Redundancy: did service with previous employer count?

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Redundancy: did service with previous employer count?

Two employees were entitled to redundancy payments that took into account service with previous employers, a court has ruled.

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Two employees were entitled to redundancy payments that took into account service with previous employers – by force of relevant agreements and contracts.

On appeal, a full court of the Federal Court dismissed the employer’s appeal and confirmed that the the employees’ service with the appellant-employer’s predecessors was ‘previously agreed industry service’ so as to be taken into account in the calculation of the redundancy payments.

The leading judgment was handed down by Justice White with Justices Mortimer and Bromwich JJ agreeing.

The appeal was from the former Industrial Relations Court of South Australia.

Background


Mr J and Mr P (the employees) were formerly employed by the appellant (Qube Ports). Both were retrenched by Qube Ports on 18 August 2014 when their positions became redundant.

Under the 2011 Enterprise Agreement, employees were entitled to a redundancy payment calculated on the basis of three weeks’ pay ‘for each completed year of continuous service’ to a maximum payment, including payment in lieu of notice, of 70 weeks’ pay.

The employees commenced employment at Qube Ports on 16 April 2008 at Port Pirie. Before that, they had been employed by the predecessors of Qube Ports that had the contracts to provide stevedoring services at Port Pirie.

An industrial magistrate found that it was a term of the contracts of employment of Mr J and Mr P that their industry service would be recognised in the event of retrenchment, and that their employment with Qube Ports’ predecessors was ‘previously agreed industry service’. Qube Ports was ordered to pay the difference between 44.76 weeks' pay and 70 weeks’ pay: Maritime Union of Australia v Qube No 1 Pty Ltd [2017] SAIRC 5.

Qube Ports appealed against that judgment on a number of grounds.

Industrial magistrate’s decision supported


The Federal Court supported the judgment handed down by the industrial magistrate.

The industrial magistrate found that it was a term of the contract of employment of each of Mr J and Mr P that their industry service would be recognised by Hobart Ports in the event of retrenchment. This was a critical finding.

The magistrate rejected Qube Ports’ contention that Hobart Ports’ South Australian Enterprise Agreement (the 2004 Enterprise Agreement), which came into operation on 23 July 2004, had the effect of negating the respective contractual terms.

In reaching those conclusions, the industrial magistrate rejected Qube Ports’ submission that the evidence of Mr N (the former secretary of the Maritime Union's South Australian branch) and Mr J concerning the oral agreement with Hobart Ports in March and April 2000 was inadmissible hearsay. The magistrate also found there was written correspondence supporting the employees’ claims. The magistrate further held that the 2004 Enterprise Agreement had not had the effect of negating or cancelling the term in the contracts of employment.

The industrial magistrate then found that the term in the employees’ respective contracts of employment with Hobart Ports – that their industry service with P&O Ports would be recognised in the event of retrenchment – was one of the terms encompassed by the offer by Capital P&O Logistics Pty Ltd of employment on terms and conditions ‘that are generally no less favourable than those to which you are entitled as an employee of TasPorts’.

No previous redundancy pay


The employees did not receive any redundancy payment from Hobart Ports on the termination of their employment by it.

The industrial magistrate then found that the term in the employees’ respective contracts of employment with Hobart Ports that their industry service with P&O Ports would be recognised in the event of retrenchment was one of the terms encompassed by the offer of employment by the other employer, CPOL, on terms and conditions ‘that are generally no less favourable than those to which you are entitled as an employee of TasPorts’.

The bottom line: The relevant service applicable to redundancy entitlements is usually service with the current employer that is acting to terminate an employee’s service. However, there may be relevant agreements and contracts that impact on the current terms of employment and such agreements and contracts may incorporate service with previous employers as relevant in the calculation of redundancy entitlements.

Read the judgment


Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 (14 May 2018)


 
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