45In respect of the outsourcing of Parklea Correctional Centre and the sale of WSN Environmental Solutions, FreightCorp and the electricity generators the same payments applied as those above.
46Whilst these precedents might have provided a basis for the claim in this case it is not entirely apparent from the material tendered in relation to those precedents what the employer's rationale was for making the payments. The evidence of Mr Turner, the Assistant General Secretary of the PSA, who had been involved in the negotiations of some of the separation packages referred to above, was that the transfer payments were made to compensate employees "for the loss of employment conditions and job security."
47It seems to us that the rationale for transfer payments is necessarily linked to the concept of redundancy. It has been well established for over 30 years that where the employer no longer wishes the job the employee has been doing to be done by anyone through no fault of the employee the job has become redundant (R v Industrial Commission of South Australia: Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6 at 8; Termination, Change and Redundancy Case (1984) 8 IR 34) ("TCR Case") and the employee may be entitled to a compensatory payment often referred to as redundancy pay or a severance payment. Usually, no obligation falls on an employer to pay redundancy pay where there is a transmission of business or where the employer has obtained acceptable alternative employment: TCR Case at 75.
48In respect of Mr Daly and Mr Dillon, the Department decided that it no longer wished the job the two men had been doing done by anyone. That constitutes the classic redundancy situation. The circumstance of the privatisation of a government agency does not change the fact that redundancies may result that requires employees to be compensated: Re Government Cleaning Services (Privatisation) Award (No 2). At 218, Schmidt J relevantly stated:
When a business is sold, or a Governmental undertaking privatised, the original employment comes to an end. Employees do not always obtain work with the new employer. The fact that the old employer assists the employees to obtain work with the new employer, does not alter the consequence, that the termination of the original employment arose as a result of the employer's decision, that it no longer wished any of its employees to perform the jobs they were performing and not through any fault on the employee's part. It seems to me that employees in that situation have been made redundant, whether or not they are assisted in obtaining alternate employment.
See also Re Clerks (State) Award (Redundancy Case) [1976] AR (NSW) 417 at 431.
49Thus, whilst it may be concluded that the jobs of Mr Daly and Mr Dillon were made redundant, they still had the protection of the Policy, which required their employer to endeavour to redeploy them before any question of a voluntary or forced redundancy payment arose. However, as I have already observed, the prospects of redeployment within the public sector were slim and this would seem to be the principal reason why the two men opted for employment with the Company. If Mr Daly and Mr Dillon had remained in public sector employment the inevitable outcome would appear to have been redundancy, either voluntary or forced.
50The question then arises as to whether Mr Daly and Mr Dillon were entitled to any compensation in the nature of a redundancy or severance payment in circumstances where they opted for employment with the Company.
51Neither Mr Daly nor Mr Dillon would be disentitled to compensation by reason of a transmission of business. The transfer of the National Arts School to the Company was not a transmission of business whereby Departmental employees suffered no interruption to the continuity of their employment and no loss of benefits. Moreover, whilst the Department clearly assisted Mr Daly and Mr Dillon in obtaining employment with the Company, I do not consider the Department could be regarded as having obtained acceptable alternative employment for Mr Daly and Mr Dillon. In United FM at [79]-[83] the Full Bench stated:
[79] Thus, it seems to us that where an employer, through its efforts, has obtained alternative employment involving minimal dislocation for employees, no loss of accumulated employment benefits such as sick leave and long service leave, where there is continuity of service and the employees are not disadvantaged by the terms offered in the new employment (as would be the case in a succession, assignment or transmission of business), the employer would have a prima facie case for the exercise of discretion in its favour for the granting of an exemption, either in whole or in part, from the award obligation to make severance payments. We elaborate on this view in the following paragraphs.
[80] For the reasons expressed by the Full Bench in Re Clothing Trades Award we do not consider that the word "obtains" should be given a narrow, literal interpretation. As the Full Bench determined in that case, where the employer is a "strong moving force" in causing the employment to become available, that will be an important consideration for a tribunal of fact in exercising its discretion as to whether an exemption from the requirement to make severance payments should be granted. However, there is the additional consideration that cannot be ignored or overlooked, of whether the employment was acceptable. There will be circumstances, as is the case here, where the incoming employer intends to employ the employees of the outgoing employer, regardless of any overtures or effort of the outgoing employer to secure that employment. In those circumstances it is necessary for the tribunal to consider what role the outgoing employer has played in causing the new employment to be available on acceptable terms.
[81] In other words, the tribunal will have regard to the full extent of the role of the outgoing employer in the placement of its employees, not simply in alternative employment, but in acceptable alternative employment. That is to say, even though the outgoing employer did not "obtain" employment for the employees in the fullest sense of that word, when regard is had to the employer's overall role, including the part played in bringing about new terms of employment that were acceptable when viewed objectively, it may be concluded that in the absence of the employer's effort or request, acceptable alternative employment would not have become available to the employees.
[82] To express the notion differently, if the outgoing employer is a strong moving force in causing acceptable alternative employment to become available to employees or, in circumstances where employment becomes available regardless of the outgoing employer's efforts or overtures, but the outgoing employer is a strong moving force in causing the employment to become available on acceptable terms, we consider the employer would have an arguable case for the exercise of the tribunal's discretion in favour of granting an appropriate exemption, whether in whole or in part.
[83] We take the view that the primary objective should be maintaining employees in acceptable employment and thus, where an employer is a strong moving force, to use the words of the Full Bench in Re Clothing Trades Award, in causing to have made available acceptable alternative employment for employees, the employer should, prima facie, be entitled to the exercise of discretion in its favour granting an exemption from having to make severance payments, either in whole or in part. To take a different approach is likely to have the effect of removing the incentive for employers to make the necessary effort to maintain employees in acceptable employment.
52As Staff J found, both Mr Daly and Mr Dillon suffered a loss of continuity of employment, a loss of job security that at the time was associated with public sector employment and they incurred a significant reduction in their employment benefits. Further, Mr Dillon and Mr Daly were required to submit to a competitive recruitment process in order to obtain employment with the Company. In these circumstances, the test of obtaining acceptable alternative employment laid down in United FM has not been met in this case.
53One needs to consider then the Policy, which provided for compensation by way of a redundancy payment in two circumstances: first, where redeployment was considered impractical, the agency head could, with the approval of the relevant Minister, offer employees voluntary redundancy. Those who accepted were entitled to the voluntary redundancy package. Secondly, if an employee had been unable to find an alternative position after the 12-month retention period had expired, the agency head could consider making the excess employee redundant as a last and unavoidable resort. In such circumstances the employee was entitled to the compulsory redundancy package.
54Neither Mr Daly nor Mr Dillon was offered voluntary redundancy and they were not made compulsorily redundant. Therefore, no entitlement arose under the Policy. No entitlement arose under the default position prescribed under the Employment Protection Act 1982 because it does not apply to the Crown or a public authority within the meaning of the Industrial Relations Act.
55In these circumstances, I have given consideration to whether fairness requires that in making any award the Commission should use as the benchmark the compulsory redundancy package under the Policy. That package included four weeks' payment in lieu of notice (for employees aged 45 years and over with five or more years of completed service, an additional one week's notice or pay in lieu) plus three weeks for each year of service, up to a maximum of 39 weeks (3 x 13 years).
56However, I have concluded this approach would not be appropriate. The compulsory redundancy package included payment in lieu of notice. A period of notice or payment in lieu is to give an employee the opportunity to adjust to the change in circumstances that is to occur and to seek other employment: Westfield Holdings v Adams [2001] NSWIRComm 293; (2001) 114 IR 241 at [141] referring to Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 331 per von Doussa J. It would be inappropriate to pay Mr Daly and Mr Dillon any compensation by way of payment in lieu of notice because at no time were they unemployed and did not need to seek out other employment. Moreover, employees were granted a period of six months' leave without pay from the Department, with approval to engage in secondary employment during that period with the Company. As Staff J noted, the practical effect of this was that an employee could, during this period, terminate their employment with the Company and return to the Department to be declared excess and, therefore, trigger the Department's redeployment obligations under the Policy.
57A severance payment, on the other hand, is intended to provide a payment as compensation for the loss of non-transferable credits and entitlements that have been built up through length of service such as sick leave and long service leave, and for inconvenience and hardship imposed by the termination of employment through no fault of the employee: TCR Case at 62; Westfield at [144]. Inconvenience and hardship includes the disruption to an employee's routine and social contacts and the competitive disability to long term employees arising from opportunities foregone in the continuous service of the employer: Fryar at 331 referring to Food Preservers Union of Australia v Wattie Pict Ltd (1975) 172 CAR 227; Westfield at [141].
58The loss to Messrs Dillon and Daly of non-transferable credits was ameliorated in one important respect, namely, by the Department obtaining approval to have the Company listed as an employer under the various Superannuation Acts applicable to public sector employees. This enabled Mr Dillon and Mr Daly to continue to contribute to a defined benefits superannuation scheme as employees of the Company.
59Furthermore, permanent employees who accepted positions with the Company, and who had extended and recreational leave balances of less than 20 days, had their leave balances paid out. However, employees with leave balances in excess of 20 days, which included Mr Dillon, had the option of either cashing out the value of their entitlements on resignation, or have the current monetary value of their entitlements remitted to the Company based on the salary offered by the Company. There was also the capacity to transfer long service leave entitlements, but not sick leave.
60It follows from the foregoing analysis that whilst the jobs of Mr Dillon and Mr Daly were effectively made redundant, neither individual was put to the task of seeking out new employment and the Department sought to ameliorate the loss of non-transferable credits. This distinguishes their situation from a typical redundancy. Nevertheless, both individuals have foregone the job security historically associated with public sector employment, have suffered a reduction in employment benefits and have suffered the inconvenience and hardship referred to by von Doussa J in Fryar in so far as continuity of employment had to be foregone.
61Given these considerations I am of the view that some compensation is appropriate, particularly given the precedents already established by the Government in circumstances where agencies have been privatised or outsourced and where the voluntary redundancy package was applied to the academics despite them having no right to the package under the Policy.
62However, I am not inclined to simply adopt the standard in the Policy's compulsory redundancy package of three weeks' and multiply that by Mr Dillon's, or Mr Daly's, years of service. In Mr Dillon's case he was employed in the public service from 2001 to 2011 (10 years) and in Mr Daly's case from 1999 to 2011 (12 years). Nor am I inclined to grant the claim of 30 weeks' pay, which almost amounts to applying the compulsory redundancy scale to the two individuals.
63In my opinion, a payment of 13 weeks' pay is fair compensation as a "transfer payment" for Mr Dillon and Mr Daly, given the particular circumstances associated with their public sector jobs becoming redundant.