C2015/6206, Transcript of Proceedings [2015] FWCTrans 673 (23 November 2015)

TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1052704

---

VICE PRESIDENT WATSON
DEPUTY PRESIDENT KOVACIC
COMMISSIONER WILSON

C2015/6206

s.604 - Appeal of decisions

Compass Group (Australia) Pty Ltd

and

National Union of Workers & United Firefighters' Union of Australia-Victorian Branch
(C2015/6206)

Melbourne

10.02 AM, WEDNESDAY, 11 NOVEMBER 2015

PN1

VICE PRESIDENT WATSON: Can we have the appearances, please. Mr Neil.

PN2

MR I NEIL: If the Commission pleases, I appear with my learned friend Mr Wheelahan, pursuant to the permission that the Full Bench has granted, for the appellant.

PN3

VICE PRESIDENT WATSON: Mr White.

PN4

MR E WHITE: I appear for the two unions in the appeal and am assisted by Mr Snowball and Mr Murphy.

PN5

VICE PRESIDENT WATSON: Thank you. Yes, Mr Neil.

PN6

MR NEIL: If the Commission pleases - - -

PN7

VICE PRESIDENT WATSON: We've had a chance to read the outline of submissions. We might mark that exhibit N1 in these proceedings.

EXHIBIT #N1 OUTLINE OF SUBMISSIONS OF THE APPELLANT

PN8

MR NEIL: If the Commission pleases, may we if it is convenient address the question of permission to appeal in the context of our submissions on the appeal generally. May we start with this observation; we take it as an axiomatic premise of our argument that there must be strict adherence to the principles laid down in the TCR cases. They represent the orthodoxy of more than 30 years. They are the foundation of ever federal award that addresses the subject of redundancy that has been made in that time.

PN9

They are the foundation or every enterprise agreement that has been made and approved, including those that are in issue in this case. They are replicated in the Fair Work Act, importantly in section 119. These proceedings concern two enterprise agreements. The relevant provisions are set out in the primary decision. The primary decision is behind tab 22 of the appeal book. The provisions in question are reproduced in paragraphs 4 and 5.

PN10

At issue in this case was the proper construction and application of those provisions so far as they concerned the concept of the ordinary and customary turnover of labour. We propose to begin by identifying the most fundamental of the areas that vitiate the primary decision in our submission and then demonstrate why they are wrong by reference to the TCR cases.

PN11

May we invite the Commission to take up the primary decision. It is, as I said, behind tab 22 of the appeal book. Our starting point is paragraph 19, which begins on page 935.

PN12

In paragraph 19, the Commissioner set out the celebrated passage from the judgment of Fisher J in the Employment Protection Act case in which the expression "the ordinary and customary turnover of labour" was used for the first time.

PN13

The critical errors in the primary decision are located in paragraphs 20 and 21. We go through those now. The first sentence in paragraph 20 is incorrect. The correct position is the opposite of the statement there made. As to the second sentence, the first three words are incorrect for the same reasons as the first sentence. The rest of the second sentence does not matter. As to the third sentence, the statement there made is incorrect. Contrary to that statement, there is an explicit link between the concept of "the ordinary and customary turnover of labour" as it was identified in the TCR cases on the one hand and on the other hand, terminations due to loss of or changes in contracts.

PN14

As to the fourth and last sentence in paragraph 20, the statement there made is correct at one level, but not if intermittency is treated as though it were coextensive with the concept of the ordinary and customary turnover of labour. As it will be seen, the latter is an error that effects the primary decision.

PN15

Going then to paragraph 21, the first sentence is correct. The second sentence, however, is incorrect if it is posed as an exhaustive test. The same applies to the third sentence. In the fourth sentence, the Commissioner introduces the idea of employees' expectations of continuous or continuing employment. That sentence marks the introduction of what we submit is an irrelevant or wrongly formed consideration. That error is reflected in the fifth and last sentence.

PN16

The errors that we have identified in paragraphs 20 and 21 then vitiate the Commissioner's ultimate conclusion. That is relevantly found in paragraph 44. Paragraph 44 is on page 945 of the appeal book. The ultimate conclusion is in the last two sentence of that paragraph. That conclusion in an error.

PN17

VICE PRESIDENT WATSON: Just in terms of our role in this appeal, the case below concerned an interpretation of an enterprise agreement.

PN18

MR NEIL: Correct.

PN19

VICE PRESIDENT WATSON: It is not a discretionary decision.

PN20

MR NEIL: Correct.

PN21

VICE PRESIDENT WATSON: We proceed by way of rehearing, if permission is granted and have the power to correct error. The error, if there is one, is in the ultimate conclusion rather than aspects of the reasoning, is it not?

PN22

MR NEIL: That is so.

PN23

VICE PRESIDENT WATSON: So our task really is to look at the conclusion and to determine whether we are of the view that it's correct or not. We may form the view that it is correct for different reasons that the Commissioner used or that the reasoning was correct, but the conclusion is not correct. Ultimately, we need to look at the conclusion to determine whether that is in error.

PN24

MR NEIL: We accept that that is so. The conclusion is a mixed question of law and fact. So far as the law is concerned, the conclusion involves questions of the construction and application of the redundancy provisions in the two enterprise agreements. Our submission is that the Commissioner erroneously construed and applied those provisions. Our contention is that the correct construction and therefore the correct application of those provisions accord with the TCR cases. We would therefore wish to remind the Full Bench of the way in which the TCR cases approached those questions in order to arrive at what we submit is the correct construction of the provisions in question.

PN25

Once one has the correct construction of those provisions, the question of fact arises. It involves applying the facts to that construction. One feature of the present appeal which is significant for the task of this Full Bench, is that all of the relevant facts were uncontradicted and unchallenged. It is our submission that there is therefore a firm foundation for this Full Bench once the redundancy provisions are correctly construed to apply those provisions to the facts. That would lead, In our respectful submission, to a decision reversing the primary decision and substituting the result for which we content.

PN26

VICE PRESIDENT WATSON: So the facts were not in contention below, and your appeal doesn't seek to challenge any of the findings of fact.

PN27

MR NEIL: There are some findings of facts that we challenge, but none that touch this central point.

PN28

VICE PRESIDENT WATSON: Yes.

PN29

MR NEIL: So if it please the Commission, that's the way in which proceed. May we then turn to remind the Full Bench for a moment of the way in which the TCR cases approach the question of the ordinary and customary turnover of labour, and define that concept. We have three bundles of authorities the first of which is the first of the termination change and redundancy cases. It is reported in volume 8 of the Industrial Reports at page 34.

PN30

First, some general background by way of reminding the Full Bench of the way in which the issue was framed for the decision of the TCR Full Bench. The Full Bench will recall that the proceedings there began with a claim made on the part of the ACTU to provide for compensation to employees affected by redundancy. The first issue with which the Full Bench grappled in this decision concerned the definition of redundancy. That issue was resolved at page 56, at about point 2.

PN31

A second issue, with which the TCR Full Bench grappled is the question of whether there should be a distinction between the causes of redundancy when awarded compensation. Now, the Full Bench will find that issue identified first at about point 5 on page 56 in the paragraph that begins, "The ACTU claimed".

PN32

Then the ACTU's contentions in that regard are recorded on page 61, again at about point 5, in the first sentence under the heading, "Scope of redundancy clause." And the final decision in relation to that second issue is recorded on page 62 at about point 4. In these circumstances we do not believe that there should be any fundamental distinction in principle based on the clauses of redundancy.

PN33

A third issue before the TCR Full Bench was the question of whether general standards should be laid down in the then Commission's awards, or whether there should be a case-by-case approach. That issue is identified on page 57 at about point 5, and then the conclusion is recorded on page 59, again at about point 5.

PN34

In this sentence,

PN35

We also have a positive belief that there is a need for some stability and consistency of approach in dealing with redundancy."

PN36

And then in the paragraph that follows, this important statement:

PN37

In all of the circumstances, we are of the opinion that we should, so far as is practicable, determine prospective provisions to apply to redundancy situations and we are also of the opinion that we should look to the more recent decisions of industrial tribunals and the material before us for guidance. However, we are also conscious of the need for consideration to be given in particular cases to particular circumstances and we have endeavoured to reconcile the conflict between those conclusions in coming to our decision.

PN38

We stop reading there. That was the framework for what is the critical issue for present purposes; how to determine the circumstances in which redundancy pay should be granted.

PN39

The TCR Full Bench commenced its consideration of that question on page 73 and it's to that that we next invite the Full Bench's intention. At about point 5 on that page is an important statement that has influenced this Commission's approach to redundancy pay ever since. It's at point 5.

PN40

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.

PN41

Then may we invite the Full Bench to drop down to the foot of page 73. The issue there takes as its starting point the passage on page 59 to which we drew attention a moment ago.

PN42

We have decided that in determining the circumstances in which severance pay should be granted, the quantum of severance pay we should award for reasons of equity and industrial justice, we should pay regard to the most recent decisions of this Commission and other industrial tribunal.

PN43

And then over the top of page 74, and following, the Full Bench identifies those decisions and introduces them with these words, "In particular we have had regard to". Our submission is that when the Full Bench said, at the foot of page 73, "we should pay regard to the decisions in question" and again at the top of page 74, "We have had regard to them", what it was saying was that it adopted them. That is the opposite of the conclusion to which the Commissioner came in this case in the first sentence of paragraph 20 of the primary decision.

PN44

That will be apparent as we remind the Full Bench of other aspects of the first termination change and redundancy case and then the second. Before we do that, may we draw attention to the fact that as will be apparent in subparagraph (b) on page 74, one of the decision to which the Full Bench had regard and, as we have submitted, adopted was the decision of Fisher J in the Employment Protection Act case.

PN45

A copy of that decision is, we hope, the second in our bundle. It is reported in volume 7 of the Industrial Reports at page 273.

PN46

VICE PRESIDENT WATSON: Mr Neil, back to the TCR decision, is the passage commencing at point 4 of page 74, through to the bottom of the page a qualification mention of Fisher J's decision?

PN47

MR NEIL: We submit no, as will be seen. We do intend to come back to the first TCR case, but for the moment may we invite the Full Bench to turn to Fisher J's decision so that it can be seen how it was used by the TCR Full Bench.

PN48

VICE PRESIDENT WATSON: Yes.

PN49

MR NEIL: So volume 7 of the Industrial Reports, page 273. Now, the Full Bench will recall that Fisher J was addressing the employment protection act, a statute introduced in New South Wales in 1982. It required that notification be given to the Registrar of the New South Wales Commission of certain terminations of employment. The purpose of the act was to provide jurisdiction to the New South Wales Commission to make orders and awards, amongst other things providing for compensation to employees who were dismissed on account of redundancy.

PN50

In this case, Fisher J addressed the question of the circumstances in which awards of that kind ought to be made, remembering of course, as we respectfully remind the Full Bench that the discretion conferred on the Industrial Commission to make such award was general. There was no statutory limitation once the terminations were found, as a matter of fact, to have fallen within the classes in respect of which notification was required.

PN51

A question that Fisher J considered was that there are - there were then, as there are now, redundancies and redundancies. Some warranted the making of redundancy payments and some did not. It was to the question of identifying the latter that his Honour turned to page 277 and may we invite the Full Bench to go to that page.

PN52

At about point 4, this sentence appears. In a passage that the Full Bench will recognise as being the passage quoted by the Commissioner in paragraph 19 of the primary decision. The passage is introduced by this sentence:

PN53

There is, of course, in the industry and always has been a general turnover of labour.

PN54

Stopping there for a moment, that's the chapeau to what follows. Everything that follows in the next three paragraphs is addressing the question that arises in circumstances where there is a general turnover of labour. And as will be apparent, what Fisher J then does is to classify dismissals that fall within that description; that is, dismissals that are part of a general turnover of labour into three classifications.

PN55

Now, the first begins - is identified in the next sentence:

PN56

It has been customary for employees' services to be dispensed with because it is the view of management that they are in some way less than satisfactory employees, not appropriately skilled, not appropriately motivated unreliable or exhibiting other forms of unhelpful conduct in an industrial context, but not amounting to misconduct.

PN57

That is one circumstance, one class of redundancy. The second class is described in the balance of that paragraph. That class comprises employees who are employed on terms that contemplate intermittency in employment. That's the second class. Then the third class if identified in the next paragraph. It will be seen that that class explicitly included employees who were dismissed because of loss of contracts or changes in contracts. That's the third class.

PN58

Then overleaf, at the top of page 278, Fisher J drew that analysis together in that, in doing so, his Honour used for the first time the words that now appear in the enterprise agreements here in question, and that as your Honours will recall informed the terms of the general provision that the TCR Full Bench later made.

PN59

I am not aware of system", said his Honour Fisher J, "which loads an ordinary and customary turnover of labour with a significant costs burden in relation to severance as such, or where the object of remedial legislation cannot be fairly described within the three classifications of retrenchment to which I had referred", and the three classifications of retrenchment to which his Honour had referred are, of course, the three classes that we identified on page 277.

PN60

So from the Employment Protection Act case and this passage in particular, these propositions can be derived. First, Fisher J was talking about the ordinary and customary turnover of labour in a way that was coextensive with the chapeau concept of a general turnover of labour; that is, his Honour was talking about the same thing. Second, there were a number of classes of retrenchment that his Honour considered did not properly attract an entitlement to severance pay.

PN61

One of those classes consisted of employees who were employed on terms which contemplated intermittency in employment. Another and distinct class consisted of employees who were dismissed because of loss of contracts or changes in contracts not relating to recession.

PN62

VICE PRESIDENT WATSON: Can I just take you back to the top of page 278. There seems to be two separate propositions in the first sentence. The first is not being aware of a system which loads significant cost burdens on ordinary and customary turnover of labour. That's one proposition. The second one seems to expressed in the opposite way. You said it referred to the three types of ordinary and customary turnover of labour, and I'm questioning you on that.

PN63

MR NEIL: Yes.

PN64

VICE PRESIDENT WATSON: Because it says, "where the object of remedial legislation cannot be fairly described within the three classifications of the retrenchments to which I refer." Now, grammatically, that's saying it doesn't fall positively within the three types of retrenchment that redundancy pay is appropriate for, because at the bottom of page 277, there are three types of redundancies - retrenchments - which were dismissals, which qualify for redundancy pay; economic circumstances, technological change, and I think it might be retrenchment situations. So they are the type of changes which are also dealt with in these cases of the - and the TCR case number 1 where redundancy pay is warranted. It seems to be that the reference in the second part of the first sentence.

PN65

MR NEIL: The force of your Honour's observation put in that way is immediately obvious. The - - -

PN66

VICE PRESIDENT WATSON: It might not change the thrust of anything you've said, but - - -

PN67

MR NEIL: It does not. It does not, but we would accept the force of that observation.

PN68

VICE PRESIDENT WATSON: Yes.

PN69

MR NEIL: The reason why it doesn't change the thrust of anything we have said, appears on the balance of the paragraph at the top of page 278, because it is plain that what there Fisher J is addressing is the idea that severance payments should not be ordered in relation to all dismissals, regardless of cause. The corollary of that position was that there are classifications of retrenchment or dismissals that do not attract an entitlement to severance payments and they are the classifications of retrenchment that are set out on page 277. Now, that's the concept that was taken up by the TCR Full Bench.

PN70

For that purpose, may we for a moment go back to the first of the TCR cases. Now, may we go back to page 74. Now, the first - in the middle of that page, in the paragraph to which your Honour the Vice President drew our attention a little while ago, a reference is made to provisions in the Employment Protection Act which excluded certain dismissals from the requirement to make a notification and therefore precluded the Commission from making an award of redundancy pay. They're classes of employment, which in the present statutory regime governing this Commission are substantially replicated in section 123 of the Fair Work Act.

PN71

Then the TCR Full Bench went on to say this, at about point 7:

PN72

Furthermore, the decision of Fisher J applies only to terminations due on economic grounds. Terminations due to seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession et cetera are expected to be dealt with on the particular merits of the case and so on.

PN73

Now, the first of the TCR cases, may we remind the Full Bench of two passages on page 75, and the second full paragraph on that page, the Full Bench refers back to its decision that there should be a general prescription and to the decision that there should not be a distinction between the causes of redundancy when awarding compensation and then says this:

PN74

Our reasoning in these proceedings, other decisions of this Commission and various decisions of other industrial authorities are also inconsistent with the general severance pay prescription being granted where -

PN75

And then a number of circumstances are set out. We draw attention to the word "also". What the Full Bench was there saying, in our submission, is that circumstances identified in amongst other places the decision of Fisher J in the Employment Protection Act case including dismissals because of the lost of contracts or changes in contracts not relating to dismissal were excluded and then the circumstances identified in this paragraph were also excluded; that is, what appears in this paragraph is not an exhaustive description of the scope of the exclusions that the Full Bench had in mind.

PN76

Now, may we turn to the second termination change and redundancy case. We hope that that's the next case in the bundle. Now, here, as the Full Bench will recall, the Full Bench was concerned with the terms of the general prescription that it would make. So much appears on the first paragraph of the decision which is reported in volume 9 of the Industrial Reports at page 115.

PN77

The Full Bench will recall that the termination change and redundancy Full Bench chastised the parties for attempting to revisit the principles that it had laid down in the first decision and reminded them that the only matter witness which it was concerned was the terms of the general prescription.

PN78

May we ask the Full Bench to turn to page 128 where the subject of redundancy is dealt with. The two contentions are set out in the first paragraph under the hearing "Consultation and provision of information", and then this paragraph appears in which the Full Bench first reminded the parties of their earlier reference to the definition of redundancy and next to the earlier decision that there should not be any fundamental distinction in principle, based on the causes of redundancy and then say this, in our submission, a critical observation.

PN79

Nevertheless, it was not our intention that the redundancy provisions should apply to the ordinary and customary turnover of labour.

PN80

Their Honours then refer expressly to the passage from the judgment of Fisher J in the Employment Protection Act case of which we have already reminded the Full Bench.

PN81

Then this passage:

PN82

However, notwithstanding the helpful submissions of the parties in these proceedings, we have some difficulty in finding a suitable expression to make our intention clear. There is no doubt that we did not intend the redundancy provisions to apply when an employee is dismissed for reasons relating to his or her performance or where termination is due to a normal feature of a business.

PN83

I stop there to make this observation. It is apparent from those passages that the termination change and redundancy Full Bench was adopting precisely the same concept that Fisher J had discussed at pages 277 and 278 of the Employment Protection Act case when his Honour talked about the concept of the ordinary and customary turnover of labour and, second, the terminations due to what the termination change and redundancy Bench called a "normal feature of a business" were as their Honours thought synonymous with the concept of the ordinary and customary turnover of labour. Different words to describe exactly the same concept.

PN84

The Full Bench will recall that Fisher J in the Employment Protection Act case used another expression to describe what, in our submission, is exactly the same concept when his Honour talked about a general turnover of labour. All the same thing.

PN85

Then the provision upon which the termination, change and redundancy Full Bench ultimately decided is on page 128 at about point 6. It is paragraph 1(a). That's where the language of the ordinary and customary turnover of labour was first introduced into this field at a federal level.

PN86

Now, in our submission, there are two propositions that we submit that can be taken from the TCR cases as being the correct statements of principle governing this case. Two propositions. The first proposition is that there is no obligation to make redundancy payments to employees who are dismissed because of the loss of contracts or changes in contracts, provided that dismissal for that reason is an ordinary and customary turnover of labour in the sense that it is a normal feature of the employer's business. That's proposition one.

PN87

The second proposition is that the expressions that your Honours have seen in the TCR cases and in the Employment Protection Act case are all synonymous. Importantly, the concept of the ordinary and customary turnover of labour on the one hand and the concept of a normal feature of the business on the other are all synonyms to describe the concept of something that is not unusual or abnormal. It happens generally. That's the second proposition.

PN88

Both propositions may we say again are, in our submission, derived from the TCR cases as they are properly understood and importantly from the adoption in those cases of Fisher J's reasons at page 277 and 278 of the Employment Protection Act case.

PN89

Now, the Commissioner in the primary decision, as the Full Bench has seen, relied on four cases and the respondent relies on them here again. Could we turn to those now? In our submission, on a proper analysis two of those four cases support the two propositions for which we here contend and two have no value as precedents. The two that support our contentions are first the decision of Keogh DP in KMC Constructors and, second, the decision of Cartwright DP in the matter of the Nationwide AWU and LHMU Australian Defence Forces Services Consent Award.

PN90

May we invite the Full Bench to look at the first of those, the decision of Keogh DP. We hope that that's the next in the bundle.

PN91

VICE PRESIDENT WATSON: It is.

PN92

MR NEIL: Now, it's a little bit difficult to navigate in this decision, but your Honours will - if your Honours turn to the second of the four pages that the argument is identified in the third paragraph on that page, "The companies argue that", that identifies the issue and then if the Full Bench would be good enough to go to the third page, there's a line at about point 2 on the page, and then there is a paragraph that begins with the words, "On the evidence presented in the current proceedings."

PN93

It will be seen that in that paragraph the Deputy President made a critical factual finding. It was that the employers in question had pursued what his Honour called "a dual employment policy." On the one hand they engaged employers to meet the work requirements of a specific contract and on completion of that contract as his Honour found, they may dismiss all or most of those employees. On the other hand, the employers engage employees for work related to a specific contract and either while that work was continuing on its completion, transfer some or all of those employees to work related to other contracts, so that they could fulfil their general ongoing work requirements.

PN94

Then his Honour against that background made this finding. With the renewal of contracts and the obtaining of new contracts by the companies, the employers who fall into the second category can and do attain a degree of permanency and expectation quite different to those in the first category and are not, in my view subject to what otherwise might be the ordinary and customary turnover of labour in the industry.

PN95

Now, the first observation that one may make about Keogh DP's decision is that it is factually distinct from the circumstances of the present case. None of the employees here in question fell into what might be described as or as being analogous to the Deputy President's second category.

PN96

The second point that is made is one that is made by way of corollary to what was the Deputy President's finding. As the Full Bench will see, having found that employees in the second category - I will withdraw that and start again. Having found that the dismissal of the employees and what his Honour found to be the second category fell outside the ordinary and customary turnover of labour, then his Honour held those employees were entitled to severance pay upon the event of their dismissal.

PN97

A corollary of that analysis is that his Honour proceeded upon the footing that employees who fell into the first category would not be entitled to redundancy pay if they were dismissed upon the conclusion of the contracts in connection with which they were employed. If that were not so, then there would have been no need to divide the employees into the two categories that his Honour so carefully delineated and applied. That's KMC Constructors.

PN98

Next, may we invite the Full Bench's attention to the decision of Cartwright SDP. We hope that's the next in the bundle. This was an unusual decision - an unusual matter. It concerned the two issues that are identified in paragraphs 2 and 3 of his Honour's decision. Then would the Full Bench be good enough to turn to paragraph 10? There it will be seen that what his Honour described as "the current redundancy provisions in the award" did not use language that replicated the general prescription laid down in the TCR cases, importantly did not explicitly use the concept of the ordinary and customary turnover of labour.

PN99

Instead, they used this language:

PN100

Dismissals arising from the loss or termination of a contract held by the employer.

PN101

The point at issue was the union's argument that those provisions should be replaced by provisions which used that expression. So much will be seen in paragraph 12 of the decision.

PN102

Now, the issue was whether the existing redundancy provisions in the award accorded with the test, what his Honour called, having regard to the legislation then in force, "the test case standard."

PN103

After dealing with an anterior issue as to the identification of the test case standard and deciding, unexceptionally we submit, that the test case standard consisted of the provisions laid down by the TCR in the TCR cases, his Honour then turned to the question of whether the current award provision accorded with the TCR case standards, and the discussion to which we particularly draw attention begins at paragraph 23 where his Honour introduced the issue, then paragraphs 24 and 25 where his Honour referred to critical aspects of the general provision laid down in the TCR cases, and then in paragraph 26 his Honour said this:

PN104

The question of whether dismissals arising from the loss of a contract are due to the ordinary and customary turnover of labour is one of fact and interpretation. In order to assess whether the dismissals are due to the ordinary and customary turnover of labour, it is necessary to examine the circumstances of the particular case and the normal features of the business. That is, the redundancy standard is to be applied to the facts of the case.

PN105

The we stop there for a moment and draw attention to paragraph 27.

PN106

It may be that Spotless can demonstrate that in the context of its business, dismissals arising from the loss of a contract are, in fact, dismissals due to the ordinary and customary turnover of labour. Indeed, the line of cases Spotless referred to in its submissions demonstrate that such dismissals have been found to be within the meaning of "ordinary and customary turnover of labour."

PN107

I stop there for a moment. By the word "such dismissals" his Honour is referring, of course, to dismissals arising from the loss of a contract. Continuing,

PN108

However, Spotless conceded in oral submissions that the question is to be decided on its facts. None of the cases supports the application of a redundancy standard or the conclusion that dismissals arising from the loss of a contract are always due to the ordinary and customary turnover of labour. This will be a question of interpretation for a court to decide based on the facts.

PN109

We stop there to observe there are our two propositions.

PN110

Before we go to the other two cases that the Commissioner relied upon and upon which our learned friend places so much weight, can we interpose a reminded of the decision of Sams DP, as his Honour then was, sitting in the New South Wales Industrial Relations Commission in the matter of Arslan v Berkeley Challenge Commercial Pty Ltd. We hope that that's the next in the bundle. The reason why we do this - - -

PN111

VICE PRESIDENT WATSON: Before we do that, Mr Neil, we are coming up to 11 am.

PN112

MR NEIL: We note the time, yes.

PN113

VICE PRESIDENT WATSON: We propose to adjourn for a short time. Can I also interpose whether you've given any consideration to a decision of Spencer C in a case of Kilsby v MSS Security of 21 November 2014. It's reported at [2014] FWC 7475. You can take that question on notice, but we might adjourn until 10 past 11.

PN114

MR NEIL: 10 past?

PN115

VICE PRESIDENT WATSON: Yes.

SHORT ADJOURNMENT [10.55 AM]

RESUMED [11.11 AM]

PN116

VICE PRESIDENT WATSON: Mr Neil.

PN117

MR NEIL: If the Commission pleases. Arslan if we may - this is a decision from Sams DP sitting as we observed earlier in the Industrial Relations Commission of New South Wales. This was an unfair dismissal case. It concerned dismissals as a consequence of the loss of a contract.

PN118

The reason why - perhaps we should have observed earlier - the reason why we are inviting the Commission to look at Arslan now is that it played an important part in the other two decisions on which the Commissioner relied and upon which our learned friend places so much weight.

PN119

However as will be apparent Arslan was factually very distinct from the present case. Arslan was decided on a concession made by the employer. That's recorded in paragraph 15. Mr Diamond appeared for the employer. He described the circumstances of the loss of contract as being unusual, and then a little further down this concession is recorded:

PN120

However Mr Diamond accepted that these circumstances were not - - -

PN121

That is the circumstances of the loss of the contract there in question.

PN122

- - - were not able to be characterised as redundancies occurring in the course of the ordinary or customary turnover of labour.

PN123

Against that concession what followed is, we submit, readily understood. At paragraph 28 the Deputy President identified one circumstance of unfairness as being the failure to provide reasonable standards of redundancy benefits.

PN124

The Full Bench will see that his Honour referred to the concept of the ordinary and customary turnover of labour, but only in order to make the point again that having regard to the employer's concession this was not such a redundancy. As his Honour records towards the end of that section:

PN125

Mr Diamond - as his Honour put it - correctly eschewed describing these terminations as arising within the scope of the term. He described the circumstances as unique and unusual. I agree with this submission - said the Deputy President - or over the unusual circumstances disclosed in this case justify an unusual and unique remedy.

PN126

That remedy his Honour fashioned in the context of the discretion involved in an unfair dismissal case and against the background of the unusual circumstance of the dismissal in this way:

PN127

I cannot imagine in any decent contemporary industrial environment that employees with many years service with the same employer should be denied the same rights that other employees are guaranteed by test case standards of this Commission.

PN128

Now, against that background can we turn to a decision of Commissioner Lawson in Garcia v Limro. This is one of the cases relied upon by the Commissioner and by the respondent in the present case. It was argued in this case, that is the case of Garcia, that the terminations in question occurred due to the ordinary and customary turnover of labour.

PN129

In connection with that argument there was at issue, as the Commissioner put it, the interpretation to be given to the words "the ordinary and customary turnover of labour". That issue is identified in paragraph 30 of Commissioner Lawson's decision, and it will be seen there that the debate centred on the circumstance of the loss of a contract.

PN130

Paragraph 31 is critical.

PN131

To the Commission's knowledge the interpretive impasse remains. I was not taken to any authorities which gave clarity to the impasse. I was not taken to any authorities. In those circumstances I consider the view of Deputy President Sams in Arslan to be apposite.

PN132

And the Commissioner then found that the dismissals in question were harsh, unjust and unreasonable because in the circumstances of the redundancies in that case a redundancy payment had not been made.

PN133

It will be readily seen in our submission that the value of this decision as a precedent is substantially diminished. Indeed we submit, with respect, negated by the fact that the Commissioner was not given any assistance whether by reference to the TCR cases or otherwise. Without the benefit of assistance of that kind the Commissioner resolved the issue of construction by picking the meaning that best fitted the Commissioner's appreciation of the contemporary industrial environment.

PN134

Moreover the value of Garcia as a precedent is further diminished by the fact that it does not appear that the Commissioner was told of the factual circumstances in which Sams DP had made his observation in Arslan. Importantly the Commissioner was not told that Arslan explicitly concerned a case that did not involve the ordinary and customary turnover of labour.

PN135

Garcia and the use made in Garcia of Arslan was picked up in the matter of Klooger v Tempo Services Limited. The Full Bench decision in that matter is one on which the Commissioner relied and the respondent relies in connection with this appeal, but because the facts are not readily apparent in the decision of the Full Bench we wish to remind this Full Bench of the decision at first instance. It was a decision of Commissioner Redmond and it should be the next in the bundle we hope.

PN136

We don't wish to take the Full Bench now through the facts, but we make this submission, that it is apparent when regard is had to the Commissioner's decision, it is apparent that there was no indication that any consideration was given to whether the loss of the contract was ordinary and customary or whether it was a normal feature of the employer's business.

PN137

What is apparent is that the Commissioner relied substantially on Garcia, and that appears in paragraphs 20 and 21 of the decision. Once again no consideration of the termination change and redundancy cases or of any of the principles deriving from those cases.

PN138

The Full Bench on appeal did not disturb the Commissioner's decision, essentially on factual grounds, and so much is apparent from paragraph 16 of the decision of the Full Bench which is reported in volume 136 of the Industrial Reports at page 358; it should be the next in the bundle. Paragraph 16 is on page 363. In the first two sentences in paragraph 16 the Full Bench will see set out propositions which accord with the two propositions for which we contend, and then in the third sentence and following the factual findings that the Full Bench thought were open to the Commissioner.

PN139

Those are the four decisions on which the Commissioner relied in the primary decision and that the respondent relies on here. Two it will be seen support the propositions for which the appellant contends and two have no value as precedence for the reasons that we have advanced.

PN140

May we by way of taking the next step in our argument remind the Full Bench of our second proposition. That proposition is that the concept of the ordinary and customary turnover of labour, the concept of a normal feature of the business are synonyms that both describe the concept of something that is not unusual or abnormal.

PN141

In our submission something that happens more often than not falls naturally into that concept, and the evidence was that in this case dismissal because of the loss of a contract happened more often than not, or in other words it happened generally.

PN142

May we first of all remind the Full Bench of where that evidence is collected or is found. It's in the appeal book first of all behind - and we first go, I am sorry, to tab 19 CH4, page 761 of the appeal book, over on to page 762. If the Full Bench has that may we invite the Full Bench to read paragraph 36 - page 761 over on to page 762. There was some cross-examination of this witness in relation to this evidence. It's in the appeal book behind tab 20 at page 868. It is substantially the whole of that page. It would be fair to say we respectfully submit that the cross-examination joined issue at a semantic - with the evidence at a purely semantic rather than objectively factual level. The objective evidence was left entirely unchallenged.

PN143

There is also evidence to the same effect behind tab 19 JF30 at page 709 of the appeal book, paragraph 92. That evidence was unchallenged. The Commissioner referred to that evidence in the primary decision at paragraph 40 and following. That's in the appeal book at page 944. The relevant passages are paragraph 40, paragraph 41, the last sentence of paragraph 42. The Commissioner does not record whether the evidence there referred to is accepted, but a fair reading of the decision as a whole indicates, in our submission, that the evidence was accepted as a matter of objective fact.

PN144

The way in which the Commissioner dealt with it appears in the first sentence of paragraph 35 on page 943 and then in paragraph 44 in the last two sentences. The conclusion set out there in paragraph 44 in the last two sentences was not reasonably open on the evidence that the Commissioner apparently accepted when the test is correctly appreciated and applied. That is in effect the first point of this appeal.

PN145

We repeat our second proposition and apply it to those facts; something that happens more often than not falls naturally into the concept of something that is not unusual or abnormal, something that is part of the ordinary and customary turnover of labour, something that is a normal feature of the appellant's business. It is a part of the general turnover of labour. As the Commissioner found in the second sentence of paragraph 42 it is something that happens generally. Something that happens generally is a normal feature of the business, it is therefore something that falls within the exception, and that is the point.

PN146

One could stop there, just as the Commissioner should have done, we submit, and decide this appeal in the appellant's favour, but for completeness may we say something shortly about three other aspects of the primary decision.

PN147

DEPUTY PRESIDENT KOVACIC: Mr Neil, just before you do, the reference in the primary decision and the language that the Commissioner uses distinguishes between what might be core employees and in unit employees.

PN148

MR NEIL: Yes.

PN149

DEPUTY PRESIDENT KOVACIC: The percentages that are referred to in the primary decision and also in the witness statement material that you refer the Bench to does that distinguish between those two categories of employees at all?

PN150

MR NEIL: It does, and if I may have a moment to show your Honour how that is so. The reference in paragraph 36 of Ms Holmes' evidence, that's the evidence that's at page 761 of the appeal book is to employees who are working on client contracts, if your Honour sees that, and they are in unit employees. The Commissioner recognised that in the first sentence of paragraph 44. So that distinction is drawn. Does that answer your Honour's question?

PN151

DEPUTY PRESIDENT KOVACIC: Yes, it does, thank you.

PN152

MR NEIL: Three particular aspects of the decision; the first relates to paragraph 22 of the decision in which the Full Bench will find on page 937 of the appeal book - may we invite the Full Bench to read that paragraph. At one level the statements there made are difficult to understand. It's obvious and goes without saying that the TCR Full Bench could not have intended to provide for something that did not then exist. In our submission the Commissioner should be understood in this paragraph as expressing a preference not to construe the provisions in question so as to have the effect that the Commissioner describes in the last sentence of paragraph 22.

PN153

If they are to be understood in that way this paragraph is to be understood in that way, and we would, with respect, submit that the Commissioner's preference was idiosyncratic and was an irrelevant and extraneous consideration. That's the first of the three additional matters that we wish to address.

PN154

The second relates to the significance that the Commissioner attached to the employees' subjective expectations of continuing employment and the length of employment. The references, or that part of the Commissioner's reasoning can be identified, or found rather in paragraph 22 on page 937, paragraph 33 on page 943 and in paragraph 79 in the last dot point on page 945.

PN155

In each of those passages the Commissioner used different language to describe what appears to be the same concept, that is the subjective expectations of continuing employment and the length of employment. In our submission that is an irrelevant consideration in the application of these provisions. The correct focus and the only correct focus is on the appellant's business and whether the terminations in question were due to the loss of a contract such that those terminations were a normal feature of the appellant's business. That is an entirely objective question. No one's subjective assessment is relevant. That, we submit, is axiomatic.

PN156

We should say something however and something short about how this idea has crept into this field. It starts with the judgment of Fisher J in the Employment Protection Act case, but it starts in a way that needs particularly to be understood. May we invite the Full Bench to go back to that decision, it's in volume 7 of the Industrial Reports. The passage in question is on page 290. It's in the first two full paragraphs on that page. May we invite the Full Bench to read those paragraphs.

PN157

From them it is apparent that the concept of employees' expectation of continued employment, an expectation which his Honour observed perhaps increases with the length of employment, was not relevant and not being addressed in connection with an entitlement to redundancy pay, but was being addressed by way of identifying his Honour thought was something, the loss of which required compensation.

PN158

What the Full Bench sees in those two paragraphs has been a part of the jurisprudence of the New South Wales Commission since this time, but as the Full Bench was reminded when looking at the first of the TCR cases federally it has been recognised since that time that redundancy pay is payable for, or rather as compensation for non-transferable credits and the inconvenience and hardship imposed on employees. That was in the passage on page 73 of the first TCR case that we reminded the Full Bench of a little earlier. But be that as it may since the Employment Protection Act case the concept of employees' settled expectation of continuing employment associated with the length of service has always been relevant as an item or a head of loss for which compensation was payable by way of severance payments.

PN159

That idea traced its way through to the decision of a Commission in Court Session in Fashion Fair, which features again in the primary decision and in the respondent's submissions on this appeal. Fashion Fair we hope is in the bundle. It's reported in volume 92 of the Industrial Reports at page 271.

PN160

This case concerned the dismissals caused by, or following upon the loss of lease of premises in which employees had been employed. On page 280 if the Full Bench has that - unfortunately the paragraphs aren't numbered, but at about point 8 having referred to the passages from the Employment Protection Act case of which we have reminded the Full Bench the Commission in Court Session said this:

PN161

The concept of the ordinary and customary turnover of labour has been considered in subsequent cases.

PN162

That is after the Employment Protection Act case.

PN163

It has frequently been observed that whether an entitlement to redundancy or severance pay accrues upon termination depends upon whether there was a settled expectation of continued employment or whether the employees were aware that their employment was for a specified period or task.

PN164

That slightly inverts what Fisher J had actually said, as the Full Bench will have seen, and does so in a way which may have been productive of error in the primary decision. On page 281 the Commission in Court Session refers to a decision of an earlier Court Session in the matter of application for redundancy awards, and at about point 3 quotes this passage:

PN165

Terminations in the context of the general turnover of labour are the norm. They are expected. There is no basis for thinking that some settled expectation has been lost.

PN166

Now that of course, if you stop reading there, that of course is an orthodox if shorthand description of what Fisher J described on page 290 of the Employment Protection Act case.

PN167

What the redundancy awards Full Bench or Commission in Court Session did not decide and did not stipulate was that employees' expectations could operate as a proxy for the correct test of whether the dismissals were in the ordinary and customary turnover of labour.

PN168

The Fashion Fair is referred to in paragraph 27 of the primary decision; that's on page 938 of the appeal book, and in a way that, in our submission, is incorrect; that is using employees' expectations of continuing employment as a proxy for the correct test. That erroneous use of employees' expectations is replicated in the fourth, that is the penultimate sentence in paragraph 21 of the primary decision, which we had earlier identified as being the source of error.

PN169

Before we leave this point, that is the question of employees' expectations, may we draw attention to an alternative submission that we make on this point, which is that the Commissioner's findings as to the employees' expectations in this case were wrong in the sense that they were not reasonably open, and we make our submissions in that regard in paragraph 32 of our written submissions to which we draw attention but do not repeat.

PN170

DEPUTY PRESIDENT KOVACIC: Mr Neil, just a question - in the circumstances of the facts in this case where in some cases the contract had been rolled over on a number of - there had been a number of extensions to the contract beyond its initial - - -

PN171

MR NEIL: Rolled over is not an expression we would adopt.

PN172

DEPUTY PRESIDENT KOVACIC: But extended by on four occasions I think it was. Is your submission that the ordinary customary turnover of labour, the weight that's given to that may diminish in circumstances where contracts may either be extended, renewed on a number of occasions? Let me put the question, what's your views on an argument to that extent?

PN173

MR NEIL: We would not accept that that makes a difference.

PN174

DEPUTY PRESIDENT KOVACIC: Can I just press you a little bit in terms of the reasons why that would be the case?

PN175

MR NEIL: It inverts the correct inquiry, in our submission. The correct inquiry focuses on the reasons for the dismissals in question. Is it a normal feature of our business that upon the cessation of a contract the employees who were performing work on that contract would be dismissed. The answer to that question on the evidence is yes, and in our submission that brings those dismissals within the exception.

PN176

Now it does not matter, in our submission, whether the contracts in question had been extended or rolled over or any other circumstance, the focus is on what happens when the contracts cease.

PN177

It is, we would accept, not helpful to postulate hypothetical circumstances in which a finding would be made on the one side or the other, because the circumstances will vary so infinitely. For example in Arslan the employer really had only one contract relating to those employees, so the concession that the loss of that contract was an unusual or exceptional circumstance was one that was rightly made. Of course that's not this case, no matter how many times the contract was extended or how many new contracts we won. That's the reason for our answer, that it doesn't make a difference.

PN178

DEPUTY PRESIDENT KOVACIC: Thank you.

PN179

MR NEIL: It doesn't make a difference. Perhaps at the risk of labouring that point the focus isn't on the contracts, the focus is on what happens when the contracts cease, what happens to the employment of the employees who are engaged to perform work in connection with those contracts. When the termination change and redundancy Full Bench talked about a normal feature of the business what it was talking about was is it a normal feature of the employer's business that when a contract is lost or when a contract is changed the employment of employees engaged to perform work on that contract will come to an end. That's the correct question.

PN180

COMMISSIONER WILSON: Mr Neil, isn't it foreseeable though in a company as large as Compass that that normality may well vary, that across the organisation there might be one view of normality in relation to a particular type of contract in a particular region that might be that it's not normal that people are dispensed with, but in another region it may well be that they are in fact.

PN181

MR NEIL: Yes.

PN182

COMMISSIONER WILSON: How does one reconcile those kind of differences, does one take a view of the totality?

PN183

MR NEIL: It's a purely factual inquiry. In this case that kind of analysis was undertaken, because as, Commissioner, you have seen evidence was given about the position that obtained generally across the whole of Compass's business, and then other evidence was given about what happened in the Defence sector, and of course in the Defence sector it was the evidence that from 1999, a very long period indeed, 67 per cent of employees who had been engaged to work on contracts in that sector were dismissed when those contracts came to an end. On any view, in our submission, that's normal, that's a normal feature of our business in that sector.

PN184

So I think the answer, in our submission, to your question, Commissioner, is that as we have submitted generally the correct analysis is case by case. You need to look at the circumstances of each case. In this case it's easy because the evidence went all one way and was unchallenged and uncontradicted. On any view of it something that happens more often than not is, as we have submitted, a normal feature of the business.

PN185

VICE PRESIDENT WATSON: Mr Neil, could it be that the circumstances as it affects particular individuals might change at different points in time?

PN186

MR NEIL: That may be so.

PN187

VICE PRESIDENT WATSON: It could be that someone terminated in the Defence part of the business is treated one way, but some employees are found alternative work in another business, another part of the business. They're not terminated because they're offered alternative employment, and then their terminated subsequently. Do you say that you need to look at the circumstances of the termination of that contract at that time to determine what was normal?

PN188

MR NEIL: We would accept that proposition. It all comes down in practical terms to the issue on which the parties were joined below and the forensic choices that informed that. Our contention was from the very beginning that the dismissals of each of the particular employees in question, all of whom were engaged on a contract in the Defence sector, fell within the description of an ordinary and customary turnover of labour, they were a normal feature of our business, and in support of that proposition we tendered the evidence that the Full Bench has seen.

PN189

If the respondent had wished to contest that evidence by pointing to particular circumstances of particular employees or particular contracts or a particular point in time then it was open to it to do so, but it chose not to. So issue was joined at this level.

PN190

Your Honour's question, may we submit, with respect, makes an important point. We are not here contending for any new principle, we're contending for what we have avowedly described now many times as an orthodox position. Nor are we contending for any overarching statement of principle. The Full Bench will have seen that our case is one that acknowledges that the inquiry starts with the proposition that the loss of a contract or a change in a contract and terminations that are because of those circumstances can fall within the ordinary and customary turnover of labour, can be an ordinary feature of an employer's business, and the question of whether they actually are is one that is determined on a case by case basis according to the evidence in relation of the particular circumstances of that case. That's in a sense all this is.

PN191

The evidence is as it is, and our proposition here below and here on appeal is that that evidence dictates one conclusion, the opposite of the conclusion to which the Commissioner came. I am sorry, your Honour, that's a very long answer to your Honour's question.

PN192

VICE PRESIDENT WATSON: Yes, thank you. You have made submissions as to what is appropriate to have regard to and what isn't, and as I understand your submission it's that the focus is on the circumstances of the termination of the contract, the employment and - - -

PN193

MR NEIL: Of the employment rather than the contract.

PN194

VICE PRESIDENT WATSON: Employment - based on an analysis of the employer's normal business practice.

PN195

MR NEIL: Yes.

PN196

VICE PRESIDENT WATSON: So what is the relevance of terms of contract with employees upon their engagement? There's evidence in this matter of different terms in those contracts, but are they part of the relevant inquiry or not?

PN197

MR NEIL: Marginal at best is our answer; marginal at best, because no matter what those terms were the fact is all the contracts authorised dismissal in the circumstances that occurred and the question is what does the employer, what do we do when the contracts on which those employees were working come to an end.

PN198

It might have been one thing if it could be said that the contracts between us and the employees in question did not permit us to dismiss them in those circumstances, then that might be a more relevant circumstance, but that's not this case.

PN199

So that's one aspect of the decision in Kilsby that we would not adopt, because some significance was attached to the terms of the employees' contracts in that case.

PN200

VICE PRESIDENT WATSON: If there is liability to pay redundancy pay based on an analysis of the normal nature of the business, any statement agreed as part of an individual contract that redundancy pay will not be payable to you if your employment is terminated at the conclusion of this contract would not be effective. It would be an attempt to contract out of an obligation that arose under the enterprise agreement.

PN201

MR NEIL: That's correct, in that hypothesis, yes.

PN202

VICE PRESIDENT WATSON: In that hypothesis. So you say that that sort of provision is not necessary or determinative. What is determinative is an inquiry as to what is the normal operating basis of the employer.

PN203

MR NEIL: Correct. That's precisely the point. What's our normal operating basis, to use your Honour's expression, in the event that the contract on which employees are working ceases. That's the correct inquiry.

PN204

VICE PRESIDENT WATSON: Speaking hypothetically might that vary for particular classes of employees. It might be senior employees that are retained on a regular basis and moved around when contracts are lost, but for lower level catering classifications or whatever that's not the case.

PN205

MR NEIL: It might, and if the evidence had revealed there was such a distinction here then it would follow from the submissions that we have made that that distinction would make a difference, but there was no such distinction demonstrated in the evidence here. The only distinction I am reminded in the evidence is between the whole of our business and contracts in the Defence sector. One could readily understand why contracts in the Defence sector have a distinct place in our business, but that's the only distinction the evidence revealed.

PN206

DEPUTY PRESIDENT KOVACIC: The question, a hypothetical question which most of my reading of the material doesn't suggest it was a factor in this particular case, but using the distinction between in unit and core employees, so if in this case the appellant had lost a number of contracts which had meant that some core employees needed to be made redundant or have their employment terminated that might be one of the circumstances where there is a distinction because in that part of - to use the language of the Vice President - because in that part of the business the suggestion would be that it wouldn't be normal practice for those employees to be terminated on the cessation of a contract or contracts.

PN207

MR NEIL: At the risk of repeating ourselves if the evidence had revealed such a distinction then it would make a difference. To use examples akin to those that his Honour the Vice President used if there had been evidence that it was a normal feature of our business that upon the cessation of a contract fire fighters were dismissed but cleaners were not, then that would make a different, but there was no such evidence. There could be evidence of that kind in another case, and nothing that we are submitting here, if accepted, would preclude that, indeed it would follow.

PN208

Now could we turn to the last of the particular matters we wish to address, and that relates to the way in which the Commissioner dealt with, what the Commissioner described as the commercial decisions that arose in connection with the Department of Defence's new contractual arrangements. In our submission, with respect, the Commissioner got into something of a tangle here.

PN209

Now, some foundational propositions. First, there is no dispute that the so‑called RMV defence contract that the full bench has read about in the primary decision - that's the contract on which these employees were working - there's no dispute that that contract came to an end in accordance with its terms. Nor is there any dispute that the dismissal of each of the employees here in question was a consequence of the cessation of the RMV defence contract. That was the contract on which they had all been working.

PN210

The evidence was that the Department of Defence restructured its arrangements and put out new contracts for tender with new regions and new components. The evidence is a little bit complicated, but for present purposes that description, in our submission, suffices. There were new contracts out to tender. They had new regions and new components. The evidence was that the appellant tendered for one of those new contracts - the so‑called EMOS component - but it was unsuccessful and it didn't tender for others. All the evidence in that regard is collected in paragraphs 26 and 30 of our written submissions.

PN211

The Commissioner dealt with this in the following places of the primary decision: first of all, in paragraph 51, then in paragraph 52, particularly the last two sentences, and finally in paragraph 54. Our submission about that is that it involves three propositions. First of all, the conclusion that the full bench will see in paragraph 51, the conclusion that a commercial decision not to tender for work does not involve -

PN212

a normal feature of the business and a decision not to tender on those grounds does not lead to customary and ordinary turnover of labour.

PN213

That conclusion is evidently the product of a priori reasoning that is obviously incorrect. The correct inquiry is empirical. That is, it turns on the facts. The second submission we make in this regard relates to the rather odd concept that is reflected in paragraph 54 of the primary decision that there is a distinction between a loss of a contract that is the occasion for and not the cause of relevant dismissals.

PN214

That rather odd concept, so far as we have been able to see, has its source in a decision of Brown C that Keogh DP referred to without comment in KMC Constructors. If the full bench would be good enough to take that up, the passage from Brown C's decision is at about point 3 on the third page. Having quoted that decision, Keogh DP does not appear to have done anything with it. However, it's a concept that did feature significantly in the primary decision as paragraph 54 demonstrates.

PN215

In our submission, it's a distinction. That is, the distinction between the occasion for and the cause is a distinction without a difference. If one looks into the dictionaries, "occasion" and "cause" have precisely the same meaning. We cannot give any content to the concept. It's repeated, I'm reminded, in the primary decision in the third dot point in paragraph 79. That's the second submission we make in this area.

PN216

The third and last is this: in any event, no matter what one says about the reasoning, to the extent that the Commissioner finds in paragraph 52 of the primary decision that the new contract involved only a quantitative and not a qualitative change, that finding is wrong and was not available for the reasons that we have given in paragraphs 26 and 30 of our written submissions. Those are the submissions we wish to make in connection with the substantive appeal.

PN217

May we turn very shortly to address the separate question of permission to appeal. We have dealt with that in our written submissions at paragraphs 2 through to 7. We wish to highlight two aspects of that submission. First, as we submit in paragraph 6 of our written submission, there is a public interest in correcting an obvious departure - a clear departure - from the principles laid down in the TCR cases and in reversing what we respectfully say are incremental and compounding errors that have crept into this field. As we say in paragraph 6 of our written submissions, this appeal affords an opportunity for a full bench to authoritatively re‑state the orthodoxy of the TCR cases.

PN218

The second circumstance to which we draw attention is the jurisdictional character of the grounds of appeal and we set that out in paragraph 7 of our written submissions. They are the two aspects of permission to appeal that we wish to highlight now. Unless the full bench has anything more of us - - -

PN219

VICE PRESIDENT WATSON: I thought it was a case tied up entirely on the facts.

PN220

MR NEIL: I'm sorry, your Honour?

PN221

VICE PRESIDENT WATSON: I thought it was a case involving questions of fact.

PN222

MR NEIL: It is, but the first step is the construction of the language of the enterprise agreement. If a decision of the Commission in this aspect of its work is inconsistent with the provisions of an enterprise agreement, then for the reasons we've submitted in paragraph 7, it's a decision that is made outside jurisdiction. The jurisdictional character of the question to that extent gives this appeal a degree of public interest. That's the way in which we put it. Unless the full bench has anything more of us, those are the submissions we wish to put by way of expanding upon what we have said in writing.

PN223

VICE PRESIDENT WATSON: Thank you, Mr Neil. Mr White, we'll mark your outline, exhibit W1.

EXHIBIT #W1 RESPONDENT'S OUTLINE OF SUBMISSIONS

PN224

MR WHITE: Thank you, your Honour. If the Commission please, it is with some significant hesitation that I say there are aspects of my learned friend's submissions with which we agree. We agree that the TCR provisions have been around for 30 years, that as considered by a number of benches of this Commission, they have applied the full bench decision in the two TCR decisions. We agree that they have formed the basis of a significant number of enterprise agreements and we agree that the TCR provisions have been replicated in the Fair Work Act.

PN225

We also agree that to a certain extent it is the case that a consideration of the factual circumstances in any particular case to whether an entitlement to redundancy arises, involves a consideration as to whether or not the dismissals - the terminations - are a normal feature of the business. My learned friend spent some time seeking to convince this full bench of that as a proposition.

PN226

In paragraph 42 of the decision, the learned Commissioner also came to the same conclusion. He says that in respect of the terminations, they weren't part of the normal features of the business. These are the tests which he applied and, in my submission, there is nothing impermissible or extraordinary about the Commissioner's approach. You will see also in paragraph 33 the first dot point, where the Commissioner sets out the test now urged upon the Commission. That is:

PN227

Was the employee dismissed for reasons relating to his/her performance or where termination is due to a normal feature of a business?

PN228

Now, this assumes some significance. The significance it assumes to the extent that the appellant relies on jurisdictional error, involves the appellant having to satisfy this full bench that either the Commissioner has committed an error of law which caused him to identify a wrong issue or whether the Commissioner asked himself a wrong question.

PN229

In my submission, in respect of the first proposition which the appellant urges on the Commission - the conclusion of which is that one is directed to the normal features of the business - as we have said in our written outline, this was an unexceptional application of an unexceptional principle and the Commissioner, we say, in those circumstances has not made any error of the type which would justify the Commission finding jurisdictional error.

PN230

The second proposition which was put by my learned friend today is that the concepts of "ordinary and customary turnover of labour" and the words "normal features of a business" are synonymous. To make good that proposition, my learned friend took you to the decision of Fisher J and the way in which it was had regard to - not adopted, but had regard to - by the full bench in the TCR decisions. I'll stop agreeing with my learned friend at this stage and say there is a clear distinction between us.

PN231

You will have seen in our outline of submissions from paragraphs 6 through to effectively 53, where we have set out - perhaps in synopsis form - an analysis of the TCR decisions. It is clearly seen, the conclusion which we urge on the Commission, expressed in our paragraph 33 and to make good that proposition if one looks at the decision of Fisher J, 7IR 273 - these are passages to which my learned friend has already taken the full bench - his Honour in that case, as will be seen from page 277, concludes within the concept of ordinary or customary turnover of labour, those situations which he sets out in the beginning of the last paragraph commencing on that page:

PN232

Similarly, employees have at the height of economic prosperity, been dismissed because of seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession, changes in model or product, shifts in marketing emphasis and many other day to day causes removed from the present recession and its mounting toll of unemployment. All these employees are dismissed, almost invariably upon notice. If redundancy or severance payments applied generally to them a significant charge would apply to the turnover of labour generally. This would involve a major shift in the principles normally applied by this and other industrial tribunals to retrenchment situations.

PN233

It can be seen there, in my submission, that the concept of the ordinary and customary turnover of labour which Fisher J talked about was a significantly broader concept than that which is customarily or contemplated by the Full Bench in the normal TCR provisions.

PN234

I ask rhetorically: can it be said, for example, if Holden ceased - probably not a good example, given the problem with Holden - but if a car company ceased to manufacture a particular model of car and concentrated only on another particular model, might that - it's difficult to see that not falling within what is customarily - I shouldn't use that word either - is understood falling within a circumstance where redundancy payments would be made.

PN235

When one goes to the TCR decisions, in my submission there is nothing in there which would justify the conclusion drawn that the Full Bench in the TCR decisions adopted the breadth of circumstances described by Fisher J as contemplated within the phrase "ordinary and customary turnover of labour".

PN236

We have set out in our written outline - and I won't repeat it now - where we say the Full Bench relevantly considered these matters. We do not agree with my learned friend that "have regard to" and the phrase "have regard to" is synonymous with "adopt". No doubt it would have been within the wit of the Full Bench and the TCR decisions if it wished to adopt the phrases - adopt the meaning and circumstances described by Fisher J that it was able to use those words.

PN237

Can I say something in respect of this as well: the TCR case, as you will have perhaps noticed on the way reading through it, had its genesis in a particular application. The Full Bench described the application and that which was sought to be included. This submission is in respect of both the breadth of employment circumstances which were in contemplation before the Full Bench, and moreover, relevant to the later point, that dealing with the legitimate expectation of ongoing employment.

PN238

The application by the ACTU is described by the Full Bench at pages 53 and 54 of the decision. It says:

PN239

The ACTU claimed that the scheme should apply to all weekly and other employees with a reasonable expectation of continuous employment but it would not apply to seasonal employees engaged as such or employees under fixed term contracts.

PN240

The application that was before the Commission was an application described in much broader terms than those types of employment which had been included in the New South Wales case, Fisher J's decision, and moreover, we say the decision of the Commission is to be understood in that context. It is the limitations of that broad application which are relevant, and it is the limitations which we say are carved out much more narrowly than the exceptions set out by Fisher J.

PN241

The second fundamental difference between the TCR case or decisions and Fisher J's decision is another different starting point. And the starting point, we say, has significant effects on the way in which the decision should be interpreted. And the starting point for the Commission, as part, also, of the ACTU claim, was that there should be no distinction drawn between the cause of termination of employment or the cause of the redundancy.

PN242

Once that distinction is accepted - and it was clearly accepted by the Full Bench - then the distinctions drawn by Fisher J are clearly irrelevant, and in large part do not sit comfortably with the concept of the decision applying to terminations or redundancies, whatever the cause. We then look to the specific carve-outs. And for reasons which we indicated in our written outline and which I won't repeat here, they are, we say, much more constrained carve-outs, much more limited carve-outs than the extraordinarily broad exceptions and exemptions described by Fisher J.

PN243

Can I go, then, to the question of - the submissions made by the appellant as to the legitimate expectations of ongoing and continuing work. First I remind the Full Bench that was the basis on which the ACTU applied, or that was what the ACTU wanted as subject of this application. That was the decision to be made by the Full Bench. That was the question before it. Whether or not the question of legitimate expectation of employment in the New South Wales system otherwise provided a separate head of damage, we say is beside the point.

PN244

That point in relation to the TCR case is that the question of legitimate expectation was a description of the type of employees who might be made redundant and ought be entitled to redundancy payment. That's one element of that submission we wish to make. The second is this: in my submission the decision of Roe C cannot be described as one in which he proceeded on the basis that it was the subjective intention only which was relevant.

PN245

My learned friend referred you to a number of paragraphs of the Commissioners decision in which he considered these matters. First to paragraph 22 of the Commissioner's decision, although he didn't go there, and I don't see any submission about that in this regard. Secondly he took you to paragraph 33. In paragraph 33 Roe C considers it relevant to consider whether they employees had a reasonable or settled expectation of continuing employment.

PN246

A reasonable or settled expectation, we say doesn't carry with it a limitation on a purely subjective element; rather, the question of reasonable or settled - use of the words reasonable or settled, we say reflected at the ACTU claim decided by the TCR, imports - albeit not necessarily wholly, but certainly imports some objective elements for the consideration of the question. The last paragraph my learned friend took you to was paragraph 79 of the Commissioner's decision, which the last dot point where there was a conclusion that the employee selected in this case had a reasonable settled expectation of continuing employment.

PN247

So the first point we want to make about this is that the reasonable expectation of employment has a provenance different from a head of damage, to the extent that that proposition is, in any event, correct for the New South Wales jurisdiction. Secondly we say it's an unfair criticism of the decision if it's characterised as being limited to employees' purely subjective intention. And thirdly, perhaps apropos of a question arising from your Honour Kovacic DP, the evidence is much more than the subject of intention of the employees in any event.

PN248

In our submissions we set out in some more detail than I wish to go to now from paragraph 60 and following, the contractual position of the parties - the employees and the appellant. We set out in paragraph 60 and 61 references to a number of contracts, but perhaps conveniently paragraph 67 in the decision of Roe C sets out what can be described, perhaps generally, as characteristic of the contracts.

PN249

So the term of employment contains a number of matters. First it describes the appellant, the company, as a contractor. It is a contractor. According to it, the 10th largest employer in the world, subject to operational demands, requirements of the client, tenure of the contract - can I just stop there. This is a generic contract used in business, and it wasn't directed specifically to RMV contracts, either the cleaning or the fire contracts.

PN250

Continuous employment, salary, working hours, et cetera, can't be guaranteed through particular breaks - you know, sporting breaks; well, clearly points to the generic nature of the contract. Then it continues:

PN251

As a result of changes in operational demands, requirements of the client, and tenure of the contract, you may be given the opportunity and/or required - or required to transfer to another location.

PN252

Things occur if that happens. It continues - sorry, can I just interpolate there. A requirement to transfer, we say certainly carries with it an objective sense that the employee has agreed and the company has agreed that the employee can be - within reason, no doubt - deployed on a number of contracts or any number of locations.

PN253

These changes will be discussed with you and confirmed in writing. Please be aware that if the alternate position offered is not - if it is not accepted, then the company may be unable to continue to employ you.

PN254

So first of all there is a requirement to transfer to another site. If you don't accept that, we may not be able to continue to employ; in which case your employment will be terminated. This is a significantly different proposition than an employee - for example in the Kilsby matter to which the learned Presiding Member has referred, where the contract was tied to a specific contract - sorry - the employment was tied to a specific contract.

PN255

Can I just ask the Commission to look at JF22, which is page 539 of the appeal book. This is one of the contracts attached to Mr Farthing's statement. You will see when you go to that page that that part of the contract which the learned Commissioner sets out in paragraph 67 appears under term of employment.

PN256

What the learned Commissioner did not set out, however, was the position. The position - the third of the items in the contract - provides: you will be initially classed as X; your commencement site will be the particular site; during your employment you make the required to work in another classification of work within your skills and competencies, and the company may require you to transfer to another work location.

PN257

So once again, the contract between the employees and the appellant specifically envisage moving around. And the moving around is not limited to the exigencies of a particular contract. One of the other things to observe in relation to this contract is that - I'm sorry, I've make that submission already, contrasting the Kilsby case, where there is nothing in this contract and, in my submission, any of the others which were attached, which limit this to a particular contracts with Defence in the Riverina Murray Valley region.

PN258

So the submission of my learned friend that the settled expectation was incorrectly taken into account, we say fails. And in any event, in terms of the secondary submission of my learned friend that as a matter of fact there is no settled expectation, similarly fails. The provisions of the contract to which I've just taken the Full Bench to are also relevant to consider when the Full Bench considers the second proposition that my learned friend put to you as arising from the TCR cases.

PN259

That second proposition, following on from what we say is an error to describe the concepts of "ordinary and customary turnover of labour" and "normal features of business" as synonymous, is that something that happens more often than not is normal. Well, there's no normative test which appears in the courts; there's no normative test which appears in the TCR decision. There is no basis, we say, to apply, as a normative test, a simple majority.

PN260

That is, I understand it, how my learned friend has put the proposition to the Full Bench today. Rather, we say that what is normal must be measured on a case to case basis. Now, my learned friend says, "Well, in any event, the appellant succeeds in that", because in a case to base basis, once again, the figures my learned friend points to somehow support the normative test that he would have Commission accept.

PN261

On a case by case basis there are a number of other things which the Commission ought take into account in this particular case: (1) Compass, by its own assertion, is the 10th largest employer in the world; (2) it has contracts throughout Australia; (3) it is contractually entitled to require its employees to move to different sites. So in my submission it would be an error, we say, to equate normal with a normative approach as simple as a majority.

PN262

In any event, once again, arising out of questions asked by your Honour Kovacic DP, in terms of the distinction between "core" and "in unit" employees, it's very difficult to see from the figures in any event that a majority would use the appellant's phrase "normally be dismissed". But those figures which my learned friend took you to were people who were in unit employees who were dismissed.

PN263

If you added to the percentage or the number of persons who were not dismissed, you would include in that figure core employees. Once you included core employees in those employees who were not dismissed, it is very unclear on the evidence - and the appellant, in my submission, can't establish it now - that in any event a majority of employees would have been or were in fact dismissed in this case.

PN264

Can I - and I'm sorry to do this - backtrack shortly, but address somewhat, again, very briefly, on the question of the subjective or the legitimate expectation of employment. In the appellant's submissions reference is made to a number of pieces of evidence in the cross-examination of the employee witnesses.

PN265

Can we make this observation about that: first of all it is relevant, perhaps only to the extent or the extracts which the appellant points to are relevant only to the extent that the question of the subjective expectation was the determinative factor. You've heard our submissions in respect of that. If the subjective intention was the determinative factor, then in any event when the Full Bench goes to a number of those references, you will see that the employees, in any event, often had an expectation that would be redeployed.

PN266

For example, Mr Klasups at appeal book 781 says so. Mr Sheath, when asked about whether there was a new contract and that ended - reason his employment ended - says of itself nothing about any legitimate expectation. Mr Chambers, at AB 388, asked if he understood employment would come to an end at the end of the contract he said, "Yes, if there's no redeployment." At AB 805, PN 406 - I'm sorry, that's not AB 388, that's - can I just - that was an error.

PN267

I'm sorry, yes, appeal book 388. I think I have an error in the notes, and I'm just going to try and track that error down. I will come back and have to give your Honours and Commissioner the correct reference to that. But certainly the reference at AB 805, PN 406, is where Mr Chambers also talks about - well, he answers this question, and what I put to him is:

PN268

Taken from your own evidence, the contract ending, subject to any redeployment that might be able to occur, your employment was always going to end of compass. Correct?‑‑‑Yes.

PN269

So clearly it was actually put by the appellant's counsel, apparently asking Mr Chambers to accept that employment was only going to cease subject to any redeployment.

PN270

I perhaps refer also to Mr Gill, AB 840, where he thought - accepted that the loss of the contract would mean a change in his employment status. Mr Thompson, at 863:

PN271

When I applied for the job I was given the impression they had a lot of work areas; that you might necessarily start in one, that you might go to another one. That was part of the attraction.

PN272

So perhaps those references to which I've just taken the Commission are relevant only to the extent the Commission was to find that subjective intention of the parties was - of the employees was determinative, and that's not something which we urge upon the Commission in any event.

PN273

Now, my learned friend submitted in respect of the legitimate and reasonable expectation of continuing employment that the provenance of that concept came from the decision of Fisher J, page 290, as to head of damage. I've made submissions about that already. The head of damage aspect of it all and the different basis upon which the case proceeded in the TCR case can be seen from the TCR case, page 70, in which or at which the Full Bench - I've taken your Honours and Commissioner to that already.

PN274

My learned friend made submissions in respect of what are said to be errors made by the learned Commissioner in respect of commercial decisions, and whether it's a commercial decision to apply or not apply to a contract. In order to found an appeal or established jurisdictional error, the appellant must establish that the particular error which is alleged or which is said to be made good must have an effect. It must have an effect in terms of reaching an erroneous finding or to reach a mistaken conclusion; or it must have an effect whereby the exercise of power is affected.

PN275

In my submission - and we said this in our written outline - the characterisation of contracts; the commercial circumstances in which contracts are applied for or not apply for, and the commercial circumstances in which contracts are won or not won, really we say was part of the background and not determinative, and would not have affected adversely the Commissioner's decision.

PN276

The reason we say that is this, because he had, as an anterior point, properly considered the unexceptional test, and would have, we say is clear from his decision, arrived at the same decision in any event. My learned friend doesn't point to the particular way in which the appellant asserts the decision was directly affected in a way not otherwise supportable by the parts of the decision by the expression is used about the commercial decisions that were made or not made.

PN277

We put in our written outline - I've tried to address what we considered to be the main points raised by the appellant in its - my learned friend's oral submissions. I certainly don't wish to have missed any of the oral submissions which raised new or different - the same issues in a different way than those raised in the appellant's written outline, and I hope I've not done so.

PN278

But in the event that the Commission would be assisted by any submissions about a particular aspect of the appellant's oral submissions this morning, I would certainly be happy to assist. But I think that I've covered the main thrust of my learned friend's submissions.

PN279

As to permission to appeal, there are two bases relied on: (1) that somehow applying the test which my learned friend urged on the Commission was an error; that is, the test which Roe C adverted to in paragraph - I think - 42 of his decision, where he considered the normal features of a business; and the other perhaps lesser test, are somehow said to be an outward and visible sign of an inward and spiritual weakness of an incremental creep of error. In my submission there is no such proper characterisation.

PN280

As we have said in our written outline, this was an unremarkable application of unremarkable principles, some of which are agreed with by the appellant today; and on a factual - specific factual basis. And if my learned friend's client wishes broad and general statements from this Commission that there is somehow incremental error creeping into the application of TCR provisions, then this is not the case for that proposition.

PN281

My learned friend seems to have it both ways: first wants to limit it to the facts of this case; but then seeks to apply for permission to appeal on a much broader basis - that is, on the particular facts of this case, wants a general statement from the Commission about proper application to TCR. And we say that's not the proper circumstance to grant permission to appeal.

PN282

Secondly, the without definition or decision, the second basis upon which the appellant seeks leave to appeal is what was described as the jurisdictional character of the appeal. In my submission there is no case made good that Roe C identified a wrong issue; no case made good that he asked himself a wrong question; no case made good that he ignored irrelevant material.

PN283

The alleged erroneous factual findings, we say are findings which were open to the Commissioner in the exercise of his jurisdiction and don't amount to or equate to an appealable error. And those errors which might otherwise be seen, particularly in relation to the application for - or the tendering for a new contract, we say there's no clear basis on which it has been put that the Commission's exercise of power was affected by that error.

PN284

So we say the jurisdictional character of the appeal, whatever that means, is not satisfied in this case in any event, and the Commission, in our submission, should refuse permission to appeal.

PN285

VICE PRESIDENT WATSON: Mr White, if we did grant permission to appeal, and we moved to considering the appeal, how do you answer the question I asked Mr Neil earlier? Is the question of error on a matter like this ‑ ‑ ‑

PN286

MR WHITE: I'm sorry, your Honour

PN287

VICE PRESIDENT WATSON: Does the question of error in a matter like this involved the agreement or otherwise with the ultimate conclusion, or does it involve discerning error from aspects of the reasoning?

PN288

MR WHITE: It depends how it's put to you. I suppose my learned friend has put it both ways. That is that he - the appellant identifies what it asserts errors in reasoning, but that has just led to the incorrect - according to the appellant - conclusion. Perhaps just go back to pause and thinking out loud. The Commission on appeal is unable to do anything unless it identifies an error at first instance, that's point 1.

PN289

If the Commission was to identify an error in the process of reasoning but not in the conclusion, then the appeal would be dismissed, arguably, in those circumstances, depending upon the nature of the error in the reasoning, there might be some public interest to expose that error or to debate the error. That's only in some circumstances. It would need to be an error of the relevant jurisdictional type; that is, an error which would have had some different determinative effect on the decision.

PN290

If the error the Commission was to find is in the conclusion, then the normal process would there have to follow. I don't know whether I've ducked and weaved or answered your Honour's question, but hopefully the letter ‑ ‑ ‑

PN291

VICE PRESIDENT WATSON: I treat it as an answer to that question. Thank you. Thank you, Mr White. Mr Neil.

PN292

MR NEIL: If it please the Full Bench, eight points in reply. First, we are taxed with not having identified appealable error. At the risk of repeating ourselves, may we say that we summarise our submissions in that regard by pointing out that we have identified errors in four categories.

PN293

First, the Commissioner misunderstood and misapplied the principles laid down in the TCR cases; second, by reason of the first error the Commissioner misconstrued the relevant redundancy provisions; third, the Commissioner applied that misconstruction to the accepted facts; fourth, by reason of the first, second and third errors, the Commissioner came to a conclusion that was not open on the accepted facts or on the relevant redundancy provisions according to their true meaning. They are the four classes of error that we have identified.

PN294

Next, our learned friend pointed to paragraph 33 of the primary decision, and some weight on the first dot point in paragraph 33. Our submissions in reply is that the first dot point in paragraph 33 is not relevant in applying the test, it is the test.

PN295

Next, as to our learned friend's submission that what Fisher J said in the Employment Protection Act case was broader than the TCR cases, we say two things: first that submission cannot survive any reading of the passage on page 128 of the second Termination, Change and Redundancy Case, of which we reminded the Full Bench earlier.

PN296

In that passage in unambiguous terms the TCR Full Bench everything that Fisher J had said about the concept of the ordinary and customary turnover of labour; that is, about the concept of the general turnover of labour - everything that Fisher J said on pages 277 and 278 of the Employment Protection Act case.

PN297

Our second submission is that our learned friend, with respect to him, misread what the first Termination, Change and Redundancy case says on page 74. My learned friend referred to the passage - do your Honours have that? Do the members of the Full Bench have that judgement at page 74 of volume 8 of the industrial reports. The passage to which our learned friend referred is at about point 7, it begins with the word "furthermore". And the second sentence is important:

PN298

Terminations due to "seasonal shifts in markets, loss of contracts or changes in contracts not relating to recession, changes in model or product, shifts in marketing emphasis" and the like are not included and -

PN299

that's the critical word -

PN300

and cases involving "retrenchments due to technological change" and "retrenchments due to company reconstruction, mergers and takeovers" are expected to be dealt with -

PN301

in other ways. The first - before the word "and" one has set out a description of terminations that fall outside the scope of an entitlement to redundancy pay. That explicitly includes loss of contracts or changes in contracts. Loss of a contract or a change in the contract falls within the meaning of an ordinary and customary turnover of labour as that concept was identified in the TCR cases.

PN302

Next - and this is our fourth point in reply - our learned friend submitted that once the TCR Full Bench had decided not to distinguish between causes of redundancy, then the approach taken by Fisher J ceased to be relevant. That, with respect, does not reflect what the Termination, Change and Redundancy Full Bench actually did. The critical passage is at the foot of page 73 and going over onto page 74:

PN303

An examination of this Commission's reasons for decision and the decisions of various other industrial tribunals make it appropriate to consider in what circumstances our general prescription should be departed from.

PN304

That makes it clear that what the Full Bench was doing was this: it had decided there should be a general prescription; it had decided that in connection with that general prescription there should be no distinction between the causes for redundancy; and the it addressed a separate question, a quite different question: in what circumstances should that general prescription be departed from? Everything that follows relates to that topic.

PN305

That approach was then taken up at page 128 of the second TCR case and is reflected in the provision that the TCR Full Bench actually laid down, which - if support for that proposition be needed, it appears on page 128 of the second TCR case at about point 3. Having said that there should be no fundamental distinction in principle based on causes of redundancy, then the Full Bench said this, "Nevertheless, it was not our attention", and then goes on. So the approach is perfectly clear.

PN306

The fifth point we wish to address by way of reply relates to the submissions that our learned friend made about the significance of the contracts between the appellant and the particular employees. The terms of the contracts - in that regard, may we remind the Full Bench of the finding of facts that is made in the first sentence of the sixth dot point in paragraph 79 of the primary decision. First sentence, sixth dot point, paragraph 79.

PN307

Our learned friend then went on to draw attention to page 539 of the appeal book, one of the contracts in question, and drew attention to the fact that the contract allowed the appellant to transfer employees to new work. The question, of course, is not with we could do so; the real question is whether it was a normal feature of our business, that on the loss of a contract we would exercise that power. It's not what we could do, it's what we actually did that is the relevant question.

PN308

Next, the seventh point we wish to address by way of reply is our learned friend's submission that there was no - as he put it - normative test in the TCR cases. I'm not sure that that's quite the way we put it, but the proposition is this: It cannot be doubted that the general prescription that the TCR Full Bench devised, the prescription that is reflected in the present enterprise agreements uses that language, "ordinary, customary"; as the Full Bench said, "normal"; as Fisher J said, "general". They are all concepts that direct attention to what is normal or usual; or in other words, what is not abnormal or unusual.

PN309

Next, and this is the last point wish to address by way of reply, our learned friend drew a distinction between what he called "core" and "in unit" employees. If the respondent had wanted to draw such a distinction - if it had wanted to draw a distinction between core and in unit employees, it could have done so; but the fact is, it did not. It didn't lead any evidence about that, and it didn't challenge the evidence was led upon the footing that such a distinction was proper to be made.

PN310

In the event, the unqualified evidence was led and accepted in an unqualified way, and that's the end of the matter. That, in our submission, is determinative. If it please the Commission, those are the eight points we wish to address by way of reply.

PN311

VICE PRESIDENT WATSON: I assume there's no generally accepted proposition as to what percentage of cases would constitute normal. You say that normal is something that's not abnormal. That might - so that it's a pretty low percentage is all that's needed.

PN312

MR NEIL: It's not a precise concept, which is one reason why we accept, and that's one reason why it's helpful to describe it by reference to what it is not. They're all words of ordinary - with ordinary and natural meanings. As a matter of fact - if I can adopt, by way of analogy, it is a statistical fact that in our society fewer people have blue eyes than do not, but everyone would accept that in the ordinary and natural use of the word, blue eyes are normal in Australian society.

PN313

VICE PRESIDENT WATSON: Well - - -

PN314

MR NEIL: Perhaps if I could go on for a moment, your Honour.

PN315

VICE PRESIDENT WATSON: Yes.

PN316

MR NEIL: One doesn't have to consider the difficult question of whether something that occurs less often than not is normal or ordinary or customary because in this case the undoubted evidence was that the relevant circumstance occurred more often than not. More often than not, whether you look at it at the level of the whole of our business; and certainly more often - and much more often than not when you look at it at the defence sector.

PN317

It's a "standard practice" is another expression used in the evidence that answers that description. I'm sorry, your Honour, that's a long answer to your Honour's question, but - - -

PN318

VICE PRESIDENT WATSON: Yes. Well, it could be a quite different approach if one addressed it as normal compared to not abnormal. To use an example, if we said that it is normal for representatives in this Commission to stand while they were addressing the Commission, a very high percentage of cases, that's the case, that would fit the description of normal.

PN319

MR NEIL: Yes.

PN320

VICE PRESIDENT WATSON: If we say that it's abnormal for parties not to stand when they're addressing the Commission, then that's a very, very small percentage.

PN321

MR NEIL: Yes.

PN322

VICE PRESIDENT WATSON: But what if it is fifty-fifty? What's the normal position?

PN323

MR NEIL: We would say - that's an interesting question. Happily, it's not a question that has to be answered here. But our submission would be if we would - - -

PN324

VICE PRESIDENT WATSON: Well, Mr White says it's not a matter of a simple majority. In order to be normal, it needs to be more than that.

PN325

MR NEIL: Well, our - we don't look at the simple majority. Our first answer to all of this is if it happens more often than not, it must be normal, it must be ordinary. That must answer any conception of those concepts that must fall naturally within it. That's our starting point. But then, your Honour asks us, "What would your position be if it was fifty-fifty?" And our answer to that would be both would be normal. Both would be normal. Both would answer that description.

PN326

VICE PRESIDENT WATSON: Well, the alternatives - - -

PN327

MR NEIL: I don't - - -

PN328

VICE PRESIDENT WATSON: The alternatives here, this phrase is in context, is put - is mutually exclusive categories.

PN329

MR NEIL: And that's an error, we would submit, in that submission. It's not mutually exclusive for any purpose. If dismissal and not dismissal were both normal, then any dismissal of the relevant kind would not attract severance pay. That's the only purpose for which the question is being asked. It's not a binary proposition. So they aren't exclusive alternatives - they aren't. There's no penalty imposed on people ‑ ‑ ‑

PN330

VICE PRESIDENT WATSON: So you say normal is ‑ ‑ ‑

PN331

MR NEIL: ‑ ‑ ‑ who are not deal with normally.

PN332

VICE PRESIDENT WATSON: ‑ ‑ ‑ similar to common. If it's a common practice it might be, you know, 30, 40, 50 per cent of cases is common practice. It's not a majority.

PN333

MR NEIL: That, we would say ‑ ‑ ‑

PN334

VICE PRESIDENT WATSON: That's what you say it is.

PN335

MR NEIL: We would say that, happily, for present purposes, that's not a question that needs to be considered here because it doesn't arise on the evidence. If your Honour is pressing me ‑ ‑ ‑

PN336

VICE PRESIDENT WATSON: Well, depending on how you view the business. The Commissioner viewed the business as the entire company - Compass business.

PN337

MR NEIL: Then we meet the test still. It does happen more often than not. On fifty ‑ ‑ ‑

PN338

VICE PRESIDENT WATSON: 54 per cent.

PN339

MR NEIL: ‑ ‑ ‑ four per cent of occasions - 54 per cent of employees who were working on contracts that we lost were dismissed upon the loss of the contract. That's normal. That's ordinary. That's customary. That's standard. That's general. They're all words that describe the same concept, but they're not words that admit of a precise arithmetical definition. However you describe them, we meet it.

PN340

VICE PRESIDENT WATSON: Yes. Thank you.

PN341

MR NEIL: If the Commission pleases.

PN342

MR WHITE: Can I raise one matter? I'm not going to take a Parthenon shot of anything that was raised, but I refer to the stay that was granted by your Honour Kovacic DP in which your Honour ordered, as order 2, that:

PN343

Subject to any further order, if the appeal is dismissed, Compass shall make redundancy payments to the individuals the subject of the decision and named therein with interest calculated from 3 September 2015 at a rate to be determined by the Full Bench in accordance with the prevailing interest rates in the retail term deposit account market at the time.

PN344

Now, we don't have details of the retail term deposit account market at the moment, but ‑ ‑ ‑

PN345

MR NEIL: Perhaps we consider the ‑ ‑ ‑

PN346

MR WHITE: ‑ ‑ ‑ but if the Commission decides in our favour, then perhaps as between us we can ‑ ‑ ‑

PN347

MR NEIL: There can't be any issue with that.

PN348

VICE PRESIDENT WATSON: Yes.

PN349

MR NEIL: Whatever is necessary, if that event occurs, we will accept.

PN350

VICE PRESIDENT WATSON: Yes. Thank you. We thank counsel for their submissions in this matter. We will reserve our decision. We will now adjourn the proceedings.

ADJOURNED INDEFINITELY [1.12 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #N1 OUTLINE OF SUBMISSIONS OF THE APPELLANT........... PN7

EXHIBIT #W1 RESPONDENT'S OUTLINE OF SUBMISSIONS................ PN223