Allman v Teletech International Pty Ltd
[2008] FCA 1820
At a glance
Source factsCourt
Federal Court of Australia
Decision date
2008-12-02
Before
Marshall J
Source
Original judgment source is linked above.
Judgment (16 paragraphs)
REASONS FOR JUDGMENT 1 The issue for determination in this proceeding is whether the respondent, Teletech International Pty Ltd, arranged alternative employment for certain of its employees with another employer where the wages, terms and conditions of employment with the new employer were comparable with those that applied to their employment with Teletech. The proceeding is brought pursuant to, at least, s 170VV of the Workplace Relations Act 1996 (Cth) as it was prior to amendment by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) ("the Pre-Reform Act"). Whether or not it was effectively brought pursuant to other provisions is not presently material. 2 The first to fifty-sixth applicants (with the exception of the forty-second applicant who is no longer part of the proceeding) are former employees of Teletech who claim an entitlement to severance pay under the terms of Australian Workplace Agreements (AWAs) which applied to their employment with Teletech. The entitlement of each employee applicant to bring this proceeding is not in dispute. 3 The fifty-seventh applicant is a workplace inspector under the post-reform Workplaces Relations Act ("the Act"). There is no dispute concerning her entitlement to bring this proceeding. 4 Teletech, amongst other activities, provides services to clients in the telecommunications industry. It claims to be involved in the provision of "outsourcing solutions" for its clients, including Telstra Corporation Limited. As part of a commercial arrangement between Teletech and Telstra, Teletech provided Telstra with labour at a call centre site at Moe in Victoria's West Gippsland region. Teletech and Telstra entered into the arrangement in late 2001 but, in July 2004, Telstra advised Teletech that it would not renew the service agreement. The arrangement ceased on 23 February 2005. 5 Teletech terminated the employment of the employee applicants on 23 February 2005. From July 2004 until November 2004 Teletech and Telstra had discussed the method by which certain employees, including the employee applicants, would be offered employment with Telstra. 6 Each employee applicant became an employee of Telstra after being made redundant by Teletech. Each AWA applicable to each employee applicant whilst employed by Teletech provided for the payment of severance pay in the event that Teletech terminated employment due to redundancy. The quantum of severance pay which would ordinarily be paid to each employee applicant is not in dispute. Teletech claims that it is not liable to pay severance pay to the employee applicants because of one of the exceptions contained in each AWA which provides that severance payments "shall not apply where…Teletech is able to arrange alternative employment with another employer that is comparable in wages, terms and conditions of current employment." 7 The provision of severance pay in industrial instruments may be traced back to the Termination Change and Redundancy Cases (1984) 8 IR 34 and (1984) 9 IR 115, in the Australian Conciliation and Arbitration Commission. Those decisions illustrate that severance pay is designed to compensate employees for loss of transferable employment credits, loss of security in employment, loss of seniority and the hardship associated with redundancy for longer serving and older employees. See especially 8 IR 34 at 72-75 and see also the Redundancy Case (2004) 129 IR 155 at [133] - [142]. Those decisions further stress that severance pay is not designed to compensate employees for a period of unemployment. 8 The most common method of providing an exception to the liability to pay severance pay to an employee is for an employer to apply to be exempted from that requirement where it obtains acceptable alternative employment for an employee: see 8 IR at 75. 9 Rather than providing that Teletech must approach an industrial tribunal to be exempted from paying severance pay, the relevant AWAs provide inbuilt exemptions to the severance pay clause, including that referred to at [6] above. 10 An AWA is an industrial instrument and a creature of statute. AWAs are "a species of agreement which derive their legal effect from the [Workplace Relations] Act": McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105 at [25]. As an industrial instrument created by the Act, an AWA should be interpreted in the same way as one would interpret an award made by an industrial tribunal. One looks to the particular language of the provision in light of its context and purpose: see Amcor Limited v Construction Forestry Mining and Energy Union (2005) 222 CLR 241 at [2] per Gleeson CJ and McHugh J, at [30] per Gummow, Hayne and Heydon JJ, at [66] per Kirby J, and at [129] and [130] per Callinan J.