Central Norseman Gold Corporation Ltd v Kempton
[2010] FWA 5316
•21 JULY 2010
[2010] FWA 5316 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Central Norseman Gold Corporation Limited
v
Mr Murray Lee Kempton
(C2010/2748)
Mining industry | |
COMMISSIONER WILLIAMS | PERTH, 21 JULY 2010 |
Application to vary redundancy pay.
[1] This is an application made pursuant to s. 120 of the Fair Work Act 2009 by Central Norseman Gold Corporation Limited (the applicant). The respondent is Mr Murray Kempton.
[2] Relevantly Section 119 and 120 of the Act are as follows:
Subdivision B—Redundancy pay
s. 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.
Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.
Amount of redundancy pay
(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:
Redundancy pay period | ||
Employee’s period of continuous service with the employer on termination | Redundancy pay period | |
1 | At least 1 year but less than 2 years | 4 weeks |
2 | At least 2 years but less than 3 years | 6 weeks |
3 | At least 3 years but less than 4 years | 7 weeks |
4 | At least 4 years but less than 5 years | 8 weeks |
5 | At least 5 years but less than 6 years | 10 weeks |
6 | At least 6 years but less than 7 years | 11 weeks |
7 | At least 7 years but less than 8 years | 13 weeks |
8 | At least 8 years but less than 9 years | 14 weeks |
9 | At least 9 years but less than 10 years | 16 weeks |
10 | At least 10 years | 12 weeks |
s. 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.
Background
[3] The evidence of the applicants Mine Manager Mr Doust is that Mr Kempton commenced work on 23 November 1993 at the Central Norseman Gold Mine which comprises a number of related mines including the Bullen Mine and the OK Decline Mine. The Central Norseman Gold Mine has been owned and operated by the Applicant since 1935.
[4] Immediately prior to 1 May 2007 the Applicant was a subsidiary of Croesus Mining NL (Croesus) and the mine employees, including Mr Kempton, were employed by Croesus. The Applicant was purchased from Croesus by Davos Pty Ltd (which changed its name to Norseman Gold Pty Ltd). The Applicant became a wholly owned subsidiary of Norseman Gold Pty Ltd effective as at 1 May 2007.
[5] On 1 May 2007 the mine employees ceased their employment with Croesus and were employed by the Applicant on the understanding that their accrued employment benefits would continue to accrue upon commencement of employment with the applicant
[6] By a letter of offer of employment dated 1 May 2007 and an Australian Workplace Agreement of the same date, Mr Kempton was employed in the position of Mine Operator by the Applicant. Mr Kempton worked in this position in the role of "airleg washdown" in the airleg division of the Bullen Mine (the previous position).
[7] This history of Mr Kemptons employment with some non critical exceptions is largely consistent with the evidence of Mr Kempton.
[8] In the second half of 2009 it became apparent to the Applicant that the Bullen Mine was not operating efficiently and did not have the gold resources or revenue from gold production to support the number of employees and associated cost base.
[9] A decision was made by the Applicant to restructure the Bullen Mine. The intention of the management was to prevent the short term closure of the Bullen Mine and for it to remain in operation, albeit at a reduced level of activity.
[10] The restructure involved a reduction in operating equipment and production levels for the Bullen Mine and consequently a reduction in employees. As a result of the restructure several divisions at the Bullen Mine were downsized including the airleg division. Consequently several positions within the airleg division were no longer required. The number of airleg operators in the Bullen Mine has been halved between December 2009 and March 2010. Both of the associated "airleg washdown" roles, including Mr Kempton's previous position, were no longer required.
[11] In December 2009 the Applicant employed 16 people in the airleg division including Mr Kempton. That number has been reduced over time to 8 employees in March 2010. All employees whose positions were involved in the restructure were offered alternative positions either at Bullen Mine or at two other mines operated by the Applicant.
[12] Accordingly a decision was made to offer Mr Kempton the alternative position of Mine Operator (Bogger Operator) at the Applicant's OK Decline Mine (the alternative position). A letter dated 30 December 2009 sent by the Applicant to Mr Kempton advised of the restructure and the intention to redeploy him to the alternative position on 15 January 2010.
[13] Mr Kemton did not accept the offer of the alternative position although it was offered on a number of occasions to him. Ultimately he was terminated on the basis that his former position was no longer required.
The issues
[14] The issue between the parties is whether the offer of employment amounted to “acceptable alternative employment” within the terms of s 120 for Mr Kempton and if it was whether the amount of redundancy pay payable should be reduced.
Jurisdiction.
[15] There is disagreement as to which industrial instrument applied to Mr Kempton’s employment at the time of his termination. The applicant says it was an AWA whilst Mr Kempton asserts it was a pre reform Certified Agreement.
[16] However both parties submit that there is jurisdiction here because on 1 July 2009 each of the instruments became a 'transitional instrument' by virtue of Item 2 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the FW Transitional Act).
[17] The FW Transitional Act at Item 23(1) provides that:
To the extent that a term of the transitional agreement is detrimental to an employee, in any respect when compared to an entitlement of the employee under the National Employment Standards, the term of the transitional instrument is of no effect. (Item 23(1)).
[18] Under those provisions (the 'no detriment rule') an employee is entitled to the most beneficial combination of provisions drawn from the National Employment Standards (NES) in the Fair Work Act 2009 (FW Act) and any applicable transitional agreement. The comparison between the NES and any applicable transitional agreement is a 'line by line' comparison 1.
[19] Both Transitional instruments, the AWA and the pre reform certified agreement provide for up to 16 weeks pay for 10 years and over of continuous service in the event the employer terminates the employment because it no longer requires the job which Mr Kempton had been doing to be done by anyone. This entitlement is superior to the NES and so applies to Mr Kempton.
[20] Both the AWA and the Pre reform Certified Agreement provide that the severance payment entitlement shall not apply if the employer finds reasonable acceptable alternative employment as an alternative to redundancy.
[21] However by comparison under the NES an employee who is otherwise entitled to redundancy pay upon being made redundant in accordance with Section 119 remains entitled to redundancy pay subject to an employer making an application to FWA and FWA making a determination that the employee is only entitled to redundancy pay reduced to a specified amount under s 120(2).
[22] Under the 'no detriment rule', it is submitted by both parties that the terms in the transitional instruments dealing with acceptable alternative employment have no effect because s 120 of the NES is more beneficial to an employee in that the question of whether they had been offered acceptable alternative employment is determined by FWA, rather than the employer unilaterally. In addition under the NES the employer must make an application for the reduction of redundancy pay, whereas under the transitional instruments the employee would have to bring proceedings for enforcements of the agreement if he or she wished to challenge the employer not providing redundancy pay on the basis of finding the employee acceptable alternative employment.
[23] On this basis it is submitted the application under s. 120 is within jurisdiction.
[24] The above submission on jurisdiction was put initially by the applicant but is accepted by Mr Kempton and applies equally whichever of the two transitional instruments applied at the time of termination. Given these submissions I accept the s 120 application can be determined as sought in this instance.
Acceptable alternative employment
[25] The parties provided various authorities that canvassed the issue of acceptable alternative employment.
[26] As noted by the Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 2 at 124:
"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 provisions 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 elections 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."
[27] The determination of whether the position offered was acceptable alternative employment must be determined objectively and not subjectively from the perspective of the employer or the employee.
[28] As was explained by Watson SDP in Feltex Australia Enterprise Agreement 2004 3 at [89]
“…acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”
[29] That the alternative employment may be rejected by employees does not objectively make it unacceptable.
[30] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 4 a Full Bench of the Commission found that the determination of whether alternative employment is acceptable will involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.
[31] In National Union of Workers v Linfox Australia Pty Ltd 5 Vice President Watson considered the following criteria:
(a) the employee's skills, experience and physical capacity;
(b) the rates of pay, hours of work, duties and conditions of employment associated with the proposed job;
(c) whether or not continuity of employment is provided to the employee;
(d) the extent of any additional travel distances from home to the new place of work and whether the employee has to substantially alter their method of travelling to and from work in order to attend to duty; and
(e) the level of any compensation.
[32] In this case the applicant explained the alternative position offered to Mr Kempton involved 12 hour shifts organised in a rotating roster of 7 days on/3 days off followed by 7 days on/4 days off. In contrast the respondent’s previous position involved 10 hour shifts Monday to Friday with weekends off in accordance with the shift roster at the Bullen Mine.
[33] The shift rate offered to Mr Kempton in the new position was the same as the shift rate in his old position.
[34] In Mr Kempton's previous position he was entitled to receive $106,888 per annum and in the alternative position offered to Mr Kempton he would have been entitled to receive $99,899 per annum.
[35] It is submitted that to the extent that the alternative position offered to Mr Kempton involved any detrimental alteration that detriment was marginal and does not make the offered position unacceptable. This is particularly so taking into account the particular circumstances at the Applicant's operations, namely that Mr Kempton was already being paid well above the other employees performing similar work, the right of the Applicant to redeploy Mr Kempton and the right of the Applicant to vary Mr Kempton's shift roster.
[36] Further the applicant submits that the alternative position offered would have provided significant job security because that role is in high demand within the underground gold mining industry in the goldfields of Western Australia. Conversely, the use by mining employers of personnel performing roles similar to Mr Kempton's previous role is diminishing. Mr Kempton had the opportunity to achieve secure employment by accepting the role offered to him.
[37] It is submitted the role offered to Mr Kempton was not detrimental in the sense that it was a less senior role, on the contrary the position offered to Mr Kempton was more senior than the position that he was previously employed in.
[38] Finally it is submitted that the proposed increase in the length of each shift would not have caused a reduction or a dilution of existing entitlements by virtue of the commitments given to Mr Kempton.
[39] Consequently it is argued that considered objectively the position offered was acceptable alternative employment and the tribunal should accordingly reduce the severance payment payable to Mr Kempton to zero.
[40] On behalf of Mr Kempton it is not submitted that the alternative employment need be identical to the previous position nor that in particular the new position was less senior or less secure. Rather it is submitted that the total hours to be worked in the new position were higher and the total salary to be paid would have been less. Accordingly the derived hourly rate for the alternative position would have been less than for the previous position. Consequently it is submitted the new position offered was not acceptable alternative employment and so Mr Kempton’s redundancy pay should not be adjusted and this application should be dismissed.
Conclusion
[41] On behalf of Mr Kempton the acceptability of the alternative position is not challenged on the basis of the skills, duties, location, continuity of employment or seniority involved. I accept then that these particular factors all support the applicant’s argument that the new position was acceptable alternative employment.
[42] Mr Kempton however argues that the salary payable combined with the new hours to be worked are such that the alternative position objectively is not an acceptable alternative to the previous position made redundant.
[43] Whilst there was some disagreement in the original submission of Mr Kempton with the view of the applicant about the shift rate for the alternative position I have reviewed the materials the parties have provided and accept that the evidence is that the offer to Mr Kempton was that the alternative position would be paid at the same rate per shift as for the previous position namely $ 411.11 per shift.
[44] Whilst the shift rate was to be the same this rate of $ 411.11 was to be paid for 12 hours work in the alternative position rather than for only 10 hours work in the previous position.
[45] In this case the material difference between the two positions that Mr Kempton argues makes it objectively not acceptable alternative employment is the difference in the derived hourly rate of pay.
[46] The roster for the alternative position would require Mr Kempton to work 243 days per year totalling 2916 hours compared to 260 days and 2600 hours per year previously. He would be paid $ 99,899.73 per annum compared to $ 106,888.60 previously.
[47] In the alternative position Mr Kempton would be required to work 6.5% fewer days per year but because of the longer length of each shift he would work 12.2% more hours per year. At the same time in the alternative position he would be paid 6.5% less salary per annum. The derived rate per hour would have been $ 41.11 for Mr Kempton’s previous position compared with $ 34.26 per hour for the alternative position that was offered to him. This is a reduction of 16.7% in the derived hourly rate of pay for Mr Kempton.
[48] In short although Mr Kempton would work less days per year in the alternative position he would work more hours each day but be paid only the same daily amount he had received in his previous position. In total each year he would work more hours for a lesser salary.
[49] The derived hourly rate does eloquently show the cumulative effect of the differences in the two positions. The hourly rate would be significantly less, so much so in my view that it cannot objectively be said that the position was an acceptable alternative to the previous position. That being my conclusion the application to reduce the redundancy amounts payable to Mr Kempton is refused, this application is dismissed.
COMMISSIONER
1 paragraph 83, explanatory memorandum to the FW Transitional Act
2 (1990) 140 IR 123
3 21 November 2006, [PR974699]
4 27 IR 226
5 [2008] AIRC 647
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