Hi-Class Composites Pty Ltd

[2012] FWA 7814

[2012] FWA 7814

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Hi-Class Composites Pty Ltd
(C2012/5108)

COMMISSIONER GOOLEY MELBOURNE, 13 SEPTEMBER 2012

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

[1] On 21 May 2012 Hi-Class Composites Pty Ltd (the Applicant) advised Mr Jeffrey Taylor that his position was redundant. It was not disputed that under section 119 of the Fair Work Act 2009 (the FW Act) Mr Taylor was entitled to redundancy pay.

[2] On 29 August 2012 the Applicant filed an application pursuant to section 120(2) of the FW Act seeking orders that the amount of redundancy pay payable to Mr Taylor be reduced to zero on the grounds that the employer had obtained acceptable employment for Mr Taylor.

The Legislative Framework

[3] Section 120 of the FW Act provides as follows:

“120(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.

120(2) On application by the employer, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA considers appropriate.

120(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.”

The Evidence

[4] The Applicant submitted that it had obtained two other positions for Mr Taylor.

[5] It was submitted that Mr Taylor had been offered a lower paid position with the Applicant.

[6] The Applicant submitted that Mr Taylor was also offered a position with Trakmaster - Off Road Pty Ltd (Trakmaster). It relied on a letter of Mr Richard Metcalfe an Assistant Manager with Trakmaster to support its submissions. Mr Metcalfe was not called to give sworn evidence. In the letter, Mr Metcalfe said that Mr Chris Wood from the Applicant told him that Mr Taylor was looking for work and asked if they would interview him. Mr Metcalfe arranged an interview with Mr Taylor and Mr Craig Miles, the Managing Director of Trakmaster. Mr Metcalfe said that wages and conditions were discussed at the interview but did not in his letter provide any details about the position on offer or the terms and conditions attached to the position. Mr Taylor was subsequently offered a position but Mr Taylor told Mr Miles that he would not be able to start until 18 June 2012 as he wanted some time off before he started a new job and he wanted to consider other offers. Mr Metcalfe said that Mr Taylor said he would let them know but he never advised them if he wanted the position.

[7] Trakmaster manufactures caravans. The Applicant manufactures components for caravans. The Applicant submitted that the job with Trakmaster was a manufacturing job and was an equivalent position to the position Mr Taylor had with the Applicant.

[8] The Applicant did not call any oral evidence to support its submissions.

[9] Mr Taylor gave evidence 1 and was cross examined. He gave evidence he was paid $25.50 per hour in his position with the Applicant.2 He was a qualified fibreglass technician. It was his evidence that the “Applicant is in the business of manufacturing fibreglass components for caravans and other automobiles.”3 He was employed to manufacture fibreglass components. He had worked in the fibreglass industry for over 18 years.4

[10] Mr Taylor agreed that Mr Wood had told him that there was a position available at Trakmaster. He contacted Mr Metcalfe who told him to come in for an interview which he did. Mr Miles interviewed him and he asked Mr Taylor what his current rate of pay was and when he was told it was $25.50 per hour Mr Miles told Mr Taylor they would not be able to pay him that much money. 5 The role at Trakmaster would involve the assembly and construction of caravans which Mr Taylor said was significantly different work to the work he had been performing with the Applicant.6

[11] Mr Taylor followed up this offer with Mr Miles who told him that he needed someone who could start as soon as possible. Mr Taylor told Mr Miles he had to work out his notice period and then he wanted to take a break. Mr Miles told him that he could not guarantee that the position would still be available but that Mr Taylor should ring him when he finished work with the Applicant. It was Mr Taylor’s evidence that no firm offer of employment was ever made and that the terms of the offer were never discussed. All that he was told was that he would be paid less than he was being paid by the Applicant. 7

[12] Mr Taylor did not contact Trakmaster again as he decided that he wanted to continue working in the fibre glassing industry. 8

[13] Mr Taylor was not cross examined on his discussions with Mr Miles or about the rate of pay offered by Trakmaster.

[14] In cross examination Mr Taylor accepted that there was no issue with the location of job offered by Trakmaster.

[15] The Applicant relied upon the meaning given to acceptable employment by the Full Bench of the Australian Industrial Relations Commission in Australian Chamber of Manufactures and Derole Nominees  9:

“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.”

[16] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd  10(Hot Tuna), a Full Bench of the Australian Industrial Relations Commission found that the onus rested on the employer making an application to vary redundancy pay to demonstrate that the alternative employment is acceptable. The determination of that issue may involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and travelling time. The determination of the question of acceptability of the employment however can only be done on “the evaluation of the facts proved in evidence or otherwise established.”11

[17] The Applicant in this matter provided no evidence about the nature of the position offered to Mr Taylor or the terms and conditions attached to the position. Further it did not cross examine Mr Taylor on his evidence about these matters.

[18] It is unclear from the evidence that a position was ever offered by Trakmaster, but assuming it was, the only evidence before me was that the job would pay Mr Taylor a lesser wage doing work he was not trained to do. I do not accept the submission of the Applicant that as this was a manufacturing job, as was Mr Taylor’s position with the Applicant, that the position involved work of a like nature. I accept Mr Taylor’s evidence that he was employed as a fibreglass technician and the position with Trakmaster would involve the assembly and construction of caravans. I accept his evidence that Trakmaster, while it installed fibreglass components in its caravans, did not manufacture fibreglass components. I accept the evidence of Mr Taylor that working at Trakmaster would have involved a significant career change.

[19] The Applicant submitted that it offered Mr Taylor a lower paid position. It was not clear what was the nature of this position was. It however would have paid Mr Taylor $9.50 per hour less than the wage he had been earning.

[20] The Applicant submitted that it could rely upon clause 18.2 of the Vehicle Manufacturing, Repair, Services and Retail Award 2010 to support its contention that it should not be required to pay Mr Taylor any redundancy pay.

[21] Clause 18.2 provides as follows:

“18.2 Transfer to lower paid duties

Where an employee is transferred to lower paid duties by reason of redundancy, the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may, at the employer’s option, make payment instead of an amount equal to the difference between the former ordinary time rate of pay and the new ordinary time rate of pay for the number of weeks of notice still owing.”

[22] There is no doubt that had Mr Taylor accepted the lower paid position the Applicant would only have been required to pay Mr Taylor that higher rate of pay for the notice period. However Mr Taylor did not accept the lower paid position and therefore clause 18.2 has no application.

[23] I do not consider that the reference to acceptable employment in section 120 of the FW Act is a reference to employment with the Applicant but even if it were, there was no evidence about the nature of the position with the Applicant before the Tribunal. The only information on this position was that it involved a significant reduction in pay.

[24] On the material before me I am unable to find that the position offered by Trakmaster was acceptable employment. It was work of a different character to the work performed by Mr Taylor and it was paid at a lower rate of pay. Further the position would not have utilized Mr Taylor’s skills as a fibre glass technician. I am also unable to find that, if the position offered by the Applicant can be considered for the purpose of section 120, it was acceptable employment as it was at a substantially lower rate of pay.

[25] The application is therefore dismissed.

COMMISSIONER

Appearances:

B Cameron for the Applicant.

J Taylor on his own behalf.

Hearing details:

2012.

Melbourne:

10 September.

 1   Exhibit T1

 2   Ibid at [2]

 3   Ibid at [9]

 4   Ibid

 5   Ibid

 6   Ibid

 7   Ibid at [10]

 8   Ibid at [13]

 9   Print J4144

 10 27 IR 226, in particular p230 to p231

 11   Ibid at p231

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