Jeanswest Corporation Pty Ltd T/A Jeanswest v Ms Rebecca Robinson

[2016] FWC 4932

[2016] FWC 4932

FAIR WORK COMMISSION

DECISION

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

Jeanswest Corporation Pty Ltd T/A Jeanswest
v
Ms Rebecca Robinson
(C2016/4025)

COMMISSIONER SPENCER BRISBANE, 26 JULY 2016

Variation of redundancy pay.

[1] This Decision relates to an application made under s.120 of the Fair Work Act 2009 (Cth) (the Act). The application has been made by Jeanswest Corporation Pty Ltd T/A Jeanswest (the Applicant).

[2] The Applicant has applied to the Fair Work Commission (the Commission) seeking that the redundancy entitlement of Ms Rebecca Robinson (the Respondent) be reduced to one thousand, seven hundred and thirty-five dollars and twenty five cents ($1,735.25). According to the National Employment Standards under the Act, Ms Robinson is entitled to 6 weeks redundancy pay, which the Applicant stated, equates to a sum of five thousand, five hundred and fifty-two dollars and thirty-one cents ($5,552.31). This amount corresponding to 6 weeks is calculated at Ms Robinson’s pay rate at the time of the redundancy.

[3] The Applicant has made this application pursuant to s.120(1)(b)(i) of the Act, on the basis that the Applicant submitted that it had obtained other acceptable employment for the Respondent. The Respondent has accepted a less senior role on a lower rate of pay, working fewer hours, as a Part Time Retail Team Manager at the Respondent’s Springfield Orion Store. Ms Robinson, at the time her job was made redundant, was working as a Full Time Store Manager, and had been performing this role Full-Time since February 2014, firstly at the DFO Jindalee Store, and then at the Mt Ommaney Store since October 2015.

[4] The Commission issued Directions on 9 June 2016 for the filing of materials. Further Directions were issued on 27 June 2016 seeking specific information in relation to the differences between the roles.

[5] The Applicant is content to have the matter determined on the papers. The Respondent has also indicated that she is content to have the matter determined on the papers.

Background

[6] The Applicant operates retail clothing stores. The Respondent has been employed with Applicant since 25 November 2013 and commenced in the role of Part-Time Store Manager at the Jeanswest Orion Store. On 23 February 2014, the Respondent transferred to a Full-Time Store Manager at the Jeanswest DFO Jindalee store. The Respondent then commenced at the Mt Ommaney store in October 2015, as a Full-Time Store Manager.

[7] On 28 April 2016, the Applicant’s management reviewed the performance and rental costs of the Mt Ommaney store. Upon completion of the review, the Applicant determined it was no longer viable to continue operating the store and as a result, decided to cease trading on 30 May 2016.

[8] The Applicant, in a letter to the Respondent dated 30 April 2016, formally advised the Respondent of the cessation of trading at the Mt Ommaney store from Monday 30 May 2016. This letter also advised that the Applicant was looking for suitable alternative employment for the Respondent in another Jeanswest store.

[9] The Respondent was advised in a letter dated 26 May 2016 that her employment would cease from 28 May 2016, as her position was being made redundant.

[10] The Applicant argued that they had secured “other acceptable employment” for the Respondent at the Jeanwest Orion store as a Part Time Retail Team Member and that the Respondent verbally accepted this new position on 27 May 2016.

[11] The terms and conditions of this other employment are contained in a Letter of Offer dated 31 May 2016 and contains as follows:

• Ms. Robinson will be based at the Orion store as a Part Time Retail Team Member effective 01 June 2016;



• Ms Robinson will be paid in accordance with the General Retail Industry Award 2010 at an ordinary houly rate of $18.99;



• Ms. Robinson’s accrued leave entitlements will carry over from her previous role;

[12] In a letter dated 6 June 2016, the Applicant wrote to the Respondent confirming that the position of Store Manager at the Mt Ommaney Store was made redundant due to store closure. The Applicant further notified the Respondent that, as the Respondent had accepted an offer of redeployment to the position of Part Time Retail Team Member, the Applicant would pay the Respondent a portion of the Respondent’s redundancy pay entitlement, following the Fair Work Commission’s approval. This letter sets out the reduced amount ($1,735.25) and sets out the calculation of this amount, as follows:

• 4.5 hours x $24.35 (hourly rate) x 6 weeks (redundancy pay period) = $657.45 (gross); and



• $5.36 hourly difference x 33.5 hours x 6 weeks redundancy pay period = $1,077.80 (gross).



• Total $1,735.25 (gross).

[13] The letter dated 6 June 2016 states that the calculations take into account that the Respondent’s hours of work will reduce from 38 to 33.5 hours. The calculations also appear to reflect that the Respondent’s pay rate will reduce by $5.36 per hour.

[14] From 1 June 2016 until 11 June 2016, Ms Robinson worked at the DFO Jindalee as a Part Time Retail Team Member position, while another employee at the Orion Store worked the remainder of their notice period. The Respondent commenced the Part Time Retail Team Member role at the Orion Store on Sunday 12 June 2016.

Relevant legislation and award clauses

[15] The National Employment Standards (NES) prescribe the minimum entitlements to redundancy pay pursuant to s.119 of the Act:

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

[16] The application has been made pursuant to s.120(1)(b)(i) of the Act which provides:

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…

(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.

Summary of submissions

[17] The Applicant submitted that they had obtained other acceptable employment for the Respondent in the form of the Part-Time Retail Team Member at the Orion Store.

[18] The Applicant submitted that this was acceptable employment which justified a reduction in redundancy pay, which the Applicant has calculated to take into account the reduction in hours (38 to 33.5 hours per week), and the reduction in hourly rate (of $5.36 per hour).

[19] The Applicant provided the following calculations in support of the reduced amount ($1,735.25) they are seeking the redundancy entitlement to be varied to:

• 4.5 (hours) x $24.35 x 6 weeks (redundancy pay period) = $657.45 (gross); and



• $5.36 per hour (difference) x 33.5 hours x 6 weeks (redundancy pay period) = $1,077.80 (gross).

[20] The Respondent submitted that she was in shock upon being informed of her position being made redundant. Ms Robinson stated that her approximate loss of income will be $7,500 per year. The Respondent submitted that she was offered a role at the Garden City store as an Assistant Manager, but that she was unable to take that role due to family responsibilities and school and day care hours.

[21] The Respondent submitted that she felt she had to make the decision, about whether to accept the position at the Springfield Orion store, quickly and that the significant financial impact put her under pressure to make the decision before the position was filled, whereby she would face no employment with the Applicant. The Respondent submitted that she was placed at the Jindalee Store until the Orion Store position became available, and that she was happy to do this to ensure an income during this period.

[22] The Respondent submitted that she should receive the full entitlement to redundancy pay.

[23] In response to the Further Directions, the parties were asked to provide information as to the differences between the roles.

[24] The Applicant provided two of the Respondent’s rosters, showing that the redundant Store Manager position was rostered 40 hours per week, and the new Part-Time position is rostered at 33.5 hours per week.

[25] The Applicant submitted that the Store Manager position is a Level 6 classification under the General Retail Industry Award 2010, while the Retail Team Member is classified as a Level 1 under the General Retail Industry Award 2010.

[26] It was submitted that Ms Robinson currently resides in the suburb of Redbank Plains. The Applicant submitted that the Mt Ommaney store is located 19.5kms from the Respondent’s current address and that it took approximately 24 minutes to travel to this store from Redbank Plains, whereas the Orion store is located 10.4kms from the Respondent’s current address and the Applicant submitted that it takes approximately 17 minutes to travel to this store from Redbank Plains, according to Whereis. The Respondent submitted that the Mount Ommaney Store was approximately a 25 minute drive from my residential address whereas the Springfield Orion Store is approximately a 15 minute drive.

[27] The Applicant submitted that Ms Robinson will be able to apply for any future positions that become available and would be subject to the Jeanswest recruitment process. Further, it was submitted that Ms Robinson would have equal opportunity at being appointed into another management role as any other applicant; as the recruitment process takes into account a number of factors, including but not limited to, prior experience, store grading, suitability to the current position and store location.

[28] Ms Robinson stated that she believed that if a Management Role became available within the company, that she felt she was suited to and was suitable travelling distance for her family commitments that she would still have to apply for this role, in the same was as everyone else.

[29] The Applicant provided a document which indicates that the annual salary for the redundant Store Manager position was $48,120, which is reflected in the October 2015 Letter of Offer. It appears that this annualised salary takes into account rostered overtime, penalties and leave loading, and is based on a base hourly rate of $21.26 per hour.

[30] The difference in hourly rate that is used in the Applicant’s calculations justifying the reduction in redundancy is apparently derived from dividing the annualised salary into an hourly rate based on a 38 hour week ($48,120 / 52 / 38 = $24.35).

[31] The new hourly rate of the Part-Time position is $18.99/hour, which was derived from the Award. The difference between 24.35 and 18.99 is $5.36 per hour.

[32] However, the Respondent continues to be entitled to penalties, and a document has been provided by the Applicant which indicates that the new Part-Time position (if annualised) would work out at a salary of $39,795.54. With the reduced hours and the reduced hourly rate, the difference between the approximate annualised amounts earned per year is $8,324.46.

[33] The hourly rate difference between the two positions is the difference between $21.26 and $18.99, that is, $2.27 per hour.

[34] The Respondent submitted that her Store Manager salary was $48,120.00 per annum plus superannuation, and as a Store Manager she also received a $750 Clothing Allowance per year. The Respondent submitted that her Part Time Team Member hourly rate of pay is $18.99 and that she does receive penalty rates for her 6 hour Sunday shift. The Respondent stated that she believed if she was on a salary it would work out to be approximately $38,000 per year in the Part-Time position.

[35] The Applicant submitted that Ms Robinson’s commencement date remains unchanged as there has been no cessation to her tenure with Jeanswest and that the Respondent’s accrued leave entitlements have been transferred over to her new position. The Applicant provided a document which sets out the Respondent’s entitlement to accrued annual leave as at 4 June 2016. At 4 June 2016, the Respondent had an entitlement to 19.09 hours of annual leave, equating to an amount of $464.88. This has been calculated at a rate of $24.35 per hour ($464.88/19.09hours). This document indicates that the Respondent’s annual leave accrued while working as a Full-Time Store Manager, will be paid out at the Store Manager’s rate. This has not been confirmed by the Applicant and if this is not the case, then the accrued annual leave will be paid out at the lower base rate under the Award ($18.99/hour) as, from the material provided by the Applicant, the Part-Time position does not have an annualised rate. This would result in a loss to the Respondent of approximately $100.

Consideration

[36] An application pursuant to s.120 has multiple elements, of which the Commission must be satisfied, prior to issuing an Order.

[37] Firstly, the wording of the section is that an entitlement to redundancy pay must exist, in order for the Commission to vary that redundancy pay entitlement. The Commission has previously held that in order for s.120 of the Act to have any application, there must first be an entitlement to redundancy pay pursuant to s.119 of the Act. 1 Further, it was held that where there is no entitlement under s.119, there can be no order to reduce the “entitlement” pursuant to s.120.2

[38] Employees are entitled to redundancy pay pursuant to the provisions of the Act. Section 119 relevantly provides that an employee is entitled to be paid redundancy pay by the employer, if the employee’s employment is terminated 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. The Respondent’s position of Store Manager on the Applicant’s information was no longer viable due to the performance and rental costs of the Mt Ommaney store. This is not contested by the Respondent.

[39] The Respondent’s period of service has been stated in the application as approximately 2 years and 6 months. Under s.119 of the Act, a period of over 2 years’ service but less than 3 corresponds with an entitlement to redundancy pay of 6 weeks. Both parties accept, and I am satisfied, that the Respondent has an entitlement to redundancy pay, pursuant to s.119 of the Act, subject to any order that the Commission may make. Relevantly, what must be considered is whether the Applicant obtained other acceptable employment for the Respondent.

[40] A Full Bench of the Commission in The Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 3 summarised the case authority in relation to whether other acceptable employment had been “obtained”, as follows:

“[42] The question of what is required by the word “obtains” was considered by the Full Bench in Derole Nominees. It found:

“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 (3rd ed 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.” 4 [citations removed]

And

“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.” 5

[43] In Datacom Vice President Lawler also expressed the view that the word “obtains” in the context of s.120 should be given a very broad interpretation. 6

[44] In Allman v Teletech International Pty Ltd, 7 Marshall J considered whether Teletech International Pty Ltd (Teletech) had been “able to arrange alternative employment” which appeared in provisions for relief from the obligation to pay redundancy payments within relevant workplace agreement, upon its employees being offered employment by Telstra upon taking over a contract formally held by Teletech. His Honour considered the Full Bench decision in Derole Nominees, finding that “[t]here is no material difference between obtaining alternative employment and being able to arrange it.”8

[45] Justice Marshall found that Teletech assisted its employees to apply for jobs with Telstra, had active involvement in the transition of the employees to work with Telstra, met with Telstra to discuss the possible employment of the employees by Telstra and secured a commitment from Telstra that Telstra would give all redundant Teletech employees the opportunity to apply for employment with Telstra. He found:

“Teletech was not, however, a strong moving force towards the creation of the available opportunity. The available opportunity arose because Telstra was to perform functions formerly performed for it by Teletech. Telstra required staff. It made sense for it to approach Teletech staff. Teletech did not secure the offer of a job for Teletech staff with Telstra. As counsel for the applicants submitted, Teletech arranged an opportunity for the employee applicants to participate in a recruitment process undertaken by Telstra.” 9

[46] Whilst accepting that Teletech brought the employees and Telstra together and that Teletech’s conduct was one of the factors that brought about the employment, Justice Marshall found that it did not mean that Teletech was able to arrange the employment, finding that Teletech facilitated its staff applying for jobs with Telstra, competing on their merits for the available positions. 10 His Honour found that:

“The encouragement and facilitation of a process is not the same as doing everything possible to ensure a result. Arranging alternative employment means bringing about that employment should the employee choose to accept it. Anything short of that, such as competing with competitor applicants (albeit limited to two categories of applicant: existing Telstra and Teletech employees) does not meet the test provided by the relevant sub-clause in the AWAs.” 11”

[41] The Applicant submitted that on 26 May 2016, the Respondent was informed of a resignation of a Part Time Retail Team Member at Jeanwest Orion Store and the Respondent informed the Applicant that she would be interested in being re-deployed to this position. This position was verbally offered to the Respondent on 27 May 2016 and Ms Robinson accepted this position verbally on 27 May 2016.

[42] On the material provided, the Applicant “obtained” the other employment of Part Time Retail Team Member at the Orion Store. Accordingly, the differences in the resulting employment conditions must be considered in relation to whether the other employment was “acceptable”.

[43] The Commission must consider the new employment contract, to enable the Commission to assess the “acceptable” nature of that employment.

[44] In the matter of Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 12, the Full Bench stated as follows:

“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 a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 13

[45] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 14, the Full Bench stated:

“...We do not propose to repeat here the thoroughly detailed argument presented by counsel for the union. A considerable part of that case was devoted to questions of onus and to supporting the proposition that the test of acceptability of the alternative employment 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. It was argued that the failure of the employer to adduce evidence of such matters caused the company to fail to make out a case for an exemption. We have no doubt that there is an onus on the employer invoking cl 51(c) and that matters of the kind referred to by the union may be relevant in assessing the position in a particular case. We do not believe it to be necessary to make that examination in every case. Where an employee has accepted alternative employment in circumstances as those here, then in the absence of positive evidence going to the unacceptability of that employment, including unacceptable features of it, then the Commission is entitled to hold the employment as an acceptable alternative and relieve the employer of the obligation under cl 51(c) of the award...” 15

[46] On the information presented, The Respondent accepted the offer of employment which involved a lower status from Store Manager to Retail Team Member, a lower hourly pay (from an annualised rate of $24.35/hour, to a base rate of $18.99/hour plus penalties) and a reduction of 4.5 hours per week. However, the rostered hours in the Store Manager position was 40 hours/week, while the new rostered hours are 33.5 hours per week. This is a reduction in 6.5 hours/week.

[47] The location is closer in distance and time taken to travel to work is less at the new location. No submissions were made that the location rendered the new employment unacceptable.

[48] The Respondent’s service is continued, and her entitlements have been rolled over, however, while a document provided by the Applicant indicates an accrued entitlement at this Store Manager Rate, the Applicant did not confirm that the accrued annual leave and other accrued leave would be paid to the Respondent at the higher rate of pay.

[49] There was no guarantee provided by the Applicant that the Respondent would be able to return to a Store Manager role, should such a position become available. The Applicant submitted and the Respondent confirmed her understanding that the Respondent would be required to apply for any such position in competition with other applicants.

[50] Whilst the Respondent agreed to the offer of other employment, given that there was a reduction in the pay rate and the job status, and a reduction in the rostered hours, the new job, therefore, was not on commensurate terms with the prior job. The Applicant has not demonstrated that they obtained other employment nor did they satisfy that the terms of the other employment were acceptable (pursuant to s.120(b)(i) of the Act), to a degree to obviate their total obligation to pay redundancy.

[51] The reduction in hourly pay rate and hours rostered per week will have an on-going negative financial impact on the Respondent.

Conclusion

[52] Accordingly, for the aforementioned reasons, taking into account all of the circumstances, I am satisfied that, in accordance with s.120 (1)(b)(i) of the Act, I should exercise the discretion pursuant to s.120(2) of the Act, and reduce the amount of redundancy pay, on the basis that the other employment was obtained by the Applicant in their business, with the Respondent confirming such. The resultant position, however, provides lesser terms.

[53] The Respondent has an entitlement to 6 weeks redundancy pay for at least two years, but less than 3 years, of service. The comparison between the roles sets out further evidenc of the impact of the lesser terms of the other employment. Accordingly, pursuant to the discretion in s.120(2), the redundancy pay is reduced to the amount of three (3) weeks redundancy payment (based on the annualised rate of the Store Manager position, applicable at the date the redundancy was effected by the Applicant), that is, a reduction in the redundancy entitlement to $2,776.16 (gross), payable as a redundancy payment, less an amount of taxation according to law associated with a redundancy payment. This amount is payable within 14 days from the date of this Decision.

[54] An Order reflecting the terms of this Decision will issue separately 16.

COMMISSIONER

 1   Application by CAE Australia Pty Ltd [2012] FWA 7992 per Watson VP at [13].

 2   Ibid; also refer M & S Dickson [2011] FWA 5206 per Lewin C.

 3   [2014] FWCFB 6737.

 4 (1990) 140 IR 123, at 127.

 5 (1990) 140 IR 123, at 128.

 6   [2013] FWC 1327, at para 12.

 7 [2008] 178 IR 415.

 8 [2008] 178 IR 415, at 418.

 9 [2008] 178 IR 415, at 419.

 10 [2008] 178 IR 415, at 419.

 11 [2008] 178 IR 415, at 419.

 12 (1990) 140 IR 123.

 13 (1990) 140 IR 123 at pp128.

 14 (1988) 27 IR 226.

 15 (1988) 27 IR 226 at pp230 - 231.

 16   PR583234.

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