FEDERAL COURT OF AUSTRALIA

Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RARES J:

Introduction

1    I have had the benefit of reading the reasons of Collier and Rangiah JJ and agree that both appeals should be dismissed, broadly for the reasons that they give. Their Honours have dealt with the myriad of arguments that the appellants (Berkeley Challenge Pty Ltd and Spotless Services Australia Limited) deployed to support their contention that, as members of the Spotless group of companies, they were not liable to make redundancy payments under s 119(1)(a) of the Fair Work Act 2009 (Cth) to long-serving employees whose employment they terminated after the relevant appellant lost a contract to supply its services to a customer. I wish to explain my principal reasons for agreeing in what follows.

2    The critical issue argued in the appeals was the proper construction of the national employment standard in s 119(1)(a) and, in particular, the exception within it. Relevantly, s 44(1) provided that an employer must not contravene a national employment standard. The object of the Act is to provide a balanced framework for workplace relations including by ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through those standards, modern awards and minimum wage orders (s 3(b)). Part 2-2 (which included Div 11 and s 119) contained the standards that s 61(1) provided “cannot be displaced”. Relevantly, s 119(1) provided:

Division 11—Notice of termination and redundancy pay

Subdivision B—Redundancy pay

119  Redundancy pay

Entitlement to redundancy pay

(1)        An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a)        at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b)        because of the insolvency or bankruptcy of the employer.

(italic emphasis added)

3    An employer’s liability to pay redundancy pay under s 119(1)(a) is triggered if it makes a decision that it no longer requires the job done by an employee to be done by anyone. However, that liability is not absolute. Apart from the exception in s 119(1)(a), Div 11 of Pt 2-2 of the Act also provides that the liability can be displaced or reduced if:

    the employer obtains a determination to that effect from the Fair Work Commission, if the employer either obtains acceptable employment for the employee or it cannot pay the amount due (s 120);

    the employee had worked continuously for the employer for less than 12 months (s 121(1));

    the employer is a small business employer (s 121(1));

    a modern award so provides (s 121(2));

    the employee rejects a transfer of employment to a new employer on substantially similar, and overall no less favourable, terms that include the new employer’s recognition of the employee’s service with its predecessor (subject to the power of the Commission to grant the employee relief if it considers that the employee’s rejection of employment with the new employer was justified because those terms operated unfairly to the employee) (s 122); or

    the employee was:

    employed for a specified period of time, for a specified task, or for the duration of a specified season (s 123(1)(a)) unless a substantial reason for so employing him or her was to avoid the application of Div 11 of Pt 2-2 (s 123(2));

    terminated because of serious misconduct (s 123(1)(b));

    a casual (s 123(1)(c));

    employed pursuant to a training arrangement (s 123(1)(d)); or

    disentitled to redundancy pay pursuant to a regulation made under the Act (s 123(1)(e)).

4    Berkeley and Services each contended at the trial and on appeal that, first, the Spotless group’s practices governed how the exception applied to it, as a member of the group, and, secondly, it was not necessary for that company, as the actual employer, to prove that it had such a practice or that the practice applied to, or was inherent in, the nature of the job of the affected employees.

5    Although each primary judge construed s 119(1)(a) differently, each found that Berkeley and Services respectively had failed to prove that it fell within the exception in s 119(1)(a) that I have italicised above. Their Honours rejected, on the facts, each appellant’s claim that its terminations of the affected employees fell within the exception. They rejected each appellant’s reliance on its membership of the Spotless group and the group’s practices as establishing its own ordinary and customary turnover of labour.

The background to the exception

6    Both primary judges considered the application of Fisher P’s statement of principle in Shop, Distributive & Allied Employees’ Association (NSW) v Countdown Stores (1983) 7 IR 273 at 277–278. He said:

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. These types of dismissals contrast with dismissals which do not arise in any way from the behaviour of the employee or from ordinary changes in the incidents of employment, but where the employee is dismissed on a collective basis along with others and where the reason for the dismissals lies in the force of adverse economic circumstances, restricting employment opportunities and resulting in collective redundancies. Dismissals arising out of technological change or out of major company restructuring have similar characteristics.

I am not aware of any system 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 have referred.

(emphasis added)

7    Thus, in Countdown Stores 7 IR at 277, Fisher P distinguished an employment relationship in which an employer ordinarily and customarily was entitled to terminate an employee “almost invariably upon notice” as a consequence of, among other reasons, market forces, an economic recession, or the employer’s loss of a contract, from that in which both parties to the employment relationship expected that it was, as he explained (at 290), one of continued employment. His Honour’s characterisation of when redundancy pay would not be due, now encapsulated in the exception in s 119(1)(a), applied to the former, not the latter, class of employment relationships. Fisher P said of the latter (Countdown Stores 7 IR at 290):

the cases before me concern industrial employees in ordinary weekly wage employment. They most certainly often have a settled expectation of continued employment, an expectation which perhaps increases with the length of employment. This is lost to them on retrenchment and it is something for which they should be compensated.

(emphasis added, citation omitted)

8    In other words, an employee in career or long-term employment, with a particular employer, in which there is a reasonable expectation of continued employment (i.e. reasonable because of the common circumstances known to both the employer and employee about the continuing or likely duration of the employment relationship) is not within the meaning of the exception in s 119(1)(a).

9    In Re Application for Redundancy Awards (1994) 53 IR 419 at 444, Fisher P, Glynn J and Buckley CC said:

Taking a balanced view of the case as a whole, it is appropriate that this aspect of terminations, traditional as it is, be distinguished from redundancies arising from economic recession and financial stress, technological change and company reconstruction or restructuring. 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. The occurrence of the likely or expected event should not bring with it an unnecessary and unwarranted additional burden on the employer and a windfall gain for the employee.

(emphasis added)

10    In addition, both primary judges considered how other tribunals and courts had applied or interpreted Fisher P’s phrase, “due to the ordinary and customer turnover of labour” in the Termination, Change & Redundancy Case [No1] (1984) 8 IR 34 (per Moore P, Maddern J and Brown C in the Australian Conciliation and Arbitration Commission) (the First TCR case), the Termination, Change & Redundancy Case [No2] (1984) 9 IR 115 (by the same bench) (the Second TCR case), Transport Workers’ Union v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIR Comm 22 (Haylen J), Compass Group (Aust) Pty Ltd v National Union of Workers (2015) 253 IR 32 (per Watson VP, Kovacic DP and Wilson C in the Fair Work Commission) and Amcor Ltd v Construction Forestry Mining and Energy Union (2005) 222 CLR 241. All of those decisions except Countdown Stores 7 IR 273 and Compass Group 253 IR 32 dealt with provisions of industrial agreements and awards.

11    When the various reasons of the statutory tribunals and courts in the industrial or employment law field referred to “expectations”, they were identifying the expectations of a reasonable person in the position of both parties, with knowledge of the nature of the employment or job and the particular circumstances in which the parties were engaged. It is not merely the fact that a person is employed as, eg. a cleaner, a kitchenhand or an accountant, that suffices to identify the nature of the employment in the overall industrial context. It is also necessary to have regard to all of the circumstances, including the particular job, the context in which the employee entered into it with the employer and its “expected” duration.

What is the proper construction of s 119(1)(a), and in particular, the exception?

12    In Amcor 222 CLR at 256 [43]–[44] Gummow, Hayne and Heydon JJ explained how the pre-existing industrial and judicial decisions had developed an approach to when an employer would be liable to pay redundancy pay. They said of the Second TCR case 9 IR 115:

The Commission said, in its supplementary decision (Termination, Change and Redundancy Case [No 2] (1984) 9 IR 115 at 128), that it had “some difficulty in finding a suitable expression” to make its intention clear about what constituted “redundancy”. In its earlier decision, it had referred (Termination, Change and Redundancy Case [No 1] (1984) 8 IR 34 at 55–56) to a number of definitions of redundancy. Chief among those was the decision by Bray CJ in R v Industrial Commission (SA); Ex parte Adelaide Milk Supply Co-operative Ltd ((1977) 16 SASR 6 at 8) which was understood (8 IR at 56) as emphasising that redundancy refers “to a job becoming redundant and not to a worker becoming redundant”.

For present purposes, what is important is that the Commission appears to have been seeking a form of words that would accommodate two features. First, as was said in the Commission’s supplementary decision (9 IR 115 at 128), it “did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business”. Secondly, the Commission did not intend redundancy provisions to be engaged by the transmission of a business. In its earlier decision, the Commission had emphasised (8 IR 34 at 75) that it did “not envisage severance payments being made in cases of succession, assignment or transmission of a business”. That is, the Commission regarded termination of employment by a particular employer as not sufficient to engage the redundancy obligations, even if that employer was ceasing any participation in the particular business. The focus of the provision was upon the work undertaken by the employee (the “job”), not upon the identity of either the employee or the employer. The relevant inquiry was whether employment in a particular kind of work then being undertaken was to come to an end. If that employment was to come to an end, it was necessary to consider why that was to happen. Was it because the employer no longer wanted the job, then being done by the employee, done by anyone? Or was it “due to the ordinary and customary turnover of labour” (9 IR at 128)? And, as the Commission’s evident concerns about drafting show, these alternatives were not, and are not to be, understood as exhausting the cases that might have to be considered.

(emphasis added)

13    Thus, the critical question is why the employment is to come to an end.  Their Honours treated an employer’s decision that it does not want the job then being undertaken by the employee to be done by anyone (such as when the employer loses a contract for which the employee performed its job) as distinct from the employment coming to an end “due to the ordinary and customary turnover of labour”.

14    The Act creates a prima facie right to redundancy pay as a national employment standard if the conditions in s 119(1)(a) are satisfied. That right is defeasible if the circumstances fall within the exception s 119(1)(a) itself or another exclusion in Div 11 of Pt 2-2.

15    The consideration of the exception in s 119(1)(a) has to be approached from the perspective that it is a derogation from what s 61(1) prescribes as a legislated minimum standard for all contracts of employment and the object of the Act that it, as a national employment standard, would provide a guaranteed safety net. Fisher P introduced, in his reasons in Countdown Stores 7 IR at 278, the wording that is now expressed verbatim in the exception. He took a cautious approach as to whether the Employment Protection Act 1982 (NSW) created a broader obligation on an employer to pay redundancy pay than was ordinary or customary at that time. The substance of the approach adopted by the industrial tribunals and courts that have considered Fisher P’s formulation was to assess, objectively, the nature and circumstances of the employment relationship and to determine whether, in that particular relationship, the circumstances of the termination occurred due to the ordinary and customary turnover of labour. As Gleeson CJ, Gaudron and Gummow JJ said in Concut v Worrell (2000) 176 ALR 693 at 697–698 [17], employment relationships are not purely contractual and often are affected by industrial instruments, statutory provisions and equitable considerations.

16    Here, s 123(1)(a) recognises that employers can include in their contracts of employment with employees a provision specifying the term or duration of the employment that excludes an entitlement to a redundancy payment, albeit that s 123(2) limits the ability to contract out of, or avoid, the substantive application of s 119(1)(a).

17    It is important also to appreciate that the words before the exception in s 119(1)(a) recognise that an employer has a right, at its volition, to terminate a contract of employment when it no longer requires anyone to do the job then done by the employee. The Act provides that, ordinarily, when an employer exercises that right, it will assume an immediate liability, as part of the standards, to pay the employee redundancy pay, unless the termination is due to the cause described in the exception.

18    The exception does not refer in terms to an employer’s particular business or circumstances. It is, instead, worded to convey, as Fisher P suggested originally, a concept that a contract of employment can be made in a context where a reasonable person in the position of the parties would understand that, if termination occurred due to the “ordinary and customary turnover of labour”, there would be no entitlement to redundancy pay.

19    I am of opinion that the use of the words “ordinary” and “customary” in the exception was not accidental. Both words in the cognate phrase convey that, in the usual course of the employment relationship from its inception (or perhaps as it evolves into a long-term job), there had to be a practice akin to a custom, that the parties to that relationship would not expect that the employer would be liable to make a redundancy payment to the employee when the contract came to an end. The statutory phrase essentially refers to the nature of the employee’s job and requires consideration of whether, in the usual course, a person employed in it and the employer would have no reasonable basis to understand that the job was to last for an indefinite or substantial time.  The word “turnover” connotes change, not long term stability.  The word “ordinary” connotes what is usual or unexceptional.  And, the word “customary” connotes what is inherent in the relationship of an employer and an employee for the particular job or a job of that kind.

20    In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40] Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement.

(emphasis added)

21    The principle of objectivity applies to the ascertainment, in any case, of what amounts to the “ordinary and customary turnover of labour” in the context of the particular job or category of employment relationship at hand.

22    The appellants’ argument that the subjective purposes and circumstances of an employer will be determinative of whether or not the exception will apply would render meaningless the entitlement that the Parliament intended s 119(1) to confer as a national employment standard.  The application of such a standard cannot be dependent on the idiosyncratic, subjective intentions of an individual employer, which will necessarily differ between employers in the same industry and need not be shared by the employees concerned or a reasonable person in the position of the parties.  The national employment standard in s 119(1) must apply objectively to the circumstances of a particular job with an employer or to a class or category of job in an industry, trade, calling or employment market.  The exception in s 119(1)(a) is equally objective. 

23    The common law concept of a contractual term implied by custom offers some insight as to what “customary” means in the exception.  In Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 236, Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ said:

There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract: Young v. Tockassie ((1905) 2 C.L.R. 470, at p. 478); Summers v. The Commonwealth ((1918) 25 C.L.R. 144, at p. 148); Majeau Carrying Co. Pty. Ltd. v. Coastal Rutile Ltd. ((1973) 129 C.L.R.48, at pp.60-61). In the words of Jessel M.R. in Nelson v. Dahl ((1879) 12 Ch. D. 568, at p.575.), approved by Knox C.J. in Thornley v. Tilley ((1925) 36 C.L.R. I, at p. 8.):

"[The custom] must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself."

However, it is not necessary that the custom be universally accepted, for such a requirement would always be defeated by the denial by one litigant of the very matter that the other party seeks to prove in the proceedings.

(emphasis added)

24    The appellants’ arguments sought to identify the particular commercial circumstances of the Spotless group as the governing criterion for ascertaining whether, in any employment situation in which a member of the group found itself when it decided to terminate an employee’s employment, the ordinary and customary turnover of labour exception relieved it from the statutory obligation to pay redundancy. They asserted that the Spotless group’s business was, as the appellants said, to win and lose contracts on a regular basis.

25    However, the Spotless group’s overall perceptions of how it ran its business cannot control what reasonable persons in the position of any member company in the group and any particular employee of that company would expect to be the nature and duration of that employment relationship or job. As Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 483 [34]:

the “general test of objectivity [that] is of pervasive influence in the law of contract” (Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549, per Gleeson CJ). The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions (Gissing v Gissing [1971] AC 886 at 906, per Lord Diplock; Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502, per Lord Diplock).

(emphasis added)

26    Something that is ordinary and customary and affects the incidents of a job must be known to the actual or prospective parties to the contract of employment. Hence, the distinction that Fisher P identified between terminations of employment due to the ordinary and customary turnover of labour, which almost invariably occurred on the employer giving the employee a reasonable period of notice, and those terminating a career or settled expectation of continued employment, which attracted the right to payment on redundancy.

The critical facts in each of the appeals

27    The primary judge in the Services case found that the Spotless group was managed as a single entity and that its workforce included, first, a large group of casual employees whom it deployed to undertake work for particular contracts and, secondly, permanent employees who undertook work in relation to a particular contract. He preferred the contemporaneous business records of the Spotless group, including a memorandum issued on 7 October 2014 by the group’s general manager – human resources (there is a typographical error dating this as 4 October 2014 in [172] of his Honour’s reasons which is of no moment) to the evidence of Matthew Potter, the Spotless group’s national human resources manager as to its employment practices (see Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9 at [146], [162], [172]–[173]). His Honour accepted that the Spotless group’s practice was accurately reflected in the following passage from the 7 October 2014 memorandum (see [2019] FCA 9 at [162]):

This memo is to advise you of upcoming changes to the way in which Spotless employs many of its staff in Australia.

Effective 5 November 2014, Spotless will be implementing a policy of employees in Australia, where their employment is directly related to provision of services to a Spotless client, being employed on a maximum term contract which is reflective of the contract term with the client.

…

Currently, the employment structure of staff is not aligned with the nature of our business in that most employees are employed on a permanent ongoing contract of employment when the work they are performing is for delivery of services to our customer; which is subject to a fixed term service contract with that customer.

Subsequently, when a service contract comes to an end, the Company is required to find suitable alternative employment or be subject to payment of redundancy pay. This obligation is relaxed through the use of maximum term contracts.

(emphasis added)

28    The memorandum pointed out that the Spotless group’s practice as to its employment contracts did not conform with its manner of doing business with the companies with whom it dealt externally, and that the group wished to realign matters. The memorandum showed that the terminations of the three Services employees were not due to the ordinary and customary turnover of labour. Rather, those terminations were of contracts of permanent employment in which the members of the Spotless group were free to, and did, reassign such employees to other work sites albeit that, at some point, as in every employment relationship, the employment would come to an end, either by termination or retirement of the employee.

29    That finding of fact demonstrated that, even if Services’ construction of the exception in s 119(1)(a) were correct (which it was not), the appeal was hopeless because, as French CJ, Bell, Keane, Nettle and Gordon JJ said in Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550 at 558–559 [43]:

a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, [Fox v Percy (2003) 214 CLR 118 at 128 [28] per Gleeson CJ, Gummow and Kirby JJ] or they are “glaringly improbable” or “contrary to compelling inferences” [Fox 214 CLR 118 at 128 [29]. See also Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 381 [76]]

30    The primary judge’s credibility based findings in Services [2019] FCA 9 at [162], [172]–[173] were supported by the documentary evidence in the Spotless group’s contemporaneous business records.

31    Berkeley did not challenge the other primary judge’s factual finding, that for Berkeley as an employer, the terminations of the affected employees were “uncommon and extraordinary and not a matter of long-continued practice”. His Honour based that finding on his construction of s 119(1)(a): United Voice v Berkeley Challenge Pty Ltd (2018) 274 IR 93 at 121 [80]. Whilst his Honour’s construction of the exception was erroneous, that unchallenged factual finding entailed that the terminations could not be characterised as “ordinary” or “customary” even on Berkeley’s own argument since, as he found as a fact, there was no uniform practice in the Spotless group of the kind Berkeley alleged.

Conclusion

32    The purpose of the exception in s 119(1)(a) is to protect an employer from having to make redundancy payments in circumstances where a reasonable person in the position of both parties to the contract of employment would have understood or expected, from its inception or nature or as the length of the employee’s service grew, that the job was not of a permanent or an ongoing nature, but would come to an end within a reasonably foreseeable timeframe. In other words, in order to fall within the exception in s 119(1)(a), the employment, or job, must be of such a nature that a reasonable person in the position of both those offering or seeking the particular job (or who were aware of all of the circumstances in which the employee had remained in the employer’s workforce for sufficiently long) would be aware and expect that it would come to an end in the ordinary course. That expectation arises objectively because, in the regular or usual order of things, and the accepted custom of the industry, trade, or employment market, when the employer terminates the employee’s job and he or she is not replaced, the employee will have no right to payment of redundancy pay.

Associate:

Dated:    1 July 2020

REASONS FOR JUDGMENT

COLLIER AND RANGIAH JJ:

33    Before the Court are appeals from decisions of this Court in United Voice v Berkeley Challenge Pty Limited [2018] FCA 224 and Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9. Both matters require consideration of the proper construction of s 119(1)(a) of the Fair Work Act 2009 (Cth) (FWA).

34    In respect of the decision in [2018] FCA 224 (being appeal QUD 285 of 2018) the appellant is Berkeley Challenge Pty Ltd (Berkeley) and the respondent is United Voice. The Fair Work Ombudsman (the Ombudsman) is an intervener.

35    In respect of the decision in [2019] FCA 9 (being appeal WAD 76 of 2019), the appellant is Spotless Services Australia Limited (SSA) and the respondent is the Ombudsman. Berkeley and United Voice are interveners.

Background

36    Key background facts are not in dispute. It is helpful to set out the background to each matter separately before turning to relevant issues.

Appeal QUD 285 of 2018 – Berkeley Challenge

37    From around 1994, Berkeley provided security, cleaning and related services at the Sunshine Coast Plaza (the Contract Services) under a series of contracts with the principal, Lend Lease Property Management Pty Ltd (Lend Lease). The duration of those contracts was, on average, between two and four years.

38    On or around 1 November 1999, Berkeley was acquired by the Spotless Group of Companies (Spotless Group). Following the acquisition, another company within the Spotless Group became the party that contracted with Lend Lease for the provision of the Contract Services. Berkeley continued to employ the staff necessary to provide those services.

39    A contract for the provision of Contract Services between Lend Lease and the contracting company within the Spotless Group commenced on 1 July 2004, for an initial four year term with an option to extend for an additional two years (the 2004 Contract).

40    A further contract for Contract Services commenced on 1 October 2008, with an initial three year term (expiring 30 September 2011) and an option to extend for an additional two years (the 2008 Contract).

41    On 29 April 2011, the operation of the 2008 Contract was extended pursuant to the additional two year extension provision.

42    On or around April 2013, the 2008 Contract was further extended (the Contract Extension Agreement).

43    On or around October 2013, the Contract Extension Agreement came to an end. Following this, Berkeley continued to provide the Contract Services on a month to month basis.

44    On or around 4 December 2013, the Spotless Group was informed that Lend Lease had decided to go to the market to tender for the Contract Services. Invitations to tender were made in January 2014, including to the Spotless Group, who submitted a tender.

45    On or around 29 August 2014, Lend Lease informed the Spotless Group that its tender had been unsuccessful and notified the Spotless Group that it would exit the current contract upon close of business on 30 September 2014 (the Date of Exit).

46    On or around 1 September 2014, two operation managers within the Spotless Group arranged for a staff meeting to inform the staff of the Spotless Group’s unsuccessful tender. A letter titled “Notification of Loss of Contract” and a list of available jobs within the Spotless Group were provided to the staff.

47    On or around 3 September 2014, Lend Lease extended the Date of Exit to close of business on 7 October 2014. Staff were notified of this via noticeboards in the staff lunch room and security office.

48    On or around 24 September 2014, the successful tenderer for the Contract Services, SECUREcorp, informed the staff of the Spotless Group as to which of them had been successful in obtaining employment with SECUREcorp.

49    On or around 7 October 2014, the Spotless Group, on behalf of Berkeley, provided the 21 employees affected by the loss of contract with Lend Lease (the affected employees) a document headed “Employment Termination Form”.

50    Relevantly, the employment contracts of the affected employees provided for permanent employment. There was no term specifying that their continued employment was dependent upon the continued provision of the Contract Services by Berkeley or that their employment would be terminated without redundancy pay should the contract with Lend Lease be lost.

51    In comparison, most other employees within the Spotless Group were employed for specific contracts, and their employment was terminated when the specific contracts came to an end if redeployment within the Spotless Group or employment with the incoming contractor was not possible. The primary judge noted at [45] that no witness gave detailed evidence about Berkeley’s business practices or the turnover of its employees; evidence as to turnover and business practices was only given in relation to the Spotless Group.

Appeal WAD 76 of 2019 – Spotless Services

52    From approximately October 1986 there were a series of contractual arrangements made between SSA and Perth Airport Pty Ltd (formerly Westralia Airports Corporation Pty Ltd (PAPL) and/or Spotless Facilities Services Pty Ltd (SFS). Those contractual arrangements related to the provision of catering and hospitality services at the Perth International Airport (PIA) and included:

    The 2003 Concession Agreement entered into on 16 June 2003 (effective 1 July 2002) between SSA and PAPL, whereby SSA was granted a licence to provide designated catering and hospitality services at approved premises at PIA until 30 June 2012. The 2003 Concession Agreement was extended several times: on 31 January 2013 (effective 1 November 2008), extending the expiry date to 30 June 2013; on 29 May 2014 (effective 1 July 2013), extending the expiry date to 30 June 2014; and on 27 May 2015 (effective 20 June 2014), extending the expiry date to 30 June 2016. The 2003 Concession Agreement was also novated to SFS, with SSA as guarantor, by a deed of novation in October 2011 (effective 1 July 2011).

    The 2011 Concession Agreement entered into on 4 October 2011 (effective 1 December 2012) between SSA and PAPL, granting SSA a licence to operate an additional outlet (Wots in the Wok) at PIA until 30 November 2015.

53    In October 2012, SFS and SSA commenced negotiations with PAPL for contractual arrangements for the provision of food and beverage services at new outlets to be established on the “landside” and “airside” of PIA in its redevelopment. An offer, subject to the approval of the board of directors of SFS, was put to PAPL by SSA on 23 October 2012. A confirmed proposal was then provided to PAPL by SSA on 30 January 2012 for outlets on the “landside” of PIA (the Landside Proposal).

54    On 31 January 2013, SFS, SSA and PAPL entered into another deed of variation, effective 4 June 2012.

55    In April 2013, PAPL proposed the surrender of one outlet each under both the 2003 Concession Agreement and the 2011 Concession Agreement (the Surrender). An agreement detailing the Surrender was entered into on 7 April 2014 (effective 14 April 2013). The Surrender transpired on 14 April 2013. Employees from the closed outlets were redeployed by SSA. This was referred to by SSA as the “stage one closures”.

56    The Surrender was conditional on PAPL and SSA entering into a new concession agreement for the new PIA “landside” outlets, which was provided by PAPL to SSA on 21 May 2013. However, on 24 May 2013 SFS informed PAPL that it was withdrawing the Landside Proposal as its board had determined not to proceed with the project. What followed was a series of closures of the outlets and operations by SSA and/or SFS at PIA, namely:

    “stage two closures” in June 2014 of further outlets at PIA;

    “stage three closures” in January 2015 where SSA’s remaining “back of house operations” were closed; and

    “stage four closures” on 27 June 2015 whereby the final outlets were closed pursuant to a notice of termination provided to SSA on 22 May 2015 (effective 25 June 2015).

57    The Ombudsman claimed that three employees under consideration, namely Mr Campilan, Ms Wright and Mr Ramble, were entitled to redundancy pay in these circumstances. The relevant facts in relation to those employees appeared at [176]-[203] of the primary judgment and may be succinctly summarised as follows.

58    Mr Campilan commenced employment with SSA in August 1982. He was transferred to PIA as an accountant in November 1998. There was no mention during the course of his employment that his continued employment was tied to the provision of services under a particular contract or that he would be terminated if a particular client was lost.

59    Mr Campilan was a full time-employee, and transitioned to becoming a permanent part-time employee in February 2015. At that time, Mr Campilan enquired as to how altering the status of his employment might affect his redundancy entitlements. Ms Jerome, the then WA state manager, responded:

Firstly we would look to redeploy, if redundancy were to happen you would get whatever you would be legally entitled to.

I believe that being either part time or full time won’t make a difference, it’s about years of service, AL not used, notice periods

I can’t exactly say however, I’ve put the fair work link below if this helps

60    On 8 June 2015, Mr Campilan received a letter from SSA notifying him that SSA’s contract with PIA would terminate on 25 June 2015. The letter stated that it did not constitute notice of termination, but noted that, should no alternative employment options be available with SSA or the incoming contractor, Mr Campilan’s employment would be terminated on 24 July 2015 “as a consequence of ordinary and customary turnover of labour”. In the result, his employment was terminated for reasons of redundancy with effect from 24 July 2015 without redundancy pay. However, on 1 December 2017, SSA made a payment of $10,126.80, without admitting any liability, being the correct amount of redundancy pay if he were so entitled.

61    Ms Wright commenced employment with SSA as a supervisor at a food outlet at PIA in February 2011. After January 2015, she was redeployed to various locations as a retail manager. She received a letter of engagement in relation to both of those positions in February 2011 and December 2011 respectively. Neither letter made reference to her continued employment being linked to a specific contract or being terminated due to the loss of a contract with a client. The letter of engagement provided in relation to the retail manager position, under a section headed “Redundancy”, stated that in the event of termination Ms Wright would be entitled to a retrenchment benefit calculated by reference to the length of her service if alternative employment was not located.

62    On 9 July 2014, Ms Wright received a letter informing her of the conclusion of the contract with PIA on 31 July 2014. The letter stated that her employment would be terminated as a result of redundancy on 31 July 2014 if no alternative employment for her was found. Ms Wright was then redeployed within SSA on a short term basis. Ms Wright received a further letter on 22 May 2015 informing her that the contract to provide services at PIA would terminate on 25 June 2015. The letter also noted that her employment would be terminated on 25 June 2015, as a result of redundancy, should no alternative employment be found. Ms Wright was terminated, for reasons of redundancy, with effect from 30 June 2015 without any redundancy pay. On 16 February 2017, she was paid $9,265.92 by SSA (without admitting liability), being the correct amount of redundancy pay if she were so entitled.

63    Mr Ramble commenced employment with SSA as an outlet manager at PIA on 6 October 2010. His letter of engagement made no reference to his continuing employment being linked to a contract or being terminated due to the loss of a contract with a client. Nor did a further letter of engagement, provided to him in October 2011, in relation to a new position at PIA. On 22 May 2015, he received a letter in similar terms to that received by Mr Campilan and Ms Wright. His employment was terminated on 25 June 2015, for reasons of redundancy, without redundancy pay. Similar to Mr Campilan and Ms Wright, Mr Ramble received a payment of $9,620.93 by SSA (without admitting any liability), being the correct amount of redundancy pay if he were so entitled.

The primary judgment in [2018] FCA 224

64    At first instance United Voice, representing employees who had their employment terminated, brought proceedings against Berkeley claiming that Berkeley did not provide valid notices of termination to the affected employees, and that a number of those employees were entitled to redundancy payments. United Voice sought pecuniary penalties under s 546(1) of the FWA against Berkeley for its alleged contravention of ss 44, 117 and 119 of the FWA, and compensation under ss 545(1) and 545(2)(b) of the FWA, including the payment of prejudgment interest under s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) for the alleged losses of employees due to Berkeley’s alleged contravention of ss 44, 117 and 119 of the FWA.

65    Section 44(1) of the FWA provides that an employer must not contravene a provision of the National Employment Standards. A contravention of s 44 will follow where a contravention of either ss 117 or 119 of the FWA is demonstrated. The key issues before the primary Judge were:

    whether the letter titled “Notification of Loss of Contract” constituted a valid notice of termination under s 117 of the FWA; and

    whether the exception provided for in s 119(1)(a) of the FWA applied to Berkeley’s decision to terminate the employment of the affected employees such that the affected employees were not entitled to a redundancy payment upon their termination.

66    The primary Judge determined the first issue in the negative, giving reasons at [23]-[32]. Those findings have not been challenge on appeal and it is unnecessary to further consider that issue.

67    With regard to the second issue, s 119(1) of the FWA provides:

(1)    An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a)    at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

  (b)    because of the insolvency or bankruptcy of the employer.

  Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

  (Emphasis added.)

68    Critical in this context is the proper interpretation of the exception to redundancy pay set out in s 119(1)(a) (Exception). His Honour noted relevant principles were explained by the High Court in Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12, including that the process must begin and end with a consideration of the text in its context, having regard to the legislative history and extrinsic materials, and the preferable interpretation is that which would best achieve the purpose or object of the Act. His Honour also noted at [21] the comments of the High Court in Alphapharm Pty Limited v H Lundbeck A/S (2014) 254 CLR 247; [2014] HCA 42 that the task of statutory construction may also require some appreciation of the pre-existing law.

69    Berkley submitted that the historical origins of the Exception were reflected in the industrial law decisions of Shop, Distributive & Allied Employees’ Association (NSW) v Countdown Stores (1983) 7 IR 273 (Countdown Stores), Termination, Change and Redundancy Case (1984) 8 IR 34 and Termination, Change and Redundancy Case (1984) 9 IR 115 (together: TCR cases), Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10 (Amcor), FBIS International Protective Services (Aust) v Maritime Union of Australia (2015) 232 FCR 1; [2015] FCAFC 90 (FBIS International) and the two Compass Group decisions, being National Union of Workers v Compass Group Pty Ltd [2015] FWC 6055 and Compass Group (Aust) Pty Ltd v National Union of Workers (2015) 253 IR 32; [2015] FWCFB 8040 (together: Compass Group).

70    The primary Judge examined these cases, in particular the judgment of Fisher J in Countdown Stores. The primary Judge observed:

57.    After a large number of employers gave notices to the Industrial Registrar as outlined above, a set of proceedings came before the New South Wales Industrial Commission, of which Fisher J was the President. Fisher J began his decision by discussing the details of the proceedings, the objects and purposes of the Employment Protection Act 1982 (NSW) (as outlined above) and the opening contentions made by the various parties. His Honour then made the following general observations which included the expression “ordinary and customary turnover of labour” (at 278):

I am not aware of any system 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 have referred. I would therefore require to be affirmatively persuaded by clear language that it is the intention of this statute to impose upon almost all dismissals, regardless of cause, a costs burden in the midst of the worst economic recession in the last 50 years.

(Emphasis added.)

As will become apparent when I come to discuss the TCR case below, the early 1980s economic recession in Australia also had a significant impact on those two decisions.

58.    The three classifications of retrenchment to which his Honour referred above appeared to be the dismissal of unsatisfactory employees, the termination of employees employed on an “intermittency” basis and dismissing employees through market-related causes unconnected with the economic recession. Those three classifications were outlined in the immediately preceding paragraphs of the decision, as follows (at 277):

[Unsatisfactory employees]

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

[“Intermittency” employees]

Many employees, particularly in the building construction, contracting and sub-contracting industries are employed on terms which contemplate intermittency in employment. Provisions for compensating for holidays and annual leave by making an allowance in the calculation of hourly or weekly rates of pay are often made. Many awards contain a specific factor to compensate for “following the job”, ie., for intermittency in employment when one job cuts out and another has to be obtained. Payments on severance would appear to be inappropriate to these circumstances and may contain an element of double counting ...

[Market-related dismissals]

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.

His Honour went on to contrast these three types of retrenchment with those which were unrelated to employee behaviour or to market-related factors as follows (at 277):

These types of dismissals contrast with dismissals which do not arise in any way from the behaviour of the employee or from ordinary changes in the incidents of employment, but where the employee is dismissed on a collective basis along with others and where the reason for the dismissals lies in the force of adverse economic circumstances, restricting employment opportunities and resulting in collective redundancies. Dismissals arising out of technological change or out of major company restructuring have similar characteristics.

It would appear that Fisher J included these types of dismissals as a part of the third classification above.

71    At [62] the primary Judge examined the decision of the Commission in the TCR case, and noted the Commission’s adoption of the expression “the ordinary and customary turnover of labour”, continuing:

62.    … It said “we are prepared to provide that the redundancy provisions shall not apply where the termination of employment is ‘due to the ordinary and customary turnover of labour’ but we will not include the other categories referred to by the employers” (at 128). The Commission explained its reasoning for this conclusion in the following terms:

In our decision at 55-6 we made reference to a number of definitions of redundancy and our draft order was based on the definition of the Chief Justice, Bray J. in the South Australian Supreme Court. Further, at 61 of the decision we decided that there should not be any fundamental distinction, in principle, based on the causes of redundancy. Nevertheless, it was not our intention that the redundancy provisions should apply to the “ordinary and customary turnover of labour”; an expression used by Mr Justice Fisher in his decision related to the Employment Protection Act in New South Wales ((1983) 7 I.R. 273).

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 where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business. Furthermore, there is an overlap between the definition of redundancy for the purposes of any award and the categories of employees exempted from severance pay. To some extent the same can be said for the provisions relating to the introduction of change.

(Emphasis added.)

72    His Honour at [64] noted the discussion of Gummow, Hayne and Heydon JJ in Amcor, particularly [44] where their Honours endorsed the findings of the Commission in the TCR case concerning the non-application of redundancy provisions where, inter alia, termination was due to a normal feature of a business.

73    Finally, his Honour considered the Compass Group cases, noting that the employer concerned in those two decisions provided similar services to those that the Spotless Group provided to Lend Lease in this matter. His Honour referred, inter alia, to the following observation of Commissioner Roe:

21.    I am satisfied that the Full Bench [in the TCR case] adopted the expression “ordinary and customary turnover of labour” to encapsulate situations where an “employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business.” A normal feature of a business is a reference to businesses where there is intermittency in employment because of the nature of the business. These are businesses where employment, or part of it, is seasonal, casual, or linked to the duration of a particular contract or task. These are situations where the employee has no reasonable or settled expectation of continuous or continuing employment. This will often be reflected in the casual, seasonal, or fixed term or fixed task nature of the employment arrangement.

22.    I am satisfied that the Full Bench did not generally exclude those employed by contracting firms from coverage under redundancy provisions by the “ordinary and customary turnover of labour” exemption. The Australian economy has changed and contracting firms have greatly expanded in the decades since the TCR decisions. There is no basis for concluding that the Full Bench intended to encourage a particular employment model by providing contracting firms with the competitive advantage of lower labour costs by excluding them from redundancy provisions.

(Emphasis added.)

74    His Honour noted however that Compass Group appealed Commissioner Roe’s decision to the Full Bench of the Fair Work Commission, which concluded:

[20]    We are respectfully unable to agree with the Commissioner on this issue. The TCR Full Bench expressly stated that it did not intend for redundancy provisions to apply to the “ordinary and customary turnover of labour.” In doing so, the TCR Full Bench drew on the decision of Justice Fisher and the concept he developed of excluding terminations arising from the ordinary and customary turnover of labour. There is no basis in these decisions for excluding dismissals arising from loss of contracts from the concept where this is a normal feature of the business.

[21]    The Full Bench was providing for a new general right of redundancy pay. It was seeking to reflect approaches to redundancy pay arising from previous decisions. Redundancies that arise because of economic circumstances, technological change or company restructure involve a common element of unexpected termination. Termination of employment where an employee has been engaged for a job or contract is in a different category. The TCR Full Bench expressly stated this. It adopted the wording of an Exception developed from previous cases. In the first decision it referred to the decision of Justice Fisher and mentioned employees engaged for contracts. In the second decision it again referred to the decision of Justice Fisher and drew on his formulation of the Exception. Justice Fisher expressly refers to loss of contracts as encompassed within the concept ordinary and customary turnover of labour.

(Emphasis added.)

75    His Honour noted at [71] that none of these decisions were binding authority, and the historical context in which the decisions were made could not be described as legislative history because s 119 marked the first occasion upon which a redundancy pay entitlement had appeared in the FWA or one of its legislative predecessors. His Honour noted further at [72] that the statutory context to s 119(1)(a) was that it was in Pt 2-2 Div 11, which included sections such as s 123(1)(a), s 123(1)(c) and s 123(2). His Honour continued:

73.    … It follows that the express exclusions mentioned above, together with a number of others contained in Division 11 of Part 2-2 which I have not mentioned, appear to act to confine the Exception in s 119(1)(a) to a narrow set of circumstances. However, as it turns out, it is unnecessary for me to explore those confines because this matter can be disposed of on the text of the Exception and the evidence adduced by the parties, matters to which I will now turn.

76    His Honour then observed at [74] that there were two phrases in the Exception which were pivotal, namely “this is due to” and “turnover of labour”.

77    In relation to “this is due to”, his Honour considered that the word “this” was not directed to the termination per se, but rather to the situation where an employer decided to terminate an employee’s employment and also decided that it no longer required the employee’s job to be done by anyone. His Honour continued:

74.    … It is the attachment of the latter decision to the termination that gives rise to the redundancy pay entitlement under s 119 and it is to that feature of the termination that the Exception in s 119(1)(a) applies. Furthermore, the words “due to” introduce a causal relationship between such a termination and the set of labour turnover conditions to which the Exception applies.

78    In relation to the words “turnover of labour” his Honour said:

75.    Next, the words “turnover of labour” are pivotal because they define the set of labour turnover conditions mentioned immediately above. Individually, those words mean (Macquarie Dictionary (6th ed, Macquarie Dictionary Publishers Pty Ltd, 2013)): “turnover” “n. ... 2. the aggregate of worker replacements in a given period in a given business or industry. 3. the ratio of the labour turnover to the average number of employees in a given period ...”; and “labour” “n. 1. bodily toil for the sake of gain or economic production. 2. the workers or class of workers engaged in this. ... 4. a work or task done or to be done ...”.

79    His Honour noted at [76] that the words “turnover of labour” were qualified by the adjectives “ordinary” and “customary”, and examined the dictionary meaning of those words. His Honour then observed:

76.    … Those adjectives are expressed conjunctively in the Exception. Thus, together they mean that the aggregate of employee replacements (the turnover of labour) is for the employer of a kind that is both common, or usual (ordinary), and a matter of long-continued practice (customary).

80    His Honour continued:

77.    So, to sum up, the Exception applies if a particular employer decides to terminate a particular employees’ employment and to render that employee’s job redundant in circumstances where the redundancy component of that decision is for that employer, with respect to its labour turnover, both common, or usual, and a matter of long-continued practice. In that confined set of circumstances, the employer concerned does not have to pay the employee concerned any redundancy pay. As I have already mentioned above, it is unnecessary, in this matter, to explore the interaction between the various exclusions in Division 11 Part 2-2 and this meaning of the Exception.

81    In this respect his Honour concluded at [78] that the critical question was:

…has Berkeley, as the employer of the affected employees, discharged its onus to show that its decision to terminate their employment and, at the same time, to render their jobs redundant was, for it, common or usual and a matter of long-continued practice? I should interpose to note that, because this question is entirely focused on Berkeley’s decision to undertake the terminations and to make the jobs redundant and the circumstances in which it made that decision, any expectations the affected employees held about those matters are irrelevant. I therefore reject United Voice’s contentions to the contrary.

82    His Honour at [79]-[80] noted that Berkeley was in a difficult evidentiary position answering this question because, in summary:

    Although there was evidence as to the common practice in the Spotless Group regarding turnover of labour, with associated practices concerning job redundancies, there was negligible evidence from Berkeley about relevant aspects of its decision, including how Berkeley dealt with job redundancies. His Honour noted that while it was clear that the main reason Berkeley had terminated the affected employees was because Spotless lost its contract with Lend Lease, “that evidence does not say anything about Berkeley’s additional decision to render their jobs redundant vis-à-vis its labour turnover practices or frequency” (at [79]).

    The evidence before the Court stood against a conclusion that Berkeley dealt with job redundancies in the manner described. The evidence showed that: by the time Spotless lost its contract with Lend Lease, the contractual relationship with Lend Lease had existed continually for more than 20 years; that throughout that period Berkeley had employed all the employees necessary to provide the contract services; and that the affected employees had been employed by Berkeley for that purpose for between four and 21 years. His Honour concluded that the evidence appeared to show the opposite of the circumstances in which the Exception applied – it appeared to show that the terminations and connected job redundancies were, for Berkeley, uncommon and extraordinary and not a matter of long-continued practice (at [80]).

83    Accordingly, Berkeley had not discharged its onus to show that the Exception in s 119(1)(a) applied to the terminations of employment of the affected employees, and the affected employees were entitled to be paid the redundancy pay entitlements prescribed by that section.

84    It followed that his Honour found Berkeley contravened each of ss 44 and 119 of the FWA for not paying the affected employees their redundancy pay entitlements under s 119, and those employees were entitled to compensation under s 545(2) of the FWA for the loss they suffered because of those contraventions

THE PRIMARY JUDGMENT IN [2019] FCA 9

85    The Ombudsman in this proceeding sought declarations that SSA had contravened:

(1)    Section 44 of the FWA by failing to pay redundancy pay to three employees, namely Ms Wright, Mr Ramble and Mr Campilan;

(2)    Section 530(4) of the FWA by dismissing the employees (identified in Appendix A to the statement of claim) for reasons (or including for reasons) of an economic, technological, structural or similar nature without first giving written notice to Centrelink; and

(3)    Section 535(1) of the FWA by failing to keep employee records of the kind required by Regulation 3.40 of the Fair Work Regulations 2009 (Cth) in relation to two employees.

86    The Ombudsman also sought orders pursuant to ss 546(1) and 546(3)(a) of the FWA for the imposition of pecuniary penalties for the breach of ss 44, 530(4) and 535(1), and the payment of any such penalties to the Commonwealth.

87    The primary Judge dismissed the claims concerning the alleged contravention of s 530(4) of the FWA. His Honour’s findings in this respect have not been challenged on appeal. Further, the alleged contravention of s 535(1) of the FWA does not appear to have been argued before the primary Judge and accordingly is not relevant in this appeal.

88    Whether SSA had contravened s 44 of the FWA depended on whether it was required to pay redundancy pay in accordance with s 119 of the FWA. Whether s 119 had been contravened was dependent on whether the failure of SSA to make redundancy payments to Ms Wright, Mr Ramble and Mr Campilan was justified by those employees falling within the Exception to s 119(1)(a) of the FWA.

89    The key issues before the primary Judge were, in summary:

    the construction of the Exception (or more precisely: the meaning of the phrase “ordinary and customary turnover of labour” within the Exception), and

    determination of whether the circumstances of the terminations of those three employees fell within the Exception.

90    After setting out and examining general principles of statutory construction, his Honour at [23] turned to s 119(1)(a) and its statutory context. His Honour commenced by having regard to the object of the FWA in s 3, and the National Employment Standards set out in Pt 2.2 of the FWA. His Honour then turned to Pt 2.2 Div 11, being s 117 to s 123. His Honour observed at [36] that general statements could be made about the purpose manifest from the overall scheme of the FWA and the express statements of object and purpose, in summary:

    The FWA was to provide a safety net of minimum terms and conditions of employment that cannot be undermined (at [37]);

    The object of the FWA is to ensure fair, relevant and enforceable minimum terms and conditions. In this respect it was difficult to discern any specific object concerning the relativity between minimum standards as they existed before the FWA was enacted and those expressed through the Standards. However it was unlikely that the FWA would deploy established terminology in the field of industrial law concerning an established standard (such as redundancy pay) where it was intended to change the standard (at [38]);

    The FWA has detailed provisions providing for compliance and enforcement by the Ombudsman and Fair Work Commissions, such that there is a substantial structure to support the making of claims. However, the FWA confers statutory entitlements upon employees that cannot be undermined and to that extent is protective of the interests of employees (at [39]);

    The objects of the FWA include the promotion of productivity, economic growth and flexibility for business (at [40]); and

    The terms of Division 11 manifest an intention to provide a qualified right to redundancy pay. The qualifications are in the language of s 119(1)(a), the exclusions expressed in s 121, and in respect of employees described in s 123 (at [41]).

91    The primary Judge then turned to pre-existing law at the time of enactment of the FWA, and examined in detail decisions prior to the FWA interpreting the term “ordinary and customary turnover of labour”. His Honour concluded that these cases were of varying utility in respect of the extent to which the cases engaged with the problem before the Court. At [60] his Honour said:

60.    The present case is concerned with instances where a large number of employees are required to perform the obligations under particular contracts and the end of each contract produces a transition whereby a considerable number of employees may no longer be required to undertake work for a particular contract and there may not be a new contract to which they can be deployed immediately. In such cases, even if the business of the employer involves providing services under a portfolio of contracts to which it is seeking to add over time and the employer is reallocating particular employees to the work required under different contracts in the portfolio where possible, there is still the prospect that an employee may not be able to be deployed when a contract comes to an end. In such instances, there is a prospect of termination for redundancy that might be viewed as a function of the nature of the business. On the other hand, an employee may be deployed from contract to contract or continue to work as the contract with the customer is renewed. Such deployment may be relatively common. An employee may be deployed from contract to contract in this way a number of times and then be terminated. The Termination, Change and Redundancy Case did not consider the extent to which such cases may fall within the ordinary and customary turnover exception.

92    (See similar comments of his Honour at, for example, [64], [67], [72] and [79].)

93    In discussing the Compass Group case his Honour noted that the decision in Compass Group postdated the enactment of the FWA, and also involved an application of what was considered to be previously established principles concerning redundancy pay to the facts of that case. In this context his Honour examined the distinction between the business circumstances of the employer, and the nature of the job, and observed:

80.    The relevant distinction is properly exposed by considering a case, like the present, where a business needs labour to provide the services required to perform the obligations under a contract between the employer and a particular customer. In such instances, the prospect that the work may come to an end when the contract comes to an end and when that might be are not matters inherent in the nature of the work or matters that may necessarily be evident to a prospective employee from the nature of the business being conducted. Possibly, the employer may make it known with clarity that the nature of the work is that it is for the duration of a particular contract or is from contract to contract. However, that position may change if the employment continues without any new terms being agreed when the customer's contract is renewed or the employee is reallocated to another contract. The employees may not even know that the contract has been renewed and may simply continue what appears to be indefinite employment. Alternatively, these possibilities may be generally known or expected amongst employees because of the kind of business and what is customary for a business of that type. This position may be reinforced by a practice of terminating employment of all employees at the end of a contract without any opportunity to work in the same role for the purposes of another customer contract secured by the employer. The position may not be the same for all employees with some moved on to new contracts and remaining in employment by the company in an indefinite way.

81.    However, business circumstances that are only communicated to the employee when the employer comes to terminate the employment on the basis that the customer has not renewed the contract, or the employer has chosen not to seek to renew the contract with the customer, or the employer has chosen not to reallocate or redeploy the employee to undertake the same work to provide the services required to perform a contract with another customer are in a different category. In such instances, the employee is engaged in circumstances where it appears that work will be ongoing (and agrees to terms on that basis), but when terminated is confronted with a claim that the redundancy pay that would normally apply where the employer no longer requires that particular work to be undertaken is not due because of the way the employer has decided to operate its business.

82.    Indeed, the evidence advanced in Compass Group exposed the importance of the distinction. It referred to some cases where the employment was for the purposes of a contract with a customer that may be rolled over or extended but only upon Compass Group securing a further contract to provide the same services. In other instances, 'the contract is only for a specific task of limited duration - for example, to provide catering and accommodation services to construction workers on a major construction project'. In the latter case, it was inevitable that employment would be terminated at some point: at [32].

94    His Honour continued:

88.    In [sic] can be seen that the case law before the enactment of s 119(1)(a) had developed a well-established jurisprudence concerning the circumstances in which payments for redundancy may be required by an employer. The state of that law was such that it focussed upon the nature of the job to be done and whether that work was still required to be undertaken by any employee. It recognised a general right to redundancy pay where the terminated employment had been ongoing and for an indefinite term such that there was a degree of security that might be expected to be associated with the employment. Amongst other qualifications, it was a right that was subject to the exception that it was not payable where employment was brought to an end as part of the ordinary and customary turnover of labour. The exception was said to apply where the termination was a normal feature of the business and also where termination after a period was to be expected by the employee. Properly understood, these two descriptions are not competing. The exception applies where it was evident that the nature of the work to be done was not ongoing. It might be evident from the nature of the job itself that it was not ongoing, such as where the task to be undertaken was inherently itinerant or for a specific project. Or it might be evident because it was a normal feature of a particular kind of business that the work would not be ongoing, such as where the business involved securing a workforce to perform services under a particular contract and it was the usual practice that all employees would no longer be required at the end of the contract. It was a concept that was considered to invite a factual inquiry in the particular circumstances of the case that was concerned with the extent to which there was an expectation, in the ordinary course, that the employment would be ongoing. In undertaking that inquiry consideration would be given to whether it was a normal feature of a business that the employment would be terminated rather than be ongoing.

89.    Therefore, the use of the phrase 'ordinary and customary turnover of labour' had acquired a particular meaning within the pre-existing law. The existence of that body of industrial law decisions was part of the context in which s 119(1)(a) came to be enacted using precisely the same terminology as had been developed and applied in the decided cases.

95    His Honour turned to decisions in which s 119(1)(a) of the FWA had been considered, namely Transport Workers' Union v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIRComm 22, and the other case on appeal before this Court, United Voice v Berkeley Challenge Pty Ltd [2018] FCA 224. His Honour noted that in Veolia the employment contract in question was not one which was for a specified term without any provision for renewal, or a contract to perform work only until a specific task was completed – rather in Veolia the employee was entitled to have a settled expectation that his employment would be continuing and that he would not lose his position with the employer simply because a particular contract between the employer and a third party was not renewed. His Honour observed:

93.    … The decision adopts the terminology of 'reasonable or settled expectation of continuing employment' which may be found in many of the cases in the field and was applied in Fashion Fair.

96    His Honour then observed that the reasoning of the primary Judge in [2018] FCA 224 was a result which gave:

… the phrase 'ordinary and customary turnover of labour' when used in s 119(1)(a) an application that depended upon the extent to which the employer had a long established practice of deciding to terminate a particular job in particular circumstances. (at [103])

97    Before the primary Judge, SSA submitted that the decision in [2018] FCA 224 was “plainly wrong and should not be followed”. His Honour summarised this submission as follows:

104.    The error was said to lie in wrongly discounting the relevance of previous decisions. It was said to give rise to unreasonable and impractical outcomes. By requiring that the practice of termination be shown to be a long continuing practice of the particular employer it was said that a well-established employer would not be liable to pay redundancy pay, but a new entrant with the same business model would have to do so. This would place the new entrant at an economic disadvantage in having to bear additional costs for a period of time despite the fact that it was apparent to all concerned that the employment would not be ongoing. Then at some indefinable point the employer could cease paying redundancy pay. It was unclear as to how this would be applied to particular employees who had commenced employment before the required point of long-continuing practice had been reached. It was submitted that these outcomes were contrary to the express objects of the Fair Work Act and was a construction that should have been rejected by reason of its unreasonable and impracticable application.

98    His Honour noted that the reasoning of the Court in [2018] FCA 224 rested on two significant propositions, namely:

    the previous decisions as to ordinary and customary turnover were of limited value because Parliament had chosen to express the relevant concepts in some detail in Pt 2.2 Div 11 of the FWA (in particular s 123); and

    section 119(1)(a) was concerned with what was ordinary and customary as a matter of longstanding practice of the particular employer.

99    In relation to the first proposition, his Honour noted that the phrase “ordinary and customary turnover of labour”:

    was developed and applied in a series of determinations made in accordance with applicable industrial law to express an exception to a general entitlement to redundancy pay – in other words redundancy pay was to be paid for loss of a job that had been expected to be ongoing (at [109]);

    was understood to invite a factual inquiry as to the circumstances of the particular case, and qualified a general right to redundancy pay in circumstances where the employment always carried with it regular turnover (that is, there was no reasonable expectation of ongoing employment) (at [110]); and

    was used in s 119(1)(a) without statutory definition, and was introduced to have the same role as it did under the pre-existing law in respect of expressing a general exception to entitlement to redundancy pay.

100    It followed, in his Honour’s view, that the adoption of the same language to perform the same function in the operation of a law about the same subject matter meant that the pre-existing law was an important contextual consideration in construing the words “ordinary and customary turnover of labour” in s 119(1)(a).

101    His Honour considered s 123, including the discussion of that section in [2018] FCA 224. Section 123, in providing that Div 11 did not apply to certain employees, reflected a view that, but for such a provision, the Division would apply to such employees. However, his Honour considered that recording the categories of employees listed in s 123 as employees to whom redundancy pay provisions did not apply reflected earlier industrial law decisions.

102    His Honour disagreed with the findings of the Court in [2018] FCA 224 that s 123 was a reason for earlier decisions being of limited relevance in construing the words of Exception in s 119(1)(a) – rather his Honour found that it was wrong to disregard the pre-existing law when construing those words.

103    In relation to the second proposition relating to whether the words “ordinary and customary” meant what was ordinary and customary for the business of the employer as a matter of longstanding practice, his Honour observed at [126] that it was necessary to approach the statutory construction task informed by the context of the pre-existing usage of the words of expectation. His Honour had regard to the TCR case, Amcor and Compass Group and continued:

129.    For reasons I have given, the phrase 'ordinary and customary turnover of labour' as used in the pre-existing law referred to a termination that was to be expected by the employee in the particular circumstances of the case. It may be expected because it was a normal aspect of a business of the kind conducted by the employer that would be evident to the employee. The 'normal feature of a business' was a reference to a feature inherent in the nature of the particular kind of business, not a feature that was made normal for the particular business by its own practices in terminating employees.

130.    As Reeves J stated, the form of s 119(1)(a) requires a causal link between a termination which occurs 'because the employer no longer requires the job done by the employee to be done by anyone' and the ordinary and customary turnover of labour. The use of the word ‘this’ in the words of exception means termination for redundancy which is due to the ordinary and customary turnover of labour. So, s 119 (1)(a) focusses upon the reasons for the termination.

131.    The phrase ‘turnover of labour’ is a general description of the coming and going of labour. The expression ‘general turnover of labour’ was used by Fisher P in the Crocker decision to refer to the many reasons why it has been customary for employees’ services to be dispensed with.

132.    The expression 'ordinary and customary turnover of labour' must refer to a narrower category than general turnover. It is dealing with the specific case where the termination of employees for redundancy is both 'ordinary and customary'. The semantic range of the two words overlap. Both are used to indicate that which is common or usual. However, they identify slightly different respects in which something (in this case the termination of employment) is expected or part of the every day. The adjective ordinary is applied to indicate that an object is commonly observed or is the kind of thing that is standard or usual. The adjective customary is applied to indicate that an activity is habitual or a matter of usual practice. Inherent in the notion that an activity is customary is a recognition that it is a behaviour that is longstanding and has an ongoing consistency.

133.    So, in context the terminology connotes a termination where the employer no longer requires the job to be performed because termination in the particular case is common or usual, both in the sense that it is commonly observed and in the sense that it is habitual or of longstanding practice. Because it has that character it is expected. There is no loss or harm to an employee whose job is terminated in such circumstances. That which is inherent in the nature of the work and, in a sense, inevitable, comes to pass.

104    The primary Judge examined the argument advanced by SSA that there were difficulties in interpreting “customary” turnover of labour by reference to what was customary for a particular business in the case, for example, of a new business which did not have a “customary” practice. In relation to this issue his Honour said:

135.    The answer to that conundrum does not lie in giving the word 'customary' a meaning denuded of any requirement for a consistent common or usual practice that might be described as habitual or longstanding. Rather, that aspect of the terminology indicates that the exception is concerned with instances where it is generally habitual or a matter of long-standing practice for the particular kind of employment to be terminated rather than ongoing. In a particular case, it may be able to be demonstrated that the kind of businesses that have to put together a significant labour force to meet the requirements of a particular contract with a customer have that character. The nature of the contracts with customers and the lumpy changes in required employees may mean that for such businesses termination of certain types of employment at the end of the contract with the customer is common or usual for such a business.

136.    However, given that s 119(1)(a) is enacting a minimum standard, it would be inconsistent with the evident purpose of the provision if an employer could by its own unique practice create that kind of expectation. If that were so, an employer could simply announce to its employees 'when your job is no longer required to be performed for the business your employment will be terminated without redundancy pay, that is our common and usual practice so you should expect that to occur' and thereby bring about their own exemption. Further, neither s 119(1)(a) nor the pre-existing law refer to an exception where termination for redundancy is due to the ordinary and customary practice of the employer.

137.    Rather, informed by the context of the earlier decisions where the terminology was developed and applied, the phrase 'ordinary and customary turnover of labour' is describing termination that is a common and usual outcome for anyone working in a job of that kind. It is both commonly observed and a matter that is habitual or of longstanding practice such that it is to be expected that for anyone in that type of job, the employment will not be ongoing. Where the termination is because it is common and usual for the type of job to be brought to an end rather than for it to be ongoing (for so long as there is no misconduct or poor performance or inability to undertake the work) then the exception applies.

138.    It is not a term that applies where there is simply an identifiable risk that the employment may come to an end. All ongoing employment is attendant with such risks and yet is considered to be indefinite. The risks include insolvency of the business of the employer, technological change, a reduction in customers of the employer's business and the restructure that may follow a takeover or amalgamation. In some cases, the fact that an employer depends upon securing new contracts in order to be able to continue to offer employment will be such a risk. It will be a question of fact in each case whether termination is so inherent in the nature of the job for a particular employee that it cannot be described as ongoing or indefinite employment. In such a case when the termination occurs it will be an outcome that is part of the ordinary and customary turnover of labour.

(Emphasis added.)

105    In relation to its particular case, SSA contended that:

    the loss of service contracts with its customers was a regular and ordinary part of the business of SSA;

    from the perspective of SSA, employees were hired for a specific service contract;

    what was important for the application of s 119(1)(a) was how the employees were regarded by SSA as their employer – were they thought by SSA to be employed for the purposes of a particular contract;

    SSA supported and facilitated “contract requirement employees” redeployment at the end of service contracts, but only where that was possible;

    as a matter of priority SSA sought to redeploy the employees on the loss of the Perth International Airport contract; and

    the fact that employees could not be redeployed meant that the operations of Spotless Group as a whole could not absorb the cost of those employees because there would be no utility in having excess workers.

106    At [141] his Honour noted that SSA did not seek to demonstrate that, by reason of the nature of the work they were employed to do, the circumstances in which they came to be employed or the circumstances in which their employment continued, each employee had, or ought to have had, an expectation that it was the kind of job that would come to an end when the contract that SSA had with its customer came to an end. His Honour continued:

142.    Instead, Spotless sought to rely upon its own policy and practices. It contended that it was enough that the practice of Spotless was such that it viewed all 'contract requirement employees' as coming and going with each customer contract. It did not seek to demonstrate that those policies and practices were known to the employees when they undertook their employment. It did not seek to demonstrate that the termination of the employees occurred because the nature of their employment was such that it was common or usual for their employment to be terminated when the contract came to an end. It was for Spotless to establish matters that would bring it within the words of exception. Given the nature of the case it advanced and the view I have expressed as to the meaning of the exception to s 119(1)(a), it failed to do so.

143.    It was not in issue that the employees were terminated in circumstances of redundancy. Therefore, the contravention by Spotless of s 119(1)(a) has been established.

107    His Honour also made findings of fact including:

    The Spotless Group was managed as a single entity (at [146]).

    It was entirely a matter for each company in the Spotless Group to determine who would undertake the work required to perform the contracts with its customers (at [149]).

    SSA and the Spotless Group as a whole each had an interest in keeping its experienced employees by redeploying them to other contracts as well as the power to do so (at [149]).

    The evidence was to the effect that SSA wanted to keep its employees and where possible to allocate them to a different contract where a particular contract came to an end (at [150]).

    The deployment of employees to new contracts when a customer contract was not renewed would create an expectation amongst employees that such deployment would occur (at [150]).

    SSA was a very large entity with customer contracts being won and lost on a regular basis (at [151]).

    SSA did not have a practice of terminating the employment of all employees upon each customer contract coming to an end (at [152]).

    Within the Spotless Group customers who were undertaking a job required to perform a particular contract were known as 'contract requirement employees'. There was no evidence that this was a term used in regular communications with those employees. It was not usual for contract requirement employees to be moved from working under one contract to another during the course of the contract (at [154]).

    The contracts entered into by SSA with employees did not indicate that the contracts would come to an end when the contract with a particular customer came to an end. In the course of the proceedings, the Spotless Group produced 1,062 agreements with its employees recording the terms and conditions of the employment of 839 employees who had been paid redundancy pay in the period 1 January 2015 to 31 July 2015.

    For most of those employees there was no reference to the customer contract. There were terms providing that the employee could be directed to work at another location, on other duties for other Spotless Group companies, and there was no express term relating to redundancy or severance pay (at [155]).

    SSA had a standard procedure entitled ‘managing redundancy arising out of loss of contract’. The termination for position redundancy only arose where there was no internal position identified and no choice to continue with the incoming contract – the procedure did not state that employment was terminated for redundancy in all cases upon the end of the contract with the customer.

    In respect of evidence presented by SSA relating to the termination of employees, his Honour preferred the evidence as to the practice of the Spotless Group that was recorded in the contemporaneous business records in the form of the procedure and the memorandum issued on 4 October 2014, showing a practice whereby permanent employees were sought to be redeployed within the Spotless Group.

    The evidence as to how the records were extracted to support the analysis undertaken by Mr Matthew Potter (the National Human Resources Manager within the Spotless Group) showed that there was no consistent arrangement for keeping those records. They were maintained in different systems that had been kept by the different companies and reflected the fact that some companies had joined the Spotless Group through acquisition. There were demonstrated to be inconsistencies and inaccuracies in the data. Therefore, the data was not a reliable basis upon which to draw conclusions as to the actual practice followed when contracts came to an end (at [173]).

108    In relation to the evidence of the relevant employees, his Honour found, in summary, in respect of each employee:

    until termination they had never heard the term “ordinary and customary turnover of labour”; and

    during the course of their employment, they were never told that their employment was linked to a specific contract or for a fixed period, or that their employment would be terminated if any particular contract was terminated by the client, lost or not renewed.

109    His Honour found that SSA had contravened s 119 of the FWA by failing to pay the affected employees redundancy pay upon termination of their employment.

GROUNDS OF APPEAL

QUD 285 of 2018

110    The grounds upon which Berkeley relied in its amended notice of appeal filed on 11 January 2019 are as follows:

1.    In the Liability Decision, the primary judge erroneously held that the exception set out in s. 119(1)(a) of the Fair Work Act 2009 (Cth) did not apply to the terminations of the employment of the employees to whom the proceedings related (the affected employees).

Particulars

a.    The primary judge adopted and applied an erroneous construction of the exception set out in s 119(1)(a) of the Act in the following respects:

i.    By holding in [74] of the Liability Decision that it applied only ‘where an employer decides to terminate and employee’s employment and also decides that it no longer requires the employee’s job to be done by anyone’, whereas the correct construction is that the circumstances that the employer no longer required the employee’s job to be done by anyone is not an element to the exception.

ii.    By holding in [74] of the Liability Decision that the exception applied to an employer’s decision that it no longer requires the employee’s job to be done by anyone, whereas the correct construction is that the exception applies to the termination of the employee’s employment.

iii.    If the last sentence in [74] of the Liability Decision is to be understood to be a holding that the words ‘due to’ in the exception introduce a causal relationship between the employer’s decision that it no longer required the employee’s job to be done by anyone and the set of circumstances described in the exception, then by so holding.

iv.    By holding in [76] of the Liability Decision that the words ‘turnover of labour’ refer to ‘the aggregate of the employer’s employee replacements’, whereas the correct construction is that they refer to every change or movement that affects or applies to labour, including equally to hiring and dismissing employees at the employer’s initiative, termination at the employees’ initiative. .-ceasing to offer casual employees, and redeployment of employees.

v.    By holding in [77] of the Liability Decision that the exception applied only ‘in circumstances where the redundancy component of [the employer’s decision to terminate a particular employee’s employment and make the employee redundant] is for that employer, with respect to its labour turnover, both common, or usual, and a matter of long-continued practice’. The correct construction is that the exception applies whenever the terminations of employment in question are a normal feature of the employer’s business and are properly described as falling within the ordinary and customary turnover of labour in that business, and that terminations of employment that arise from the loss of contracts are encompassed within that concept. The matter of ‘long-continued practice’ is irrelevant. The exception applies when each of the following questions can be answered in the affirmative by the employer:

A.    Was there a turnover of labour?

B.    If so, was that turnover of labour ordinary and customary?

C.    If so, was the termination of employment ‘due to’ the turnover of labour?

b.    Further to Particular (a)(v) the primary judge should have followed and applied, but erred by not following and applying, Shop Distributive & allied Employees’ Association (NSW) v Countdown Stores (1983) 7 IR 273, the Termination Change and Redundancy Cases (1984) 8 IR 34 and 9 IR 115, and Compass Group (Aust) Pty Ltd v National Union of Workers (2015) 253 IR 32.

c.    The primary judge erroneously held in [79] of the Liability Decision that, while the evidence led by the appellant established the employment of the affected employees was terminated because the Spotless Group lost its contracts with Lend Lease, it ‘did not say anything about [the appellant’s] additional decision to render their jobs redundant vis-à-vis its labour turnover practices or frequency.’ The error lay in focusing on the appellant in isolation. The source of that error is the holding in [36] of the primary judgment that it was the appellant’s ‘decisions and business activities’ were the sole points of reference for the purpose of the exception. The correct position on the evidence was that in that respect the appellant was and acted as a member of the spotless Group, such that the relevant business for the purpose of the exception was that of the Spotless Group.

d.    The error referred to in (b) carried through into [80] of the Liability Decision, which incorrectly focusses on the appellant in isolation. The correct finding was that the evidence showed that the terminations of the employment of the affected employees were properly described as falling within the ordinary and customary turnover of labour in the business of the Spotless Group, and thus fell within the exception.

2.    Further to Ground 1, the primary judge erroneously held that the appellant had contravened ss 44 and 119 of the Fair Work Act by not paying redundancy pay to the affected employees under s 119 (the Redundancy Contraventions).

3.    Further to Ground 2, the primary judge erroneously held and ordered that the affected employees were entitled to, and should be paid, compensation under s 545(2) of the Fair Work Act in respect of the Redundancy Contraventions.

4.    Further to Ground 2, the primary judge erroneously held and ordered that the appellant should pay penalties under s 546 of the Fair Work Act in respect of the Redundancy Contraventions.

(Tracked changes in original.)

111    On 14 September 2018 United Voice filed a notice of contention, asserting the decision of the primary Judge in [2018] FCA 224 should be affirmed on grounds other than those relied on by the Court, as follows:

1.    The correct approach to determining the question whether a ‘turnover of labour’ is ‘ordinary and customary’, for the purposes of s 119 (1)(a) of the Fair Work Act 2009 (Cth), is that the exception does not apply unless the court is satisfied that ‘turnover of labour’ is ordinary and customary, having regard to the circumstances of the employer concerned; and the circumstances of the market or the industry concerned; and the circumstances of the employee or employees concerned.

2.    In the present case, the termination of the affected employees was not due to the ‘ordinary and customary turnover of labour’ because there was no evidence that the turnover of labour was ordinary and customary when considering the circumstances of the employer concerned, the industry concerned or the employees concerned.

WAD 76 of 2019

112    The grounds of appeal relied on by SSA in appealing against the primary judgment are as follows:

1.    The Court wrongly found that the appellant had contravened s.119(1)(a) of the Fair Work Act 2009 (Cth) by failing to pay redundancy to each of Mr Expedito Campilan, Ms Katherine Wright and Mr Simon (Richard) Ramble upon termination of their employment in June 2015 (for Ms Wright and Mr Ramble) and July 2015 (for Mr Campilan).

Particulars

a.    The correct finding was that each of Mr Campilan, Ms Wright and Mr Ramble were not entitled under s.119(1)(a) to be paid redundancy pay upon termination of their employment in June 2015 (for Ms Wright and Mr Ramble) and July 2015 (for Mr Campilan), and that the appellant had therefore not contravened s.119(1)(a) by not making such payments to them.

b.    The primary judge construed s.119(1)(a) having regard to the wrong and irrelevant consideration that it would be contrary to the purpose of the Act is s.119(1)(a) ‘was interpreted in a manner that, in effect, conferred power upon an employer by adopting a particular business practice to decide whether its employees would receive the benefit of … [redundancy pay].”

Paragraphs [39] of the primary judgment; see also paragraphs [81] and [129].

c.    The primary judge wrongly gave the exclusion in s.119(1)(a) a construction that included, as a necessary element, the actual or constructive perceptions, assessments, judgments or expectations of employees as to whether their employment would or would not be ongoing

See, for example. Paragraphs [57], [72], [73], [81], [86], [88], [110], [129], [137] and [163] of the primary judgment.

d.    Further to Particular (c), the primary judge wrongly treated as decisive to the application of the exclusion in s.119(1)(a) that which was communicated to or known by employees before the termination of their employment.

See, for example, paragraphs [81] and [142] of the primary judgment.

e.    The primary judge wrongly gave the exclusion in s.119(1)(a) a construction that gave effect to a wrong and irrelevant distinction between the business or business practices of the employer on the one hand, and on the other hand, either or both of ‘the kind of business conducted by the employer’ and the nature of employees’ jobs, and that focused on the latter to the actual or practical exclusion of the former. The correct focus of the exclusion in s.119(1)(a) is only on the normal features of the employer’s business.

See, for example. Paragraphs [80], [129], [135] and [136] of the primary judgment.

f.    The primary judge wrongly construed the exclusion in s.119(1)(a) so as to require that the end of the job that the employees in question were doing before termination of their employment be due to the ordinary and customary turnover of labour. The correct construction is that the requisite connection be between the termination of employment and the ordinary and customary turnover of labour.

See, for example, paragraphs [72], [130], [132] and [137] of the primary judgment.

g.    The primary judge wrongly construed the word ‘customary’ in s.119(1)(a) to mean ‘behaviour that is longstanding and has an ongoing consistency.’ The correct construction is that ‘customary’ taken together with ‘ordinary’ as part of a composite expression, should be understood to refer to something that is characteristic of an employer’s business.

Paragraph [132] of the primary judgment.

h.    The primary judge wrongly held that the words ‘ordinary and customary turnover of labour’ referred to a narrower category that general turnover.

Paragraph [132] of the primary judgment.

i.    The primary judge wrongly held that the appellant had not sought ‘to demonstrate that the termination of the employees occurred because the nature of their employment was such that it was common or usual for their employment to be terminated when the contract came to an end.’ The correct position was that the appellant’s case was that the termination of the employees’ employment was due to a turnover of labour that was ordinary and customary in the business in which they were employed.

Paragraph [142] of the primary judgment.

j.    The primary judge wrongly held that the appellant had not proven ‘the actual practice [as to the turnover of labour] followed when contracts came to an end.’ The correct position was that the appellant’s evidence demonstrated that a turnover of labour in that event was ordinary and customary.

Paragraph [173] of the primary judgment.

2.    Further to Ground 1, the Court wrongly declared by Order 1 that the appellant had contravened s.119(1)(a) of the Fair Work Act 2009 (Cth) by failing to pay redundancy to each of Mr Campilan, Ms Wright and Mr Ramble upon termination of their employment in June 2015 (for Ms Wright and Mr Ramble) and July 2015 (for Mr Campilan).

Submissions of the parties in QUD 285 OF 2018

113    Written and oral submissions in this appeal were made by the appellant Berkeley, the respondent United Voice, and the intervener the Ombudsman.

Submissions of Berkeley

114    Overall, Berkeley submitted the primary Judge in [2018] FCA 224 erred in construing the Exception. In summary, Berkeley submitted that his Honour erred in:

1.    Coupling Berkeley’s decision to terminate the relevant employment with the decision to render the relevant jobs redundant.

2.    Applying too narrow a conception of the concept of “turnover of labour” as used in s 119(1)(a) of the FWA.

3.    Construing the words “ordinary and customary” to require that a turnover of labour be “common, or usual, and a matter of long-continued practice”.

4.    Treating the line of authority exemplified by Countdown, the TCR case and Compass Group as being of limited relevance.

5.    Focusing on Berkeley in isolation to the exclusion of the business of the Spotless Group.

115    In relation to the notice of contention filed by United Voice, Berkeley submitted that the primary Judge was correct at [78] to reject United Voice’s contentions concerning the relevance of the expectations of the affected employees. Berkeley also submitted, in summary:

a)    the language of s 119(1)(a) is in objective terms;

b)    the policy behind s 119(1)(a) would not be undermined by giving effect to the exclusively objective meaning of the text;

c)    the authorities do not support the proposition that employees’ subjective expectations are an element of s 119(1)(a);

d)    contractual principles relating to custom are irrelevant;

e)    the decision in [2019] FCA 9 wrongly gave the Exception a construction that included the expectations of employees as to whether their employment would or would not be ongoing; and

f)    the introduction of a subjective element into s 119(1)(a) creates ineradicable problems.

Submissions of United Voice

116    Addressing Berkeley’s submissions, United Voice submitted:

1.    Berkeley did not demonstrate that the primary Judge’s reading of the grammar of s 119(1)(a) was wrong;

2.    Berkeley’s contended interpretation of “turnover of labour” in the Exception would embrace a wider category of circumstances than the circumstances to which it is an exception;

3.    As found by the primary Judge in [2019] FCA 9, and contrary to the submissions of Berkeley, no “conventional” reading of what amounts to “ordinary and customary” turnover of labour can be distilled from the decisions in Countdown Stores, the TCR cases or the Compass Group;

4.    The submissions of Berkeley in relation to the line of authority exemplified by Countdown Stores, the TCR case and Compass Group are contradictory;

5.    The submissions of Berkeley that the correct focus of the primary Judge should have been on the business of the Spotless Group as a whole rather than that of Berkeley are answered by the notice of contention. In any event, the evidence before the Court at first instance was that the relevant employees were all employed by Berkeley and in some cases that employment pre-dated Berkeley’s relationship with the Spotless Group.

117    Further, United Voice submitted more generally that the Court should adopt the reasoning and approach of the primary Judge in [2019] FCA 9.

Submissions of the Ombudsman

118    In summary the Ombudsman submitted:

    An issue squarely raised for determination before the Full Court was the correctness of the decision in [2019] FCA 9;

    The proper interpretation of s 119(1)(a) was that the exception contained therein is enlivened where the particular job or employment of the employee has been terminated by the employer because it is no longer required to be performed, and that fact is due to the “ordinary and customary turnover of labour” in the sense that the relevant termination was common or usual, expected, commonly observed, habitual or a matter of longstanding practice (as explained in [2019] FCA 9 at [132]-[135]).

Submissions of the parties in WAD 76 of 2019

119    Written and oral submissions in this appeal were made by the appellant SSA, the respondent Ombudsman, and the intervener United Voice. Berkeley also intervened but made no written submissions.

Submissions of SSA

120    In summary, SSA submitted:

    Most of the grounds of appeal in this case were already canvassed in the appeal in QUD 285 of 2018, and SSA adopted what had already been submitted by the appellant in that appeal concerning the construction and application of s 119(1)(a), the policy and legislative history behind the provision, and the errors in the primary judgment.

    The primary Judge erred at [39], [81] and [129] in his construction of s 119(1)(a), in particular that it would be contrary to the purpose of the section if it were interpreted “in a manner that, in effect, conferred power upon an employer by adopting a particular business practice to decide whether its employees would receive the benefit of” redundancy pay.

    The primary Judge erred by construing s 119(1)(a) in a subjective manner which included, as a necessary element, the actual or constructive knowledge or expectations of employees as to whether their employment would or would not be ongoing.

    Communications to or knowledge of employees during their employment was irrelevant except insofar as it was capable of constituting evidence of whether a relevant turnover of labour was in fact objectively ordinary and customary.

    The correct focus of the Exception was only on the normal features of the employer’s business.

    The primary Judge wrongly construed the word “customary” in s 119(1)(a) at [132] to mean “behaviour that is longstanding and has an ongoing consistency”. The correct construction is that “customary”, taken with “ordinary” as part of a composite expression, should be understood to refer to something that is characteristic of an employer’s business.

    The primary Judge erred at [132] in construing “ordinary and customary turnover of labour” as a narrower category than “general turnover”.

    The correct position was that SSA’s evidence established the requirements of the language of s 119(1)(a), in particular that the termination of the employees’ employment was due to a turnover of labour that was ordinary and customary in the business in which they were employed.

    There was no doubt that that there was a “turnover of labour” following the loss of SSA’s contact, and that that turnover of labour was “ordinary and customary”.

    The loss of contracts was a regular and ordinary part of Spotless’ business, with the maintenance of the group’s overall contract numbers depending upon new contracts being won elsewhere.

    Spotless supported and facilitated contract requirement employee’s redeployment at the end of service contracts, but only where that was possible

Submissions of the Ombudsman

121    In summary the Ombudsman submitted:

    The findings of fact made by the primary Judge were not challenged.

    The primary Judge’s construction of the Exception was correct because: the entirety of the text was given meaning; considerations as to the circumstance of the employment and its features cannot be ignored; the words “due to the ordinary and customary turnover of labour” give rise to a compendious phrase and should be read as a whole; and pre-existing law was relevant in construing the legislation.

    The Exception was directed to be an encompassing concept to capture instances where it would be evident that the character of employment would not be indefinite or ongoing because of a series of factors including the nature of the work, the business activity, the type of business.

Submissions of United Voice

122    In summary United Voice submitted:

    The primary Judge’s construction of the Exception at s 119(1)(a) is a product of a reading of the text of the provision in context, having proper regard to statutory purpose, and consistent with decisions given by tribunals and Courts in the pre-existing law.

    The primary Judge correctly, and consistently with the pre-existing law, construed the Exception such its application is referable to the expectations of the employees concerned, and having regard to the objective features or nature of the employment and the job performed by those employees.

consideration

123    Turning now to the separate appeals before the Court we make the following preliminary observations.

124    First, while each case is referable to its own facts, nonetheless there is important overlap in those facts. In particular:

    the appellant in each case is a subsidiary of the Spotless Group;

    employees in each case were employed by the respective appellants and engaged in work relating to contracts each employer had with third parties;

    the contracts between the employers and the third parties had terminated;

    all employees had been employed for lengthy periods at the time of termination; and

    none of the employment contracts contained provisions to the effect that they were subject to the retention of specified agreements between the employer and external third parties.

125    Second, it does not appear that either appellant cavils with the proposition that, on the facts of each case, relevant employees were terminated, at the employer’s initiative, because the employer no longer required the job done by the employee to be done by anyone. It follows that, unless the Exception set out in s 119(1)(a) applied, the relevant employees would be entitled to be paid redundancy by their employers pursuant to s 119(1)(a). However, in each case the respective employer claimed – for essentially the same reasons – that the relevant employees were terminated as part of the ordinary and customary turnover of labour of each employer within the meaning of s 119(1)(a) of the FWA. Accordingly, the legislation the subject of each claim, requiring interpretation by the Courts at first instance and now this Court, and applicable case law, were the same in each appeal.

126    Third, the questions the primary Judge in each case addressed were substantially the same – namely whether the employer had discharged the onus of proof that the Exception applied in its respective case.

127    Fourth, the decision in [2018] FCA 224 was subsequently the subject of extensive examination and comment by the primary Judge in [2019] FCA 9. The reasoning of the primary Judge in [2019] FCA 9 departed from that of the primary Judge in [2018] FCA 224 in respect of relevant legal principles. To that extent, this Court has the benefit of the reasoning of the primary Judge in [2018] FCA 224 and the commentary of the primary Judge in [2019] FCA 9 to inform its consideration of the appeal in QUD 285 of 2018.

128    Finally, the respondents and the interveners in both QUD 285 of 2018 and WAD 9 of 2019 (with the exception of Berkeley as intervener in WAD 76 of 2019) strongly submitted that the reasoning of the primary Judge in [2019] FCA 9 was correct, and that the principles articulated by his Honour in that decision should be adopted by this Court in determining both appeals. The notice of contention filed by the respondent in QUD 285 of 2018 is to that effect. Indeed, as the Ombudsman (as intervener) submitted in QUD 285 of 2018:

It is evident from a reading of the parties’ submissions … that an issue that is squarely raided for determination before the Full Court is the correctness of the decision in Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9…

129    To the extent that the essential case of the appellants in both proceedings is that the primary Judge misconstrued the Exception to s 119(1)(a) of the FWA in its application to the termination of the employees at first instance, the grounds of appeal in each proceeding, and the respective submissions of the parties, can be addressed by reference to the following overarching issues:

1.    Whether the circumstances that the employer no longer required the employee’s job to be done by anyone is an element of the Exception to s 119(1)(a) of the FWA (see QUD 285 of 2018 grounds of appeal 1(a)(i), (ii), (iii); WAD 76 of 2019 ground of appeal 1 (f))

2.    Whether it was a wrong and irrelevant consideration, and would be contrary to the purpose of the FWA, if s 119(1)(a) was interpreted in a manner that conferred power upon an employer to adopt a particular business practice to decide whether its employees would receive the benefit of redundancy pay (WAD 76 of 2019 ground of appeal 1(b))

3.    Whether the actual or constructive perceptions, assessments, judgments or expectations of employees as to whether their employment would or would not be ongoing was relevant (WAD 76 of 2019 ground of appeal 1(c), (d))

4.    Whether the decisions in Shop Distributive & Allied Employees’ Association (NSW) v Countdown Stores (1983) 7 IR 273, the Termination Change and Redundancy Cases (1984) 8 IR 34 and 9 IR 115, and Compass Group (Aust) Pty Ltd v National Union of Workers (2015) 253 IR 32 were relevant in interpreting the Exception (QUD 285 of 2018 ground of appeal 1(b))

5.    The meaning of “ordinary and customary turnover of labour” in the Exception (QUD 285 of 2018 ground of appeal 1(a)(iv), (v); WAD 76 of 2019 ground of appeal 1(i), (j); QUD 285 of 2018 notice of contention grounds 1 and 2) including:

•    the proper meaning of the words “customary”, “ordinary and customary” and “turnover of labour”, including whether the words “ordinary and customary turnover of labour” referred to a narrower category than general turnover; (QUD 285 of 2018 ground of appeal 1(a)(iv), (v); WAD 76 of 2019 grounds of appeal 1(g), (h)); and

•    the proper focus of the Court in construing this phrase (QUD 285 of 2018 ground of appeal 1(c), (d); WAD 76 of 2019 ground of appeal 1(e)).

130    Once these issues are determined, it is necessary to turn to the facts of each case to identify whether the Exception applied to the relevant employees (QUD 285 of 2018 grounds of appeal 1, 2, 3 and 4; WAD 76 of 2019 grounds of appeal 1 and 2).

Issue 1: Whether the circumstances that the employer no longer required the employee’s job to be done by anyone is an element of the Exception to s 119(1)(a) of the FWA (see QUD 285 of 2018 grounds of appeal 1(a)(i), (ii), (iii); WAD 9 of 2019 ground of appeal 1(f))

131    The text of s 119(1)(a) of the FWA states that an employee is entitled to redundancy pay where:

•    the employee’s employment is terminated at the employer’s initiative; and

•    that termination was a result of the employer no longer requiring the job done by the employee to be done by anyone.

132    The Exception exempts an employee from an entitlement to redundancy pay in these circumstances where “this is due to the ordinary and customary turnover of labour.” An exception, by its very definition, is a subset of circumstances to which a rule or statement would otherwise apply.

133    In relation to grounds of appeal 1(a)(i), (ii) and (iii) in QUD 285 of 2018, the appellant in that appeal referred to paragraph [74] of the primary judgment where the primary Judge said:

74.    There are two phrases in the Exception which I consider are pivotal. They are: “this is due to”; and “turnover of labour”. The words “this is due to” are pivotal because they indicate what it is that the Exception relates to. Contrary to the submissions of both parties, I do not consider the word “this” is directed to the termination per se. Rather, I consider it is directed to the situation where an employer decides to terminate an employee’s employment and also decides that it no longer requires the employee’s job to be done by anyone. It is the attachment of the latter decision to the termination that gives rise to the redundancy pay entitlement under s 119 and it is to that feature of the termination that the Exception in s 119(1)(a) applies. Furthermore, the words “due to” introduce a causal relationship between such a termination and the set of labour turnover conditions to which the Exception applies.

134    In relation to ground of appeal 1(f) in WAD 76 of 2019, the appellant in that appeal referred to paragraphs [72], [130], [132] and [137] of the primary judgment.

135    The discussion of the primary Judge in [2019] FCA 9 at [72] is under the heading “Pre-existing law” and is part of his Honour’s discussion of the judgment of Gummow, Hayne and Heydon JJ in Amcor, and their Honours’ examination of the decision of the Commission in the TCR case. Relevantly, paragraph [72] and the preceding paragraph [71] provide:

71.    Their Honours then considered the decision in the Termination, Change and Redundancy Case and said at [44]:

For present purposes, what is important is that the Commission appears to have been seeking a form of words that would accommodate two features. First, as was said in the Commission's supplementary decision..., it "did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business". Secondly, the Commission did not intend redundancy provisions to be engaged by the transmission of a business. In its earlier decision, the Commission had emphasised... that it did "not envisage severance payments being made in cases of succession, assignment or transmission of a business". That is, the Commission regarded termination of employment by a particular employer as not sufficient to engage the redundancy obligations, even if that employer was ceasing any participation in the particular business. The focus of the provision was upon the work undertaken by the employee (the "job"), not upon the identity of either the employee or the employer. The relevant inquiry was whether employment in a particular kind of work then being undertaken was to come to an end. If that employment was to come to an end, it was necessary to consider why that was to happen. Was it because the employer no longer wanted the job, then being done by the employee, done by anyone? Or was it "due to the ordinary and customary turnover of labour"...? And, as the Commission's evident concerns about drafting show, these alternatives were not, and are not to be, understood as exhausting the cases that might have to be considered.

72.    The exploration in the above passage of the Commission's decision identifies the relevant enquiry as to whether there has been redundancy as being concerned with whether the work being done was expected to come to an end. If so, there needs to be a consideration as to whether the end of the 'job' was due to the ordinary and customary turnover of labour. However, no view was proffered about what those words might mean. Nor was there any explication of the shorthand summary used by the Commission, namely 'termination due to a normal feature of a business'. For reasons I have given, those words were not used by the Commission to focus attention upon the peculiar termination practices of the particular business of the employer, but rather appeared to refer to an inherent feature of a business (that is the kind of business conducted by the employer) that would mean that an employee would not expect there to be ongoing employment. If termination after a period of time was a likely and foreseeable characteristic of employment by such a business (and therefore part of what the employee took on when agreeing to undertake the particular employment) then redundancy was inherent in the nature of the employment and in that sense was ordinary and customary. It was not a matter of agreeing a limited term of employment. It was not a question of what practice the employer may choose to adopt. Rather, the job itself was of a kind where it was not to be ongoing.

(Emphasis added.)

136    Paragraphs [130], [132] and [137] are in the context of a discussion of the meaning of the words of the Exception, and read as follows:

130.    As Reeves J stated, the form of s 119(1)(a) requires a causal link between a termination which occurs 'because the employer no longer requires the job done by the employee to be done by anyone' and the ordinary and customary turnover of labour. The use of the word 'this' in the words of exception means termination for redundancy which is due to the ordinary and customary turnover of labour. So, s 119(1)(a) focusses upon the reasons for the termination.

…

132.    The expression 'ordinary and customary turnover of labour' must refer to a narrower category than general turnover. It is dealing with the specific case where the termination of employees for redundancy is both 'ordinary and customary'. The semantic range of the two words overlap. Both are used to indicate that which is common or usual. However, they identify slightly different respects in which something (in this case the termination of employment) is expected or part of the every day. The adjective ordinary is applied to indicate that an object is commonly observed or is the kind of thing that is standard or usual. The adjective customary is applied to indicate that an activity is habitual or a matter of usual practice. Inherent in the notion that an activity is customary is a recognition that it is a behaviour that is longstanding and has an ongoing consistency.

…

137.    Rather, informed by the context of the earlier decisions where the terminology was developed and applied, the phrase 'ordinary and customary turnover of labour' is describing termination that is a common and usual outcome for anyone working in a job of that kind. It is both commonly observed and a matter that is habitual or of longstanding practice such that it is to be expected that for anyone in that type of job, the employment will not be ongoing. Where the termination is because it is common and usual for the type of job to be brought to an end rather than for it to be ongoing (for so long as there is no misconduct or poor performance or inability to undertake the work) then the exception applies.

137    There was significant cross-reference by each appellant to submissions in the other appeal currently before this Court, as well as findings by each primary Judge. Both appellants relied on Compass Group at [27] where the Full Bench of the Fair Work Commission observed:

[27]    In order to determine whether the Exception applies in a given case it is necessary to consider the normal features of the business and then determine whether the relevant terminations are properly described as falling within the ordinary and customary turnover of labour in that business. This is a question of fact, to be determined on the basis of the circumstances of each termination and each business. It necessarily focuses on the business circumstances of the employer.

138    In summary, the appellants submitted that both primary Judges erred because, contrary to the findings of their Honours, the correct construction of the Exception was that the requisite connection be between the termination of employment on the one hand, and on the other hand the ordinary and customary turnover of labour. They cumulatively contended:

    the words “ordinary and customary” are an adjectival phrase, together qualifying the noun phrase “turnover of labour”, such that it follows that it is the turnover of labour which must be ordinary and customary;

    there is no logical or syntactical connection between such a turnover of labour and the concept described by the first part of s 119(1)(a);

    the function of that concept is to describe the terminations of employment that are the subject of s 119(1); and

    the only possible “this” in s 119(1)(a) is the terminations of employment that are identified in the chapeau to s 119(1).

139    Berkeley submitted that the correct construction of s 119(1)(a) required the application of a three stage test:

    Was there a turnover of labour?

    If so, was that turnover of labour ordinary and customary?

    If so, was the termination of the relevant employees’ employment “due to” the turnover of labour?

140    Berkeley further submitted that the evidence in the primary proceedings demonstrated that the question of each stage of that test should have been answered in the affirmative, such that his Honour should have concluded that the terminations of employment came within the Exception.

141    In our view, the arguments of the appellants in respect of this issue are not substantiated.

142    First, to the extent that the appellants relied on the Compass Group decision of the Full Bench of the Fair Work Commission, it is clear that references by the Full Bench at [27] to “the relevant terminations” were to terminations made by an employer because the employer no longer required the job done by the employee to be done by anyone – that is, terminations for redundancy. This was made plain, for example, at [7] of the Compass Group decision where the Full Bench said:

[7]    It is not in dispute that the employment of the employees has been terminated because the employer no longer requires the job done by the employees to be done by anyone. The issue between the parties is whether the exception in the clause applies – specifically, whether the termination of employment “is due to the ordinary and customary turnover of labour”. We will refer to this phrase as “the Exception” in the course of this decision.

(Emphasis added.)

143    In this respect, it was not only inappropriate, but impossible to separate the concept of “termination” from that of redundancy in the Full Bench’s decision.

144    Second, it is difficult to understand the logic to the appellants’ submission that there is no logical or syntactical connection between an ordinary and customary turnover of labour on the one hand, and the concept described by the first part of s 119(1)(a) (namely the termination being for redundancy). As the Ombudsman correctly submitted in these appeals:

    In construing s 119(1)(a) of the FWA, the entirety of the text of the section must be given meaning.

    The subject matter of the provision is termination of employment at the employer’s initiative because the employer no longer requires the job done by the employee to be done by the employee or anyone.

    The Exception is enlivened where that subject matter – that is, the termination in circumstances that the employer no longer requires a job to be performed – is due to the ordinary and customary turnover of labour.

    The combination of these parts – including the specific text “this is due to” – establishes the requirement for a causal connection between the termination for the reason that the job is no longer required, and the ordinary and customary turnover of labour.

145    Contrary to the submissions of the appellants, it is clear from the text of s 119(1)(a) that the requisite connection contemplated by the section was between, on the one hand, the termination of employment because the employer no longer requires the job done by the employee to be done by anyone, and on the other hand the ordinary and customary turnover of labour. The findings of the primary Judges in [2018] FCA 224 at [74] and [2019] FCA 9 at [130] are plainly correct.

146    The grounds of appeal referable to this issue fail.

Issue 2: Whether it was a wrong and irrelevant consideration, and would be contrary to the purpose of the FWA, if s 119(1)(a) was interpreted in a manner that conferred power upon an employer to adopt a particular business practice to decide whether its employees would receive the benefit of redundancy pay (WAD 76 of 2019 ground of appeal 1(b))

147    In ground of appeal 1(b) the appellant claimed that the primary Judge in [2019] FCA 9 had regard to a wrong and irrelevant consideration in construing s 119(1)(a), namely that it would be contrary to the purpose of the Act if s 119(1)(a) “was interpreted in a manner that, in effect, conferred power upon an employer by adopting a particular business practice to decide whether its employees would receive the benefit of … [redundancy pay]”.

148    In written submissions, the appellant relied on the submissions in reply of the appellant in QUD 285 of 2018, which were as follows:

The reference to an employer’s “practices” is a straw man, unfairly coloured by “enable” and “own”. The construction of s 119(1)(a) for which the appellant contends does not focus or depend on an employer’s practices as such. Instead, it requires an examination of whether the termination of employment in question is due to a turnover of labour that is ordinary and customary as a matter of objective fact. By this means s. 119(1)(a) focuses on what really happens. In that sense it is the opposite of a device. Whether what really happens has its origin in a practice adopted by the relevant employer, or in a practice that operates throughout an industry, or in something else altogether, is extraneous to the statutory enquiry.

Further, it is not apparent how the Union identifies the employer’s “own practices”, or the “device” used by it to determine what dismissals fall within the exception in s. 119(1)(a), as opposed to the usual and legitimate commercial activities of the employer (or an employer of that kind). In this case, what aspects of the appellant’s business are said to constitute its “own practices” or the “device” used by it? It is illogical for that to be the relevant aspect because the appellant’s business would not exist if it did not hold services contacts [sic] with clients. Further, where a services contract comes to an end and the relevant employees who were working on that contract cannot be redeployed, there is no other sensible business option than to terminate their employment. For these reasons, any inquiry into the employer’s “own practices” as such does not assist in the statutory enquiry.

149    The appellant in WAD 76 of 2019 referred in the notice of appeal to paragraphs [39], [81], and [129] of the primary judgment in [2019] FCA 9. It is illuminating to have regard to these paragraphs.

150    Paragraph [39] of the primary judgment appeared under the heading “Relevant legislative purpose evident from the legislative text” where his Honour makes general statements concerning the purpose manifest from the overall scheme of the FWA and the express statements of object and purpose. Paragraph [39] reads as follows:

39.    Third, the Act has detailed provisions that provide for compliance and enforcement and establishes a Fair Work Ombudsman and a Fair Work Commission with substantial powers to supervise compliance and ensure enforcement of the Standards. The rights and protections afforded by the Act do not depend upon the employee independently resorting to claims. The Act puts in place a substantial structure to support the making of claims. Nevertheless, the Fair Work Act confers statutory entitlements upon employees that cannot be undermined and to that extent is protective of the interests of employees. It would be contrary to this purpose if a particular condition was interpreted in a manner that, in effect, conferred power upon an employer by adopting a particular business practice to decide whether its employees would receive the benefit of a particular minimum entitlement (such as redundancy pay).

(Emphasis added.)

151    Paragraph [81] of the primary judgment is part of a discussion by his Honour of the pre-existing law, and provides as follows:

81.    However, business circumstances that are only communicated to the employee when the employer comes to terminate the employment on the basis that the customer has not renewed the contract, or the employer has chosen not to seek to renew the contract with the customer, or the employer has chosen not to reallocate or redeploy the employee to undertake the same work to provide the services required to perform a contract with another customer are in a different category. In such instances, the employee is engaged in circumstances where it appears that work will be ongoing (and agrees to terms on that basis), but when terminated is confronted with a claim that the redundancy pay that would normally apply where the employer no longer requires that particular work to be undertaken is not due because of the way the employer has decided to operate its business.

(Emphasis added.)

152    Paragraph [129] of the primary judgment can be found in a discussion by his Honour of the meaning of the words of exception in s 119(1)(a), and reads:

129.    For reasons I have given, the phrase 'ordinary and customary turnover of labour' as used in the preexisting law referred to a termination that was to be expected by the employee in the particular circumstances of the case. It may be expected because it was a normal aspect of a business of the kind conducted by the employer that would be evident to the employee. The 'normal feature of a business' was a reference to a feature inherent in the nature of the particular kind of business, not a feature that was made normal for the particular business by its own practices in terminating employees.

(Emphasis added.)

153    It is plain from a broader reading of his Honour’s reasons for judgment in [2019] FCA 9 that his Honour was, quite properly, having regard to the appropriate test by which the statutory purpose for s 119(1)(a) could be ascertained. Earlier in the judgment at [9] his Honour observed:

9.    In construing a statute, the task is to ascertain the contextual meaning of the words used: SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [14]. Statutes speak as an entire instrument so it is necessary to consider the words in the context of the instrument as a whole and to construe them so as to ensure consistency between all provisions: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69] and Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320. The relevant context also includes legislative history and extrinsic materials: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503 at [39]. It also includes preexisting law: Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42; (2014) 254 CLR 247 at [42]. In an appropriate case where examination of contextual materials discloses an evident mischief that the statute was intended to remedy then the statute is to be read in that context: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408.

10.    Statutory construction involves choosing from the range of possible meanings which Parliament should be taken to have intended: Independent Commission Against Corruption v Cunneen [2015] HCA 14; (2015) 256 CLR 1 at [57]. Further, the range of meanings is itself to be informed by matters of context from the outset and not just when ambiguity is thought to arise: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 315 and SZTAL at [14].

11.    The context of the language used in the statutory instrument or the legislative history may aid the construction by narrowing the semantic breadth or linguistic ambiguity that may otherwise attach to the words used if considered out of context.

12.    In addition, consideration of the language used in context may enable a purpose to be discerned that may be applied to aid in the choice between competing constructions. Indeed, the purpose of the statute may appear from an express statement in the legislation itself. Other contextual matters may also aid in discerning purpose. The application of the rules of statutory interpretation will properly involve the identification of a statutory purpose from these sources, recognising that it must be a purpose that 'resides' in the 'text and structure' of the legislation: Lacey v AttorneyGeneral (Qld) [2011] HCA 10; (2011) 242 CLR 573 at [44].

13.    However, care must be taken to ensure that the purpose identified is specific enough to be used to resolve the ambiguity: Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529. Further, it is not for the Court to conjure a purpose that is more specific than the context discloses and then use that purpose to construe the legislation: Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56; (2012) 248 CLR 378 at [26] and Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194 at [21].

14.    It is possible that there may be no available indication of a specific purpose that aids the construction: Carr v State of Western Australia [2007] HCA 47; (2007) 232 CLR 138 at [6]. In that case, the focus must be upon the textual meaning.

(Emphasis added.)

154    In relation to the FWA, as his Honour later pointed out in the primary judgment:

23.    The Act provides for terms and conditions of employment that apply broadly though not exhaustively throughout Australia. Its object is expressed in s 3 which begins in the following terms:

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations;

24.    A number of further means by which the stated object is to be attained are stated in the following provisions in s 3. They include, 'ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders' (s 3(b)) and 'ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual agreements of any kind' (s 3(c)).

25.    The National Employment Standards (Standards) are 'minimum terms and conditions' that apply to all employees covered by the Act: s 41. They are set out in Part 22: s 43(1)(a) and s 59. Their detail is in Divisions 3 to 12 of Part 22: s 59. The Standards 'underpin what can be included in modern awards and enterprise agreements': s 59. They cannot be excluded or displaced by modern awards or enterprise agreements: Part 21 and s 61(1).

26.    An employer must not contravene the Standards: s 44(1).

27.    One of the 10 Standards relates to the matter of 'notice of termination and redundancy pay': s 61(2)(i). It is dealt with in Division 11 of Part 22, being s 117 to s 123.

155    Section 44(1) of the FWA prohibits employers contravening a provision of the National Employment Standards. Section 44(1) is a civil remedy provision under the FWA, contravention of which can be the subject of an application by an employee, an employee organisation, or a Fair Work inspector pursuant to s 539 of the FWA.

156    Section 119(1)(a) must be read in this statutory context, and a determination of whether facts of a particular case fall within the Exception as expressed in s 119(1)(a) must similarly be made in that light. So, in determining whether an employee falls within the exclusionary words “except where this is due to the ordinary and customary turnover of labour” and is thus deprived of the entitlement to redundancy otherwise contemplated by s 119(1)(a), it would be entirely antithetical to the statutory purpose of ensuring that the National Employment Standards are not to be undermined to give effect to an artifice created, for example, by a practice instituted by an employer.

157    It is in this light, for example, that s 123(2) of the FWA, which also appears in Pt 2.2 Div 11 of the Act, specifically provides that s 123(1)(a) (which contemplates an employee being employed for a specified period of time, for a specified task, or for the duration of a specified season) does not prevent the Division from applying to an employee if a substantial reason for employing the employee as described in s 123(1)(a) was to avoid the application of the Division.

158    The question of what is a “normal” practice, such as to fall within the description of “ordinary and customary” in s 119 (1)(a) of the FWA, is an issue to which we will turn later.

159    In our view the primary Judge in [2019] FCA 9 did not have regard to a wrong or irrelevant consideration as claimed by the appellant in ground 1(b) in WAD 9 of 2019. This ground of appeal is not substantiated.

Issue 3: Whether the actual or constructive perceptions, assessments, judgments or expectations of employees as to whether their employment would or would not be ongoing was relevant (QUD 285 of 2018 notice of contention ground 1; WAD 76 of 2019 ground of appeal 1(c), (d))

160    The primary Judge in [2018] FCA 224 found at [78] that the critical question before the Court was whether Berkeley, as the employer of the affected employees, discharged its onus to show that its decision to terminate their employment and, at the same time, to render their jobs redundant was, for it, common or usual and a matter of long-continued practice. His Honour continued:

78.    … I should interpose to note that, because this question is entirely focused on Berkeley’s decision to undertake the terminations and to make the jobs redundant and the circumstances in which it made that decision, any expectations the affected employees held about those matters are irrelevant. I therefore reject United Voice’s contentions to the contrary.

161    The respondent in QUD 285 of 2018 contended in its notice of contention that the circumstances of the employee or employees concerned were relevant to determining whether a “turnover of labour” was “ordinary and customary” for the purposes of s 119(1)(a). In particular, the respondent submitted that:

    The circumstances of the employee concerned were directed at whether the employee had an expectation of ongoing employment.

    The expectation of the employee was also relevant to the circumstances of the employer given the features of the business conducted by the employer.

    It is consistent with the purpose of ensuring that the National Employment Standards not be undermined if the approach to ascertaining whether a turnover of labour was “ordinary and customary” took into consideration the expectations of employees.

    The reasoning of the primary Judge in [2019] FCA 9 should be preferred.

162    The Ombudsman, as intervener in QUD 285 of 2018, submitted that the resolution of the factual question of the application of s 119(1)(a) in any given case would involve an inquiry as to a range of matters, including the settled expectations of employees.

163    In respect of the relevance of the actual or constructive expectations of employees as an element in the proper application of s 119(1)(a) of the FWA, there was significant cross-reference between the submissions of each appellant in each appeal. In particular, the appellant in WAD 76 of 2019 incorporated into its submissions the submissions of the appellant in QUD 285 of 2018 as to the notice of contention.

164    The appellants cumulatively submitted that the actual or constructive perceptions, assessments, judgments or expectations of employees were irrelevant because:

    As the primary Judge found in [2018] FCA 224, the employees’ actual or constructive expectations were not an element in the proper application of s 119(1)(a).

    The language of s 119(1)(a) is objective. There is no reference to any subjective consideration.

    The policy behind s 119(1)(a) would not be undermined by giving effect to the exclusively objective meaning of the text. In particular, a National Employment Standard should not be undermined, but the Standard is identified by reading s 119(1)(a) as a whole.

    The reasoning of the primary Judge in [2019] FCA 9 should not be followed to the extent that the expectations of employees were treated as relevant.

    The authorities relied upon by the respondent used the concept of employees’ expectations as a proxy for, or as evidence of, the statutory test of an objectively ordinary and customary turnover of labour.

    Introducing a subjective element into s 119(1)(a) would create problems including determining whether expectations of employees are to be actual or constructive. Such problems indicate that the legislature did not intend to import such issues into s 119(1)(a), but instead intended to delineate an entitlement to redundancy pay that was entirely objective.

    Evidence of the expectations of both parties is relevant insofar as that evidence goes to establishing whether a state of affairs objectively existed. However, the relevant distinction is between the subjective state of mind of either the employer or the employee about whether a state of affairs objectively existed, and the objective state of affairs. Proper construction of s 119(1)(a) permits only reference to the objective state of affairs.

165    The primary Judge in [2019] FCA 9 at [66] referred to the decision of the Industrial Commission of New South Wales in Fashion Fair Pty Ltd v Department of Industrial Relations (Inspector Rouse) (1999) 92 IR 271 where the Commission observed:

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.

166    His Honour further noted at [93] that Haylen J in Transport Workers' Union v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIRComm 22 adopted the terminology of “reasonable or settled expectation of continuing employment” which could be found in many of the cases in the field and was applied in Fashion Fair.

167    At [110] of [2019] FCA 9 the primary Judge noted that, historically,

The phrase 'ordinary and customary turnover of labour' was understood to invite a factual inquiry as to the circumstances of the particular case. It was used to qualify a general right to redundancy pay in circumstances where the employment always carried with it regular turnover or, put another way, there was no reasonable expectation of ongoing employment.

168    His Honour continued:

110.    … It might be said that there was no unfairness or harm associated with the termination of employment in a manner that was known from the outset because the burden that arose in the case of redundancy was the unexpected character of the termination and the need for an employee who expected to have ongoing employment to face the prospect of an extended period of being out of work.

169    His Honour further observed at [126] that it was necessary to approach the statutory construction task informed by the context of the pre-existing usage of the words of expectation, and subsequently noted:

129.    For reasons I have given, the phrase 'ordinary and customary turnover of labour' as used in the pre-existing law referred to a termination that was to be expected by the employee in the particular circumstances of the case. It may be expected because it was a normal aspect of a business of the kind conducted by the employer that would be evident to the employee. The 'normal feature of a business' was a reference to a feature inherent in the nature of the particular kind of business, not a feature that was made normal for the particular business by its own practices in terminating employees.

(Emphasis added.)

170    At [163] his Honour further found that:

The exception was to deal with cases where there was an expectation that the employment would not be ongoing.

171    In our view, the submissions of the appellants in respect of this issue, including their criticism of the reasoning of the primary Judge in [2019] FCA 9, do not withstand scrutiny. We take this view for following reasons.

172    First, as the primary Judge explained in detail in [2019] FCA 9, historically the phrase “ordinary and customary turnover of labour” in the context of redundancy, incorporated issues of reasonable expectation on the part of employees. This is because, historically, when employees were engaged, unless there were reasons for them to expect otherwise, they expected to remain employed in the absence of such factors as dismissal for misconduct or cessation of the employer. As the primary Judge also explained in [2019] FCA 9 at [88], the pre-existing law recognised a general right to redundancy pay where the terminated employment had been ongoing and for an indefinite term such that there was a degree of security that might be expected to be associated with the employment.

173    This point is also clear from such earlier authorities as Morris v New South Wales Bookstalls Pty Limited (1985) 12 IR 1 at 6, Fashion Fair at 277, 280, 283, and Allens Stores Ltd v De-Winter (unreported, Glynn and Peterson JJ and Murphy CC, Matter No IRC 1831 of 1993, 17 June 1994) at page 6.

174    We respectfully adopt the analysis on the part of his Honour in [2019] FCA 9 in respect of earlier case law and the treatment in those cases of this issue.

175    Second, the appellants contended that the authorities relied on by the primary Judge in [2019] FCA 9 used the concept of employees’ subjective expectations as a “proxy” for, or as evidence of, the statutory test of an objectively ordinary and customary turnover of labour. The appellants submitted, in summary that it is only the objective state of affairs which is relevant in applying the Exception.

176    The case of the appellants – as is particularly found in ground of appeal 1(c) in WAD 76 of 2019 – appears to be that the understanding of employees as to the nature and basis of their employment, and whether they had an expectation of ongoing employment, is irrelevant in determining whether the Exception applies, because such belief is “subjective”, and the application of the Exception is determined only by reference to the “objective state of affairs.”

177    The reality is that the reasonable expectations of employees are relevant to inform the Court as to whether the Exception applies in cases where employees are terminated for redundancy. Such expectations cannot be coloured by facts that the employees neither knew, nor could have known, because (for example) those facts were known (or could be known) only to the employer as a “hidden” practice of that employer. Reasonable expectations of employees could derive from material provided to them by the employer, or facts generally known about an industry.

178    As the primary Judge correctly observed in [2019] FCA 9 at [141], employees’ reasonable expectations of ongoing employment (or otherwise) may arise from the nature of the work they were employed to do, the circumstances in which they came to be employed, or the circumstances in which their employment continued. Ultimately this will be a question of fact in any particular case, based on the evidence before the Court.

179    In summary, reasonable expectations of employees are relevant to inform the Court’s consideration of the application of the Exception, for reasons including:

    objective assessment of the employment relationship and whether the employee was entitled to be paid redundancy in accordance with s 119(1)(a) requires examination of the facts of the case;

    the facts of the case invariably include reference to the basis on which employees are engaged, and whether the employees were engaged on the basis that their employment was finite and/or dependent on external factors;

    the permanency or otherwise of employment, or the relationship between employment and contractual arrangements between the employer and third parties may not have been clarified at the time of engagement of the employee; and

    whether employees were engaged on the basis that their employment was finite and/or dependent on external factors, could be informed by their reasonable expectations arising from communications by or with the employer at the commencement of the employment or throughout the employment.

180    Fourth, the hypothetical complexities raised by the appellants concerning, for example, actual or constructive expectations, in our view not only confuse the issue, but ask the wrong questions in respect of the application of s 119(1)(a). In their submissions the appellants raised the spectre of subjective employee expectations being the principal – if not sole – determinative factor in applying s 119(1)(a). However, these submissions:

    ignore the historical approach of Courts taking overall employee expectations into consideration;

    disregard other relevant factors which may inform the Court’s determination of whether the Exception applies; and

    simultaneously disregards the fundamental basis of the historical operation of redundancy pay as recognised in s 119(1)(a), which is that employees are entitled to redundancy pay where they had a reasonable expectation of ongoing employment and that employment is terminated.

181    Ultimately, the reasonable expectations of employees are a critical, but not the only, factor in determining whether the particular termination was due to the ordinary and customary turnover of labour.

182    Grounds of appeal 1(c) and (d) in WAD 76 of 2019 are not substantiated.

Issue 4: Whether the decisions in Shop Distributive & Allied Employees’ Association (NSW) v Countdown Stores (1983) 7 IR 273, the Termination Change and Redundancy Cases (1984) 8 IR 34 and 9 IR 115, and Compass Group (Aust) Pty Ltd v National Union of Workers (2015) 253 IR 32 were relevant in interpreting the Exception (QUD 285 of 2018 ground of appeal 1(b))

183    The appellant in QUD 285 of 2018 claimed that the primary Judge in [2018] FCA 224 erred because he should have followed and applied the decisions in Countdown Stores, the TCR cases and Compass Group, but did not.

184    The primary Judge examined these decisions at [55]-[70] of his reasons. His Honour observed at [71] that none of those cases were binding authority, although they illustrated the history to the introduction of redundancy pay entitlements in Australia and disclosed the parameters of the debate about the situations to which the Exception was intended to apply. His Honour continued:

71.    … That said, none of this history could truly be described as legislative history in the sense described by the High Court (see at [21] above). That is so because s 119 marks the first occasion upon which a redundancy pay entitlement has appeared in the FWA, or in one of its legislative predecessors. Notably, there was, for example, no similar provision in the Standard in Part 7 of the Workplace Relations Act 1996 (Cth). Consequently, prior to 2009, redundancy pay entitlements were dealt with under Federal and State industrial instruments, including enterprise agreements and awards.

185    His Honour referred to the importance of statutory context, noting that many of the examples the subject of the Exception identified by Commissioner Roe at first instance in the Compass Group case now fell under s 123(1) of the FWA. His Honour then observed:

73.    These examples of the statutory context to the Exception as it appears in s 119(1)(a) of the FWA serve to demonstrate two things: the limited value of the decisions I have reviewed above when construing the meaning of the Exception; and the very important role that statutory context has in this particular construction exercise. The latter is accentuated in this instance by the principle of statutory construction that the words of a statutory provision must be given some meaning and effect (see Project Blue Sky Inc at [71] and Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23 at [39]). It follows that the express exclusions mentioned above, together with a number of others contained in Division 11 of Part 2-2 which I have not mentioned, appear to act to confine the Exception in s 119(1)(a) to a narrow set of circumstances. However, as it turns out, it is unnecessary for me to explore those confines because this matter can be disposed of on the text of the Exception and the evidence adduced by the parties, matters to which I will now turn.

186    The appellant submitted, in summary:

    the conventional approach established in the Countdown Stores, the TCR Cases and Compass Group was to treat “ordinary and customary” as being, in effect a composite phrase that required only the turnover of labour to be a normal feature of the relevant business;

    the focus of the pre-existing law was always on the normal features of the business in which the employee worked, and included terminations of employment as a consequence of the loss of a contract where that was a normal feature of that business;

    the inclusion of a requirement that the turnover of labour be “a matter of long-continued practice” was an error; and

    the correct construction followed the conventional approach by requiring only that it be a normal feature of the relevant business.

187    Relevantly, the primary Judge in [2019] FCA 9 disagreed with the findings of his Honour at [73] in [2018] FCA 224. His Honour in [2019] FCA 9 noted at [109] that

109.    … the words 'ordinary and customary turnover of labour' were developed and applied in a series of determinations made in accordance with applicable industrial law to express an exception to a general entitlement to redundancy pay. Redundancy pay was to be paid for loss of a job that had been expected to be ongoing, not where there was a dismissal for misconduct or other circumstances that explained the termination, such as poor performance or because the employment was on a casual basis

188    His Honour continued:

111.    When the Fair Work Act entitlement to redundancy pay was expressed, it adopted the same language of exception in respect of a provision dealing with precisely the same subject matter.

112.    Significantly, when the same words were used in s 119(1)(a) no statutory definition of the terminology was introduced. Further, the words were introduced to have the same role as they did under the pre-existing law, namely to express a general exception to the circumstances in which there would be an entitlement to redundancy pay. The words were adopted as part of a statutory provision which, though not expressed to be a codification of previous legal rights, expressed in statutory terms the conditions of employment that were to apply to employees throughout Australia and which might be expected to deal with matters that had been the subject of earlier employment law. In that context, to the extent that there was to be a substantial deviation from the pre-existing law captured by a particular formulation of words then it might reasonably be expected that there would either be a new definition expressed to apply to those words or the adoption of different language. Neither course was adopted when the words 'ordinary or customary turnover of labour' were used in s 119(1)(a).

113.    Accordingly, the adoption of the same language to perform the same function in the operation of a law about the same subject matter meant that the pre-existing law was an important contextual consideration to be brought to account when construing the same words in their statutory context in the Fair Work Act.

114.    As noted by Gummow, Hayne and Heydon JJ in Electrolux Home Products Pty Ltd v Australian Workers' Union [2004] HCA 40; (2004) 221 CLR 309 at [162]: 'The field of industrial relations legislation in Australia is not one where the Parliament may readily be taken to have legislated without awareness of the interpretation placed by this Court on pivotal definitions'. The same applies where, as here, the phrase used is one that has a well-established usage as a matter of industrial law in the very same context where it is deployed in the legislation that is subsequently enacted.

115.    It was separately argued for Spotless that before the enactment of the Fair Work Act the redundancy entitlements of employees were the exclusive preserve of certified agreements and state and federal industrial awards. Those instruments have statutory effect and therefore it was said that they formed part of the legislative history to be taken into account as a matter of context. This reasoning provides further support for the significance of the pre-existing usage of the words of exception when it came to construe them as deployed in s 119(1)(a).

116.    Further reliance was placed by Spotless on the terms of the Explanatory Memorandum for the Fair Work Bill which stated that redundancy provisions 'are currently awards-based entitlements, which will be legislated to provide more comprehensive protection for employees and extend redundancy to award-free employees'. This is another contextual indication that the legislature had in mind the adoption of concepts that applied under the pre-existing law.

117.    In all those circumstances, having regard to the principles of statutory construction to be applied, there are compelling reasons why it is not correct to view the preexisting law concerning the expression 'ordinary and customary turnover of labour' to be of limited value in construing the language used in s 119(1)(a). Rather, those decisions and what they reveal about the way the terminology had been used and what it was intended to capture are important contextual matters to consider when it comes to construing the same language deployed for the same purpose in s 119(1)(a).

118.    As to whether there was any indication in the language used in Division 11 that the phrase ordinary and customary turnover of labour was to be given a meaning that was to be determined independently of the previous decisions, Reeves J drew attention to the terms of s 123. As I have noted, it states that Division 11 does not apply to certain types of employees. One category of employees to which Division 11 (and therefore s 119(1)(a)) does not apply is 'an employee employed for a specified time, for a specified task, or for the duration of a specified season'. Another category is 'a casual employee'. These provisions were said to appear to confine the words of exception to a narrower category than was indicated by the earlier decisions. The precise extent to which that might be so was a matter that Reeves J found did not need be determined in the particular case: at [73].

119.    It may be accepted that the form of s 123 in providing that Division 11 does not apply to certain employees reflects a view that but for such a provision the Division would apply to such employees. However, for the following reasons recording the categories of employees listed in s 123 as employees to whom the redundancy pay provisions do not apply reflects the earlier industrial law decisions rather than contradicts them.

120.    As I have explained, the determinations by which the right to redundancy pay was established considered all of the circumstances which account for the turnover of labour. They identified dismissals of employees for wrongdoing or poor performance as not giving rise to any entitlement to redundancy pay. Further, they treated casual employees and apprentices and those whose duration of employment had not yet reached 12 months as being in a different category to employees generally. In such cases, there was to be no entitlement to redundancy pay even though it might also be said in some cases that, in a sense, the termination of employment was because the job was no longer required to be performed.

121.    So, under the earlier determinations concerning redundancy pay there were three broad aspects to considering whether the entitlement arose. First, one excluded certain identified cases where the reason for termination meant there was no entitlement to redundancy pay for various identifiable reasons developed as a matter of fairness in all the circumstances. These included termination for misconduct or by reason of the itinerant nature of the work or where the term of employment has been less than 12 months. Next, one recognised there was otherwise a general entitlement to redundancy pay, but subject to an exception for instances where the turnover of labour is ordinary and customary. Then, one considered the particular facts to determine whether the type of employment was of a kind where it is ordinary and customary for there to be a turnover of labour.

122.    The expression of the exclusions in s 121 is consistent with the above structure. Further, the categories of exclusions reflect cases identified in the determinations to which I have referred. Therefore, the existence of those exclusions does not manifest an intention to deploy the words 'ordinary and customary turnover of labour' in a way that is inconsistent with the way the same words were developed and deployed under the pre-existing law.

123.    The fact that a person employed for a specified period, task or season will not be entitled to redundancy pay does not mean that the words of exception in s 119(1)(a) must have a narrower field of operation than they did under the pre-existing law. A person may not be employed for a specified period, task or season and yet, on the particular facts, may be a person who, when employed, has no expectation of ongoing employment by reason of 'ordinary and customary turnover of labour'. The work may be of kind that it can be seen that it will not be ongoing even though it is not agreed to be for a specified period, task or season. Indeed, a person who is employed to undertake the work required to perform a specific contract between the employer and its customer may have that character. In such cases, the parties may not expressly agree that the employment is to come to an end, but it will be evident from the nature of the employment that this will be the case. Whether that is so will depend upon the facts in each case.

124.    Therefore, the terms of s 123 were not a reason for concluding that the words 'ordinary and customary turnover of labour' were intended to be used in a sense that that was not to be informed by the context of usage as part of the pre-existing law.

(Emphasis added.)

189    His Honour in [2019] FCA 9 at [125] concluded:

125.    For those reasons, I am respectfully of the view that there are compelling reasons as to why Reeves J was wrong in finding that s 123 was a reason why the earlier decisions were of limited relevance when it came to the construction of the words of exception in s 119(1)(a). It was not suggested that there were discretionary reasons why, even so, the decision should be followed. Therefore, I regret to say I am strongly of the conviction that the decision of Reeves J should not be followed to the extent that it depends upon disregarding the pre-existing law when construing the words of exception in s 119(1)(a).

190    We have set out in detail the reasoning of the primary Judge in [2019] FCA 9 because in our view it entirely answers the question whether such decisions as those in Countdown Stores, the TCR Cases and Compass Group are relevant in interpreting the Exception. As the primary Judge in [2019] FCA 9 had earlier observed:

[21]    For reasons I have given, the pre-existing law in the form of decided industrial cases may form part of the context to be considered in resolving the construction questions in this case. However, it is important to be clear about the way the pre-existing law may be used. It provides an historical context in which to read the words, particularly to consider what was intended by using words in the Act that echo a phrase deployed as part of the pre-existing law. It may also assist in understanding the purpose of the excluding words in s 119(1)(a) which may then be used to choose between competing constructions.

[22]    However where, as here, there is no contextual matter manifesting an intention to simply codify the rights conferred by the pre-existing law in the form of the industrial law decisions, the construction task is more subtle than simply asking whether the words bear the meaning they were given in the pre-existing law. The words are placed in a new legislative context. It is necessary to consider the context established by those provisions with some care. It is also possible that the statutory words were placed in a particular context that was intended to build on the pre-existing law by resolving ambiguity that was present or by qualifying or adjusting the way the words are to be understood.

(Emphasis added.)

191    His Honour’s reasoning in respect of the proper approach to statutory interpretation in this context is consistent with the comments of the High Court concerning statutory interpretation: SZTAL v Minister for Immigration & Border Protection [2017] HCA 34 at [14], Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39] and Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247; [2014] HCA 42 at [42]. We can usefully add nothing to the reasoning of the primary Judge in [2019] FCA 9 concerning the relevance of the pre-existing law in construing the Exception to s 119(1)(a), and respectfully adopt it.

192    To the extent that the primary Judge in [2018] FCA 224 found that the pre-existing law was of limited relevance to the interpretation of the Exception in s 119(1)(a), we consider that his Honour erred. The pre-existing law was relevant. However, the decision in [2018] FCA 224 did not rest solely on this point. A more important question in determining the appeal in QUD 225 of 2018 is whether the primary Judge erred in the application of the Exception. This is a question squarely raised in Issue 5 and by reference to the evidence before the Court.

Issue 5: The meaning of “ordinary and customary turnover of labour” in the Exception (QUD 285 of 2018 ground of appeal 1(a)(iv), (v), WAD 76 of 2019 ground of appeal 1(i), QUD 285 of 2018 notice of contention grounds 1 and 2)

Meaning of the composite phrase “ordinary and customary turnover of labour”

193    As we noted earlier, the primary Judge in [2018] FCA 224 at [75]-[76] examined in detail the dictionary definitions of key terms in s 119(1)(a). At [73], his Honour found that the matter could be disposed of on the text of the Exception and the evidence adduced by the parties, and that the pre-existing law was of limited value in construing the meaning of the Exception and words therein.

194    We have already found, however, that the primary Judge in [2018] FCA 224 was incorrect in downplaying the relevance of the pre-existing law in interpreting words in s 119(1)(a) including the Exception. Further, we have already noted that the primary Judge in [2019] FCA 9 examined, in detail, the pre-existing law and its relevance to the meaning of the relevant terms, and respectfully adopt that reasoning of his Honour in [2019] FCA 9. We are satisfied that it is not in accordance with proper statutory construction in these appeals to limit the meaning of the words in the Exception to the textual dictionary meaning of the words.

195    This is not to say that the literal meaning of the words in the Exception is irrelevant. As the appellants in both appeals correctly submitted, the term “turnover of labour” appears in the FWA only once (namely at s 119(1)(a)) whereas otherwise, the FWA the legislation repeatedly refers to “employment”.

196    The appellants submitted that this distinction was deliberate, that “turnover” connotes a wider concept than “termination at the initiative of the employer” which also appears in s 119(1)(a), and that “labour” is broader than “employment”. The appellants in both appeals also submit that the expression “turnover of labour” includes every change or movement that affects or applies to labour, including hiring and dismissing employees at the employer’s initiative, termination at the employee’s initiative, ceasing to offer work to casual employees and contractors and redeployment of employees. “Ordinary and customary turnover of labour” therefore simply means, in the submission of the appellants, that in the particular case the turnover of labour was a normal feature of the business in which the employee worked.

197    The expressions “turnover of labour” and “general turnover of labour” have relevantly received consideration in the context of the phrase “ordinary and customary turnover of labour”.

198    The primary Judge in [2019] FCA 9 observed:

131.    The phrase 'turnover of labour' is a general description of the coming and going of labour. The expression 'general turnover of labour' was used by Fisher P in the Crocker decision to refer to the many reasons why it has been 'customary' for employees' services to be dispensed with.

199    Relevantly in Countdown Stores Fisher P said:

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

200    See also NSW Industrial Relations Commission in Re Application for Redundancy Awards (1994) 53 IR 419 at 444.

201    His Honour in Countdown Stores went on to describe circumstances where employees’ services would be terminated for reasons relating to performance, or on terms which contemplated intermittency, or because of seasonal factors, in which case redundancy would not be available.

202    Fisher P then went on to say:

I am not aware of any system 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 have referred.

203    Subsequently in the supplementary TCR case (1984) 9 IR 115, the Full Bench of the Commission at 128 addressed the submissions of the employers that redundancy provisions should not apply to termination of employment (inter alia) “associated with general turnover of labour”. In doing so, the Full Bench quoted Fisher P in Countdown Stores and noted that it was not their intention that the redundancy provisions would apply to the “ordinary and customary turnover of labour”. Their Honours further said they did not intend the redundancy provisions to apply where an employee was dismissed for reasons relating to performance or where termination was “due to a normal feature of a business”, and then went on to say that they were:

… prepared to provide that the redundancy provisions shall not apply where the termination of employment is “due to the ordinary and customary turnover of labour” but we will not include the other categories referred to by the employers.

204    As correctly submitted by United Voice, and contrary to the submissions of Berkeley, no conventional reading of what amounts to “ordinary and customary” turnover of labour can be distilled from the decisions in Countdown Stores, the TCR cases or the Compass Group. As a general proposition, the adjectives “ordinary and customary” qualify the words “turnover of labour” in the Exception. In [2019] FCA 9, the primary Judge concluded:

132.    The expression 'ordinary and customary turnover of labour' must refer to a narrower category than general turnover. It is dealing with the specific case where the termination of employees for redundancy is both 'ordinary and customary'. The semantic range of the two words overlap. Both are used to indicate that which is common or usual. However, they identify slightly different respects in which something (in this case the termination of employment) is expected or part of the every day. The adjective ordinary is applied to indicate that an object is commonly observed or is the kind of thing that is standard or usual. The adjective customary is applied to indicate that an activity is habitual or a matter of usual practice. Inherent in the notion that an activity is customary is a recognition that it is a behaviour that is longstanding and has an ongoing consistency.

133.    So, in context the terminology connotes a termination where the employer no longer requires the job to be performed because termination in the particular case is common or usual, both in the sense that it is commonly observed and in the sense that it is habitual or of longstanding practice. Because it has that character it is expected. There is no loss or harm to an employee whose job is terminated in such circumstances. That which is inherent in the nature of the work and, in a sense, inevitable, comes to pass.

205    “Turnover of labour” was historically a phrase used by reference to termination of employment and hiring of new staff. Fisher P noted that there had always been a “general turnover” of labour in industry, for reasons including referable to performance, skill, intermittency of employment terms, economic conditions, changes in model or product, and shifts in marketing emphasis. “Ordinary and customary turnover of labour” must logically refer to a narrower range of circumstances than simply “turnover of labour”.

206    As United Voice correctly submitted, Berkeley’s contended interpretation of “turnover of labour” in the Exception would embrace a wider category of circumstances than the circumstances to which it is an exception.

207    Further, and although not specifically stated in the legislation, it is likely that the words “turnover of labour” appear in s 119(1)(a) – and not otherwise in the FWA – for the simple reason that s 119(1)(a) is concerned with redundancy, and the expression “ordinary and customary turnover of labour” is a concept which historically has been given a particular meaning in the context of redundancy, which Parliament can be taken to have intended to import into the section. As the primary Judge observed in [2019] FCA 9 at [114], the phrase “ordinary and customary turnover of labour” has a well-established usage in this field of law. The words “turnover of labour” are not used in isolation in s 119(1)(a). His Honour also observed:

88.    In can be seen that the case law before the enactment of s 119(1)(a) had developed a well-established jurisprudence concerning the circumstances in which payments for redundancy may be required by an employer. The state of that law was such that it focussed upon the nature of the job to be done and whether that work was still required to be undertaken by any employee. It recognised a general right to redundancy pay where the terminated employment had been ongoing and for an indefinite term such that there was a degree of security that might be expected to be associated with the employment. Amongst other qualifications, it was a right that was subject to the exception that it was not payable where employment was brought to an end as part of the ordinary and customary turnover of labour. The exception was said to apply where the termination was a normal feature of the business and also where termination after a period was to be expected by the employee. Properly understood, these two descriptions are not competing. The exception applies where it was evident that the nature of the work to be done was not ongoing. It might be evident from the nature of the job itself that it was not ongoing, such as where the task to be undertaken was inherently itinerant or for a specific project. Or it might be evident because it was a normal feature of a particular kind of business that the work would not be ongoing, such as where the business involved securing a workforce to perform services under a particular contract and it was the usual practice that all employees would no longer be required at the end of the contract. It was a concept that was considered to invite a factual inquiry in the particular circumstances of the case that was concerned with the extent to which there was an expectation, in the ordinary course, that the employment would be ongoing. In undertaking that inquiry consideration would be given to whether it was a normal feature of a business that the employment would be terminated rather than be ongoing.

89.    Therefore, the use of the phrase 'ordinary and customary turnover of labour' had acquired a particular meaning within the pre-existing law. The existence of that body of industrial law decisions was part of the context in which s 119(1)(a) came to be enacted using precisely the same terminology as had been developed and applied in the decided cases.

208    We respectfully endorse these observations. The reasoning of his Honour in these paragraphs is supported by earlier decisions to which his Honour refers at [42]-[88] of [2019] FCA 9.

209    For example, Countdown Stores, Fisher P described the “three basic causes” in which retrenchment pay was payable to employees as being in circumstances of:

    technological change,

    company merger, takeover or reconstruction; and

    redundancy caused by economic recession.

210    His Honour in Countdown Stores at 278 distinguished these classifications of retrenchment from circumstances where employees are made redundant from “ordinary and customary turnover of labour”:

I am not aware of any system 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 have referred. I would therefore require to be affirmatively persuaded by clear language that it is the intention of this statute to impose upon almost all dismissals, regardless of cause, a costs burden in the midst of the worst economic recession in the last 50 years.

211    Subsequently in the TCR cases the Australian Conciliation and Arbitration Commission discussed the concept of “redundancy”. In the first TCR case the Commission discussed circumstances where redundancy protection should apply, noting (at 55) the submission of the employer body that redundancy protection should apply where an employee is dismissed through no fault of his own including by reference to the operational requirements of the business, namely, reasons of an economic, technological, structural or similar nature. In the supplementary TCR case (1984) 9 IR 115 the Commission at 128 said

The employers submitted that the redundancy provisions should not apply to termination of employment "associated with the general turnover of labour or a seasonal downturn within the industry or reclassification or alteration of working conditions". All these expressions were opposed by the ACTU because they would cut down unreasonably the redundancy provisions, they were uncertain as to meaning and they were not justified by the argument.

In our decision at 55-6 we made reference to a number of definitions of redundancy and our draft order was based on the definition of the Chief Justice, Bray J. in the South Australian Supreme Court. Further, at 61 of the decision we decided that there should not be any fundamental distinction, in principle, based on the causes of redundancy. Nevertheless, it was not our intention that the redundancy provisions should apply to the "ordinary and customary turnover of labour"; an expression used by Mr Justice Fisher in his decision related to the Employment Protection Act in New South Wales ((1983) 7 I.R. 273).

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 where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business. Furthermore, there is an overlap between the definition of redundancy for the purposes of any award and the categories of employees exempted from severance pay. To some extent the same can be said for the provisions relating to the introduction of change.

In the circumstances, we are prepared to provide that the redundancy provisions shall not apply where the termination of employment is "due to the ordinary and customary turnover of labour" but we will not include the other categories referred to by the employers. We are also of the opinion that the employer should provide all relevant information "in writing".

212    From this passage it appears that the Commission considered categories of termination where redundancy pay was not payable as including termination for “ordinary and customary turnover of labour”, termination for reasons relating to performance, and termination due to “a normal feature of a business”. Termination for performance-related reasons has traditionally been exempt from redundancy (see for example Countdown Stores at 277). Termination due to a “normal feature of a business” was however not explained by the Commission in either TCR case.

213    The expression “ordinary and customary turnover of labour” clearly evolved throughout these decisions. The Full Bench of the New South Wales Industrial Relations Commission in Allens Stores Ltd v De-Winter (unreported, Glynn and Peterson JJ and Murphy CC, Matter No IRC 1831 of 1993, 17 June 1994) succinctly summarised the meaning of the expression as is relevant to modern usage:

Whether viewed from the perspective of the industry as a whole or that of Allens’ business, the phrase ‘ordinary and customary turnover of labour’ to our mind necessarily encompasses circumstances which are expected or not surprising; the ordinary run of things. In this case the losses of employment arose from what is clearly a business reconstruction resulting from loss of the lease. We accept that the circumstances were unplanned and unwelcome. Far from being ordinary or customary the circumstances must be viewed as the result of commercial or legal error. The question thus arises whether or not the dismissals should attract severance pay.

…

In determining whether the dismissals form part of the ordinary and customary turnover of labour an examination of the cause is unavoidable. It is not possible to treat the dismissals in this case as related to a restructuring resulting from the termination of a lease; the ordinariness of it depends upon its cause. This is not to apportion blame but is an inherent feature of a consideration of the circumstances.

(Emphasis added.)

214    We are satisfied that, in the context of the Exception to s 119(1)(a), “ordinary and customary turnover of labour” has the meaning explained by the primary Judge in [2019] FCA 9 at [132]-[133]. “Ordinary and customary turnover of labour” connotes a termination where the employer no longer requires the job to be performed because termination in the particular case is common or usual, both in the sense that it is commonly observed and in the sense that it is habitual or of longstanding practice.

Relevant factors

215    Whether there was “ordinary and customary turnover of labour” in any particular case depends on the facts of that case. It is neither possible nor appropriate to stipulate an exclusive list of relevant factors. However, it is possible to nominate factors which are relevant.

Expectations of employees

216    We have already discussed, in detail, the relevance of the expectations of employees. Evidence of employees is relevant to the extent that it informs the objective expectations of the employees that the work was (or was not) ongoing.

Whether normal feature of “the” business

217    The appellants submitted that Countdown Stores, the TCR cases and Compass Group should be followed in that they each treated “ordinary and customary” as requiring only the turnover of labour to be a normal feature of the relevant business, which included termination of employment as a consequence of a loss of a contract where that is a normal feature of that business.

218    We do not accept this proposition. The correct approach in our view is that explained by the primary Judge in [2019] FCA 9 where his Honour said:

129.    …It may be expected because it was a normal aspect of a business of the kind conducted by the employer that would be evident to the employee. The 'normal feature of a business' was a reference to a feature inherent in the nature of the particular kind of business, not a feature that was made normal for the particular business by its own practices in terminating employees.

(Emphasis added.)

219    As his Honour in [2019] FCA 9 pointed out at [127] in relation to the decision of the Commission in the supplementary TCR case:

The phrase actually used by the Commission was that it 'did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business'. It did not refer to a normal feature of the employer's business.

(Emphasis added.)

220    Re-examining the supplementary TCR case the language of the Commission is not unambiguous – indeed exactly what circumstances the Commission was referring to when it referred to termination being “due to a normal feature of a business” is unclear. We are not satisfied that it necessarily was a reference to termination being in the “ordinary and customary turnover of labour”, particularly as their Honours in the following paragraph reverted to their use of “ordinary and customary turnover of labour”. It may be that their Honours had something else in mind, which they did not elaborate.

221    In Transport Workers' Union (NSW) v Veolia Environmental Service (Australia) Pty Ltd [2013] NSWIRComm 22, Haylen J in the New South Wales Industrial Court at [68] referred to the decision of the Industrial Relations Commission of New South Wales in Fashion Fair Pty Limited v Department of Industrial Relations (Inspector Rouse) (1999) 92 IR 271 at 272, where the Commission had in turn referred to the following observations of the Chief Magistrate:

To establish that a termination did not take place in the ordinary and customary turnover of labour is a question of fact and is to be approached by having regard to the normal features of the business wherein the employee worked, and whether is was customary to dismiss employees regardless of their service history upon the loss of contracts.

Conversely, an employee with a relatively long and faithful history of service has a reasonable expectation to continued employment where no such custom and customary turnover of labour.

(Emphasis added.)

222    Further, the Full Bench of the Fair Work Commission in Compass Group on appeal in [2015] FWCFB 8040 referred at [26] to this reasoning of Haylen J in Veolia.

223    However examination of Fashion Fair reveals that the Commission went on to quote the Chief Magistrate stating:

In conclusion, the employee had every expectation of continued employment in a business and in an industry not characterised by the ordinary and customary turnover of labour as I have set out in the examples above.

(Emphasis added.)

224    It is apparent from this passage that neither the Chief Magistrate nor the Commission in Fashion Fair were limiting their consideration to the particular business features of the specific employer.

225    Importantly, in Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10, in referring to the supplementary TCR case, Gummow, Hayne and Heydon JJ observed:

For present purposes, what is important is that the Commission appears to have been seeking a form of words that would accommodate two features. First, as was said in the Commission’s supplementary decision, it “did not intend the redundancy provisions to apply where an employee is dismissed for reasons relating to his/her performance, or where termination is due to a normal feature of a business”. Secondly, the Commission did not intend redundancy provisions to be engaged by the transmission of a business. In its earlier decision, the Commission had emphasised that it did “not envisage severance payments being made in cases of succession, assignment or transmission of a business”. That is, the Commission regarded termination of employment by a particular employer as not sufficient to engage the redundancy obligations, even if that employer was ceasing any participation in the particular business. The focus of the provision was upon the work undertaken by the employee (the “job”), not upon the identity of either the employee or the employer. The relevant inquiry was whether employment in a particular kind of work then being undertaken was to come to an end. If that employment was to come to an end, it was necessary to consider why that was to happen. Was it because the employer no longer wanted the job, then being done by the employee, done by anyone? Or was it “due to the ordinary and customary turnover of labour”? And, as the Commission’s evident concerns about drafting show, these alternatives were not, and are not to be, understood as exhausting the cases that might have to be considered.

(Footnotes omitted, emphasis added.)

226    None of these cases are authority for the proposition advanced by the appellants, namely that the Court is confined to examining the normal features of the employer’s business.

227    That is not to say that the “normal” features of the employer’s business are irrelevant. The size of the employer, whether the employer is part of a corporate group and the practices of that group, the manner in which the employer is managed (including within a corporate group), labour turnover frequency and practices within the employer and the group, and the manner in which an employer (and potentially the corporate group) conducts its business, are factors to be taken into account. Contrary to the submissions of the appellants however, such factors are not decisive. The Court should not unequivocally accept that practices claimed by the employer to be “normal” for its business are objectively normal for that kind of business. Evidence of the employer of what it understood to be “normal” could potentially inform the Court’s understanding of such practices, but as the primary Judge observed in [2019] FCA 9 at [129] an employer cannot claim that termination practices constitute “ordinary and customary turnover of labour” simply because it is the practices it adopts. Such an outcome would be contrary to the purposes of the FWA and outside the scope of “ordinary and customary turnover of labour” as traditionally understood.

228    Finally, we note that policies of an employer which are uncommunicated and/or hidden from employees cannot in any way inform legitimate expectations of employees as to whether or not work is ongoing (see comments of the primary Judge in [2019] FCA 9 at [81]).

The nature of the job to be performed

229    The nature of the work or the kind of business activity being conducted by the employer may be such that it was evident, because of the nature of the job itself, that the work to be performed would come to an end even though the business would be ongoing.

230    If the terms of the contract between the employer and the employee explicitly state that the job is not to be ongoing, then subject to such provisions as s 123(2) of the FWA there may be little ambiguity in respect of the nature of the job.

231    Fisher P gave an example in Countdown Stores at 277 of workers in the building construction, contracting and sub-contracting industries employed on terms which contemplated intermittency in employment, where allowances were made in the calculation of rates of pay to compensate for the potential termination of the work. Similar considerations were noted by the Commission in the first TCR case at 75 in respect of workers engaged for a specific job or contract or itinerant workers.

232    We also note and adopt comments of the primary Judge in [2019] FCA 9 at [57], [72]-[73] and [88].

Whether “customary” requires long-standing practice

233    The appellants submitted that both primary Judges were wrong to the extent that they found the word “customary” in s 119(1)(a) required the turnover of labour to be “a matter of long-continued practice “([2018] FCA 224 at [76], [80]) or a practice which was “long-standing and has on-going consistency” ([2019] FCA 9 at [132], [133]). The appellants submitted that a construction requiring the practice to be long-standing would be unreasonable and impractical because it would depend on how long the employer had been in business.

234    In relation to the unreasonableness/impracticability of the requirement that there be a long-standing practice, the primary Judge in [2019] FCA 9 observed:

134.    For reasons submitted by Spotless, there are difficulties if the reference to customary turnover of labour is read as referring to what is customary for a particular business. A new business does not yet have a common way of doing things, it has not developed habits or usual, longstanding practices. How would the exception apply to a relatively new business?

135.    The answer to that conundrum does not lie in giving the word 'customary' a meaning denuded of any requirement for a consistent common or usual practice that might be described as habitual or longstanding. Rather, that aspect of the terminology indicates that the exception is concerned with instances where it is generally habitual or a matter of long-standing practice for the particular kind of employment to be terminated rather than ongoing. In a particular case, it may be able to be demonstrated that the kind of businesses that have to put together a significant labour force to meet the requirements of a particular contract with a customer have that character. The nature of the contracts with customers and the lumpy changes in required employees may mean that for such businesses termination of certain types of employment at the end of the contract with the customer is common or usual for such a business.

(Emphasis added.)

235    We respectfully adopt this reasoning of the primary Judge in [2019] FCA 9.

236    In our view, it is reasonable to take into account, as one relevant factor, whether practices of termination are “long-standing” for that particular type of employment or business. This may be the case even if the business of the employer itself is not of long-standing.

Whether the event of termination is unusual

237    Terminations arising from adverse economic circumstances resulting in, for example, permanent closure, loss of lease, or liquidation of a business, are not “ordinary and customary turnover of labour”: Morris v NSW Bookstalls Pty Ltd (1985) 12 IR 1, Fashion Fair.

Conclusion

238    Grounds of appeal 1(a)(iv), (v) in QUD 285 of 2018 and ground of appeal 1(i) in WAD 76 of 2019 are not substantiated.

Has the appeal in QUD 285 of 2018 been substantiated?

239    We have found that the decision of his Honour in [2018] FCA 224 was attended by errors in respect of the manner in which the primary Judge framed the test for the application of the Exception to s 119(1)(a). The question now remaining is whether the decision of the primary Judge ought nonetheless be affirmed on other grounds, in particular that the termination of the affected employees was not due to the “ordinary and customary turnover of labour” because there was no evidence that the turnover of labour was ordinary and customary when considering the circumstances of the employer concerned, the industry concerned or the employees concerned (notice of contention, ground 2).

240    As we have already noted, prima facie the employees whose employment was terminated at the employer's initiative because the employer no longer required the job done by the employees to be done by anyone were entitled to redundancy pay in accordance with s 119(1)(a) FWA. It is not controversial in either appeal that the employer bore the onus of proof that the Exception applied and the employees whose employment was terminated were not entitled to receive redundancy payments (see for example discussion of general principles referable to “avoidance” of claims which a plaintiff otherwise has in JD Heydon Cross on Evidence at [7065]). The primary Judge in [2018] FCA 224 found at [81] that the appellant had not discharged that onus of proof in circumstances where:

80.    That evidence shows that, by the time Spotless lost its contract with Lend Lease, the contractual relationship with Lend Lease had existed continually for more than 20 years, that throughout that period Berkeley had employed all the employees necessary to provide the contract services and that the affected employees had been employed by Berkeley for that purpose for between four and 21 years. This evidence therefore appears to show the opposite of the circumstances in which the Exception applies. That is, it appears to show that the terminations and the connected job redundancies were, for Berkeley, as the employer, uncommon and extraordinary and not a matter of long-continued practice.

241    So far as appears from the Appeal Book in this appeal, the evidence adduced by the appellant in the proceedings at first instance were the witness statements of the following witnesses:

    Matthew Potter, an employee of Spotless Management Services Pty Ltd and National Human Resources Manager within the Spotless Group;

    Michael McDonald, an employee of Spotless Management Services Pty Ltd and formerly employed as the Operations Manager for the management of integrated services contract with Lend Lease at the Sunshine Plaza Shopping Centre;

    Michelle Bennett, an employee of Spotless Management Services Pty Ltd and the State Manager of Queensland, Education, Business and Industry, Leisure, Sport and Entertainment; and

    Pamela Fleming, an employee of the Spotless Group subsidiary Spotless Management Services Pty Ltd and the Operations Manager for cleaning services at Clean Domain (a business within Spotless), who also had managerial responsibility for a number of sites in the central business district of Brisbane where Spotless’ cleaners worked.

242    The witness statements of Mr Potter, Mr McDonald and Ms Fleming were tendered at the hearing before his Honour. The witnesses also gave oral evidence.

243    Ms Bennett’s witness statement was tendered, however the extent to which the appellant relied on the annexures to her statement was limited.

244    The evidence of Matthew Potter in his witness statement was, in summary, as follows:

(1)    The Spotless Group consisted of 61 entities, 26 of which were employing entities. Berkeley was one such employing entity. The Spotless Group operated as a contracting business that provided clients with over 100 services under a range of different “brands” on a contract basis including catering and hospitality, cleaning, plant and equipment maintenance, ground and garden maintenance, laundry services, general maintenance, security, and other services.

(2)    The number of contracts held by the Spotless Group, and services it had, changed regularly because contracts with clients ended or were renegotiated, and new clients were won and mobilised.

(3)    The Spotless Group serviced clients that operated in a wide range of industry sectors. The operations and management structure were primarily arranged and managed through an industry sector focus, rather than a “brand” focus. The Spotless Group had several divisions, namely: business and industry; education; government; health; resources; public-private partnerships; defence; leisure, sport and entertainment; infrastructure, telecommunications and utilities; and laundries.

(4)    There were numerous companies in the facility services market including Sodexo, Broadspectrum, ISS, Compass and Delaware North.

(5)    Clients often conducted competitive tender processes to get the best possible service at the lowest price.

(6)    At any point in time, the Spotless Group was in the process of tendering or bidding for new contracts, and mobilising and demobilising sites as contracts were won and lost.

(7)    The Spotless Group’s contracts with clients varied greatly in terms of the scope and scale of the services provided and the period over which the services were to be provided.

(8)    At the time of making the statement, the Spotless Group had approximately 424 client contracts with over 350 different clients.

(9)    The average contract term was 4.92 years for new contracts won as at December 2016 for the financial year ended (fye) June 2017. The average contract term was 2.6 years for contracts won in the fye June 2016, and 2.21 years for contracts won in the fye 30 June 2015.

(10)    In the financial year ended June 2016, the Spotless Group secured 44 new contracts, was unsuccessful in securing 85 new contracts, successfully renewed 86 contracts, and was unsuccessful in renewing 44 contracts. In the fye June 2015, those numbers were 54, 152, 79 and 59 (including the Sunshine Plaza Contract). In the fye June 2014, those numbers were 52, 110, 67 and 59. In the last six months of the fye June 2013, those numbers were 25, 28, 62 and 52.

(11)    The Sunshine Plaza Contract fell within the Business and Industry sector of the Spotless Group. That sector had, at the time of making the statement, approximately 136 client contracts, 154 in the fye June 2016, 158 in the fye June 2015, and 166 in the fye June 2014. The average contract term for new contracts won as at December 2016 was 3.4 years for the fye June 2017, 3.12 for the fye June 2016, and 2.24 years for the fye June 2015 (being the year in which the Sunshine Plaza Contract was lost).

(12)    In the business and industry sector for the fye June 2016, the Spotless Group was successful in securing 13 new contracts, not successful in securing 27 new contracts, successfully renewed 18 contracts, and was not successful in renewing 25 contracts. For the fye June 2015, those numbers were 20, 71, 19 and 32 (including the Sunshine Coast Plaza Contract). For the fye June 2014, those numbers were 13, 38, 23 and 38. For the last six months of the fye June 2013, those numbers were 13, 22, 12 and 45.

(13)    With the exception of some employees, the Spotless Group recruited employees solely to work on a specific client contract. Those employees had their employment “tied” to a particular contract. Mr Potter referred to such employees as “contract requirement employees”.

(14)    Contract requirement employees accounted for 93% of the Spotless Group workforce. Spotless Facilities Services Pty Ltd and Spotless Services Australia Pty Ltd were the main employing entities for contract requirement employees. The need for contract requirement employees depended on the demand for labour, which fluctuated with the turnover of client contracts.

(15)    When the Spotless Group acquired Berkeley, the employing entity remained as Berkeley.

(16)    The Spotless Group employed approximately 582 “support service” personnel who did not have their employment tied to a particular contract.

(17)    The Spotless Group also employed approximately 1,050 casual employees in its “staffing services unit”, which filled short term vacancies as they arise.

(18)    When the Spotless Group lost a contract, the termination of employment of the employees tied to that contract was often terminated. The Spotless Group took reasonable steps to redeploy employees to other client contracts or find alternative employment with another service provider, but it was not always possible. Hundreds of employees ended their employment with the Spotless Group each year for this reason.

(19)    Simply because the Spotless Group won a new contract did not always mean the workforce from a lost contract could be redeployed to the new contract. The industry sector and geographical location of the contract influenced the number of employees, skill set and experience required, which potentially prevented redeployment.

(20)    Employees were terminated if they were not successfully redeployed to another contract. For the fye June 2017 (only including up to early November 2016), 74% of the contract requirement employees of the Spotless Group (with the exception of the laundries and infrastructure, telecommunications and utilities sector) who were tied to contracts that were lost were terminated. For the fye June 2016, 59% of contract requirement employees tied to contracts that were lost were terminated. For the fye June 2015, 69% of contract requirement employees tied to contracts that were lost were terminated. For the fye June 2014, 78% of contract requirement employees tied to contracts that were lost were terminated. For the last six months of the fye June 2013, 87% of contract requirement employees tied to contracts that were lost were terminated.

(21)    For the building and industry sector of the Spotless Group, for the fye June 2017 (only including up to early November 2016), 62% of contract requirement employees tied to contracts that were lost were terminated. For the fye June 2016, 80% of contract requirement employees tied to contracts that were lost were terminated. For the fye June 2015, 83% of contract requirement employees tied to contracts that were lost were terminated. For the fye June 2014, 79% of contract requirement employees tied to contracts that were lost were terminated. For the last six months of the fye June 2013, 88% of contract requirement employees tied to contracts that were lost were terminated.

245    In oral evidence, Mr Potter additionally deposed, inter alia, that:

    The expression “contract requirement employees” was his own term, was not used by any other managers or employees, and did not appear in employment contracts of employees working at Sunshine Plaza Shopping Centre (transcript p 41);

    The employment contracts did not identify the contract with Lend Lease, or “tie” the employment to that contract or any others (transcript p 42);

    The employment contracts did not specify that if the client contract ended, the employment of employees ended (transcript pp 42-44, 49);

    His reference to “contract requirement employees” was a reference to the purpose of the employee being employed in the first place namely to service a customer (transcript p 51); and

    Redeployment of employees in the Spotless Group increased from fye June 2014 to fye June 2016 (transcript p 53).

246    Mr McDonald had previously worked as the operations manager in the Business and Industry Division of the Spotless Group. In that role, Mr McDonald managed various cleaning contracts for Spotless Group on the Sunshine Coast, namely:

    in Caloundra he managed a cleaning contract with Stocklands; and

    in Kawana he managed the contract between Spotless Group and Mirvac Retail, for the cleaning and security services at Kawana Shopping World.

247    In summary, Mr McDonald’s evidence as set out in his witness statement and given at the hearing was as follows:

(1)    From June 2013 to 1 September 2014, Mr McDonald’s role as an Operations Manager included management of the integrated services contract with Lend Lease at the Sunshine Plaza Shopping Centre.

(2)    Ms Fleming, who reported to Mr McDonald, was the site contract manager and was based at the Sunshine Plaza every day.

(3)    The Sunshine Plaza contract had expired when Mr McDonald assumed responsibility, but it continued to operate while Lend Lease decided if they wanted to renew the contract or go to the market to tender.

(4)    Mr McDonald directed Ms Fleming to tell the staff that Lend Lease had decided to tender to the market for the Spotless Group’s work covered by the Sunshine Plaza contract.

(5)    Staff would often ask Mr McDonald if there was any news or updates in relation to the tender. In response, Mr McDonald would advise that the process was ongoing, specify any feedback from Lend Lease and state that employees needed to “put their best foot forward” to demonstrate to Lend Lease the benefits of Spotless Group retaining the Sunshine Plaza contract.

(6)    Following the loss of the tender, Mr McDonald and Ms Michelle Bennett decided to tell the staff at Sunshine Plaza about the loss of the contract and manage the demobilisation on 1 September 2014.

(7)    Over the weekend of 30 and 31 August 2014, Mr McDonald prepared a template letter to be given to employees to notify them that Spotless Group had lost the Sunshine Plaza contract, was required to exit on 30 September 2014, and as a result, their employment at Spotless Group would be terminated unless they could be placed in another role within Spotless Group.

(8)    From his experience of demobilising the Kawana Shopping World contract, Mr McDonald learned the procedure of demobilising contracts at the Spotless Group and that he needed to explain to the Spotless employees that they could apply for a job with the incoming contractor or find alternative work within Spotless.

(9)    Mr McDonald notified Spotless employees at Kawana Shopping World that the contract had been lost in May 2014. It was easier for employees to be transferred within Spotless when that contract ended, as the Sunshine Plaza contract was still operating and some employees were transferred in early May 2014. Mr McDonald did not remember the names of employees who were transferred.

(10)    Since moving on to a new role on 2 September 2014, Mr McDonald had also overseen the demobilisation of other contracts by Spotless, including a longstanding contract Spotless held to provide services to the Suncorp Stadium in December 2015. Spotless had held the contract for more than 25 years and the employees who worked on that contract were not paid any redundancy pay when their employment at Spotless Group ended on the basis that their employment was terminated due to ordinary and customary turnover of labour.

(11)    On 1 September 2014, Mr McDonald noticed that a number of SECUREcorp packs had been left in the staff room. Meetings with employees were organised in groups of 3-4 employees in the staff room. Each staff member was given a notice letter.

(12)    Mr McDonald explained to each employee what had happened and talked them through the process and the options of either moving forward of either applying for a role with the incoming contractor or seeking an alternative role with Spotless.

(13)    Mr McDonald advised staff that they could apply for and may be offered employment with SECUREcorp (the incoming contractor) and advised that they could take employment packs which had been left in the staff room by SECUREcorp.

(14)    Ms Bennett arranged for Ms Fleming, Gerard Nolan and Michael David, another Operations Manager at Spotless, to manage the demobilisation of the Sunshine Plaza contract after Monday, 1 September 2014 when he moved into his new role.

(15)    Mr McDonald had no further direct involvement in the demobilisation of the Sunshine Plaza contract.

248    Ms Bennett’s evidence as found in her witness statement was, in summary:

(1)    Ms Bennett had been employed by Spotless since 2008, holding various management roles responsible for operations of Spotless Group in Victoria, Tasmania and Queensland.

(2)    Prior to her employment with Spotless, Ms Bennett was employed as an Operations Manager in Victoria by Alliance Catering which was acquired by Spotless in 2008. From 2014, she had held management roles for Alliance/Spotless for 17.5 years.

(3)    From the time Ms Bennett commenced her current role in April 2013, Ms Bennett had overarching responsibility for Berkeley’s contract with Lend Lease. At the time, there was a separate State Manager who was responsible for cleaning services in Queensland, Gerard Nolan. That position no longer exists and it became the responsibility of Ms Bennett.

(4)    Ms Bennett was not involved in the recruitment process of any staff who worked at the Sunshine Plaza.

(5)    Ms Bennett detailed her involvement with the 2014 Sunshine Plaza contract tender process, including attending the site tender walkthrough. Ms Bennett noted that the tender process was very protracted.

(6)    Ms Bennett knew that the staff who worked at the Sunshine Plaza were advised that Berkeley was going through the tender process at staff meetings throughout 2014, based on discussions with Ms Fleming.

(7)    Staff were being told that it was “business as usual” until the tender process had been completed. Ms Bennett had this discussion with at least four staff located in the food court on different visits to the Sunshine Plaza in 2014.

(8)    Following notification that Berkeley was unsuccessful in the tender, Ms Bennett spoke with Mr McDonald and Mr Nolan and told them they should arrange meetings with the staff at Sunshine Plaza on 1 September 2014; and that they needed to issue staff with letters notifying them that Berkeley had lost the Sunshine Plaza contract; the contract would end on 30 September 2014; and their employment would come to an end unless they were redeployed within the Spotless Group.

(9)    Ms Bennett said “this is Spotless’ standard practice when it loses a client contract. The nature of Spotless’ business and the industry is that client contracts are continually won and lost. Spotless is constantly mobilising when client contracts are won and demobilising when client contracts end or are lost”.

(10)    Ms Bennett had previously overseen the demobilisation, in an advisory position to the operations team, for similar contracts such as Kawana Shopping Centre and Stanwell Power Station (which involved multiple service lines) in 2014.

(11)    Ms Bennett was further involved in the demobilisation of contracts with Stockland Group in September 2015 and Vicinity Group in October 2016.

(12)    When Mr McDonald and Ms Bennett arrived at the Sunshine Plaza on 1 September 2014, she saw that packs containing information about employment with SECUREcorp (including job application forms) had been left in the staff room.

(13)    On 1 September 2014, staff briefings took place to advise staff of the loss of contract and give them formal written notice. Ms Bennett only attended 3 or 4 meetings as Mr McDonald and Ms Fleming mostly conducted the meetings.

(14)    In the meetings attended, Mr McDonald advised staff that Spotless had not been successful in securing the contract and SECUREcorp would be taking over from Spotless on 30 September 2014. Staff were issued with a notice letter and the SECUREcorp employment pack.

(15)    In the meetings Ms Bennett attended, the issue of redundancy pay was not mentioned.

(16)    To ensure that all staff were aware of the loss of contract, further meetings were held by Ms Fleming and Mr David, an operations manager from another part of Spotless. Ms Bennett was not present at these meetings but understood that this had occurred.

(17)    Based on the meetings Ms Bennett attended, and feedback from Mr McDonald and Ms Fleming, some of the staff were nervous about what the future held for them at the Sunshine Plaza. Other staff were quite blasé when they received the news. Ms Bennett recalled some staff reacting by sayings words like “ok – let’s see what happens” but she was unable to remember who specifically said this. Others did not comment at all. The staff were informed that if they had any questions once the news had sunk in, they should contact Ms Fleming.

(18)    At the meetings attended by Ms Bennett, all staff were advised that she would attend a meeting to ask for an adjustment of the final date of the Sunshine Plaza contract. Mr McDonald and Ms Fleming told her that staff were advised of the likely extension of the contract at meetings with staff which Ms Bennett did not attend.

(19)    On 1 September 2014, Ms Bennett met with Dianne Healey (operations manager for Lend Lease) and negotiated an extension of time to the Sunshine Plaza contract to deal with an issue pertaining to a sufficient notice period for some employees (as some staff were over 45 years of age, they would need to be paid out several days in lieu of notice, Spotless proposed to invoice Lend Lease for this additional cost). On 3 September 2014, Lend Lease confirmed that the contract would be extended until 8 October 2014. Following confirmation of the contract extension, Ms Bennett confirmed these details with Ms Fleming and a notice was posted in the staff room informing them that the contract would be extended until 7 October 2014.

(20)    Upon notification of loss of the Sunshine Plaza contract, affected employees were advised that they could apply for a role with SECUREcorp and provided with a SECUREcorp employment pack. They were also advised they could seek redeployment. Given the regional location, there were not many positions close to the Sunshine Plaza.

(21)    A requirement of Spotless is that when an employee leaves employment, an employment termination form must be completed by the relevant manager and provided to the payroll department. Ms Bennett stated: “This Form was updated at the time we were demobilising the Sunshine Plaza Contract. Even though in the case of some employees the old forms had been completed and signed, payroll advised that they required new forms to be completed for all staff. In the case of Sunshine Plaza staff, the box selected on the new form as the reason for termination was “Termination – Loss of Contract, ordinary & customary turnover of labour (no severance pay)”. By the time the new forms were completed on around 10 October 2014, employees had already ceased employment so they were only signed by Gerard Nolan as the department manager. Gerard Nolan is no longer employed by Spotless and neither is Michael David who signed some of the original forms.”

(22)    In preparing for costs assessments as part of a tender, Spotless Group did not factor in the cost of severance pay because it relied on the longstanding ordinary and customary turnover of labour exception.

249    In summary, Ms Fleming’s evidence as set out in her witness statement and given at the hearing was as follows:

(1)    Ms Fleming was the “on-site go-to person” for employees of Berkeley, as the Contract Manager for Berkeley at the Sunshine Plaza.

(2)    Ms Fleming inducted new employees and, as part of that induction process, explained to them that Lend Lease had engaged the Spotless Group to provide the services and it was Lend Lease who ran the Sunshine Plaza.

(3)    Staff were informed about the tender process in 2014 and many staff had asked her questions about what was going to happen with the tender.

(4)    Staff were informed that the tender had been unsuccessful and were given a list of jobs within the Spotless Group that they could apply for as well as employment packs from another prospective employee, SECUREcorp.

(5)    Some staff enquired about their entitlements after SECUREcorp notified staff about who had been successful in obtaining employment. Ms Fleming told the staff she did not know if they would get a redundancy.

(6)    Some staff had conversations about the fact that, if they did not arrange employment with SECUREcorp, they would be unemployed because Spotless did not have any jobs near them and they did not want to move.

(7)    In filling out the termination form, Ms Fleming initially ticked the box labelled “loss of contract, position redundant (no equivalent Spotless position available)”, but was later told by Gerard Nolan to tick the box labelled “termination – loss of contract, no redundancy”.

(8)    Ms Fleming did not know whether staff were entitled to a redundancy.

250    His Honour’s decision relied primarily on evidence of the business practices adopted by the employer, Berkeley. His Honour noted that the contract facility services industry in which the Berkeley operated was “fiercely competitive” and that at any one time the Spotless Group was negotiating contracts (at [50]). Importantly, his Honour noted at [50] that, at the trial, the appellant contended that if a client contract were lost, it was normal practice for Spotless to terminate the employment of those employees, if redeployment was not possible, and that it did not generally make redundancy payments in those circumstances. We note that at [40]-[45] his Honour detailed the evidence on which the appellant relied concerning relevant practices of the Spotless group, in particular the evidence of Mr Potter.

251    In reaching the conclusion that the Exception did not apply, it is clear that his Honour also referred to evidence relevant to determining the expectations of the affected employees, including that:

    the contracts of employment provided for permanent employment;

    the contracts of employment contained no date of expiry;

    there was no term in the contracts of employment which rendered that employment subject to or dependent upon the employer’s continuing tenure of contract with its client;

    relevant employees had been employed for terms ranging between four and 21 years;

    affected employees who gave evidence attested to their expectation of ongoing employment, based on circumstances such as their long term employment, their permanent employment status, their regular and set roster arrangements, and the absence of any suggestion that their employment would be terminated in the event that the employer lost any particular contract; and

    none of the employees were cross-examined at the trial.

252    His Honour misstated the statutory test referable to the Exception and failed to have regard to a number of relevant factors referable to grounds of appeal 1(b), (c) and (d). His Honour found that the appellant had contravened provisions of the FWA, that the affected employees were variously entitled to compensation, and that the appellant was liable to pay pecuniary penalties in respect of its contraventions. The fact that, in so finding, his Honour disregarded factors relevant to both the appellant and the respondent is not to the point. However, on balance we are satisfied that, having reviewed the evidence of the appellant before his Honour, even if his Honour had applied the correct test the outcome would have been no different.

253    Section 28 of the Federal Court of Australia Act 1976 (Cth) relevantly provides:

(1) Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:

(a)    affirm, reverse or vary the judgment appealed from;

(b)     give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order;

…

254    As the High Court explained in Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2 at 220:

36.    … Section 28(1)(f) of the Federal Court of Australia Act empowers the Federal Court to allow an appeal “on any ground upon which it is appropriate to grant a new trial''. This power is expressed in wide terms and should be given a liberal construction. It is a power that must, of course, be exercised judicially. But there is nothing unjudicial, arbitrary or capricious in refusing to order a new trial when, although error has occurred, no miscarriage of justice has occurred. The common law courts applied such a rule in civil proceedings for more than a century. …

37.    Very early in the history of the Federal Court, a Full Court of that Court held that the general rule referred to in Stokes applied to s 28(1)(e) of the Federal Court of Australia Act. In Duff v The Queen, Brennan, McGregor and Lockhart JJ said that in a criminal appeal the grounds under this paragraph are not to be taken as identical with the grounds in the common-form criminal appeal statutes, a view later rejected by this Court in Chamberlain v The Queen [No 2]. Nevertheless, their Honours accepted that:

[T]he new trial grounds contain a qualification that, if the appellate court feels some reasonable assurance that the blemish at the trial could not reasonably be supposed to have influenced the result, the conviction under appeal may be allowed to stand. The qualifying rule and the proviso in the common form statute have a similar operation, for they avoid the need to quash a conviction whenever an error in the summing-up or in the admission or rejection of evidence or in procedure is established, whether the error be material or not.'' …

(Footnotes omitted.)

255    In this case, key evidence before his Honour as advanced by the appellant was, in summary

    93% of employees were engaged by the Spotless Group on the basis of contractual relationships between the Spotless Group and third parties;

    According to Mr Potter, across the fye June 2014 to June 2016 between approximately 60% and 90% of “contract requirement employees” of the Spotless Group tied to contracts that were lost were terminated, and in respect of the building and industry sector in the Spotless Group, between approximately 60% and 85% of such employees were terminated.

    Mr McDonald and Ms Fleming did not know the specific entitlements of individual employees including whether those employees were entitled to redundancy.

    Client contracts were continually won and lost, and the Spotless Group was constantly mobilising when contracts were won and demobilising when client contracts ended or were lost.

    As part of the induction process for new Berkeley employees, Ms Fleming explained to them that Lend Lease had engaged the Spotless Group to provide the services and it was Lend Lease who ran the Sunshine Plaza Shopping Centre.

    At the point of termination, Berkeley employees were told that their employment would come to an end unless they were redeployed within the Spotless Group and were actively encouraged to either seek redeployment or apply for work with the incoming contractor.

    The Spotless Group employees in respect of a long-standing contract with Suncorp Stadium were not paid redundancy pay when that contract ended.

256    However:

    None of this evidence supported a finding that the reasonable expectations of affected employees were anything other than that they had ongoing employment, particularly in light of their long history of employment, the information provided to them at the time of their engagement and during their employment, and the terms of their individual employment contracts.

    While evidence across the Spotless Group was relevant to the question of ordinary and customary turnover of labour of the appellant, there was no evidence that affected employees were told of the alleged business practice of Spotless Group of terminating employees when external contracts were lost.

    The evidence did not demonstrate that the employment of employees of Berkeley was, or had ever been, contingent on any external contract.

    The witnesses of the appellant who gave evidence of alleged dependency of employment of affected employees on external contracts, were management staff of the Spotless Group. To that extent a serious question arose as to whether such dependency was known only to the employer, and not to employees.

    There was no evidence of industry practices outside the Spotless Group (such as the practices of the other facility service providers referred to by Mr Potter) to support a finding that the termination of affected employees fell within the ordinary and customary turnover of labour in the industry, or to inform consideration of what was the “ordinary and customary turnover of labour” in businesses of the kind in question.

    In the circumstances of the case, the appellant had had minimal turnover of labour because of its long-standing contract with Lend Lease and a stable workforce, which in turn fed into the reasonable expectations of employees of ongoing employment.

257    It follows that the evidence on which the appellant relied before the primary Judge was insufficient to discharge its onus that the Exception applied.

258    In our view the appeal should be dismissed.

Has the appeal in WAD 76 of 2019 been substantiated?

259    The remaining grounds of appeal for consideration in this appeal are ground 1(j) and ground 2.

260    Ground of appeal 1(j) cavilled with the primary Judge’s findings concerning the appellant’s evidence as to its “actual practice” when contracts ended. In particular, the appellant in that appeal challenged his Honour’s findings at [173], where his Honour stated:

173.    As I have noted, Mr Potter himself questioned the accuracy of the descriptions stated in the records of the Spotless Group as to why employees left employment. It is difficult to see why this evidence should be put to one side and the records accepted at face value. Finally, the evidence as to how the records were extracted to support the analysis undertaken by Mr Potter showed that there was no consistent arrangement for keeping those records. They were maintained in different systems that had been kept by the different companies and reflected the fact that some companies had joined the Spotless Group through acquisition. There were demonstrated to be inconsistencies and inaccuracies in the data. Therefore, the data is not a reliable basis upon which to draw conclusions as to the actual practice followed when contracts came to an end. It is notable that Spotless did not seek to lead evidence as to that practice from those who were involved in the day to day activities when contracts came to an end. These were matters especially within the knowledge of Spotless.

261    No specific challenges were made to the findings of his Honour in this paragraph other than a general claim that the primary Judge was “wrong” in refusing to accept that the appellant had proven its case before him. This general claim was referable to his Honour’s decision that the appellant’s data as to why employees left employment was unreliable.

262    His Honour noted at [170] that Mr Potter, the National Human Resources Manager of the Spotless Group at the relevant time, had given evidence seeking to identify by reference to the records of the Spotless Group that a large number of employees had been terminated as a direct consequence of the conclusion of client contracts in the period 1 January 2013 to December 2017. His Honour noted that the analysis assumed that all employees whose employment came to an end on or after the day on which the service contract with the customer came to an end had their employment terminated as a direct consequence of the conclusion of that service contract. However, in its closing submissions, Spotless did not contend for the correctness of that assumption. His Honour did not accept the validity of the assumption:

170.    … which was advanced without any knowledge of the particular circumstances and depended for its validity upon Mr Potter's evidence that the records maintained by the Spotless Group were inaccurate. Even accepting that the records are inaccurate that is not a basis upon which to reach an affirmative view as to why employees left.

263    We see no error in his Honour’s reasoning at [173]. The appellant appears from ground of appeal 1(j) to believe it had substantiated its case before the primary Judge that the Exception applied, because, in its submission, raw data demonstrated that employees had left the employment of the Spotless Group with only a minority being redeployed. This contention however disregards the fundamental question of the reasonable expectations of employees on the relevant facts, and indeed any other relevant factor to take into account in the application of the statutory test. The fact that employees left the employment of Spotless was not, in itself, an answer to the question whether the Exception to s 119(1)(a) applied. His Honour has explained the flaw in the evidence on which the appellant relied, and indeed the doubt cast on the reliability of that evidence by the appellant’s own witness.

264    In any event, we note from the submissions of Counsel for the appellant at the hearing of the appeal that, ultimately, the appellant conceded that it either “won or lost” on the issue of construction of s 119(1)(a), and otherwise, it was not challenging any of the primary Judge’s findings of fact (transcript p 54 ll 19-31). To this extent it appears that the appellant did not press ground of appeal 1(j) at the hearing of the appeal.

265    We consider that ground of appeal 1(j) was not substantiated.

266    For the reasons we have given, the appeal in WAD 76 of 2019 should be dismissed.

Associate:

Dated:    1 July 2020