KT Aviation Services Pty Ltd

[2017] FWC 4220

[2017] FWC 4220

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

KT Aviation Services Pty Ltd
(C2017/4237)(C2017/4239)(C2017/4241)(C2017/4242)(C2017/4243) (C2017/4244) (C2017/4245) (C2017/4246) (C2017/4247) (C2017/4248) (C2017/4249) (C2017/4250) (C2017/4251) (C2017/4252) (C2017/4253) (C2017/4254) (C2017/4255) (C2017/4256) (C2017/4257) (C2017/4258) (C2017/4259) (C2017/4260) (C2017/4261) (C2017/4262) (C2017/4266) (C2017/4269)

DEPUTY PRESIDENT BULL PERTH, 4 SEPTEMBER 2017

Application to vary redundancy pay entitlements to nil for 26 respondent employees. No demonstration of employer having ‘obtained’ acceptable employment for employees. Application dismissed

[1] KT Aviation Services Pty Ltd (the applicant/KTAS) seeks relief from its statutory obligation to make redundancy payments to 26 of its previous employees who are listed below:

• Aileen Rustia;



• Andi Mirzah;



• Aye Mi Hlaing ;



• David Vandy;



• Fadly Djawas;



• Fetallaw Tsegay;



• Hassan Pirzada;



• Hinemoa Ritete;



• I Nyoman Satya Laksana;



• Ireneo Eric Nueca;



• Jessica Kostarelas;



• Made Putri Sri Astuti;



• Manoj Madathil;



• Maricel Francis;



• Mary Anne Harrison;



• Mobin Jahed Diznab;



• Nasir Khan;



• Prakashan Panneri;



• Ruby Ross Idioma;



• Saw Sonny Tu Dhoo;



• Taimur Aman;



• Tresor Bahigwa;



• Waqas Amin;



• Yung Chun Cedric Chen;



• Alousis Ballah; and



• Arina Ritete



• respondents).

[2] As the facts and circumstances for each application are substantially the same they have been dealt with together.

[3] The matter was listed for hearing on 24 August 2017. The applicant’s Director, Mr Kim Bolvary, gave evidence and made submissions. A number of respondents also attended, some of whom made submissions and gave evidence.

[4] The applicant submitted that the respondent employees were covered by the Airline Operations Award 2010 (the Award). At subclause 13.1 of the Award it states that redundancy pay is provided for in the National Employment Standards (NES).

[5] Section 119 of the Fair Work Act 2009 (the Act) sets out the NES minimum entitlement to redundancy pay for national system employees. The NES provides a maximum amount of 16 weeks redundancy pay depending on an employee’s period of continuous service.

[6] The applications are made pursuant to s.120(2) of the Fair Work Act 2009 (the Act) which provides the Commission a discretion to reduce or remove an entitlement to redundancy pay should the Commission consider it appropriate.

[7] Section 120(2) is couched in the following terms:

“120(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.”

[8] Section 120(2) of the Act only applies where the terms of s.120(1) are met:

“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.”

(my underline)

[9] There is no dispute that the relevant employees were made redundant by the applicant and paid out their accrued entitlements following the loss of a two significant contracts.

[10] The applicant does not submit that it cannot pay the amount of redundancy due, but argues that it has obtained other acceptable employment for the named respondents and that on this basis the statutory redundancy entitlement of the respondents should be reduced to nil.

[11] The exclusions from redundancy pay provided for in s.121 of the Act were not raised in these applications.

[12] In these applications the Commission needs to determine two issues; firstly did the employer obtain other employment for the ex-employees; and secondly if so was it ‘acceptable’ employment? 1

Applicant’s submissions

[13] In the supporting documentation attached to the applicant’s Form F45A – Application to vary redundancy pay, the applicant via its Director, Mr Kim Bolvary, stated it provided aircraft cleaning services at the Perth International Airport under an Agreement with dnata Airport Services Pty Ltd (dnata). To perform its obligations under that agreement KTAS employed approximately 50 employees on a permanent part time basis.

[14] As stated above, Mr Bolvary made submissions and gave evidence in support of his application, which generally followed what was contained in his written documentation with one exception. Mr Bolvary also stated that the applicant had lost its contract to perform cleaning work with Menzies Aviation at the same time as losing the cleaning contract with dnata.

[15] On 12 April 2017, dnata provided KTAS with 90 days’ written notice of its intention to terminate the agreement for KTAS to provide aircraft cleaning services.

[16] Upon termination of that agreement, a new contactor, Cabin Services Australia Pty Ltd (CSA), an entity owned by dnata, took over the aircraft cleaning services in place of the applicant.

[17] With the termination of the cleaning services agreement KTAS did not have the capacity to continue to employ the respondents.

[18] Mr Bolvary states he personally explained to staff on-site that CSA was taking over the aircraft cleaning services and subsequently posted contact details of CSA in the staff crib room for staff to use to submit their resumes to be considered for employment with CSA.

[19] The applicant submitted that it was instrumental in convincing CSA to interview the applicant’s staff, 2 and that all staff who submitted their resumes were contacted by CSA to attend a meeting and training session. Those employees who were not successful in obtaining employment with CSA were paid their redundancy entitlements.3

[20] The applicant stated it paid the 26 employees all their entitlements at the cessation of their employment as the employees were not being ‘transferred’ to CSA. CSA then made its own decision regarding employment of the applicant’s staff. 4

[21] Mr Bolvary also relied on an email of 4 August 2017, from the Vice President of Menzies Aviation which confirmed that while Menzies Aviation could not force any (KTAS) recruitment onto the CSA the “question was raised on numerous occasions in the hope that this was the case”.

[22] On 7 August 2017, in an email to the Commission, Mr Bolvary stated that KTAS were:

“… instrumental in the meetings with the CSA management and the management from Dnata and Mensies (sic) to convince CSA to at the very least, interview the KTAS staff of which they did. KTAS have never stated KTAS got the ex-staff a job with CSA this is ludicrous to even suggest this. CSA are the only ones who can decide if they want to employ someone.”

[23] On 9 August 2017, Mr Bolvary confirmed by email that KTAS did not transfer staff to CSA; all entitlements were paid out to KTAS staff on termination.

[24] On 12 August 2017, Mr Bolvary advised in an email to one of the named respondents that he had held meetings with CSA management and attempted to convince them to “at the very least interview KTAS staff”. 5 He stated that further meetings were held with dnata and Menzies to convince CSA to interview KTAS staff.

[25] The applicant submitted that the respondents, in their employment with CSA, complete work of a like nature; work at the same location; had no interruption to their employment; and have comparable roles and responsibilities in their new employment.

[26] The applicant submitted that it should not be liable for redundancy payments for the respondents because it obtained acceptable employment for each of the respondents with the new contactor, CSA. A comparison of rates and conditions was not provided and in his evidence Mr Bolvary stated he was unaware of what rates and conditions the respondent employees were engaged under at CSA.

Respondents’ submissions

[27] The Commission forwarded KTAS’ application to the named respondent employees who were asked to provide any comment. A number of responses were received.

[28] In support of their objections to their redundancy entitlements being reduced to nil, numerous respondents submitted a letter addressed to them personally from CSA which stated:

“You were employed by CSA through a recruitment process independent of your former employer, KT Aviation Service Pty Ltd (KTAS). To clarify, KTAS did not assist CSA when it recruited you.

…

CSA recognises any entitlements you may have accrued from your Commencement Date with it. However, any entitlement owed prior to the Commencement Date are owed to you by your former employer.”

[29] Aileen Rustia submitted that KTAS did not assist CSA when she was employed by CSA. 6 Ms Rustia attached correspondence from the CSA Human Resources and Compliance Manager referred to abovewhich stated, inter alia:

“You were employed by CSA through a recruitment process independent of your former employer, KT Aviation Services Pty Ltd (KTAS) .To clarify, KTAS did not assist CSA when it recruited you.”

[30] Andi Mirzah submitted that KTAS did not assist CSA in recruiting him, having been employed through a recruitment process independent from CSA. 7 Mr Mirzah attached a copy of correspondence from CSA as evidence of this assertion.

[31] Mr Mirzah stated that as a casual with CSA he is no longer employed on a permanent part time basis and has reduced hours in comparison to his previous position with KTAS. Mr Mirzah, on this basis, submitted that he was entitled to his redundancy payment.

[32] Hassan Pirzada, in his written submission to the Commission, stated that KTAS never provided advice that they had obtained work for him at CSA. 8 He was only provided with a brochure from KTAS about an information session he could attend. At the information session he was told that there was no guarantee of a job with CSA. While he obtained a job with CSA, he stated it was always only to be on a casual basis. Mr Pirzada stated he was entitled to 7 weeks redundancy pay.

[33] He resigned from CSA after 4 days on the basis he would never be made permanent and to seek permanent work. He was relying on his redundancy payment to pay his rent and bills.

[34] David Vandy submitted that KTAS did not give or find ways for him to obtain employment with CSA, and attached a letter from CSA confirming that he had undertaken a recruitment process independent of KTAS. 9

[35] Fadly Djawas also contended that he was entitled to his redundancy entitlement. He stated that he was interviewed by CSA and was not guaranteed a position. 10 He has been fortunate to obtain a casual position with CSA, but with less hours and no job security.

[36] Fetallaw Tsegay advised the Commission that he went through an interview process like any other applicant and obtained a casual position with CSA; he was previously a permanent employee at KTAS. 11

[37] Hinemoa Ritete stated that KTAS had nothing to do with her obtaining employment with CSA and attached correspondence from CSA. She stated that her redundancy entitlement should be paid. 12

[38] I Nyoman Satya Laksana forwarded correspondence from CSA which stated that KTAS did not assist CSA when he was recruited. 13

[39] Jessica Kostarelas, in her written correspondence, stated that on her termination of employment with KTAS she was given the option by KTAS of applying for a position with CSA. 14 Ms Kostarelas submitted that CSA stated that there was no guarantee of employment and that her new position with CSA was casual with 15 – 20 hours per week, whereas she was on a permanent contract with KTAS previously working 40 – 50 hours. At the hearing Ms Kostarelas stated that her new employment was also subject to a 6 month probationary period and that she was only working 4 shifts a week of 4 hours each. On this basis she was looking for other work as her reduced income was insufficient to pay her living expenses.

[40] Made Astuti provided the Commission with correspondence from CSA stating that she went through a recruitment process independent of KTAS. 15

[41] Mobin Diznab opposed the application stating that he made his own arrangements in obtaining work at CSA. 16 He stated that his position at CSA was casual with no guarantee of hours, which were inferior conditions to his previous position with KTAS.

[42] Nasir Khan advised the Commission that he went through a process of sending his resume to CSA and attending an interview and was advised there was no guarantee of being successful. 17 His position went from permanent part time at KTAS to casual with CSA.

[43] Ruby Idioma stated that she was required to make an individual application and attend an interview; she did not accept that KTAS did anything for her to be employed with CSA. 18 Her new position was as a casual leading hand whereas she was employed by KTAS as a permanent full time supervisor.

[44] Taimur Aman advised the Commission that KTAS did not assist in his obtaining employment with CSA. 19 He went from a permanent part time fixed roster of 36 hours per week to a casual position of up to 20 hours per week. At the hearing Mr Aman advised that he had now resigned from CSA as he could not survive on the casual hours CSA provided.

[45] Tresor Bahigwa, in an email to the Commission, stated that KTAS did not offer him any employment prior to his leaving KTAS. 20

[46] Waqus Amin stated he was hired by CSA on his own merits by applying and going through a process. 21 He was no longer a permanent part time employee as he was hired as a casual with no job security. He also lost his unused sick leave.

[47] Alousis Ballah submitted that he had to attend the CSA office for information on applying for a position and had been offered only a casual position which is not guaranteed. 22

[48] Maricel Francis and Maryanne Harrison responded to the application by submitting they were entitled to their redundancy payments. 23 Mr Yung Chen stated he had to go through the necessary processes to obtain employment with CSA and attached CSA’s letter confirming his recruitment was independent of KTAS.24

Consideration

[49] Redundancy payments are intended to compensate for the loss of non-transferrable credits such as sick and long service leave and other entitlements based on length of service and the inconvenience and hardship imposed on employees. 25

[50] The statutory provision to enable a reduction in redundancy entitlements arises historically from a decision of a Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (theRedundancy Case). 26 This case introduced a general severance pay entitlement under federal awards for employees whose employment was terminated on account of redundancy.

[51] In the Redundancy Case, employers submitted that it would not be appropriate where the employee concerned had secured alternative employment for the employee to then receive a redundancy benefit. The Full Bench stated:

“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. However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business.” 27

[52] Later in that case, the Full Bench considered the terms of an amendment to the Metal Industry Award 1984 that should be made to reflect its decision. 28 The Full Bench ruled that the following provision should be included in the amendment to that award:

“An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he/she obtains acceptable alternative employment for an employee.” 29

[53] Redundancy payments are intended to compensate for the loss of non-transferrable credits such as sick and long service leave as well as other entitlements based on length of service and the inconvenience and hardship imposed on employees, as discussed in the Redundancy Case.

[54] It is a serious step for the Commission to make an order to limit or remove an employee’s statutory entitlements to redundancy pay. The employer must demonstrate that they have ‘obtained acceptable’ employment for the employees concerned.

[55] It is well established that the onus lies on the employer who seeks to activate the exemption from redundancy payment obligations  30 to its employees.

[56] In this application the employer argues that it has obtained employment or at least that it took positive steps to obtain such employment for the respondents. Mr Bolvary submits that KTAS had obtained acceptable employment on the basis that:

● Meetings were arranged with CSA where they were advised that it would be good business practice to interview KTAS staff for the purpose of employing them;

● KTAS staff were advised to submit their resumes to CSA;

● There was no time lost between ‘transferring’ from KTAS to CSA;

● The aircraft cleaning work of KTAS is comparable to that of CSA and employees work at the same location.

[57] The Full Court of the Federal Court in FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia 31made a finding regarding the meaning of obtaining employment under s.120 of the Act, holding at at paragraph [18]:

“ To “obtain” employment for an individual means to procure (acquire or get) another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice. If the offer is not accepted the question whether that employment was acceptable will then arise. The applicant may have facilitated the opportunity for its employees to apply for employment with the third party, but what it obtained for them was something less than offers of employment which they could accept or decline as a matter of choice. The applicant did not “obtain” employment with the third party for its employees.”

[58] As discussed in the FBIS Case, if an offer of alternative employment has been made by the employer, and the employee does not accept it, then the question turns to whether the offer was an acceptable one. To establish the acceptability of alternative employment, the test is an objective one, involving a consideration of matters such as hours of work, pay levels, recognition of previous service, fringe benefits, distance of travel to job, workload, job security and other matters. 32

[59] In this application, there are a number of factors to consider concerning whether alternate employment was obtained by the applicant for the named respondents and if so, whether the offer was an acceptable one.

[60] No respondent employee conceded that KTAS had obtained other acceptable employment; all ex KTAS employees who provided their views were unanimous in stating that they were not guaranteed positions with CSA and only obtained a position with CSA via their own application and successful interview.

[61] Further there was no evidence that the alternative positions obtained equated to ‘acceptable employment’. The evidence of the respondents that was before the Commission was that their new positions with CSA were inferior to their previous positions with KTAS in that they had moved from permanent guaranteed hours to casual employment with less hours.

[62] Despite the submission of the applicant, the evidence before the Commission does not demonstrate that the applicant obtained employment for the respondents.

[63] CSA have made it clear in their correspondence to ex KTAS employees that KTAS did not assist in their recruitment process. CSA states that the employment of the respondents occurred through a recruitment process independent of KTAS. 33

[64] It is accepted that KTAS facilitated the opportunity for its employees to apply for employment with the CSA; KTAS did not however obtain offers of employment which the respondents could accept or decline as a matter of choice.

[65] Facilitating the process of obtaining job offers while highly commendable, falls short of the threshold requirement as enunciated in the FBIS case of obtaining offers of employment the respondents could accept or decline. The offers of employment arose from the respondents submitting their resumes and attending an interview where it then became a decision of CSA as to whether a position would be offered.

[66] The applicant has not satisfied the Commission that it obtained other employment for the respondents, being work with CSA. On this basis the discretion available to reduce or eliminate its redundancy pay obligations does not arise.

[67] Even if it was accepted that KTAS had obtained employment for the respondents with CSA, the evidence falls short of demonstrating that it could be considered ‘acceptable’ employment. Mr Bolvary was unable to address this question, as he stated he had no knowledge of the terms and conditions of employment the respondent employees enjoyed at CSA. It is difficult for KTAS to argue that it obtained acceptable employment for the respondents when the details of that employment are not known to KTAS.

[68] On the evidence before the Commission, the respondents appear to have reverted to casual employment with fewer hours than their previous permanent part time work. A number have since either resigned or are looking for alternative work on the basis that the hours are insufficient to maintain a living.

[69] The applications to reduce the respondents’ statutory redundancy entitlements to nil are dismissed.

DEPUTY PRESIDENT

 1   FBISInternational Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 at paragraph [18]

 2   Email of 7 August 2017 from Kim Bolvary

 3   Email of 3 August 2017 from Kim Bolvary to Hassan Pirzada

 4   Email of 9 August 2017 from Kim Bolvary

 5   Email of 12 August from Kim Bolvary to Ruby Idioma

 6   Email of 11 August 2017

 7   Email of 11 August 2017

 8   Email of 9 August 2017

 9   Email of 14 August 2017

 10   Email of 14 August 2017

 11   Email of 14 August 2017

 12   Email of 9 August 2017

 13   Email of 11 August 2017

 14   Email of 7 August 2017

 15   Email of 11 August 2017

 16   Email of 7 August 2017

 17   Email of 8 August 2017

 18   Email of 12 August 2017

 19   Email of 13 August 2017

 20   Email of 12 August 2017

 21   Email of 9 August 2017

 22   Email of 7 August 2017

 23   Email of 15 August 2017; Email of 7 August 2017

 24   Email of 11 August 2017

 25   Termination Change and Redundancy Case (1984) 8 IR 34; AIRC Print F6230 at p.50.

 26 (1984) 8 IR 34

 27   Ibid at 75

 28 (1984) 9 IR 115

 29   Ibid at 135

 30   Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226.

 31 [2015] FCAFC 90

 32   Ibid at 230-231

 33   CSA letter to ex-KTAS employees, dated 9 August 2017

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