100317801

ALLEGED UNFAIR DISMISSALS

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES AUSTRALIAN LIQUOR, HOSPITALITY AND MISCELLANEOUS WORKERS UNION, WESTERN AUSTRALIAN BRANCH

APPLICANT

 -v-

 EUREST (AUSTRALIA) PTY LTD

RESPONDENT

CORAM COMMISSIONER J L HARRISON

DATE MONDAY 10 NOVEMBER 2003     

FILE NO CR 248 OF 2002

CITATION NO. 2003 WAIRC 09979

_______________________________________________________________________________

Result Application alleging unfair dismissals upheld in part and order issued for compensation in lieu of reinstatement

Representation

Applicant Ms Northcott

Respondent Ms Auerbach (of counsel)

_______________________________________________________________________________

Reasons for Decision

1         Ingrid Hanscombe, Robyn Carter, Margaret Kennedy and Jannelle Holden were employed by Eurest (Australia) Pty Ltd (“the respondent”) until the end of September 2002.  The Australian Liquor, Hospitality and Miscellaneous Workers’ Union, Western Australian Branch (“the applicant”) argues that these employees were unfairly terminated when the respondent lost the contract to provide catering services at Murdoch University effective 29 September 2002.  As a result of the employees’ termination the applicant commenced proceedings under s.44 of the Industrial Relations Act 1979 (“the Act”).  Conciliation proceedings did not resolve the claim and the matter was referred for arbitration under s.44(9) of the Act.  Following is the memorandum of matters for hearing and determination as amended at hearing:

“1. The applicant claims the respondent made the following 4 employees redundant on 29 September 2002:

1. Robyn Carter
2. Ingrid Hanscombe
3. Margaret Kennedy
4. Jannelle Holden

2. The applicant maintains that as the respondent did not make the payments detailed in Clause 49. – Redundancy (sic), of the Restaurant, Tearoom and Catering Workers’ Award 1979 (the Award) to the above employees the employees were unfairly terminated.

3. The applicant seeks an order that the respondent compensate the employees for the loss they have incurred as a result of the respondent’s actions.

4. The respondent disputes the applicant’s contentions and states the employees’ contracts of employment came to an end due to the ordinary and customary turnover of labour and the respondent disputes that Clause 49 (sic) of the Award applies.  On this basis the respondent opposes the claim and order sought.”

Amendment to the Respondent’s Name

2          At the hearing the applicant sought leave to amend the respondent’s name and this amendment was agreed to by the respondent.  Given the respondent’s consent to this course of action and having formed the view that it was appropriate in the circumstances to grant the amendment I propose to issue an order that Eurest Catering be deleted as the named respondent in this application and be substituted with Eurest (Australia) Pty Ltd.

Background

3          An agreed statement of facts was submitted (Exhibit 1).  The respondent and its predecessor P&O had the catering contract at Murdoch University for eight years.  The respondent had 16 employees working at Murdoch University when its contract ceased in September 2002.  The terms and conditions of employment of the relevant employees were those contained in the Restaurant, Tearoom and Catering Workers’ Award, 1979 (No R48 of 1978) (“the Award”).  The four employees the subject of this application had the following length of service at termination:  Ms Hanscombe 1 August 1994 (eight years service), Ms Carter 1 August 1994 (eight years service), Ms Kennedy 28 September 1998 (four years service) and Ms Holden 4 April 1997 (five years service).

4          On 19 August 2002 the respondent gave its employees at Murdoch University written notice that its contract would cease on 29 September 2002.  A copy of this letter is included at Exhibit 1.  Ms Holden commenced maternity leave on 22 August 2002 and has not returned to work with the respondent since that date.  Even though the respondent advertised alternative position for its employees at Murdoch University the three remaining employees listed in the schedule did not obtain employment with the respondent at other sites after ceasing employment at Murdoch University.  Ms Carter and Ms Hanscombe accepted casual employment with the incoming contractor at Murdoch University in early October 2002 and they worked for the respondent for one day on a casual basis on 30 September 2002 at Edith Cowan University, Churchlands.

5          The respondent is part of a large organisation with approximately 8,000 employees, 200 of whom work in Western Australia.  The respondent contracts to undertake catering at various facilities including mine sites, tertiary institutions and hospitals.  Employees are employed either full-time, part-time or on a casual basis.  If an employee is employed part-time the usual hours are from 20 to 37 hours per week.  Employees are retained by the respondent at a specific workplace as long as the respondent maintains the contract and contracts usually cover a period of between one to three years.  Since 1999 the respondent has lost approximately 12 contracts.

Applicant’s evidence

6          Ms Carter stated that she worked approximately 37 hours per week at Murdoch University.  She stated that she was no longer employed by the respondent when the respondent’s contract at Murdoch University ceased.  She confirmed that throughout September 2002 job vacancies for positions with the respondent were listed on the respondent’s staff notice board at Murdoch University.  Ms Carter did not apply for any of these advertised positions because she considered they were not suited to her experience, or the hours were insufficient or some of the jobs were outside of Perth’s Metropolitan area.  She had discussions with the new contractor’s representatives at Murdoch University prior to ceasing employment with the respondent and in the week before the end of September 2002 she was offered casual employment with the new contractor.  She worked with the new contractor until the end of November when she left for personal reasons.  She stated that when she ceased employment with the respondent she was paid pro rata annual leave entitlements and annual leave loading.  She did not receive any other payments. 

7          Ms Carter stated that in August 2002 she attended a meeting called by the respondent and was informed that there was uncertainty about the future employment of employees working at Murdoch University.  A second meeting held in September 2002 was a meeting to farewell staff.  Ms Carter stated that the respondent sent her a letter dated 19 August 2002 which gave her the option of joining the respondent’s casual pool of employees if suitable alternative employment was not available with the respondent (Exhibit 1).  She was aware that some of the 16 other employees at Murdoch University were transferred to alternative positions with the respondent.  Ms Carter stated that throughout August and September 2002 she was only aware of four alternative jobs with the respondent that were possibly relevant to her skills.  She stated that she was not qualified for some of the positions on offer and the other positions had insufficient hours.  It was put to Ms Carter that a number of permanent part-time positions working 25 to 30 hours per week were available at this time.  Ms Carter stated that these positions were given to other employees and were never offered to Ms Carter.  She stated that no-one from the respondent approached her personally about taking up any positions. 

8          Under cross-examination Ms Carter confirmed that when she initially commenced employment with the respondent her job application form contained reference to the possibility of transferring to another site as a condition of her employment (Exhibit R2).  Ms Carter also agreed that she was aware that if the respondent lost a contract that she may be required to move to another site in order for her to retain her job.    Ms Carter confirmed that the average hours she worked was approximately 31 hours per week when university breaks were taken into account.  She stated that after the respondent lost its contract at Murdoch University she wanted to continue working with the respondent however, there was not a suitable position with the respondent at the time for her to undertake.  Ms Carter stated that some of the positions which were on the respondent’s notice board had already been filled and were not available and she confirmed that the respondent did not transfer her to an alternative position.  Ms Carter confirmed that she is currently working at Murdoch University and is working between 25 to 30 hours per week.   

9          Ms Hanscombe stated that she would have been due for long service leave in February 2003 but because the respondent lost its contract at Murdoch University at the end of September 2002, she was unable to access this entitlement.  She raised the issue of here long service leave entitlements with the respondent but was told that because she had not completed 10 years of service she was ineligible to receive her long service leave entitlement.  Ms Hanscombe stated that when her last two employers at Murdoch University had lost their contract her entitlements were rolled over to the new contractor and eventually the respondent.  She confirmed that at the end of September 2002 she completed a form indicating that she was prepared to go onto the respondent’s casual list.  On or about 21 September 2002 Ms Hanscombe was offered a casual position with the new contractor at Murdoch University and she remained working with this contractor until its contract finished at the end of December 2002.  Subsequently Ms Hanscombe was unemployed for a period of approximately two and a half months.  Exhibit A3 is a copy of the job seeker diary for the positions that she applied for during this period.  She managed to obtain another position on 10 March 2003.

10       Ms Hanscombe confirmed that she discussed possible employment options with the respondent in September 2002 and that she was aware that some jobs were advertised on the respondent’s notice board.  She recalled that one position was for a tavern manager at Edith Cowan University for which she was not qualified.  Another position was for a counter hand and she stated that as this job was for only 18 hours per week this was insufficient as it was significantly less hours than her existing position.  The advertised positions at Hollywood Hospital and the Galleria were also inappropriate because the positions were for significantly less hours than her current position.  Although jobs were available at mine sites she stated that these were for chefs or managerial positions which were positions for which she was not qualified.  She stated that when she ceased employment with the respondent she lost her long service leave accrual (nearly 10 years), plus her sick leave which she was counting on to use to have an operation in 2003.  Ms Hanscombe stated that she did not resign from her employment with the respondent.  She confirmed that she applied to be put on the respondent’s casual list as she was told at the time if she did not she would be terminated.  To the best of her knowledge Ms Hanscombe still remains on the respondent’s casual list.  Ms Hanscombe was aware that a number of the respondent’s employees at Murdoch University transferred to other jobs prior to 29 September 2002.  Ms Hanscombe stated that in some instances she was unaware that the jobs taken up by these employees were available.  She enquired about the prospect of taking up alternative positions with the respondent but was informed that only those positions that were advertised on the respondent’s notice board were available.  She confirmed that she had a meeting with Mr Alan Yeardley about the possibility of working elsewhere with the respondent.  She told him that she was interested in remaining employed by the respondent but she did not hear back from him. 

11       Ms Hanscombe stated that she accepted employment with the new contactor at Murdoch University even though this position was casual as she was hoping that something may come up in the future with the respondent.  Ms Hanscombe is currently employed at Murdoch University at the Aroma Café. 

Respondent’s evidence

12       The respondent’s State Manager Mr Richard Ream gave evidence that the respondent was aware in approximately September 2001 that there was the possibility of losing the Murdoch University contract and employees were informed of this when the contract came up for tender.  He stated that the respondent had a policy of promoting employees and transferring them internally before advertising positions to the general public.  As a result of this policy, staff members working at Murdoch University were given the opportunity to take up positions that the respondent had available at the time.  He stated that a number of positions were advertised at Murdoch University and many were similar to the duties undertaken by the employees the subject of this application.  He stated that he understood that the hours of the advertised positions were between 20 to 37 hours, depending on the scope of the contract.  He confirmed that eight employees were transferred from Murdoch University to alternative positions.  Most of the jobs were counter hand/kitchen hand positions with weekly hours between 20 to 37 hours.  As a result of employees being transferred they retained their entitlements to long service leave and sick leave. 

13       Mr Ream understood that prior to the cessation of the Murdoch University contract three meetings were held with staff.  He held a meeting with Murdoch University staff approximately one year prior to losing the contract to advise staff personally that the contract was up for renewal.  He understood that Ms Beryl Beard and Mr Yeardley personally approached employees about alternative positions and he understood that details about each available position were put on the respondent’s notice board.  Mr Ream stated that at the end of September 2002 the respondent had four vacant positions which were not filled and that all employees at Murdoch University were given the opportunity to apply for these positions.  As a result the respondent had to advertise these four vacancies externally.  He confirmed that Ms Holden was currently on maternity leave and he understood she would be indicating her long term intentions to the respondent next month.  In support of this he tendered Exhibit R7 which confirms that Ms Holden remains an employee of the respondent, on maternity leave.  He stated that Exhibit R7 confirms that Ms Hanscombe, Ms Carter and Ms Kennedy remain on the respondent’s relief pool.  He confirmed that Ms Hanscombe, Ms Carter and Ms Kennedy all completed applications to undertake casual work with the respondent. 

14       In cross-examination it was put to Mr Ream that in September 2002 some of the respondent’s employees were terminated because the contract with Murdoch University was lost.  He said that this was not the case as employees were either transferred to another site or they resigned and took up employment with another employer.  He understood that Ms Hanscombe and Ms Carter remained on the respondent’s casual list therefore they had not been terminated.  It was put to Mr Ream that a job with 18 hours work per week was different to one encompassing 31 hours per week.  He stated that he understood that it was a condition of each employee’s contract of employment that set hours were not always guaranteed.  It was his view that Ms Hanscombe could have undertaken the tavern job as she had experience serving liquor and could have easily gained the required licence.  He stated that he was of the opinion that the jobs offered to all employees at Murdoch University constituted acceptable alternative positions.  He confirmed that employees were not forced to transfer to the advertised positions against their will because it was up to the individual to assess whether or not the advertised position was suitable for them.  It was his view that it was the respondent’s role to make employees aware of available positions and offer them the opportunity to take up these positions.  He stated that existing employees did not have to apply for the advertised positions as would normally be the case and that all of the respondent’s employees at Murdoch University were efficient and valued employees who the respondent wished to retain as employees.  He confirmed that Ms Hanscombe, Ms Carter, Ms Kennedy and Ms Holden were the only Murdoch University employees who had not worked with the respondent since 30 September 2002.  He understood that this was their choice as they had not contacted the respondent seeking employment.  Mr Ream stated that if Ms Holden wished to return to work after maternity leave then it was his understanding that there would be a position for her with similar hours to what she previously worked.

15       Mr Yeardley is currently the respondent’s Catering Manager at Edith Cowan University.  Prior to taking up this job he worked as the respondent’s Catering Manager at Murdoch University.  He has worked on and off with the respondent for approximately seven years and he understands that notwithstanding the occasional time off between jobs his service with the respondent has been continuous.  As catering manager at Murdoch University he ran the café, cafeteria, restaurant and tavern and oversaw the day to day running of the respondent’s operations.  It was also his role to hire and fire staff.  He stated that every endeavour was made to place existing staff at different sites when the respondent lost its contract at Murdoch University and that this relocation process commenced three to four months prior to the contract finishing.  Mr Yeardley stated that he was transferred to Edith Cowan University in late August but continued to also work at the Murdoch University site as he was still in charge of this site.  He was aware that the respondent had other jobs available at Galleria and at other university campuses.  He also understood that there was a pot washer position at Hollywood Hospital.  He stated that some of the available positions were on a permanent part-time basis and others were casual.  He stated that except for the tavern job the duties of these positions were the same as the duties of staff employed at Murdoch University.  He confirmed that 12 staff were transferred from Murdoch University to other jobs.  He agreed that he had no discussions with Ms Holden about alternative positions because she was on maternity leave and he understood that Ms Kennedy was not interested in a transfer as she was moving east.  He confirmed that there was a minimum and maximum number of hours permanent part-time employees worked and that the hours worked each week varied.  He understood that Ms Carter wanted to remain working at Murdoch University because of the travel involved and that Ms Hanscombe wanted to take her chances with the new contractor at Murdoch University. 

Submissions

16       The applicant maintains that the four employees named in the schedule were terminated on 29 September 2002.  Apart from one day of casual work undertaken by Ms Hanscombe and Ms Carter on 30 September 2002 none of the four employees worked with the respondent subsequent to this date.  The applicant argues that as no suitable alternative employment was made available by the respondent for Ms Hanscombe and Ms Carter when they were terminated on 29 September 2002 they were left with no alternative but to take up casual employment with the new contractor at Murdoch University.  The applicant conceded that the respondent posted a number of jobs on the staff notice board in the lead up to the end of September 2002 and that employees were encouraged to apply for these positions however the advertised positions were unsuitable for Ms Hanscombe and Ms Carter.  The applicant relies on the authority contained in Clothing & Allied Trade Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226 in support of this contention. 

17       The applicant argues that the employees the subject of this application were given notice of their termination when they were  sent the letter dated 19 August 2002 (attached to Exhibit 1) which was written five weeks prior to the respondent’s contract expiring at Murdoch University. 

18       The applicant argues that the employees named in the schedule were treated unlawfully and thus unfairly because they were not paid redundancy entitlements at termination (Frederick John Rogers and Leighton Contractors Pty Ltd (1999) 79 WAIG 3551).  Clause 48 – Redundancy of the Award states that when an employee is made redundant an employee is entitled to a redundancy payment if an employee is not transferred to lower paid duties or where the employer has not applied to vary the redundancy payments due pursuant to Clause 48(6) of the Award.  The employees were treated unfairly because they were long term employees with lengthy service who were not compensated for the loss of non transferable entitlements in relation to sick leave and long service leave, which was particularly severe in Ms Hanscombe’s case. 

19       The applicant maintains that each employee was made redundant and not terminated due to the ordinary and customary turnover of business and relies on a number of authorities in support of this proposition (The Forest Products, Furnishing and Allied Industries Industrial Union of Workers, W.A. v Dancroft Holdings Pty Ltd t/a Concept Contract Interiors (1994) 74 WAIG 1885, and Short v. F.W. Hercus Pty Ltd (1993) 46 IR 128, 137). 

20       The applicant submits that as all four employees were unfairly terminated they should be compensated at least the amount of the Award redundancy entitlement due to them. 

21       The respondent maintains that the employees the subject of this application were not dismissed nor made redundant.  The respondent claims that its employee numbers were organised according to the number of contracts the respondent held and once the respondent finished a contract then it was normal for employees to transfer to other sites operated by the respondent.  As the respondent lost its contract at Murdoch University due to its contract expiring and not due to an economic downturn the respondent thus argues that when the employees ceased employment with the respondent it did not constitute a redundancy situation.  The respondent argues that if the normal feature of a business is to operate on the basis of winning and losing contracts this constitutes the ordinary and customary turnover of business therefore the employees named in the schedule were not made redundant.  The respondent relies on the Australian Industrial Relations Commission Termination, Change and Redundancy Case (1984) 8 IR 34 and Short v F W Hercus Pty Ltd (1991) 58 SAIR 868 in support of this contention.  The respondent also argues that a redundancy situation occurs where an employer no longer needs an employee and in this case the evidence was clear that the respondent wanted to continue employing the four employees in alternative positions. 

22       The respondent argues that all employees at Murdoch University were offered suitable alternative employment and all employees the subject of this application (except Ms Holden) chose not to take up these offers of their own volition. As Ms Hanscombe and Ms Carter arranged new jobs with the contractor at Murdoch University prior to the respondent’s contract finishing it was clear that they had no intention of continuing their employment with the respondent.  The respondent maintains that Ms Holden has not been terminated as she is currently on maternity leave.  Ms Kennedy is interstate and the respondent understands that as a result of her long term plans to relocate she had no interest in undertaking alternative employment with the respondent.  She could have transferred to another job with the respondent but chose not to.  The respondent maintains that there was no excuse for Ms Hanscombe not making sufficient enquiries about the tavern job which was available and argues that if she had accepted this job then she would not have lost her long service leave accrual.  The respondent argues that as alternative employment was available to all employees then it is not open for the applicant to argue that the four employees were made redundant.  The respondent also argues that as Ms Hanscombe and Ms Carter accepted alternative employment with the new contractor at Murdoch University they suffered no loss and therefore should not be compensated.

Findings and Conclusions

Credibility

23       I listened carefully to the evidence given by all witnesses.  In my view they gave their evidence honestly and to the best of their recollection.  On this basis I accept the evidence given by each witness.

Was suitable alternative employment offered to each employee?

24       The test for determining whether alternative employment offered to an employee should be taken up by an employee is an objective one (Clothing & Allied Trade Union of Australia v Hot Tuna Pty Ltd (supra)).  In applying an objective test to this circumstance it is my view that the factors that require consideration are whether the new position to be performed is within the same range of duties previously undertaken by the employee, whether the terms and conditions of employment of the new position are similar to the employee’s existing contract of employment and whether the employee could be expected to undertake the new position under the terms of their existing contract of employment.  It is also relevant to consider that even if some employees find offers of alternative employment suitable this does not make the offer of alternative employment suitable to all employees. 

25       It is my view that the respondent did not offer Ms Hanscombe and Ms Carter suitable alternative employment subsequent to the respondent losing its contract at Murdoch University in September 2002.  I accept that the respondent had some job opportunities available at the time that it lost the contract at Murdoch University and that these jobs were advertised on the respondent’s notice board at Murdoch University.  I also accept that existing employees working at Murdoch University were encouraged to take up the advertised positions and many employees at Murdoch University did so.  However, I find that the respondent has not demonstrated that the jobs available at this time for Ms Hanscombe and Ms Carter to transfer into constituted suitable alternative employment. 

26       I accept Ms Hanscombe’s and Ms Carter’s evidence that the positions advertised by the respondent immediately prior to their termination were unsuitable for them.  Some of the positions were to work outside of the metropolitan area, and others involved skills that were not equivalent to the skills being exercised by Ms Hanscombe and Ms Carter in their existing positions.  For example the tavern manager position required a person to be licensed.  I also accept that the hours involved in some of the advertised positions were considerably less than the existing hours that Ms Carter and Ms Hanscombe had been working for a lengthy period in their existing positions.  Even though there was a range of hours that the respondent’s part-time employees could work, I find that as some of the jobs advertised had significantly lower hours than the existing jobs of Ms Carter and Ms Hanscombe then these jobs did not constitute suitable alternative employment.  I also find that the respondent did not thoroughly negotiate the possibility of taking up available positions with Ms Carter and Ms Hanscombe even though Ms Hanscombe gave evidence that she had some discussions with the respondent about possible employment options.    Negotiations may well have resulted in either Ms Carter or Ms Hanscombe undertaking training in order to take up the position of tavern manager.  I am unable to make findings in relation to Ms Holden and Ms Kennedy in this regard as they did not give evidence in these proceedings.  As it is not apparent why Ms Kennedy did not take up alternative employment with the respondent I am unable to find that Ms Kennedy was not offered suitable alternative employment.  I also take into account that some of the positions available to Ms Kennedy involved the same duties as her existing position.  I thus conclude that Ms Carter and Ms Hanscombe were not offered suitable alternative employment by the respondent.

Where the employees terminated?

27       In this case a determination needs to be made as to whether the four employees were terminated and if so whether the employees were terminated due to a redundancy situation or due to the ordinary and customary turnover of labour.

28       In Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200 at 205, the Full Court of the Industrial Relations Court of Australia said:

“termination at the initiative of the employer” involves a “termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship”. 

“[A]n important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee.  That is, had the employer not taken the action it did, the employee would have been remained in the employment relationship”. See Macken, McCarry and Sappideen’s Law of Employment 4th Edition page 227-228.

29       It is my view that each employee, except Ms Holden was terminated at the initiative of the respondent when they ceased working for the respondent on 29 September 2003.  It was common ground that as at that date, Ms Carter, Ms Hanscombe and Ms Kennedy had not been transferred into new positions.  The only formal offer of continuing employment was on a casual basis.  The contents of the formal advice sent to the respondent’s employees on 19 August 2002 confirms that each employee was advised that in the event that an employee was not offered a position by 29 September 2002, or alternative employment was unable to be found then each employee would be offered casual work at other sites.  Even though Ms Carter and Ms Hanscombe went onto the respondent’s causal list they were not offered work for more than one day.  In the circumstances it is my view that the change to each employees’ contract of employment from permanent part-time to casual with no additional work being offered to each employee (apart from one day) constitutes a termination at the initiative of the employer.

30       The issues relevant to the definition of ordinary and customary turnover of labour were canvassed by the Full Bench in The Forest Products, Furnishing and Allied Industries Industrial Union of Workers, W.A. v Dancroft Holdings Pty Ltd t/a Concept Contract Interiors (supra) at 1886. 

31       This decision related to a definition of redundancy which is in essentially the same terms as the definition of redundancy in the Award covering the four employees the subject of this application.  Clause 48. – Redundancy of the Award defines redundancy as occurring “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”.  The redundancy clause that was discussed in The Forest Products, Furnishing and Allied Industries Industrial Union of Workers, W.A. v Dancroft Holdings Pty Ltd t/a Concept Contract Interiors (supra) defined redundancy as “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…”.  

32       In this decision His Honour the Acting President Fielding stated:

“There is, in reality, no challenge to the primary facts as found by the learned Magistrate. Rather, it is the conclusion he draws from those findings which is attacked by the Appellant. As the Appellant contends, the issue in question is really one of interpretation of Clause 20A of the Award.

It is beyond question that the relevant provisions of Clause 20A had their genesis in the decisions of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (1984) 8 IR 34 and (1984) 9 IR 115. Equally, there is no question that the provisions of subclause 20A(3) were intended to apply to employees who were made redundant within the meaning of that term as explained in R. v. The Industrial Commission; ex parte Adelaide Milk Supply Co-Operative Ltd ( 1977) 16 SAR 6 (see: Short v. F.W. Hercus Pty Ltd (1993) 46 IR 128, 137). In handing down its award in the Termination, Change and Redundancy Case (supra), the Commission said at (1984) 9 IR 128 that it "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". Thus the Commission inserted into the award, of which Clause 20A is a copy, the requirement that the provisions of the clause were not to apply to the "ordinary and customary turnover of labour". True it was, as the Respondent asserts, that the words were derived from the decision in Shop, Distributive & Allied Employees' Association (NSW) v. Countdown Stores (1983) 7 IR 273. In that case, which concerned the provisions of the Employment Protection Act 1982 (NSW), the President of the New South Wales Industrial Commission noted at page 294 that there was a need to mark off collective dismissals by way of retrenchment on economic grounds "from the ordinary turnover of labour not related to the pressure of present economic recession". Reference to the economic recession was made because the President had held that the provisions of the Act were principally designed to provide machinery to compensate for hardship of other employees as the result of being dismissed because of circumstances beyond their control "predominantly in the present economic recession". It does not follow, as the Respondent contends, that the only persons who fall within the instant provisions of the Award are those who are made redundant as the result of general economic considerations rather than through economic considerations peculiar to the employer. Indeed, as the Australian Commission noted in the Termination, Change and Redundancy Case (supra) at page 128 "we decided that there should not be any fundamental distinction, in principle, based on the cause of redundancy". As Gray J observed in McGarry v. Boonah Clothing Pty Ltd (1993) 49 IR 66 at 77 "a broad view should be taken of the reach of the clause".

In Short v. F.W. Hercus Pty Ltd (1991) 58 SAIR 868, Parsons SM of the Industrial Court of South Australia held that -

"... in using the expression 'the ordinary and customary turnover of labour' in the redundancy provision of the Metal Industry Award, the Full Bench intended to limit to (sic) right to severance pay to those employees whose jobs are no longer required by the employer to be done by anyone and this occurrence is not a normal feature of the business of the employer. Thus seasonal employees or intermittent employees such as building workers would be excluded from the operation of the redundancy provision as would other employees on fixed contracts or engaged for the duration of a specific contractual commitment of the employer. The redundancy provision seeks to distinguish between those particular employees and another category of employee who has an expectation of continuity of service. The redundancy provision compensates the latter category for the loss of non- transferable credits and the hardship and inconvenience of termination".

With respect I agree with that interpretation. It is consistent with the general concept of redundancy, as explained in the Termination, Change and Redundancy Case (supra). Furthermore, it is consistent with the interpretation placed on similar words, albeit in a different context by Rich J in Downs Distributing Company Pty Ltd v. Associated Blue Star Stores Pty Ltd (In Liquidation) (1948) 76 CLR 463, which was referred to by the Supreme Court of Western Australia in Douglas-Brown v. Isles In Re Vetter Trittler Pty Ltd (Receiver and Manager Appointed) (In Liquidation) [( Unreported) - Coy No. 109 of 1991 - 2nd September 1992].

In the final analysis, whether a dismissal falls within the description of being in the ordinary and customary turnover of labour is largely a question of fact. Thus in the present case the Respondent contends that the dismissal of Mr Alvarez was in the ordinary and customary turnover of labour because it did not result from a general economic recession, but the simple failure by the Respondent to win sufficient contracts to enable him to continue to be gainfully employed. Furthermore, the Respondent's agent argues that the Respondent had a history of engaging extra employees where necessary to satisfy its workload and conversely when there was a diminution in the workload, it reduced manning levels. Mr Richardson, as agent for the Respondent, pleaded with the Full Bench not to accept a narrow meaning of the expression "ordinary and customary turnover of labour" and in particular not to look at Mr Alvarez's dismissal in isolation of the Respondent's labour history.

In the present case the evidence indicates that at or about the time Mr Alvarez was dismissed from his employment, there were approximately 12 others dismissed because the Respondent had been unable to attract sufficient work. Further, the uncontradicted evidence is that earlier in the year the Respondent reduced its workforce by approximately 10 following the completion of a large contract for Coles-Myer. The uncontroverted evidence of the Respondent's contracts manager, Mr Johnson, is that most of those were "fairly short term employees". Moreover, the evidence is that shortly after Mr Alvarez was terminated, the Respondent shifted to a smaller factory. Mr Johnson testified, and again his evidence was not seriously questioned, that in recent years a number of companies had gone into liquidation and ceased trading "purely through a lack of work or low profit margins". He further testified that although some companies were busy, they were "literally buying work to try and survive" at what he described at "ridiculous margins" which in the end became too low for the Respondent to entertain. In short, the evidence was that the Respondent was priced out of business by unorthodox pricing policies of competitors.

The learned Magistrate appears to have concluded that Mr Alvarez's dismissal was in the ordinary and customary turnover of labour because it resulted from the Respondent's failure to win sufficient work, which inferentially he seems to have regarded as an ordinary feature of commerce. With great respect to the learned Magistrate, that was not the issue. The issue, as the decided cases suggest, was whether it was a normal feature of the Respondent's business to reduce its workforce by dismissing those employees with a significant length of service, such as Mr Alvarez, following the loss of contracts. In my view, had the learned Magistrate approached the matter in the way indicated by the decided cases, which regrettably were not put to him as they ought to have been, the evidence admits of only one conclusion; that is, that the termination of Mr Alvarez was not made in the ordinary and customary turnover of labour. Although the evidence shows that in the past the Respondent may have taken on additional staff to enable it to perform a specific contract, the evidence does not reveal that it was usual and customary for it to reduce the size of its operation to the level which occurred on or about 31 August last. Indeed, the fact that not long after Mr Alvarez's employment was terminated the Respondent moved to a smaller factory after being in the other for so long does not suggest that it was a normal occurrence. There is no evidence to suggest that it was a normal incident of the Respondent's business to dismiss long serving employees. At best the evidence suggests that it was customary for the Respondent to turn over short term employees where there was a reduction in work.

Although each case must be determined on its facts, the facts in this matter are not materially different from those considered by the Industrial Court of South Australia in Short v. F.W. Hercus Pty Ltd (supra) where an employee dismissed through a downturn in business and who was not replaced was held to come within the scope of an identical provision to that now in question, under Part II of the Metal Industry Award 1984. That decision was ultimately upheld by the Full Court of the Federal Court in Short v. F.W. Hercus Pty Ltd (1993) 46 IR 128. A similar decision was reached McGarry v. Boonah Clothing Pty Ltd (supra) where large scale dismissals were found to have been effected in order to scale down the operations of the employer. Furthermore, in Metals and Engineering Workers' Union v. Bundaberg Foundry Engineers Ltd [1991] 7 CAR 516 the Australian Industrial Relations Commission found that, although there was a substantial history of turnover of labour, an employee with a long and faithful history of service had a reasonable entitlement not to expect to be dismissed as part of that custom and thus was entitled to the benefit of a similar provision under Part I of the Metal Industry Award 1984 (see also: Metals and Engineering Workers' Union v. Orford Pty Ltd [1991] 7 CAR 248).”

33       When applying this authority I find that Ms Carter and Ms Hanscombe were made redundant and were not terminated due to the ordinary and customary turnover of labour.  It was not in dispute that as a result of the respondent losing its contract at Murdoch University there were no longer any positions available for the respondent’s employees at Murdoch University.  Further, Ms Carter and Ms Hanscombe had an expectation of ongoing work with the respondent as the respondent had a policy to redeploy its employees to other sites if work was available elsewhere.  This was confirmed by Mr Ream when he stated that the respondent’s policy was not to terminate employees when a contract finished, but to offer employees alternative employment at its other work sites.  Generally the ordinary and customary turnover of labour involves an employee having some knowledge and understanding that their employment is of a limited duration, such as a seasonal worker or where termination was a normal feature of an employer’s operations.  In this instance the respondent’s employees had a reasonable expectation that their employment would be ongoing (each employee already had lengthy years of service with the respondent at termination) and the employees were aware that if the respondent lost a specific contract there was the possibility of being redeployed elsewhere in the respondent’s operations.  I therefore find that when the respondent’s employees were terminated as a result of the respondent’s loss of the contract at Murdoch University this was not a termination due to the ordinary and customary turnover of labour but due to a redundancy situation. 

34       Redundancy is itself a sufficient reason for dismissal (Amalgamated Metal Workers and Shipwrights Union of Western Australia and Other v Australian Shipbuilding Industries (WA) Pty Ltd (1987) 67 WAIG 733).  Despite the requirement to accord procedural fairness, not every denial of procedural fairness will entitle an employee to a remedy.  No injustice will result if after a review of all the circumstances of the termination it can be said that the employee could be justifiably dismissed (Shire of Esperance v Mouritz (1991) 71 WAIG 891; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 430 per Brennan CJ, Dawson and Toohey JJ and at 466 per McHugh and Gummow JJ).  If a decision is made to make an employee redundant based on the operational requirements of the company that can be a valid reason for the dismissal.  In this case I am of the view that Ms Carter, Ms Hanscombe and Ms Kennedy were made redundant and thus terminated for a valid reason.  Given no evidence to the contrary I accept Mr Ream’s evidence that Ms Holden continues to be on maternity leave and remains an employee of the respondent.   I am thus in no position to find that Ms Holden has been terminated due to a redundancy situation. 

35       Having said that it is appropriate to consider any unfairness in relation to the process used in effecting the employees’ redundancy, as well as all of the circumstances surrounding the termination of their employment having regard to s.26 of the Act.  The question to be determined by the Commission is whether the legal right of the respondent to dismiss the employees has been exercised harshly or oppressively against the employee so as to amount to an abuse of that right (The Undercliffe Nursing Home v The Federated Miscellaneous Workers’ Union of Australia, Hospital, Service and Miscellaneous, WA Branch (1985) 65 WAIG 385).

36       The employees’ contract of employment was governed by the terms of the Award.  Clause 46. – Changes With Significant Effect and Redundancy of the Award provides as follows:

“(3)     Where an employer has decided to –

  (a)       take action that is likely to have a significant effect on an employee; or

  (b) make an employee redundant,

 the employee is entitled to be informed by the employer, as soon as reasonably practicable after the decision has been made, of the action or the redundancy, as the case may be, and discuss with the employer the matters mentioned in sub-clause (4) of this clause.

  (4)    The matters to be discussed are --

  (a)  the likely effects of the action or the redundancy in respect of the employee;  and

(b)  measures that may be taken by the employee or the employer to avoid or minimize a significant effect,

                       as the case requires.

            … 

 (6)    (a) An employee who has been informed that he or she has been, or will be, made redundant is entitled to paid leave of up to 8 hours for the purpose of being interviewed for further employment.

             (b)      The 8 hours need not be consecutive.

             (c)      An employee who claims to be entitled to paid leave under paragraph (a) is to provide to the employer evidence that would satisfy a reasonable person of the entitlement.

 (d)      Payment for leave under paragraph (a) is to be made at the rate the employee would have been paid if the leave was not taken.”

Clause 46 of the Award provides that where an employer has decided to make an employee redundant the employee is entitled to be informed by the employer as soon as is reasonably practicable after the decision has been made of the redundancy and discussions are to be held with the employee about the likely effects of the redundancy and measures that may be taken to avoid or minimise its effect.  In this case these requirements were met to a certain extent.  It is clear that there was some discussion about the possibility of Ms Hanscombe taking up alternative positions with the respondent but there was no evidence that discussions were held with Ms Carter.  Clearly, the respondent had an obligation to consult with Ms Carter and Ms Hanscombe about the impact of the redundancy on each employee (such as transferring over sick leave and long service leave entitlements to the new contractor) and to discuss impediments to taking up alternative positions given that Ms Carter and Ms Hanscombe did not indicate that they were interested in transferring to any of the alternative positions available at the time.  Any uncertainties, such as the necessity to have a licence for a particular position could have thus been addressed.  Further, it appears that the employees were not given the opportunity to access paid leave for interviews.  However, as Ms Carter and Ms Hanscombe obtained work with the incoming contractor at Murdoch University prior to ceasing employment with the respondent, I do not find this issue to be significant.

37       It was not in dispute that all employees were covered by the terms and conditions of the Award.  Clause 48 – Redundancy of the Award provides that when an employee is made redundant he or she is due to be paid redundancy entitlements.  As I have found that each employee (except Ms Holden) was terminated due to a redundancy situation in my view the respondent acted unlawfully and each employee was thus treated unfairly as they were not given a redundancy payment as provided in Clause 48 of the Award.

38       In all of the circumstances I find that Ms Hanscombe, Ms Carter and Ms Kennedy were terminated unfairly and were not afforded “a fair go all round” (Undercliffe Nursing Home v. Federated Miscellaneous Workers Union of Australia, Hospital Service and Miscellaneous WA Branch  (supra)).

Compensation

39       I now turn to the question of relief in this case.  Ms Hanscombe and Ms Carter and Ms Kennedy are not claiming reinstatement and in my view, given the particulars of this case reinstatement is impracticable.  It is clear on the evidence that Ms Carter and Ms Hanscombe have satisfied the onus on them to seek out alternative employment. 

40       I have found that the respondent failed to fully comply with the requirements of Clause 46 of the Award.  As a result of being made redundant Ms Carter and Ms Hanscombe have lost access to accrued sick leave and long service leave entitlements which they built up over many years of service with the respondent.  Ms Carter and Ms Hanscombe have also had to suffer the uncertainty which arises when seeking out employment after losing their employment through no fault of their own.  As Ms Kennedy may have been offered suitable alternative employment with the respondent I am unable to find that she has suffered any loss.  In Ms Holden’s case I accept the respondent’s evidence that she currently remains as an employee of the respondent.  I therefore find that Ms Holden has not been terminated and no loss has been sustained.  I consider Ms Carter’s and Ms Hanscombe’s loss to be a period which would have enabled discussions concerning suitable alternative employment and the ramifications of termination on each employee, as well as measures which could have been taken to minimise the effect of the termination on Ms Hanscombe and Ms Carter.  I find this period in this case to be two weeks’ pay.  This is in addition to the five weeks’ notice that each employee was given at termination.  As no details were given in the proceedings about Ms Carter’s and Ms Hanscombe’s rate of pay I require the parties to confer on the amount of compensation to be awarded to Ms Carter and Ms Hanscombe within seven days of the date of this decision.