Eagers Automotive v Trevor Varcoe

[2021] FWC 6602

[2021] FWC 6602

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Eagers Automotive
v
Trevor Varcoe
(C2021/7251)

COMMISSIONER HUNT BRISBANE, 14 DECEMBER 2021

Application to vary redundancy pay for other employment or incapacity to pay

[1] Eagers Automotive (Eagers) has made an application to the Fair Work Commission (the Commission) for a variation to the redundancy pay to be paid to Mr Trevor Varcoe.

[2] The application is made pursuant to s.120(b)(i) of the Fair Work Act 2009 (the Act) on the basis that Eagers asserts that it obtained other acceptable employment for Mr Varcoe and this employment was refused.

[3] Mr Varcoe commenced employment with Eagers on 7 February 2002 and was employed by Eagers until 22 October 2021. It is not in dispute between the parties that Mr Varcoe’s employment was terminated by Eagers because it no longer required the job to be done as provided in s.119(1) of the Act. Pursuant to the terms of the Vehicle Repair, Services and Retail Award 2020, which applied to Mr Varcoe’s employment, he would otherwise be entitled to 12 weeks’ redundancy pay under the National Employment Standards (NES) within the Act.

[4] Eagers seeks that Mr Varcoe’s redundancy pay be varied to nil for the reason that it obtained other acceptable employment for him.

Legislation

[5] As noted above, the application is made pursuant to s.120 of the Act which provides the following:

“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.”

Conference and Hearing

[6] On 9 November 2021, I convened a telephone conference of the parties.

[7] A telephone hearing was held on 25 November 2021. Ms Sheree Tarman, People & Safety Manager – QNT and Mr Darren Temby, Dealer Principal appeared on behalf of Eagers. Ms Samantha Dean, People & Safety Partner QNT gave evidence. Mr Varcoe appeared on his own behalf.

Employment with Eagers

[8] Mr Varcoe commenced employment on 27 February 2002 as a Sales Consultant at Torque Ford, located at North Lakes, north of Brisbane. He had worked at Torque Ford and Torque Honda at various times in his 19 years of employment. The two businesses are located next to each other.

[9] In June 2021 he was transferred from Torque Honda to Torque Ford due to stock shortages as a result of the COVID-10 pandemic and the global shortage of new vehicles. Mr Varcoe’s evidence is that there was not enough work for four Sales Consultants, and he joined Torque Ford as the fourth Sales Consultant.

[10] On 20 August 2021, Mr Temby, Dealer Principal of Torque Ford/Torque Honda consulted with the four Sales Consultants located at the Torque Ford premises. They were all informed that due to the global shortage of new vehicles to sell, there were limited sales opportunities and large lead times for customers awaiting new vehicles.

[11] In September 2021, the four Sales Consultants were informed that four roles could not be sustained. The employees were encouraged to take annual leave. The stock availability did not change.

[12] On 11 October 2021, Mr Temby met with the four Sales Consultants and requested a volunteer to accept a transfer at other locations which included Zupps Aspley Mitsubishi or Metro Ford, Newstead. None of the affected employees volunteered to be relocated.

[13] Following the consultation referred to above, a skills matrix was prepared. Mr Varcoe was selected as the employee to be made redundant.

[14] On 13 October 2021, Mr Varcoe met with Mr Temby and was informed that his role had been made redundant, however, another role was available at Zupps Aspley Mitsubishi. Eagers considered that the Aspley role was suitable alternative employment as it was the same position title and had the same tasks and duties. Eagers considered that the additional travel time for Mr Varcoe was approximately 10 minutes each way. He would receive the same remuneration and entitlements and have a company supplied vehicle and fuel card.

[15] Eagers no longer considered the Newstead role to be suitable given the extensive additional travel required.

[16] On 15 October 2021, Mr Varcoe met with Mr Mark Thompson, General Sales Manager at Zupps Aspley Mitsubishi. On 18 October 2021, Mr Varcoe declined the Aspley role.

[17] On 21 October 2021, Mr Temby informed Mr Varcoe of another redeployment opportunity at Torque Honda, next door to Torque Ford. One of the staff members at Torque Honda required approximately three months off work due to a personal injury, so it was considered appropriate to provide that opportunity to Mr Varcoe.

[18] Mr Varcoe’s evidence is that when he inquired about the longevity of the role, given the incumbent was going to be off work indicatively for three months, Mr Temby informed him he could not guarantee him a permanent position. Mr Varcoe discussed this scenario with his partner, and he decided that he didn’t want to be in the same position in three months’ time; he’d prefer to obtain permanent employment.

[19] Later that same day, Mr Varcoe formally declined both the Zupps Apsley Mitsubishi role and the Torque Honda role. He was informed that Eagers would make a s.120 application to the Commission seeking his redundancy payment be ordered to nil. Mr Temby’s evidence is that Mr Varcoe informed him that he had already secured alternative employment. Mr Varcoe denies that he made such a statement, noting that he did not interview with his new employer until 23 October 2021 and was offered the new role that day, following the interview. He accepted the role on 23 October 2021.

[20] On 22 October 2021, Eagers issued to Mr Varcoe a termination letter noting that he had been offered the two redeployment opportunities which he had refused. Eagers informed him in writing an application to the Commission would be made.

[21] In consideration of travel time for the Aspley role, Mr Varcoe provided a number of maps showing how long the commute would likely take on workday mornings and evenings. Mr Varcoe resides on Bribie Island. His various maps demonstrated that it could generally take around 1hr, 10 minutes to travel to and from work, and as little as around 50 minutes. The commute to Torque Ford is generally around 40 minutes. When estimating the journey might take only an additional 10 minutes, it is clear that Eagers was working off a best-case scenario.

[22] During the hearing, Mr Temby stated that the Torque Honda role remained unfilled.

[23] Mr Varcoe stated that he has now secured a permanent role where he sells used cars.

Authorities

[24] Eagers requests the Commission reduce Mr Varcoe’s redundancy payment to nil on account of it having obtained other acceptable employment for him.

[25] Prior to the term in s.120 of the Act stating that the Commission can make an order relevant to whether the employer obtains other acceptable employment, provisions in awards made pursuant to the Workplace Relations Act 1996 referenced the term ‘acceptable alternative employment’. I consider it suitable to have regard to precedents where the consideration was, at that time, whether the employer obtained acceptable alternative employment.

[26] In Spotless Services Australia Limited t/as Alliance Catering 1 Deputy President Sams usefully identified the authorities relevant to “other acceptable employment” and the task to be performed by the Commission where he stated:

“[60] The question of what constitutes ‘other acceptable employment’ in the context of a redundancy situation, has been considered by the Commission and its predecessors in many and varied circumstances and industries over a number of years. In Derole Nominees, a Full Bench of the Australian Industrial Relations Commission (AIRC) said at pp 128-129:

‘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.

This approach to the test demonstrates that any alternative employment available to the eighteen former employees of the company cannot be regarded as “acceptable” merely because a number of other former employees took up employment at the new location. The relevant aspects of the job must be examined objectively to determine whether the employment is “acceptable”.

…

The exemption provision imports the notion that an effort of a sufficient kind by an outgoing employer may cause his obligation for redundancy pay to be reduced; a decision by an employee not to co-operate with the employer may well disentitle the employee to all or some of the payment.’ (my emphasis)

[61] In Oscar Oscar Group Services Pty Ltd v Lees[2012] FWC 3901 (‘Oscar Oscar’), Commissioner Asbury (as Her Honour then was), said at paras [18]-[19]:

‘[18] The question of whether alternative employment is acceptable, must be assessed on an objective basis. It is relevant to the assessment that redundancy payments are not made solely for the purpose of assisting employees to find alternative employment. Redundancy payments are intended to tide an employee over during the search for alternative employment, and to compensate the employee for loss of credits for sick leave, long service leave and other entitlements based on length of service. The question of whether previous service with the previous employer is recognised as service with the new employer, will also be relevant.

[19] Other considerations will be whether the alternative employment is of a like nature; a reasonable distance from the previous employment; whether pay and conditions are comparable; hours of work and job security in relation to the new position. The fact that an alternative position does not meet the personal preferences of an employee, may place the right to receive full redundancy pay at risk, where the employee refuses a position that is found to be acceptable on an objective basis.’ (my emphasis)

[62] Senior Deputy President Watson in Feltex said at a para [33] and [89]:

‘[33] The parties accept, as do I, that matters to be considered in assessing whether alternative acceptable employment has been obtained include matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security, the location of work, continuity of service and accruals and the application of probationary periods. The relevant authorities also demonstrate that this listing of matters is not exhaustive and the question of whether an employment is acceptable alternative employment will be decided on the peculiar facts of a matter. Further, the authorities suggest that acceptable employment is not synonymous with identical employment, although the basis of the 2004 variation of the TCR test case provision suggests that, whilst not identical, terms and conditions should be substantially similar and no less favourable, overall, than the terms and conditions applicable to the employee at the time of the redundancy.

…

[89] I accept the proposition advanced by Feltex Australia that 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.’

[63] In Vicstaff Pty Ltd (t/as Stratco) v May (2010) 204 IR 233 (‘Vicstaff’), Bissett C said at paras [29]-[30]:

‘[29] The determination of whether or not alternative employment is acceptable must be determined objectively and not subjectively from the perspective of the employer or employees. That the alternative employment may be rejected does not objectively make it unacceptable nor does the fact that the employment was offered make it, by virtue of the offer, acceptable. Further, that one of the persons out of a group may have accepted the employment does not make the employment acceptable for the others in the group.The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.

[30] It is therefore incumbent upon the employer (Vicstaff) in this matter to demonstrate that the alternative employment is acceptable taking into account all matters relevant in such a consideration. Had the alternative work been considered acceptable to the individuals one imagines they would have accepted the work offered.’

[64] In DRW Investments t/as Wettenhalls v Timothy Richards & Others[2016] FWC 461, I said at para [183]:

‘[183] Notwithstanding the above general principles, whether the alternative employment is acceptable, will likely include consideration of the following matters:

•  rate of pay;

•  hours of work;

•  work location;

•  seniority;

•  fringe benefits;

•  workload;

•  job security;

•  continuity of service;

•  accrual of benefits;

•  probationary periods;

•  carer’s responsibilities; and

•  family circumstances.

This list is not exhaustive. There may be other relevant factors.’

[65] The above decisions have some common features, including:

•  The test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.

•  ‘Acceptable employment’ is not identical employment, as no two jobs could be exactly the same.

•  An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.

•  An employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable’.

•  The acceptance of alternative employment by one or more persons in a group of redundant employees, does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.

•  There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.”

[27] In deciding the present matter, I adopt the approach set out by the Deputy President and the authorities referred to by him.

Consideration

Was Mr Varcoe “entitled to be paid an amount of redundancy” (s.120(1)(a))?

[28] It is common ground between the parties that Mr Varcoe’s employment with Eagers came to an end because his position was made redundant. Consequently, I am satisfied that Mr Varcoe is entitled to be paid an amount of redundancy pay by Eagers because of s.119 of the Act. Section 120(1)(a) of the Act has been established. The amount is 12 weeks’ pay at the rate of $899.46 per week being an amount of $10,793.52.

Did Eagers “obtain” other employment for Mr Varcoe (s.120(1)(b)(i))?

[29] Mr Varcoe does not dispute that Eagers “obtained” other employment for him. I am satisfied that in so far as s.120(b)(i) of the Act requires an employer to “obtain” other employment, Eagers did so for Mr Varcoe. Therefore, part of s.120(1)(b) of the Act has been established.

Was the employment “acceptable” (s.120(1)(b)(i))?

[30] While Mr Varcoe, in weighing up the variables between his role and the alternative employment offered, declined to accept the alternative employment, that is not the relevant test before the Commission in determining this application. An objective test must be applied.

[31] It is not necessary that the redundant role and the role(s) offered be identical in order for the latter role to be acceptable.

Option 1 – Zupps Aspley Mitsubishi

[32] I have had regard for the potential additional travel time Mr Varcoe would have had to experience driving from his home on Bribie Island to Aspley. I have also had regard to the fact that his vehicle expenses are paid for by Eagers.

[33] I consider the additional travel between North Lakes and Aspley would generally be around 20 minutes each way. That would be time spent in a vehicle on the Bruce Highway. Having regard for Mr Varcoe’s circumstances, particularly noting his decision to reside on Bribie Island, I appreciate and understand his desire not to be caught up in traffic on the Bruce Highway for periods longer than necessary.

[34] I am satisfied that in the circumstances, the additional travel time would have been inconvenient and onerous. While all other aspects of the role are equal, in all of the circumstances, I consider that the Aspley role obtained for Mr Varcoe was not other acceptable employment.

Option 2 - Torque Honda

[35] The Torque Honda role was identical to the role Mr Varcoe had been performing, but for the product being sold. Mr Varcoe had worked within the Torque Honda business at various times over his 19 years’ service.

[36] The travel time from home to work was identical. The only objection Mr Varcoe had was that he would be temporarily replacing a permanent employee for an estimated period of three months, and then he was unsure what would occur when the incumbent returned to work.

[37] I explored with Mr Varcoe during the hearing the fact that if he had accepted the Torque Honda role, and in three or four or more months been made redundant, and unable to be redeployed, he’d be in the same position, and eligible to receive 12 weeks’ severance pay. Mr Varcoe explained that he understood that but wished to secure what he considered to be ‘more permanent employment’.

[38] I am satisfied that the employment offered to Mr Varcoe was acceptable alternative employment. There was no difference in the duties he was required to perform, his remuneration was the same, and the location almost identical. Mr Varcoe had 19 years of service and would continue to accrue long service leave. In his new employment he will have to attain ten years’ service before he is eligible for paid long service leave, or close to that, subject to pro-rata eligibility.

[39] The only difference is that Mr Varcoe was unsure what would happen if and when the incumbent returned from personal leave. If Mr Varcoe’s concerns rang true and on the incumbent’s return to work he was left without a role and redeployment was not possible, he would have been entitled to 12 weeks’ severance pay. Mr Varcoe’s apprehension is not a suitable reason to decline the offer made to him to accept the Torque Honda role and still receive, in-full, a severance payment.

[40] In all of the circumstances, I consider that the role obtained for Mr Varcoe was other acceptable employment.

Should the amount of redundancy pay be reduced (s.120(2))?

[41] Section 120(2) of the Act vests the Commission with discretion to reduce the amount of redundancy pay by a specified amount. It does not automatically follow that a finding that the other employment obtained by Eagers for Mr Varcoe was acceptable will result in the redundancy pay being reduced to nil.

[42] I have had regard to the fact that Eagers did not require Mr Varcoe to work out the five weeks of his notice period and released him from the obligation to attend for work after 22 October 2021.

[43] I have had regard to the fact that Eagers communicated with Mr Varcoe its decision to pursue this application, and this was known to him before he made a decision against accepting the alternative role.

[44] I have had regard to the very lengthy period of service Mr Varcoe had with Eagers.

[45] I have also had regard for the fact that, to his credit, Mr Varcoe quite promptly obtained alternative employment.

[46] I have decided to exercise my discretion to reduce the redundancy payment owed to Mr Varcoe from 12 weeks to four weeks. Eagers will be ordered to pay to Mr Varcoe the amount of $899.46 x 4 weeks = $3,597.84. It is expected the amount to be paid to Mr Varcoe will be treated for tax purposes as a bona fide redundancy, however that is a matter for Eagers to inform itself on.

[47] An Order consistent with the foregoing will be issued at the same time as this Decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR736741>

 1  [2016] FWC 4505.