Cleaning contractors score victory in battle for redundancy pay

Cases

Cleaning contractors score victory in battle for redundancy pay

The AIRC has ordered Tempo Services Limited to pay redundancy benefits to five ACT cleaners, who were made redundant when Tempo turned in their Belconnen Westfield contract, after finding the company’s failure to pay award entitlements amounted to unfair dismissal.

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The AIRC has ordered Tempo Services Limited to pay redundancy benefits to five ACT cleaners, who were made redundant when Tempo turned in their Belconnen Westfield contract, after finding the company’s failure to pay award entitlements amounted to unfair dismissal.

This case makes the point that even when terminations of employment are for a valid reason, they may still be unfair if, as in this case, unfair treatment is meted out to the employees that is, the failure to explore genuine alternative employment and a failure to provide reasonable standards of redundancy benefits. 

Background

The five cleaners applied for relief pursuant to s.170CE of the Workplace Relations Act 1996 alleging harsh, unjust or unreasonable termination of employment by Tempo Services Limited.

The company told the cleaners it was turning in the Westfield contract and, as their services were no longer required, their employment would be terminated.

Tempo argued that since the Westfield contract comprised approximately 30-45% of its work in the ACT, it had no other jobs it could offer employees. It said this meant the section of the Act that compelled it to consult and assist in finding other jobs for the employees did not apply because it was in fact scaling back its operations in the ACT.

At the commission, Tempo submitted that the clause in the award that entitles employees to redundancy pay would not apply in these circumstances. It said it had paid the necessary entitlements and the fact that the employees started  with the new employer the very next day, did not entitle them to any redundancy pay.

Findings

Commissioner Redmond initially found that because Tempo had passed the contract in and had no other work for its employees at that site, there was a valid reason for the termination of the five applicants under s170CG(3)(a).

On the issue of entitlements to award severance pay under section 170CG(3)(e), the commissioner referred to the decisions of Commissioner Lawson in Garcia v. Limro Pty Ltd, and Deputy President Sams in Huseyin Arslan and Berkely Challenge (Commercial) Pty Limited.

Commissioner Lawson examined the definition of redundancy which states it occurs when an employer decides that it no longer wishes the job the employee has been doing to be done by anyone. This is not due to the ordinary and customary turnover of labour.

Deputy President Sams examined the interpretation of 'ordinary and customary turnover of labour' and concluded that, 'in a contemporary industrial environment employees with many years service with the same employer should not be denied the same rights as other employees which are guaranteed through test case standards'.

He said that the award obliged employers to make certain payments in the event of redundancy and that he did not regard terminations resulting from loss of a contract as falling within the definition of, "ordinary and customary turnover of labour".

The deputy president went on to say that the terminations - while for a valid reason in each case - were harsh, unjust and unreasonable because of the unfair treatment meted out to the employees as a consequence of the loss of a contract. That is, the failure to explore genuine alternative employment and the failure to provide reasonable standards of redundancy benefits.

Commissioner Redmond said he agreed with this interpretation and consequently found the five terminations did not fall within the definition of 'ordinary and customary turnover of labour'. He ordered the employees’ union to calculate the monetary value of the unpaid severance entitlement each was entitled to and submit it as a draft order.

Klooger and others v Tempo Services Limited, AIRC PR950776, (August 12, 2004).

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