Brims Tweed Frame & Trusses Pty Ltd v Phillip Jensen

[2012] FWA 9376

[2012] FWA 9376

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment

Brims Tweed Frame & Trusses Pty Ltd
v
Phillip Jensen; Travis McGiugan
(C2012/3888)

COMMISSIONER BULL SYDNEY, 2 NOVEMBER 2012

Redundancy - application to vary NES entitlement, whether employer has obtained other acceptable employment for employees.

[1] In this matter, Brims Tweed Frame & Trusses Pty Ltd (the Applicant) seeks relief from its statutory obligation to make redundancy payments to two of its previous employees; Phillip Jensen and Travis McGuigan (the Respondents).

[2] The application originally included two other previous employees; however, the Tribunal was advised that the issues between those employees and the Applicant have been resolved.

[3] The application is made pursuant to s.120(2) of the Fair Work Act 2009 (the Act) which grants the Tribunal a discretion to reduce or remove an entitlement to redundancy pay should the Tribunal consider it appropriate. Section 120(2) is couched in the following terms:

120(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.

[4] Section 120(2) of the Act applies where the terms of s.120(1) are met:

120(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.

(my underline)

[5] The Applicant does not submit that it cannot pay the amount of redundancy due, but argues that it has obtained other acceptable employment for the Respondents.

[6] Section 119 sets out a minimum entitlement to redundancy pay as a National Employment Standard for national system employees. The exclusions from redundancy pay provided for in s.121 of the Act were not raised in this application.

[7] The Applicant’s case was presented by Mr Charles O’Brien, a solicitor with the Affordable Legal Company Pty Ltd. Mr O’Brien called two witnesses; Ms Debra Gilles, a Director of the Applicant and Mr Enzo Ciuffetelli, the Applicant’s Sales Manager.

[8] The Respondents gave evidence and represented themselves before the Tribunal.

Applicant’s submissions

[9] The Applicant submitted that it was necessary to outsource work from its Truss Plant due to the serious illness of its Marketing Director, Mr Mark Gilles, who was responsible for the operations of the Truss Plant. As it was unlikely Mr Gilles would be able to return to manage the Truss Plant it was decided to lease the plant and outsource the work to one of its competitors.

[10] On 24 May 2011, the Applicant entered into an agreement with Custom Truss and Frame Pty Ltd (Custom Truss) to lease the Applicant’s plant and to carry out specified work. The Applicant states that this agreement was subject to Custom Truss offering work to those employees of the Applicant who may be affected by the outsourcing.

[11] The application submitted by Mr O’Brien on behalf of Brims Tweed Frame & Trusses Pty Ltd included a list of grounds justifying the reasons why the Tribunal should order that no redundancy pay is required to be paid to the Respondents.

[12] The Applicant submitted in its written application, that it should not be liable for redundancy payments because the Respondents have chosen to accept an offer of employment from a new employer rather than accepting an offer from the Applicant. The Applicant states that it is unreasonable for the Respondents to simply reject offers of employment from the Applicant in order to claim redundancy pay. In particular, the Applicant states that Mr Jensen had said that he no longer wished to be employed in the industry.

Debra Gilles

[13] Ms Gilles gave evidence as a Director of the Applicant. Ms Gilles stated that she was responsible for the management of all aspects of the business conducted by the Applicant. Ms Gilles visited the Truss Plant on 19 May 2011 and advised the workforce that they would most likely be outsourcing the work due to Mr Gilles’ health. On 23 May 2011, Ms Gilles confirmed to the Truss Plant workforce that the work had been outsourced to Custom Truss as of 1 June 2011.

[14] On 24 May 2011, Ms Gilles spoke to the Applicants and told them that Mr Dave Wareham from Custom Truss would be speaking to them about working for Custom Truss. None of the Respondents ever advised Ms Gilles that they could not get alternate employment.

Enzo Ciuffetelli

[15] Mr Ciuffetelli is the Sales Manager of the Brims Group. Mr Ciuffetelli stated that on 24 May 2011, Ms Gilles went to the Truss Plant and told the employees that Custom Truss was taking over production at the Truss Plant and those employees not remaining with the Brims Group would be offered employment by Custom Truss.

[16] On 26 May 2011, Mr David Wareham of Custom Truss came to the Truss Plant and spoke to the employees. On 7 June 2011, the Production Manager for Custom Truss telephoned and said he wanted to offer Mr Jensen a job. Mr Ciuffetelli telephoned Mr Jensen and passed on this message. Mr Jensen replied by stating that Custom Truss have offered me contract work but I am not taking the job as I am looking to get out of the industry.

Respondent’s submissions

[17] Both Respondents gave evidence to the Tribunal that the Applicant never offered, arranged or obtained alternate work for them with Custom Truss or any other employer following their redundancies.

[18] Both Mr Jensen and Mr McGuigan told the Tribunal that they personally knew the Director of Custom Truss, Mr David Wareham and maintained that despite their best efforts to obtain employment with Custom Truss, they were never offered employment and had been told by Custom Truss that no employment was available.

Phillip Jensen

[19] Mr Jensen tendered a witness statement and gave evidence before the Tribunal. Mr Jensen commenced employment with the Applicant in February 2003 and was the Chief Estimator/Truss Detailer when made redundant.

[20] Mr Jensen’s evidence was that in mid to late May 2011, Ms Gilles visited the Truss Plant and spoke to staff about a possible shut down of the plant, and said she would provide further details at a later date.

[21] On 30 May 2011, Mr Jensen was called to Mr Ciuffetelli’s office and told by Ms Gilles that the Truss Plant would stop production as of 1 June 2011 and that his services would no longer be required. Mr Jensen was told he would possibly work up until 17 June 2011, which would be confirmed by Ms Gilles at a later date. Mr Jensen says that he received a written note stating his finish date was 20 June 2011. The note made no reference to further employment with either the Applicant or Custom Truss. 1

[22] Mr Jensen disputed that Ms Gilles ever told him that Custom Truss would offer him employment (PN 401).

[23] Mr Jensen stated in his evidence that he has known Mr Wareham for 20 years and that he never received a job offer from Mr Wareham or Custom Truss (PN 302). Mr Jensen’s evidence was that he never said that he wanted to get out of the industry (PN355).

Mr McGuigan

[24] Mr McGuigan tendered a witness statement and gave evidence before the Tribunal. Mr McGuigan was employed by the Applicant as a full-time Timber Wall Frame and Truss Detailer/Estimator and commenced his employment on 19 January 2009. Three weeks before his redundancy he was told his employment would be reduced to working four days a week.

[25] Mr McGuigan stated that in mid to late May 2012, Ms Gilles attended the Truss Plant and told staff of a possible shut down of the plant and would provide further details at a later time. On 30 May 2011, he was called to Mr Ciuffetelli’s office where Ms Gilles told Mr Ciuffetelli and himself that the Truss Plant would stop production on 1 June 2011 and his services would not be required after 17 June 2011. Mr McGuigan stated that there was no mention of alternate employment within the Applicant’s operations or any other business taking over the Truss Plant.

[26] On enquiring with Ms Gilles as to his redundancy pay Ms Gilles responded that he was not entitled to any redundancy pay. He subsequently lodged a complaint with the Fair Work Ombudsman.

[27] Mr McGuigan disputed completely any notion that the Applicant had obtained other acceptable employment for himself. Mr McGuigan stated that he received a phone call from Mr Wareham whom he had known for six to seven years in mid July 2011, offering some contract work. Mr Wareham offered him some contract work because he hadn’t been paid redundancy from his employer and Mr Wareham knew he was struggling (PN480). He undertook this work as a contractor through his business which he completed within one week, no further contract work was ever offered. He stated that he has been asking Mr Dave Wareham for five months for work but was told there was no position available (PN 150). Mr McGuigan sent an email to Custom Truss asking if any more contractor work was available could they send it his way, but none has been received (PN 487).

[28] Mr McGuigan stated that he had to ask the Applicant for a letter of separation so he could start his mortgage protection as he had no other job to go to (PN 431).

[29] Mr McGuigan stated the Applicant never ensured that he was offered other acceptable employment with Custom Truss or within the Brims Group. Mr McGuigan’s evidence was that Ms Gilles only spoke to him regarding the plant closure and his termination of employment. Mr McGuigan disputes any reference made by Ms Gilles to seeking outside employment for the Applicant’s employees. Mr McGuigan’s evidence was that he was told:

“...the doors were being closed and that was it. I was not offered any job, any position, whatsoever.” (PN 482).

[30] When Mr Wareham came to the Truss Plant he spoke to Mr McGuigan personally but said nothing about offering him work at Custom Truss (PN 456).

[31] Mr McGuigan’s evidence was that as a result of not being offered a job he had to rent out his house and take over a caretaker’s role “...just to live, have a roof over my head.” (PN514).

Conclusion

[32] Redundancy payments are intended to compensate for the loss of non transferrable credits such as sick and long service leave and other entitlements based on length of service and the inconvenience and hardship imposed on employees. (Termination Change and Redundancy Case) 2

[33] It is a serious step to make an order to limit or remove an employee’s statutory entitlements to redundancy pay. The employer must demonstrate that they have obtained other acceptable employment for the employees concerned. Having obtained such employment, whether the employees’ then chose to avail themselves of the opportunity provided is beyond the control of the Applicant.

[34] It is well established in this Tribunal that the onus lies on the employer who seeks to activate the exemption from redundancy payment obligations (Clothing and Allied Trades Union v Hot Tuna) 3 to its employees.

[35] To establish the acceptability of alternative employment, the test is an objective one, involving a consideration of matters such as hours of work, pay levels, recognition of previous service, fringe benefits, travel to job, workload, job security and other matters. 4

[36] In this application the employer argues that it has obtained other acceptable employment or at least that it took positive steps to obtain such employment. On this basis Mr O’Brien submits that the Applicant meets the test in Derole Nominees Pty Ltd and ACM 5, so that it can be said that the Applicant was a strong moving force towards the creation of the opportunity for the Respondents to gain acceptable alternative employment.

[37] In the Applicants initial application a number of grounds were put forward to justify the exemption.

[38] Ground (1) stated that the circumstances did not constitute a “genuine redundancy” as the employer required the job done by the Respondents to continue to be done by Custom Truss & Frame Pty Ltd, to whom the Truss Plant was leased, or to continue employment within the Brims Group on terms which were not to the disadvantage of the Respondents.

[39] The evidence adduced by the Applicant, demonstrated that the work previously performed by the Respondent employees was no longer performed by the Applicant. There was no suggestion during the proceedings that the Respondents were not genuinely made redundant. The Respondents were told their positions were redundant and they were not offered alternate work within the Brims Group (the Applicant).

[40] Ground (2) of the application referred to an attached statement (B) from Mr David Wareham “...who attests to having offered suitable terms of employment to the Respondents on 26 May 2011 as well as two other employees of the Applicant”. There was no statement from Mr Wareham attached to the application and none was presented at the hearing. Mr Wareham was not called to give evidence.

[41] Ms Gilles in cross examination stated that Mr Wareham had “... reneged on signing it.”(PN 115).

[42] Mr Jensen attached to his submissions an email dated 16 July 2012, sent to him from Mr Wareham, which stated that he had never offered Travis McGuigan or Phillip Jensen employment at Custom Truss, while acknowledging that Mr McGuigan performed one job on a contract basis. Mr O’Brien submitted that there was no proof that this email actually came from Mr Wareham.

[43] The Applicant’s position in respect of Mr Jensen at least, has varied over time. Mr Jensen submitted that he had been given three different reasons why he was not entitled to receive redundancy pay (PN319).

[44] On 1 June 2011, Mr O’Brien wrote to the Applicant on behalf of the Affordable Legal Company and stated that Mr Jensen was a casual employee and was excluded from redundancy pay under the NES. A copy of this correspondence was then given to Mr Jensen by the Applicant.

[45] On 5 September 2011, Mr O’Brien in a letter to the Fair Work Ombudsman stated that “... he never ceased working for the company until he resigned voluntarily.”

[46] The application is now pursued on the basis that Mr Jensen was made redundant but offered acceptable alternate employment by Custom Truss which was arranged and facilitated by the Applicant.

[47] While the Applicant submits that it had arranged other acceptable employment through Custom Truss, Custom Truss did not appear at these proceedings. The Tribunal has no written employment offers to the Respondents from Custom Truss or any other employer before it.

[48] The Applicant produced no evidence, nor made any submissions regarding why the alternate employment obtained was acceptable. Matters referred to above, such as hours of work, travel to new job, pay levels, fringe benefits, workload, job security, recognition of previous service were not raised in the Applicant’s submissions or evidence. This suggests support for the position of the Respondents, being that no other employment was obtained by the Applicant for the Respondents. On this basis there can be no consideration of whether the alternate employment is “acceptable” as it had not been offered or obtained.

[49] Mr O’Brien submitted that the Applicant had done its best to find employment for its staff and has endeavoured to do the right thing (PN525). Even if I accept the submission as put it is not the statutory test that must be met for the Tribunal to exercise its discretion to waive or reduce the Respondents’ statutory redundancy pay entitlements.

[50] Despite the submission of the Applicant, there was no evidence before the Tribunal that the Applicant has obtained other employment for the Respondents or was a moving force behind the creation of an opportunity to gain alternate employment. Ignored in the Applicant’s submissions and evidence was any attempt by the Applicant to demonstrate that the illusory employment obtained, was acceptable by way of reference to the terms and conditions under which it was to be performed.

[51] I accept the position as put by the Respondents, being that they were not offered alternate employment with Custom Truss. As such, whether the illusory employment was acceptable is not a matter I need address.

[52] The Applicant has not satisfied the Tribunal that the discretion available to reduce or eliminate its redundancy pay obligations to the Respondents should be exercised. The claim is accordingly dismissed.

COMMISSIONER

Appearances:

Mr C O’Brien Solicitor on behalf of the Applicant.

Mr T McGuigan on his own behalf.

Mr P Jensen on his own behalf.

Hearing details:

2012.

Brisbane:

September 24.

 1   Exhibit RJ1, Attachment B, page 1.

 2   AIRC Print F6230 at p.50.

 3 (1988) 27 IR 226.

 4   Ibid at 230-231.

 5 (1990) 140 IR 123.

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