Bradford v Aere Services Pty Ltd [2001] QIRC 88 (2001) 167 QGIG 190

190 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 29 June, 2001 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 74 – application for reinstatement Charles Bradford AND Aere Services Pty Ltd (No. B1701 of 2000) COMMISSIONER THOMPSON 18 June 2001 -- 1 of 7 -- 29 June, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 191 Application for reinstatement – Engineering Award – State – Termination, Change and Redundancy Provisions – Sale of business – Offer of employment – Transfer of employment terms, conditions and entitlements – Refusal to accept offer – Application rejected. DECISION Background The applicant in this matter, Mr Charles Bradford, had been employed by Aere Services Pty Ltd (Aere Services) since 15 August 1994 as a Service Technician, until the employment arrangement was terminated when the respondent company was purchased by Haden Engineering Pty Ltd (Haden), a wholly owned subsidiary of Tyco International Pty Ltd, on 25 October 2000. It was agreed by the parties in the sale negotiations that all staff employed by the respondent would continue to maintain their employment under the same terms and conditions as their current arrangement. Applicant Mr Bradford, in conducting his case, called evidence from Mr Geoffrey Adams, in addition to giving evidence on his own behalf. Mr Adams who, at 25 October 2000, was employed as the Executive Support Officer of the Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland (AMEPKU), gave evidence that on or around 25 October 2000, he was contacted by the applicant in relation to a purported “transfer” of his employment to Haden. In evidence, Mr Adams stated that he was aware that the Engineering Award – State (Award), at clause 2.4 “Termination of Employment, Introduction of Changes, Redundancy”, confers the duty on the employer to notify employees and their industrial organisation/s in relation to the introduction of change, and to discuss with those parties such change. Mr Adams, to the best of his knowledge, believed that neither himself nor any other officer of the union were contacted by the respondent over the proposed employment changes. Mr Bradford, in giving his evidence, told the Commission that the terms and conditions of his employment were governed by the Award, and that during his employment with Aere Services, he had remained a financial member of the AMEPKU. On 20 October 2000, for the first time, Mr Bradford and other employees of the respondent were advised of the intended sale of the business to Haden, and that their employment, as a subsequence of that sale, would be transferred to Haden. On 23 October 2000, the applicant received correspondence from Haden, under the signature of Mr Peter Walsh, Queensland Branch Manager of the Maintenance Division, confirming that Haden intended to continue his employment on the same terms and conditions as to remuneration currently received by the applicant, and that any leave entitlement outstanding would also be transferred across to Haden. Two copies of a document detailing the proposed employment arrangement with Haden were enclosed with that correspondence, and it was indicated within the correspondence that, should Mr Bradford accept the transfer of employment, he would be deemed to commence with Haden on 25 October 2000. The applicant forwarded a letter to Aere Services on 25 October 2000, which advised that the alternate employment details were unacceptable, and he raised the issue of the lack of consultation in respect of the changes. He further put to the company that he would be seeking payment of notice, severance and wages in arrears. A meeting was held with Mr Michael Oulten, Director of Aere Services, and Mr Walsh, on 26 October 2000, and the applicant was requested to take some annual leave to allow for time to discuss his future employment situation. Mr Bradford claimed that Aere Services had not fulfilled it’s obligations in respect of the Award, and in particular clause 2.4, in that they had not consulted with his union or himself. Due to his reluctance to accept employment with a multinational company, he believed that reinstatement was not an appropriate outcome, and sought the following compensation as a remedy:– • One week’s pay (balance) in lieu of notice still owing. • Eight week’s wages from the time of dismissal, and the first date he received his termination pay. • Seven week’s pay for the period between his dismissal and re-employment. • Further damages for mental anguish and turmoil arising from: the circumstances of the dismissal; humiliation at being treated like a “chattel” of the former employer; aggravation arising from the way in which the employer conducted itself since the dismissal; dislocation in time expended in seeking redress; costs of obtaining alternate employment; payments made to obtain legal advice; in addition to, interest on such amounts at such rates as the Commission deems appropriate. Under cross-examination by Mr Gary Black, on behalf of Aere Services, at page 17, line 1 of transcript, the following was revealed:– “Black: Thank you, Mr Bradford. The paragraph that you read contains statements among other that Haden is sending you a positive signal that it’s intention is to continue your employment, to offer continuity of employment, to take you on. Then it goes on to say though that should you choose to accept this transfer to Haden Engineering, setting aside the use of the word transfer. This letter is saying to you it’s up to you to choose whether you accept employment with Haden Engineering? Bradford: Yes, it is, yes. Black: So, it must have been clear in you mind you had an option? -- 2 of 7 -- 192 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 29 June, 2001 Bradford: Yes, yes. Black: To accept employment with Haden Engineering or effectively to accept redundancy? Bradford: No, there was no offer of redundancy. Black: No, but if you didn’t accept the offer of employment with Haden Engineering what did you expect would happen to you? Bradford: I’d have to be paid all my entitlements. The award said four weeks notice, eight weeks severance and my holiday pay. Black: Yes, but you accepted that the job that you were doing would no longer exist so you accept that there was - - ? Bradford: Yes, yes.”. Further on, in the cross-examination process, Mr Bradford was questioned in respect of the meeting he attended with Mr Oulten and Mr Walsh, at page 20, line 30, of transcript:– “Black: Do you accept that in these discussions with Mr Oulton and particularly Mr Walsh there was a genuine attempt by Mr Walsh and therefore Haden Engineering to surface whatever concerns you had about the company, whether it be the employment arrangements or other matters, and try to resolve those concerns with you? Bradford: Yes, they asked me what the problems were. Yes, yes, that’s correct. Black: So there was no doubt in your mind that you were being presented with a genuine offer of alternative employment? Bradford: Yes, Yes, no doubt. Black: At the end of the day is it just this ideological position that prevented you going across to Haden? Bradford: That I wanted to work for an Australian owned company? No, that’s not the only factor.”. Respondent Evidence from the respondent was given by Mr Oulten, Mr Walsh and Mr Richard Rayment. Mr Oulten was formally the Managing Director of Aere Services, a business which was sold to Haden by way of a contract of sale entered into on 19 October 2000, with the sale being effective as of 25 October 2000. In terms of “The Deed of Sale and Purchase of Assets Agreement” (Deed), a clause was included pertaining to an offer of employment for those employees employed by Aere Services and the time of sale:– “16(1) The Purchaser shall make offers of employment to the Eligible Employees on the terms disclosed in Schedule C.”. Additionally, at annexure A of the Deed, there was a pro forma letter of offer that was to be given to the eligible employees, one of which was Mr Bradford. Mr Oulten, in evidence, provided details of a meeting held on the morning of Friday 20 October 2000, at which Aere Services staff were advised of the sale, and given assurances that their employment would continue through Haden on the same terms and conditions as they were currently receiving. Mr Walsh was in attendance at the meeting, and distributed draft offers of employment to all staff and, at the same time, issued an invitation to the staff to raise any matters of concern they may have with himself. In the case of the applicant, Mr Oulten stated he continued to work as normal on 20, 23 and 24 October 2000, and when he failed to attend on 26 October 2000, it was assumed, by the respondent, that he had taken an accrued rostered day off. On arriving at work on Thursday 26 October 2000, Mr Oulten found a fax that had been forward by Mr Bradford advising that he was not prepared to accept the offer of employment from Haden. Phone contact was made by Mr Oulten with Mr Bradford, and a meeting was arranged for later that day, at which Mr Walsh was also in attendance. During the course of that meeting, the applicant raised a number of issues with the offer from Haden that he indicated were of concern. These included: • Tool allowance. (omitted) • Vehicle allowance. (omitted) • Confirmation was sought that a flexible arrangement for the taking of Rostered Days Off (RDO’s) would continue. • Reluctance of the applicant to work for a foreign owned corporation. The discussions were amicable between the parties, and Mr Walsh undertook to redraft the offer of employment to incorporate the agreed positions reached at that meeting. Mr Oulten’s evidence was that the applicant seemed happy enough with the outcome and, whilst a redrafted document was available on the next day (27 October 2000), no further communication was received from Mr Bradford until a letter dated 31 October 2000 from Mr Bradford’s legal representative arrived. In his evidence-in-chief, Mr Black asked Mr Oulten questions in respect of the sale of Aere Services, at page 32, line 56, of transcript:– “Black: When did you know that the business of Aere Services was going to be sold to Haden Engineering? -- 3 of 7 -- 29 June, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 193 Oulten: There was obviously some negotiations happening over time, but in fact there was a legal problem that we seemed to have a stop on and the actual letter of intent was only sighted by our solicitor on Thursday, 19 October, which was about 2 o’clock I got from my solicitor to say that the sale would be going through on the basis of the letter of intent. It wasn’t a formal contract, it was only a letter of intent. Black: When was the formal contract signed? Oulten: It was signed on 25 October, so in effect we called a meeting with our employees on the basis that the letter of intent would be going ahead, which some would argue was premature.”. Whilst cross-examining Mr Oulten, the applicant raised issue with a number of employees of Aere Services at the time of its sale. At page 33, line 45, of transcript:– “Bradford: And was Mrs Oulten – was she paid to do office work at the company? Oulten: She was. Bradford: So wouldn’t it be 15 employees? Oulten: There was - - Bradford: There’s 14 on the list plus Mrs Oulten? Oulten: I was also an employee of the company. As I said, there were 14 employees plus the two directors. Bradford: So there’s 16? Oulten: That’s right.”. Mr Walsh, as the Queensland Branch Manager of the Maintenance Division of Haden, gave evidence confirming that given by Mr Oulten in respect of the acquisition (sale) of Aere Services and the various meetings that were held with the employees of that company. He stated that a “few” Aere Services staff approached him on 25 October 2000 with their offers of appointment and pointed out that Tool Allowance, correct Vehicle Allowance, and a Phone Allowance were not reflective of the arrangement that they had with Aere Services. Mr Walsh assured those employees that the matters were oversights, and that Haden would be honouring the conditions of employment under which they currently worked. At around the same time, Mr Walsh was made aware of Mr Bradford’s concerns with Haden’s offer and, at the meeting held on 26 October 2000, he believed that he addressed all of those concerns, with the exception of the multinational company issue of which there was nothing that could be done in respect of that matter. Evidence from Mr Walsh was, in relation to a Vehicle Allowance provided to the applicant by Aere Services in which he received $45 per week (or $2,340 per annum) and a fuel card for using his own vehicle, that Haden proposed a payment to the applicant of $5,000 per annum, plus a fuel card, to continue with the same arrangement. The final evidence, on behalf of the respondent, came from Mr Rayment, a Service Technician currently employed by Haden, formally in the employ of Aere Services until the sale of that company on 25 October 2000. His evidence, in the main, supported that given by Mr Oulten and Mr Walsh as to what occurred at the time of the sale, and in particular, meetings that were held involving staff of Aere Services. In his affidavit of evidence, he made reference to those events, and in particular, at paragraph 3:– “Peter Walsh explained that Haden Engineering Pty Ltd wanted to take all employees on, and that our conditions of employment would remain the same. Peter Walsh offered to meet individually with everyone to discuss any of their concerns. While I did not meet with Peter, a number of other staff did.”. Further, at paragraph 5 of Mr Rayment’s affidavit, he stated:– “In my view the transition from Aere Services to Haden Engineering Pty Ltd was handled professionally and Management of both organisations took a genuine interest in the welfare of the employees affected.”. Final Submissions Applicant In putting his final submissions, Mr Bradford stated that most of the material to which he would rely upon had been given when he was in the witness box. However, by way of summary, it was clear that the employer believed that he could force employees to transfer to another employer upon the sale of the business. If Aere Services had not been sold, then the applicant would have continued to remain employed. But with the sale came his termination, which occurred at the initiative of the respondent. At the time of his dismissal, the Termination, Change and Redundancy (TCR) provisions of the Award had not been complied with, and the failure of the respondent to provide adequate notice or consultation and, in particular, the decision not to involve the applicant’s industrial organisation, rendered the termination as harsh, unjust and unreasonable. The applicant reiterated his claim as given during the course of his evidence. -- 4 of 7 -- 194 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 29 June, 2001 Respondent Mr Black, for the respondent, challenged the assertion of Mr Bradford that the inclusion of Mr and Mrs Oulten as employees of Aere Services meant that the size of the workforce, at the time of the sale, was 16 employees as opposed to 14 employees. Therefore, the threshold in which the TCR provisions apply (15 or more employees) had been met. He further argued that the applicant’s reference to the dismissal of 15 or more employees in accordance with s. 86 of the Industrial Relations Act 1999 (Act) was not relevant as Mr and Mrs Oulten had remained at Aere Services, and on that basis, clearly the number of persons affected by the sale were 14 employees, and therefore less than the 15 employees that is required for s. 86 of the Act to be activated. The applicant has appeared to base his claim for reinstatement on the sole failure of the employer to provide information to the union, which is alleged, constituted a breech of an Award provision. However the overall concept of this case does not provide grounds, according to Mr Black, that established the termination was harsh, unjust or unreasonable. Mr Black drew the attention of the Commission to s. 77(a) and (b) of the Act, and argued that there was no evidence before the Commission upon which a conclusion could be drawn that Mr Bradford was not notified of the reason for his termination. The applicant had not disputed that his employment had come to an end due to the sale of the business and his refusal not to accept the offer of employment with the purchaser. The termination was not based on his capacity, conduct or performance, and purely arose from the fact that the business no longer existed, and with that, his job disappeared. Provided to the Commission by Mr Black were a number of authorities including Gill v Ericsson Australia Pty Ltd AIRC (Simmonds C) (S8677) 28/7/00; and, Windsor Smith v Liu and Others AIRC (Giudice P, Polites SDP and Gay C) (Q3462) 13/7/98, both of which, it was submitted, supported the actions of the respondent. Whilst Mr Bradford complained about the consultation process in the matter before Brown C Queensland Chamber of Commerce and Industry Limited, Industrial Organisation of Employers v Bradford (B1931 of 2000), the Commission was quite explicit in finding that the respondent gave the applicant reasonable notice in the circumstances, and that the company conducted an appropriate consultation process. The circumstances in this matter are the same (as B1931 of 2000), and the evidence, which was also largely the same to the extent that the assertions of Mr Bradford that notice and consultation were lacking, is not sustainable. In addressing the applicant’s claim for compensation, Mr Black paid particular attention to the request for compensation arising out the concept of pain and suffering. In conclusion, the respondent’s position was that they did not act in a harsh, unjust or unreasonable manner and, in fact, the employer took all reasonable steps that could have been expected of any employer in the same circumstances. Mr Black put forward a somewhat rhetorical question:– “That we don’t know how the employer could have handled the matter differently. What more could the employer have done?”. The Commission was requested to reject the application. Conclusion In determining this matter, it is first necessary to establish the common ground to which there is no disagreement between the parties. These are:– • Letter of intent for the sale of Aere Services was generated on 19 October 2000. • Aere Services employees (including Mr Bradford) were advised of the sale on 20 October 2000. • Sale was effected on 25 October 2000. • The Deed of Sale provided offers of employment for all eligible employees (including Mr Bradford) of Aere Services. • The applicant met with Mr Oulten and Mr Walsh to discuss his concerns in relation to the offer of employment from Haden. • Haden agreed to amend their offer after hearing the concerns of Mr Bradford which, in effect, through an increase in the vehicle allowance, had the applicant receiving an offer of a total package that was in excess of his circumstances as at the time of sale. Mr Bradford argued that his termination was harsh, unjust and unreasonable, in that the employer failed to provide proper notice and consultation to both himself and his union as prescribed for in clause 2.4 “Termination of Employment, Introduction of Changes, Redundancy” of the Award. Mr Black drew the Commission’s attention to clause 2.4(3)(l) of the Award:– “Employers Exempted – Subject to an order of the Commission, in a particular redundancy case, this subclause shall not apply to Employers who employ less than 15 people.”. Attached to the affidavit of evidence of Mr Oulten, at schedule 7, there was a list of eligible employees that was, in effect, all the employees of Aere Services as at the point of sale on 25 October 2000. The persons on this list numbered 14 in total, and did not include the names of either Mr or Mrs Oulten, whom were, according to evidence of Mr Oulten, directors of Aere Services. -- 5 of 7 -- 29 June, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 195 At page 36, line 30, of transcript, Mr Oulten was questioned by the Commission in respect of the number of employees as identified in Schedule 7:– “Commissioner: I’ve got a couple of questions and Mr Black I’ll give you an opportunity, if you want to, if there’s anything that comes out of it. But Mr Bradford, Mr Oulton, touched on a document that’s attached to your statement which was schedule 7 – eligible employees. And I think on that there’s 14, but in terms of the payroll would it have actually been more than the 14? Oulton: The only two would have been myself and my wife. Commissioner: Right. But they were employees who received wages paid by the company - -? Oulton: - - Yes. Commissioner: - - on a weekly basis - -? Oulton: - - Monthly basis. Commissioner: Or monthly, whatever, yes? Oulton: Yes. Commissioner: And both the name of yourself and your wife, whilst being directors of the company as well, were left off that list, weren’t they? Oulton: They were because they weren’t eligible employees to be transferred to Haden.”. It is the view of the Commission that whilst Aere Services paid remuneration to both Mr and Mrs Oulton as “employees”, that they were, first and foremost, directors of the company. In seeking some material on this matter, I have referred to J.J. Macken, P. O’Grady and C. Sappideen in Macken, McCarry and Sappideen’s The Law of Employment Fourth Edition LBC 1997 where, at page 50, under the heading “COMPANY DIRECTORS”:– “A company director is not an employee. He or she is an officer. The various judicial expositions of the criteria for identifying an office holder are apt to be confusing, but the most useful distinguishing feature of an officer is that he or she exercises independent functions, that is, functions derived from some source other than the orders of a superior; functions in the discharge of which a superior has no legal power – not merely no physical or intellectual capacity – to interfere. That other source of the officer’s independent function or authority could be a statute, for example, a Companies Act, or the memorandum and articles of association of the company or the general law. It has been said that: ‘generally speaking . . . the word “director” when used in relation to a company incorporated under the Companies Act, means to the commercial world one of a group of persons (or, if special provision is made, the person) who, pursuant to the memorandum and articles of association (and ultimately the parent Act) constitute or embody the directing mind and will of the company as contrasted with those who, however senior, receive directions and, within various ranges of discretion and authority, carry them out.’ ”. Whilst the material referred to may not be, in the strict legal sense, an authority, it did provide the Commission with a reasonable description of a company director to the extent that I am prepared to accept the position put forward by the respondent that Aere Services had 14 employees at the time of sale, and therefore was not required to notify the union of the proposed changes due to the number of employees being less than 15. The fact that there was not the requirement to notify the union in respect of this matter, did not remove the obligation from the respondent to provide adequate notice and consultation to their employees, nor did it detract from the rightful role of the union to represent the applicant in this matter. In fact Mr Bradford, in evidence, told of contacting the union in respect of the matter, and evidence was provided during the course of proceedings from Mr Adams who, at the time, was the union officer with whom contact was made. Still, on this issue, at page 12, line 40, of transcript, Mr Bradford said:– “I believe that the lack of consultation in conjuction with the AMWU denied me due process.”. Yet, under cross-examination from Mr Black, at page 22, line 60, of transcript, the applicant gave quite a telling response to a question in respect of representation by his union:– “Black: Why haven’t you asked the union to represent you in this matter then? Bradford: I could have. I think I trusted myself as much as the union.”. I find that on the first day (20 October 2000) available to the respondent after the letter of intent was signed by the parties in respect of the sale, that the respondent assembled all of their employees and provided them with a full disclosure of the relevant information that was likely to impact on their employment or ongoing employment arrangements. The commercial sensitivity of the sale would have prevented such consultation occurring prior to 20 October 2000. The respondent had, as part of the sale arrangement, negotiated a transfer of employment for all eligible employees and, as evidenced before the Commission, this option was taken up by all of the employees with the exception of the applicant. The applicant was, as were other employees, given reasonable opportunity to raise concerns with the prospective employer, and on 26 October 2000, availed himself of that offer. The evidence before the Commission was that the applicant raised issues of genuine concern, and with the exception of the “multinational” nature of the Haden/Tyco conglomerate, all matters were given favourable treatment in respect of the applicant’s position. The respondent allowed the applicant to take a week’s leave, at virtually no notice, so as to consider his position. It was at this point, from the evidence before the Commission, that the employment arrangement, in practical terms, ceased to exist. -- 6 of 7 -- 196 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 29 June, 2001 The applicant’s legal representative forwarded correspondence, dated 31 October 2000, to the respondent. From that followed a series of events that included a number of conferences and a hearing before the Queensland Industrial Relations Commission, in addition to an involvement from the Department of Industrial Relations, Wages Inspectorate Division, and an attempt for the parties to participate in mediation. During the course of this activity, the respondent paid the applicant an amount of $1,900 (on a “without prejudice” basis) for an alleged Award entitlement to which, at a later date, there was some doubt cast as to the right of that entitlement. On 19 December 2000, the applicant received a payment of three weeks in lieu of notice, with an additional three day’s being paid in early 2001. I acknowledge the applicant’s position in that the company could not force him to transfer to Haden and, for reasons best known to the applicant, he chose not to take up that offer of employment, knowing full well that the job that he had held for the past six years would no longer be there. In the determination of this matter, I find that the respondent, following the sale of the business, acted in a proper and reasonable manner in respect of their handling of the employment arrangements of Mr Bradford, and that there was no evidence before the Commission that would allow for a view that the termination of the applicant was harsh, unjust or unreasonable, as defined in the Act. Therefore, the application is rejected. I order accordingly. J.M. THOMPSON, Commissioner. Released: 18 June 2001 Appearances:– Mr C. Bradford, Applicant. Mr G. Black, on behalf of the Queensland Chamber of Commerce and Industry Limited, Industrial Organisation of Employers, for the Respondent. -- 7 of 7 --