CAE Australia Pty Ltd v Mr Jim Zekants and Mr Roy Edwards
[2012] FWA 7992
•4 OCTOBER 2012
[2012] FWA 7992 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
CAE Australia Pty Ltd
v
Mr Jim Zekants and Mr Roy Edwards
(C2012/4706)
VICE PRESIDENT WATSON | SYDNEY, 4 OCTOBER 2012 |
Whether termination due to redundancy - whether termination at initiative of employer - whether entitlement to redundancy pay exists - application to vary redundancy pay - Fair Work Act 2009, ss.119, 120.
Introduction
[1] This decision concerns an application by CAE Australia Pty Ltd (CAE) pursuant to s.120 of the Fair Work Act 2009 (the Act) to vary the redundancy pay obligation in s.119 of the Act with respect to two of its former employees, Mr Roy Edwards and Mr Jim Zekants (the employees). Both employees left the employment of CAE after accepting employment with CAE’s client, Boeing Defence Australia (Boeing) after the roles of the employees were in-sourced. CAE is unsure whether the departure of Mr Edwards and Mr Zekants gives rise to an obligation to pay redundancy pay. In the event that it does CAE seeks an order that the amount of redundancy pay should be waived or reduced in the circumstances.
Background
[2] Mr Edwards and Mr Zekants were employed by CAE as Avionics Instructors for a period of approximately five years. During that period CAE had a contract with Boeing to provide flight instructor services and both employees were deployed to perform work exclusively on that contract for Boeing.
[3] Following a decision in 2012 by Boeing to in-source the roles performed by Mr Edwards and Mr Zekants, Boeing terminated the contract with CAE and offered employment to both employees on the same training programs on which they had previously worked. On 17 July 2012, once it became clear that Boeing was not going to extend the contract with CAE, CAE offered the two employees ongoing employment as IOS Operators on the same terms and conditions of employment.
[4] The employees considered that the offers to work with Boeing were superior in a number of respects and accepted the Boeing offers. They ceased work for CAE on 24 July 2012 and commenced employment with Boeing on 25 July 2012.
[5] Documentation regarding these circumstances is scant. It appears that no notice of termination was issued by CAE and no written resignations were given by the employees to CAE.
[6] In these circumstances it is necessary to consider whether s.120 of the Act applies. The first issue is whether the employees are entitled to be paid an amount of redundancy pay because of s.119 of the Act: s.120(1)(a). If so, I am required to consider whether the other circumstances in s.120(1) are present - in this case whether the employer obtained other acceptable employment for the employees: s.120(1)(b).
The relevant legislation
[7] Section 119 of the Act relevantly provides:
“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.”
[8] Section 119 goes on to provide the amount of redundancy pay by reference to the employee’s period of continuous service with the employer.
[9] Section 120 provides as follows:
“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.”
[10] The Act contains other exclusions from the obligation to pay redundancy pay and permits awards to specify exceptions to the application of s.119.
The Entitlement to Redundancy Pay
[11] It will be seen from the terms of s.119 set out above that the pre-requisites for an entitlement to be paid redundancy pay include termination of employment at the employer’s initiative and the employer’s decision to be based on the circumstance that the employer no longer requires the job done by the employee to be done by anyone. These are essentially questions of fact to be determined on the evidence before the court or tribunal called upon to determine these questions.
[12] On the evidence before me I find that CAE did not terminate the employment of the employees. Rather, it sought to retain them in employment by offering them alternative roles. The employees nevertheless chose to accept employment with Boeing thereby bringing their employment with CAE to an end. They knew that they could no longer work with CAE if they accepted the Boeing offers. It is not to the point that the CAE roles were offered late in the piece, that the Boeing roles were more attractive or that they thought that the choice was clear. They chose to accept the Boeing offers and in doing so, brought about the termination of their employment with CAE. The employees were not terminated at the employer’s initiative.
Conclusion
[13] For the above reasons I find that the first requirement for a redundancy pay entitlement in s.119 is not present. It follows that s.120 of the Act has no application to this case. There can be no order to reduce an entitlement where no entitlement under s.119 arises. The application is therefore dismissed.
VICE PRESIDENT WATSON
Appearances:
G. Karp on behalf of CAE Australia Pty Ltd
R. Edwards on his own behalf
J. Zekants on his own behalf
Hearing details:
2012.
Sydney (by telephone)
August, 15.
Final written submissions:
Submission by CAE Australia Pty Ltd, 23 August and 6 September 2012.
Submission by Mr Edwards and Mr Zekants, 29 August 2012.
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