Lee Crane Hire Pty Ltd v Ms Michelle Coombes
[2015] FWC 4727
•23 JULY 2015
| [2015] FWC 4727 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Lee Crane Hire Pty Ltd
v
Ms Michelle Coombes
(C2015/4392)
COMMISSIONER SPENCER | BRISBANE, 23 JULY 2015 |
Variation of redundancy pay, seeking reduced payment in recognition of delaying redundancy to accommodate employee’s personal circumstances and for offer of other acceptable employment.
Introduction
[1] This decision relates to an application filed pursuant to s.120 of the Fair Work Act 2009 (Cth) (the Act). The application has been made by Lee Crane Hire Pty Ltd (the Applicant). The Applicant has applied to the Fair Work Commission (the Commission) seeking that the redundancy entitlement of Ms Michelle Coombes (the Respondent) be reduced to nil.
[2] The Applicant filed a previous s.120 application (matter C2015/2390), and while this application was on foot, the Respondent filed an unfair dismissal application (U2015/5099). The issue of whether the Respondent was made genuinely redundant was considered in the unfair dismissal application, and the initial s.120 application (C2015/2390) file was closed. Both parties are located in Gladstone so a telephone conference was held and the issues in dispute between the parties were discussed. The unfair dismissal application was dismissed, as the Respondent was found to have been made genuinely redundant (Decision PR569339) 1, and the Applicant has made a new application pursuant to s.120 (C2015/4392). This Decision deals with this s.120 application.
[3] The Applicant submitted that the amount of the redundancy payment should be reduced, as it had resiled from the original notification of redundancy and extended the Respondent’s employment to accommodate her personal circumstances and had made offers of other acceptable employment opportunities to the Respondent, which the Respondent declined. The Applicant is not making the application because the business is unable to pay the Respondent her redundancy entitlements, but, for the above reasons pursuant to s.120(1)(b)(i).
[4] Directions were issued for the filing of material in the previous s.120 application (C2015/2390). Both parties filed material. The Applicant has resubmitted material filed in the previous application with the current application. The Respondent seeks to rely on the material submitted in relation to the previous s.120 application, in addition to correspondence from the Respondent’s solicitor of 17 June 2015. These materials have been considered. The parties consented to the mater being dealt with on the papers.
[5] While not all submission and evidence filed in this matter have been referred to, all of such have been considered.
Relevant legislation and award clauses
[6] 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 |
[7] The application has been made pursuant to s.120 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; 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. (emphasis added)
389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
Background
[8] The Respondent had been employed on a full-time basis working 38 hours per week as a payroll officer at the Applicant’s Gladstone office. The Respondent had worked for the Applicant since 25 July 2011, a total of 3 years and 8 months.
[9] In August of 2014, the Applicant held meetings with Gladstone administration staff regarding the downturn of business and the possibility that staff may have to be terminated, and offered casual positions to staff. On 15 August 2014, termination letters were sent to 3 administrative staff, including the Respondent, advising of termination of their full-time employment (due to redundancy), and providing 4 weeks notice. The correspondence indicated that they had been offered casual employment, which, if accepted, would commence on 12 September 2014. The Respondent submitted it had provided letters of offer for casual employment for 4 days per week. The Respondent submitted that given the higher casual hourly rate, the wages over 4 days would be commensurate with the Respondent’s current earnings.
[10] The letter, dated 15 August 2014, stated as follows:
“…
RE: TERMINATION OF FULL TIME EMPLOYMENT CONTRACT
Dear Michelle,
As per our consultation with regards to terminating your full time employment, this is a decision based entirely on the down turn of work available in the Gladstone area and not a reflection on your performance. There has been a decline in business in the Gladstone area over the past months and at this stage I cannot continue to employ you on a full time basis.
This letter serves as documentation stating your notice period of 4 weeks will commence as of today’s date. This was calculated on your continuous service of over 2 years plus an extra week for your age being in the over 45 year’s category. Completion date of this notice will be the 11th September 2014.
If the casual position offered to you is accepted, your commencement date for this position will be the 12th September 2014.
Should you choose to decline this position, or not continue to work for the full notice period, pro rata payment in lieu may be deducted from your termination payment.
…”
[11] The Respondent, subsequent to the redundancy notification, became ill. The Applicant submitted that, in September 2014, it agreed to hold the Respondent’s redundancy “in abeyance” until the course of her cancer treatment was known. The Applicant continued the Respondent’s employment in order for her to have access to the Applicant’s income protection insurance and to accommodate the illness and as she suffered a bereavement in her family, to allow her to take annual leave.
[12] The Respondent was further informed, on 5 March 2015, that her job was redundant, effective 2 April 2015. A letter was provided to the Applicant, dated 5 March 2015, as follows:
“…
RE: TERMINATION OF FULL TIME EMPLOYMENT CONTRACT
Dear Michelle,
Last August we consulted with all administration staff in the Gladstone branch regarding the severe business downturn and the need to terminate full time employment of all administrative staff and transition to casual employment with fewer hours. The other administration employees in the office were terminated and accepted casual employment as agreed with all of you. However, we delayed your termination due to your medical condition so that you could access income protection insurance.
Unfortunately the Lee Crane Hire business in Gladstone has not recovered from the market downturn in the Gladstone area. As advised we are also going to centralise administration for Gladstone Branch back to the Biloela head office. As a result of the sustained business downturn we must now follow through with the termination of your full time employment as per last year’s consultation and agreement. This is not a reflection on your individual performance.
We advised you on the 3rd March 2015 in the presence of (names omitted) about the availability of a fulltime payroll position in the Head Office at Biloela. Because of your length of service and experience we were eager for you to accept the Head Office payroll position. Unfortunately for Lee Crane Hire you declined the Biloela-based full time position and so as an alternative we are now offering you a casual position in Office Administration at the Gladstone Branch. At this stage we have a requirement for 4 days per week and up to 8 hours per day. This would be at your current rate plus the casual loading.
This letter confirms the termination of your fulltime employment with Lee Crane Hire and that your notice period of 4 weeks will commence as of today’s date. This notice period was calculated on your continuous service of over 3 years plus an extra week for your age being in the over 45 year’s category. Completion date of this notice will be the 2nd April 2015. During this notice period I would expect your full co-operation in the transition of the payroll to the Head Office.
If you accept the casual position, your commencement date for this position will be the 3rd April 2015.
Should you choose to decline this causal position, or not continue to work for the full notice period, pro rata payment in lieu may be deducted from your termination payment.
…”
[13] The Respondent remained in her full time role until 2 April 2015, when her employment ended, because she did not accept the offer of a casual position or a full-time role in Biloela. The Respondent complained that she had not been offered her redundancy entitlement in addition to this alternative employment. The Applicant argued that, in accordance with s.389, the Respondent was being redeployed within the employer’s enterprise.
Summary of Applicant’s submissions
[14] The Applicant submitted that in January to February 2015, it held the second round of redundancy discussions with the Respondent and therefore the need for the Respondent to transition to casual employment, or a full time role in Biloela. The Applicant submitted that the roles were not attractive to the Respondent. However, the Applicant had additional administrative work for the Respondent at this time, to complement her payroll position, which was then only requiring 2-3 days per week.
[15] On 3 March 2015, the Applicant submitted that a meeting was held with the Respondent in which they offered her a Payroll Officer Role (that had just been vacated) at the Biloela office. The Applicant stated that the Respondent (MC below) asked for some time to think about it, and the Applicant gave her until 5 March 2015.
[16] The Applicant submitted that (in consideration of the job in Biloela):
“On the intervening day MC requested consideration of travel costs and increased hourly rate. Based on her existing rate, options for local accommodation, and the distance, our opinion was that the remuneration she enjoyed was appropriate for the role and experience level. We declined any additions to her terms and conditions.”
[17] The Applicant submitted that the Respondent declined the offer on 5 March 2015, and the Applicant therefore indicated it would move her to a casual role in the Gladstone office. The Applicant submitted that, whilst it issued its notice of termination due to redundancy on 15 August 2014; this had been held in abeyance due to the Respondent’s personal circumstances, and out of fairness they gave the Respondent a further 4 weeks notice on 5 March 2015, (as per the NES), ending on 2 April 2015, along with an offer of casual employment.
[18] The Applicant submitted it received a letter from the Respondent on 1 April 2015 outlining her position that she believed she had been made redundant and requesting her redundancy payment. In response, the Applicant sent an email outlining that the Respondent had not been made redundant as they had offered her acceptable alternative employment.
[19] The Applicant submitted the parties arranged a meeting on 2 April 2015 to discuss the letter and the Applicant’s response. During the meeting, the Applicant stated that the Respondent maintained her position that the full-time payroll position in Biloela, and the 4 day per week casual role in Gladstone were both unacceptable, and asked if her employment was being terminated. The Applicant submitted that Mr Earl Stevens, CEO of the Applicant, told the Respondent that he had already terminated her employment due to redundancy in the letter of 5 March 2015. It was submitted further that Mr Stevens explained that he stated he would file an application with the Commission to dispute that there was a severance amount payable in the circumstances, given that acceptable alternative employment had been offered.
[20] Following the meeting, further correspondence passed between the parties, in which the Respondent maintained her position regarding the redundancy and reiterated she would not accept casual employment, as she considered it did not provide her with security of employment. The Respondent stated it told the Applicant they were filing a s.120 application with the Commission.
Respondent’s Submissions
[21] The Respondent submitted that her full time employment was terminated on 2 April 2015, due to a severe business downturn. The Respondent submitted that she was offered a role in Biloela, as the Applicant intended on moving the Payroll function of the business from Gladstone. The Respondent submitted that she declined the offer mainly due to the distance required to travel to and from Biloela, it being a 260 kilometre round trip daily, with no compensation costs, time or accommodation. The Respondent’s family home is in Gladstone and therefore it was submitted that the journey was too significant a daily imposition.
[22] The Respondent submitted she was subsequently offered a casual role of 4 days per week, more or less doing the same role, which the Respondent did not accept as suitable alternative employment, to her full time role and she also declined the offer. It was submitted that, when she was offered the casual employment, the Respondent voiced her opinion that the Applicant was effectively terminating her employment and making her role redundant.
[23] In the Respondent’s submissions, the Respondent queried the reasoning behind the Applicant terminating the full time employees and offering casual employment, as while there is a decrease in hours to 4 days per week, there would be an increase in hourly rate because of casual loading, and the net effect will be the same. The Respondent’s concern, it was submitted, was that the Applicant would decrease the Respondent’s hours as soon as she became casual, “therefore negating the obligation to pay severance payments”.
[24] The Respondent submitted there was confusion as to whether she had been made redundant, as the Applicant had stated in the initial s.120 application that the role was not redundant, as the Applicant still required employees to carry out the payroll and administrative functions. However, the Applicant also clearly stated in the application that the Respondent’s full-time job was no longer required to be performed.
[25] The Respondent submitted that her termination was a genuine redundancy and that severance was payable. The letter of 17 June 2015, submitted on behalf of the Respondent, argued that, as the Respondent’s wage was low, and the Respondent had incurred legal costs, and the full amount of severance would not cover her loss, the Respondent therefore should be awarded the full amount of her redundancy entitlement.
Consideration
[26] An application pursuant to s.120 has a number of elements, of which the Commission must be satisfied, prior to issuing an Order, to vary redundancy pay.
[27] Firstly, the wording of s.120, is that an entitlement to redundancy pay must exist, in order for the Commission to consider varying that redundancy pay entitlement. Where there is no entitlement under s.119 there can be no order to reduce the “entitlement” pursuant to s.120. 2
[28] The unfair dismissal application (U2015/5099) required a consideration as to whether the Respondent’s job had been made redundant. The application was dismissed as it was found that the Respondent’s job had been made redundant pursuant to s.389 of the Act 3.
[29] An entitlement to redundancy pay under s.119, arises where an employee’s employment is terminated either at the employer’s initiative, because the employer no longer required the job done by the employee, or to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or because of the insolvency or bankruptcy of the employer.
[30] Section 389 of the Act requires a consideration of whether the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise, in addition to other considerations. It was determined in the Decision 4 dealing with the unfair dismissal application, that the Applicant no longer required the Respondent’s job to be performed by anyone.
[31] For the purposes of this application, the Commission is satisfied that the Respondent has an entitlement to redundancy pay under s.119, as the Applicant no longer requires the (full -time) job done by the Respondent to be done by anyone, and that this is not due to the ordinary and customary turnover of labour, or because of the insolvency or bankruptcy of the Applicant.
[32] As the Respondent had been employed by the Applicant for 3 years and 8 months, her redundancy entitlement is 7 weeks wages. It then needs to be considered whether a variation of the redundancy pay for offering other employment, is warranted.
Other Acceptable Employment
[33] The Applicant stated they have obtained other acceptable employment for the Respondent pursuant to s.120(1)(b)(i).
[34] The Commission must consider the submissions and evidence regarding any alternate employment to enable the Commission to assess the “acceptable” nature of that employment.
[35] In the matter of Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 5, 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.” 6
[36] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 7 , 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...” 8
[37] The Respondent did not accept the alternative full-time employment offer of similar work in Biloela, obtained by the Applicant, and offered to her.
[38] The Applicant has now made the s.120 application, on the basis the Respondent was offered further employment by delaying the redundancy (to accommodate personal circumstances) after she was first notified of the redundancy in August 2014. Further the Applicant submitted it again offered acceptable alternative employment in March 2015, when the Applicant determined, on the basis of the Respondent’s personal circumstances, they could proceed with the redundancy notification. In line with the case authority above, matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security, work being of a like nature, the location being not unreasonably distant, and pay arrangements have to be considered.
[39] The Respondent also submitted that they should not have to pay a redundancy where they have given the Applicant two rounds of notice and had accommodated her illness and her personal circumstances, by initially extending her current employment. Accordingly, the Applicant considered it was unfair that they should have to pay the Respondent her full redundancy entitlement in those circumstances, where they had afforded such assistance.
[40] The Respondent rejected the full-time Biloela position, on the basis that it would require excessive travel to and from work, involving a 260 kilometre round trip daily. The Respondent asked about additional compensation for travel costs, but was told that there would be no additional compensation. On the evidence, all other considerations remained the same. The distance of the job and travel costs and possible re-location are factors to be taken into consideration, as to whether the Biloela position was acceptable.
[41] It is considered that a 260 kilometre drive each day, where travel expenses were to be met by the Respondent, does not demonstrate that the alternative employment was acceptable pursuant to s.120(b)(i) of the Act, to obviate the Applicant’s total obligation to pay redundancy.
[42] The Respondent was also offered a casual position in the Gladstone office of 4 days per week. Her job security and pay arrangements would have been changed, although the Respondent did concede that her take home pay would have been comparable to her full-time position, given the casual loading. However, the Respondent would no longer receive any entitlements to paid leave. The Respondent’s submissions also indicated a concern that, as a casual, the hours of work could be reduced by the Applicant. The Applicant provided a submission that they had had to employ a casual office administration clerk in Gladstone to perform the casual role, 4 days per week, in support of the casual position’s acceptability, and that this employee did perform the role for at least 4 days per week.
[43] It was submitted that there was confusion between the parties regarding the redundancy, on the basis that the Respondent may have accepted the offer of casual employment if her concerns regarding whether she had been made redundant, and was entitled to a redundancy pay, until the Commission made an order otherwise, were assuaged. The Applicant’s contradictory claim, that the Respondent had not been made redundant, as contained in their original s.120 application, reflect this confusion. In the current s.120 application, the Applicant at Question 2.2 states as follows:
“The Respondent insisted that the matter of redundancy be dealt with before she would consider the casual role. As noted previously, the Applicants business requirements prevented us from holding the casual role open for the Respondent during the period required for the resolution of this matter and so a casual administration clerk was hired 4 days a week and continues to be employed on this basis.”
[44] It appears the Respondent was seeking clarification of whether or not she had been made redundant and would receive redundancy pay, before she accepted the casual role, and that she sought to do this by filing the unfair dismissal application.
[45] This determination of this application involves the matter of a largely common set of facts and the exercise of the Commission’s discretion as to whether to reduce the redundancy entitlement.
Conclusion
[46] In both positions, there would be an on-going negative financial impact on the Respondent (in terms of the time and costs of travel for the full time job and for the casual position, the loss of the leave provisions), and the Respondent’s job security would be reduced in the casual position. However, it appears that the Respondent did not outright reject the casual position, but sought clarification over her redundancy entitlements given the Applicant’s claims that her job had not been made redundant, despite two notifications to the contrary.
[47] Taking into the account the alternative casual employment, and the Respondent’s history of continuing the employment after the initial notification, in all 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 to reduce the amount of redundancy pay on the basis that acceptable alternative employment in terms of the casual position had been obtained by the Applicant and offered to the Respondent. The variation to the redundancy pay takes into account that the alternative offer was not commensurate with the previously held full-time position.
[48] Pursuant to s.119(2), an employee has an entitlement to 7 weeks redundancy for at least 3 years but less than 4 years service. For the aforementioned reasons, the discretion pursuant to s.120(2) is exercised, to reduce the amount to five (5) weeks redundancy payment, at the rate of pay at the date of the final redundancy notification.
[49] This variation in payment, firstly, takes into account the continued employment the Applicant provided by delaying the initial redundancy for approximately 7 months (during which she was able to access the Applicant’s income protection insurance), while the Respondent received cancer treatment, and dealt with a family bereavement and was then able to take a period of annual leave. Secondly, the variation accounts for the offer of the causal position of four days per week, which is seen in the circumstances, to account for commensurate remuneration, but it is acknowledged that it was on a casual basis and involved less job security.
[50] The amount of redundancy pay owing is therefore 5 weeks pay. The variation takes into account the Applicant’s significant efforts to avert the redundancy when it was initially notified, in offering on-going employment for approximately 7 months, and then the alternative casual position that was offered but also the confusion over the entitlement at the time.
[51] This amount, of 5 weeks redundancy pay, less the appropriate tax, is payable within 14 days from the date of this Decision.
[52] I Order accordingly.
COMMISSIONER
1 PR569339, Coombes v Lee Crane Hire Pty Ltd[2015] FWC 3930
2 Ibid; also refer M & S Dickson [2011] FWA 5206 per Lewin C.
3 PR569339, Coombes v Lee Crane Hire Pty Ltd[2015] FWC 3930
4 PR569339, Coombes v Lee Crane Hire Pty Ltd[2015] FWC 3930
5 (1990) 140 IR 123.
6 (1990) 140 IR 123 at pp128.
7 (1988) 27 IR 226.
8 (1988) 27 IR 226 at pp230 - 231.
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