WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2016 WAIRC 00305

DELIVERED :  WEDNESDAY, 18 MAY 2016

FILE NO. : M 61 OF 2015

CLAIMANT

AND

Consolidated Ice Holdings Pty Ltd ATF the Watson Family Trust No 2 T/A PERTH ICE WORKS

RESPONDENT

Catchwords : Alleged non-payment of pro-rata long service leave entitlement upon termination – Whether respondent had the obligation to pay pro-rata long service leave – Whether the respondent was a ‘transmittee’ within the meaning of section 6(4) of the Long Service Leave Act 1958

Legislation : Long Service Leave Act 1958

Result : Claim proven

Case(s) referred to
in Reasons  : Miller v Minister of Pensions
    [1947] 2 All ER 372

Representation

Claimant : Mr A. Dzieciol (counsel) and with him Mr M. J. Collier instructed by the Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australian Branch

Respondent : Mr R. A. Watson, director, Consolidated Ice Holdings Pty Ltd

REASONS FOR DECISION

1          Mr Kieran Cousens (the claimant) alleges that his former employer Consolidated Ice Holdings Pty Ltd as Trustee for the Watson Family Trust No 2 T/A Perth Ice Works (the respondent) owes him pro-rata a long service leave entitlement in the amount of $4,574.04. He asserts that he was not paid that entitlement upon his employment with the respondent ending in January 2011 and accordingly brings this claim pursuant to s 11 of the Long Service Leave Act 1958 (LSL Act) in order to recover that amount.

2          The respondent denies that it is liable to pay the claimant pro-rata long service leave. It says that it employed the claimant only for a short period and that a pro-rata long service entitlement did not accrue to the claimant for the period of that employment. It says that the claimant’s recourse (if any) is against some other entity and not the respondent.

Undisputed Facts

3          The business known as Perth Ice Works manufactures and supplies ice in Western Australia. On 2 July 2008 the respondent entered into an agreement to purchase that business from Perth Ice Works Pty Ltd. Settlement of the purchase occurred on or about 1 September 2008 at which time the respondent took over the business which it continues to run.

4          The claimant commenced working at Perth Ice Works in late October 2003 and continued in that employment until on or about 7 January 2011. He was working at Perth Ice Works when respondent took it over. During his employment at Perth Ice Works, the claimant variously worked as a ‘bagger’ and ‘bagger and truck driver’ and at the end of his employment was performing some administrative functions.  When his employment ended his pay rate was $19.29 per hour (see exhibit 1)

5          The claimant’s employment by Perth Ice Works from 27 October 2003 until 7 January 2011 was for the uninterrupted period (save for authorised leave) of seven years and 73 days equating to 7.2 years.

Burden and Standard of Proof

6          Although the claimant carries the legal burden of proof for his claim, the respondent carries the legal burden of proving those things which it asserts.

7          The standard of proof required to discharge the respective burdens of proof is the balance of probabilities. This standard was explained by Lord Denning in Miller v Minister of Pensions [1947] 2 All ER 372 as follows:

That degree is well settled. It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it more probable than not’ the burden is discharged, but if the probabilities are equal it is not [374].

8          Accordingly, where in these reasons I say that ‘I am satisfied’ of a fact or matter or otherwise make a finding as to a fact or matter, I am saying ‘I am satisfied on the balance of probabilities’ of that fact or matter. Where I state that ‘I am not satisfied’ of a fact or matter I am saying that ‘I am not satisfied on the balance of probabilities’ of that fact or matter.

Contentious Factual Issues

9          The respondent’s director, Mr Robert Athol Watson (Mr Watson), asserts that the claimant’s performance in the months leading up to his employment ending was generally unsatisfactory and substandard. He says that the claimant did not turn up to work as required and that he claimed to have worked hours which he did not in fact work. Mr Watson asserts that the claimant was reprimanded about his conduct and performance.

10       The claimant denies each of those assertions.

11       It is unclear as to why Mr Watson has raised those issues given that he was unprepared to say that the claimant’s employment was terminated by reason of serious misconduct. If termination had occurred by reason of serious misconduct, then that would have been a disentitling event (see s 8(3)(b) of the LSL Act) that would have precluded the entitlement to pro-rata long service leave.

12       The respondent has failed to produce any direct evidence that is capable of establishing those things which it asserts. Mr Watson’s testimony concerning such issues was based entirely on hearsay. There was no documentary evidence produced to support his assertions.

13       I accept the claimant’s evidence that the termination of his employment with the respondent was a planned event. Further, I accept that the claimant used his annual leave period in late 2010 to train and acquire skills which ultimately led him to securing alternate employment. Having secured that alternate employment, he resigned his employment with Perth Ice Works.

14       Acceptance of the claimant’s evidence is supported by the fact that it is common ground that when the claimant’s employment with the respondent ended the respondent held a ‘send-off BBQ’ for him. That contraindicates any notion of dismissal for serious misconduct.

15       I am satisfied that the claimant’s employment came to an end in circumstances other than by his employer for serious misconduct.

The Issue

16       The issue to be determined in this matter is whether between 27 October 2003 and 11 January 2011 the respondent, for the purposes of the LSL Act, continuously employed the claimant.

The Law

17       Section 8(1) of the LSL Act provides:

 8. Long service leave

  (1) An employee is entitled in accordance with, and subject to, the provisions of this Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer.

18       The entitlement to long service leave is set out in s 8(2) of the LSL Act which states:

 (2) An employee who has completed at least 10 years of such continuous employment, as is referred to in subsection (1), is entitled to an amount of long service leave as follows — 

  (a) in respect of 10 years so completed, 8 2/3 weeks;

   (b) in respect of each 5 years’ continuous employment so completed after such 10 years, 4 1/3 weeks; and

  (c) on the termination of the employee’s employment — 

  (i) by his death;

  (ii) in any circumstances otherwise than by his employer for serious misconduct,

in respect of the number of years of such continuous employment completed since the employee last became entitled under this Act to an amount of long service leave, a proportionate amount on the basis of 8 2/3 weeks for 10 years of such continuous employment.

19       Pro-rata long service leave is available to an employee who has not met the criteria in s 8(2) of the LSL Act, but has otherwise completed at least seven years’ continuous employment.

20       Relevantly, s 8(3) of the LSL Act provides:

  (3) Where an employee has completed at least 7 years of such continuous employment since the commencement thereof, but less than 10 years, and the employment is terminated — 

  (a) by his death; or

  (b) for any reason other than serious misconduct,

   the amount of leave to which the employee is entitled shall be a proportionate amount on the basis of 8 2/3 weeks for 10 years of such continuous employment.

21       What constitutes continuous employment is set out in s 6 of the LSL Act. Of particular relevance to this case are s 6(4) and s 6(5) of the LSL Act which provide:

(4) Where a business has, whether before or after the coming into operation hereof, been transmitted from an employer (herein called the transmittor) to another employer (herein called the transmittee) and an employee who at the time of such transmission was an employee of the transmittor in that business becomes an employee of the transmittee — the period of the continuous employment which the employee has had with the transmittor (including any such employment with any prior transmittor) shall be deemed to be employment of the employee with the transmittee.

(5) In subsection (4) —

transmission includes transfer, conveyance, assignment or succession, whether voluntary or by agreement or by operation of law, and transmitted has a corresponding meaning.

Determination

22       It is not in dispute that, as a result of the purchase agreement entered into on 2 July 2008, Perth Ice Works Pty Ltd (the transmittor) transferred its business known as Perth Ice Works to Consolidated Ice Works Holdings Pty Ltd (the transmittee).  That occurred on or about 1 September 2008.

23       In accordance with what is provided by s 6(4) of the LSL Act, any employee of the transmittor at that time became an employee of the transmittee and any period of continuous employment that an employee had with the transmittor was deemed to be employment of the employee with the transmittee. In this instance the claimant’s continuous employment with Perth Ice Works Pty Ltd was deemed to be employment of him by Consolidated Ice Holdings Pty Ltd.

24       At the time that the transmission of the business occurred, the claimant did not have any entitlement to pro-rata long service leave. That entitlement accrued much later. It accrued because all of the time the claimant had worked with Perth Ice Works Pty Ltd was deemed to have been worked for the respondent. Accordingly, for the purpose of s 8(1) of the LSL Act, the claimant is deemed to have been in continuous employment with one and the same employer, being the respondent.

25       I find that the claimant had, at termination, been in continuous employment with the respondent (as deemed by s 6(4) of the LSL Act for the purpose of s 8(1) of the LSL Act) for a period of at least seven years. Accordingly, at termination of his employment, the claimant was entitled to the pro-rata long service leave entitlement provided by s 8(3) of the LSL Act.

26       I accept that the amount that the claimant is entitled to in that regard is $4,574.04 as calculated by Mr Joshua Dalliston (Mr Dalliston).

27       Mr Dalliston, an Industrial Officer of the Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australia Branch (TWU), was called by the claimant. He produced a document (exhibit 5) which contains calculations he has made with respect to this matter. I accept that his calculations are accurate. I adopt his calculations.

28       I find that the claimant’s pro-rata long service leave entitlement consists of 0.8667 weeks of long service leave for each year of service. Having accumulated 7.2 years of service his proportionate long service leave entitlement is 6.24 weeks (0.8667 weeks x 7.2 years).

29       Given that at termination, the claimant was paid $19.29 per hour, amounting to $733.02 per week ($19.29 x 38 hours) it follows that he is entitled to $4,574.04 (6.24 weeks x $733.02 per week).

Sale Agreement and Deed of Variation

30       Before concluding it will be appropriate to make comment as to why the respondent defends this claim.

31       Mr Watson testified that when the respondent purchased the business, it ensured that Perth Ice Works Pty Ltd had paid all employees of Perth Ice Works all their entitlements, including wages, superannuation, annual leave and pro-rata long service leave. It appears that cl 20.1(a) of the Sale Agreement expressly provided that to be the case (see exhibit 6). Indeed it is clear that the settlement of the purchase of the business was delayed to ensure that such requirement was met.  Further  a deed of variation was entered into on 1 September 2008 (see exhibit 6), in which Perth Ice Works Pty Ltd and another covenanted that they would indemnify the respondent with respect to claims arising from the seller’s failure to pay employee entitlements.

32       Mr Watson testified that prior to entering into any agreements, he liaised with an officer of the TWU to ensure that all workers’ entitlements were known and paid by the seller. Mr Watson said that he also received professional advice about such issues. That is why he is now dumbfounded by this claim.

33       It is his belief that Perth Ice Works Pty Ltd had paid all existing employees their entitlements and that when the respondent took over the running of the business it did not have any carry over liabilities or contingent liabilities with respect to those employees who had worked for Perth Ice Works Pty Ltd.

34       Mr Watson says that the respondent cannot be held accountable for anything that occurred prior to the respondent taking over the business. His position is that, given that the claimant had only worked for the respondent for less than two years, the respondent cannot be liable to the claimant with respect to pro-rata long service leave. The respondent suggests that if there is a liability, then that should be met in whole or in part by the vendor. In his response lodged on 26 May 2015, Mr Watson asserted that the claimant sued ‘the wrong person’. He believes that the vendor is responsible.

35       Mr Watson impressed as being an honest and forthright man. I accept that, at all material times, he honestly believed that Perth Ice Works Pty Ltd had paid up all of Perth Ice Works’ employee liabilities and that the respondent would not assume any liability with respect to those employees.

36       It seems somewhat regrettably that Mr Watson’s attention may not have been drawn to s 8(1) and s 6(4) of the LSL Act. Those provisions make it quite clear that the contingent qualification of an employee with respect to long service leave is transferred from the transmittor to the transmittee of a business.

37       When the respondent purchased the business there was no long service leave liability with respect to the claimant. There was only a contingent liability which would crystalise if the claimant remained in continuous employment for the qualifying period as is stated in s 8(2) or s 8(3) of the LSL Act.  It was only when the claimant met the qualifying criteria for entitlement to pro-rata long service leave that the respondent’s liability arose by virtue s 8(1) and s 8(3) of the LSL Act. 

38       Mr Watson failed to appreciate, at the time that the respondent purchased the business, that the respondent could not, because of s 6(4) of the LSL Act, sever the claimant’s previous service with the transmittor. The claimant’s service for the purposes of long service leave qualification carried over and had to be taken into account for the purpose of the qualification required by s 8(3) of the LSL Act. Having met the criteria required by s 8(3) of the LSL Act, the claimant became entitled to the payment of pro-rata long service leave upon the termination of his employment. The respondent was obligated to make that payment.

Conclusion

39       It follows that the respondent must pay the claimant his pro-rata long service leave entitlement of $4,574.04.

G. CICCHINI

INDUSTRIAL MAGISTRATE