Brauntell MBK Pty Ltd v Ryan Murphy

[2020] FWC 3620

[2020] FWC 3620

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Brauntell MBK Pty Ltd
v
Ryan Murphy
(C2020/4063)

DEPUTY PRESIDENT CROSS SYDNEY, 10 JULY 2020

Variation of redundancy pay.

[1] This is an application under s.120 of the Fair Work Act 2009 (the “Act”) by Brauntell MBK Pty Ltd (“Brauntell” or the “Applicant”) to reduce the redundancy pay otherwise due under National Employment Standards (the “NES”) on the grounds that Brauntell has offered Mr Ryan Murphy (the “Employee”) acceptable alternative employment.

[2] The application was lodged on 28 May 2020, and was heard on 10 July 2020. Brauntell was represented by Ms Alexandra Meissner, from their Human Resources department, and the Employee represented himself. At the conclusion of the proceedings on 10 July 2020, I indicated that I would dismiss the application. These are the reasons for that dismissal.

Statutory provisions

[3] Section 120 of the Act is to be found in Chapter 2, Part 2-2, Division 11. Division 11 relates to notice of termination and redundancy pay, and is an NES. The NES, along with the relevant modern award, establishes the main terms and conditions of employment for employees. 1 The NES must not be contravened by an employer.2

[4] A modern award must not exclude the NES or any provisions of the NES although it may include terms with respect to the NES that it is expressly permitted to include under the NES or the relevant regulations. 3 A modern award may include terms ancillary or incidental to the NES or supplement the NES but only to the extent that the effect of those terms is not detrimental to any employee in any respect when compared to the NES.4

[5] The NES provisions in relation to notice of termination and redundancy pay specify the requirements for notice of termination or pay in lieu of notice. 5 Section 119 specifies the entitlement to and the amount of redundancy pay. Section 120 provides:

“(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.”

[6] Brauntell relies on paragraph (b)(i), that is, that it has obtained other acceptable employment for the Employee.

[7] I am satisfied that there is no relevant modern award which alters the NES relevant to this application. The provisions as they appear in the Act are therefore relevant to the determination of this matter.

[8] In considering a similar provision to s.120 of the Act in the Clothing Trades Award 1982 a Full Bench of the Commission, in Australian Chamber of Manufactures and Derole Nominees 6 (Derole), found that:

“The provision does no more than provide an avenue by which an employer may apply to the Commission to vary the obligation which otherwise would be imposed by the award. It does not follow from the terms of the clause that an employer coming within its scope will achieve necessarily full or partial relief. The level of relief, if any, to apply in a given case is a matter to be determined as an exercise of discretion in the circumstances of that case.” 7

[9] This has not changed. The Fair Work Commission (the “Commission”) has a discretion to reduce redundancy pay if the requirements set out in s.120(1)(b) of the Act are met. This is clear from the use of the word ‘may’ in subsection 120(2).

Considerations

[10] Commissioner Bissett in Vicstaff Pty Ltd T/A Stratco 8 usefully analysed the relevant considerations for determining if other employment obtained by the employer for the employee is ‘acceptable employment’. Commissioner Bissett quoted the case of Derole where a Full Bench found:

“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 like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 9 (emphasis added)

[11] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd  10(Hot Tuna), a Full Bench of a predecessor of the Commission found that the onus rested on the employer making an application to vary redundancy pay to demonstrate that the alternative employment is acceptable. The determination of that issue may involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and travelling time. The determination of the question of acceptability of the employment however can only be done on the evaluation of the facts proved in evidence or otherwise established.

[12] I adopt the approach of Commissioner Bissett:

“The determination of whether or not alternative employment is acceptable must be determined objectively and not subjectively from the perspective of the employer or employees. 11 That the alternative employment may be rejected does not objectively make it unacceptable nor does the fact that the employment was offered make it, by virtue of the offer, acceptable. Further, that one of the persons out of a group may have accepted the employment does not make the employment acceptable for the others in the group.12 The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.

It is therefore incumbent upon the employer (Vicstaff) in this matter to demonstrate that the alternative employment is acceptable taking into account all matters relevant in such a consideration.” 13

Findings

[13] The following facts are not in contest:

(a) The Employee commenced with Brauntell on 9 April 2018, however Brauntell also recognized the Employee’s previous service from his previous employer, Core Personnel Dot-Com Pty Ltd (in liquidation). The Employee started with Core Personnel on 6 November 2017.

(b) The Employee’s tenure was therefore 2 years, 6 months and 20 days.

(c) The Employee’s employment was terminated by way of redundancy on 15 May 2020.

(d) The Employee was employed as a Supervisor Level 2, QA Weld Inspector and Trainer. The Employee is a qualified and experienced Boilermaker.

(e) Brauntell no longer requires the job done by the Employee to be done by anyone. Brauntell has offered the Employee a full-time permanent position within the business utilising his skills as Boilermaker.

Should I reduce the amount of redundancy payment to a specified amount?

[14] A simple reading of section 120 of the Act suggests that the amount of redundancy pay owing can only be reduced in circumstances where the employer has: (i) found other acceptable employment; or (ii) cannot pay the amount otherwise owing. Brauntell only agitates pursuant to the first limb of the section. Should I find the other employment was acceptable, I have discretion to determine the reduced amount of redundancy pay otherwise owing.

[15] I have determined that the employment found does not constitute “other acceptable employment”, and completely reject the Applicant’s baseless and serf serving assertion that the terms and conditions of the Boilermakers role were “equivalent or better than his existing role”. The reduction in the Employee’s remuneration would have been very significant and in all of the circumstances means that it cannot be regarded as acceptable alternative employment.

[16] In fact the submission of Brauntell as to remuneration involves a sophistry that belies belief. It was submitted by Brauntell as follows:

“1. Ryan would be paid an equivalent hourly rate of $48.0769 per hour (to calculate Ryan’s hourly rate, we divided his annualized salary of $150,000 by 52 weeks and then by 60 hours)

2. Ryan would work 40 hours per week (excluding meal breaks), which is a reduction of approximately 33% of required working hours.”

[17] Quite simply, the Applicant would go from being paid an annualised salary of $150,000.00 per annum, to approximately $100,000.00 for ordinary hours. The use of the 60 hour divisor regarding the existing salary, which I consider was no more than a means to drive down the hourly rate needed as a Boilermaker to allege equivalency, was devoid of basis. I note that in a schedule provided by the Applicant in reply it was asserted that the Employee’s hours of work in his existing position were “40 - 45 hours per week”.

[18] There would also be a significant diminution of seniority, status and responsibility. The Employee would be required to move from a largely office environment to being “on the tools”.

Conclusion

[19] The employment as a Boilermaker offered was not acceptable at the significantly reduced pay rate, and with the significant diminution of seniority, status and responsibility. I do not consider that the Applicant has demonstrated that the employment offered to the Employee is acceptable employment. The application is therefore dismissed.

[20] The Employee should be paid the full redundancy amount prescribed in the NES.

DEPUTY PRESIDENT

Appearances:

Mr A Meissner appeared on behalf of Brauntell MBK Pty Ltd.

Mr R Murphy appeared for himself.

Hearing details:

Sydney 10 July 2020 (telephone)

Printed by authority of the Commonwealth Government Printer

<PR720882>

 1 Section 43 of the Fair Work Act 2009.

 2 Section 44 of the Fair Work Act 2009.

 3 Section 55(1) and (2) of the Fair Work Act 2009.

 4 Section 55(4) of the Fair Work Act 2009.

 5 Section 117 of the Fair Work Act 2009.

 6   AIRC [Print J4144], 12 September 1990 (Derole).

 7   Derole Page 2.

 8   [2010] FWA 3141, Paragraphs 23 to 32.

 9   Derole page 5.

 10 27 IR 226, In particular 230 to 231.

 11   Feltex Australia Enterprise Agreement 2004, Watson SDP, 21 November 2006 [PR974699], at [32].

 12   Derole, page 5.

 13   [2010] FWA 3141, Paragraphs 29 and 30.