Hunt Energy and Mincer Co Australia Pty Ltd v Thomas

[2012] FWA 7845

[2012] FWA 7845

FAIR WORK AUSTRALIA

DECISION

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

Hunt Energy & Mineral Company Australia Pty Ltd
v
Mr Ian Thomas
(C2012/4807)

COMMISSIONER HAMPTON ADELAIDE, 14 SEPTEMBER 2012

Redundancy - entitlement under the NES - application to vary redundancy pay due to other employment - alternative position acceptable - whether employer obtained the other employment - assisted but not obtained - no basis to reduce severance entitlement - application dismissed.

BACKGROUND AND CASE OUTLINE

[1] Hunt Energy & Mineral Company Australia Pty Ltd (Hunt Energy) has made application pursuant to s.120 of the Fair Work Act 2009 (the Act) in relation to a redundancy payment otherwise due to its former employee, Mr Ian Thomas. Hunt Energy is seeking that the redundancy pay be reduced by fifty percent on the basis that it has allegedly obtained acceptable alternative employment for Mr Thomas.

[2] Mr Thomas opposes the application on the basis that he obtained the alternative employment, rather than Hunt Energy.

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

“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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA 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.”

[4] The redundancy pay provided by s.119 is as follows:

“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

.....”

[5] As a result of a directions conference conducted on 17 August 2012, the following facts have been agreed by the parties, or at least are not in dispute:

• Mr Thomas was made redundant in July 2012;



• He is, subject to this application, entitled to (notice and) redundancy payments based upon his years of relevant continuous service (between 2 and 3 years);



• The redundancy entitlement arises from s.119 of the Act; 1



• Mr Thomas has found acceptable alternative employment within the meaning of s.120(1)(b)(i); 2 and



• Hunt Energy is not claiming that it cannot pay the amount of redundancy pay (s.120(1)(b)(ii)).

[6] As outlined above, there is however a dispute as to whether Hunt Energy obtained the alternative employment for Mr Thomas within the meaning of the Act and whether there should be any reduction in the amount of redundancy pay due to Mr Thomas.

[7] Given the narrowness of the issues in dispute, and after consulting with the parties, I issued directions providing for the filing of submissions and evidence (by way of sworn statements). I also indicated that I would determine the matter based upon the filed material if appropriate. I also provided that one or both parties could apply for a hearing if sought.

[8] Neither party sought to be further heard and given the nature of the evidence and the fact that it confirmed both the common facts and the competing positions advanced by both parties in the directions conference, I have determined the matter based upon the evidence as filed.

[9] Hunt Energy provided evidence from Mr Caleb King, who was at the relevant time its Human Resource Manager. The substance of Mr King’s evidence is as follows:

• Mr King had dealings with a company, Harness Energy Services (Harness), which provides employment and training opportunities in the Onshore Drilling Industry;



• Harness provided some staff to Hunt Energy from time to time;



• In early July 2012, Mr King became aware that Hunt Energy would be closing its main operations and was requested to assist the rig operators when/if redundancies occurred;



• Shortly thereafter, Mr King met with Harness staff and provided a full list of the relevant Hunt Energy staff and provided a reference for many of them, including Mr Thomas; and



• On 6 or 7 July 2012, Mr King contacted Mr Thomas and advised him of the redundancy, discussed potential employment with Harness and mentioned the reference that had been provided.

[10] There is a dispute about the date of the final conversation between Mr King and Mr Thomas however it is not critical to the determination of this matter.

[11] Hunt Energy seeks a fifty percent reduction in the level of redundancy payments provided by s.119 of the Act. That is, a reduction of three weeks.

[12] Mr Thomas provided evidence and the substance of that is as follows:

• There was a discussion with Mr King on 6 or 7 July 2012 during which the prospect of employment with Harness was also discussed and a period of notice (of dismissal) was referred to by Hunt Energy. There was no follow-up from this discussion by Mr King or anyone else from Hunt Energy or Harness;



• On 9 July 2012, Mr Thomas sought advice about his entitlements and immediately sought confirmation from Hunt Energy;



• Shortly after, Hunt Energy, through a Human Resources Officer, indicated that he was entitled to 40 hours notice and that the employer would be seeking to approach Fair Work Australia to reduce its (redundancy) obligation;



• There was no subsequent contact between Hunt Energy and Mr Thomas; and



• On 10 July 2012, Mr Thomas contacted Harness and enquired about employment opportunities. Mr Thomas sent in his résumé and was subsequently employed by them.

[13] Mr Thomas also contends in evidence that his contact with Harness reveals that it was aware of Hunt Energy closing down but the response from Harness was not consistent with anything further having been done by Hunt Energy in relation to his new employment.

[14] It is not clear whether there are outstanding entitlements due to Mr Thomas beyond those connected with this matter, however, this is not critical to the application. Of course, if there are any outstanding entitlements, including leave and the minimum notice period provided by the Act 3, these should be paid immediately.

CONSIDERATION

[15] The immediate issue is whether Hunt Energy obtained the alternative employment for Mr Thomas within the meaning of the Act. The history and intent of this element of the legislation 4 is in effect explained by the Full Bench of the Australian Industrial Relations Commission in Australian Chamber of Manufacturers and Derole Nominees Pty Ltd - Clothing Trades Award 19825 in the following terms:

“We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment. Where such an application was made it would be important to consider whether previous service with the previous employer was recognized as service with the new employer.

The word "obtains" does not appear in its context to mean actually obtain in the fullest sense possible. In circumstances like those occurring at the company one employer is incapable in law of effecting a contract of employment between his employee and another employer whether by assignment or otherwise; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate.

It follows that "obtain" must be given some lesser meaning. The Shorter Oxford Dictionary (third edition, revised) provides as its relevant meaning, the definition of "obtain" as "to procure or gain, as the result of purpose and effort". It seems to us that meaning is of assistance here; that is, the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind.

This approach is supported if the passages quoted above from the Termination, Change and Redundancy Case are read in conjunction with what was said under the heading “assistance in seeking alternative employment”. There the Commission records the ACTU objective of achieving award provisions “designed to ensure that the employer assists the employee to find alternative employment”.

Reliance was placed by the ACTU on a decision of the South Australian Industrial Commission in the Milk Processing and Cheese Etc Manufacturing Case:

“where it was decided that there should be included in any detailed prescription on redundancy an obligation on the employer actively to offer, or to make reasonable endeavours to procure, suitable alternative employment for redundant employees.”

Dealing with the circumstances in which the general prescription the Full Bench was awarding might be departed from, the decision in the Termination, Change and Redundancy Case indicates that particular regard was paid to, inter alia, the S.A. Milk Processing and Cheese Etc. Manufacturing decision. Viewed in this way it will be seen that the intention is not to impose an absolute test on the employer’s ability to “obtain” alternative employment but rather it refers to action which causes acceptable alternative employment to become available to the redundant employee. The employer must be a strong, moving force towards the creation of the available opportunity.”  6

[16] On that basis, it is necessary to consider whether Hunt Energy was the strong, moving force behind the creation of the available opportunity subsequently taken up by Mr Thomas. This is not an absolute test but rather one that needs to be realistically assessed in the particular circumstances of each case.

[17] At its highest, Hunt Energy contacted Harness, confirmed that redundancies would be occurring, advised that this may include Mr Thomas and provided a reference for him. Further, in advising Mr Thomas of his redundancy, it also referred to the possibility of employment with Harness. These elements assisted with the alternative employment ultimately found by Mr Thomas.

[18] Hunt Energy did not however make any arrangements for contact between Mr Thomas and Harness, arrange for an interview or the supply of his résumé, or have any apparent role in the formation of the new employment contract. There is also no evidence that any transitional arrangements were made or proposed by Hunt Energy in relation to the new employment. Although not all of these would need to be present to meet the criteria of obtaining the new employment, they are indicative of the kind of role envisaged by the s.120(1)(b)(i) of the Act.

[19] The background was certainly set by Hunt Energy. However, based upon the evidence before the Tribunal, in the end, Mr Thomas made the direct approach to Harness, supplied his résumé and in effect, obtained the new employment.

CONCLUSIONS

[20] On balance, I am not persuaded that Hunt Energy obtained the new employment for Mr Thomas within the meaning of s.120(1)(b)(i) of the Act.

[21] Accordingly, there is no basis to consider the reduction in the redundancy payments provided by s.119 of the Act and this application is dismissed.

COMMISSIONER

Conference details:

2012

17 August

Adelaide (by Telephone)

Written submissions:

23 August, (Applicant)

31 August (Respondent)

 1   I understand that the parties are not subject to an Enterprise Agreement or other industrial instrument providing redundancy payments and therefore subject only to the redundancy arrangements set out in the National Employment Standards, including s.119 of the Act.

 2   I understand that the alternative position is also within the oil and gas drilling industry, consistent with the position occupied by Mr Thomas with Hunt Energy and provides the same or better conditions of employment.

 3   Section 117 of the Act provided minimum periods of notice of termination or pay in lieu. This would represent two weeks in the case of Mr Thomas.

 4   In the Australian Industrial Relations Commission’s supplementary decision in the 1984 Termination, Change and Redundancy Case Print F7262, the Full Bench adopted a provision which closely reflects s.120(1)(b)(i). Accordingly, although in the context of an award application under earlier legislation, the apparent purpose of s.120(1)(b)(i) of the Act with respect to reductions based upon obtaining alternative employment remains the same.

 5   Print J4414, 12 September 1990, per Peterson J, Marsh DP and Oldmeadow C.

 6   Print J4414, p. 4 and 5.

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