100320058

WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATE’S COURT

PARTIES MICHELLE JANET MURPHY

CLAIMANT

 -v-

 JOHN BARNETT, MANAGING DIRECTOR C/O CELESTE CORPORATION

RESPONDENT

CORAM MAGISTRATE WG TARR IM

DATE THURSDAY, 6 NOVEMBER 2003

CLAIM NO M 107 OF 2003

CITATION NO. 2003 WAIRC 10010

_______________________________________________________________________________

Representation

Claimant The Claimant appeared on her own behalf

Respondent The Respondent appeared on his own behalf

_______________________________________________________________________________

Reasons for Decision

1         The claim before me is a claim alleging an entitlement to a redundancy payment pursuant to the Commercial Travellers and Sales Representatives’ Award 1978 No R43 of 1978 (the Award).

2         There is not an issue that the Award applies to the parties to this claim.

3         The Claimant was employed as a sales representative by Catering Concepts Australia Pty Ltd (Catering Concepts), which traded as Jiffy Foods, from 17 March 1997.

4         Jiffy Foods was purchased by the Respondent, Celeste Corporation Pty Ltd, by contract dated 23 January 2002 with effect from 13 March 2002.

5         Effectively the Claimant continued her employment with Jiffy Foods until her services were terminated on 19 May 2003.  She was given two week’s notice and, as I understand the evidence, a redundancy payment of two week’s pay.

6         Clause 26 of the Award sets out the requirements and obligations of employers at the time of any redundancy.  Subclause (4) of that clause provides for severance pay as follows:

(4) Severance Pay

 In addition to the period of notice provided in Clause 13. - Contract of Employment and Termination, a permanent employee whose employment is terminated for reasons set out above shall be entitled to the following amount of severance pay in respect of a continuous period of service -

 Period of continuous service Severance Pay

 "Weeks pay" means the ordinary time rate of pay for the employee concerned.

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

7         The Claimant argues that because she commenced employment with Catering Concepts on 17 March 1997 and continued that employment with the Respondent when it purchased the business she should be considered an employee with continuous service for a period in excess of five years.  She should, therefore, qualify for ten week’s severance pay and is accordingly entitled to be paid a further eight week’s pay.

8         She relies on subclause (10) of clause 26 which provides:

(10) Transmission of Business

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

  (i) The continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission, and

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

 (b) In this subclause "business" and "transmission" has the same meaning and effect as in the Long Service Leave General Order at Volume 59 of the Western Australian Industrial Gazette, at pages 1 to 6.

9         The Long Service Leave General Order mentioned in subclause 10(b) of clause 26 defines transmission as including:

“…transfer, conveyance, assignment or succession whether voluntary or by agreement or by operation of law and “transmitted” has a corresponding meaning.”

10     It is the Respondent’s argument that because it was a condition of the contract of sale of the business that Catering Concepts would terminate the employment of all staff and pay them all accrued entitlements, the Respondent is only responsible for the Claimant’s redundancy entitlement for the period of employment with the Respondent.

11     Clause 3 of the Contract of Sale provides as follows:

3.1  Catering Concepts shall terminate the employment of all staff (both full time and casual) employed in the Business with effect from the date of Completion.

3.2  Catering Concepts will pay to all staff (full time and casual) on the date of Completion the amount of all accrued entitlements calculated to the date of Completion in respect of salary, wages and annual leave of all such employees and as at the date of Completion shall also make payment of all employees Superannuation entitlements to the relevant complying Superannuation fund or funds calculated up to the date of Completion.

3.3  As soon as practicable following notification by Catering Concepts to the employees of the Business of the termination of their employment with effect from the date of Completion, the Director of Celeste shall negotiate upon and use reasonable endeavours to reach an agreement with each of the forty nine (49) existing full time employees of the Business (excluding workshop staff) in respect to their future employment and the terms and conditions of such employment from the date of Completion.

12     There is evidence that the Claimant was presented with a letter dated 18 March 2002 in the following terms:

RE:  EMPLOYMENT ARRANGEMENTS FROM 13TH MARCH 2002

As you are aware, I have acquired the business known as Jiffy Foods, effective from the 13th March 2002.

Due to a very hectic schedule in acquiring the business, it has not been possible to finalise any future employment/contractual arrangements with existing staff of the business prior to takeover of the business.

Consequently, as an interim measure, I am offering employment to yourself on the same terms and conditions as the previous owner, until I have had the chance to meet with you and discuss future opportunities for you within our business.  I envisage this occurring within the first month of our operation of the business.

13     The letter was signed by J Barnett as a director of the Respondent.  There was provision on the bottom of the letter for the Claimant to sign under a sentence which reads:

“I hereby accept employment on the terms outlined above.”

14     The Claimant signed that acceptance on 21 March 2002.

15     On the same day she completed and signed an Application for Employment with the Respondent.

16     I accept the Respondent’s evidence as to the terms of the Contract of Sale, the offer as an interim measure made to the Claimant of employment on the same terms and conditions as the previous owner and that she made application for employment with the Respondent.

17     It is clearly the intention of the Award that employees be rewarded for continuous service by the payment of severance pay at the time of being made redundant.

18     In determining whether or not there is merit in the Respondent’s argument that it is only liable to pay the Claimant severance pay for the time during which she was employed by the Respondent it is necessary to consider the provisions of the Award.

19     When considering the meaning of a provision of an award the ordinary meaning of the words used should be applied.

20     Clause 26(4) is clear as to an employee’s entitlement on termination on account of redundancy and the amount of severance pay payable based on years of continuous service.

21     Clause 26(10) has application in circumstances where during the course of employment of an employee in a business, the business is taken over by another owner.  It provides that where a business is transmitted from one employer to another and an employee who at the time of transmission was an employee of the owner which, for example, sells the business, becomes an employee of the new owner then “(t)he continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission” and the period of employment which the employee has had with the owner selling the business shall be deemed to be service of the employee with the new owner.  There can be no argument that the business was transmitted for the purpose of clause 26.  The definition aforementioned includes “transfer” which the Shorter Oxford Dictionary has its meaning to include:

“to convey or make over (title, right or property) by deed or legal process.”

22     I have been referred to a decision of Matthewson v Celeste Corporation Pty Ltd (Jiffy Foods) 2002 WAIRC 07114. That case was brought pursuant to the provisions of section 29(1)(b)(i) of the Industrial Relations Act 1979 alleging unfair dismissal. I have given consideration to the reasons for the decision in that case and in my view the Commissioner’s finding in relation to the transmission of the business are not inconsistent with mine. However, that case can be distinguished from this one because of the nature of the action therein. This action is one involving breach of an Award where as I have found the relevant terms of the award create an obligation on the Respondent herein. The Matthewson case was decided on the law as it relates to unfair dismissals and it was properly found that the Respondent had a right not to re-employ Mr Matthewson.

23     I do not see that there is any doubt, notwithstanding the evidence of re-employment, that the award provision as to severance pay is affected by any such re-employment, particularly in view of the deeming provisions.  In any event the evidence before me is that there was continuity of employment of the Claimant.

24     While the Respondent may have intended not to have any obligation for its employees prior to the transmission of the business, there was clearly an obligation provided for in the Award to which, it would appear, consideration was not given during negotiations to purchase the business.

25     It is clearly the intention of the Award to protect the rights of employees who are employed in a business which has a change of ownership.  One of those rights is severance pay.

26     I find, therefore, that the Respondent is liable to pay the Claimant her entitlement under clause 26(4) of the Award based on her continuous employment with Jiffy Foods during its ownership by Catering Concepts and the Respondent.

WG Tarr

Industrial Magistrate