Stellar Call Centres Pty Ltd v CEPU

16 On 29 March 1999 CPSU, Ms Moore, Mr Letizia and Stephen Jones, CPSU's National Telecommunications Secretary ("the CPSU applicants"), commenced a proceeding in this Court by filing an Application seeking declaratory and injunctive relief and the imposition of a penalty. The form of the orders sought by the applicants was subsequently amended on two occasions, most recently to read as follows: "1. A declaration that, in relation to employees of the Respondent engaged on work required to be done by the Respondent in the performance of a contract or contracts between Telstra Corporation Ltd ('Telstra') and the Respondent by which the Respondent is to operate a Call Centre at Robina which provides call management services of a Telstra Call Centre, the following awards apply: (i) Telstra/CPSU Consolidated Award 1996 [Print N7759] (ii) Telstra Corporation General Conditions of Service Award 1996 [Print Q2734] 2. A declaration that, in relation to employees of the Respondent engaged on work required to be done by the Respondent in the performance of a contract or contracts between Telstra Corporation Ltd ('Telstra') and the Respondent by which the Respondent is to operate a Call Centre at Robina which provides call management services of a Telstra Call Centre, the following certified agreements apply: (i) Telstra Corporation 1995 - 97 Enterprise Agreement (ii) Australian and Overseas Telecommunications Corporation Redundancy Agreement 1993 (iii) Telstra Customer Service representative Competency Based Training and Pay Structure Agreement 1996. And orders that: 3. The Respondent by itself, its servants or agents, refrain from contravening or cease contravening Section 285E of the Workplace Relations Act 1996 ('the Act') by refusing or unduly delaying entry to the premises at the Robina Centre by officers of and employees of the Community and Public Sector Union ('CPSU') entitled to enter those premises under section 285C of the Act. 4. A penalty be imposed on the Respondent. 5. Under Section 356 of the Act the penalty be paid to the First Applicant."

17 It was agreed between the parties at the time of the hearing before the primary judge that the awards and agreements referred to in the above draft orders bound Telstra in respect of the persons it employs at its customer call centres. It was also agreed that, as at 16 March 1999, at least one of the persons employed by Stellar at Robina was a member of CPSU, but without prejudice to a contention by Stellar that persons employed by it fall outside the eligibility criteria in CPSU's rules. 18 Shortly before the projected hearing day before the primary judge another union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ("CEPU"), gave notice to the parties of its intention to apply for leave to intervene. Ultimately the CEPU filed a separate Application which was heard by the primary judge with that of the CPSU. 19 The CEPU Application sought the following relief: "1. A declaration that in relation to employees of Stellar Call Centres Pty Ltd engaged on work required to be done by Stellar Call Centres Pty Ltd in the performance of a contract or contracts between Telstra and Stellar Call Centres Pty Ltd by which Stellar Call Centres Pty Ltd is to operate a call centre at Robina which provides call management services of a call centre, the following awards of the Australian Industrial Relations Commission (the 'Commission') are binding upon Stellar Call Centres Pty Ltd: (i) Telstra Corporation General Conditions of Service Award 1996 [Print Q2734] (now known as the Telstra Corporation General Conditions of Employment Award 1998 - Print Q9145) (ii) AOTC/APTU Award 1993. 2. A declaration that in relation to employees of Stellar Call Centres Pty Ltd engaged on work required to be done by Stellar Call Centres Pty Ltd in the performance of a contract or contracts between Telstra and Stellar Call Centres Pty Ltd by which Stellar Call Centres Pty Ltd is to operate a call centre at Robina which provides call management service of a call centre, the following Certified Agreements of the Commission are binding upon Stellar Call Centres Pty Ltd: (i) Telstra Corporation 1995-97 Enterprise Agreement (ii) Australian and Overseas Telecommunications Corporation Redundancy Agreement 1993 (iii) Telstra Customer Service Representative Competency Based Training and Pay Structure Agreement 1996." 20 Again, it was agreed before the primary judge that the awards and agreements mentioned in the draft orders bound Telstra in respect of its call centre employees. 21 By its amended statement of claim ("the Statement of Claim") the first respondent pleaded: "13. Telstra has, for some time, organised its operations into distinct business units. These business units are usually based around distinct functions, operations or clients of Telstra. Telstra business units include its Commercial and Consumer business unit. 14. At all material times Commercial and Consumer has been responsible for providing services to Telstra's residential and business customers who have between 1 and 2 telephone lines. It also has and had responsibility for Telstra's payphones. The functions of the business unit include and included: a. connecting new services; b. fixing faults; c. receiving and responding to customer complaints and enquiries; d. selling new products; e. billing customers for services used; and, f. providing directory assistance. 15. At all material times within Commercial and Consumer there is and was a distinct part of the business called Commercial and Consumer Sales ('C&C Sales'). The work of C&C Sales was performed in Call Centres located throughout Australia. 16. The business of a C&C Sales Call Centre is to take and respond to calls from customers regarding: a. phone bills; b. payments including credit card payments which can be made over the phone; c. requests for new products; d. requests for connections; d. [sic] complaints about a service or a billing matter; e. making appointments for technical or lines staff to connect or fix a service;

f. ensuring that the field staff have the details of the products that the customer wants; g. encouraging customers of a competitor to switch over to Telstra. 17. In or about May 1998 Telstra and Excell Global Services (a US based company) formed Stellar as a joint venture company. 18. At or prior to 9 November 1998 Telstra contracted with Stellar for Stellar to operate a Call Centre or Call Centres and conduct in part, that part of Telstra's business conducted by C&C Sales referred to in paragraph 16."

Legislation 22 Section 149(1) of the Act provides: "Subject to any order of the Commission, an award determining an industrial dispute is binding on: (a) all parties to the industrial dispute who appeared or were represented before the Commission; (b) all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared); (c) all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute; (d) any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer; (e) all organisations and persons on whom the award is binding as a common rule; and (f) all members of organisations bound by the award." 23 Section 170MB(1) of the Act provides: "If: (a) an employer is bound by a certified agreement; and (b) the application for certification of the agreement stated that it was made under Division 3; and (c) at a later time, a new employer becomes the successor, transmittee or assignee (whether immediate or not) of the whole or part of the business concerned; then, from the later time: (d) the new employer is bound by the certified agreement, to the extent that it relates to the whole or part of the business; and (e) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and (f) a reference in this Part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business."

REASONS OF THE PRIMARY JUDGE 24 The primary judge considered that this case was governed by the decision of the Full Court of this Court in North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477. His Honour at [47] of his reasons for judgment identified the critical point in North Western Health Care as the "substantial identity of work between that performed by employees of the new employer and that previously performed on behalf of the old employer". He concluded that "[t]hat is this case", and observed: "Once attention is paid to the matter of substantial identity of work, as distinct from the nature of any legal transaction between the old employer and the new employer, it is apparent that an 'outsourcing' arrangement may fall within s 149(1)(d) or s 170MB(1)." 25 The primary judge rejected the contention that for s 149(1)(d) or s 170MB(1) to operate in respect of a part of a business, the transmitted part must itself be a viable business. However, his Honour concluded that:

"In a real sense, the Robina call centre is a commercially viable, free standing business."

GROUNDS OF APPEAL 26 The grounds of appeal are the same in each appeal. They are: "1. His Honour erred in the construction of the test formulated in North Western Health Care Network v The Health Services Union of Australia (1999) FCA [sic]. 2. His Honour erred in the application of the test in North Western Health Care Network v The Health Services Union of Australia in finding that there was a 'substantial identity' between the business of Telstra and the business of the Applicant. 3. His Honour erred insofar as he found that result in these proceedings was governed by the decision of the Full Court of this Court in North Western Health Care Network v The Health Services Union of Australia. 4. His Honour erred in the construction of Section 149(1)(d) and Section 170MB(1) of the Workplace Relations Act 1996. 5. His Honour erred in the application of Section 149(1)(d) and Section 170MB(1) of the Workplace Relations Act 1996 in finding that the Applicant was a 'successor, assignee, or transmittee' of part of the business of Telstra. 6. His Honour erred in the application of Section 149(1) and Section 170MB(1) of the Workplace Relations Act 1996 in finding that the Applicant's business was 'part of the business' of Telstra. 7. His Honour erred in failing to have any regard to the evidence concerning the eligibility of the First Respondent and the Fifth Respondent to represent the industrial interests of the Applicant's employees at Robina. 8. His Honour erred in failing to have proper regard to the evidence concerning the engagement of the Appellant in activities with clients other than Telstra. 9. His Honour erred insofar as he accepted that the certified agreements which bound Telstra Corporation Limited as at the date of hearing were those identified in the declaration which His Honour made. 10. His Honour erred in finding that an agreement made otherwise than under the provisions of the Workplace Relations Act 1996 could be transmitted for the purposes of that legislation. 11. Upon such other grounds and reasons as appear to this honourable Court appropriate at the hearing of this appeal."

27 The delivery of judgment in this matter was delayed to allow the Court and the parties to have the benefit of the then pending decision of the High Court in PP Consultants Pty Limited v Finance Sector Union of Australia (2000) 176 ALR 205 ("PP Consultants"). PP Consultants is concerned with whether, for the purposes of s 149(1)(d) of the Act, the operator of a pharmacy business in Byron Bay is the successor, assignee or transmittee of the business or part of the business of St George Bank Limited. Following the closure of the St George Bank branch at Byron Bay, a branch agency of the Bank has been conducted by the operator of the pharmacy from the pharmacy. 28 In PP Consultants, Gleeson CJ, Gaudron, McHugh and Gummow JJ in a joint judgment at [13-15] said: "While the notions of 'profit' and 'commercial enterprise' will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business, [see eg Smith v Anderson (1880) 15 Ch D 247 at 258 per Jessel MR; White v FCT (1968) 120 CLR 191 at 216 Barwick CJ; Thomas v FCT (1972) 46 ALJR 397 at 401 per Walsh J; Ferguson v FCT (1979) 26 ALR 307 at 311 per Bowen CJ and Franki J, 318-19 per Fisher J; cf Tweddle v FCT (1942) 180 CLR 1 at 6 per Williams J] they play little, if any, role identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word 'business' takes on a special or particular meaning in the expression 'the business of government'. It is not because, as a matter of ordinary language, 'business' means or includes activities undertaken in the course of business. The question of whether one person has taken over or succeeded to the business or part of the business of another is a mixed question of fact and law. For this reason and, also, because 'business' is a chameleon-like word, it is not possible to formulate any general test to ascertain whether, for the purposes of s 149(1)(d) of the Act, one employer has succeeded to the business or part of the business of another. Even so it is possible to indicate the manner in which that question should generally be approached, at least when a non-government employer succeeds to the commercial activities of another non-government employer. … As a general rule, the question whether a non-government employer who has taken over the commercial activities of another non-government employer has succeeded to the business or part of the business of that other employer will require the identification or characterisation of the business or the relevant part of the business of the first employer, as a first step. The second step is the identification of the character of the transferred business activities in the hands of the new employer. The final step is to compare the two. If, in substance, they bear the same character, then it will usually be the case that the new employer has succeeded to the business or part of the business of the previous employer." 29 In the judgment of the Full Court of this Court in Finance Sector Union v PP Consultants Pty Ltd (1999) 91 FCR 337, which was overruled by the High Court in PP Consultants, it was observed at [32]: "Counsel for PP Consultants argue that the bank's business was unchanged; it had disposed of nothing, it had merely replaced a branch by an agency. We accept the bank still carried on a banking business in which it sought to earn profits by exploiting lending margins and charging fees of various kinds. But it disposed of an important aspect of operating that business in Byron Bay: the maintenance of premises, and employment of staff to service the customers who were the source of its loan funds, lending margins and bank fees. It substituted PP Consultants for itself, in relation to this aspect of the business. It seems to us this amounted to a transmission of a part of the bank's business, notwithstanding that the transmission was revocable on one month's notice or immediately on breach of the agency agreement." In the light of the observations in the joint judgment in the High Court, especially at [15] quoted above, it is no longer sufficient to ask whether the putative transmittor, the first employer, has "disposed of an important aspect of operating" its business. Rather, one must characterise the business or the relevant part of the business of the first employer, and see whether, so characterised, it substantially corresponds with the character attributable to "the transferred business activities in the hands of the new employer". 30 The High Court must be taken impliedly to have rejected the suggestion of the Full Court in Finance Sector Union v PP Consultants at [33] that "it is logical to focus on the nature of the activities undertaken by the two employers and the question whether there is any material change in the nature of the employees' duties or working conditions". As we understand it, even if there be complete identity between the duties and working conditions of the relevant employees of both employers, that will not attract the application of s 149(1) unless the business in which those duties are performed for the new employer is in substance identical in character with the business, or a distinct part of the business, of the presumptive transmittor. 31 It is thus necessary to identify, within the confines of the case pleaded by the first respondent, what it is that the appellant is alleged to have taken over from Telstra. It is asserted by the first respondent in paragraph 18 of the Statement of Claim that "Telstra contracted with Stellar for Stellar to operate a Call Centre or Call Centres and conduct in part, that part of Telstra's business conducted by C&C Sales referred to in paragraph 16". Paragraph 16 of the Statement of Claim refers to C&C Sales Call Centres taking and responding to particular types of calls from Telstra customers. That is, it is the case of the respondents that the appellant has taken over from Telstra part of Telstra's business, namely that part of Telstra's business which involves the taking and responding to part only of the total number of telephone calls of particular types from Telstra customers. So understood, in our view, the respondents' case is untenable. 32 The activities conducted by C&C Sales are neither the business, nor are they or were they part of the business, of Telstra. The learned trial judge did not hear detailed evidence as to the nature of Telstra's business. However, by its Statement of Claim the first respondent pleaded that "Telstra is a corporation which conducts businesses in the telecommunications industry". This plea is admitted by the appellant in its defence. The activities of Telstra conducted by C&C Sales are activities in support of Telstra's businesses in the telecommunication industry; they are not themselves, in our view, the business or part of the business of Telstra. That business can appropriately be characterised as providing telecommunications services to its customers. In the course of conducting that business, Telstra is called upon to respond to enquiries, requests for services and complaints from its customers, including those made by telephone. However, the making of those responses is not a distinct "part" of Telstra's business within the meaning of s 149(1), as explained by the High Court, any more than, for example, cleaning undertaken as a necessary aspect of the conduct of a restaurant is a "part" of the business of the restaurateur. An analogy may be drawn with the business of banking considered in PP Consultants. Both the St George Bank branch, when operating, and the branch agency subsequently conducted from the Byron Bay pharmacy accepted deposits and processed withdrawals. However, the High Court did not consider that these activities could themselves be seen as part of the Bank's business which was banking. They were merely activities which facilitated the conduct of the Bank's business. The answering of telephone calls from actual and potential customers of Telstra similarly facilitates the conduct of Telstra's business. It is not Telstra's business or part of Telstra's business. The reliance of the respondent on evidence that Telstra employs some 12,000 employees at 100 call centres is thus, in our view, misplaced. 33 Stellar's business is the provision of telephone answering services. The fact that it may be required by a particular customer, like Telstra, to provide those services for it at "a centre that is physically and electronically isolated from any infrastructure used for the purposes of providing services to anyone other than [Telstra]" may indicate that the provision of services for that customer is a distinct or identifiable part of the business of Stellar. However that is not the inquiry on which the Court is required to enter. The inquiries mandated by s 149(1) on the construction adopted by the High Court are whether the answering of telephone calls was a distinct part of Telstra's business and, if so, whether there has been a transmission of that part of its business from Telstra to Stellar. For the reasons explained above, the first of those questions must be answered in the negative. 34 In any event, there was no finding by the learned trial judge of a shifting of any service obligation or other business function from Telstra to Stellar. Telstra continues to operate its own call centres. It has not withdrawn from this activity or contracted out its own call centre operations. His Honour did not find that any person who had been employed by Telstra in a call centre had been transferred to the employment of Stellar or, indeed, that any person had had his or her employment with Telstra terminated by reason of the operation of the Stellar call centre. None of the facilities used by Telstra to operate its call centres has been transferred or assigned to Stellar. His Honour's findings support the conclusion that Telstra entered into an arrangement with Stellar for Stellar to undertake a function under contract to Telstra that Telstra did not itself have the capacity to undertake without expanding its own call centre capacity. That is to undertake the handling of its "overflow" calls. Telstra has apparently chosen not to expand its own call centre capacity so as to prevent there being "overflow" calls. It cannot realistically be said, in our view, that the appellant has "taken over" any commercial activities of Telstra (PP Consultants at [15]).

CONCLUSION 35 In our view the appeals should be allowed. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Dated: 21 February 2001 Counsel for the Appellant: Mr JN West QC, Mr G Hatcher, Mr F Parry

Solicitor for the Appellant: Freehill Hollingdale & Page

Counsel for the Respondents in N 978/99: Mr M Bromberg, Mr D Langmead

Solicitor for the Respondents in N 987/99: RL Whyburn & Associates

Counsel for the Respondent in N 1298/99: Mr R Reitano

Solicitor for the Respondent in N 1298/99: RL Whyburn & Associates

Date of Hearing: 10 February 2000

Date of Judgment: 21 February 2001