Tortolani, Ronald v Group 4 Securitas
[1997] FCA 987
•19 SEPTEMBER 1997
FEDERAL COURT OF AUSTRALIA
INDUSTRIAL LAW - AWARD - BREACH OF AWARD - TERMINATION OF EMPLOYMENT - REDUNDANCY - EMPLOYMENT CONTRACT - NOTICE OF TERMINATION - RESIGNATION - whether severance payment entitlement required termination by employer - whether employees transferring to new contractor resigned - whether employer repudiated contract of employment.
Workplace Relations Act 1996 (Cth) ss170CL, 170GA
Security Employees (Victoria) Award 1993, cls 28, 38
The Termination, Change and Redundancy Case (1984) 8 IR 34
Lawrence v Clutha Development Pty Ltd (unreported, Federal Court of Australia, Keely J, 10 May 1985)
Victoria v Australian Teachers Union (1993) 49 IR 149
Loughbridge v Lavery [1969] VR 912
Gunnedah Shire Council v Grout (1995) 62 IR 150
Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154
Short v F W Hercus Pty Ltd (1993) 40 FCR 511
The Forest Products, Furnishing and Allied Industries Industrial Union of Workers, W.A. v Dancroft Holdings Pty Ltd (1994) 74 WAIG 1885.
Mann v Capital Territory Health Commission (1981) 2 IR 29
Macken, et al: The Law of Employment (4th ed.)
RONALD TORTOLANI, ANTHONY SAMMUT, WENDY PHILLIPS,
PAULINE SMALES, IAN JOHNSON, MIRIAM SMITH, EILEEN BUSUTTIL,
MARY HATTY, GABE TARDIO, MARGARET TORTOLANI, COLIN PETTIGROVE, PETER FINCH, MARGARET LAWDORN, GAIL POYSER, MARLENE WEBB, LEE LUTHER, MICHAEL BEGGS, MARK FAIRFAX AND ANGELA WARD v. GROUP 4 SECURITAS
VI97/1372, VI97/1373, VI97/1374, VI97/1375, VI97/1376, VI97/1377, VI97/1378, VI97/1379, VI97/1380, VI97/1381, VI97/1384, VI97/1385, VI97/1386, VI97/1388, VI97/1389, VI97/1390, VI97/1398, VI97/1404
BEFORE: MURPHY JR
PLACE: MELBOURNE
DATE: 19 SEPTEMBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1372, 1373, 1374, 1375, 1376, 1377, 1378, 1379, 1380, 1381, 1384, 1385, 1386, 1388, 1389, 1390, 1398, 1404 of 1997
BETWEEN:
RONALD TORTOLANI, ANTHONY SAMMUT, WENDY PHILLIPS,
PAULINE SMALES, IAN JOHNSON, MIRIAM SMITH, EILEEN BUSUTTIL,
MARY HATTY, GABE TARDIO, MARGARET TORTOLANI,
COLIN PETTIGROVE, PETER FINCH, MARGARET LAWDORN,
GAIL POYSER, MARLENE WEBB, LEE LUTHER, MICHAEL BEGGS,
MARK FAIRFAX and ANGELA WARD
Applicants
AND:
GROUP 4 SECURITAS
Respondent
JUDGE: MURPHY JR
DATE OF ORDER: 19 SEPTEMBER 1997
WHERE MADE: MELBOURNE
MINUTES OF ORDERS:
THE COURT ORDERS THAT:
The applications are dismissed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1372, 1373, 1374, 1375, 1376, 1377, 1378, 1379, 1380, 1381, 1384, 1385, 1386, 1388, 1389, 1390, 1398, 1404 of 1997
BETWEEN:
RONALD TORTOLANI, ANTHONY SAMMUT, WENDY PHILLIPS,
PAULINE SMALES, IAN JOHNSON, MIRIAM SMITH, EILEEN BUSUTTIL,
MARY HATTY, GABE TARDIO, MARGARET TORTOLANI,
COLIN PETTIGROVE, PETER FINCH, MARGARET LAWDORN,
GAIL POYSER, MARLENE WEBB, LEE LUTHER, MICHAEL BEGGS,
MARK FAIRFAX and ANGELA WARD
Applicants
AND:
GROUP 4 SECURITAS
Respondent
JUDGE:
MURPHY JR
DATE:
19 SEPTEMBER 1997
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
These are proceedings under s 179 of the Workplace Relations Act 1996 (“the Act”). The matter comes before the Federal Court of Australia under the provisions of Schedule 16 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth). Each of the applicants make a money claim against the respondent alleging that the respondent failed to pay amounts due upon their redundancy. The applicants are members of the Australian Liquor, Hospitality & Miscellaneous Workers Union (“the union”) and were represented at the hearing by an employee of the union, Mr Kamal Farouque. Mr Giudice of Counsel appeared for the respondent.
The claims arise out of the respondent’s loss of contracts to provide passenger screening services to the two main carriers at Tullamarine Airport. There have been proceedings in the Magistrates Court of Victoria involving three other employees of the respondent who were affected by the loss of the contracts. A number of witnesses who gave evidence in those proceedings again gave evidence in these proceedings, and the transcript of the proceedings has been tendered in evidence.
Background and issues.
In January 1995 the respondent was advised that it had lost the contract to provide passenger screening services to the Qantas International Terminal. It had held that contract for around fifteen years and the loss came as a shock to the respondent and the employees who were working at the airport. The respondent was able to negotiate with the incoming contractor, Protection Management (International) Pty Ltd (“PMI”) that its employees at the airport apply for positions with PMI . Most employees did so and subsequently joined PMI. In late March 1995 the same thing happened with the respondent’s contract with Ansett. Each of the applicants in these proceedings claim that the circumstances associated with the cessation of their employment with the respondent gave rise to an entitlement to severance pay under the Security Employees (Victoria) Award 1993 (Print K8045) (“the Award”). The respondent was bound by the Award. In order to focus on the issues in the proceedings it is of assistance to set out the relevant provisions of the Award:
“28 - Contract of Employment
.......
Weekly employees - Notice of Termination by Employer
..
Non probationary employees(ii)In order to terminate the employment of a weekly employee the employer shall give to the employee the following notice:
[periods of notice are set out]
......
38 - Redundancy
Discussions before Termination
(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.
(ii)The discussions shall take place as soon as practicable after the employer has made a definite decision which will invoke the provisions of subclause (a)(i) hereof and shall cover, interalia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.
.....
Severance Pay(c)In addition to the period of notice prescribed for ordinary termination in subclause 28(b) and subject to further order of the Commission, an employee whose employment is terminated for reasons set out in subclause (i) hereof shall be entitled to the following amount of severance pay in respect of a continuous period of service:”
[periods of service and weeks pay are set out].
The applicants claimed that their employment had been terminated in circumstances that fell within cl 38(a)(i) and that they were entitled to the severance payments set out in cl 38(c). The respondent denied that it had terminated the applicant’ employment. It maintained that they had voluntarily left the respondent to commence duties with PMI. The representative for the applicants submitted that the respondent had given the applicants notice of termination of employment. In the alternative he submitted that the respondent had repudiated the contract of employment with each of the applicants, or alternatively breached the implied duty of trust and fidelity in the contract which amounted to a termination of employment. As an alternative defence the respondent claimed that if it had terminated the applicants’ employment then such a termination did not fall within cl 38(a)(i) as it was due to the “ordinary and customary turnover of labour” and did not give rise to any entitlement under cl 38(c). The final defence raised by the respondent was that what happened here gave rise to a transmission of business and it was exempted under cl 38(i).
The Qantas contract applicants.
The applicants Ronald Tortolani, Anthony Sammut, Wendy Phillips, Pauline Smales, Ian Johnson, Miriam Smith and Eileen Busuttil, were each employed at the Qantas International Terminal. They each had very considerable service with the respondent, most of it at the airport. They each joined the incoming contractor, PMI, but alleged that their employment had been terminated by the respondent.
The applicants’ evidence concerned what went on at the three meetings. Two were held on 9 January. All the applicants, except Ms Smith, were at what was described as the “main meeting”. Mr Tortolani and Ms Smith attended a second meeting soon after that. The meetings were also attended by representatives of the respondent, namely Mr Peter Mitchell, the then Operations Manager, Mr Wayne Gobert, Human Resources Manager, and Mr Colin Wilson-Evered, Business Development Manager. Ms Suzanne DePedro, a branch organiser of the union also attended the meetings held on 9 January. What was said to the applicants at those two meetings was the subject of contention.
It was the applicants’ account that Mr Mitchell advised staff at the two meetings on that day that the respondent had lost the Qantas contract, there were no positions to offer the staff, and that staff would be better off going over to PMI. Mrs Busuttil said that Mr Mitchell told the meeting that the respondent would not have any “employment” for the staff after the contract ended. Mr Tortolani said Mr Mitchell indicated that there were “no positions anywhere”; Ms Phillips said she was told she “didn’t have a job”, they “wouldn’t be able to find the work for us”, and that the best thing to do was to go across to PMI. Ms Phillips’ evidence was that if staff wanted to stay at the airport or to have a job they should apply to PMI. Ms Phillips said that the word “dismissed” was not used. Mr Tortolani said that he expected that some time before the Qantas contract expired, someone would tell him that his employment was terminated. No-one did.
In cross-examination some of the applicants accepted that the respondent may have suggested that some positions might be available. Mr Tortolani had the possibility of a position at the Ansett terminal relayed to him. This did not proceed. Ms Smales said she was told at the meeting on 9 January that there may have been positions available interstate. When she followed it up none were available. Ms Smith delayed having an interview with PMI because she knew that in this business, with contracts coming up, further positions may arise. Ms Smith had also been told by Mr Mitchell in December that as she was on a consultative committee he would do all he could to help keep her on. During January he had not, however, offered her any position, and she had therefore applied to PMI for a position.
Ms DePedro’s account of the meeting at which she was present was generally along the lines of that presented by the applicants. She said Mr Mitchell told staff that it was unlikely that there would be ongoing employment, as the respondent had lost another contract. In cross-examination she conceded that the respondent’s representatives may have said that alternative employment could be found for staff who wished to stay with the respondent. After the meeting Ms DePedro attended with Ms Smales on Mr Lombard, the representative of PMI, to see if PMI would accept the staff as a group. The PMI representative indicated that there would have to be individual interviews. Ms DePedro had no further involvement. The next meeting at which the union was involved was on 27 January and another union official was present.
After the meeting on 9 January the various applicants made application and had interviews with PMI. None were offered any further position by the respondent and each were offered positions by PMI. None of the applicants advised the respondent that they were ceasing employment and had accepted positions with PMI. The respondent ascertained this from PMI and arranged to pay each of them their outstanding annual leave and pay. PMI declined to transfer across accrued sick leave entitlements or to maintain any continuity of service. Each of the applicants maintained that they had not resigned from the respondent and that they accepted the positions with PMI because of what they had been told by Mr Mitchell.
The respondent’s response to the Qantas applicants.
There was a significant difference in emphasis in the account presented by the respondent’s representatives. Mr Mitchell’s account was that the 9 January meeting was conducted by Mr Gobert. Mr Gobert advised employees of the loss of the contract. Mr Gobert recommended to employees that if they were offered employment by PMI they should take it up as the respondent at that time did not have any permanent positions available at the airport. If employees were unsuccessful then the respondent gave an undertaking that employees “would be looked after”.
Mr Gobert’s evidence was that the respondent had a policy that in the event of loss of contracts it did retain employees. He told staff of their options at the meeting and that the respondent would find them work, and they would not be disadvantaged.
Staff were told that their safest option was to stay with the respondent but that the respondent would have discussions about entitlements with PMI. He denied ever saying that staff would have their employment jeopardised by remaining with the respondent. They were told the respondent would try to place them elsewhere within it. He maintained that employees were told that if they remained employed they would be paid. Mr Gobert said that most people, including Ms DePedro, understood what was meant. Mr Mitchell’s evidence on this point was to the same effect. He said that it went without saying that the Award provided for thirty-eight hours per week for permanent employees. Mr Wilson-Evered was vague as to what went on in the meeting but said that in any situation regarding employees, the respondent sought to abide by the Award. He was unable to say whether payment for thirty-eight hours per week was mentioned at the meeting.
The Ansett contract applicants.
The ten applicants who gave evidence all joined PMI upon the contract changeover on 5 April 1995. Some have now resumed employment with the respondent as a result of the respondent regaining the contract in April 1996. The evidentiary contest was similar to that involving the Qantas contract applicants. In late March 1995 a meeting was held at which Mr Priest, the then State Manager, Mr Mitchell, and Mr Russell Ward, the then Services Manager, were present. Mr Priest’s evidence was that he advised the employees present of the loss of the contract, and advised them that if they wanted to remain at the airport, they should apply to PMI. The respondent’s witnesses denied saying that there were no jobs available with the respondent. The evidence from the applicants was similar to that of the Qantas applicants.
Mr Beggs gave evidence that he was told that the respondent had nothing else for him, and that he should apply to PMI. Mr Peter Finch was told there were no positions available. According to Marlene Webb the reason why the respondent had no jobs was that it had recently lost a number of contracts. Ms Lee Luther said that Mr Priest told her that if she elected to stay with the respondent “we cannot promise you anything, because there is nothing going”. Mr Ward advised her to take the job with PMI. Ms Poyser said that she was told that she should go over to PMI because it could offer employment and the respondent could not.
Mr Priest gave evidence that in the meeting he was asked what would happen if an employee chose not to go to PMI and remained with the respondent. His reply was “you will be redeployed to another position - your employment package would continue”. He was further asked whether redundancy packages would be available. He replied: “No, definitely not. We are not letting people go.” He circulated a memorandum on 27 March listing the options discussed at the meeting as staff applying to PMI or seeking redeployment within the respondent.
In common with the Qantas applicants, none of the Ansett applicants asserted that they were told that their employment would be “terminated”. Mr Tardia, Ms Poyser and Mr Mark Fairfax said this was never stated. Ms Luther said the term was never used. She said that the “choice” to go to PMI was hers. She conceded that Mr Priest said that “we are just as concerned about your continued employment as you are”. Mr Mark Fairfax was asked by the Court:
“You understood you would not be employed or there would not be a job?”
- “There would not be a job.”
The respondent circulated a form to the Ansett applicants seeking their preferences as to redeploying to an alternative position within the respondent or transferring to PMI. The purpose was to allow the human resources section to process the employee preferences. The employees were told that they could tick either or both boxes. Most ticked both boxes. Mr Beggs only ticked the redeployment box while others did not even complete the form. The respondent also indicated that some positions were immediately available which they could apply for. Two of those positions in fact did not exist as they were announced in the expectation of a contract that did not materialise. Some of the Ansett applicants inquired of Ms Terri West as to the availability of the positions in the memorandum but nothing was forthcoming.
Finding on Qantas applicants.
These findings are not based on the demeanour of particular witnesses but on the inherent likelihood of what actually happened in the face of the conflicting oral testimony. Both sides here have a financial interest in accounts that are most favourable to the ultimate conclusion to be drawn. The applicants all had considerable entitlements to sick leave, and lengths of service that they were unable to take across to PMI. On one view a redundancy payment is to compensate for this loss. The respondent’s witnesses have to defend the proclaimed policy that redundancies do not occur upon contract loss and the respondent treats its employees fairly, and its good relations with the union.
The only documentary evidence as to what was said at the meeting on 9 January is a letter dated 15 March 1995 from Mr Priest, the incoming managing director, to Ms Margaret Bacon, generally corroborating Mr Gobert’s account of what he told the meeting. It is Exhibit A24, and it erroneously refers to a meeting on 9 February. It refers to “continuity of employment” being the “main issue”.
The key issue that divides the parties on the Qantas contract is whether the respondent told the Qantas applicants that they would have no employment with the respondent after the cessation of the contract. I find that this is inherently unlikely.
The respondent’s witnesses gave evidence that turnover of contracts is common in the industry. The respondent’s policy at the time was that it would seek to retain its employees or assist them to obtain positions with the incoming contractor. It had a policy that there would not be redundancies as a result of the loss of a contract. That policy was, according to Mr Gobert, confirmed to him by the respondent’s managing director when he was asked to come to Melbourne to address staff after the loss of the Qantas contract. The respondent was at that time giving effect to the policy by seeking to place employees displaced by the loss of the Nissan contract. One of the Ansett applicants, Mr Mark Fairfax, had been redeployed after the loss of a contract in 1993.
In the face of that policy of the respondent it is unlikely that Mr Gobert and Mr Mitchell, would have, in the meetings on 9 January and subsequently, indicated anything different. Their evidence as to the value to the respondent of retaining employees, despite short term difficulties, is inherently credible. The respondent also had both permanent and casual employees. This would give it the flexibility to retain its permanent employees.
A further consideration is the role of the union. The respondent sought to involve the union in the meetings. Ms DePedro was aware of the practice in the industry that upon contract loss employees are either transferred or retained. If the respondent, in its dealings with its employees at the time was departing from that practice, it is highly probable that this would be the subject of comment at the time. It was not. This leads to the inference that to all parties involved the usual practice in the industry, and of the respondent, was being followed.
Ms DePedro, being a union organiser, must also have been aware of the Award. The Award sets out periods for the giving of notice of termination of employment. Had the respondent been giving what she, and the other union official, believed to be a notice of termination of employment to any employees in any of the meetings in January, it is highly probable that the Award provisions governing notice would have been raised. The Qantas contract expired on 5 February. For employees of the age and service of some of the Qantas applicants, five weeks notice of termination of employment was required. Had the respondent been giving notice of termination of employment then the periods of notice required under cl 28 of the Award for most employees were insufficient. The union did not raise the matter at the time. Similarly, had this contract loss been seen by anyone from the union involved as a redundancy, then the question of severance pay entitlements would most likely have been raised, and a demand made for higher payments.
The fact that it was common ground that these matters were not raised at the time points to the inherent probability that the respondent’s account of what happened in January is more likely than that of the seven applicants.
The applicants, in their evidence, used the terms “jobs”, “positions”, “work” and “employment” interchangeably. In common usage these terms are often used in that fashion. It is also not surprising that the various applicants, because of their long service in a permanent position at the airport, saw that “position” or “job” as synonymous with employment by the respondent. That is different from whether, when the respondent advised the Qantas applicants that it had lost the contract, it also indicated to them that it was ending their employment. Here the clause in the applicants’ contract of employment allowing transfer is relevant. Their continuing employment was not tied to a particular position. Their employment status with the respondent and under the Award was Security Officer Level 1 at whatever location the respondent chose to assign the employee. The applicants had obviously grown comfortable with the familiar airport environment. In their concern over the disruption to their lives caused by the loss of the security of a permanent position at the airport with the respondent, the applicants have either misunderstood or misconstrued what I am satisfied they were told.
It follows from these considerations that I prefer the respondent’s account of the meetings in January. The willingness of the respondent to involve the union in its dealings is a key consideration. I am satisfied that Messrs Gobert and Mitchell advised the Qantas applicants that they could apply for positions at PMI if they wished to retain employment at the airport. I am satisfied however, that employees were also advised that if they were unsuccessful in such applications, or they wished to remain with the respondent, then they would retain employment and would be paid according to the Award. If the latter was not actually said, it was the common understanding among all present. If it was not then, as Counsel for the respondent submitted, it is most likely that friction with the union and the employees would have developed. That the respondent actually applied such a policy is evidenced by the position of a Ms Nicolson, who was unsuccessful in her application to PMI, and was assigned a new position by the respondent. It was virtually common ground that the representatives of the respondent said that it had no positions as such available at the time. The fact that the respondent said this is consistent with its policy, known to the union, that it did not treat the loss of a particular contract as creating a need for terminations of employment. A further reason why the respondent’s version of events is inherently more likely is that on 9 January the respondent did not know how many of the Qantas employees would be accepted by PMI. It had arranged for PMI to be available to interview the staff, but it did not know how many would be accepted. That is why the letter of 15 March refers to “redundancy was discussed as a last possible resort”.
Given this uncertainty it is therefore highly likely that the employees would have wanted to know what the position would be in the event that they were unsuccessful in obtaining employment with PMI. It is then that the respondent’s evidence that it reassured the employees that it would look after them, find them other positions, and implicitly continue to pay them, has a ring of truth to it. Any other response would have immediately brought howls of protest from the employees present and the union. I am satisfied the respondent’s representatives told the applicants that it would do what it had done in the event of loss of contracts in the past. That was to maintain employment for those employees who did not transfer with the contract.
Findings on Ansett applicants.
Similar considerations apply in relation to the conflicting evidence on the Ansett contract. Here the documentary evidence supporting the respondent’s version is stronger. The “Employment Preferences” form and the 27 March memorandum are consistent with the internal memoranda tendered in the Magistrates Court proceedings which indicate that the respondent was not treating this as a redundancy. It was making arrangements to find other positions for the potentially displaced employees. The fact that it was painting a pessimistic picture of the availability of other work is still consistent with the evidence of Mr Priest that the respondent intended to maintain the employment package of any employees who did not cross over to PMI. Ms Luther was frank in her evidence when she said that she had a choice. Mr Finch said in the earlier proceedings that he could have stayed with the respondent if he wished. I find that the respondent’s representatives did advise the Ansett applicants that there were limited positions available. They did not tell them, however, that their employment would end. On the contrary, they were advised that if they were unsuccessful with PMI, or did not wish to transfer, they would have their employment package maintained. This statement is consistent with what had happened to the Qantas contract employees a couple of months earlier, and was consistent with the respondent’s long standing policy.
Having made the above findings on the evidence it is now necessary to consider the submissions as to the legal consequences of the evidence.
Construction of Redundancy Clause.
The first submission by Mr Farouque was that cl 38 applied irrespective of whether the employer terminates the employment. Such a submission is not sustainable given the context of cl 38 in the Award, and the history of comparable provisions. Awards in the form of cl 38 derive from The Termination, Change and Redundancy Case (1984) 8 IR 34, which in turn followed the ILO Convention Concerning Termination Of Employment At The Initiative Of The Employer, 1982 [Sch 10 to the Act].
The original claim in the TCR case shows that the right to a redundancy payment was to flow from a decision of an employer to terminate employment for economic reasons. The initiating factor is the employer’s operational requirements. This is in accordance with the ILO Convention and also with s 170GA of the Act. S 170GA is premised on an employer contemplating terminations on economic grounds and then being required to consult the employees. An employer is also, in certain cases, required to notify the CES under s 170CL. This shows that cl 38(a) is directed to imposing obligations on employers who are contemplating terminations for economic reasons. As a response to the redundancy situation facing it an employer may, upon proper notice, transfer employees to lower paid duties under cl 38(b). When the employer, having failed to avoid the need to terminate employment for those reasons, actually terminates the employment in accordance with the notice requirements in cl 28, then cl 38(c) gives an entitlement to payment.
The whole of cl 38 is premised on action by the employer. Cl 38(c) requires the employer to terminate the employment. Such an interpretation is consistent with Lawrence v Clutha Development Pty Ltd (unreported, Federal Court of Australia, Keely J, 10 May 1985); Victoria v Australian Teachers Union (1993) 49 IR 149; Short v F W Hercus Pty Ltd (1993) 40 FCR 511; and The Forest Products, Furnishing and Allied Industries Industrial Union of Workers, W.A. v Dancroft Holdings Pty Ltd (1994) 74 WAIG 1885.
Did the respondent terminate the employment?
The central contest here was whether the applicants had their employment terminated by the respondent. Mr Farouque submitted that the respondent through its representatives gave the applicants notice that it was no longer to employ them after a specific event, namely the cessation of the contracts.
It is difficult on my findings on the evidence to find this submission made out. The applicants did not assert that the respondent told them they were dismissed. At its highest they asserted they were told they would have no employment or jobs or work after the contracts expired. None asserted that they were told that their employment was terminated or that they were dismissed effective on that date.
As I indicated above, it is a strong inference that had such a proposition been communicated by the respondent in the presence of a union official, there would have been a dispute. I am satisfied that the respondent did not give either group of applicants notice of termination.
Mr Farouque relied on the documents handed to the applicants detailing their final entitlements as evidencing a termination of employment by the respondent effective on the contract changeover.
Those documents are neutral in this context. They are premised on the fact that the respondent received notice from PMI that the applicants were accepting employment with it. Given this background, the fact that some of the documents are headed “Termination Pay”, while others refer to “final pay”, does not assist. The fact that the documents make no reference to any payment in lieu of notice is strongly against the submission here. If the respondent intended to terminate the applicants employment, why did it fail to make any arrangements to pay them in lieu of notice, an industrial entitlement taken for granted? The respondent’s evidence was that it was an unspoken assumption that the employment package would continue for those employees who did not join PMI. That actually happened in the case of one employee on the Qantas contract, and three on the Ansett contract. It was also the respondent’s case, not contested by the applicants, that it was common industry practice for employees to join the incoming contractor. The respondent’s documents concerning payments to the applicants upon the changeover are consistent with the applicants voluntarily transferring across.
Repudiation or breach of an implied term?
The next submission from the representative for the applicants was that the respondent had terminated their employment by repudiating the employment contract. It had done this by evidencing an intention to no longer be bound by an essential term. Alternatively, the applicants were entitled to infer from the respondent’s conduct that it was repudiating their contract of employment. The applicants had accepted the repudiation by joining PMI.
Whether the respondent’s conduct can be characterised as repudiatory must be considered in the context of the employment contract. Under the Terms and Conditions of Employment signed by each applicant except Marlene Webb, the respondent was entitled to transfer employees from site to site. At common law an employer is entitled to discharge its obligations under a contract in a way most advantageous to it. In an employment contract this means that provided the employer pays a willing and able employee, the employee does not have to be offered work: Mann v Capital Territory Health Commission (1981) 2 IR 29; see also Macken et al: The Law of Employment (4th ed.) at 110. That is where the evidence of Mr Gobert and Mr Priest as to what was to happen to those employees who did not wish to go across to PMI is crucial. Both said it was implicit that they would continue to be paid. Such a position is implicit in the 15 March letter recording that the Qantas applicants were told that “redundancy was discussed as a last possible resort”. That is consistent with Mr Gobert’s evidence that the respondent did not treat loss of a contract as creating redundancies due to its investment in its employees, and the ever changing demand for staff. The position was made explicit by Mr Priest when he said at the meeting that the respondent did not regard the Ansett contract as a redundancy.
None of the applicants said it was explicitly stated to them that they would not be paid. Mr Farouque asked each applicant a leading question, unchallenged by Mr Giudice, whether they had ever agreed that they would have to wait indefinite periods between transfers and not be paid. All applicants said they had not. The evidence is of little probative weight because there was no evidence that the respondent sought to impose such a regime on them. Similarly all applicants gave evidence that it was not their understanding that they had to apply for other positions. The respondent had the right to assign them to other positions. It was within its rights under the contract to ask employees to apply for possible positions.
In this case, in considering whether the respondent evidenced an intent to repudiate the contract, timing is crucial. Because the respondent, on the evidence, was operating in an industry where contracts often change hands, and it is constantly receiving ad hoc requests for security guards, at any particular point in time it may or may not have work available for all its permanent employees. Thus it could not have known, with any real certainty, until after the respective changeover dates, how many employees it had to place. When it did know it would then have a choice as to whether it asked the employees to take any leave owing, as it did with some of the employees after the Ansett contract, or just continue to pay them but not utilise their services. The respondent did not reach that point with the applicants because they chose to join the incoming contractor.
The representative for the applicants relied on Loughbridge v Lavery [1969] VR 912 at 923, to support the submission that it was reasonable for the applicants to infer that the respondent would no longer employ them after the cessation of the contracts. He submitted that the respondent had professed an inability to provide employment. The “Employment Preference” form completed by the Ansett applications showed only a willingness to perform the contracts. I am unable to accept the submission.
At no stage did the respondent express an inability to continue to pay the applicants. It did express an inability to provide them with work in the terms of immediate permanent positions akin to those at the airport. The latter is different from an intention not to pay them until the future of the employment contract was resolved one way or another. Such an action would be repudiatory but it did not occur here.
The respondent’s approach is consistent with cl 38 itself. The clause envisages employers concluding that a job is redundant and that terminations of employment for that reason are necessary. Here the respondent did not ever reach the conclusion that terminations of employment were necessary. Even if, on the evidence, it had reached that conclusion, it had not given notice of termination of employment. Cl 38, the ILO Convention, and ss 170CL and 170GA of the Act, all contemplate that in the period between when a position or job becomes redundant and when an employee is given notice of termination, the employment relationship subsists. If the employer cannot usefully employ that employee’s services but continues its obligations to pay wages, that is the employer’s look out. Only when there is a duty to provide work does the position change.
The principles for determining whether there has been a repudiation of a contract of employment have been considered in Gunnedah Shire Council v Grout (1995) 62 IR 150. There it was held that repudiation should not be lightly inferred, and the question is whether the conduct, viewed as a whole, constituted an absolute refusal to perform the contract. Where a resignation is in issue, it must be considered and voluntary.
Here I am not satisfied that in respect of any of the applicants the respondent’s conduct, viewed as a whole, amounted to an absolute refusal to perform its obligations under the contract. It paid the applicants until the changeover. It only ceased paying them when they accepted positions with PMI. It did not give them notice that their employment was to cease after the changeover. It simply indicated that it could not utilise their services in a specific position similar to that the applicants held. In the context of the right to re-assign employees, and the turnover of contracts being a feature of the business, the respondent’s actions do not have the flavour of an absolute refusal to perform the contract. On the contrary, given the suddenness of the contract loss, and the up and down nature of the respondent’s business, what the employer did, in the circumstances, was reasonable and consistent with its duty of good faith and fidelity to the applicants. The Employment Preferences form implicitly assumes the continuation of employment. That indeed was the evidence of a number of the Ansett contract applicants, and was the evidence of the unsuccessful applicant, Ms Smith, before the magistrate.
I am further satisfied that the applicants voluntarily left the employment. Something was sought to be made of the fact that none of the applicants actually tendered a written notice of resignation. The applicants resigned their employment by accepting employment with PMI. By doing so they put themselves in a position where they were unable to serve the respondent. Mr Giudice submitted there was nothing rushed about the matter. This is consistent with a free choice, in contrast to many of the constructive dismissal matters that have come before the Industrial Relations Court of Australia.
In Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 at 160 Moore J was considering the issue of a “termination at the initiative of the employer” under the Act. He said:
“(i)t is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect.”
Applying these comments, it cannot be said that the respondent’s actions would probably have the effect of ending the employment. The applicants had a choice which they exercised. The respondent’s actions were not intended to induce the applicants to transfer to PMI. They were not a repudiation of the contract of employment. They were also not in breach of the implied duty of trust and fidelity.
The applicants have failed to satisfy me that the respondent terminated their employment. Neither cl 38 nor cl 28 of the Award apply. In these circumstances it is unnecessary to consider the respondent’s further defence that cl 38 was inapplicable because this was ordinary and customary turnover of labour. Each of the applications will be dismissed.
ORDER:
The applications are dismissed.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of JUDICIAL REGISTRAR MURPHY.
Associate: KAREN HALSE
Dated: 19 September 1997
Appearing for the Applicants: MR K FAROUQUE Applicants’ Representative: ALHMWU Counsel for the Respondent: MR G GIUDICE Solicitors for the Respondent: DEACON GRAHAM & JAMES Dates of Hearing: 9,10,11,12 SEPTEMBER 1997 Date of Judgment: 19 SEPTEMBER 1997
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