CCMG Pty Ltd T/A Central Coast Motor Group
[2022] FWC 657
| [2022] FWC 657 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120—Redundancy pay
CCMG Pty Ltd T/A Central Coast Motor Group
(C2021/7717)
| DEPUTY PRESIDENT EASTON | SYDNEY, 24 MARCH 2022 |
Application to vary redundancy pay for other employment or incapacity to pay – case law and principles regarding exercise of discretion to reduce redundancy pay – whether employer obtained acceptable alternative employment – finding that the employer did obtain acceptable alternative employment for the employee – remedy – discretionary relief – the employee chose between the alternative employment or a full redundancy payment – not acceptable that the severance payment be heavily reduced – application granted.
The Applicant, CCMG Pty Ltd, made Mr Brady’s employment redundant on 10 November 2021. Mr Brady had been employed by the Applicant for nine years and is otherwise entitled to 16 weeks’ redundancy pay under the National Employment Standards. The Applicant has applied to reduce Mr Brady’s severance pay from 16 to 2 weeks because it offered Mr Brady redeployment into a new role.
Legislative Provisions
Within the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act), s.119 provides an entitlement to redundancy pay according to the table provided therein. Section 120 of the FW Act allows the entitlement under s.119 to be reduced to a lesser amount “that the FWC considers appropriate.” Sections 119 and 120 are in the following terms:
“119 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.
…”
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.”
There was no suggestion that CCMG Pty Ltd (CCMG) could not pay the amount, nor was there any controversy that CCMG had “obtained” alternative employment for Mr Brady (insofar as it offered him an alternative position). The central issue in this manner is whether the alternative employment offered to Mr Brady was “acceptable” employment.
The following general principles apply to the present application:
(a)the acceptability of the alternative employment is generally regarded to be an objective question to be answered by reference to objective factors;[1]
(b)the fact that an employee accepts or does not accept the alternative employment is not necessarily determinative of whether the employment was ‘acceptable’ for the purposes of s.120;[2]
(c)the FW Act creates a prima facie right to redundancy pay as a national employment standard if the conditions in s 119(1)(a) are satisfied;[3]
(d)applications under s.120 must be considered from the perspective that any reduction ordered is a derogation from legislated minimum safety net standards that the FW Act otherwise applies to all contracts of employment;[4]
(e)the origin of s.120 lies in the decision of the Full Bench of the Conciliation and Arbitration Commission in Termination, Change and Redundancy Case (1984) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy;[5]
(f)a determination under s.120 is not to be made in a vacuum and must consider factors such as whether the work is of a like nature; whether the location of the employment being offered is not unreasonably distant; whether the pay arrangements comply with award requirements; the hours of work; seniority; fringe benefits; workload and speed; and job security;[6]
(g)the onus lies on the applicant employer to provide evidence as to the provision of acceptable employment;[7]
(h)in determining whether the employment is acceptable the Commission must consider the particular circumstances of the employee(s);[8]
alternative employment might be acceptable even if its terms are less advantageous;[9]
(j)on its face the expression “other acceptable employment” is not confined to employment with another employer ;[10]
(k)section 120(1)(b)(i) is not concerned with the reasonableness of the employer’s conduct, but only with the acceptability of the employment obtained by the employer. The reasonableness of the employer’s conduct might be relevant to the exercise of discretion to provide relief;[11]
(l)for an employer to avail itself of s.120, the other acceptable employment must be ‘obtained’ and offered to the employee while she or he is still employed by that employer;[12]
(m)information and even misinformation provided to employees is irrelevant to the threshold question of whether the alternative employment is acceptable, but might be relevant to the exercise of the Commission’s discretion;[13] and
(n)the employee’s willingness to meaningfully engage with the employer’s various offers of reemployment may affect the exercise of the Commission’s discretion.[14]
The Evidence
Mr Brady was employed as the Fleet Manager at the time his employment ended. As the Covid 19 pandemic unfolded CCMG’s sales volumes dropped significantly, although the profit made per vehicle sold increased significantly. Fleet sales also dropped significantly.
Over a period of two years the number of full-time sales staff employed by CCMG at Wyong reduced from 17 to 10.
Over this time a temporary informal arrangement had been introduced whereby Mr Brady was able to sell retail vehicles and be paid commission under the Fleet Manager commission structure. CCMG says that “the Fleet Manager role was proving hard to justify … as most of [Mr Brady’s] sales were new and used retail vehicles.”
An Isuzu salesperson resigned and CCMG took the opportunity to formally restructure the Fleet Manager role to increase efficiency and provide more relevant responsibilities. CCMG says that the offer of redeployment “mirrored the informal arrangement.”
On 19 October 2021 CCMG told Mr Brady that his position as Fleet Manager was to be “restructured”. The restructure required CCMG to assume new and used to vehicle sales responsibilities and his title was to change to “Fleet Manager/Isuzu Salesperson”. CCMG met and formally consulted with Mr Brady on 3 November 2021, and again on 10 November 2021. Mr Brady’s position was effectively made redundant on 10 November 2021.
The alternative position required Mr Brady to work an additional two days per month in line with the work pattern of other vehicle salespeople working an 11-day fortnight. CCMG says the 11-day fortnight is “essential to the operation of the sales departments, and could not be adjusted despite careful consideration.” CCMG proposed to increase Mr Brady’s base weekly wage by $90 to compensate for the additional two days worked per month. Of the proposed remuneration package CCMG said:
“As a Fleet Manager/Isuzu Salesperson a new commission structure was drafted which would reward Chris fairly. Chris having 9 years of experience in the industry in both retail and fleet sales had all the required competencies to fulfil the jobs tasks required in the new role. CCMG believes Chris would have excelled and reached targeted objectives that would allow him to earn a commission that was equivalent, if not more, than in the redundant role.”
CCMG says the offer of redeployment was fair and appropriate, considering Mr Brady’s seniority, location, responsibility and remuneration. The alternative position is said to have allowed Mr Brady to maintain his title and sense of seniority. It was also suggested that the Fleet Manager position was different to other management positions because Mr Brady “never assumed responsibilities or tasks that were comparable to the rest of our managers within the dealership.” CCMG cites as an example that the Fleet Manager position was not responsible for a team of staff and was not accountable to a budget.
Mr Brady was paid four weeks’ pay in lieu of notice and CCMG continued to make car lease payments on Mr Brady’s behalf until 26 November 2021.
Mr Brady gave evidence that he was the Sales Manager at the Gosford Nissan branch of CCMG’s business until January 2020, when he was then tasked to assist the Mazda team as a Floor Manager until CCMG could find another position for him. For almost all of his employment with CCMG, Mr Brady worked an 11-day fortnight. It was only in his role as Fleet Manager, i.e. his final position, that Mr Brady worked 10 days per fortnight. Mr Brady has a young family and, understandably, preferred to work 10 days per fortnight rather than 11 days.
In May 2020 CCMG asked Mr Brady to change location and work at Wyong as the Fleet Manager.
Mr Brady says that as the Fleet Manager he did multiple tasks “above and beyond the role of a typical Fleet Manager” in order to accommodate a lean sales team. He says he worked predominantly alongside the Nissan Manager who “lent on [his] experience as a previous Nissan Sales Manager.”
Mr Brady cited a number of instances where he says he suffered “unfair treatment”, which caused him to distrust the bona fides of the alternative position offered to him. He says in this regard:
“In the past I have had multiple positions, however I did not receive new terms of employment when I changed each position, and I haven’t had any staff appraisals within the past four years.
-Sales Person (Wyong Nissan) >
-Sales Person (Wyong Mazda) >
-Floor Manager (Wyong Mazda) >
-Sales Person with Floor Manager Title (Wyong Mazda) >
-Sales Person (Gosford Mazda) >
-Floor Manager (Gosford Mazda) >
-Sales Manager (Gosford Nissan) >
-Floor Manager (Gosford Mazda) >
-Fleet Manager (Wyong Dealership – Multi Franchise).
…
In regards to the situation that had led to my redundancy, I have experienced this same situation previously and I know from experience it is not an equivalent role with similar or better benefits, working conditions or hierarchy. It led to lesser earning potential and performing tasks that were not required of the role I left, the seniority is challenged by the manager and in the short while before I was made redundant it was unclear on where I stood if I continued employment as an Isuzu Salesperson…
I believe there are protections in place that protect employees from employers changing roles, duties, hours required to work, to prevent rash or knee jerk decisions if they are not prepared to replace a staff member once they resign. There is a requirement to pay staff an amount based on their years of service, due to having worked at CCMG for over 9 years, CCMG have said, I am entitled up to 16 weeks.”
Mr Brady is firmly of the view that the alternative position offered to him was in truth an Isuzu salesperson role with a different title. He says:
“The truth is when Brodie Palmer presented the proposed role it was always presented solely of that of an Isuzu Sales person with my previous responsibilities and rights being diminished with the hope that in the future a manager’s position would become available.”
Mr Brady says that after achieving record sales in 2021 (excluding lockdown months) CCMG made a business decision to restructure sales commissions of all sales staff, telling staff that “as the times change, previous structures in place are no longer viable.”
CCMG said that it restructured Mr Brady’s role in the context of the history of the business described above, as part of a strategy to keep Mr Brady in employment. CCMG submits that Mr Brady is not eligible for genuine redundancy pay on the basis that he was offered redeployment that was reasonable for his experience and skills, remuneration, seniority and working condition expectations. CCMG has applied to have the redundancy pay reduced to 2 weeks, it says, “as a goodwill gesture.”
Consideration
There being no contest that Mr Brady’s position was made redundant, that he was otherwise entitled to redundancy payments under s.119 of the FW Act, and also that CCMG did obtain other employment for Mr Brady, the two matters to be determined are:
whether the alternative employment was “acceptable” within the meaning of s.120; and if so
(ii)whether to exercise my discretion to reduce the amount of redundancy pay.
I am satisfied that the conditions of employment attached to the alternative position were inferior to Mr Brady’s conditions of employment as the Fleet Manager.
It is impossible to say with any precision whether Mr Brady’s total remuneration in the alternative position would have been more or less than the remuneration he could have earned if he remained as the Fleet Manager. Commission payments were a significant portion of the remuneration for each position. As such, any comparison between the two positions can only be a comparison of estimates. I am satisfied on the evidence that if Mr Brady had accepted the alternative position his annual total remuneration might have reduced by approximately 10%.
If Mr Brady had accepted the alternative position he would have returned to working an industry-standard 11-day fortnight. CCMG says it offered Mr Brady an increase in his base salary of $90 per week to compensate for this change. I am prepared to accept that overall, the change back to an 11-day fortnight was detrimental for Mr Brady. I do not think, however, that the detriment to Mr Brady is large in the circumstances. As referred to above, Mr Brady worked an 11-day fortnight for almost all of his employment with CCMG.
As the Covid 19 pandemic unfolded, and CCMG made changes to its work arrangements to deal with the challenges to its business, CCMG took a number of appropriate measures to keep positions available for its staff. The informal arrangement whereby Mr Brady was able to sell retail vehicles for commission is one example.
CCMG submitted that the restructure actually only formalised the informal arrangement that had been in place for some time. On the other side of the same coin, Mr Brady submitted that the restructure was an opportunistic decision to demote Mr Brady to an Isuzu salesperson role with a different title.
I am inclined to favour CCMG’s description of the restructure and of the alternative position created for Mr Brady. One feature of the restructure and of the alternative position offered to Mr Brady is that he would no longer have been the manager of only a discrete area of CCMG’s business. That is, Mr Brady perceived the alternative position to have less seniority, less management responsibility, and more work on direct sales.
It is important to note that Mr Brady would have retained the responsibility for fleet sales, and therefore the opportunity to pursue that line of business.
There appears to be a significant degree of fluidity within CCMG’s business and also in Mr Brady’s career progression over his time with CCMG. I consider this to be relevant to the question of whether the alternative position offered to Mr Brady was objectively acceptable. If, for example, Mr Brady had been the Fleet Manager for a longer period of time and had not worked in the role of a salesperson for a long period of time, then the alternative position offered to him would have been less acceptable, perhaps even unacceptable. The proposed alternative employment was sufficiently similar in its role and functions to constitute acceptable employment, when considered in light of Mr Brady’s employment history.
Accordingly, I find that CCMG obtained other acceptable employment for Mr Brady for the purposes of s.120(1)(b)(i) of the FW Act.
Discretionary relief
Section 120(2) of the FW Act gives the Commission considerable latitude in the relief it can provide if a threshold requirement in s.120(1) is met.
One concerning feature of this matter is the fact that when CCMG met with Mr Brady on 3 November 2021 and discussed with him the restructure/alternative position, CCMG indicated to Mr Brady that if the alternative position was rejected then Mr Brady would be entitled to 16 weeks’ severance pay. The letter dated 10 November 2021 advising Mr Brady of the termination of his employment also refers to 16 weeks’ severance pay.
The choice presented to Mr Brady was to either take the new position or exit employment with a full redundancy package. It is quite possible that Mr Brady might have chosen to stay if the severance payment due to him was less.
It would not be ‘appropriate’, for the purposes of s.120(2), for Mr Brady’s severance entitlements to be heavily reduced in the circumstances. I accept that the foundation for the Commission’s jurisdiction is the offering/obtaining of acceptable alternative employment rather than the employee’s decision to reject the employment offered. It is inescapable however, that Mr Brady’s decision to reject the alternative employment was significantly influenced by the amount of severance he expected CCMG would pay.
I strongly doubt that CCMG deliberately withheld important information or deliberately misled Mr Brady. In fact to the contrary, I am very satisfied that CCMG genuinely tried to provide an alternative position for Mr Brady that it thought would keep him in employment. However, the fact is that Mr Brady made his decision without full information.
If Mr Brady had known that CCMG would make an application to the Commission to reduce the severance payment, he could have made a more informed decision about the alternative position offered to him. It is important to note in this regard that at the time the employment ended neither CCMG nor Mr Brady could have known the outcome of the s.120 application. Mr Brady, however, would have at least had a better idea of the potential risk that he might ultimately receive something less than the full entitlement available under s.119.
In all the circumstances it is appropriate to reduce the amount of redundancy pay from 16 weeks to 12 weeks. Mr Brady had worked for CCMG for a considerable period and the severance payment to him should reflect his longevity. The alternative position was acceptable and did provide a proper alternative for Mr Brady. The reduction should also reflect CCMG’s genuine attempts to mitigate the effect of making Mr Brady’s original position redundant.
An order to that effect will now be issued.[15]
DEPUTY PRESIDENT
Appearances:
Mr B Palmer, for the Applicant
Mr C Brady, for the Respondent
Hearing details:
2022.
Sydney (By Video using Microsoft Teams)
January 27.
[1] Clothing and Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226, noting the observations in Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 at 451-2, [2015] FCAFC 189 at [48]-[51]
[2] Get Started Pty Ltd v Matthew Lee[2018] FWC 3295 at [28].
[3] Berkeley Challenge Pty Ltd v United Voice (2020) 297 IR 397, [2020] FACFC 113 at [14].
[4] Berkeley Challenge Pty Ltd v United Voice (2020) 297 IR 397, [2020] FACFC 113 at [15].
[5] Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441, [2015] FCAFC 189 at [12], citing FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia (2015) 232 FCR 1 at 4, (2015) 250 IR 476 at 479, [2015] FCAFC 90 at [9]ff.
[6] Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 at 452, [2015] FCAFC 189 at [52]-[54].
[7] Brims Tweed Frame & Trusses Pty Ltd v Jensen (2012) 227 IR 45, [2012] FWA 9376.
[8] Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 at 452, [2015] FCAFC 189 at [54].
[9] Application by Ikon Administration Pty Ltd [2019] FWC 5269 at [22] citing Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai[2013] FWC 1327 at [9] and NUW v Tontine Fibres [2007] AIRCFB 101.
[10] Broadlex Services Pty Ltd v United Workers' Union (2020) 296 IR 425 at 435, [2020] FCA 867 at [49].
[11] Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 at 453, [2015] FCAFC 189 at [60].
[12] Application by Electricity Wizard Pty Ltd T/A Electricity Wizard Pty Ltd [2018] FWC 4556 at [24].
[13] Australian Commercial Catering Pty Ltd v Fair Work Commission (2015) 235 FCR 441 at 454, [2015] FCAFC 189 at [64].
[14] Application by Spotless Services Australia Limited [2016] FWC 4505 at [90].
[15] PR739660.
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