Colola Pty Ltd as Trustee for the Briggs Family Trust T/A Garden City Mechanical and Service Centre v Andrew Williams

[2016] FWC 290

[2016] FWC 290

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Colola Pty Ltd as Trustee for the Briggs Family Trust T/A Garden City Mechanical and Service Centre
v
Andrew Williams
(C2015/7259)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 21 JANUARY 2016

Summary: precondition to exercise jurisdiction under s.120 – whether employee had an entitlement under s.119 – whether resignation or meaning of “obtains” employment for purposes of exclusion from obligation to pay redundancy pay – Federal Court – whether jurisdictional fact – recommendations by outgoing employer brought about offer of employment by new employer – inquiry into effect of outgoing employer’s actions on incoming employer decision making necessary – exclusion granted.

[1] On 11 November 2015, an application was made under section 120 of the Fair Work Act 2009 (“the Act”) seeking a variation to the redundancy pay obligation the employer - in this case Colola Pty Ltd as Trustee for the Briggs Family Trust T/A Garden City Mechanical and Service Centre - might otherwise be obliged under s.119 of the Act to pay to an employee, Mr Andrew Williams.

[2] On the initial materials filed, there appeared to me to be a question as to whether or not the preconditions to the Commission exercising its jurisdiction under s.120 of the Act had been satisfied. In summary, the circumstances disclosed in the parties’ materials did not disclose whether or not Mr Williams had resigned his employment or else whether he had been dismissed at the initiative of his employer for reasons of redundancy.

[3] In this respect, I corresponded with the parties to the following effect:

“Section 119 of the Fair Work Act 2009 (“the Act”) 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 […].

Section 119 of the Act stipulates that an entitlement to redundancy pay arises when a specific condition is satisfied. That condition is that the employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone.

Section 120 of the Act provides:

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; […]

The application by the employer under s.120 of the Act may only be made when an employee is entitled to be paid redundancy pay because the conditions in s.119 of the Act have been satisfied. That is, essentially that the employee’s employment was terminated at the employer’s initiative for the prescribed reason.

Whilst the materials as filed by both the employer and Mr Williams demonstrate that the relinquishment of the franchise was an inevitability, the materials do not satisfy me at this stage that the employer terminated Mr Williams’ employment for the prescribed reason.

Mr William’s statement indicates that he was informed by Ms Denise Briggs on 16 July 2015 that the business would be closing down “and that the process may take some months”.

Following a meeting with Mr John Wilson on 29 July 2015, Mr Williams claims that he was offered employment with RACQ Autoglass.

Mr Williams claims he was “not given any further notice that the workshop of the Applicant would be closing”.

Mr Williams goes on to state that “[o]n 19 August 2015, my employment ceased with the Applicant [and on] 20 August 2015, my employment commenced with RACQ.”

Mr Williams claims he subsequently met with the employer “regarding his redundancy pay”.

Putting aside the argument under s.120 of the Act as to whether the employer “obtained” the employment for Mr Williams and if the employment was “acceptable employment”, the question at first instance to be answered is whether Mr Williams ever had an entitlement under s.119 of the Act arising from the fact that his employment was terminated at the employer’s initiative for the prescribed reason.

The materials before me do not illuminate this matter. Did the employer exercise its initiative to terminate Mr Williams’ employment for the prescribed reason? If so, when and how was this given effect, orally or by written notice? What were the circumstances through which Mr Williams communicated his acceptance of alternative employment to his employer? Was it actually the case that Mr Williams resigned his employment at his own initiative?

The tense in which s.119 of the Act is couched is in the past.

As will be understood, no application under s.120 of the Act can arise unless the conditions under s.119 of the Act are satisfied, and unless those conditions are satisfied there is no entitlement under s.119 of the Act (which can be varied or to which Mr Williams is entitled).

I would appreciate hearing from Mr Williams and the employer about these matters at the hearing as set down. Of course, a summary written response would be appreciated prior to the hearing.”

Consideration of precondition to exercising discretion under s.120

[4] On hearing of this matter, the evidence adduced demonstrated that Mr Williams was not at any point informed by the Applicant either verbally or in writing that his employment had come to an end for reasons of redundancy. The Applicant took the view, rather, that after such time as Mr Williams had been interviewed by Mr Wilson (to whom reference is made in the above correspondence) he effectively indicated that he had obtained new employment and that this amounted to a resignation, albeit with future effect.

[5] Mr Williams himself indicated that his employer had never given him any verbal indication or indication in any other form that his employment would come to an end on a particular date for reasons of redundancy. The most that Mr Williams had been informed was that the employer’s business would cease at a point in the future (as I have set out in the above correspondence) and after that undefined point in the future RACQ Autoglass would operate the business.

[6] Mr Williams also indicated that he had taken no steps in any form to indicate to his employer that he was intending to or wished to resign his employment.

[7] The cross examination revealed that the parties had not had any discussions following Mr Williams’ job offer through Mr Wilson about any of the circumstances relating to redundancy. In effect, all that happened was that Mr Williams continued to work in his current position until the date on which the business ceased to operate under his then current employer. On the following day, Mr Williams became an employee of RACQ Autoglass and was at Mr Wilson’s direction thereafter.

[8] It appears to me that the determination of this issue rests on identifying the action or event that caused the employment of Mr Williams to cease.

[9] On the facts before me, Mr Williams ceased to be an employee of the employer for reasons that it was ceasing to operate in its own right from 19 August 2015. Mr Williams’ employment with the employer did not cease because he had obtained employment with Mr Wilson/RACQ Autoglass. Whilst Mr Williams had accepted employment with RACQ Autoglass, that circumstance was not the reason his employment ceased on 19 August 2015 (and his accrued entitlements were discharged in full). Had Mr Williams’ employer continued to operate its business, Mr Williams would have continued to be an employee beyond 19 August 2015. Mr Williams’ employment with the employer only ceased on 19 August 2015 because the business ceased to be operated by his employer for reasons that the contract had been taken over by RACQ Autoglass.

[10] On the basis of this reasoning, Mr Williams’ employment with the employer only ceased on 19 August 2015 because his employer ceased to operate the business and handed its contract back to RACQ Autoglass.

[11] Whilst the parties may have conducted their affairs with a significant degree of informality, it is nonetheless evident that Mr Williams’ employment came to an end for reasons that the employer no longer required his job to be done by him or anyone else. Thus Mr Williams was terminated from his position with the employer on 19 August 2015 at his employer’s initiative because of the changes in the operational circumstances of the business. Again, it was not Mr Williams’ prospective employment with RACQ Autoglass that brought the employment relationship to an end, but rather the change in his employer’s operational circumstances on 19 August 2015.

[12] In light of this finding, I am satisfied that the jurisdictional precondition to exercising the powers under s.120 the Act is available to me. I will now proceed to deal with the substantive application itself.

Section 120 consideration

[13] Section 120 of the Act 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.

[14] In light of the commentary provided in the judgment of the Full Court of the Federal Court in Australian Commercial Catering Pty Ltd v Fair Work Commission [2015] FCAFC 189, I hesitate in characterising the determination as to whether the employer “obtains” (acceptable) employment for the employee as a task requiring the objective determination of a jurisdictional fact. In the current case, whether the employer obtains employment (that is acceptable) for the employee is in the nature of a precondition to the exercise of jurisdiction, and in the current case it appears to me that it may be determined on what are here the uncontested facts (see below). However, as my discussion further below suggests, determinations as to whether an employer’s ‘action’ amounted to obtaining employment may in future often rest upon assessments of the credibility of the incoming employer’s evidence. As such, they may not amount to a task involving the identification of jurisdictional facts (and will be more akin to the evaluative task involved in identifying whether the employment as obtained is “acceptable”).

[15] Elemental to the employer’s argument is that it was through the actions of Ms Briggs that Mr Wilson of RACQ Autoglass was alerted to the availability of Mr Williams as a prospective employee in the business going forward. Ms Briggs deposed that she “would like him (John Wilson) to at least consider giving Andrew Williams a position because he was a young fellow with a partner and a baby and [she] did not want to see him unemployed.”

[16] It appears from the further evidence that Ms Briggs proposed a meeting, with Mr Williams setting the time and place subsequently. In the course of that meeting, held on 29 July 2015, Mr Williams was invited in and carried out a discussion with Mr Wilson in private.

[17] Mr Williams’ evidence was that Mr Wilson offered him conditional employment with RACQ and informed him that he would need to undertake the application process and that their human resources department would be in contact with him. Mr Williams accepted the employment on such terms. Mr Williams subsequently completed an employment application form with RACQ on 3 August 2015. He also undertook the required medical and drug tests and provided two references. Mr Smith, who is the operations manager for the employer, gave evidence that he had been contacted by Mr Wilson on 20 July 2015 enquiring about Mr Williams’ work profile, including his work ethic. Mr Smith stated that he gave an honest and accurate assessment of Mr Williams’ performance as an employee, including comments that Mr Williams may currently lack motivation but could develop into a very effective employee nonetheless.

[18] In FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90, the Full Court reviewed a decision on the part of a full bench of the Fair Work Commission to quash a decision of a single member who had concluded that an employer had taken sufficient steps to obtain employment for its employees such that it was relieved of his obligation to pay redundancy pay. In the first instance decision, the employer had taken steps to arrange interviews with the incoming employer for some 49 employees. In so doing the employer had had a degree of interaction with the incoming employer in relation to engaging surplus employees and conducting discussions about the employees’ engagements and facilitating access to their contact details and other information about the terms and conditions of employment. The full bench of the Fair Work Commission disagreed with the decision of the member at first instance and held that the employer had done no more than to establish contact between its employees and the incoming employer, with the effect that the employees were only enabled to participate in a recruitment process, and this fell well short of action which amounted to the employer obtaining employment for the employees in question. The decision of the full bench was reviewed by the Full Court in the above mentioned judgement. In that judgement the Court stated as follows:

“[5] On the findings of the Commissioner at first instance, the applicant had taken a number of steps to facilitate the 49 employees securing employment with ACG in anticipation of it replacing the applicant as contractor to Asciano, namely, having discussions with representatives of ACG about the 49 employees’ future engagement by ACG, providing ACG with the contact details of the employees who agreed to allow that to be done, providing ACG with (as the Full Bench put it) “information about the arrangements within” the enterprise agreement by which the 49 employees were covered in the employ of the applicant and providing advice to ACG that it (the applicant) had paid the 49 employees their wages up to and including 31 October 2013, together with all accrued leave entitlements.

[6] In its reasons of 21 October 2014, the Full Bench itself set out, in detail, the steps that had been taken by the applicant in this regard. It referred to the evidence of the applicant in the following terms:

Mr Christmas’ witness statement discloses that the action taken by [the applicant] to obtain employment with ACG for its soon to be redundant employees was to provide a list of employees and their contact details to ACG in respect of those employees who gave permission to do so, with the two main communications in evidence of employee details occurring on 9 October 2013 in respect of 32 of the employees subject to the orders made and 21 October 2013 in respect of an additional 15 employees subject to the orders made. […]

According to the Full Bench, a further action undertaken by the applicant was to request ACG to make arrangements to meet those of its employees who were about to be retrenched through the applicant, so that the applicant might manage its obligations under its enterprise agreement. The Full Bench noted that this request was not acceded to by ACG, which made its own arrangements to contact those employees. The Full Bench said:

Whilst [the applicant] sought to play a role in arranging contact between ACG and its employees, it in fact played no role other than the provision of contact details to ACG.

The Full Bench added that the only other actions taken by the applicant were its unsuccessful attempts to engage ACG in discussions directed to a commercial agreement between the two companies in relation to the employees’ accrued leave and accrued service with the applicant, and the provision of a copy of the enterprise agreement, which ACG already had from another source.”

[19] The Full Court went on to state that:

“[22] The 49 employees did obtain employment with ACG. It seems to be uncontentious that this employment was acceptable. But, on the facts referred to earlier in these reasons, we would not find that the applicant obtained that employment for those employees. It may have facilitated the opportunity for them to apply for employment with ACG, but what it obtained for them was something less than offers of employment which they could accept or decline as a matter of choice.”

[20] On my construction of the above judgment, an employer would essentially need to “acquire” or “get” offers of employment for its surplus or redundant employees in order to “obtain” the employment for the purposes of s.120 of the Act.

[21] The Full Court did not require that an employer should obtain employment for an employee to the point at which the employee is employed. Legal and practical considerations mitigate against such an absolute requirement, as was made apparent by the Full Bench of the Industrial Relations Commission in Re Clothing Trades Award 1982(1) (1990) 140 IR 127-128 (“the Clothing Trades Full Bench”). The Full Court relevantly found as follows:

“[18] Returning to Clothing Trades, the actual outcome in that case demonstrated that there could be cases in which an exemption was granted from the operation of the standard award provision notwithstanding that an alternative employment relationship did not come into existence at all. In its reasons, the Full Bench characterised an outcome of this kind as implying a particular connotation of the word “obtains”. However, we would regard such an outcome as an instance of the reality that any new state of employment could only come about by the agreement of the new employer and the employee concerned. In this respect, we agree with Marshall J, in Allman, that to obtain employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice. If the employment is not accepted, the question whether that employment was “acceptable” will then arise.” [My emphasis]

[22] The Court did not believe it would be unachievable in some manner for an employer to meet the relevant statutory test for an exclusion under s.120 of the Act:

[23] It was submitted on behalf of the applicant that, if it were not held that it had done enough to “obtain” the employment of the 49 employees with ACG, employers could, in effect, forget about having recourse to s 120 in any “change of contractor” situation. This submission should not be accepted. While the resolution of any future disputes in this area cannot be anticipated, it is clear from the facts of the present case as set out by the Full Bench that there was more that the applicant might have done to advance the prospects of any application which it proposed to make under the section. Likewise, any future outgoing contractor would, in our view, see ample scope for the operation of the section notwithstanding the unsuccessful outcome of the applicant’s own case before the Full Bench. The applicant failed because of the limited nature of what it had been able to obtain for the 49 employees, not because the bar set by s 120 was too high for the section to be of practical utility in a change of contractor situation.”

[23] There will be a variety of circumstances in which an employer might procure an employment opportunity for an employee. One such circumstance might be when the new employer has entered an agreement sponsored by the outgoing employer. But other efforts that fall short of acquiring, getting or procuring new employers to make job offers - which is the focus of the Full Court’s judgment - will not satisfy the statutory exclusion (any longer).

[24] With the focus now being upon the whether an outgoing employer procured an employer to make a job offer to a redundant employee, the investigation required to satisfy that test must be directed more so to the state of belief of the incoming employer.

[25] It appears to me that an assessment of whether an employer through its actions “obtains” acceptable alternative employment for an employee by way of procuring or acquiring or getting another employer to make an offer of employment cannot always be undertaken on the evidence only of the steps taken by the outgoing employer. This is because the offer of employment arises from the discretionary will of the new employer, and it is only by way of inquiring of the new employer as to the impact of the outgoing employer’s actions on its discretion to offer new employment can it be determined whether or not the actions of the outgoing employer procured the relevant job offer(s).

[26] An assessment only of the actions taken by the outgoing employer in obtaining new employment for its redundant employee/s may not on its own illuminate the motivation of the new employer in offering employment opportunities to the redundant employees. That is, whether or not the actions by an outgoing employer were sufficient to cause (or “procure” or “get” or “acquire”) a new employer to offer employment opportunities resides as a matter of evidence in the state of mind of the new employer, and as reflected in its subsequent decision making.

[27] In some instances, facilitative steps taken by an outgoing employer may be sufficient to procure an employment opportunity for redundant employees, but that will be a matter of evidence in the particular case. For example, such evidence may include an incoming employer who credibly insists that but for the actions of the outgoing employer in arranging meetings (etc) with redundant employees, no offer of employment would have been made. Such evidence may agitate the jurisdiction under s.120 of the Act.

[28] Conversely, absent evidence as to the impact of the outgoing employer’s actions on the incoming employer’s state of mind that led to the offer of employment, an application under s.120 of the Act may not meet the statutory test for the exclusion.

[29] It appears that in the judgments cited above, there was no evidence before the Full Bench or the Full Court as to the affect, if any, of the outgoing employer’s actions on the incoming employer (and the employees were required to apply for the jobs and to be interviewed as they might be ordinarily). Thus it could not be concluded that the statutory exclusion was satisfied. Equally, it appears that the matter of the affect of the outgoing employer’s actions on the new employer’s state of mind (about offering an employment opportunity) was not the subject of discussion or argument in the either the Court or the Full Bench proceedings.

[30] In light of this discussion, the question before me then is did the employer procure another employer to make an offer of employment to Mr Williams? The answer to this question (because it is the same question recast by the Full Court in substitution to that posed by the Clothing Trades Full Bench) will determine whether the employer obtained (acceptable) alternative employment for Mr Williams.

[31] In the current circumstances Ms Briggs recommended Mr Williams to Mr Wilson for purposes of future employment and suggested they should meet in the future. Mr Wilson then subsequently proposed a date and time for a meeting during which he adjourned to have discussions with Mr Williams. Those discussions yielded a job offer that was conditional on completion of the ordinary job application procedures that apply in RACQ, such as satisfying a medical examination.

[32] But how instrumental were Ms Briggs’ steps in procuring employment for Mr Williams? To answer this question I turn to my examination of Mr Wilson, which proceeded relevantly as follows:

SENIOR DEPUTY PRESIDENT: Do you recall what words, or words to what effect Ms Briggs used in relation to Mr Williams on that occasion that she raised his name with you?

Mr Wilson: Uhm, that he was a good worker, and that he had a good work ethic and that he just needed some good direction and that he’d work out well for us. She couldn’t speak highly enough of him to be honest.

SENIOR DEPUTY PRESIDENT: Can you tell me, you subsequently attended the meeting on 29 July 2015?

Mr Wilson: Correct, your Honour

SENIOR DEPUTY PRESIDENT: Did you come to that meeting with an expectation of meeting Mr Williams?
Mr Wilson: Yes

SENIOR DEPUTY PRESIDENT: And that meeting broke up at a point? Did it? Was Mr Williams in that meeting all the time or did you adjourn to…?

Mr Wilson: Not at the start of the meeting. At the start of the meeting it was myself, Rod and Denise and then after that Andrew came

SENIOR DEPUTY PRESIDENT: And did you meet with him with the others or by yourself?
Mr Wilson: At first I met with Andrew with the others and then we spoke to Andrew about coming to work for us. I explained to him that Denise had given him a good wrap, said he had, went through all that formal process. I explained to him how it works to work for us, that everybody goes through a medical, and a uh, fit to work is what we call it. They do a police check and a criminal check, that sort of stuff.

SENIOR DEPUTY PRESIDENT: Did you know Mr Williams in any degree or measure prior to this occasion?

Mr Wilson: Yeah look I did. I knew Andrew because he had been working for Denise a long time. We had spoken to Andrew over the last couple of years since has been with Denise yeah.

SENIOR DEPUTY PRESIDENT: Did you… according to paragraph 3 of the statement, you made an offer of employment to Mr Williams during that discussion with him on 29 July 2015, subject to ROCQ application procedures.
Mr Wilson: Yes, a medical and uh… they just do a background check.

SENIOR DEPUTY PRESIDENT: And what was Mr Williams’ response to the proposal?
Mr Wilson: At the point he said he was appreciative, he said he was happy. Seemed like a normal [indistinct]

Would you have employed Mr Williams had Ms Briggs not made the recommendation to you in the telephone conversation that you had prior to the meeting on 29 July 2015.

Mr Wilson: That would be a hard one. It’s possible. It is possible. To say yes or no? I did employ another fitter up there straight after who is experienced as well and I have had another couple since we first did that. Within like a week I had about 3 or 4 fitters applying for that job. So uh, yeah.

SENIOR DEPUTY PRESIDENT: So you wouldn’t?

Mr Wilson: I couldn’t say yes or no. If he applied for a job and he got the job, yes it’s quite possible he could have got it. But there are no guarantees he would have got the job. If Andrew wasn’t working for Garden City Mechanical at the time and he came to me as an employee. If he had applied for a job with us, he would have gone through the normal process. Paul would have interviewed him… I couldn’t say yay or nay. He would have had to pass… he would have been up against other guys too. He would have been up against Josh and those other two fitters. So I wouldn’t know exactly yes or no if he would have definitely got the job. He would have had been in with a chance though, but it would have come down to experience at that point in time. But because of where he came from, and the job he had and uh, yeah it all fell into place for us

SENIOR DEPUTY PRESIDENT: So, Mr Wilson is it correct to say that your decision to employ Mr Williams was not solely the result of Ms Briggs recommendation?

Mr Wilson: At that point…when Andrew was hired, it was all around Garden City’s, Denise’s, recommendation, that’s why he got the job so fast. He didn’t apply, but as to say that if they didn’t recommend him. Well if he didn’t get a good recommendation from them I’d be extremely cautious [indecipherable] to employ him. If he didn’t have a good recommendation from them, but… as I said to say that I wouldn’t have hired him I can’t say that because I don’t know.

SENIOR DEPUTY PRESIDENT: Yes…But the offer of employment at that time on 29 July …

Mr Wilson: Was solely and wholly based on the discussions we had had with Rod and Denise at that time. [My emphasis]

[33] Mr Wilson’s evidence demonstrates that Mr Williams may have been employed in the future on the basis of his own experience and qualifications regardless of his employer’s recommendations, though he would have faced some competition in the market.

[34] However, critical to the issue before me, the employment he was offered on 29 July 2015, and which he accepted, arose only because of the actions taken by Ms Briggs to recommend Mr Williams as an able and promising employee to Mr Wilson. That is, Ms Briggs’ action had a positive effect on the state of mind and subsequent decision of Mr Wilson to offer an employment opportunity to Mr Williams.

[35] In so recommending Mr Williams for employment, with its consequent and evidenced effect on Mr Wilson, Ms Briggs, as the employer, “procure[d] another employer to make an offer of employment, which [Mr Williams] may or may not accept as a matter of his[...] choice”.

[36] By so doing, Ms Briggs satisfied the statutory tests for purposes of agitating the Commission’s discretion to grant an exclusion from the obligation that otherwise fell upon it to pay Mr Williams redundancy pay.

Conclusion

[37] On the basis of the foregoing reasoning I must grant the application under s.120 of the Act as made by the employer. Having determined that the employer obtained an offer of acceptable employment from a new employer, I have elected to exercise my discretion to reduce the obligation on the employer to pay redundancy pay to Mr Williams to nil.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr T. Kowalski of MTAQ, for the Applicant

Ms A. Davies, solicitor, for the Respondent

Hearing details:

Brisbane (by telephone)

2016

14 & 15 January

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