FEDERAL COURT OF AUSTRALIA
United Voice v Berkeley Challenge Pty Limited [2018] FCA 224
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Details
- Case
- [2018] FCA 224
- Decision Date
CaseChat Overview and Summary
United Voice brought this case against Berkeley Challenge Pty Limited in relation to the termination of various employees. The dispute centred on whether Berkeley had breached the National Employment Standard by terminating the employees without providing proper notice or redundancy payments. The Fair Work Commission heard the case and found that Berkeley had indeed contravened sections 44(1) and 117(1) of the Fair Work Act 2009 (Cth) (FWA) by terminating the employees without valid notice and failing to pay redundancy. The Commission determined that the notice letter provided to the employees did not constitute valid notice of termination under section 117 of the FWA. Furthermore, the Commission ruled that Berkeley could not rely on the “ordinary and customary turnover of labour” exception in section 119(1)(a) of the FWA to avoid paying redundancy. The Commission found that Berkeley had not adequately demonstrated that the termination of the employees was due to the ordinary and customary turnover of labour within the company's business.
In reaching its decision, the Commission considered the terms of the employment contracts, the nature of Berkeley's business, and the frequency of contract turnover. The Commission found that the notice letter did not explicitly state that the employees' employment was being terminated, nor did it specify the termination date. Additionally, the Commission held that Berkeley, as the employer, had the burden of proving that the termination was due to the ordinary and customary turnover of labour. However, Berkeley failed to provide sufficient evidence to support this claim, as the company's business involved frequent contract turnovers and employee fluctuations. The Commission concluded that the termination of the employees was not due to the ordinary and customary turnover of labour, and thus, Berkeley was required to pay the employees compensation for the contraventions.
The Fair Work Commission ordered that Berkeley contravened sections 44(1) and 117(1) of the FWA and that each affected employee is entitled to compensation under section 545(2) of the FWA. The compensation should be calculated based on the agreed facts and the provisions of section 117(3) of the FWA, with pre-judgment interest added since 7 October 2014 in accordance with section 51A of the Federal Court of Australia Act 1976 (Cth). The parties were directed to file orders in an agreed form within 21 days to give effect to these reasons.
In reaching its decision, the Commission considered the terms of the employment contracts, the nature of Berkeley's business, and the frequency of contract turnover. The Commission found that the notice letter did not explicitly state that the employees' employment was being terminated, nor did it specify the termination date. Additionally, the Commission held that Berkeley, as the employer, had the burden of proving that the termination was due to the ordinary and customary turnover of labour. However, Berkeley failed to provide sufficient evidence to support this claim, as the company's business involved frequent contract turnovers and employee fluctuations. The Commission concluded that the termination of the employees was not due to the ordinary and customary turnover of labour, and thus, Berkeley was required to pay the employees compensation for the contraventions.
The Fair Work Commission ordered that Berkeley contravened sections 44(1) and 117(1) of the FWA and that each affected employee is entitled to compensation under section 545(2) of the FWA. The compensation should be calculated based on the agreed facts and the provisions of section 117(3) of the FWA, with pre-judgment interest added since 7 October 2014 in accordance with section 51A of the Federal Court of Australia Act 1976 (Cth). The parties were directed to file orders in an agreed form within 21 days to give effect to these reasons.
Orders
Orders of the court
1. Within 21 days the parties file orders in an agreed form to give effect to these reasons.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
To counter this evidence, Berkeley pointed to the express term of the letters of offer of employment mentioned above which provided that, as the employer, it may direct an employee to transfer to other locations to perform work. As well, it relied on the memorandum addressed to Mr Woods in 1995 (another of the affected employees employed at the Sunshine Plaza), which stated that “all staff positions and hours of work are subject to current contractual arrangements with [Lend Lease] and may change with any alteration in Sunshine Plaza trading hours or loss of contract”. However, United Voice pointed out that there was no evidence Mr Woods had received this memorandum and, in any event, it does not state that his employment will be terminated if the Lend Lease contract were lost.The evidence about the Spotless Group’s business As I have already mentioned above, Mr Potter is employed within the Spotless Group as a National Human Resources Manager. In his evidence, he described the business of the Spotless Group, the “fiercely” competitive industry in which it operated and the frequency with which Spotless won and lost client contracts, as follows:As the primary function of the Spotless Group is as a contract service provider, the Spotless Group’s income is wholly derived from client contracts. The vast majority of the Spotless Group’s revenue is generated from facility services contracts and as far as I am aware this has been the case for at least the last 15 years.The contract facility services market in which the Spotless Group mainly operates, and has operated for many years, is fiercely competitive. The competition for new contracts and the retention of existing contracts in the industry is intense. There are numerous companies servicing the market including other large international and Australian contracting service companies such as Sodexo, Broadspectrum, ISS, Compass and Delaware North.…At any point in time, the Spotless Group is in the process of tendering or bidding for new contracts, mobilising new sites as new contracts are won, and demobilising sites and contracts following the loss of a client contract after a competitive tender process or natural conclusion of a client contract (for example due to the end of a construction project). In some circumstances, contracts are lost prior to their expiry date due to site closures, or the client decides to no longer outsource the services of the contract. Resulting from the frequency with which it turned over contracts, Mr Potter gave the following evidence about the fluctuation of employees within the Spotless Group:The number of employees the Spotless Group employs constantly fluctuates based on the contracts the contracts available for employees to work on. In Australia as at 6 January 2017, the Spotless Group currently employs around 28,215 employees. This includes 8,718 full time employees, 2,722 part-time employees, and 16,775 casual employees. As at 26 September 2014, before the Sunshine Plaza Contract ended, the Spotless Group employed around 24,543 employees including 7418 full time employees, 3035 part-time employees, and 14,090 casual employees.
Decision
Reasons for decision
For these reasons, I do not consider the Notice Letter gave the affected employees notice that their employment was being terminated, and nor do I consider it gave notice of the day of that termination, in compliance with s 117(1) of the FWA. That being so, it is unnecessary to consider whether that non-existent day of that non-existent termination was extended by the notice placed on the noticeboards at Sunshine Plaza, as Berkeley contended it was.Conclusions – contraventions occurred and compensation is payable It follows that Berkeley contravened ss 44(1) and 117(1) of the FWA on 7 October 2014 when it terminated the affected employees’ employment without giving them a valid notice of termination of their employment under s 117(1) of the FWA. The former section was contravened because, as is explained above, s 117 is a provision of the National Employment Standards. Each of the affected employees is therefore entitled to compensation under s 545(2) of the FWA for the loss they suffered because of those contraventions. That compensation should be calculated for each of the affected employees in accordance with the information contained in the agreed facts and the provisions of s 117(3) of the FWA. In addition, pre-judgment interest should be added to that compensation since 7 October 2014 in accordance with the provisions of s 51A of the Federal Court of Australia Act 1976 (Cth).THE REDUNDANCY ISSUEIntroduction and some further factual context As mentioned above, there is no issue that the employment of the affected employees was terminated on 7 October 2014 and that was done at Berkeley’s initiative because it no longer required their jobs to be done by anyone. The only area of dispute with respect to this redundancy issue is, therefore, whether the exception in s 119(1)(a): “except where this is due to the ordinary and customary turnover of labour” (which I will, for convenience, refer to hereafter as “the Exception”), applied to absolve Berkeley of the obligation to pay them redundancy pay. Before I set out some pertinent details of the evidence concerning the terms of employment of the affected employees and the business activities of the Spotless Group, it is worth returning to the matter I mentioned above because it will have a significant bearing on the outcome of this issue. That issue concerns the admitted fact that Berkeley was the employer of all of the affected employees as at 7 October 2014, when their employment was terminated. According to Mr Potter, a National Human Resources Manager within the Spotless Group, this state of affairs arose because “when the Spotless Group acquired [Berkeley], the employing entity of employees (sic) remained [Berkeley]. Employees who were employed post-acquisition of [Berkeley] by Spotless have also been employed by [Berkeley]”. Mr Potter also said that when Berkeley became part of the Spotless Group, it was one of 26 employing entities in that Group. It necessarily follows that, for the purposes of both ss 117 and 119, Berkeley was the “employer” and it is Berkeley’s decisions and business activities to which reference must be made in determining whether the Exception applied to the termination of the affected employees. Furthermore, to succeed in gaining the benefit of the Exception in s 119(1)(a), it is Berkeley, as the employer, that bears the onus of establishing that its initiative to terminate the employment of the affected employees’ and render their jobs redundant was due to that Exception.The affected employees’ terms of employment
Ratio Decidendi
Legal Principle Established
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