Er 24 Pty Ltd T/A Er 24 v Mr Dan Young

[2017] FWC 393

[2017] FWC 393

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

ER 24 Pty Ltd T/A ER 24
v
Mr Dan Young
(C2016/5761)

COMMISSIONER SPENCER BRISBANE, 26 MAY 2017

Variation of redundancy pay.

[1] This Decision arises out of a number of applications made by ER 24 Pty Ltd (the Applicant) for orders varying redundancy pay said to be payable to a number of former employees. These reasons should be read in conjunction with my substantive reasoning in ER 24 Pty Ltd T/A ER 24 v Ms Susan Mary Berthun[2017] FWC 383 1. That decision is issued with, and forms part of, each of the decisions of the Respondents who were employed as security. That decision also includes the submissions of ER24 relevant to the Respondent in these matters. Mr Young made individual submissions as below.

Applicant’s submissions

[2] The applicant submitted that Mr Daniel Young, was employed by the Applicant in a full-time security position at Gregory Crinum Mine paid an hourly rate of $28.00 per hour.

[3] The Security Services Industry Award 2010 (the Award) applied to the Respondent’s employment.

[4] The Respondent had served three (3) years and 1.5 months’ service with the Applicant.

Respondent’s submissions

[5] United Voice, on behalf of the Respondent, provided the following submission to the Commission:

“5. It is common ground that the Applicant held a contract with BHP Mitsubishi Alliance (BMA) to perform emergency response, nursing and paramedic services across seven sites in Queensland.

6. It is further agreed that the contract expired on 30 June 2016 with the Applicant no longer providing the services to BMA, following a competitive tender process. The contracts were ‘picked up’ by Corporate Protection Australia (CPA) and MSS Strategic Medical and Rescue (MSS) (the incoming contractors).”

[6] United Voice relied on the following extract from Baywood Products Pty Ltd v Mervyn Inall (Baywood), where Commissioner Asbury considered “obtains” to mean:

“In deciding whether to exercise discretion on the grounds that the employer has obtained acceptable alternative employment, FWA must be satisfied that the employer took positive and proactive steps to obtain such employment, so that it can be said that the employer is a strong moving force towards the creation of the opportunity for the employee to gain alternative employment”.

[7] United Voice submitted that the Applicant was not the strong moving force towards the creation of any available opportunity for the Respondent to obtain acceptable alternative employment 2 and that the employment obtained by the Respondent was by his own volition and independent acts.

[8] With respect to the Applicant’s correspondence on 23 May 2016 to the Respondents advising of an information session concerning the transfer of employment, United Voice submitted that the scheduled information sessions for Moranbah and Emerald did not take place and that the Applicant did not re-schedule any further sessions for either Moranbah or Emerald.

[9] It was submitted that the correspondence sent by the Applicant on 23 May 2016, was the full extent of any proposal by the Applicant, for both parties to discuss the Respondent’s further employment with the incoming contractors.

[10] United Voice submitted that, in obtaining employment with the incoming contractors, the Respondent applied for his position through employment website SEEK of his own volition and applied for alternative employment in approximately mid-May 2016.

[11] United Voice submitted that the Applicant advised the Respondent of alternative employment on or around the end of May 2016 but by this stage the Respondent was already mid-way through the incoming contractors’ recruitment processes. Further, United Voice submitted that the Applicant did not provide resumes or information to assist the incoming contractors in making offers of employment to the Respondents, nor did the Applicant make time available for the Respondent to attend interviews with the incoming contractors.

[12] United Voice noted that, where further qualifications have been required for a position with the incoming contractor, the Respondent was required to fund their own private training.

[13] It was submitted that had the Applicant engaged in active measures, they may have been seen as being the “strong moving force” in the Respondents obtaining employment with the incoming contractors, for example, had the Applicant arranged for an interview or supplied information such as résumés, or had an apparent role in the formation of the new employment contract, United Voice submitted that these would be indicative of s. 120(1)(b)(i) of the Act. It was submitted that the Applicant has not undertaken, nor sought to undertake any indicative actions of s. 120(1)(b)(i) of the Act and any employment obtained by the Respondent was through their direct approach to the incoming contractors.

[14] In considering whether the alternative employment was “acceptable”, it was submitted that the Commission should adopt the reasoning adopted in Baywood Products Pty Ltd v Mervyn Inall which applied the principles of Clothing and Allied Trades Union v Hot Tuna, as follows:

“In Clothing and Allied Trades Union v Hot Tuna a Full Bench of the AIRC held that the onus lies on an employer seeking exemption from redundancy provisions to establish the acceptability of alternative employment, and that the test 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.8 In that case, the employer failed to adduce evidence about these matters and did not succeed with the application for exemption from the obligation to make redundancy payments.”

[15] In respect of recognition of service, United Voice relied on Oscar Oscar Group Services Pty Ltd v Lees, where Commissioner Asbury, stated:

“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.

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.”

[16] It was submitted that the Respondent’s service has not been recognised by the incoming contractors and as a result the Respondent’s employment can be terminated arbitrarily, without recourse to unfair dismissal under the Act. Further, it was submitted that the Respondent lacks job security in their current position, which needs to be considered when the Commission determines if employment was acceptable alternative employment.

[17] The Respondent filed a witness statement, which is extracted as follows:

“2. I commenced employment with the Applicant as a Security Officer on or around 22 May 2013

3. I was employed for three (3) years and five (5) months on a full-time basis with the Applicant.

Obtained Acceptable Employment

1. I received notification from the Applicant on 16 May 2016 that due to being unsuccessful in the tender for the contract with BMA, my position would be terminated as of the 30th June 2016.

2. I was informed via Info Brief on the 23 May 2016 that an information session would be presented by an executive manager of the Applicant.

3. The Applicant did not provide a date for the session and the proposed session did not take place.

4. I was not advised of any further information sessions.

5. I was made aware of available positions being advertised by Corporate Protection Australia (CPA) on SEEK, by the owner of the contract for BHP Billiton (BMA) Mr Rod Morris.

6. Mr Rod Morris also advised that he would be a referee for all staff on this site.

7. The Applicant did not provide notification of positions being advertised on SEEK until the end of May 2016. At this stage I had already applied for the position and had received positive feedback from CPA Group.

8. CPA provided feedback that I was offered employment on information I provided for my application and referees I had supplied. The applicant did not provide a reference or information which contributed to me obtaining employment with CPA.
9. Towards the end of May, I received correspondence from the Applicant which were SEEK advertisements. However, I had already applied and been accepted by CPA.

10. The current role I obtained was openly advertised on SEEK.

11. The positions were open to any applicant and the information contained in the advertisement did not refer to ER24.

12. I was not given any preferential treatment because I was a current or former ER24 employee.

Alternative employment was acceptable

13. My current position is an Asset Protection Officer, Team Lead with CPA Group at Gregory Crinum Mine Emerald Queensland.

14. I have been employed on a fulltime basis working 84hours per fortnight with the hourly rate of $29.

15. My duties include:

A. Site Access Administration;
B. Foot Patrols, Boundary and Site Patrols;
C. Attending daily pre-start meetings; and
D. Any other duties requested.

16. My Annual Leave, Personal/Careers leave and length of service were not transferred across to MSS when I commenced employment.”

Respondent’s submissions on ordinary and customary turnover of labour

[18] United Voice noted that the Application has been made under s.120 of the Act ad that the Applicant has sought to prosecute two contentions: there is no entitlement to redundancy pay under s.119; or in the alternative, the entitlement to redundancy pay should be reduced pursuant to s.120(1)(b)(i).

[19] In relation to the first contention, United Voice submitted that in seeking to prosecute

this contention, the Application is self-defeating and therefore misconceived, as a pre-requisite for the granting of an order under s.120 by the Commission is the entitlement to payment to an employee of redundancy pay under s.119.

[20] United Voice submitted that, if the Applicant genuinely believes that there is no entitlement under s.119, by virtue of the employment being terminated as a result of the “ordinary and customary turnover of labour”, the application under s.120 is fatally flawed and contrary to its purpose.

[21] United Voice did not concede that the termination of the Respondent’s employment is as a result of the ordinary and customary turnover of labour in any event.

[22] It was submitted that the Applicant’s reliance on a term in the employment contracts is misguided. United Voice noted that the obligations in relation to redundancy, including redundancy pay are contained in Part 2-2 of the Act, i.e. the National Employment Standards (NES), and that the NES provides the statutory minimum terms and conditions of employment for all federal system employees. United Voice submitted that the NES cannot be excluded, and any term which purports to contract out of the NES would be void.

[23] United Voice acknowledged that in respect of those employees whose employment

was covered by the Security Services Industry Award 2010, clause 12.5 of that Award may have relevance to those employees’ entitlement to redundancy pay.

[24] United Voice submitted that the reliance of the Applicant on the Decision of the

Commission in the Decision of Kilsby v MSS was misplaced, as that matter arose in the context of a s.739 dispute application, and therefore, the questions for determination were in a different context to that which exists presently.

[25] United Voice notes that the Applicant had referred to a small number of instances in which the Commission has determined that the loss of contract gives rise to termination of employment by reason of ordinary and customary turnover of labour.

[26] United Voice submitted that the exercise of discretion on the part of the Commission to make an order under s.120 is reliant upon certain pre-conditions being met, and characterised these as “jurisdictional facts” for ease of reference.

[27] United Voice referred to several decisions of the Commission in which loss of contract has clearly been determined as having satisfied the relevant jurisdictional facts (the entitlement under s.119) 3

[28] United Voice noted that whilst none of these decisions specifically question whether the terminations arose as a result of the ordinary and customary turnover of labour, it must be taken as read that the Commission was satisfied that the relevant jurisdictional facts had been

established such as to warrant the exercise of the discretion by the Commission under s.120 (to either make, or not make an order).

[29] United Voice submitted that it could not identify any decisions in which the Commission has determined a s.120 application in the absence of an entitlement under s.119.

[30] United Voice submitted that Applicant has conceded to the jurisdiction of s.120 in this

matter, and that on that basis, submitted the Commission should determine the matter on the basis of whether the relevant conditions under s.120(1)(b)(i) are met and after that, whether discretion to make an order reducing severance pay should be exercised.

[31] In the alternative, United Voice submitted that, should the Commission not be satisfied that the relevant preconditions are met, the Application should be withdrawn as it is made ultra vires.

[32] United Voice confirmed it was content to have the matter determined on the papers.

Summary of Applicant’s material in reply

[33] The Applicant summarised the Respondent’s position with the Applicant and the new position with CPA as follows:

ER24	CPA
Position	Full-time Security	Full-time Asset Protection Officer
Location	Gregory Crinum Mine	Gregory Crinum Mine
Pay	$28/hr	$29/hr

[34] The Applicant submitted that they “took positive and proactive steps” for the Respondent which resulted in the Applicant obtaining acceptable alternative employment, which included:

“i. The Applicant speaking with BMA requesting their assistance and informing them of their intention of working with the incoming providers to secure the Respondent with acceptable alternative employment.

ii. Arranging and participating in weekly meetings with BMA to ensure that the Applicant was remaining informed on the progress of the incoming providers liaising with the Respondent(s).

iii. As per paragraphs 16 and 17 of Mr Wicht’s Affidavit, the Applicant sent a tailored list including the details of the Respondent detailing their qualifications and relevant training to the requirements of CPA as evidenced by the document marked “TW4” in Mr Wicht’s Affidavit.

iv. Later on the same day as the Applicant provided the tailored list to CPA, CPA provided a link to their Seek advertisement contained in the document marked “TW7” in Mr Wicht’s Affidavit.

v. The Applicant sent an updated list to CPA following receipt of their Seek advertisement this list was comprehensive and employees listed with (or without) the qualifications and skills desired contained in the document marked “TWA” in Mr Wicht’s Further Affidavit, the Respondent remained on this list which provided more than just contact details but matched the skills of the Respondents to the requirements of CPA’s Seek advertisement.

vi. The Applicant sending out information provided at information sessions and sending follow up email correspondence of the information session contained in the document marked “TW59” of Mr Wicht’s Affidavit. The Respondent was advised that he fulfilled all skill requirements for new employment with CPA in this email.”

[35] The Applicant noted that the Respondent’s evidence was that Mr Rod Morris of BMA had sent directly to the Respondent (without the Applicant’s consent) information pertaining to the job opportunities at CPA. The Applicant submitted that it cannot verify that such action took place however; it submitted that, if it did, it undermined the considerable efforts made by the Applicant in diverting their head office management team exclusively and concentrating their time and attention to securing the Respondent’s employment with the incoming providers.

[36] The Applicant submitted that the current circumstances may be distinguished from the Baywood Products Pty Ltd v Mervyn Inall (Baywood Case) for the following reasons:

“a. In the Baywood Case the employee was made redundant not due to the unsuccessful re-tendering of a contract (being the ordinary and customary turnover of labour as the Applicant submits is the reason for the Respondent’s position being terminated in the current case);

b. Furthermore, in the Baywood Case it was at the request of the employee after being advised of his redundancy that the employer look into alternative positions for him. Conversely, in the current case the Applicant proactively made a great effort as far as reasonably permitted within their commercial realities to obtain acceptable alternative employment for the Respondent without the prompting of the Respondent. If the Applicant had undertaken more it would have severely damaged the relationship with BMA and adversely affected their ability to “re-tender” further work in the future effecting in part ongoing profitability of the business; and

c. The Respondent was offered a redeployment position with the Applicant and the Applicant also provided the opportunity of further acceptable alternative employment with either CPA or MSS”.

[37] The Applicant submitted that it was not within the commercial realities of the Applicant to fund training costs for obtaining further qualifications, however, it was submitted that the Consultation Letter provided that if time off was required to obtain additional qualifications the Applicant would make such time available.

[38] The Applicant submitted that the Respondent has transferred employment at the same location, on relatively the same pay as with the Applicant, has had her entitlements paid out by the Applicant and was arguing that redundancy payment is due and owing to what was essentially a ‘shirt swap’. The Applicant submitted it obtained for the Respondent a position with the incoming contractor on wages more beneficial to the Respondent.

[39] The Applicant submitted that there was no entitlement to redundancy under s.119(a) of the Act, on the basis that the unsuccessful re-tender of the BMA sites contracts constitutes “ordinary and customary turnover of labour”. The Applicant provided a copy of the Respondent’s latest employment contract, and relied on the following clauses:

“14.1. This Agreement may terminate or be terminated in the following circumstances:

(a) By the Employer without notice if the Employee engages in:

…
(x) The Employer’s contract with the operator of the Nominated Mine Site is varied or comes to an end;

…

(b) This Agreement will terminate automatically if either of the following occur:

(i) The Employer's contract with the operator of the Nominated Mine Site is terminated or comes to an end.”

[40] The Applicant submitted that the Respondent was aware that their employment was dependent on the Applicant’s on-going contract with the mine site operator, and was therefore consistent with the Kilsby Decision and employment ending due to “customary and ordinary turnover of labour”.

Conclusion

[41] On the reasoning provided in the decision of Ms Berthun, I find that there is no entitlement to redundancy pay under s.119. The effect of clause 12.5(b) of the Award is that s.119 does not apply.

[42] Accordingly, on the evidence before the Commission, the Respondent has agreed to other acceptable employment with an incoming contractor and the Applicant has paid to the Respondent his accrued statutory and award entitlements on termination of the Respondent’s employment.

[43] The Commission is objectively satisfied that the employment with the incoming contractor is “other acceptable employment” on the basis that Mr Young’s current employment is substantially the same as his previous employment with ER24, as he is working similar hours, with similar duties. While Mr Young submits that the employment is not acceptable, it is clear on the basis of the authorities I have summarised in Berthun that the enquiry is not whether the employee in question considers the employment acceptable, but rather, whether it is objectively acceptable. I am satisfied that the new employment is other acceptable employment with the incoming contractor that has been agreed to by Mr Young.

[44] I Order accordingly.

COMMISSIONER

 1   A copy of the decision ([2017] FWC 383) was provided to the Respondent by email.

 2   Serco Sodexo Defence Services Pty Ltd (SSDS) [2015] FWC 772, [8]

 3   Cleandomain Pty Ltd [2014] FWC 5243; ISS Facility Services Australia [2013] FWC 5396; ISS Facility Service [2013] FWC 7382; Serco Sodexo Defence Services Pty Ltd (SSDS) [2014] FWC 7678; Serco Sodexo Defence Services Pty Ltd (SSDS) [2015] FWC 641; Serco Sodexo Defence Services Pty Ltd (SSDS) [2015] FWC 772; Sodexo Australia Pty Ltd [2016] FWC 4012; Spotless Services Australia Limited [2016] FWC 4505; Spotless Services Australia Limited [2014] FWC 6938;

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