JCORP Pty Ltd T/A Now Living

[2018] FWC 2627

[2018] FWC 2627

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

JCORP Pty Ltd T/A Now Living
(C2018/1249)

COMMISSIONER WILLIAMS PERTH, 11 MAY 2018

Variation of redundancy pay.

[1] This decision concerns an application by JCORP Pty Ltd T/A Now Living (the Applicant or JCORP) to reduce the amount of redundancy pay to which an employee, Mr Ryan Souren (Mr Souren), is entitled under section 119 of the Fair Work Act 2009 (the Act).

[2] The parties have provided written materials regarding this matter.

Factual findings

[3] Mr Souren commenced employment in 2013 as a Senior Draftsperson. In 2014 he was promoted to the position of Drafting Manager. In this position Mr Souren was the manager of the design and drafting department. During the business peak in this position Mr Souren managed up to 13 staff members. He was being paid at the rate of $93,000 per year in this position.

[4] In October 2017 the Applicant underwent a restructure following a downturn in the housing industry and several roles were made redundant. The design and drafting department was reduced from the staffing at that time of seven employees consisting of the Drafting Manager Mr Souren, a Senior Draftsperson, a Town Planner, three Draftspersons and a Trainee Draftsperson to four employees consisting of the Drafting Manager Mr Souren, one Senior Draftsperson, one Town Planner and one Draftsperson.

[5] Sometime later further changes in the positions in this department occurred and immediately prior to Mr Souren’s position being made redundant the department he managed consisted of four senior experienced employees including himself, one Senior Draftsperson, one Senior Designer and one Draftsperson. Consequently in February 2018 a further review of Mr Souren’s department was undertaken and given the high level of seniority and experience in the department the Applicant decided there was no longer a requirement for the role of a Drafting Manager and Mr Souren’s position was made redundant.

[6] It was discussed with Mr Souren that he would be offered a change in his position and salary for a period of 12 months and that the end of that period the situation would be reviewed with the expectation that the Applicant might then be in a more positive business situation.

[7] On 7 March 2018 Mr Souren accepted the alternative position as a Draftsperson on a salary of $65,000 per annum reporting to the Senior Draftsperson, whom had previously reported to Mr Souren.

[8] The next day 8 March 2018 the Applicant made this application.

[9] After commencing in the alternative position as a Draftsperson Mr Souren applied for a different position advertised by BGC Residential as a Drafting Compliance Officer. Mr Souren was successful in his application and has commenced employment in this position on 26 March 2018. This position has a base salary of $80,000.

Submissions

[10] The Applicant applied for the Commission to reduce the redundancy pay entitlement under the National Employment Standards submitting that the Draftsperson position is other acceptable employment. The Applicant submits that the redundancy pay payable to Mr Souren should be reduced by 70% to $4292.30 on the basis that the salary applicable to the Draftsperson position is approximately 30% less than the salary for Mr Souren’s former role as the Drafting Manager.

[11] Mr Souren’s view is that the Draftsperson position is not other acceptable employment because of the reduction in salary and seniority and so there should not be any reduction in the amount of redundancy pay payable to him.

The legislation

[12] Sections 119 and 120 of the Act are relevant for the purposes of this decision 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.”

The issue - Other acceptable employment

[13] Considering these facts above the issue to be determined by the Commission is firstly whether the Draftsperson position amounted to “other acceptable employment”. Only if it was other acceptable employment must the Commission then consider whether to exercise its discretion to reduce the amount of redundancy pay payable and if so by what amount.

[14] 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.”

[15] As was explained by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 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.”

[16] 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.

[17] In National Union of Workers v Linfox Australia Pty Ltd 4 Watson VP considered the following criteria to be relevant when determining whether alternative employment is acceptable:

(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.

[18] In my view the term “acceptable alternative employment” considered in this case law should be taken to have the same meaning as the term “other acceptable employment” which is used in section 120 of the Act and hence the case law is directly applicable in this matter.

Consideration

[19] The Applicant submits the other employment which they offered to Mr Souren and which he accepted as a Draftsperson is “other acceptable employment” for the purposes of section 120 of the Act. Consequently they submit the amount of redundancy pay payable to Mr Souren as a consequence of his position as the Drafting Manager being made redundant should be reduced.

[20] Mr Souren submits that his employment as the Drafting Manager was covered by the Building and Construction General On-Site Award 2010 5 (the Award) and the Award applied to him. Reviewing the classifications covered by the Award I do not accept that this was the case. The Award does not cover managerial positions and in my view did not apply to Mr Souren’s employment as the Drafting Manager.

[21] Mr Souren also submits that the redundancy pay payable to him should not be reduced.

[22] Whether other employment obtained by an employer is “other acceptable employment” is an objective question not determined by the employer’s or the employee’s opinion. Factors likely to be relevant in considering this question include amongst others the nature of the work to be done, the rate of pay, hours of work, skills, duties, seniority and location of the work when compared to the position that was made redundant. The onus is on the Applicant, in this case JCORP, to satisfy the Commission that they have obtained the other employment and that it is “other acceptable employment”.

[23] In this case I am satisfied that JCORP obtained the other employment for Mr Souren.

[24] The fact that some time after commencing work in the other employment as a Draftsperson Mr Souren was successful in gaining another position with another business is not relevant to this application. The matter to be determined is whether the position obtained by the Applicant for Mr Souren which he moved to immediately after his position as Drafting Manager was made redundant is other acceptable employment. What has transpired subsequently is not relevant to this question.

[25] I accept that the other employment as a Draftsperson is to be performed in the same location and the hours of work will be the same as Mr Souren’s redundant position. I accept that the other employment requires similar qualifications and that Mr Souren has the experience, skills and expertise necessary to perform the duties of the other employment. These factors weigh in favour of finding that the Draftsperson position was other acceptable employment.

[26] The fact the other employment was proposed to be temporary and the situation would be reviewed in 12 months involves sufficient uncertainty as to be a neutral factor.

[27] The other employment as a Draftsperson has a remuneration of $65,000 per annum compared to the $93,000 per annum Mr Souren was being paid previously. This is a 30% reduction in Mr Souren’s salary for the same hours of work which is a significant negative factor that weighs against finding that the Draftsperson position is other acceptable employment.

[28] The other employment also involves a significant reduction in seniority. Mr Souren in his redundant position was the manager of the drafting and design department. In the other employment as a Draftsperson he will no longer have any managerial responsibilities and in fact will be reporting to the Senior Draftsperson, one of the staff he previously managed. This change is a significant negative factor that weighs against finding that the Draftsperson position is other acceptable employment.

[29] Considering all of these factors I am not satisfied that the other employment as a Draftsman is other acceptable employment.

[30] Consequently it is my decision that this application will be dismissed and there will be no reduction of the amount of redundancy pay to which Mr Souren is entitled.

[31] An order [PR606978] to that effect will now be issued.

COMMISSIONER

Final written submissions:

Applicant, 4 April 2018.

Mr Souren, 22 April 2018.

<PR606977>

 1 (1990) 140 IR 123.

 2   PR974699.

 3 27 IR 226.

 4   [2008] AIRC 647.

 5   MA000020.

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