Aztec Steel Pty Ltd v Gaden
[2011] FWA 42
•7 JANUARY 2011
[2011] FWA 42 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Aztec Steel Pty Ltd T/A KGT Freight Management
v
Mr Corey Gaden; Mr Paul Pietrocola; Mr Christopher Cropper; Mr Gabriel Dzieciol; Mr Murray Mackenzie; Ms Natarsha Castigioni
(C2010/5370)
Road transport industry | |
COMMISSIONER WILLIAMS | PERTH, 7 JANUARY 2011 |
Application to vary redundancy pay.
[1] This is an application by Aztec Steel Pty Ltd trading as KGT Freight Management (KGT) made pursuant to section 120 of the Fair Work Act 2009 (the Act).
[2] By this application KGT seek to reduce the amount of redundancy pay that it is required to pay to its previous employees under s.119 of the Act to nil.
[3] The potentially affected previous employees of KGT are Corey Gaden, Paul Pietrocola, Christopher Cropper, Gabriel Dzieciol, Murray Mackenzie and Natarsha Castagioni (the employees).
[4] The application is opposed by the Transport Workers Union (TWU) on behalf of Murray Mackenzie and Gabriel Dziecoil. Separately, Paul Pietrocola has also provided information to the tribunal indicating he opposes the application.
Background
[5] The relevant background in this matter is not in dispute.
[6] KGT had a transport contract with DHL involving loading and delivering materials from DHL's distribution centre in Perth. Each of the employees was employed by KGT as a driver to meet its obligations under the contract.
[7] In the lead up to September 2010 KGT had determined that the contract was not viable and had advised to DHL that it no longer wished to continue with the contract. By this stage the original contract had expired and KGT and DHL had been operating on a month by month arrangement.
[8] In early September 2010 KGT wrote to each of its employees notifying them that from 21 September 2010 their employment with KGT would cease.
[9] The employees were advised that in order to allow a smooth transition to whomever took over the contract with DHL, if required KGT would continue to support DHL until a formal transition was achieved.
[10] Eventually two new contractors were engaged by DHL being Ellenbrook Transport and GKR Transport. Each of the employees commenced employment on 22 September 2010 with one of those companies having finished work with KGT the previous day.
Consideration
[11] The relevant section of the Act provides as follows:
s. 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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA 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.
[12] It is conceded by the TWU that the employees following their termination by KGT now have acceptable alternative employment with either Ellenbrook Transport or GKR Transport. It is accepted by the parties that the employees are effectively continuing to do the same jobs and receive very similar remuneration as they had previously with KGT.
[13] The TWU however argue that for KGT to be successful in this matter it must establish that it “obtained” the acceptable alternative employment for the employees. This requires a demonstration that KGT procured the jobs for the employees through its efforts and its endeavours and the TWU argues that this is not the case here.
[14] A number of witness statements and statutory declarations were filed by the applicant and the TWU. Both parties accept the evidence contained in these statements and declarations and chose not to cross examine any of the witnesses.
[15] At the conclusion of the proceedings I put it to the parties that the facts are the same for all six employees so they will enjoy the same outcome in this matter, including those not represented. The parties agree that this is the case.
The evidence and findings
[16] The critical facts are those provided in the witness statements of Mr Richard Ashton, KGT's Operations Manager and Mr Robert Gaden the Transport Manager of DHL. Their evidence is that Mr Richard Ashton had several meetings with Mr Robert Gaden in August and September 2010 regarding the ending of the contract. The primary reason for Mr Ashton participating in those meetings was to ensure that if possible the employees were all given new jobs with DHL if it chose to perform the work itself or alternatively with any third-party contractor who took over the contract.
[17] At one such meeting Mr Ashton said to Mr Robert Gaden that if DHL or a new contractor wanted to take on the employees then he would facilitate that.
[18] Further Mr Robert Gaden says at the time DHL was considering undertaking the contract itself and that he discussed with Mr Ashton the transfer of the employees entitlements to DHL.
[19] This evidence goes further and both witnesses say that DHL was encouraged to by Mr Ashton, and did, act as the agent for KGT in securing the employees acceptable alternative employment with the two contractors to whom the contract was awarded.
[20] What is clear from the evidence of the employees however is that they were, at this time, and afterwards unaware of these events.
[21] The question for the tribunal is given this evidence, is it correct to find that KGT obtained other acceptable alternative employment for the employees?
[22] A Full Bench of the Australian Industrial Relations Commission considering the meaning of “obtains” concluded that it does not in this context mean to actually obtain in the fullest sense but rather that:
“...the intention is not to impose an absolute test on the employer’s ability to ‘obtain’ alternative employment but rather it refers to an action which causes alternative employment to become available to the redundant employee. The employer must be a strong moving force towards the creation of the available opportunity.” 1
[23] What efforts the employer has to go to, to be a strong moving force towards the creation of acceptable alternative employment will depend on the circumstances of each case. In some cases an employer will need to go to a considerable amount of effort over a long period of time. In other cases the acceptable alternative employment may be gained quite easily with minimal effort by the employer.
[24] In this case there is sufficient evidence to find that the applicant did obtain acceptable alternative employment through its urgings of DHL which were communicated by DHL in turn to the two new contractors. The employees were not themselves responsible for gaining their acceptable alternative employment and there is no evidence that the acceptable alternative employment was obtained because of the actions of any other party.
[25] It would be unhelpful to future employees who may be made redundant to discourage employers from taking positive action to obtain acceptable alternative employment by setting unreasonably high thresholds of effort to be demonstrated before an employer is rewarded with the possible benefits available under s.120.
[26] Having found that the other acceptable alternative employment for the employees was obtained by the applicant KGT there remains the question under s.120 (2) of what reduction in the amount of redundancy pay is appropriate.
[27] The evidence from Ellenbrook Transport and GKR Transport is that the entitlements of the employees have not been transferred and their prior service with KGT will not be recognised by their new employer. Consequently it is not correct to say there has been no detriment to the employees.
[28] The length of service of the employees ranges from 5 years down to 7 months. I note that Ms Castigioni apparently has less than a year’s service. If this is correct then under s. 119 she in any event is not entitled to any redundancy pay.
[29] In the circumstances I believe it is appropriate that the amount of redundancy pay required to be paid under s. 119 of the Act to each of the employees be reduced by 50%.
[30] An order to that effect will be issued in conjunction with this decision.
COMMISSIONER
Appearances:
Mr J Hodgkinson, Managing Partner, Haynes Robinson Lawyers on behalf of the Applicant
Mr A Dzieciol, Legal/Industrial Officer, Transport Workers Union on behalf of Respondents Mr M MacKenzie and Mr G Dzieciol
Ms G Cooper, on behalf of Mr P Pietrocola.
Hearing details:
2010.
Perth:
November 24.
1 Derole Nominees Pty Ltd and The Australian Chamber of Manufactures (1990) 140 IR 123 at 128.
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