'Successor business' to previous employment conditions confined: High Court

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'Successor business' to previous employment conditions confined: High Court

The High Court (4:1) has interpreted the successor provisions of the federal industrial legislation as not applying to a business that at no time enjoyed any asset of the previous employer.

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The High Court (4:1) has interpreted the successor provisions of the federal industrial legislation as not applying to a business that at no time enjoyed any asset of the previous employer.

Issue

The issue in these appeals was whether an employer (Gribbles Radiology Pty Ltd – 'Gribbles') was a 'successor, assignee or transmittee to or of the business or part of the business of an employer that was a party to the Health Services Union of Australia (Private Radiology - Victoria) Award 1993.

If Gribbles met that description, then s 149(1)(d) of the Workplace Relations Act 1996 (Cth) provided that the Award bound Gribbles.

The determination of this issue turned on whether Gribbles was a 'successor' to or of the business, or part of the business, of Melbourne Diagnostic Imaging Group (MDIG) which employed radiographers to take medical images at the Moorabbin Heritage Clinic in suburban Melbourne.

It was not contended that Gribbles was an assignee or transmittee of any part of MDIG's business.

If bound by the Award, Gribbles was bound to pay severance pay to the radiographers whose employment at Moorabbin it had terminated.

The issue argued in these appeals focused upon the construction of s 149(1)(d) of the Workplace Relations Act 1996 (Cth) and it was only the questions about the valid operation of that provision which had to be decided.

Majority - Gribbles not a successor

Justices Gleeson, Hayne, Callinan and Heydon found that Gribbles was not a successor within the terms of the legislation and so not bound to adhere to the previously applicable employment conditions:

'The reasons that follow demonstrate that Gribbles was not a successor to or of any part of the business of MDIG and that Gribbles, therefore, was not bound by the Award. …

At no time did Gribbles enjoy any asset of MDIG, tangible or intangible, which MDIG had used in the pursuit of its business activities, whether at the Moorabbin Heritage Clinic or elsewhere.

… since first enacted, the succession provisions have made a further extension to the binding effect of an award by fastening upon the "business" of the employer who was a party to the dispute.

… the "business of an employer" must be understood as a compound conception and cannot be understood as a reference to no more than a kind of business activity

There can be no assignment or transmission of a kind of business activity. There can be an assignment or transmission of the whole or a part of a particular business. (The succession provisions fasten upon the business that an identified employer conducted.)

It is only if considerable violence is done to the language of the provision that one can read it as providing for a case of succession to a kind of business activity. So to read the provision would require at least two steps. …

… to be a 'successor' to the business or part of the business of a former employer, the new employer must enjoy some part of the "business" of the former employer.

… it will not suffice to show that the new employer pursues the same kind of business activity. If the new employer does not enjoy any part of the business of the former employer, it cannot be said to be a successor to or of that business, or a part of it. …

… Both [businesses] engaged in the pursuit of profit by conducting a radiology practice. But Gribbles did that at the Moorabbin Heritage Clinic without enjoying any part of the tangible or intangible assets that MDIG had deployed in pursuing its activity as a radiology practice, whether at that place or elsewhere. …

But what asset of MDIG did Gribbles come to use when it began to pursue that activity at the Moorabbin Heritage Clinic? Both Gribbles and MDIG used the same equipment, but the equipment was Region Dell's.

The place where they carried on this activity was not theirs. Each had a separate licence from Region Dell to occupy a part of the clinic premises but MDIG's licence had come to an end and a new licence had been granted to Gribbles. Both employed the same radiographers, but no employee is an asset in the employer's balance sheet to be bought or sold.'

Justice Kirby – dissenting

Justice Kirby considered that the legislation should be interpreted in a non-technical sense. He considered the majority view to be narrow and technical:

'… Gribbles followed MDIG into the radiology facility at the Moorabbin clinic. No more than a weekend separated the conduct of the two "businesses" in the same place. Indeed, the businesses "were precisely the same in every relevant respect" …

Essentially, all that was changed was the signage, the new employment arrangements with the continuing radiographers and the reportage on the radiographs and other images thereafter by Gribbles's radiologists …

I accept that the meanings urged by the Minister and Gribbles are arguable. However, they are needlessly narrow and literalistic. They would frustrate the achievement of the object of s 149(1)(d).'

Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd; Gribbles [2005] HCA 9 (9 March 2005)

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