WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2016 WAIRC 00308

DELIVERED : WEDNESDAY, 18 MAY 2016

FILE NO. : M 62 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 long service leave entitlement upon termination – Whether obligation to pay long service leave is that of the respondent or a previous owner of the business – Whether the respondent is a ‘transmittee’ within the meaning of section 6(4) of the Long Service Leave Act 1958

Legislation : Long Service Leave Act 1958
Industrial Relations Act 1979

Result : Claim proven

Representation:

Claimant : Mr A. Dzieciol (counsel) and with him 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 Andrew Trichet (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 $5,430.71.

2         He says that the respondent failed to pay him his long service leave entitlement when his employment ended on 24 June 2011. He brings this claim pursuant to s 11 of the Long Service Leave Act 1958 (LSL Act).

3         The respondent denies that it owes the claimant the amount claimed and says that if the claimant is owed anything what is owed is payable by the respondent’s predecessor in the business.

Facts

4         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.

5         The claimant commenced working at Perth Ice Works in about October or November 2000 and continued in that employment until 24 June 2011. It is axiomatic that the claimant was working at Perth Ice Works when respondent took it over.

6         The respondent’s purchase of the business did not affect the business’ operation and it continued to operate normally without interruption. There was no disruption or interruption to the claimant’s employment by reason of the transmission of the business.

7         During his employment at Perth Ice Works the claimant variously worked as a ‘bagger’, ‘bagger and truck driver’ and at the end of his employment with the respondent was working at its Jandakot branch predominantly as a truck driver.

8         The claimant’s employment with Perth Ice Works ended on 24 June 2011when he resigned. At termination the claimant was paid all of his entitlements, with the exception of his long service leave entitlement. His pay rate at that time was $16.49 (see exhibit 2).

9         The claimant’s employment with Perth Ice Works was never interrupted other than by the taking of leave in the form of annual leave, sick leave (less than 15 days per year), and public holidays.

Is the Respondent Liable for the Claimant’s Long Service Leave Entitlement?

10      Section 8(1) and s 8(2) of the Long Service Leave Act 1958 (LSL Act) provide:

 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.

  (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.

11      What constitutes continuous employment is set out in s 6 of the LSL Act and includes periods of authorised leave taken.

12      More relevantly, with respect to this claim, s 6(4) and s 6(5) of the LSL Act 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.

13      The pivotal issue in this matter is whether, for the purpose of determining eligibility for an entitlement to long service leave, the claimant was in continuous service of the respondent for a period of at least 10 years.

14      As indicated earlier it is not in dispute that by agreement entered into on 2 July 2008 Perth Ice Works Pty Ltd (the transmittor) transferred its business, Perth Ice Works, to the respondent (the transmittee) on or about 1 September 2008.

15      Consequently, in accordance with what is provided in s 6(4) of the LSL Act, any employee of the transmittor at that time (which includes the claimant) became an employee of the respondent as transmittee. Further, any period of continuous employment that the claimant had served for the transmittor was deemed to be employment of the claimant by the respondent. In other words, the respondent is deemed to have employed the claimant for the period leading up to the respondent taking over the business.

16      At the time that the transmission occurred, the claimant did not have an entitlement to long service leave. He accrued that entitlement later after he completed 10 years’ service with Perth Ice Works. Even though he did not actually work for the respondent for 10 years he was nevertheless deemed to have done so.

17      In the circumstances, the respondent’s employment of the claimant was deemed to have begun in October or November 2000 (s 6(4) of the LSL Act).  Given that the claimant had worked for Perth Ice Works without interruption from that time until he resigned, he was deemed to have been in continuous employment for a period of at least 10 years with one and the same employer, being the respondent. When the claimant’s employment ended the respondent was, by virtue of s 8(2) of the LSL Act, required to pay the claimant his long service leave entitlement.

18      Mr Joshua Dalliston, an Industrial Officer employed by the Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australian Branch (TWU), gave evidence concerning how the claimant’s claim is calculated.  He produced calculations that he made in that regard (see exhibit 1). I find his calculations to be accurate.

19      The claimant worked for the respondent (as deemed) for more than 10 years, but less than 11 years. He therefore had accrued a long service leave entitlement of 8.667 (8 2/3) weeks. When his employment ended, because he had not taken that leave, such entitlement became payable as a lump sum benefit.

20      His lump sum entitlement must be calculated based on his final pay rate which was $16.49 per hour. I conclude that the claimant’s weekly wage was $626.62 ($16.49 x 38 hours). It follows that the claimant is owed $5,430.71 (8.667 weeks x $626.62 per week).

Sale Agreement and Deed of Variation

21      The respondent’s director, Mr Robert Watson (Mr Watson), testified that when the respondent purchased Perth Ice Works he insisted as part of the purchase agreement that the vendor pay, prior to the transmission of the business, all employees of Perth Ice Works their entitlements including wages, superannuation, annual leave and long service leave. Clause 20.1(a) of the sale agreement expressly provided for that (see exhibit 4). Indeed, settlement of the purchase of the business was delayed to ensure that was or would be done.

22      Mr Watson testified that, before entering into the sale agreement, he sought advice from lawyers and from the TWU so as to ensure that the vendor had or would meet the payment of all existing employee liabilities. As far as the respondent was concerned it was not assuming any liability with respect to employee entitlements incurred by the vendor prior to its sale of Perth Ice Works.

23      It is against that background that Mr Watson is now flabbergasted that this and other claims have been made against the respondent. To his mind, the respondent did not assume any of the vendor’s employee liabilities or contingent liabilities. He therefore maintains that the respondent is not liable for any entitlements that have their genesis in the period prior to the respondent taking over the business.

24      He argues that because the claimant has only worked for the respondent for a period of about three years, the respondent cannot be held liable to pay his long service leave entitlement. Mr Watson says that if the claimant has a claim it is against Perth Ice Works Pty Ltd and not the respondent. He further says in the alternative, that if it is found that the respondent is liable to pay the claimant his long service leave entitlement, then Perth Ice Works Pty Ltd should be ordered to contribute to its payment.

25      Mr Watson impressed as being an honest and forthright man. I accept that he honestly believed that the respondent took over the business without any liability or contingent liabilities attaching to it with respect to the business’ employees. Regrettably for him, he did not appreciate that s 8(1) and s 6(4) of the LSL Act, by operation of the law, deemed the claimant’s prior service, and that of others, to be employment with the respondent for the purpose of long service leave entitlements. So as soon as the claimant and others attained the qualification required by s 8 of the LSL Act, the liability to pay them their long service leave entitlements became the respondent’s obligation. That was the case irrespective of anything contained in the contract of sale or the deed varying that contract. Those documents could not exclude the respondent’s liability for long service leave.

26      The claimant’s prior service with Perth Ice Works Pty Ltd carried over when the respondent purchased the business and it must be taken into account for the purpose of calculating the claimant’s qualification for long service leave. The respondent’s liability with respect to the claimant’s long service leave entitlement only arose when the claimant completed 10 years of service for Perth Ice Works.  Thereafter, the respondent’s obligation to pay out that entitlement crystallised when the claimant’s employment ended. That obligation was the respondent’s alone.

27      The claim for contribution from the Perth Ice Works Pty Ltd cannot succeed for three reasons.  Firstly, because this court is not empowered to make such an order, secondly because the court cannot make an adverse order against someone not a party to these proceedings and thirdly because even if it was so empowered there is no legal foundation for it. Whether the respondent can seek indemnification from the vendor, pursuant to the terms of the Sale Agreement as varied by the Deed of Variation thereto is a matter with respect to which the respondent will need to seek legal advice.

Delay

28      Finally, the respondent complains that the claimant has taken an inordinate amount of time to bring his claim. I observe that there is no limitation period set in either the LSL Act or the Industrial Relations Act 1979 with respect to the bringing of a claim pursuant to s 11 of the LSL Act.

Conclusion

29      I find that the respondent owes the claimant $5,430.71.

G. CICCHINI

INDUSTRRIAL MAGISTRATE