United FM Group Services Pty Limited trading as United KFPW v National Union of Workers, New South Wales Branch

United FM Group Services Pty Limited trading as United KFPW v National Union of Workers, New South Wales Branch - [2006] NSWIRComm 391 - NSWIRComm 2006 case summary — Zoe

[16]

5 After holding the Garrison Support Services contract for almost eight years the appellant was advised in May 2005 that its tender had been unsuccessful and that the Department of Defence was about to commence discussions with the preferred tenderer. During July and August 2005 there were a number of meetings between the appellant and the incoming contractor, SSDS, regarding the future employment of the appellant's employees with SSDS. These discussions included the question of employee entitlements. The appellant also conducted meetings of its employees to explain arrangements it was discussing with SSDS regarding ongoing employment. SSDS was provided with the opportunity of making presentations to the appellant's employees concerning the transition to employment with SSDS. Discussions were also held in early August between the NUW and the appellant regarding the transition. 6 On 24 August 2005, the NUW filed a dispute notification under s 130 of the Industrial Relations Act 1996. The dispute notification relevantly advised: A. United KFPW Pty Ltd ("the respondent") is an outsourcing company that provides logistics to the Commonwealth of Australia (Department of Defence). B. The contract between the Respondent and the Commonwealth of Australia will run out on 30th September 2005. C. The Department of Defence entered into a new contractual agreement with Serco Sodexho Defence Services Pty Ltd which will commence on 1 October 2005. D. The Respondent currently employs approximately 30 employees [at the Liverpool Military Area]. E. On 4th August 2005 a memorandum informed the employees that the employees could submit an application form for employment to SSDS… F. SSDS does not offer employment under the same terms and conditions as they are currently employed. There will be no immediate re-employment and no continuity of service. G. The Respondent refuses to pay severance pay to employees who are successful in finding employment with SSDS. 7 The dispute was initially the subject of conciliation before Tabbaa C but this was unsuccessful. On 25 August, the appellant issued a memorandum seeking expressions of interest from employees who wished to remain employed by the appellant in the Area Clothing Store (which had not been lost in the tender). On 26 August a period of five weeks' notice of termination commenced to run for 62 employees of the appellant. On 2 September, SSDS offered employment to 17 employees of the appellant. The offer extended to five of the employees who are the subject of this appeal and involved employment on terms prescribed by Australian Workplace Agreements (AWAs), which are industrial instruments under the Workplace Relations Act 1996 (Cth). The sixth employee, Ms Kalinda Lythall, had expressed interest in remaining in employment with the appellant in a position in the Area Clothing Store. For this reason no offer of employment was made by SSDS to Ms Lythall. However, on 26 September Ms Lythall advised the appellant she had changed her mind and was taking a position with SSDS.

[18]

(2) In return SSDS agreed at the appellant's request: to recognise the service of all former employees of the appellant who took up employment with SSDS but only for long service leave purposes; not to invoke the three months' probationary period provided for by the AWAs for all former employees of the appellant; to recognise 1 October 2005 as the commencement date for employment purposes (other than long service leave). 9 On 14 September, Mr George Salouros, a project manager with the appellant in charge of the Garrison Support Services contract, met with employees who thus far had not taken up employment with SSDS and explained the effect of the agreement the appellant had made with SSDS concerning employee entitlements. At the meeting, when the letter outlining the agreement was issued to employees, Mr Bugden, one of the affected employees, inquired as to the situation if employees did not want long service leave transferred to SSDS. Mr Salouros replied that such advice should be confirmed to him in writing. He added that the result of rejecting the Agreement would be that: [Y]ou will start employment with SSDS on probation, your employment clock for LSL starts at zero and you will miss out on pay for the public holiday. 10 It is apparent that none of the employees were involved in the negotiation of the agreement between the appellant and SSDS. What is more, the employees did not consider they were bound by the agreement. At [44] McKenna C observed: 44 The evidence makes it plain that those who had a LSL entitlement were undeterred by the advice from Mr Salouros that if they pressed for payment of pro rata LSL they would not obtain the other matters under the Agreement. The quartet of employees who had an entitlement to pro rata long service informed United in writing on 15 September 2005 of their position. That is, they advised United they wanted payment of pro rata LSL on termination of employment and noted United had no authority to direct the payment elsewhere. Mr North did not send a letter, as he did not have a pro rata LSL entitlement under the Long Service Leave Act that would have been payable by United to him on termination of employment. Although Mr North's service credits would have been transferred under the Agreement, his evidence indicated that he saw no personal benefit in the Agreement because, as he is now aged 61, he intends to resign/retire from SSDS before LSL would be fully accrued at ten years' service. Ms Lythall did not send a letter and nor is there any evidence as to her views on the Agreement. She would not have had an entitlement under the Long Service Leave Act , and nor would the LSL aspects of the Agreement have applied to her as it did not cater for employees with fewer than three years' service. 11 On 6 October, the appellant made final payments to employees who took up employment with SSDS. The employees were advised that as they had accepted employment with SSDS "a severance payment will not be made."

[34]

27 As to the second contention, which is the major issue on appeal, McKenna C relevantly found: (1) The contentions by the appellant that the agreement between it and SSDS formed a basis for making an order relieving it, in whole or in part, from making redundancy payments on the basis the appellant obtained suitable alternative employment fail for a number of distinct reasons. First, the employees (other than Ms Lythall) secured offers of employment by 2 September 2005, whereas the agreement was confirmed only as late as 13 September 2005. Second, the appellant had no actual or ostensible authority to purport to negotiate on the employees' behalf in relation to the matters in the agreement. Third, the evidence does not support a conclusion that the agreement was applied to five employees having regard to: the appellant's direct advice concerning long service leave; the terms of the job offers and AWAs; the commencement date in Ms Lythall's job offer; payment for the public holiday; and the absence of evidence concerning waiver of probation. (2) In so far as its claim for relief from payment under cl 34(v)(c) of the Award was concerned, the appellant's actions did not amount to "all that much at all in terms of obtaining suitable alternative employment for the employees". In respect of some of these actions McKenna C found: (a) SSDS had squarely indicated it had employment opportunities available and it wished to employ United employees. (b) The limited extent of the evidence would not support a conclusion that references provided by the appellant to SSDS were relevant to obtaining employment for the employees. The references provided by a number of the appellant's managers were personal references rather than official, company references. As such, the evidence as to references does not assist the appellant at all in its claim that any references were relevant to obtaining suitable alternative employment for the employees. (c) The appellant played no role in deciding who SSDS would employ; it was "totally SSDS's decision". There was no evidence the appellant was in any way influential in obtaining employment for any of the employees, either individually or collectively. It was up to SSDS to decide which job applicants from the appellant, if any, would be offered employment. (d) The appellant extended a number of courtesies to SSDS as part of the transitional arrangements, such as in relation to mailing facilities (including those for job applications) and arranging to have a bundle of twenty job application forms left on site. There is no evidence, however, that any of the employees collected the job applications on site or used the appellant's mail service to submit applications to SSDS. Indeed, to the limited extent the evidence deals with the matter, it indicated the employees attended the SSDS presentations and personally obtained the job application forms directly from SSDS (as with Messrs Nolan, North, Bugden, Janssen and Solomon). (e) The appellant provided SSDS with a list of awards and contact details for key internal and external personnel, and provided map directions on how to get to venues. These courtesies to SSDS personnel could not objectively be regarded as obtaining employment for the employees. (f) The appellant's employees also helped set-up the venue for the SSDS presentations, which would have assisted SSDS in relation to giving its presentations, but it is difficult to see how this courtesy to SSDS could be construed as obtaining alternative employment for the employees. (g) The appellant granted paid leave to attend SSDS presentations in early August and SSDS interviews later that same month. However, the significance of such paid leave is very much diminished as granting such leave would be within the spirit of or, depending on the timing of the absence, the letter of the award. 28 Under the heading "Principles" and in relation to the issue of "obtains acceptable alternative employment", the Commissioner referred to the decision of the Full Bench of the Australian Industrial Relations Commission in Re Clothing Trades Award 1982 (1990) 140 IR 123 at 128: The word "obtains" does not appear in its context to mean actually obtain in the fullest sense possible. In circumstances like those occurring at the company one employer is incapable in law of effecting a contract of employment between his employee and another employer whether by assignment (see Re Anderson Hosiery Mills Pty Ltd; Moore DP; Polites DP; Smith C; Print J1785 [T007]) or otherwise; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate. It follows that "obtain" must be given some lesser meaning. The Shorter Oxford Dictionary (third edition, revised) provides as its relevant meaning, the definition of "obtain" as "to procure or gain, as the result of purpose and effort". It seems to us that meaning is of assistance here; that is the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind. … Viewed in this way it will be seen that the intention is not to impose an absolute test on the employer's ability to "obtain" alternative employment but rather it refers to action which causes acceptable alternative employment to become available to the redundant employee. The employer must be a strong, moving force towards the creation of the available opportunity. 29 After referring to Re Clothing Trades Award (otherwise referred to as (Derole), McKenna C stated:

[35]

81 Despite the submissions of Mr Gardner , I do not consider United was a strong moving force of action, rather than just being facilitative. United did not cause the employment to become available and nor was it a strong moving force in the creation of the employment, in the sense considered in Derole . The evidence just does not support a conclusion United obtained the employment for the employees. It was clear from the outset SSDS would have alternative employment available from October 2005, subject to a competitive selection process in accordance with the recruitment programme SSDS tabled at the first Transition-Out meeting. United did not obtain that available alternative employment for the employees; the work was potentially available on competitive application and the employees personally obtained the jobs: Australian Workers' Union v Great Lakes Community Resources t/as Resource Recovery [2004] NSW IRComm 327. 30 At [83] the Commissioner held: 83 United, the applicant for the order under cl34(v)(c) of the award, has not established it "obtained" employment with SSDS for the employees. As the condition-precedent to the making of an order has not been met, there is no basis on which to further consider whether United should be granted an order relieving it, in whole or in part, of the award-based requirement to make redundancy payments. It is unnecessary, therefore, to consider the line of decisions referred to by Mr Gardner on the suitability of the alternative positions and the submissions of Mr Joseph on why the positions were not relevantly suitable. As Mr Joseph submitted, United did not get over the "first hurdle" in the award of establishing that it obtained employment for the employees. 31 The Commissioner then addressed the circumstances relating to Ms Lythall. At [95] McKenna C held: I am satisfied United obtained suitable alternative employment within its own operations for Ms Lythall as a customer service officer and should, therefore, have an order in its favour relieving it of the obligation requiring any redundancy payment. I should note, for completeness, that for the reasons common to the other affected employees, United cannot be said otherwise to have obtained for Ms Lythall suitable alternative employment with SSDS. Indeed, United's actions were ultimately anything but facilitating in relation to Ms Lythall moving into another job with SSDS. 32 As to the third of the appellant's primary contentions, the Commissioner held there was no transmission of business for the purposes of Chapter 2, Part 8 of the Industrial Relations Act: 103 I accept that the provisions of Ch 2 Pt 8 of the Industrial Relations Act are cast broadly and would not be limited only to a transfer by sale; the definitions in s101(1) make that clear. I also note that the meaning of "transfer of business" is chameleon-like and needs to be sufficiently flexible to achieve the statutory intention of giving anti-avoidance protections. Despite the breadth of the provisions of Ch 2 Pt 8, SSDS was not, in my opinion, a transmittee of any part of the business of United even though the activities conducted by United and SSDS at the LMA for the Department were the same or similar. There was a competitive tendering process for the work at the LMA. United did not transfer its business as it had no business at the LMA, as such, which it had the ability to transmit; it had "lost" the business. All that happened was that successive arrangements were made by entirely unrelated commercial competitors to employ the employees at the LMA site. The Department and SSDS entered into their own separate contract. Mr Joseph's submissions may be accepted that no evidence was led by United to support its contention there was a transfer of business. 104 Furthermore, the employees of SSDS did not become employees of SSDS "as a result" of any transfer of business from United to SSDS, using the words in s101(1) of the Industrial Relations Act . The employees became employees of SSDS through a competitive selection process for employment, resulting in individual offers and acceptances of new contracts of employment under AWAs. 33 As the issue of transmission was not pressed on the appeal, there is no need to deal with it further. 34 In the conclusion to her decision the Commissioner ordered: 126 Redundancy payments under the award, with interest, should be made no later than 21 days from today by United to the employees on whose behalf the NUW has made application in these proceedings, except Ms Lythall. Case for the appellant

[36]

35 There are two main issues raised by the appellant in this appeal and they are whether: (1) the Commissioner erred by conflating a small claim matter filed by the Respondent in respect of six particular employees with an application by the Appellant to modify its obligations under the Storeman and Packers (General) State Award ( Award ) Award (sic) for redundancy payments in respect of all employees subject to the Award whose employment was effected by the conclusion of a contract with the Department of Defence on 30 September 2005; and (2) the Commissioner erred in adopting a too narrow approach to the question of whether the Appellant had "obtained employment" for the purposes of enlivening the Commission's discretion to consider modification to the payments to be made under clause 34(4)(c) of the Award such as to constrain the Commission's jurisdiction. 36 As to the first issue, the appellant submitted that it was unclear if the Commissioner: (i) Dismissed the Appellant's application in whole; (ii) Purported to deal with the entirety of the Appellant's application as though the Appellant's claims only dealt with the claims in respect of the six employees named in the Small Claim matter; or (iii) Has not dealt with the Appellant's application but only the Small Claim application. 37 It was submitted that if the Commissioner adopted the first approach then the appellant was not accorded procedural fairness because its claims were not fully heard and determined. Further, that if the Commissioner adopted the second approach then the Commission had failed to exercise the jurisdiction invested in it to hear and determine the application because it has misconceived and failed to address the claims to invoke its jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088. Senior counsel for the appellant submitted: The effect of the second approach was to erroneously focus the inquiry on whether the Appellant had "obtained" the six employees in question and presumably extrapolate that determination to all employees for the purposes of dealing with the Appellant's application. It is submitted that such an approach is prejudicial both to the Appellant in terms of consideration of whether it should be allowed to have the benefit of the Commission's discretion at large. It is also prejudicial to other employees whose employment was not before the Commission. The Appellant accepts that if the Commissioner has in fact only made findings on the Small Claim, and only expressed views on the application of s 34(v)(c) in respect of the present claimants then there would be no error on this ground and the balance of the Appellant's application should be remitted to Commission differently constituted to be dealt with to conclusion. 38 As to the second issue, it was submitted by the appellant that there was no consideration given by the Commission to the nature of the initiatives that could be taken by the appellant to obtain employment for its employees with a business which was competitive to it and had just won a tender from it; there was no indication of what steps in such a situation could have indicated it as a "strong, moving force" (see Re Clothing Trades Award) which were not taken by it. It did not appear, it was submitted, that the commercial context was taken into account by the Commissioner at first instance. 39 Senior counsel for the appellant contended that the focus by the Commission on the effect of the agreement concerning the transfer of entitlements to determine whether the appellant has 'obtained employment' for its displaced workers, demonstrated the error in approach of the Commission in expecting efforts to be made by the appellant commensurate with the type of efforts that may be made by the transmittor of a business through sale or succession, where there is a deal of commercial leverage held by the outgoing employer over the prospective incoming employer. 40 It was submitted for the appellant that the efforts by the employer in Re Clothing Trades Award were similar or less significant than those made by the appellant in the present case. In Re Clothing Trades Award it was held that in relation to efforts by the employer to find employment for employees made redundant, the employer was found to be a "strong moving force" and thereby was held to have obtained acceptable alternative employment for the employees concerned. 41 The appellant submitted that the Commissioner failed to properly take into account the whole of the efforts made by the appellant in facilitating employment for the redundant workers because the conflation of the small claims with the appellant's application meant that the six affected employees became the entire focus of the inquiry rather than the efforts of the appellant in respect of the larger workforce. 42 The appellant further submitted that the Commissioner did not have proper regard for purpose of severance pay provisions in construing the operation of s34(v)(c) of the Award. In this regard it was submitted the approach of the High Court in Amcor Limited v Construction Forestry Mining and Energy Union (2005) 214 ALR 56 re-affirmed the focus of the protection intended to be provided by redundancy provisions in awards on the maintenance of employment for employees rather than technical changes or novations of their employment contract. 43 The approach taken by the Commission in the present case, it was submitted, involved an application of the approach taken in Australian Workers' Union, NSW v Great Lakes Community Resources T/as Resource Recovery [2004] NSWIRComm 327 at [26], namely, that "entitlement to redundancy payment is the primary right as prescribed by the Award. Relief from payment is the exception". It was submitted that such an approach misconceived the true purpose of such provisions which was to ensure, so far as practicable, that employees do not lose employment as a result of changes in the employer's business rather than the creation of a monetary entitlement payable in all but the most exceptional of circumstances where there is change in the employer's business. 44 Senior counsel for the appellant contended that the way in which the Commission construed the approach to the term "obtains" in cl 34(v)(c) of the Award unnecessarily limited the scope of the Commission's discretion to encourage employers to take reasonable and pro-active steps in the circumstances to assist their employees find employment and so mitigate against the effects of the redundancy. 45 It was also submitted by the appellant that the Commissioner erred in disaggregating the phrase "obtains acceptable alternative employment" in that as the Commissioner found the appellant had not obtained employment she erred in finding there was no need to consider whether the alternative employment was acceptable. The appellant contended that the proper approach for the Commissioner to have taken was to pose the question whether the appellant had "obtained acceptable alternative employment" not whether the appellant had merely obtained employment. As Mr Kenzie QC put it: The Commissioner determined what was obtained employment and took a narrow approach to obtaining and because employment had not actually been obtained, then the company's application failed and that included, notwithstanding the evidence of what the company had done and the agreement, the company's application failed and you never got to the stage of considering whether the employment that was actually obtained, by whatever means, was adequate alternative employment, or any role that the prior contractor played in relation to that. 46 Finally, it was submitted that the narrow approach adopted by the Commissioner to the interpretation of cl 34(v)(c) would act as a disincentive to employers to make any effort to assist employees find new employment. Case for the respondent 47 As to the first issue identified by the appellant, the respondent submitted that to the extent the appellant suggested there was a wider controversy involving the application of the Award redundancy prescription, there was no evidence led by the appellant and no relief sought by the appellant as to any other matter. The only dispute that the appellant sought to meet by its application concerned the dispute notification in Matter No. IRC 4444 of 2005, which had upon filing of the small claim operated to identify all of the matters in dispute. It was submitted the only modification to the Award sought by the appellant related to the six named employees, the only submissions made by the appellant concerned those employees and the only evidence led by the appellant concerned those employees. 48 As to the second issue, the respondent accepted there was no real issue that the appellant did a number of things that assisted or "facilitated" the affected employees obtaining their new employment. But that was not the question the Commissioner was required to address - the word used in the Award, as the gateway to variation of the standard prescription is "obtain". 49 It was submitted by Mr Reitano of counsel for the respondent: The Commissioner was required to apply the words used in the Award - namely "obtain". The word "facilitate" is not the word used in the Award. "Obtain" does not in ordinary English mean facilitate. The same can be said about the word "assist". The appellant's submissions suggest ... that a finding that the appellant 'facilitated' the employees in obtaining their new employment enlivened the Commissioner's discretion. The submission is wrong and should be rejected. The appellant invites the Commission to interpret the word "obtain" by asking what more could the appellant have done? ... In very many respects the answer is self evident - it could have gone to the incoming contractor and entered into an agreement with it that required the incoming contractor upon commencement of its contract (and the termination of employment of the employees employment with the appellant), to offer employment to the affected employees on the basis that their terms and conditions of employment would be the same or better and that their continuity based entitlements would be preserved in their new employment. It is no answer to that suggestion to say that the incoming contractor was a competitor or that the appellant may have had to pay a sum of money in return for such an agreement or that for some reason or another such a suggestion offends common sense. The appellant's submissions invite an answer to that question - the answer is self-evident. None of the things that the appellant did do as found by the Commissioner ... secured employment for any of the employees. They were all required to compete for a position in a competitive selection process... The incoming contractor of course had an interest in employing them given their history at the site in any event ... It is difficult to see how anything that the appellant did could override the inevitable force of those factors constituting the real motivations behind the incoming contractor offering employment to the employees. 50 It was submitted for the respondent that the approach in Re Clothing Trades Award and that of the Commissioner here was consistent with the purpose of the provision in cl 34(v)(c) - an employer who goes to the expense and trouble of obtaining for its employees acceptable alternative employment should be relieved of the obligation to pay redundancy payments. The purpose of the provision was not to permit an employer to take advantage of an obvious circumstance in which employees are likely to secure alternative employment so as to claim the benefit of an award exemption by reason of having done next to nothing in securing for its employees another job. 51 As to the purpose of redundancy pay it was submitted that it has been held to be, at least in part, to compensate an employee for the loss of non-transferable credits (see, for example, the Termination Change and Redundancy Case (1984) 8 IR 34 at 75). The purpose of the exemption created by the test case provision as reflected in clause 34(v)(c) of the Award was to absolve an employer from the obligation to pay redundancy pay where the employer has taken time, cost and effort to secure suitable alternative employment for affected employees. The Termination Change and Redundancy Case identified as an important consideration in determining suitable alternative employment whether or not previous service was recognised, which was not the case here. 52 The respondent submitted it was wrong of the appellant to submit that the focus of redundancy pay in award provisions is "on the maintenance of employment for employees rather than technical changes or novations" of employment contract. If that were so, it was submitted, there would be a general exclusion from redundancy pay in award prescriptions disentitling any employee from payments where those employees had secured any alternative employment prior to termination. 53 Mr Reitano submitted: The proper focus of clause 34(v)(c) of the Award is two fold - first to provide a mechanism by which employers who take the time, trouble and expense of obtaining acceptable alternative employment for their employees might seek some relief but at the same time preserving (if necessary) the compensatory aspect of redundancy pay where the employment is not "suitable" especially where continuity and non transferable credits are not preserved in any other employment but also where there are other "losses" (such as different terms and conditions of employment like here) imposed on employees. Whatever the High Court may have said in Amcor it did not develop any principles relevant or applicable to a test case provision like clause 34(v)(c) of the Award. The judgment in Amcor simply had nothing to do with the proper interpretation of clause 34(v)(c) of the Award. The suggestion that the High Court was laying down in Amcor some new or different arbitral principle or so-called 'policy considerations' relevant to the application of award or test case prescriptions concerning redundancy should be rejected. In any event that was not the reason why the appellant relied upon Amcor below and the arguments now put were never agitated at all before the Commissioner. 54 The respondent also contended that aspects of the appellant's case on appeal had not been put at first instance and that, therefore, the appellant was: [B]ound by its conduct in the proceedings at first instance because its new case on appeal involves a significant departure from what it was contending for before the Commissioner and would involve a fundamentally different process to that which has been embarked upon here. Leave to appeal

[38]

57 The first of the two main issues raised by the appellant on appeal concerns what the appellant described as a conflation by the Commissioner of the applications before her which, it was said, led to a failure to exercise jurisdiction in respect of the actual claim made by the appellant in its application of 11 October 2005. 58 It is true that the Commissioner did not specifically address and rule on the application by the appellant for relief under s 34(v)(c) of the Award. To that extent the Commissioner erred. However, the question for the Full Bench is whether, as a consequence of this particular error, it should intervene as the appellant proposed, and remit the matter to the Commission differently constituted to be dealt with to conclusion. 59 The appellant contended this was necessary because the effect of the Commissioner's approach was to erroneously focus the inquiry on whether the appellant had "obtained" employment for the six employees in question and presumably extrapolated that determination to all employees for the purposes of dealing with the Appellant's application. It was submitted that such an approach was prejudicial to the appellant in terms of a consideration of whether it should be allowed to have the benefit of the Commission's discretion at large. It was also prejudicial, it was submitted, to other employees whose employment was not before the Commission. 60 Undoubtedly, the proceedings at first instance, including the cases presented by the parties, were focused on the question of whether the appellant should be granted relief under cl 34(v)(c) of the Award in respect of six employees who were employed by SSDS. In respect of one of those employees, Ms Lythall, the relief was granted. 61 There was nothing of any substance in the appellant's submission at first instance that would have, in any reasonable way, alerted the Commissioner to the need to address the circumstances of any other employee of the appellant other than the affected employees in the context of whether relief should be granted under cl 34(v)(c) of the Award in respect of other employees. It is not surprising, therefore, that the Commissioner did not specifically turn her mind to other employees. 62 In so far as the contention by the appellant is concerned, that it was prejudiced by the Commissioner's failure to go beyond the six affected employees in her consideration of what steps the appellant had taken towards obtaining alternative employment, we are satisfied the Commissioner was cognisant of, and relevantly took into account, the whole of the appellant's initiatives. But even if that were not the case the Commissioner has only made orders in respect of the six affected employees and in doing so was required to have regard to the appellant's efforts only in respect of those employees because the reality was the proceedings at first instance were limited to a consideration of those employees. The appellant should be held to that approach on appeal. 63 If the appellant is concerned (and we do not understand how it could be) that the Commissioner's decision extends to employees other than the six affected employees, then that is not so and the appellant is at liberty to make a further application for relief in respect of other employees if it considers it necessary to do so. 64 In the circumstances, we do not consider the appellant has made out a case for appellate intervention on the first issue and we, therefore, do not propose to remit the matter. 65 We turn to the second issue. The circumstances in which the jobs of the six affected employees of the appellant became redundant were, broadly, that the appellant was unsuccessful in its tender to continue as a contractor providing services to the Department of Defence in the Liverpool Military Area. The successful tenderer was SSDS. 66 It is unquestionably the case that the appellant facilitated the employment with the incoming contractor of the six affected employees, including Ms Lythall (given an order was made in the appellant's favour in respect of Ms Lythall no further consideration is required by us as to her position). The appellant's efforts to facilitate the new employment were referred to by the Commissioner at [65] of her decision: 65 Mr Salouros confirmed United was also keen to see its employees secure employment with SSDS. To this end, the evidence adduced by United adverted to the following matters, whereby Mr Salouros and other United employees:

[52]

70 The example given by Mr Kenzie to illustrate the contention was that an employer may not obtain employment for its employees with an incoming contractor in the sense of having entered into a legally binding arrangement with the incoming contractor that secured the employment of the employees. However, the employer may negotiate terms of employment for its employees with the incoming contractor that but for the negotiations, would not have constituted terms that could be regarded as acceptable alternative employment. In those circumstances, it was contended, the employer would be regarded as having obtained acceptable alternative employment for its employees with the incoming contractor. Hence, a tribunal had to take a global approach to any consideration of the phrase "obtains acceptable alternative employment". 71 The effect of what the appellant contended seems to be that in considering what the word "obtains" qualifies, the emphasis should be on the word "acceptable" and not, as the Commissioner believed, on the word "employment". In our opinion, as we shall explain, the word "obtains" qualifies the words "acceptable alternative employment". 72 In order to determine the meaning of the phrase, "obtains alternative employment" in cl 34(v)(c) of the Award, it is necessary to consider the relevant principles to be applied when interpreting industrial instruments. These principles are well settled: Zoological Parks Board of New South Wales and The Australian Workers' Union, New South Wales [2004] NSWIRComm 85 at [42]-[46]; Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217 and Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta (2003) 146 IR 360 at [44] - [46]. In Zoological Park the Full Bench stated that: Broadly speaking, the primary consideration in such matters [interpretation of industrial instruments] is the actual words used (and these should be given their plain, ordinary meaning) and the context in which the words are used.

[53]

44 The construction of an award may include the history of the instrument in some circumstances. The words must be considered in the context of the instrument as a whole although in a practical sense, some parts of the documents will be very significant and others less significant or of no moment at all. 73 In Kingmill the Full Bench cited with approval the observations of Walton J, Vice-President, in Perisher Blue v Australian Workers' Union (1999) 91 IR 274 at 283 - 284: Speaking generally, awards should be interpreted in a similar fashion to other enactments: Geo A Bond & Co Ltd (in liq) v McKenzie [1929] 28 AR (NSW) 498 at 503 ; Short v F W Hercus Pty Limited (1993) 40 FCR 511 at 520. In the construction of the general order, and in conformity with general principles of award interpretation, the Commission should consider the wider context of the making of those provisions. Burchett J in Short v F W Hercus describes this approach to the interpretation of an award as follows: "The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is part, or to other documents with which there is an association. Context may also include, in other cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read." (at 518)

[55]

I note that a similar approach was adopted by the former Industrial Commission in re Butter, Cheese and Bacon Factories and Milk and Cream Condensories &c. (State) and Butter Cheese and Bacon Factories and Milk and Cream Condensories, &c. (Newcastle and Northern) Awards (1950) 49 AR 62 at 64 where it was held that the meaning of words within an award (which are not expressed or precise) may be ascertained by "placing upon the words their ordinary meaning as applied to the subject matter with respect to which they are used". 68 The authorities set out in Bryce considered the circumstances in which it may be appropriate to apply the award-maker's intentions to the circumstances in which the award was made and to the practical effects of a particular construction. The decision in Perisher Blue indicated the desirability of considering the terms of an award in the context in which they appeared and emerged. 74 Consistent with the approach approved in the authorities, it is appropriate in this case to consider the origins of cl 34(v)(c), particularly given the ambiguity of the phrase "obtains acceptable alternative employment". The origins can be found in the 1984 Termination, Change and Redundancy (TCR) Case where the Full Bench of the Australian Commission in that landmark test case established certain standards that flowed into the New South Wales jurisdiction. In its substantive decision (8 IR at 75) the Full Bench remarked that: We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment. Where such an application was made it would be important to consider whether previous service with the previous employer was recognised as service with the new employer. However, we make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business. 75 At 73 the Full Bench stated: We prefer the view that the payment of severance pay is justifiable as compensation for non-transferable credits and the inconvenience and hardship imposed on employees.

[56]

76 In its TCR Supplementary Decision ((1984) 9 IR 115), which considered applications by employers to modify the test case standard, the Full Bench stated at 134-135: The employers contended that where an employer has gone to the trouble and expense of finding acceptable alternative employment for his employee, that employer ought to be prima facie entitled to relief from the requirement to make severance payments. They claimed that there was not such a welter of non-transferable benefits as to provide what is an unduly onerous obligation on employers to seek an exemption. 77 The Full Bench declined to accept the provision proposed by employers, which simply exempted an employer "who obtains alternative employment for an employee from the obligation to pay any severance pay" and instead provided as follows: An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he/she obtains acceptable alternative employment for an employee. 78 The purpose, then, of severance pay is to compensate for "non-transferable credits and the inconvenience and hardship imposed on employees". See also Westfield Holdings v Adams (2001) 114 IR 241 at [144] and the cases referred to therein. However, under the test case standard, which is reflected in cl 34 of the Award, it is open to an employer to seek relief from the general obligation to pay severance pay if it is able to show it has obtained acceptable alternative employment for an employee. In considering an application for relief it will be important for the tribunal to have regard to whether "previous service with the previous employer was recognised as service with the new employer". 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.

[58]

84 Returning to the circumstances of this case, as we observed earlier, notwithstanding the "lesser meaning" assigned to the word "obtains" in Re Clothing Trades Award, McKenna C, nevertheless, held that the appellant could not be regarded as a "strong moving force" in establishing new employment opportunities for the affected employees. On the contrary, the Commissioner observed at [81], "the work was potentially available on competitive application and the employees personally obtained the jobs". 85 In this respect, we do not consider the Commissioner erred as all of the affected employees were required to compete for a position in a competitive selection process; the incoming contractor had an interest in employing them given their history at the site, had indicated it had employment opportunities available and that it wished to employ the appellant's employees; the agreement between the appellant and SSDS regarding employees' entitlements post dated job offers by SSDS; the affected employees were not a party to the agreement; the evidence does not support a conclusion that the agreement was applied to the relevant affected employees in any event; and, none of the facilitative steps taken by the appellant and referred to at [65] of the Commissioner's decision could be said, individually or in the aggregate, to have significantly contributed to SSDS making employment available to the affected employees. 86 In Re Clothing Trades Award, it was held the employer was a strong moving force in establishing new employment opportunities for the affected employees. If the employer had not approached other employers in the industry, arranged for inspections by employees of other employers' premises, invited other employers to interview employees and taken other appropriate steps, the new employment would not have eventuated. Here, as the respondent contended, the incoming contractor needed a workforce and preferably one with the necessary skill, experience and knowledge that would allow the contractor to begin meeting its obligations immediately upon commencement of the contract. The appellant's workforce was an obvious and readily available source of that labour. There was little to be done by the appellant in bringing about an employment relationship between the affected employees and SSDS and the evidence confirms this.

[59]

87 That leaves the question of the appellant's role in achieving a situation in which the employment offered to the affected employees by SSDS was acceptable employment when considered objectively. To the extent that McKenna C did not consider this question we consider the Commissioner erred. We do not, however, intend to remit the matter as a consequence of this error because there is sufficient material to enable this Full Bench to make its own determination. 88 There are a number of relevant considerations in this respect. First, the industrial instrument applicable to the affected employees changed from an award of the Industrial Relations Commission of New South Wales to an AWA. The parties did not address at first instance or on appeal, in any detail, the significant differences that exist between the two instruments, and the implications for employees in moving from the security and certainty provided by an award to what is, in effect, an individual contract. In any event, it does not appear that the appellant gave any consideration to whether employment under an AWA and the terms offered under that instrument could constitute acceptable employment. But importantly, except for the negotiation by the appellant of a transfer of credit for length of service in respect of long service leave, the affected employees commenced their employment with SSDS on the basis of a "clean slate", as it was expressed by Mr Peter McMahon, the national human resources manager for the incoming contractor. 89 In other words, except for long service leave, the affected employees took with them nothing they accrued in their employment with the appellant, including accrued leave entitlements (such as sick leave) and seniority; the employees commenced their employment with SSDS afresh and none of their service with the appellant (except in respect of long service leave) was to be counted as service with the incoming contractor. 90 This meant, for instance, in respect of Mr Nolan, who commenced with SSDS in 1999 and who would have been entitled to five weeks' notice of termination of employment under the Award and 17.5 weeks' redundancy pay, that upon commencement of employment with SSDS his entitlement to notice of termination was one week and no severance pay during the first year of his new employment. Indeed, the AWA that applied to his employment entitled the employer "to terminate the employment for any reason effective immediately" during the first three months of employment with SSDS. It also meant Mr Nolan would have to wait a further 12 months before he accrued an entitlement to sick leave. 91 In these circumstances, it is apparent that the appellant was not a strong moving force in causing acceptable alternative employment to be made available to the affected employees. This is particularly so because the appellant did not achieve, and did not make what could be regarded as a determined effort to achieve, an outcome whereby the previous service of the employees with the appellant was recognised for all purposes as service with the SSDS and where consequently, except in respect of long service, the employees lost non-transferable credits. 92 Whilst an effort was made by the appellant to facilitate the transition of employees into new employment on terms that may have been better than if the employees were left entirely to their own devices to find employment, the difference, in the final analysis, was marginal and does not justify an exemption, in whole or in part, from the requirement under the Award to make severance payments. 93 We intend to uphold the appeal but only to the extent of the error identified at [87] of this decision. In practical terms, the partial upholding of the appeal will have no effect on the Commissioner's decision to order redundancy payments to Messrs Nolan, North, Solomon, Janssen and Bugden. However, in framing any orders on the appeal account needs to be taken of the orders made by Staff J on 24 July 2006 in granting a stay and the depositing of monies into a trust account. We note in the proceedings before Staff J, the appellant accepted that as part of the terms of the stay, interest should accrue on monies ordered to be paid into the trust account. Orders

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