Airline caterer to pay rival $25K

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An airline catering company has been ordered pay its rival $25,000 after the Supreme Court threw out an appeal over holiday pay and other staff entitlements.

LSG Sky Chefs and Pacific Flight Catering were competitors in the airline catering business. Both provided airline meals for passenger aircraft.

LSG replaced Pacific as supplier of meals to Singapore Airlines in February 2011.

The Supreme Court said a "restructuring" process followed. This meant affected Pacific employees were entitled to transfer their employment to LSG on existing working terms and conditions.

LSG had to recognise workers' existing entitlements to annual holidays, alternative holidays and sick and bereavement leave. However, LSG wanted Pacific to reimburse the costs of these entitlements.

The Supreme Court said LSG based this claim "on the common law cause of action for money paid to the use of another by compulsion of law".

An earlier High Court decision said it was right to require Pacific to reimburse LSG and the Court of Appeal allowed Pacific to challenge that decision.

The Court of Appeal said relevant parts of the Employment Relations Act made it clear Pacific's obligations were finished when LSG took over the Singapore Airlines catering business.

The Supreme Court agreed and today ruled the payments LSG made and for which it sought reimbursement did not discharge any remaining debts to Pacific.

"As an employee is not entitled to be paid for untaken sick and bereavement leave, Pacific could not have had any associated related residual liabilities," the Supreme Court said in a press summary.

"...Transferring employees had no redundancy entitlements against Pacific and Pacific was prohibited from paying such employees for untaken holidays," the court added.

"More generally, the scheme as a whole makes it clear that LSG was substituted for Pacific and leaves no room for residual liability...There would not be much point in providing for a disclosure regime as to service-related entitlements unless a new contractor is to be responsible for them."

LSG was today ordered today to pay Pacific Flight Catering and its PRI Flight Catering $25,000 in costs.