BGC Residential Pty Ltd

[2018] FWC 3045

[2018] FWC 3045

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

BGC Residential Pty Ltd
(C2018/2143)

COMMISSIONER WILLIAMS PERTH, 30 MAY 2018

Variation of redundancy pay.

[1] This decision concerns an application by BGC Residential Pty Ltd (the Applicant or BGC) to reduce the amount of redundancy pay to which an employee, Mr Wayne Alexander (Mr Alexander), is entitled under section 119 of the Fair Work Act 2009 (the Act).

[2] The parties have provided written materials regarding this matter.

Factual findings

[3] Mr Alexander commenced his employment with BGC in July 2013. He enjoyed a number of promotions thereafter and in January 2016 was promoted to the position of General Manager of BGC Residential South-West.

[4] BGC has been undergoing a process of restructure which has affected various positions in its management team and the business’s individual departments over the past 12 or so months.

[5] As part of that process of restructuring Mr Alexander’s previous position as General Manager of BGC Residential South-West has been made redundant. Considering the extensive sales and management experience of Mr Alexander BGC determined that a new role of Brand Manager – South West should be offered to Mr Alexander in March 2018. On 6 April 2018 Mr Alexander advised that he would accept the new role as Brand Manager.

[6] BGC at the time explained to Mr Alexander that this application would be made to the Commission.

[7] The annual salary per annum for the former employment as the General Manager of BGC Residential South-West was $187,214. The annual salary per annum for the other employment as the Brand Manager is $160,000. The reduction in salary Mr Alexander has experienced is 15%.

[8] In the former employment Mr Alexander also had the benefit of a company car. In the other employment as a Brand Manager no company car is provided however trips from the South-West to Perth and long distance South-West based travel beyond 20 km will be eligible for Mr Alexander to claim fuel reimbursement. There is no information as to whether the company car provided in the former employment was exclusively for business use or otherwise.

[9] BGC also chose to pay to Mr Alexander the difference between what his accrued annual leave entitlements of approximately 160 hours were valued at when he was receiving the salary for the General Manager position versus what they would now be valued at as the Brand Manager on a lesser salary. This amounted to a total of $2,102.

[10] With respect to the differences and similarities between the employment as the General Manager and the alternative employment as the Brand Manager, the work for both positions is to be carried out in the South West so this remains unchanged and Mr Alexander will not be relocating. The proposed hours of work in the alternative employment will be similar to that of the former employment. The Brand Manager position is a senior management role within BGC however of lesser seniority than the former General Manager role. BGC have offered the position of Brand Manager which Mr Alexander has accepted on the basis that it will not interrupt his continuity of service and he will retain any accrued benefits.

Submissions

[11] The Applicant has applied for the Commission to reduce the redundancy pay entitlement under the National Employment Standards submitting that the Brand Manager position is other acceptable employment. The Applicant submits that the redundancy pay payable to Mr Alexander should be reduced by 85% consistent with the fact that that the salary applicable to the Brand Manager position is 85% of the salary Mr Alexander received in the former role as General Manager.

The legislation

[12] Sections 119 and 120 of the Act are relevant for the purposes of this decision and are set out below.

“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.

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

Amount of redundancy pay

(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:

Redundancy pay period
Employee’s period of continuous service with the employer on termination	Redundancy pay period
1	At least 1 year but less than 2 years	4 weeks
2	At least 2 years but less than 3 years	6 weeks
3	At least 3 years but less than 4 years	7 weeks
4	At least 4 years but less than 5 years	8 weeks
5	At least 5 years but less than 6 years	10 weeks
6	At least 6 years but less than 7 years	11 weeks
7	At least 7 years but less than 8 years	13 weeks
8	At least 8 years but less than 9 years	14 weeks
9	At least 9 years but less than 10 years	16 weeks
10	At least 10 years	12 weeks

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, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the 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.”

The issue - Other acceptable employment

[13] Considering these facts above the issue to be determined by the Commission is firstly whether the Brand Manager position amounted to “other acceptable employment”. Only if it was other acceptable employment must the Commission then consider whether to exercise its discretion to reduce the amount of redundancy pay payable and if so by what amount.

[14] As noted by the Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 1 at 124:

“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 provisions 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 elections of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.”

[15] As was explained by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 2 at [89]:

“...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.”

[16] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 3 a Full Bench of the Commission 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.

[17] In National Union of Workers v Linfox Australia Pty Ltd 4 Watson VP considered the following criteria to be relevant when determining whether alternative employment is acceptable:

(a) the employee’s skills, experience and physical capacity;

(b) the rates of pay, hours of work, duties and conditions of employment associated with the proposed job;

(c) whether or not continuity of employment is provided to the employee;

(d) the extent of any additional travel distances from home to the new place of work and whether the employee has to substantially alter their method of travelling to and from work in order to attend to duty; and

(e) the level of any compensation.

[18] In my view the term “acceptable alternative employment” considered in this case law should be taken to have the same meaning as the term “other acceptable employment” which is used in section 120 of the Act and hence the case law is directly applicable in this matter.

Consideration

[19] The Applicant submits the other employment which they offered to Mr Alexander and which he accepted as a Brand Manager is “other acceptable employment” for the purposes of section 120 of the Act. Consequently they submit the amount of redundancy pay payable to Mr Alexander as a consequence of his position as the General Manager of BGC Residential South-West being made redundant should be reduced.

[20] Mr Alexander submits that he accepted the Brand Manager which is a lesser role solely for the pragmatic reason that a lesser job is better than no job.

[21] Whether other employment obtained by an employer is “other acceptable employment” is an objective question not determined by the employer’s or the employee’s opinion. Factors likely to be relevant in considering this question include amongst others the nature of the work to be done, the rate of pay, hours of work, skills, duties, seniority and location of the work when compared to the position that was made redundant. The onus is on the Applicant, in this case BGC, to satisfy the Commission that they have obtained the other employment and that it is “other acceptable employment”.

[22] In this case I am satisfied that BGC obtained the other employment for Mr Alexander.

[23] I accept that the other employment as a Brand Manager is to be performed in the same location and the hours of work will be the similar for Mr Alexander. I accept that the other employment as the Brand Manager requires similar qualifications and that Mr Alexander has the experience, skills and expertise necessary to perform the duties of the other employment. These factors weigh in favour of finding that the Brand Manager position was other acceptable employment.

[24] The other employment as a Brand Manager has an annual salary which is 85% of the position made redundant. BGC have also chosen to pay to Mr Alexander an amount equating to the reduction in dollar value of his accrued annual leave entitlements which will in future be valued on the basis of the lower salary of the alternative employment as the Brand Manager.

[25] In this case weighing up these various factors I am satisfied that the other employment as a Brand Manager is other acceptable employment.

[26] This application will be granted and the amount of redundancy pay to which Mr Alexander is entitled will be reduced.

[27] Mr Alexander, at the time his position was made redundant, had been employed for four years but less than five years and so under section 119 was entitled to 8 weeks redundancy pay. Eight weeks of redundancy pay based on the annual salary of $187,214 which applied to the redundant General Manager position would have been an amount of $28,802.15 gross.

[28] The amount of reduction to the redundancy pay that would otherwise have been payable is a matter of discretion for the Commission. There is no particular formula to be applied.

[29] In this instance BGC have submitted that the Commission should reduce the amount of the redundancy pay by 85% so that Mr Alexander would only receive 15% of the redundancy pay that would have been payable if BGC had not obtained other acceptable employment for him. This approach reflects the fact that the other acceptable employment as the Brand Manager has an annual salary which is 85% of the salary Mr Alexander received in the redundant position. This was explained to Mr Alexander in the memo to him from Mr Bartier dated Thursday, 20 March 2018 wherein BGC says that when making this application to the Commission they “...would recommend a reduction of 85% of the gross redundancy amount because of the new salary, which would result in a total redundancy payment being approximately $4,320.” I do note however that other amounts have been mentioned erroneously both in the application filed and in the Applicant’s submissions. 5

[30] In the circumstances I do think it is reasonable for there to be a reduction of 85% in the redundancy pay that would be otherwise payable. Consequently I determine that the amount of redundancy pay that Mr Alexander is entitled to under section 119 is the gross amount of $4,320.32. An order [PR607525] will be issued to this effect.

COMMISSIONER

Final written submissions:

Applicant, 8 May 2018.

Respondent, 24 May 2018.

Printed by authority of the Commonwealth Government Printer

<PR607524>

 1 (1990) 140 IR 123.

 2   PR974699.

 3 27 IR 226.

 4   [2008] AIRC 647.

 5   Applicant’s submissions at paragraph 2.