan10]

(a) This clause applies in addition to clause 8—Consultation of this award and s.120(1)(b)(i) of the Act, and applies on the change to the contractor who provides security services to a particular client from one security contractor (the outgoing contractor) to another (the incoming contractor).

(b) Section 119 of the Act does not apply to an employee of the outgoing contractor where:

(i) the employee of the outgoing contractor agrees to other acceptable employment with the incoming contractor; and

(ii) the outgoing contractor has paid to the employee all of the employee’s accrued statutory and award entitlements on termination of the employee’s employment.

(c) To avoid doubt, s.119 of the Act does apply to an employee of an outgoing contractor where the employee is not offered acceptable employment with either the outgoing contractor or the incoming contractor.”

Background and Summary of Submissions

[10] The Applicant was employed on 1 February 2013 by the Respondent at Mackay Airport (on a part-time basis at Level 2), this being the only contract held by the Respondent in Mackay. The Applicant was notified on 23 April 2014 that the Respondent had been unsuccessful on re-tendering for the new contract.

[11] The Respondent argued that these circumstances, whereby the redundancy resulted from the loss of the contract, clearly fell within the definition of the “ordinary and customary turnover of labour”, as per s.119(1)(a) of the Act; and as reinforced by clause 2.7 Change of Contract, in the Agreement.

[12] The Respondent relied on a previous “Investigation and Finalisation” report made by the Fair Work Ombudsman (FWO), provided as evidence in this matter. The Respondent explained that the investigation was into similar circumstances by the FWO. In those circumstances, MSS Security had also lost a contract and it was determined by FWO that the employees' employment was terminated due to the “ordinary and customary turnover of labour” (as per s.119(1)(a)) and that in those circumstances redundancy entitlements were not payable (as per s.119(2)).

[13] The Respondent stated that they had offered the only alternative positions available to the Applicant and submitted that acceptable employment was offered to the Applicant. These positions were on similar duties and included permanent and casual roles, two of which were paid at a higher rate of remuneration, but located outside Mackay, where the Respondent had other contracts.

[14] The Applicant, in his submissions, provided a list of alternative sites which were available for him to be redeployed to. This included:

“a) Rolleston – Level 4: $33.42/hour

b) Gladstone – Levels 1 – 3: $18.60 - $19.47

c) Proserpine Airport – Level 2: $19.12

d) Brisbane Airport – Level 2: $19.12

e) Rockhampton Airport – Level 2: $19.12”

[15] The Applicant argued that, given that the alternative positions available to him on suitable duties were a significant geographical distance from his residence and that this would unreasonably impact on his domestic and residential situation, the alternative positions were unsuitable.

[16] The Respondent submitted that the Rolleston position offered to the Applicant was a drive in, drive out position, based on a seven days on, seven days off roster, which would not have required relocation. However, it is recognised, as the Applicant argued, that there would be significant periods of driving involved.

[17] The Respondent submitted that the Applicant was aware that his employment was dependent upon the retention of the Mackay Airport contract, by the Respondent. Further, it was submitted that the Applicant was aware of the nature of the industry and of the Mackay Airport contract, via his employment with the previous outgoing contractor (ISS Security) at the time of the February 2013 contract transition, when he then gained employment with MSS Security.

[18] The Respondent submitted that events leading up to the contract commencement by MSS Security, resulted in it being common knowledge that the contract would go out to tender again due to the screening authority changing in the future. It was submitted that the Respondent’s representatives; the General Manager Aviation, the Qantas Contract Manager and the Aviation Services Manager QLD & NT, visited Mackay airport shortly after the contract commenced and engaged in discussions with employees (including the Applicant) to update them that the contract would be re-tendered for.

[19] It was submitted by the Respondent that the Applicant’s contract of employment clearly outlined that the Act does not provide an entitlement to redundancy pay if employment ends because of the loss of contract. The Letter of Appointment filed with the application and signed by the Applicant on 10 January 2013 states:

“…Your employment with the Company in a part-time position will be dependent upon the Company retaining the contract with its client to provide security services at the site where you work.

In the event that the Company loses a contract to provide security services where you are working and has no comparable position to transfer you to, your position with the Company will be terminated in accordance with provisions set out in the Security Service Industry Award 2010 or applicable Industrial Instrument.

Job losses due to loss of contract are part of the ordinary and customary turnover of labour in the Company’s business. The Fair Work Act does not provide an entitlement to redundancy pay if your employment ends because of loss of contract.

By signing this agreement you specifically acknowledge that you understand this, and accept this as a term of your contract of employment…”

[20] The Applicant was also issued (on engagement) with the company policy “Employee Standing Instructions”, which sets out that, where a loss of contract leads to termination, this is ordinary and customary turnover of labour within the Respondent’s business and there is no entitlement to redundancy pay. The Respondent provided the following extract from the MSS Security - Employee Standing Instructions - 2012:

“7.5.2 Transfer, Location and Classification

As an employee of MSS Security, you are employed as a condition of employment to perform a wide range of duties (such as crowd control, guarding, concierge, events etc.) at any site (except employees on fixed contracts of employment) at which MSS Security has a contract to provide services. The business of MSS Security depends on the holding and performance of such contracts.

In the event that MSS Security loses a contract to provide services where you are working and has no comparable position to transfer you to, your position with the Company will be terminated in accordance with provisions set out in the Security Services Industry Award 2010 or applicable Industrial Instrument.

In the circumstances of this ordinary and customary turnover of labour within the MSS Security business, where your employment ends because of the loss of a contract; you will not be entitled to redundancy pay, as per Section 119 of the Fair Work Act 2009.

Your rate of pay and conditions as an employee shall be those applying to the duties you perform from time to time and may change according to your new assignments.”

(emphasis added).

Consideration

[21] The undertaking in clause 2.7(b)(iii) of the Agreement states that s.119 of the Act does apply to an employee of an outgoing contractor where the employee is not offered acceptable employment, with either the outgoing contractor or the incoming contractor (emphasis added). This undertaking reflects clause 12.5(c) of the Security Services Industry Award 2010.

[22] The Applicant submitted he was not offered acceptable alternative employment. On the material provided, it is accepted that the Applicant was not offered acceptable employment.

[23] In accordance with clause 2.7 of the Agreement (as amended by the undertaking), s.119 of the Act does apply to the Applicant. As stated, section 119 provides that redundancy pay is not payable where the termination of employment is due to the ordinary and customary turnover of labour. It is noted that there is a tension between the legislative provisions providing severance payments for those employees who have been made redundant, but not providing such for those employees caught by the exception, where the redundancy is due to the “ordinary and customary turnover of labour”. This term “ordinary and customary turnover of labour” in the exception is not separately defined in the Act.

[24] There is also a minimum of case law arising from the Federal Commission on the application of the exception in s.119(1)(a) of the Act. The State Tribunals have provided some consideration of the same term of “ordinary and customary turnover of labour” in relation to severance payments.

[25] In terms of the ordinary and customary turnover of labour and the impact on redundancy payments, the following extract from the Queensland Industrial Relations Commission (QIRC) decision Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland AND James Engineering Pty Limited (Nos. W141, W142 and W144 of 2000) 1 cited the origins of the term as per the 1984 Termination, Change and Redundancy Case in the federal jurisdiction2 as follows:

“In the Supplementary Test Case decision (9 IR 115 at 128) a Full Bench of the Australian Industrial Relations Commission explains the reasons for including the expression “ordinary and customary turnover of labour” in the original Test Case decision. In so doing, they expressly adopted the words of the Fisher J., the President of the Industrial Commission of New South Wales, which were formulated and explained in SDEA (NSW) v Countdown Stores (1983) 7 IR 273 at 277-278, as follows:–

“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, particularly in the building construction, contracting and sub-contracting industries are employed on 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 product, 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 dismissals lies in the force of adverse economic circumstances, restricting employment opportunities and resulting in collective redundancies. Dismissals arising out of technological change or out of major company restructuring have similar characteristics.”

(emphasis added).

[26] The applicable provision under consideration at the time, including the term “ordinary and customary turnover of labour” was contained in the declaration of policy of Termination of Employment, Introduction of Changes, Redundancy contained in a Full Bench Decision of the Industrial Conciliation and Arbitration Commission of Queensland (ICACQ) 3. It was also observed4 that the ICACQ adopted the reasons and decision of the 1984 Termination, Change and Redundancy Case5. The ICACQ declaration provided in clause C(6), that “an employee whose employment is terminated for reasons set out in subclause 1 hereof shall be entitled to the following amounts of severance pay...”6. Clause C(1)(a) contains the exception as follows:

“...Where an Employer has made a definite decision that he/she no longer wishes the job the employee has been doing to be done by anyone, and this is not due to the ordinary and customary turnover of labour, and that decision may lead to termination of employment, the Employer shall hold discussions with the employees directly affected and where relevant, their Union or Unions.” 7

(emphasis added).

[27] The Full Bench in the1984 Termination, Change and Redundancy Case   Supplementary Decision 8 further stated that severance was not applicable, in relation to circumstances of “ordinary and customary turnover of labour” where it was a ‘normal feature of business’, as follows:

“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 556 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.”

(emphasis added).

[28] The 2004 Australian Industrial Relations Commission (AIRC) Redundancy Case 9 did not deal with the exception to pay redundancy in terms of “ordinary and customary turnover of labour”.

[29] Whilst there is limited case authority on the exception to redundancy payments based on the “ordinary and customary turnover of labour”, the following decisions have dealt with the issue and are relevant to the current circumstances.

[30] A Full Bench of the New South Wales Industrial Relations Commission, in Fashion Fair Pty Ltd v The Department of Industrial Relations (Inspector Rouse) 10, stated that the reason for the loss of the contract was relevant in considering “ordinary and customary turnover of labour”11, as follows:

“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.”

[31] The Respondent stated that it was a common feature of their work in the security services industry that the regular turnover of business contracts required the Respondent to terminate staff on the basis of winning and losing such business contracts. The Applicant submitted that mismanagement of MSS Security at Mackay Airport may have “played a large part” in the Respondent not retaining the contract, and as such, the loss of contract was in their control. There was no evidence of such. The Respondent submitted that the loss of contract was not related to contractual performance or deficiencies and the new contract was awarded to another company on the basis of cost, as the incoming contractor was able to provide a “bundle” of security services.

[32] In relation to the information provided to the Applicant on engagement, the Respondent submitted that company representatives of the Respondent engaged in general discussion with employees, shortly after the contract at Mackay Airport commenced and indicated that the contract would be re-tendered for. The intention of the Respondent to maintain the contract is evidenced by such. I am satisfied that the loss of contract was not in the control of or caused by the Respondent.

[33] In further examining the term “ordinary and customary turnover of labour” in DIR v Delaware North (Australia) Pty Ltd 12, Commissioner Bloomfield (as he then was), of the QIRC, held that it was relevant that the employees in that case understood that their continued employment was dependent upon their employer retaining a contract.

[34] The Applicant was aware at the commencement of employment, as per his Letter of Appointment (as previously set out), that, should the Respondent lose the contract at Mackay Airport and an alternative or “comparable” position not be available, his employment would be terminated and he would not be entitled to a redundancy payment. It is clear from the Letter, and also the “Employee Standing Instructions”, that the Applicant was aware his employment was dependent upon the Respondent retaining the contract.

[35] The Applicant had been employed by the Respondent for just less than 15 months when he was notified that the Respondent had lost the Mackay Airport contract. The Applicant was aware of the operation of the Mackay Airport contract, due to his previous employment with ISS Security (the outgoing contractor) at Mackay Airport, following which his employment with MSS Security commenced.

[36] Commissioner Lawson in A Garcia, J Mukevski and D Petreski v Limro Pty Ltd 13 dealt with the termination of three employees; “The circumstances surrounding the respective terminations arise from a single event - the loss by the Respondent of part of a cleaning contract”14.

[37] Commissioner Lawson referred to the issue of “ordinary and customary turnover of labour” in this matter, where each of the employees was long serving and the employer had failed to provide any evidence of efforts made to redeploy the applicants, within its total workforce, via alternative contracts it held. As to the entitlements of employees to severance payments, in these circumstances, Lawson C stated as follows 15:

“The second issue of relevance under s.170CE(3)(e) is the entitlement of the applicants to award severance pay. There is so (sic) disagreement that each of the applicants were long-serving full-time employees, each with 12-13 years of service with the employer, and that their employment was governed by the Cleaning (Building and Property Services)(ACT) Award 1998 [Print Q2605]. The relevant redundancy clause provides:

“19.1 Definition

“Redundancy occurs when an employer decides that the employer no longer wishes the job the employee has been doing to be done by anyone and this is not due to the ordinary and customary turnover of labour.”

What is in dispute in the current matter is the interpretation to be given to the words “... and this is not due to the ordinary and customary turnover of labour”. The Commission was made aware of the history of a disagreement between the union and the relevant industry organisation - the “Australian Building Services Association” (ABSA) - since 2001 over the meaning and application of the disputed words. The union’s views were adequately spelt out in its correspondence to the ABSA dated 25 September 2001 (attachment B to Ms Berry’s statement; Ex W4) in which the union gave a number of examples of the application of clause 19 of the award, including “.... where a cleaning contract is lost and employees are terminated as a result.” In a reply dated 18 October 2001, ABSA (attachment C to Ex W4) notified the union of its view “.. where an employer does not have a contract renewed and is unable to place the employees associated with the contract in other employment, the termination of the employment of those people is clearly part of “ordinary and customary turnover ...”. ABSA went on to give as an example of that situation “.... where a client terminates a contract.”

To the Commission’s knowledge the interpretative impasse remains. I was not taken to any authorities which gave clarity to the impasse. In those circumstances I consider the view of DP Sams in Huseyin Arslan to be apposite: in a contemporary industrial environment employees with many years service with the same employer should not be denied the same rights as other employees which are guaranteed through test case standards. In my view clause 19 of the award obliged the respondent to make certain payments in the event of redundancy. The respondent failed to do so. When applied to the circumstances of the current applications, the terminations of employment - while for a valid reason in each case as discussed above - were harsh, unjust and unreasonable because of unfair treatment meted out to them as a consequence of the loss of part of a contract; the failure to explore genuine alternative employment; and failure to provide reasonable standards of redundancy benefits.

I do not regard these terminations as falling within the definition of “ordinary and customary turnover of labour”.”

(emphasis added).

[38] Justice Haylen of the Industrial Court of New South Wales considered the exception in s.119(1)(a) of the Act in the matter of Transport Workers' Union v Veolia Environmental Service (Australia) Pty Ltd 16as follows:

“80 Senior 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 Kuringgai. 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.

81 If 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 Kuringgai 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.

82 From 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.

83 In 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.”

(emphasis added).

[39] This contrasts to the circumstances of the Applicant in the current matter, where the Applicant’s employment was not lengthy (just over a year) and for the term of one contract; and his employment was clearly subject to the turnover of the contract.

[40] In the DIR v Delaware North (Australia) Pty Ltd, Commissioner Bloomfield of the QIRC further observed as follows:

“…The decisions of Fisher P in Walter Burnett, Glynn J in Spotless Catering and Miller CIM in Spiljar v Chubb are to the effect that employees terminated upon the loss of a periodically rotating contract (such as advertising, catering and security contracts) are terminations within the ordinary and customary turnover of labour…

… the underlying and, in my view, critical, aspect is that AFS/Delaware is in the contract catering business and its ability to engage and retain labour is always dependent upon its ability to win or to hold catering contracts. If they lose a particular contract, and are unable to relocate employees to another of their contracts, they must, regrettably, terminate such employees. Termination in such circumstances is part of the ordinary and customary turnover of its labour.” 17

[41] In similar terms, the Respondent in the current matter operates in the security services industry and lost the contract to provide services at Mackay Airport. The security services industry was identified in DIR v Delaware North (Australia) Pty Ltd as an industry (similar to the catering business) involving periodically rotating contracts, and one where terminations due to the loss of such a contract, fall within the “ordinary and customary turnover of labour”. In that decision, it was held to be important that employees had (as in the current matter) been informed of the insecurity of their positions as linked to the renewal of contracts 18.

[42] From the case law considered, the question of whether an employer will be exempt from the redundancy provisions of an Award or Agreement, on the ground that the termination is due to the “ordinary and customary turnover of labour”, turns on the facts and circumstances of each case. The determination of each matter as to whether it represented an “ordinary and customary turnover of labour” is reliant on the particular circumstances. This case by case approach was reinforced by the Full Bench of the AIRC in Tempo Services Limited v TM Klooger and others 19. In terms of the facts and circumstances to be taken into account in this decision, the length of the contract and employees’ service, and how the contract came to an end were relevant as follows:

“[16] 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 terminations. The terminations were due to the fact that the appellant handed in its 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.”

(emphasis added).

[43] In the first instance decision of the above Appeal case 20, Commissioner Redmond found that the termination of employees was harsh, unjust or unreasonable based upon the finding that the terminations were not due to the ordinary and customary turnover of labour and that the employees were entitled to redundancy payments under the relevant Award21. The employees were terminated when the employer decided to ‘turn in’ (rather than a situation of losing) the contract (underpinning their employment), and no longer required their services or had an alternative job for the employees.

[44] In the matter currently before the Commission (as presently constituted), it has been established that the Applicant’s employment was linked to the Respondent’s contract. The Applicant had been employed on the Respondent’s only contract in Mackay. He had been employed to undertake work in relation to this contract with the Respondent and had been employed for just over one year. The Applicant was also aware that the contract was up for renewal, the contract was not renewed and he was aware from the commencement of his employment that his employment was dependent on the contract continuing. The circumstances of the dismissal were related to the loss of the contract and not the “turning in” of the contract nor due to a general economic downturn. It is also relevant that the Respondent endeavoured to redeploy the Applicant. It is accepted that the alternative contracts (and hence positions for the Applicant) were a significant distance away and would require the Applicant to relocate or to spend a significant amount of time driving or living away from his domestic situation.

Conclusion

[45] The case authorities state that a case by case approach, in terms of the application of the exception in s.119(1)(a), is required. In this case, the circumstances of the Respondent’s loss of contract accords with the exception in s.119(1)(a) of the Act, clause 2.7 of the Agreement (and the associated undertaking), and the case law as discussed above. In accordance with such, due to the ordinary and customary turnover of labour, the Respondent is exempt on this basis, from the requirement to make redundancy payments.

[46] On the specific facts and circumstances of this matter including (but not exhaustively), where:

• the Applicant has been made aware in writing on engagement that his employment was linked to the Respondent’s contract;



• the Applicant had been advised of the insecurity of his employment, as linked to the continuation of the contract;



• when the Respondent confirmed to employees the contract was up for re-tender, they confirmed the vulnerability of ongoing employment, as tied to the renewal of the contract;



• the ability of the Respondent to engage and retain labour was dependent upon its ability to win or hold the contract;



• the loss of the contract was not due to the Respondent turning it in or a general economic downturn;



• the period of employment was for just over a year; and



• the Respondent offered alternative employment, however, no suitable alternative job was available,

the Applicant is not entitled to a redundancy payment as per s.119(1)(a). These specific circumstances represented the “ordinary and customary turnover of labour” as per the exception to the payment of redundancy payment in s.119(1)(a). For the aforementioned reasons, the application made pursuant to section 739 seeking redundancy payment is dismissed.

[47] I Order accordingly.

COMMISSIONER

 1   Asbury C (as at that time) in Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland v James Engineering Pty Ltd [2000] QIRComm 163; 165 QGIG 279 (14 November 2000) at page 280 - 281 (whilst this quote refers to the Australian Industrial Relations Commission, the 1984 Termination, Change and Redundancy Case was decided by the Australian Conciliation and Arbitration Commission)

 2   Termination, Change and Redundancy Case (1984) 8 IR 34 (2 August 1984) and the Supplementary Decision in Termination, Change and Redundancy Case (1984) 9 IR 115 (14 December 1984)

 3   (1987) 125 QGIG 1119-1121

 4   Asbury C (as at that time) in Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland v James Engineering Pty Ltd [2000] QIRComm 163; 165 QGIG 279 (14 November 2000) at page 280

 5   Termination, Change and Redundancy Case (1984) 9 IR 115 at page 128

 6   (1987) 125 QGIG 1119-1121 at page 1121

 7   (1987) 125 QGIG 1119-1121 at page 1120

 8   Termination, Change and Redundancy Case (1984) 9 IR 115 at page 128

 9   Giudice J, Ross VP, Smith C and Deegan C, Redundancy Case, PR032004, 26 March 2004.

 10   Fashion Fair Pty Ltd v The Department of Industrial Relations (Inspector Rouse) (1999) 92 IR 271 at page 280 - 281

 11   As per cl 2(iv) of the Retail Industry (State) Redundancy Award 1995

 12   Powell for the Department of Industrial Relations v Delaware North (Australia) Pty Ltd and Another [2002] QIRComm 180; 171 QGIG 395 (1 November 2002) at page 399

 13   A Garcia, J Mukevski and D Petreski v Limro Pty Ltd PR933625 [2003] AIRC 726 (27 June 2003)

 14   Ibid. at [1]

 15   Ibid. at [29] - [32]

 16   Transport Workers' Union v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIRComm 22 at [80] - [83]

 17   Powell for the Department of Industrial Relations v Delaware North (Australia) Pty Ltd and Another [2002] QIRComm 180; 171 QGIG 395 (1 November 2002), at page 399

 18   Ibid.

 19   Tempo Services Limited v TM Klooger and others PR953337 [2004] AIRC 1150 (19 November 2004) at [16]

 20   T M Klooger, R L Klooger, B C Hutchison, L G Carling and J Velis v Tempo Services Limited - PR950776 [2004] AIRC 788 (12 August 2004)

 21   Cleaning (Building and Property Services) (ACT) Award 1998 [Print Q2605]

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