Allegedly deliberate loss of tender by employer not substantiated in dismissal case

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Allegedly deliberate loss of tender by employer not substantiated in dismissal case

The Queensland IR Commission has agreed that a catering business that lost the tender on a Police Service café was entitled to dismiss two employees because 'termination in such circumstances is part of the ordinary and customary turnover of its labour'.

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The Queensland IR Commission has agreed that a catering business that lost the tender on a Police Service café was entitled to dismiss two employees because 'termination in such circumstances is part of the ordinary and customary turnover of its labour'.

Commissioner Bloomfield said it was essential to the case that the caterer's continued ability to employ the two employees depended upon whether the companies continued to win the tender, or had alternative employment available for them elsewhere. He rejected the employees' claim for severance pay totalling almost $8,000.

The Queensland Department of Industrial Relations argued the catering firms had decided to effectively walk away from the site by putting in a non-conforming tender. However, Commissioner Bloomfield found the caterer, though serious about attempting to re-win the tender, was not prepared to 'buy' the rights to operate the facility. Having operated the café for 10 years, the caterer was in the best position to know that the overhaul required by the Police Service was not economically justified, he said.

If the Department of Industrial Relations (which ran the case on behalf of the two employees) had been able to prove a deliberate loss of the tender as a means of terminating the employees' contracts then the employees would have been entitled to severance pay.

Background

The Queensland Department of Industrial Relations sought payments of $3,948 and $3,336 from AFS Catering Pty Ltd and Delaware North (Australia) Pty Ltd as severance pay for two employees of the associated contract catering firms.

AFS/Delaware had operated the cafeteria within the Police Service Headquarters at Brisbane's Roma Street since it first went to tender in 1990. The companies operate a number of other contract catering services in various office buildings, factories and sporting grounds in Queensland and other states. The two employees had both worked at the Blue Light Café, as the Police Service cafeteria was known, on a 'permanent' basis for several years. They were dismissed when the contract was lost to another tenderer in February 2001.

The DIR argued that the circumstances of the case, particularly the way that AFS/Delaware had approached the re-tender process, meant the two employees had been made redundant, whereas AFS/Delaware argued that their termination was due to the ordinary and customary turnover of labour. Both employees claimed that when they were engaged they were never informed that the continuation of their employment was dependent upon the companies' success in holding the contract.

Findings

Commissioner Bloomfield said that an essential feature of the case was that AFS/Delaware never owned the Blue Light Café or the rights to operate it. AFS/Delaware's continued tenure at the site was always subject to it being able to win any tender process, or to otherwise negotiate a successful arrangement with the Police Service. Consequently, AFS/Delaware's continued ability to employ the two employees depended upon whether the companies continued to win the tender, or had alternative employment available for them elsewhere.

The commissioner found that both employees, having been employed by the companies for some time, probably understood that AFS/Delaware were in the contract catering business and that their continued employment depended on whether AFS/Delaware retained the right to continue to operate the Blue Light Café. He also supported the companies' evidence that it had informed all Blue Light Café employees that the contract was up for re-tender. 'In the scheme of things this was the first formal occasion where the employees needed to be alerted to the security of their position. Prior to that the companies had operated under a contract which provided some certainty of tenure.'

The DIR inferred that AFS/Delaware did not genuinely compete in the tender process and, as a result, effectively made a decision that they were not going to continue to compete for the right to operate the Blue Light Café. However, Commissioner Bloomfield found AFS/Delaware, though serious about attempting to re-win the tender, was not prepared to 'buy' the rights to operate the facility. 'Its bid was predicated on the central requirement for the site to show a profit and the bid was put together on that basis.'

The Police Service had requested tenderers to overhaul the café at their own cost. The commissioner said that based upon AFS/Delaware's assessment of the historical figures, it determined that it was not economically feasible to include this sort of capital expenditure. Consequently, although it might have meant they were lodging a 'non-conforming' bid, the companies chose to prepare a comprehensive and detailed proposal which they believed was in keeping with the economic feasibility of the site. Ultimately, however, other tenderers produced proposals which were more to the Police Service's liking and AFS/Delaware was excluded from further consideration. 'As such I reject the department's contention that AFS/Delaware decided to, effectively, walk away from the site.'

Finally, the commissioner found it was the companies' practice when they lost a contract to attempt to relocate employees to other locations and that such attempts had been made for the two employees and others, but without success. He concluded 'termination in such circumstances is part of the ordinary and customary turnover of its labour'.

See: Dru Elliott Powell for the Department of Industrial Relations (on behalf of Roseanne Smiles) and Delaware North (Australia) Pty Ltd and Another (No. W132 of 2002), Dru Elliott Powell for the Department of Industrial Relations (on behalf of Toni Pye) and Delaware North (Australia) Pty Ltd and Another (No. W133 of 2002), (1 November 2002).

 
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