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Accident Compensation Cases

Adie v Accident Compensation Corporation (ERA, 08/01/03)

Judgment Text

DETERMINATION OF THE AUTHORITY 
Member P R Stapp
Employment relationship problem 
1.
The employment relationship problems lodged by the applicants in both proceedings (WEA 299/02 and WEA 341/02) have been consolidated to determine a threshold matter. By agreement all relevant documents and submissions in regard to this initial matter have been filed. 
2.
The initial matter relates to the interpretation of the relevant clauses of the applicants' employment agreements with the ACC. 
3.
The representatives provided the Authority with agreed statements of facts and issues. 
4.
The agreed statement of facts and issues for Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson follows — 
“Agreed statement of facts 
1.
The applicants were employed by the respondent as Business Analysts in the respondent's Business Technology (later Business Automation Division). They were part of the group of 31 ACC employees ‘outsourced’ to Unisys New Zealand Limited (Unisys). 
2.
This out-sourcing was a result of the application, maintenance and support functions carried out by ACC being subject to a contract between ACC and Unisys signed by those parties in September 2000. 
3.
As a result of that outsourcing, each of the applicants' employment with the ACC was terminated and they were employed by Unisys on 27 February 2002. 
4.
Each of the applicants' employment contracts with ACC, other than Susan Adie's contract, contain provisions relating to restructuring and redundancy at clause 14 (as contained in pages 2 and 3 of the attachments to the statement of problem). Susan Adie's contract has the provisions relating to redundancy set out at clause 12 (see pages 5 and 6 of the attachments to the statement of problem). For the purposes of the issues to be decided, the relevant terms are — 
Clause 14.2 (Clause 12.2 of Susan Adie's contract) 
‘A redundancy will only occur in ACC when a permanent staff member's position is terminated because the position occupied, and the services provided, by that staff member is, or will become, superfluous to the needs of ACC.’ 
Clause 14.7 (Clause 12.7 of Susan Adie's contract) 
‘Redundancy payments will not be made on the sale or transfer of ownership of all or part of ACC where the new owner has offered employment with no less favourable employment conditions, including service recognition and you are employed in the same or substantially similar capacity’
Agreed statement of issues 
5.
The parties agree that the Authority can limit its initial determination to the following issues — 
(a)
Was the applicants' dismissal due to redundancy as defined in clause 14.2 (clause 12.2 Adie)? 
(b)
Has there been a “sale or transfer of ownership of all or part of ACC ‘in terms of clause 14.7 (clause 12.2 Adie)?’ ”
5.
The next agreed statement of fact and issues was submitted in regard to Michelle Glamuzina's situation. The statement provided reads as follows — 
“Agreed statement of facts 
1.
The applicant was employed by ACC as a test analyst within the Business Technology Division of ACC until 1 February 2002. 
2.
The applicant's employment contract in force at the time of her employment coming to an end was standard ACC individual employment agreement. A copy of that agreement was attached to the original application annex A. 
3.
On 25 September 2000 ACC entered into an agreement for the outsourcing of its information technology services with Unisys New Zealand Limited. This agreement was entitled ‘The Master Agreement’. A copy of the sections of that agreement that had been disclosed to the applicant was attached to the original application annex B. 
4.
On 21 December 2001 ACC entered a subsequent agreement with Unisys New Zealand Limited varying the terms of the Master Agreement. A copy of the variation agreement as disclosed to the applicant by ACC was attached to the original application as annex C. 
5.
By agreement the applicant finished her employment with ACC on 1 February 2002, prior to the outsourcing being completed. The applicant claims that she has been constructively dismissed by way of redundancy. ACC claims that clauses 12.2 and 12.7 of the applicant's employment agreement apply and that no redundancy payment is payable. 
Agreed statement of issues 
The parties agree that the Authority can limit its initial determination to the following issues — 
1.
Whether the applicant was made redundant pursuant to clause 12.2 of the applicant's employment agreement. 
2.
Whether the transactions outlined in the agreements between ACC and Unisys dated 25 September 2000 and 21 December 2001 respectively constitute a sale or transfer of ownership of any part of ACC's business to a third party within the meaning of clause 12.7 of the applicant's individual employment agreement. ”
Authority's determination 
6.
Initially the ACC disputed that a dismissal had occurred in its Statement in Reply to Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson. 
7.
It is beyond question that the above applicants had their employment with ACC terminated. Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson commenced employment with Unisys New Zealand Limited (Unisys). The evidence highlights that there has been a clear change of employer. 
8.
Quite properly and very sensibly the respondent has resiled from any suggestion that there was not a dismissal in this matter. 
9.
It is my conclusion that the answer to the interpretation of clause 14.2 of Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson's individual employment agreements and clause 12.2 of Susan Adie's individual employment agreement has to be in the affirmative. It is my determination that the answer to the provision: 
“A redundancy will only occur in ACC when a permanent staff member's employment is terminated because the position occupied, and the services provided by that staff member is, or will become, superfluous to the needs of ACC ”
must be “yes” i.e. that the applicants were superfluous to ACC's needs and that this provision applies. 
10.
Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson's employment was terminated because their positions became superfluous to the needs of ACC as their employer. They were provided with alternative positions with a new employer, Unisys New Zealand Limited (Unisys). 
11.
The ACC is required to justify at the very least in respect to these applicants that their dismissals were for cause. It seems that on the facts of the Statement of Problem and the ACC reply that the ACC relies upon the transfer of these staff and their services and functions from ACC to Unisys being the cause for their dismissals in an outsourcing agreement and that they were not redundanT. This argument is simply not sustainable in terms of the facts and the relevant contractual provisions. 
12.
It follows the same must apply to the identical clause contained in Michelle Glamuzina's individual employment agreement (at clause 12.2). In other words, Ms Glamuzina's agreement that makes provision for redundancy under clause 12.2 must apply. However, this has to be subject to whatever the facts are in respect of her termination of employment, which will need to be the subject of a separate determination because she resigned and this is the subject of a contested constructive dismissal claim. The facts will need to be determined unless ACC agrees that in the circumstances Ms. Glamuzina was redundant also. 
13.
The next matter relates to clause 14.7 of Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson's individual employment agreements and clauses 12.7 of Susan Adie's agreement and Michelle Glamuzina's agreement. Each clause is identical (the clause). 
14.
The clause is relied upon by the ACC to suggest that the outsourcing of the functions and the transfer of the ACC employees' employment to Unisys New Zealand Limited relates to the transfer of ownership of part of ACC. The clause I hold is not wide enough to include relying on outsourcing being the transfer of ownership of part of ACC. This clause makes no provision for the “functions” that the outsourcing involves because ACC ceased to provide the functions now provided by Unisys under an outsourcing agreement. In other words, this particular clause is not wide enough to encompass any technical redundancy as is being suggested by the ACC because the clause does not include provision for outsourcing “functions” as being contemplated by the sale and transfer of ownership of all or part of ACC
15.
In other words Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson are redundant under clauses 14.2 and 12.2 of their agreements. The outsourcing of functions or services is not a sale or transfer of ownership of all or part of ACC and does not apply to a technical redundancy in this case. The ACC cannot continue to claim that ownership has been transferred in this way. It follows the ACC cannot infer that these clauses prevent payment of redundancy entitlement. 
16.
Therefore the same must also apply in regard to Michelle Glamuzina's individual employment agreement. As such this enables her to rely upon the clause not to apply for her to have an entitlement; upon determining the circumstances of her termination of employment from ACC when she would have been made redundant (under clause 12.2 of her agreement). This is because the outsourcing of functions does not constitute a sale or transfer of ownership of all or part of ACC to Unisys in this case. 
17.
Susan Adie, Derek Cattley, Alan Coe, Debbie McCrae and Christine Watson have lodged an employment relationship problem that they want resolved as personal grievances. Michelle Glamuzina's employment relationship problem was lodged as a dispute but behind the scenes there appears to be a claim that she was constructively dismissed by the ACC. Arrangements will need to be made for further investigation meetings if the parties cannot settle. 
18.
I add for assistance that now is the time for the parties to return to mediation in an endeavour to try and settle before any further arrangements in the Authority. 
19.
Costs are reserved. 

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