Bierton and Secretary, Department of Jobs and Small Business

Bierton and Secretary, Department of Jobs and Small Business [2019] AATA 967 (23 May 2019)
Division:GENERAL DIVISION
File Number(s): 2016/6767
Re:Peter Bierton
APPLICANT

AndSecretary, Department of Jobs and Small Business
RESPONDENT

DECISION
Tribunal:Senior Member A Poljak
Date:23 May 2019
Place:Sydney

The decision under review is affirmed.
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Senior Member A Poljak
CATCHWORDS
EMPLOYMENT ENTITLEMENTS – claim for advance under Fair Entitlements Guarantee Act – whether applicant entitled to redundancy and pay in lieu of notice under governing instrument – whether termination at the initiative of the employer – whether employment brought to an end at the discretion of the employer – where applicant claimed employer’s conduct caused his responsibilities and duties to change substantially – where finding that employer made clear to applicant that his employment was not terminated and his ongoing assistance was required – decision affirmed
LEGISLATION
Fair Entitlements Currency Act 2012 (Cth) ss 3, 5, 6, 15, 37, 38, 39, 52
Fair Work Act 2009 (Cth) ss 117, 119
CASES
Mohazab v Dick Smith Electronics Pty Ltd [No.2] (1995) 62 IR 200
REASONS FOR DECISION
Senior Member A Poljak
23 May 2019

Mr Peter Bierton, the applicant, commenced employment with Cimeco Pty Ltd (“Cimeco”) on 14 November 2011. Cimeco was a subsidiary of Forge Group Ltd. The applicant was engaged as a site supervisor. The primary purpose of the role was to provide professional and effective site supervision on Cimeco’s commercial building projects. On 21 December 2012, Cimeco’s company name was changed to Forge Group Construction Pty Ltd (“Forge”).
On 11 February 2014, KordaMentha were appointed as receivers and managers of Forge. The majority of Forge employees were dismissed shortly after KordaMentha’s appointment.
On 9 April 2014, the Department of Employment, now known as the Department of Jobs and Small Business (“the Department”) received a claim from the applicant for an advance under the Fair Entitlements Currency Act 2012 (Cth) (“FEG Act”). The claim was for annual leave, payment in lieu of notice (“PILN”) and long service leave said to be owed to the applicant by Forge. The claim form stated that the applicant worked full-time as a construction project manager of Forge between 31 October 2011 and 18 March 2014.
On 13 June 2014, a delegate of the Department made a decision under subsection 15(1) of the FEG Act that the applicant was eligible for an advance. The delegate determined that the applicant was eligible for an advance in respect of wages, annual leave, PILN and redundancy pay. In accordance with subsection 15(2), the delegate decided the amount of the advance was $42,127.71 (before tax). The advance was forwarded to Ferrier Hodgson for distribution to the applicant.
On 12 October 2015, a delegate of the Department advised the applicant that they were conducting a review of the decision made on 13 June 2014 under section 37 of the FEG Act and invited the applicant to provide further submissions or evidence. The applicant did so on 6 December 2015.
On 18 February 2016, a delegate of the Department made a decision under section 37 of the FEG Act to set aside the decision of 13 June 2014, and determined that the applicant had been overpaid $20,585.94 (before tax) as a result of the following findings:
(a)the applicant had resigned from his appointment with Forge, and therefore had been overpaid in respect of PILN and redundancy;
(b)the applicant had been underpaid in respect of annual leave; and
(c)the applicant had been overpaid in respect of wages.
On 31 May 2016, the applicant applied for internal review of the decision under section 38 of the FEG Act on the basis that he had been constructively dismissed from his appointment with Forge.
On 17 November 2016, pursuant to section 39 of the FEG Act, a delegate of the Department affirmed the decision of 18 February 2016. This is the decision under review in these proceedings.
Relevant Legislative Provisions
Section 3 of the FEG Act provides that the main objects of the Act are:
(a)to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers in cases where:
(i)      the employers are insolvent or bankrupt; and
(ii)    the end of the employment of the former employees was connected with that insolvency or bankruptcy; and
(iii)    the former employees cannot get payment of the entitlements from other sources; and
(b)to allow the Commonwealth to recover the advances through the winding up or bankruptcy of the employers and from other payments the former employees receive for the entitlements.
Section 6 of the FEG Act defines the various types of employment entitlements of a person whose employment has ended. Relevantly, PILN and redundancy are defined as follows:
Payment in lieu of notice entitlement
4The person’s payment in lieu of notice entitlement is the amount the person is entitled to under the governing instrument from the employer for a shortfall in the period of notice of termination of the employment.
Redundancy pay entitlement
5The person’s redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment.
The term ‘governing instrument’ is defined in section 5 of the FEG Act as follows:
governing instrument for employment means any of the following that governs the employment:
(a)a written law of the Commonwealth, a State or a Territory;
(b)an award, determination or order that is made or recorded in writing;
(c)a written instrument;
(d)an agreement (whether a contract or not).
The ‘governing instrument’ for the purposes of calculating the applicant’s entitlement to redundancy pay is the National Standards found in the Fair Work Act 2009 (Cth) (“FWA”). This is not disputed by the applicant.
Section 119 of the FWA provides for the entitlement to redundancy pay. It states:
1An 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.
The amount of redundancy pay is calculated using the table in subsection 119(2).
Section 117 of the FWA establishes an entitlement to PILN if an employer does not provide an employee with the minimum period of notice of termination. Subsection (2) provides:
The employer must not terminate the employee’s employment unless:
(a)the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b)the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
The period of notice is worked out using the table in subsection 117(3).
In accordance with subsection 6(4) of the FEG Act, a person’s entitlement to PILN is the amount the person is entitled to under the governing instrument. In this mater, the applicant’s Contract of Employment with Cimeco (“contract of employment”) provided an entitlement to PILN in certain circumstances. Clause 15 of the contract of employment relevantly provided:
“Notice of Termination
Your employment may be terminated by you or by Cimeco giving:
·…
·Four (4) weeks’ notice at any time after the Probationary period.
…
At its sole discretion, Cimeco may bring your employment to an end prior to the expiry of the notice period by making payment in lieu of notice.
…
In the event that you do not complete the required notice the company reserves the right to withhold payment of outstanding salary up to the value of the balance not worked.”
Section 52 of the FEG Act provides that where the Commonwealth pays an amount to a person, in circumstances where the Commonwealth does not otherwise have legislative power to pay that amount to the person, the relevant amount is due to the Commonwealth by the recipient and may be recoverable by the Secretary in a court of competent jurisdiction.
Background
KordaMentha was appointed as receivers and managers of Forge on 11 February 2014. The majority of Forge employees were dismissed shortly after KordaMentha was appointed. This was outlined in an email to the applicant from a director of KordaMentha on 13 February 2014. The email also clarified:
“For the avoidance of doubt, your employment has not been terminated and your ongoing assistance continues to be required…
We will be in touch soon to discuss your ongoing role in the Receivership; however, in the first instance we would like your assistance in ensuring that assets of Forge are secured from damage/theft…
Wages for monthly staff retained by the Receivers and Managers will be paid on Friday.
Thank you for your patience, persistence and professionalism during this difficult process.” [Emphasis added]
As advised in the email of 13 February 2014, the applicant’s wages were duly paid.
In a further email dated 13 February 2014 Brendon Rew, a director of KordaMentha, confirmed with the applicant that his work related expenses and living costs would continue to be reimbursed. He was also advised that an account had been established for flights so “as needed we can book your travel”. In a follow-up email, Mr Rew also confirmed that the “applicant’s wages will be paid as normal”.
In a diary note of the applicant dated 13 February 2014, he recorded:
“Spoke with James Bowes about employment and he said would be made redundant in a week or so and would only be paid for work complete.”
On 17 February 2014 a director of KordaMentha sent an email to retained employees, including the applicant. The email contained a series of frequently asked questions and answers about the receivership. The email provided instructions in the event that an employee’s Forge mobile telephone had been disconnected because while they had “taken steps to ensure retained employees mobile phone accounts are not disconnected”, some phone numbers may have been missed in correspondence sent to Telstra. The email also addressed what was expected of retained employees during the receivership period and stated:
“The Receivers and Managers have retained you to assist with the management of the Forge Group receivership. As such, you are expected to undertake your role as per your job description and as directed by the Receivers and Managers (and their representatives). The purpose of the receivership is to maximise the recovery of the Forge Group asset for the benefit of the Forge Group creditors. You have been retained to assist us to maximise the return to creditors.” [Emphasis added]
Further, the email stated:
“At this stage it is too early to confirm how long you will be required to assist in the Receivership. We should have a better line of sight over the coming weeks. We will try and provide as much notice as possible.”
On 18 February 2014, the applicant’s email address was disconnected. In an email of the same date, Karen Fanning of KordaMentha advised the applicant that an internet disruption had affected all retained Forge staff, and that the problem had been rectified so the email accounts “should be back in action as soon as possible today”.
Also on 18 February 2014, the applicant requested flights to be booked to Brisbane. The applicant received his itinerary for his preferred flights in an email at 7:52 PM that evening.
A diary note of the applicant dated 18 February 2014, records:
“Spoke with Ben Robinson (KordaMentha) about potential opportunity with CB&I. Ben said just to let them know and they would make me redundant.”
In an email to the applicant dated 19 February 2014, Ben Robertson, business analyst of KordaMentha, advised:
“Thanks for the call before. Following up from our conversation regarding redundancies, if you resign you will lose your 4 week notice and redundancy claim. Therefore keep us informed if you are starting a new job and we will try to have your work with Forge wrapped up before you start. That way you will not lose your redundancy and 4 week notice claim.”
The applicant filed in these proceedings a letter of offer and employment contract from CB&I dated 19 February 2014. The letter of offer notes that the applicant’s employment would be on a casual basis and the period of employment was expected to be for a period of no more than 12 weeks from the commencement date of 23 February 2014. The applicant’s obligation under the contract include, inter alia, that the applicant devote the whole of his “time, attention and skill during normal business hours and at other times as reasonably required to perform the required duties”.
On 20 February 2014, the applicant was informed that his expense claims were to be sent to Ms Fanning. On 21 February 2014, the applicant emailed Ms Fanning informing her that he had correspondence from Brendon Rew confirming that his living expenses were to be covered by KordaMentha and that he would be terminating his employment with KordaMentha immediately if his expenses were not paid.
A diary note of the applicant dated 22 February 2014 records, “still in Gladstone- Gladstone office closed (chained) – no instruction from KordaMentha – assist CB&I complete contract works”.
On 25 February 2014, the applicant submitted an expense claim form as advised by Ms Fanning for his expenses of $411.93 to be reimbursed. Payment was confirmed by the Leanne O’Reilly on 26 February 2014.
A diary note of the applicant dated 25 February 2014, records “spoke with Ben Robinson (sic) again about CB&I offer - he said wouldn’t be a problem - need to send him an email confirming”. In an email of the same date, the applicant advised Mr Robertson of the following:
“Thank you for your time earlier, as discussed CB&I have expressed their interest in employing me after my services are complete with KordaMentha. As you advised can you please action items that are needed to make sure I’m following the redundancy procedure.
Through discussions with other KordaMentha staff I believe my tasks are complete and therefore no longer required.”
A diary note of the applicant dated 26 February 2014, records:
“Gladstone – no access to site or office – no communication from KordaMentha – Tried to call James Bowes and Karen Fanning for instruction…”
On or around 28 February 2014, KordaMentha was advised by CB&I that the applicant was employed by them.
A diary note of the applicant dated 30 February 2014 records, “spoke with Karen Fanning and communicated CB&I opportunity she advised they didn’t have a requirement for me so would get the ball rolling”. In an email to Ms Fanning dated 3 March 2014, the applicant advised:
“As discussed a couple days ago. I need to get the ball rolling on closing services with KordaMentha.
As we spoke about the other day, I don’t want to put at risk my redundancy claim.”
A diary note of the applicant dated 3 March 2014 records:
“Emailed Karen Fanning- followed up with call to check progress
Called James Bowes- 1:15pm
4:30pm }no answer
No activity today from KordaMentha”
The applicant’s potential employment with CB&I was discussed in a number of emails between senior KordaMentha executives, however, in emails dated 4 March 2014, it is plain that the applicant was still considered to be required by KordaMentha as “his knowledge of the equipment around the island and his input on demobilisation difficulties and cost, will be fairly critical”.
A diary note of the applicant dated 4 March 2014 records:
“No activity for KordaMentha – Gladstone Forge operations completely closed – called James Bowes and Karen Fanning again – no answer…”
On 5 March 2014, the applicant emailed Nick Male of KordaMentha advising that he could not access his Forge account on his computer. Mr Male responded on 6 March 2014 and advised that he spoke to IT and that they could not see a reason why his Forge laptop and account were not working and advised that if there was a problem they should be able to fix it.
On 7 March 2014, the applicant submitted a further expense claim form to Ms Fanning for the amount of $422.22. The amount was reimbursed by KordaMentha on 14 March 2014.
On 11 March 2014, the Forge Group Human Resources Manager notified Ms Fanning and Ms O’Reilly of KordaMentha via email that the applicant had a posting on his LinkedIn account that he had a new job with Zinfra Contracting Pty Ltd (“Zinfra”).
In an email dated 11 March 2014, James Bowes, a manager of KordaMentha, advised Ms Fanning and a number of Directors of KordaMentha that he had spoken with the applicant that afternoon and had “asked him to confirm his intentions with respect to his ongoing employment by email tomorrow”. Mr Bowes stated that the applicant had “mentioned that he has a new role and up and asked if he could finish up at the end of the month”. Mr Bowles also stated that the applicant “is of use to us in the meantime-specifically will be assisting Grays in their site tour of CB&I this Friday”.
In a further email dated 11 March 2014, Mr Bowes advised Michael and Neil of Grays that the “[the applicant] of Forge is currently in Gladstone and will assist Michael and Neil with the inspection of the assets. [the applicant] is copied in on this email and can be contacted on …” Mr Bowes also asked that Grays contact the applicant to discuss and arrange the logistics of the site visit.
On 12 March 2014, Mr Doug Hansen of CB&I stated in an email to KordaMentha the following:
“As just noted in telecom with Avi (Forge), it was brought to my attention this morning that among the three (3) representatives you list for the subject Forge P&E site survey in your letter of 11 March 2014 is [the applicant] of Forge…However, [the applicant] is no longer a Forge employee, rather is now a CBI Constructions Pty Ltd employee…” [Emphasis added]
In response to Mr Bowes’ request the previous day, the applicant advised in an email dated 12 March 2014 that he plans “on finishing up at the end of the month” and that the only assistance he will be able to offer “post end of month will be commercial and financial information”.
David James of KordaMentha emailed Mr Bowes on 13 March 2014, advising him that he had spoken with the applicant who said “he intended to leave CB&I at the end of the month”.
A diary note of the applicant dated 13 March 2014, records:
“Continued to call KordaMentha – James Bowes and Karen Fanning – Assume role is terminated - not sure if I will be paid on 15/03 – spoke with Shane Jackson who said not to expect payment – contact payroll – no contact available”
On 14 March 2014, the applicant’s access to his work email was disabled. It appears that KordaMentha intended to terminate the applicant’s employment on the basis that he had taken employment with CB&I however there is no evidence that this was actioned.
In an email to Mr Bowes dated 17 March 2014, the applicant advised:
“Effective immediately. I will be terminating my assistance to KordaMentha.
I will be unable to assist on any issue or information which may be required moving forward.
I trust I have provided KordaMentha the necessary assistance which has enabled a successful completion of all matters on AP-LNG.” [Emphasis added]
Liquidators were appointed to Forge on 18 March 2014.
The applicant signed an employment contract with Zinfra on 19 March 2014. The agreement provided that the applicant’s commencement date in the position of Senior Project Manager was on 24 March 2014.
Consideration

The applicant does not contend that the decision under review is incorrect in so far as it deals with his entitlements to annual leave or unpaid wages. The issues to be resolved in this matter are:
(a)whether the applicant had an entitlement to an advance under section 119 of the FWA on account of redundancy pay; and
(b)whether the applicant had an entitlement to PILN in accordance with the terms of clause 15 of his contract of employment.
Was the applicant’s employment terminated at the initiative of the employer (s119) or brought to an end at its discretion (clause 15 of contract of employment)?
The applicant contends in written and oral submissions that in the context of all the events that occurred after KordaMentha was appointed as receivers and managers of Forge on 11 February 2014, his employment was terminated at the initiative of the employer and he is entitled to PILN and redundancy pay under the FWA. This is despite the applicant’s notice of resignation contained in an email dated 17 March 2014.
In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the applicant had no effective or real choice but to resign. The circumstances in which a resignation, while apparently a termination of employment by the employee, nevertheless constitutes a termination at the initiative of the employer, was considered by the Full Court of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd[No.2] (1995) 62 IR 200. The Full Court said at 205:
“These definitions reflect the ordinary meaning of the word “initiative”. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression “termination at the initiative of the employer” as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship.”
And at 205-6:
“[I]t is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.”
The applicant contends that his responsibilities and duties substantially changed from the time Forge went into receivership and that he was no longer required to perform the vast majority of his previous tasks and was instead held in a “transitional and uncertain state’. In written submissions, it appears that the applicant asserts that it was “reasonable for him to assume” that his employment was terminated at the initiative of KordaMentha in the context of the following alleged events:
(a)he had to pay for all his expenses personally as his Forge credit card was cancelled;
(b)his manager had been terminated and there was no one to give him instructions or advice;
(c)he had no access to the worksite or Gladstone office;
(d)he had to move out of the apartment where he had been staying and pay for alternative accommodation;
(e)his work mobile phone was cancelled;
(f)he had to use his personal laptop;
(g)tradesmen were no longer employed;
(h)he had no access to a car while in Gladstone;
(i)he had to organise and pay for his own flights; and
(j)his access to Forge corporate services was terminated.
Having carefully considered all the available evidence, I find that KordaMentha did not engage in any conduct that could be objectively characterised as terminating the applicant’s employment at their initiative or bringing it to an end at their discretion. The objective evidence shows that KordaMentha continued to require the applicant’s services and this was made abundantly clear to him in writing on 13 February 2014. KordaMentha advised, “For the avoidance of doubt, your employment has not been terminated and your ongoing assistance continues to be required”. In subsequent email correspondence, the applicant was also reassured that his work related expenses and living costs would continue to be reimbursed and that his wages would be paid as normal. This did occur. KordaMentha paid the applicant his wages and reimbursed him for his living expenses. The second of the two expense claims made by the applicant was made on 7 March 2014 and related to the previous two weeks, including items purchased up to 6 March 2014. In regards to travel, the objective evidence shows that KordaMentha booked and paid for his preferred flights to Brisbane as requested on 18 February 2014. I acknowledge that there were some IT issues. However the applicant was advised of the IT outages when they occurred and they were rectified. In regards to his mobile phone, the applicant was advised in writing on 17 February 2014 what to do in the event that his work mobile phone was disconnected and was advised that his mobile phone service should not be affected.
In regards to the applicant’s responsibilities and duties the applicant was advised in writing on 17 February 2014 that he was expected to undertake his role as ”per your job description and as directed by the Receivers and Managers (and their representatives)” and that he had been retained to “assist KordaMentha with maximising the return to creditors”. The applicant was further advised that at that stage it was “too early to confirm how long you will be required to assist in the Receivership” but they “should have a better line of sight over the coming weeks”. Significantly, on 11 March 2014 the applicant was advised by KordaMentha that he was required to assist with a site visit scheduled for 14 March 2014, as well as further activities planned for 15 and 17 March 2014.
On 12 March 2014, KordaMentha was informed by CB&I that the applicant was no longer an employee of Forge but was an employee of CB&I. While the prospect of leaving his current role and working for CB&I was raised by the applicant on a number of occasions since 18 February 2014, it appears that his requests to action the ‘redundancy procedures’ and close out his work with KordaMentha were not done. This may be because as at 4 March 2014, KordaMentha still regarded the applicant’s knowledge of equipment at the project site and input on demobilisation difficulties and cost as ‘fairly critical’. Nonetheless, the applicant advised KordaMentha by telephone on 11 March 2014 and by email on 12 March 2014, that he wished to finish up with Forge by the end of the month. Despite this advice the applicant emailed his resignation a few days later on 17 March 2014, terminating his employment “effective immediately”. The applicant’s subjective belief that he was no longer required by KordaMentha and that his resignation was at the initiative of KordaMentha is contradicted by the instructions he received on 11 March 2014. Had he not already been employed by CB&I at that time, his services would have been required up to and including 17 March 2014. It is not the case that his former employer no longer required the job done by the applicant to be done by anyone.
For the above reasons I find that the applicant resigned from his employment voluntarily and that his employment was not terminated at the initiative of KordaMentha or brought to an end their discretion and is therefore not entitled to an advance in respect of redundancy pay or PILN.
Was the applicant’s employment terminated due to insolvency?
The applicant is not entitled to redundancy pay under paragraph 119(1)(b) of the FWA because his employment was not terminated due to insolvency of Forge. KordaMentha specifically required the continuation of the applicant’s employment notwithstanding the appointment. The applicant continued to be paid his wages and work living expenses as normal and I have already found that the applicant voluntarily resigned on 17 March 2014.
Decision
The decision under review is affirmed.

I certify that the preceding 62 (sixty -two) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

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Associate
Dated: 23 May 2019

Date(s) of hearing: 23 February 2018

Applicant: In person

Solicitors for the Respondent: HWL Ebsworth Lawyers

[2019] AATA 967

23 May 2019

Key Legal Topics

Areas of Law

Employment Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Remedies

Date(s) of hearing:	23 February 2018
Applicant:	In person
Solicitors for the Respondent:	HWL Ebsworth Lawyers