Textile, Clothing and Footwear Union of Australia v Camelot Images P/L

[1993] FCA 380

CATCHWORDS

Industrial law - award - breach - closure of factory on two weeks' notice - whether notice inadequate for employers who had worked for former operator of factory - whether breach in failing to give additional notice to employee over 45 years of age - severance pay - amount of entitlement by employees of former operator of factory - effect of absence due to workers' compensation and maternity leave - considerations relevant to penalties - rate of interest.

Business name - change of proprietor - whether obligation of former proprietor under industrial award ceases.

TEXTILE, CLOTHING AND FOOTWEAR UNION OF AUSTRALIA V. CAMELOT

REOIST(1V

IMAGES PTY. LTD.

NO. V1 24 of 1992

Judge :  GRAY J.

Place: MELBOURNE

Date:  19TH MAY 1993

10 JUN 1993

DERAL COURT Or

PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	) No. V1 24 of 1992
INDUSTRIAL DIVISION	)
B E T W E E N :

TEXTILE, CLOTHING AND FOOTWEAR UNION OF

AUSTRALIA

Applicant

- and -

CAMELOT IMAGES PTY. LTD.

Respondent

JUDGE : Gray J.

PLACE : Melbourne

DATE : 19th May 1993

EX TEMPORE REASONS FOR JUDGMENT

The original application filed in this proceeding sought penalties for breaches of the Clothing Trades Award 1982, an award in force under the Industrial Relations Act 1988, and payments of amounts to which various employees were alleged to have been entitled. The claims arose out of the closure of a clothing factory on 21 February 1992. The breaches alleged were failure to pay numerous employees the full amount payable in lieu of notice of termination of their employment, severance pay on their being made redundant and the full amounts of accrued annual leave.

At the first directions hearing on 11th May, 1992 leave was granted to the respondent to enter an appearance and to defend the proceeding by one of its directors, Philip Agius . Mr Agius appeared that day and at a subsequent directions hearing. There was, however, no appearance for the respondent at the trial. I am satisfied that proper notice has been given to the respondent of the date and time of the trial; letters were sent to Mr Agius at the address of the respondent given in the notice of appearance, at the registered office of the respondent and at the home address of Mr Agius as disclosed by a company search.

At the trial, counsel for the applicant applied for and was granted leave to amend the application and the statement of claim by deleting the claims in respect of accrued annual leave. Some amendments were also made with

claims were made and the amounts claimed. At the trial, a	respect to the identity of the employees on whose behalf
direction was given that the trial be by affidavit.
The original applicant, the Clothing and Allied Trades Union of Australia, was an organisation first registered pursuant to the now repealed Conciliation and Arbitration Act 1904. The Industrial Relations (Consequential Provisions) Act 1988 S. 5(1) continued that registration under the Industrial Relations Act 1988. In similar fashion, S. 7(1) of the Industrial Relations (Consequential Provisions) Act 1988 continued the award under the Industrial Relations Act 1988.
On 1st July 1992, an amalgamation took effect between the Clothing and Allied Trades Union of Australia and the Amalgamated Footwear and Textile Workers' Union of Australia. The amalgamated organisation became the Textile, Clothing and Footwear Union of Australia and the Clothing and Allied Trades Union of Australia was deregistered. Section 253T of the Industrial Relations Act 1988 makes an award that was binding on a deregistered organisation and its members binding on an amalgamated organisation and its members in those circumstances. Section 253V has the effect of substituting the amalgamated organisation for the deregistered organisation as a party to a proceeding in this Court.
Accordingly, it is necessary to make an order amending the title to the proceeding, to substitute the Textile, Clothing
and Footwear Union of Australia for the Clothing and Allied
Trades Union of Australia as applicant.
The respondent is a company which is taken to be registered under the Corporations Law of Victoria. Its incorporation dates from 26th June 1990. The respondent became bound by the Clothing Trades Award 1982 on 14th November 1991, as a result of the Clothing Trades (Roping-in No.10) Award 1991, which is found in the Australian Industrial
Relations Commission's print No. K0641. Clause 2(b) makes that award binding on the employers listed in the schedule, of which one is the respondent. Clause 3 applies to those employers the provisions of the Clothing Trades Award 1982.
The affidavits of the employees concerned in this proceeding all gave evidence of employment by Moret Sportswear. In most cases, that employment commenced at dates prior to 14th November 1991 and in many cases prior to 26th June 1990. The records of Corporate Affairs Victoria show Moret Sportswear as a registered business name, commencing on 25th May 1990. At that time, a company named Yasmin Fashion Accessories Pty. Ltd. was registered as proprietor of the business name. From 1st November 1990, the respondent became registered as that proprietor. That registration ceased on 3rd February 1992, when the records show the name reverted to Yasmin Fashion Accessories Pty. Ltd. On 4th April 1992, another company, R.J. Berkeley Developments Pty. Ltd., became registered as the proprietor of the business name.
The transfer of the registration of the business name on 3rd February 1992 raised some difficulty for the applicant, since the earliest date on which any breach of award alleged could have been committed was 7th February 1992, when the employees were notified that their employment would cease on 21st February 1992.
Section 149(l)(d) of the Industrial Relations Act 1988 makes an award binding on any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of any employer who was party to a dispute in settlement of which an award was made. It follows that, if the business of Moret Sportswear had been assigned or transmitted to Yasmin Fashion Accessories Pty. Ltd. on 3rd February, that company would be bound by the award when the alleged breaches occurred. Section 149 (l) (d) does not, however, have any negative effect. It expands the binding effect of the award to a successor, assignee or transmittee, but does not effect a substitution of that successor, assignee or transmittee for the original bound employer. It does not remove the binding effect of the award in relation to the original employer. The question must always be one of fact, namely whether at the date of an alleged breach of award an employment relationship exists which is covered by an award binding the parties to that relationship.
It is also worth noting that there is authority that the registration of a person as proprietor of a business name is not conclusive; evidence may be lead as to the true situation, and a court may find in accordance with that evidence. I refer to Press v Mathers [l9271 VLR 326, Re Johnson; Ex parte Greendale Engineering and Cables Pty. Ltd. (1967) 11 FLR 335, and Aikman v Brown (1973) 1 ACTR 121.
In the present case, there is ample evidence supporting the proposition that the respondent to this proceeding, Camelot Images Pty. Ltd., remained as the employer of all the people concerned, up until their employment ceased on 21st February 1992. Mr Philip Agius appeared in the Australian Industrial Relations Commission on 5th March 1992, in relation to a dispute notified by the Clothing and Allied Trades Union of Australia against the respondent, with respect to the terminat~ons of employment the subject of this proceeding. The Commissioner constituting the Commission on that occasion asked Mr Agius if he appeared for the company; he replied in the affirmative. He made statements to the Commission but did not suggest that the respondent was not the relevant employer.
More importantly, there have been tendered to the Court a number of original triplicate group certificates in respect of some of the employees concerned. In each case, the name of the employer appearing on the group certificate is the
name of the respondent in this proceeding. In each case but
one, the employment is described as having terminated on 21st February 1992. The one case to which I refer is a case in which the dates of the period of employment were left blank in the group certificate and, I am told by counsel for the applicant, were filled in by the employee concerned. There has also been tendered an employment separation certificate dated 26th February 1992, which was obtained by one of the employees on request, and which again bears the name of the respondent as the employer, and the date of the termination of employment as 21st February 1992.
I therefore find that the respondent employed each of the relevant persons up to and including 21st February 1992, and that the respondent was bound by the Clothing Trades Award 1982 up to and including that date.
The issue was raised of the words in brackets following the name of the respondent in the title of the proceeding. Those words are, "Trading as Moret Sportswear". It is well established that words of that kind are surplusage in describing a party to proceedings. Counsel for the applicant sought their deletion, and, because they are surplusage, it seems to me appropriate that I should make an order permitting the amendment of the title to the proceeding by way of deletion of those words.
Clause 17(b) of the Clothing Trades Award 1982 deals with the question of termination of employment. The clause in its present form was inserted by variation to the award made
on 23rd April 1986 and found in the Australian Conciliation and Arbitration Commission's print No G2995. The relevant provisions are as follows:

"Notice of termination by employer

(b) (i) (1) In order to terminate the employment of an employee the employer shall give to the employee the following notice:-

Period of continuous service	Period of notice
1 year or less	1 week
over 1 year and up to the completion
of 3 years	2 weeks
over 3 years and up to the completion
of 5 years	3 weeks
over 5 years	4 weeks

(2) In addition to the notice in subparagraph (1) hereof, employees over 45 years of age at the time of the giving of the notice with not less than 2 years continuous service, shall be entitled to an additional week's notice.

(3) Payment in lieu of the notice prescribed in subparagraphs (1) and or (2) hereof shall be made if the appropriate notice period is not given. Provided that employment may be terminated by part of the period of notice specified and part payment in lieu thereof.

(4) In calculating any payment in lieu of notice the wages an employee would have received in respect of the ordinary time he or she would have worked during the period of notice had his or her employment not been terminated shall be used.

(7) For the purpose of this clause, continuity	of service shall be calculated in the
manner prescribed by subclause 18(d) - Calculation of continuous service, of this Award.

(8) When employment is terminated by an employer, the employer shall, upon the date of such termination pay to the employee (weekly or piece-worker) all monies due to him or her, and when employment is terminated by an employee in accordance with the terms of this Award the employer shall upon the date of termination pay the employee (weekly or pieceworker) all monies due to him or her. Monies due shall include a payment in lieu for any time which may have accrued in accordance with the arrangement pursuant to paragraph a(ii) of clause 11 - Hours of employment.

(9) An employee shall not be given notice or dismissed, except for misconduct, whilst legitimately absent from duty on accrued sick leave, or on annual leave and the days on which an employee is absent from duty on account of such sick leave or annual leave shall not be counted as within a working week's notice for the purpose of this Award unless, in the case of sick leave, an employee had been given notice prior to the employer being informed that paid sick leave was to be taken. Alternatively, an employee shall not be entitled to give an employer notice while absent on account of paid sick leave and paid annual leave.

Clause 18(d) of the award provides as follows:-

Calculation of continuous service

(d)	for the purpose of this clause, service shall be deemed to be continuing notwithstanding:-
(i) Any interruption or termination of employment by the employer if such

interruption or termination has been made

merely with the intention of avoiding obligations hereunder in respect of leave of absence.

(ii)      Any absence from work on account of personal sickness or accident or on account of leave granted by the employer

or absence due to long service leave,

providing that any continuous period of unpaid leave in excess of four weeks shall not be deemed to be service or [sic.]the calculation of annual leave; or

(iii)     Any absence with reasonable cause proof whereof shall be upon the employee.

It will be noted that clause 18(d) of the award makes no provision for service with another employer prior to the existing employer being in existence. It is to be noted that such provisions do appear in clause 18(e) of the award, the effect of that provision being limited to the calculation of annual leave, and in clause 51(i) of the award, to which I shall refer later on.

Since the respondent only came into existence on 26th June 1990 and cannot itself have employed anyone prior to that date, and it dismissed all of the employees less than 3 years later on 21st February 1992, then the relevant period of notice under clause 17(b)(i)(l) was not more than two weeks. It follows that the claim made in respect of breaches for most employees must be dismissed, there being evidence that two weeks notice was given.

The only remaining breach of clause 17 is in respect of one employee, whose age was established by the evidence to	have been more than 45 years, and who was therefore entitled	under clause 17(b)(i)(2) to an additional week's notice.
Kostoula Mastrapas was the employee concerned. She was entitled to a further week's notice which, on the evidence, she did not receive, or a week's pay in lieu of notice, which, on the evidence, she did not receive. I therefore find that there was a breach of clause 17(b)(i)(2) of the award in failing to pay Kostoula Mastrapas an additional week's pay in lieu of notice of termination.
Clause 51 of the award deals with redundancy. It was inserted in the same variation to the award as was the present clause 17. Its relevant provisions are as follows:

"Consultation and provision of information

(a) (i) Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing 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 with their union.

Severance pay

(c)	In addition to the period of notice prescribed for ordinary termination in subclause 17(b), and subject to further order of the commission, an employee whose employment is terminated for reasons set out in paragraph (a) (i) shall be entitled to the following amount of severance pay in respect of a continuous period of service:-
Period of continuous service	Severance pay

1 year or less NIL

Over 1 year and up to completion of 2 years 4 weeks' pay
Over 2 years and up to the completion

of 3 years	6 weeks' pay
Over 3 years and up to the completion
of 4 years	7 weeks' pay
Over 4 years	8 weeks' pay

"Weeks' pay" shall mean the ordinary time rate of pay for
the employee concerned.

Provided that the severance payments shall not exceed the amount which the employee would have earned if employment with the employer had proceeded to the employee's normal retirement date.

Transmission of business

(i) (i) Where a business is, before or after the date of this award, transmitted from an employer (in this subclause called the Transmittor) to another employer (in this subclause called the Transmittee) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee:-

(1) the continuity of the employment of the employee shall be deemed not to have been broken by reasons of such transmission; and

(2) The period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.

(ii) In t h ~ s

subclause "business" includes trade, process, business or occupation and includes part of any such business and "transmission" includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and "transmitted" has a corresponding meaning. "

There can be no doubt in the present case that the

employer, the respondent, made a definite decision that it no

anyone. Indeed, it closed its factory on 21st February 1992.	longer wished the job of any of its employees to be done by
It should be noted that the employer does not in some way escape the effect of the clause by being forced by economic circumstances to wish that the job be no longer done by anyone. Reference should be made to Short v F.W. Hercus Pty.
Ltd. (Full Court of the Federal Court of Australia, 23rd
February 1993, not yet reported).
There is evidence that, to many of the employees, a representative of the employer said that the factory would be closing down for three months. In my view that is not relevant in this proceeding because each of the employees had her employment terminated. It was plain that the employer no longer wished the jobs that those persons were doing to be done by anyone. The fact that the employer may have intended, or hoped, to reopen the factory at some later stage, perhaps by employing some only of the employees, or even employing different employees, does not evade the operation of clause 51 of the award.
For the purposes of clause 51, by virtue of subclause (i), service prior to the respondent company's existence must be taken into account. There is evidence of prior service from the respondent's own records, a copy of which is in evidence. There is also evidence of commencement dates in each of the affidavits of the employees concerned.
document which became exhibit F in the proceeding. It was a The effect of the affidavit evidence was summarised in a
copy of the particulars to paragraph 6 of the original statement of claim, and of the schedules to the statement of claim, with amendments deleting the names of those employees in respect of whom no evidence was led, and correcting some errors in the original. I am satisfied that the contents of exhibit F were substantially correct and that for the most part the correct amounts were calculated in that document.
The ordinary time rate of pay for each of the employees concerned was fixed by clause 7(b)(i) of the award, as varied on 16th October 1991, by a variation found in the Australian Industrial Relations Commission's print number J9974. The evidence of each of the employees accords with the rate fixed by that clause for wage bands numbers 2A and 2B, the rate being $353.40 per week. It follows that each of the employees in respect of whom evidence has been given was entitled by clause 51 of the award to be paid in respect of her length of service, an amount calculated in accordance with clause 51(c) of the award at the ordinary time rate of $353.40 per week.
A couple of issues arose in respect of employees who were not actually working during the period of two weeks' notice. Two of them, Eugenia Arapis and Sandra Louise Williamson were on workers' compensation. One, whose name was added to those for whom claims were made during the proceeding, Chow Hua Kuang, was on maternity leave. An
examination of the provisions of clause 48 of the award, which relate to maternity leave, makes it clear that being on
maternity leave is not intended to have any effect on entitlement to severance pay on redundancy. In particular, subclause (i) seems to be designed to make it clear that the respective rights of the parties on termination of employment are not to be affected by the taking of maternity leave.
The question with respect to employees on workers' compensation is more difficult. Clause 19 of the award provides that an employee who is absent from work on account of personal illness or injury is entitled to leave of absence without deduction of pay, subject to the conditions and limitations set out in clause 19. It seems to be the case that workers' compensation would be regarded as sick leave, even if not as paid sick leave, for the purposes of the award.
Clause 17(b)(i)(9), which I have already read, expressly prohibits the giving of notice of the dismissal, except for misconduct, whilst an employee is legitimately absent from duty on accrued sick leave. Partly because of the use of the phrase "accrued sick leave", it is not clear whether this prohibition is applicable to an employee in receipt of workers' compensation payments. Assuming that the prohibition were so applicable, then it seems to follow from the decision of the High Court of Australia in Automatic Fire
Sprinklers Pty. Ltd. v. Watson, (1946) 72 CLR 435 that termination would not be effective by the act of the employer.
On the other hand, each of the employees concerned appears to have accepted that her employment was terminated and, perhaps, thereby brought it to an end by accepting the employer's repudiation of it. In that event, there would still be a termination and termination would still be for the reasons set out in paragraph 51(a)(i) of the award, for the purposes of clause 51(c). I am, therefore, of the view that the employees who were on workers1 compensation were entitled to be paid severance pay in accordance with clause 51(c) of the award.
I therefore find that the respondent was in breach of clause 51(c) of the Clothing Trades Award 1982, in failing to pay severance pay to each of forty-six employees dismissed by it on 21st February 1992, when its factory was closed.
It is therefore necessary for me to consider the question of penalty under S. 178 of the Industrial Relations Act 1988, both in respect of the breach of clause 17(b)(i)(2)
and in respect of the breach of clause 51(c). As to the former, only a small amount is involved and only in respect of one employee. It is possible that the employer could easily have overlooked the fact that an employee was over the age of 45 and have omitted to give the requisite notice. I do not think that such an omission warrants a very large penalty and I would impose a penalty of $50 in respect of that breach.
On the other hand, the multiple breaches of clause 51(c) are much more serious. It is conceded by counsel for the applicant, and correctly so, that the breaches arose out of a course of conduct by the respondent, for the purposes of S. 178(2), and they therefore must be taken to constitute a single breach of clause 51(c). That does not mean that the fact that there were breaches in relation to a number of employees is irrelevant to the amount of the penalty. In addition, some of those employees, perhaps many of them, do not have English as their first language; some needed to swear their affidavits through interpreters. They would therefore be likely to be less conscious of their rights. There is a considerable sum of money involved when all of the entitlements of the various employees are totalled. There is also a need to reinforce the requirement that awards be obeyed, particularly in an industry such as the garment manufacturing industry. For those reasons, I regard this as an appropriate case for the imposltlon of the maximum penalty of $1000.
Section 356 of the Industrial Relations Act 1988 gives the Court a discretion as to the destination of the
penalty. It may be paid into the Consolidated Revenue Fund or
to a particular organisation or person. The usual practice
when a proceeding is commenced claiming a penalty for breach
of award is to order that the applicant, or an organisation
which the applicant represents, be the recipient of the
penalty. In the present case, there is no reason to depart

from that usual practice. I therefore propose to order that

each of the penalties be paid to the applicant.

Section 178(6) of the Act empowers the Court to order an employer to pay to any employee the amount of an underpayment which it finds exists in a case such as this. I propose to make orders that the employees concerned be paid the amounts of their underpayments.

There has also been an application under S. 179A of the Industrial Relations Act 1988 for interest. Where such an application is made, the Court is obliged to make an order for the payment of interest, unless good cause is shown to the contrary. A question arose as to the appropriate rate of interest. Evidence was placed before me as to the rate fixed by the Attorney-General for the State of Victoria under

S. 2(1) of the Penalty Interest Rates Act 1983 (Vic.). Since

30th October 1991, that rate has been 13.2 per cent. It seems to me appropriate that I should adopt that rate in the present case.

The schedule to the order which I propose to make will show beside the name of each affected employee an amount for severance pay, which will be in accordance with the amount in the relevant column of schedule A to the draft order handed up by counsel for the applicant today, plus an amount for interest from 21st February 1992 until today, which I calculate to be 453 days, at the rate of 13.2 per cent per

will dictate the form of order that I propose to make without,	annum, being the rate fixed as I have previously indicated. I
of course, dictating the terms of the schedule in detail and direct that the applicant produce the form of order for settling before it is entered in the registry.

The order will be as follows:-

1.    The title of the proceeding be amended:

(a)	by substituting for the name of the applicant the name "Textile, Clothing and Footwear Union of Australia";
(b)	by deleting the words "(Trading as Moret Sportswear)", following the name of the respondent.

2.    The respondent pay a penalty of $50 for breach of clause 17(b)(i)(2) of the Clothing Trades Award 1982 in failing to pay Kostoula Mastrapas an additional week's pay in lieu of notice.

3.   The respondent pay a penalty of $1000 for breach of clause 51 of the Clothing Trades Award 1982 in failing to pay severance pay to each of the persons named in the schedule to this order.

4.   The respondent pay each penalty to the applicant, the Textile, Clothing and Footwear Union of Australia.

5 .    The respondent pay to Kostoula Mastrapas the sum Of $353.40, together with interest on that sum, calculated at the rate of 13.2 per cent per annum, from 21st February 1992 until this day.

6.    The respondent pay to each of the persons whose name appears in the schedule to this order:

(a) the amount of severance pay set out

against the name of that person;

(b) the amount of interest set out against the

name of that person.

Counsel for the applicant:	Mr. M. Carn
Solicitors for the applicant:	Slater & Gordon
Counsel for the respondent:	No appearance for the respondent
Date of Hearing:	19th May 1993
Date of Judgment:	19th May 1993

I certify that this and the

preceding twenty (20) pages are a true copy of the reasons for judgment of his Honour Justice Gray

Personal Secretary

to Justice Gray:

Date: 9th June 1993