GCo Electrical Pty Ltd

[2017] FWC 1410

[2017] FWC 1410

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

GCo Electrical Pty Ltd
(C2017/580)

COMMISSIONER WILLIAMS PERTH, 10 MARCH 2017

Variation of redundancy pay.

[1] This is an application made pursuant to section 120 of the Fair Work Act 2009 (the Act) by GCo Electrical Pty Ltd (the Applicant). The respondents are Mr John Goddard (Mr Goddard) and Mr Andrew Fisher (Mr Fisher) (collectively, the Respondents).

[2] The Applicant is applying for the Commission to reduce the redundancy pay of the Respondents to nil on the basis that the Applicant has obtained other acceptable employment for each of the employees.

[3] Sections 119 and 120 of the Act are relevant and are set out below.

“Subdivision B—Redundancy pay

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

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.”

Background and factual findings

[4] The Applicant and the Respondents have provided statements of evidence and submissions in support of their respective positions. Both Respondent employees object to the application.

[5] There is no dispute between the parties about the factual matters which are relevant in this case, in particular the differences between the previous positions the employees were working in and the other employment offered to them.

[6] The Applicant is an electrical contracting company. It is currently subcontracted to an engineering company that has a maintenance services contract with the Midwest Ports Authority which has involved the Applicant providing eight employee electricians working continuous shifts over 24 hours a day, seven days a week.

[7] On 17 January 2017 the Applicant was notified by its client that they should reduce the number of employees they were providing from eight to four by 23 January 2017.

[8] Following a process of consultation and a selection process based on a number of criteria four of the employees, including Mr Goddard and Mr Fisher, were advised by the Applicant that they would not be continuing on work for the Midwest Ports Authority but instead returning to the Applicant’s head office/workshop.

[9] Consequently Mr Goddard and Mr Fisher were each issued a redeployment letter detailing their wages and position descriptions. Both men were offered redeployment as full-time permanent electricians. Ultimately both Mr Goddard and Mr Fisher declined the offer of redeployment.

[10] The Applicant acknowledges that the working hours and remuneration for the other employment the men were to be redeployed to is different to that they enjoyed in the prior continuous shift role. The Applicant acknowledges there is a significant difference in the hourly base rate of pay however submits that it is a competitive rate in terms of the current market for a similar roster. The Applicant argues that the employees would not have been worse off or disadvantage because they both would have still been working full-time as per employees in the same classification doing exactly or very similar duties.

[11] I find as submitted by the Applicant that the differences between the previous position and the other employment offered was:

• Different work locations but only 2km further from Mr Goddard’s home address and only 700m further from Mr Fisher’s home address.



• Slightly less hours (160 hours per 28 day period, down from 168) but with the possibility of further additional hours and noting that none of the employees are entitled to work additional hours.



• A reduction in hourly rate from $57.57 per hour to $37.57 per hour as both Respondent employees will not be doing continuous shift work but will be day workers.

[12] The approximate annual incomes for each position then is:

The previous position

A year has 365 days so therefore there are 13.036 periods of 28 days. Working 168 hours for each of 13.036 periods = 2190 hours worked per year. 2190 hours x $57.57 = $126,078 per annum.

The other employment

A year has 365 days so therefore there are 13.036 periods of 28 days. Working 160 hours for each of 13.036 periods = 2086 hours worked per year. 2086 hours x $37.57 = $78,371 per annum.

[13] The other employment involves the employees working 104 less hours each year, which at the continuous shift rate of the previous position equals earnings of $5,987 per annum. Subtracting this from the annual earnings of $126,078 gives an equivalent annual amount for having worked the same hours as the other employment of $120,091.

[14] These calculations demonstrate that the other employment offered by the Applicant to each Respondent employee involves a reduction in annual income of over $40,000 for the same hours per annum.

[15] I accept there arguably is some benefit in that the other employment does not require the Respondents to work continuous shifts. However the desirability or otherwise of particular shift patterns is very much a personal judgement individual employees make. I would not accept that any potential benefit from not working continuous shifts balances out the $40,000 annual income lost.

The issue - Other acceptable employment

[16] Considering these facts above the issue to be determined by the Commission is whether the offer of alternative employment amounted to “other acceptable employment” within the terms of section 120 of the Act and if it was whether the amount of redundancy pay payable should be reduced and by what amount.

[17] As noted by the Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 1 at 124:

“What constitutes “acceptable alternative employment” is a matter to be determined as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provisions would be without practical effect.

Yet the use of the qualification “acceptable” is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elections of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.”

[18] The determination of whether the position offered was other acceptable employment must be determined objectively and not subjectively from the perspective of the employer or the employee.

[19] As was explained by Watson SDP in Feltex Australia Enterprise Agreement 2004 2 at [89]:

“...acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”

[20] That the other employment may be rejected by employees does not objectively make it unacceptable.

[21] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 3 a Full Bench of the Commission found that the determination of whether alternative employment is acceptable will involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.

[22] In National Union of Workers v Linfox Australia Pty Ltd 4 Vice President Watson considered the following criteria:

(a) the employee's skills, experience and physical capacity;

(b) the rates of pay, hours of work, duties and conditions of employment associated with the proposed job;

(c) whether or not continuity of employment is provided to the employee;

(d) the extent of any additional travel distances from home to the new place of work and whether the employee has to substantially alter their method of travelling to and from work in order to attend to duty; and

(e) the level of any compensation.

[23] In my view the term “acceptable alternative employment” considered in this case law is the same as the term “other acceptable employment” used in section 120 of the Act and hence the case law is directly applicable in this matter.

Conclusion

[24] In this case the loss of annual income of around $40,000 is a very significant negative difference between the previous positions and the other employment offered. This is a reduction in income of 33%. I accept the Applicant has done all it reasonably can in the difficult circumstances it found itself in to retain both Mr Goddard and Mr Fisher within its workforce and provide them with on-going employment. However the immediate business realities are that the company can only offer the employees other employment which involves significantly reduced earnings.

[25] Considering the differences between the previous positions and the other employment offered to Mr Goddard and Mr Fisher I do not accept that it is other acceptable employment for the purposes of section 120 of the Act. Accordingly this application is hereby dismissed.

[26] Mr Goddard and Mr Fisher are each entitled to the full benefits of redundancy pay as provided for in section 119 of the Act.

COMMISSIONER

Final written submissions:

Applicant, 23 February 2017.

Mr Goddard, 14 February 2017.

Mr Fisher, 26 February 2017.

 1 (1990) 140 IR 123.

 2   PR974699.

 3 27 IR 226.

 4   [2008] AIRC 647.

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