ASG Maintenance Pty Ltd v Scott Picton

[2020] FWC 6161

[2020] FWC 6161

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

ASG Maintenance Pty Ltd
v
Scott Picton
(C2020/7528)

DEPUTY PRESIDENT DEAN SYDNEY, 18 NOVEMBER 2020

Variation of redundancy pay.

[1] ASG Maintenance Pty Ltd (ASG) has made an application pursuant to s.120 of the Fair Work Act 2009 seeking an order to vary the redundancy pay entitlement with respect to its former employee, Mr Scot Picton. ASG seeks to reduce the amount of redundancy pay Mr Picton is otherwise entitled to be paid to nil, on the basis that it had obtained ‘other acceptable employment’ for him within its own business for the purposes of s.120(1)(b)(i) but such offer was rejected.

[2] Mr Picton opposes the application and asserts that the positions offered were not acceptable employment.

[3] The matter was heard by telephone on 17 November 2020. Ms Chloe Bell (Staffing & Recruitment Manager of ASG) appeared for ASG and Mr Stephen Woodbury of Ashurst Australia appeared with permission for Mr Picton. Ms Bell and Mr Picton had each had filed a witness statement prior to the hearing and neither were required for cross examination.

Relevant legislative provisions

[4] Section 119 of the Act relevantly provides as follows:

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.

[5] Section 119 goes on to provide the amount of redundancy pay by reference to the employee’s period of continuous service with the employer.

[6] Section 120 of the Act provides:

120 Variation of redundancy pay for other employment or incapacity to pay

(1) This section applies if:

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and

(b) the employer:

(i) obtains other acceptable employment for the employee; or

(ii) cannot pay the amount.

(2) On application by the employer, FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWC considers appropriate.

(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.

Factual Background

[7] ASG is a project-based company that supplies labour hire and hydraulic services within New South Wales and Queensland.

[8] Mr Picton commenced employment with ASG as a light vehicle mechanic in its Mudgee NSW Workshop in January 2017 and was promoted to Workshop Supervisor in November 2017. He was transferred to Moolarben Coal Mine from May 2019.

[9] On 11 September 2020 ASG notified Mr Picton that his service at Moolarben Coal Mine was no longer required.

[10] Between 15 September 2020 and 2 October 2020 ASG had several discussions with Mr Picton concerning suitable redeployment opportunities.

[11] Two alternative positions were offered to Mr Picton: a Serviceman Mechanic position in Tomingley Gold Operations (the Tomingley position) and a Light Vehicle Mechanic/Serviceman in ASG Equipment Workshop in Dubbo (the Dubbo position).

[12] By email dated 28 September 2020, Mr Picton rejected both alternative positions due to the significant additional travel time required, his existing and ongoing family commitments and the lower remuneration for the Dubbo position.

[13] On 30 September 2020 a final meeting was held to discuss the redeployment opportunities. On 2 October 2020 Mr Picton confirmed that he declined the offers.

[14] On 7 October 2020, ASG sent an email to Mr Picton to advise that his employment with ASG was terminated for reason of redundancy. Attached to the email was a letter also dated 7 October 2020 which states in part the following:

“On 11 September 2020 the Client on Project Moolarben OC, finished the light vehicle maintenance services and as such, your employment on that project ended. We spoke to you on 11 September about finding you another position in the company, asking for your input and explaining the nature of the business being project based work.

From 11 September until 6 October, ASG Maintenance Pty Ltd has attempted to find you alternative employment within the company. During this time, in good faith, the company chose to continue paying your base salary up to and including 23 September 2020, given the current economic situation and attempting to redeploy you to another project as soon as reasonably practical.

We had presented two reasonable opportunities, which each of these opportunities you have rejected on 2 October 2020. We believe these offers were acceptable and had incorporated your feedback and made each of the opportunities a viable option. On this basis, we will not be obliged to pay you the redundancy notice. We will however pay you the termination notice as per your contract of employment and any accrued entitlements up to and including 7 October 2020 …”

[15] The email to Mr Picton also indicated that ASG would make an application to the Commission to vary his redundancy entitlements.

Evidence and submissions

ASG

[16] Ms Bell’s evidence dealt with her communications with Mr Picton in respect of the redeployment opportunities and the process and events leading to the redundancy.

[17] Ms Bell said that she received a text message from Mr Picton on 15 September asking if ASG had any vacant positions in Hunter Valley that he could fill.

[18] Ms Bell said that Hunter Valley is 203 kilometres East of Gulgong where Mr Picton resides.

[19] On 21 September, she advised Mr Picton that ASG identified a similar position in Tomingley Gold Operations which is about 162 kilometres west of Gulgong. She sent Mr Picton a copy of the employment agreement the following day at his request.

[20] Mr Picton then requested further time to consider the redeployment opportunity and expressed areas of concern regarding the redeployment opportunities.

[21] Ms Bell said that after considering Mr Picton’s response in terms of the areas of concern regarding the redeployment opportunities, ASG reviewed the Tomingley position and was able to offer the same working roster and remuneration to his previous role held at Moolarben. As a result, Mr Picton was offered the revised Tomingley position and an additional redeployment option, being the Dubbo position.

[22] ASG contends that the two positions offered to Mr Picton were acceptable alternative employment. Both positions involved the same or similar terms other than the location.

[23] ASG submits that information drawn from Google Maps demonstrate that the distance between Mr Picton’s home and the location of the Tomingley and Dubbo positions are approximately 165 kilometres and 109 kilometres respectively. This would result an additional 1 hour 30 minutes or 1 hour travel time each way which, ASG submitted, is not unreasonable given the nature of ASG’s business. In this regard, ASG notes that Mr Picton’s employment contract provided that he may be required to travel to and from areas in which the Company operates and may be required to spend days away from his usual place of work. It was argued that Mr Picton’s terms of employment contemplated a change of location due to the project nature of its business. This is consistent with the fact that he was redeployed to a different client site in May 2019.

[24] In terms of Mr Picton’s submission that the alternative employment offers would impact his lifestyle and family commitments, ASG argues that ASG took his concerns into account and altered the terms and condition in order to provide greater flexibility for him.

[25] ASG submits that it obtained other acceptable employment for Mr Picton in satisfaction of s.120 of the Act and accordingly the redundancy entitlements should be reduced.

Mr Picton

[26] Mr Picton submits that the two alternative positions offered by ASG were not acceptable employment for the purposes of s.120(1)(b)(ii) of the Act

[27] He gave evidence that he was employed as a workshop supervisor at the time he was made redundant, and said his primary duties involved servicing light road vehicles.

[28] Mr Picton set out the discussions and correspondence between him and ASG regarding various redeployment opportunities.

[29] Mr Picton gave evidence that he understood both the Tomingley and Dubbo positions required working on mine plant and equipment, including bulldozers and dump trucks, for which he had no prior experience. As a result of this and other matters, he rejected both offers. His reasons for rejecting the Tomingley position included that he would be required to either relocate or be away from his young family during the week and his commute to work would increase from twenty minutes to almost two hours each way. In terms of the Dubbo position, Mr Picton rejected this position because it would also require a commute of one hour and 20 minutes each way, and the absence of a site and shift allowance would result in a loss of income of over 15% compared to his existing salary.

[30] Mr Picton also gave evidence as to his personal circumstances, including that he had family responsibilities in relation to his two young children aged two and five.

[31] Mr Picton’s lawyer sought to draw a factual distinction between the circumstances of Mr Picton and that of one of his former colleagues, Mr Lord. ASG had made a similar application in relation to Mr Lord, which was the subject of a decision dated 4 November 2020 1 (the Lord decision).

[32] In the Lord decision, the Commission found that one of the offers of alternative employment made by ASG to Mr Lord was acceptable alternative employment, and his redundancy payment was reduced from seven weeks’ pay to five weeks’ pay.

[33] Mr Lord had been made the same offers of alternative employment as was made to Mr Picton. Both Mr Lord and Mr Picton reside in Gulgong.

[34] The distinctions drawn between Mr Picton’s circumstances and those of Mr Lord included the following:

a. Mr Picton was employed as a workshop supervisor, whereas Mr Lord was not;

b. Loss of income for the Dubbo role of approximately $13,000, or 15% of his current salary, which was not the case for Mr Lord;

c. Mr Picton’s family circumstances and responsibilities, particularly with respect to his young children.

[35] The significant travel required particularly for the Tomingley role was also highlighted.

Consideration

[36] There is no dispute that Mr Picton’s former position was made redundant and that he is entitled to a redundancy payment by virtue of s.119, which is 7 weeks in his case. There is also no dispute that ASG made alternative employment offers to Mr Picton which he rejected. ASG does not claim any incapacity to pay.

[37] Accordingly, the issue to be determined is whether the ‘other employment’ offered to Mr Picton was ‘acceptable’ within the meaning of s.120(1)(b)(i). If I am satisfied that the employment offered to Mr Picton was acceptable, I will then proceed to consider whether to reduce the redundancy payment.

Acceptable alternative employment

[38] It is well established that the question of whether the position offered was acceptable alternative employment must be determined objectively and that the mere rejection of the alternative employment does not make it objectively unacceptable.

[39] The Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 2 (Derole Nominees) considered what constitutes ‘acceptable alternative employment’ and held:

“What constitutes ‘acceptable alternative employment’ is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification ‘acceptable’ is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 3

[40] As put by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 4:

“[89] I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”

[41] In a similar vein the Full Bench in Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 5 found that the determination of whether alternative employment is acceptable will involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.

[42] In Sodexo Australia Pty Ltd T/A Sodexo 6, Deputy President Sams considered various authorities in respect of the question of what constitutes ‘other acceptable employment’ and helpfully summarised the principles in the following terms:

“•  the test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.

•  ‘acceptable employment’ is not identical employment, as no two jobs could be exactly the same.

•  an employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.

•  an employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable’.

•  the acceptance of alternative employment by one or more persons in a group of redundant employees does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.

•  There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.” 7

[43] Having considered the evidence and submissions in this matter, I do not consider either position to be acceptable alternative employment for the following reasons.

[44] Mr Picton’s role was that of a Workshop Supervisor. Both positions offered to him were at a lower level.

[45] In respect of travel time for the Tomingley position, the additional travel time is excessive. Mr Picton’s time travelling to and from work would have increased from around 40 minutes per day to around three hours and forty minutes per day. The additional travel time in my view would have been excessive and not reasonable.

[46] I do not consider the additional travel time for the Dubbo position, being an additional one hour each way, to be excessive taking into consideration the nature of ASG’s business and its rural location. However, the Dubbo position involved a loss of income which would have been considerable, particularly given the additional costs associated with the increased travel.

[47] I have also taken into consideration Mr Picton’s family responsibilities and his role as a carer for his children. Both positions would have required him to be away from home for a significant period of time, either daily or overnight, and would mean it would substantially reduce the amount of time he would be able to spend with his children.

Conclusion

[48] Having considered all the relevant factors objectively, I am satisfied and find that ASG did not obtain other acceptable employment for Mr Picton within the meaning of s.120(1)(b)(i). Accordingly, the application is dismissed.

DEPUTY PRESIDENT

Appearances:

C Bell for ASG Maintenance Pty Ltd.
S Woodbury for Scot Picton.

Hearing details:

2020.
Sydney (by telephone):
November 17.

Printed by authority of the Commonwealth Government Printer

<PR724621>

 1   [2020] FWC 5894.

 2 (1990) 140 IR 128.

 3   Ibid at 128.

 4   PR974699.

 5 (1988) 27 IR 226.

 6   [2016] FWC 4012.

 7 Ibid at [127].