Darren Lange Trust T/A Darren Lange Swimming Academy v Mr Jerome Zevenbergen
[2018] FWC 1564
•25 MAY 2018
| [2018] FWC 1564 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Darren Lange Trust T/A Darren Lange Swimming Academy
v
Mr Jerome Zevenbergen
(C2018/1292)
COMMISSIONER SPENCER | BRISBANE, 25 MAY 2018 |
Variation of redundancy pay – two offers of alternative employment – first offer made at point of redundancy on lesser terms – subsequent offer after first.
INTRODUCTION
[1] An application pursuant to s.120 of the Fair Work Act 2009 (the Act) was made by Darren Lange Trust T/A Darren Lange Swimming Academy (the Applicant) seeking to vary the amount of redundancy pay to be made to Mr Jerome Zevenbergen (the Respondent).
[2] The Respondent commenced employment with the Applicant in February 2013 on a casual basis, and then on a fulltime basis from August 2015. The Respondent’s job was made redundant on 25 January 2018.
[3] The Applicant submitted that they had obtained other alternative employment in accordance with s.120(1)(b)(i) of the Act for the Respondent, and the Respondent had accepted the job. Accordingly, the Applicant made an application to vary the amount of redundancy pay from ten weeks ($9,583.60) to approximately five and a half weeks ($5,281.60), pursuant to s.120(2) of the Act.
[4] The Respondent submitted that the alternative job was casual employment and that there was no guarantee of ongoing employment. The Respondent stated that by working in the alternative employment he was limiting his future, fulltime employment options, and that if he had not accepted the position, he would be able to receive the full amount of redundancy pay. The Respondent was seeking ten weeks redundancy pay based on his length of service.
[5] Directions were set for the filing of material, and the matter was listed for Hearing, by telephone, on 27 March 2018. At the hearing, the Applicant was represented by Mr Darren Lange, Director of the Applicant, and the Respondent represented himself.
[6] Whilst not all evidence and submissions are referred to in this decision, all of such have been considered.
RELEVANT PROVISIONS
[7] Pursuant to s.119 of the Act:
“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 |
[8] The application has been made pursuant to s.120 of the Act, which states:
“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…
(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.”
[9] The Commission is required to take into account whether the Respondent was entitled to be paid redundancy pay, in accordance with s.119 of the Act; and whether the alternative employment is acceptable including the remuneration and conditions of the alternative employment; that is:
● Status;
● Rate of pay;
● Location;
● Hours of employment;
● Duties;
● Whether the alternative employment was obtained by the Applicant; and
● Whether the alternative employment was or was not acceptable and why.
SUMMARY OF THE APPLICANT’S SUBMISSIONS AND EVIDENCE
[10] The Applicant provided an excerpt from the “Notice of Proposed Redundancy” provided to the Respondent, which set out the circumstances of the Respondent’s position being made redundant. This document stated in part:
“Proposed change to be introduced and effects of changes
After considering the operational needs of DLSA’s business and the duties you perform on a day-to-day basis, we believe that the duties associated with your position (that being, Director of Programming) can either be discontinued in its entirety (and not be performed by anyone) and/or any remaining duties performed by other employees at DLSA, including myself.
The effect of this change means that your position with DLSA will likely become redundant. Unfortunately, this also means that your employment with DLSA may also cease at this time.” 1
[11] The Applicant submitted that the Respondent was employed on a fulltime basis, and was paid at a rate of $25.22 per hour. The Applicant submitted that the Respondent had been employed on a casual basis for two and a half years, and then on a fulltime basis for two and a half years. The Applicant submitted that the Respondent’s continuous service of between five and six years entitled him to the equivalent of 10 weeks’ redundancy pay.
[12] In relation to the remuneration and conditions of the alternative employment, the Applicant provided the following table of comparison:
“Item Former Position New Position
Status Fulltime Casual
Rate of pay (base) $25.22 $21.51
Location Toowoomba Toowoomba
Hours of employ. 38 20
Duties Supervisory Supervised
The alternative employment was obtained by me.
The alternative employment was acceptable. Suited requires” 2
[13] The Applicant submitted that four meetings were held with the Respondent regarding his redundancy. Three of these meetings involved discussion of the possibility of finding alternative employment for the Respondent. These three meetings were held on 18 January, 25 January, and 6 February 2018 respectively.
[14] The Applicant submitted that at these meetings, the Respondent stated he was looking for flexible hours to allow him time to work at a family business. It was discussed that the Respondent would be, “keen to take on any position within [the Applicant’s] organisation”; that the Respondent was, “not going to be looking for fulltime position”; and was, “keen to have a casual position with at least 20 hours a week.” 3
[15] The Applicant submitted that the process of redeployment was discussed with the Respondent and that it may lead to a reduction of the redundancy payment amount. The Applicant submitted that the Respondent was told it may be possible that the reduction in the redundancy payment may be the difference between the amount the Respondent would have earned in his current position and what the Respondent would receive in the alternative employment, over a 10 week period.
[16] The calculation of the earnings over the 10 week period are as follows:
$25.22 (former position, full time rate) x 38 (hours) = $958.36
x 10 weeks = $9583.60
$21.51 (new position, casual rate) x 20 (hours) = $430.20
x 10 weeks = $4302.00
Difference between redundancy pay in former position and redundancy pay in current position
$9583.60 - $4302.00 = $5281.60
[17] The Applicant submitted he presented both the option of a redundancy payment, and also the option of a partial redundancy payment and redeployment, to the Respondent for his consideration.
[18] The Applicant submitted that they were not aware that the Respondent was seeking alternative fulltime employment, as the Respondent had discussed at length with the Applicant that he was seeking to obtain a casual position so that time could be put into the Respondent’s own business and to allow the Respondent to be available in a supportive role on a personal matter.
[19] The Applicant submitted that at all times, Mr Lange and the Respondent were in agreeance that casual employment best suited the Respondent at that point in time; that the Applicant had discussed at length the difference between redundancy pay, and the partial redundancy pay and redeployment option; that both the Applicant and Respondent had discussed that a submission would be made to the Commission, regarding a review of the redundancy pay, should the partial redundancy pay and redeployment option be taken; and that the calculation process that would be proposed to the Commission, would be the difference between what the Respondent would have been working in his former role and what the Respondent would be working in his new role, over a 10 week pay period.
[20] The Applicant disagreed with the Respondent’s assertion that working in a casual position would limit the Respondent’s employment options and submitted that working as a casual within Lange Pool & Spa, which was part of the same group of companies as the Applicant, would in fact help the Respondent find further fulltime work by providing an income for the Respondent.
[21] After the Respondent had commenced in the casual position and following receipt of the Respondent’s material, the Applicant offered a further alternative fulltime position to the Respondent, as set out:
“Fulltime Employment Opportunity
During the past week, circumstances have changed whereby my current Service Coordinator has informed me that he is seeking alternative employment in his chosen profession, having completed his studies. I feel that Jerome would be perfect for this role.
This role would be a full time position based on Level 6 of the General Retail Award supervising up to 4 other service technicians. If Jerome were to accept this position, my understanding is that this would negate the need for a redundancy pay-out as it would be a movement between roles within the same organisation. I would seek confirmation of this. In doing this, Jerome would maintain his accrued sick leave entitlements.
Should Jerome accept this offer, the role comparison as outlined in clause 7 of your Directions would be;
Item Former Position New Position
Status Fulltime Fulltime
Rate of pay (base) $25.22 $22.49
Location Toowoomba Toowoomba
Hours of employ. 38 38
Duties Supervisory Supervisory
The alternative employment was obtained by me.
If Jerome were to reject this offer, he could certainly continue on as a Service Technician in a casual capacity while he searches for another full time position, however we would seek a ruling from FWC regarding this application to vary the redundancy pay-out.” 4
SUMMARY OF THE RESPONDENT’S SUBMISSIONS AND EVIDENCE
[22] The Respondent submitted that he had been employed by the Applicant since 2012, averaging 38 hours per week. He submitted that he had been attempting to secure alternative fulltime employment. He stated that the job market in Toowoomba was competitive and that his financial position necessitated in him securing alternative employment. He stated that he brought this to the attention of the Applicant, which resulted in the alternative offer of employment.
[23] He also submitted that due to this process, he had lost 71 hours in sick pay. He was also concerned that the position was casual and that there was no guarantee of ongoing employment or regular hours.
[24] The Respondent provided a letter from the Applicant dated 19 February 2018, with an offer of redeployment. The letter set out that the position was casual at a minimum of 20 hours per week and the rate of pay would be accordingly changed to a standard rate of $26.88 per hour, $29.04 on Saturday, and $41.94 on Sunday.
[25] At a later stage, after the Respondent had accepted the casual job, a fulltime position emerged and the Applicant offered this to the Respondent. The fulltime position was on an equivalent basis to his prior fulltime position but paid at a slightly less hourly rate. After the Hearing, the Respondent was requested to confirm which position he would accept. The Respondent confirmed after the Hearing that, consistent with his submissions, the redundancy had been a shock but that given his personal circumstances he would remain in the casual role.
[26] By way of explanation for his election to remain a casual employee, the Respondent also mentioned in that email dated 29 March 2018, that the redundancy process had caused stress to himself and his family. He considered that the casual ‘outdoor’ service technician role would be a ‘stress free’ position which would positively contribute to his mental and physical health. However, he also sought the option to work an extra day so that his weekly hours would amount to approximately 28-30 hours.
[27] The Applicant submitted that it was unaware that the Respondent was seeking alternative full-time employment, as its understanding following conversations with the Respondent, was that the Respondent sought only to maintain a casual position at that stage. The Applicant had understood the Respondent’s reasons for this included that he wanted to preserve time to invest in his own business, and to perform a support role in respect of a personal issue. The Applicant considered that it had thoroughly discussed the difference between the redundancy/redeployment option and the orthodox redundancy, as well as the calculations that would be proposed to the Commission necessitating a component of casual wages (i.e. the difference between the Respondent’s former role and his new role over the 10 week period). The Applicant submitted that the Respondent had preferred the casual employment available in redeployment.
CONSIDERATION
[28] In determining an application made pursuant to s.120 of the Act, the Commission must first be satisfied that there is an entitlement to redundancy pay. 5 Where there is no entitlement to redundancy pay under s.119 of the Act, there can be no order to reduce the entitlement.6
[29] It was not in dispute that the Respondent was entitled to be paid 10 weeks’ redundancy pay on his period of employment, as his job had been made redundant. I am satisfied that the Respondent has an entitlement to redundancy pay pursuant to s.119 of the Act.
[30] The matter turns on whether the Applicant had obtained other acceptable employment for the Respondent. The Applicant directly obtained the alternative casual job of Pool Service Technician/Retail Sales Representative for the Respondent at Lange Pool and Spa. After the redundancy had taken effect and the Respondent had commenced in the casual job, a fulltime job of Service Coordinator emerged at the company. The Applicant then offered the Respondent this fulltime position.
[31] The Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd characterised “other acceptable employment” as follows:
“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 provision 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 elements of such a standard including the work being of a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 7
[32] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd the Full Bench held:
“...We do not propose to repeat here the thoroughly detailed argument presented by counsel for the union. A considerable part of that case was devoted to questions of onus and to supporting the proposition that the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters. It was argued that the failure of the employer to adduce evidence of such matters caused the company to fail to make out a case for an exemption. We have no doubt that there is an onus on the employer invoking cl 51(c) and that matters of the kind referred to by the union may be relevant in assessing the position in a particular case. We do not believe it to be necessary to make that examination in every case. Where an employee has accepted alternative employment in circumstances as those here, then in the absence of positive evidence going to the unacceptability of that employment, including unacceptable features of it, then the Commission is entitled to hold the employment as an acceptable alternative and relieve the employer of the obligation under cl 51(c) of the award...” 8
[33] Finally, the Commission in Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai stated as follows:
“[8] In NUW v Tontine Fibres [2007] AIRCFB 1016 (Tontine) a Full Bench of the AIRC considered the meaning of the expression “acceptable alternative employment” in a redundancy provision in an enterprise agreement. It was common for enterprise agreements to reflect award provisions and contain redundancy entitlements that could be reduced if the employer obtained acceptable alternative employment (or some variant of that expression). The Full Bench observed:
“[23] It is well established... that the concept of acceptable alternative employment is to be determined objectively. As noted by a Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd:
“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 provision 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 elements 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.”
[24] The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer. In order to establish whether the alternative employment obtained by the employer is acceptable it is necessary to have regard to 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)…”
[9] Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.” 9 [Footnotes omitted]
[34] It was not in dispute that the Applicant obtained the casual position, which was offered to the Respondent at the time of the redundancy. The Respondent emphasised that this first alternative job offered was a casual position, whereas prior to the redundancy, he was employed in a fulltime position. The Respondent submitted that there would be no guarantee of continuing employment or ongoing regular hours.
[35] The Applicant submitted that a consultation process was undertaken with the Respondent, which involved reviewing the Respondent’s suitability to be redeployed within the Applicant’s enterprise. The Applicant considered that, in line with the Respondent’s requests, they were of the view that there were no suitable alternative fulltime jobs at the time the redundancy took effect. The casual job was offered to the Respondent at this time.
[36] The Applicant submitted that during the consultation process, the Respondent expressed an interest in taking on a casual position within Lange Pool and Spa, and the Respondent accepted the offer of the casual job. However, as stated, a fulltime job later emerged after the redundancy had taken effect and was available for the Respondent to accept at the time of the Hearing. In correspondence following the Hearing of the matter, the Respondent confirmed that he considered the casual position to be more suited to his personal circumstances at that time. 10
[37] As stated, it was not in contention that the Respondent’s job was made redundant nor that the Applicant “obtained” the alternative jobs. The issue is whether the other employment is “acceptable”. Accordingly, the terms of the offers of redeployment are assessed as whether they are sufficiently comparable.
[38] However, it must be emphasised that only the casual job was offered at the point of the redundancy and the fulltime job was offered subsequent to the casual job being accepted, after the Respondent had reconciled that his job was made redundant and the impact of the less secure casual job with less hours on a lesser hourly rate. The assessment in s.120(1)(b)(i) of the Act is made at the time the Respondent’s position was made redundant.
[39] The offer of a casual Service Technician/Retail Sales Representative was the only offer made at the time of the redundancy. It provided a minimum of 20 hours per week, at an hourly rate of pay of $21.51 per hour. This casual position did not offer improved employment conditions, as the role was changed from fulltime to casual, with a change from supervisory duties to his duties being supervised, and also a reduction in hours and a reduction in wages overall.
[40] The subsequent alternative offer of fulltime Service Coordinator emerged after the Respondent had accepted the casual position. This fulltime position provided more comparable employment conditions as the status, location, hours, and duties were all similar to the former position. For the alternative fulltime job, the only material change was a reduction in the base hourly rate of pay from $25.22 per hour to $22.49 per hour. However, the Respondent then would also be required to amend his working pattern back to the fulltime job.
[41] The Applicant had accepted the alternative casual position immediately after the restructure and was working in this position at the time the offer of the alternative fulltime position became available.
[42] For the purpose of exercising the discretion to vary an entitlement to redundancy pay pursuant to s.120(1)(b)(i), the relevant test is whether the Applicant “obtained” alternative employment and whether that employment was “acceptable.” This assessment is made against the casual job as it was the only position available to the Respondent at the time of the redundancy. The circumstances of this case are unique. Derole Nominees makes clear that an offer of redeployment is not “acceptable” merely because it is accepted. The personal circumstances of the Respondent are known only to him, suffice to say they were sufficient enough for him to form the view that the casual position was suitable, even when subsequently given the option of the fulltime job, albeit at a later time. I am satisfied that the Respondent’s reasons for accepting the casual job and refusing the fulltime job after it emerged, are relevant factors to be taken into account. It is apparent that despite the aforementioned deficiencies with the casual position, when considered objectively in light of the Respondent’s reasons for accepting the job, the casual position was “acceptable” alternative employment.
[43] The Applicant obtained the further fulltime job. However, this position was not offered until sometime after the redundancy was conveyed to the Respondent and the alternative casual position was proposed and accepted. Whilst the Respondent had the ability to move from the casual job into the fulltime job, the Respondent preferred not to, stating:
“I will stay with the initial redundancy DLSA /LPS “offer / deploy/redeploy” (attached in previous correspondence)within the casual LPS position (weekly 20 h) I would like to have the option to work another day increasing my casual week to (approx 28/30 hours casual) THUS allowing my shift to be Mon – Thursday “approx” / 8 am – 4pm “approx”.As mentioned in my previous “situation overview email” ,this whole process has caused myself and family ,added unnecessary stress ,and I feel the casual “outdoor” service technician role will allow me to transition into a healthier both mentally and physically and stress free position within your business.” 11
CONCLUSION
[44] At the point of the redundancy, only the casual job was offered. The casual position suited the Respondent’s emergent personal circumstances at the time and he, for the same personal reasons, ultimately accepted the casual job over the full time job. It is however recognised that, as stated, the casual job was the only alternative employment at the time of the redundancy. I am satisfied that the Applicant has obtained other acceptable employment for the Respondent, although it is not entirely comparable.
[45] In line with s.119(1)(a), the Respondent was entitled to redundancy pay as the Applicant determined that they no longer required the Respondent’s job to be done by anyone. The Applicant offered the Respondent the casual position initially as set out, the Respondent accepted this in accordance with his circumstances at that time; this was reinforced when the Applicant shortly thereafter offered a full time position, and the Respondent sought to retain the casual position. The assessment has been done on both of these positions.
[46] Accordingly for the aforementioned reasons, taking into account the conditions of the Respondent’s prior job and the comparison and timing of the offers of employment, the amount of redundancy pay to be paid, in accordance with ss.120(1)(b)(i), (2) and (3) is reduced to five weeks’ wages.
[47] An Order [PR601486] to that effect will issue together with this decision.
COMMISSIONER
Appearances:
Mr D Lange for the Applicant.
Mr J Zevenbergen on his own behalf.
Hearing details:
2018,
Brisbane:
27 March.
Printed by authority of the Commonwealth Government Printer
<PR601212>
1 Submissions of the Applicant dated 20 March 2018 at page 1.
2 Ibid at pages 1 – 2.
3 Ibid at pages 3 – 4.
4 Ibid at page 4.
5 Application by CAE Australia Pty Ltd [2012] FWA 7992 at [13].
6 Ibid.
7 (1990) 140 IR 123 at 128.
8 (1988) 27 IR 226 at 230 - 231.
9 [2013] FWC 1327 at [8] – [9].
10 Email from the Respondent to the Fair Work Commission dated 29 March 2018.
11 Email from the Respondent to the Fair Work Commission dated 29 March 2018.
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