Lee Crane Hire Pty Ltd v Robert Sneek, Colin Kennedy and Greg Wiemers
[2020] FWC 4792
•7 SEPTEMBER 2020
| [2020] FWC 4792 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Lee Crane Hire Pty Ltd
v
Robert Sneek, Colin Kennedy and Greg Wiemers
(C2020/2270, C2020/2271, C2020/2353)
DEPUTY PRESIDENT LAKE | BRISBANE, 7 SEPTEMBER 2020 |
Variation of redundancy pay – alternative work offered – other employment found to be not acceptable – redundancy pay not varied – application denied.
Background
[1] Lee Crane Hire Pty Ltd (Lee Crane Hire) has applied pursuant to s.120(2) of the Fair Work Act 2009 (the Act) to have the Commission reduce to nil the redundancy entitlement of Mr Robert Sneek, Mr Colin Kennedy and Mr Greg Wiemers (the Respondents) who were employees of the company who have refused an alternative offer of employment with Lee Crane Hire following the closure of the Gladstone Depot.
[2] Lee Crane Hire operates a mobile crane hire business and operates another depot at Biloela. There has been a downturn in business of the Gladstone Depot such that the business could no longer guarantee full time work to the employees based at the Depot. The owner of the business decided to close the Gladstone Depot and operate all his business through the Biloela depot.
[3] As a result, the permanent roles in Gladstone were no longer required to be performed by anyone and those employees were made redundant.
[4] The terms and conditions of employment of the Employees were, at all material times, provided by the Lee Crane Hire Pty Ltd Enterprise Agreement 2015 (Agreement). It is pertinent to outline each of the three Respondents and their respective redundancy entitlements.
Robert Sneek
[5] Mr Sneek commenced employment with the Applicant in October 2010. His employment was terminated for reasons of redundancy on 31 March 2020. Mr Sneek’s period of continuous service with the Applicant was 9 years but less than 10 years. Under clause 2.4.2 of the Agreement Mr Sneek was entitled to 16 weeks of redundancy pay.
Greg Wiemers
[6] Mr Wiemers commenced employment with the Applicant in May 2016. His employment was terminated for reasons of redundancy on 31 March 2020. Mr Wiemers’ period of continuous service with the Applicant was 3 years but less than 4 years. Under clause 2.4.2 of the Agreement Mr Wiemers was entitled to 7 weeks of redundancy pay.
Colin Kennedy
[7] Mr Kennedy commenced employment with the Applicant in December 2009. His employment was terminated for reasons of redundancy on 31 March 2020. Mr Kennedy’s period of continuous service with the Applicant was over 10 years. Under clause 2.4.2 of the Agreement Mr Kennedy was entitled to 12 weeks of redundancy pay.
The Application
[8] The application to vary the redundancy pay of the Respondents to nil was on the basis that Lee Cranes Hire had provided acceptable alternative employment for all of the Respondents.
[9] The parties agreed on 20 July 2020 to have the matter determined on the papers with the submissions provided.
[10] The matter for determination is whether Lee Crane Hire provided other acceptable work and if so, should the commission exercise discretion to vary the redundancy? If a variation was granted, the natural corollary is that I must determine to what extent the redundancy should be varied.
Relevant legislation
[11] Section 119 and 120 of the Act provide:
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.
[12] Section 121 of the Act provides:
121 Exclusions from obligation to pay redundancy pay
(1) Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):
(a) the employee’s period of continuous service with the employer is less than 12 months; or
(b) the employer is a small business employer.
(2) A modern award may include a term specifying other situations in which section 119 does not apply to the termination of an employee’s employment.
(3) If a modern award that is in operation includes such a term (the award term), an enterprise agreement may:
(a) incorporate the award term by reference (and as in force from time to time) into the enterprise agreement; and
(b) provide that the incorporated term covers some or all of the employees who are also covered by the award term.
[13] Section 120 confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s.119 of the Act.
[14] Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s.119, and the employer ‘obtains other acceptable employment’ for the employee. These are the jurisdictional facts that must be established before the Commission may exercise its discretion. Section 120(2) then states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s.120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s.120(3)).
Submissions
[15] Lee Crane Hire ran the same process for each of the Respondents.
[16] On 27 February the Respondents attended a toolbox meeting at the Gladstone Depot of Lee Crane Hire with Mr Greg Lee, Mrs Lesley Lee and several other employees. At this meeting, the Respondents were informed of the proposed closure of the Gladstone office and that Lee Crane Hire would still be maintaining another yard where Lee Crane Hire would work
from and still perform work as required in the Gladstone area. As the work had been on the
decline in Gladstone, Lee Crane Hire could not guarantee full time hours in Gladstone so the
potential options regarding alternative employment were proposed.
[17] A letter was issued to the Respondents on 9 March 2020 requesting an expression of interest:
Due to the company’s restructure and changing business needs, the company is now seeking to:
ascertain the number of Gladstone employees interested in working out of the Biloela Depot; and
confirm the assistance available to employees opting for such transition.
In accordance with the company’s existing EBA, the following assistance will be available to Gladstone employees
working out of the Biloela depot:
Transport between Gladstone to Biloela;
Fuel card for company transport between Gladstone to Biloela;
Accommodation; and
Overnight and meal allowances (see section 4.4 Allowances).
[18] A follow up meeting with each of the respondents was held on 30 March 2020 where the employees were offered either of two options:
• The first option was for each of the Respondents to continue in the same role, but be based out of Biloela and Gladstone with the only Depot being in Biloela. This option would include payment for time spent travelling to work and accommodation, the same hours of work, a company vehicle supplied, the same salary and leave entitlements. Additionally, as the role was the same mobile crane operations role, the travel to different sites would be largely unchanged; or
• The second option was to take on casual employment for Lee Crane Hire in Gladstone, this would involve the Respondents performing the same work, however there would be no guaranteed hours of work.
[19] In essence, the Employees would retain their current role with the Applicant but would be based out of Biloela instead of Gladstone. It is noted that whilst based in Gladstone, the Respondents regularly travelled to Biloela and beyond to perform their work. They were advised that the same would happen based in Biloela. That is, they would still regularly perform work in Gladstone, but the office would not be based there.
[20] During the meeting of 30 March 2020, each of the Respondents refused both options for personal reasons. The were all terminated on the 31 March 2020.
Authorities – “other acceptable employment”
[21] In Spotless Services Australia Limited t/as Alliance Catering [2016] FWC 4505 (‘Spotless’), Deputy President Sams usefully identified the authorities relevant to “other acceptable employment” and the task to be performed by the Commission:
[60] The question of what constitutes ‘other acceptable employment’ in the context of a redundancy situation, has been considered by the Commission and its predecessors in many and varied circumstances and industries over a number of years. In Derole Nominees, a Full Bench of the Australian Industrial Relations Commission (AIRC) said at pp 128-129:
‘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 like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.
This approach to the test demonstrates that any alternative employment available to the eighteen former employees of the company cannot be regarded as “acceptable” merely because a number of other former employees took up employment at the new location. The relevant aspects of the job must be examined objectively to determine whether the employment is “acceptable”.
…
The exemption provision imports the notion that an effort of a sufficient kind by an outgoing employer may cause his obligation for redundancy pay to be reduced; a decision by an employee not to co-operate with the employer may well disentitle the employee to all or some of the payment.’ (my emphasis)
[61] In Oscar Oscar Group Services Pty Ltd v Lees [2012] FWC 3901 (‘Oscar Oscar’), Commissioner Asbury (as Her Honour then was), said at paras [18]-[19]:
‘[18] The question of whether alternative employment is acceptable, must be assessed on an objective basis. It is relevant to the assessment that redundancy payments are not made solely for the purpose of assisting employees to find alternative employment. Redundancy payments are intended to tide an employee over during the search for alternative employment, and to compensate the employee for loss of credits for sick leave, long service leave and other entitlements based on length of service. The question of whether previous service with the previous employer is recognised as service with the new employer, will also be relevant.
[19] Other considerations will be whether the alternative employment is of a like nature; a reasonable distance from the previous employment; whether pay and conditions are comparable; hours of work and job security in relation to the new position. The fact that an alternative position does not meet the personal preferences of an employee, may place the right to receive full redundancy pay at risk, where the employee refuses a position that is found to be acceptable on an objective basis.’ (my emphasis)
[62] Senior Deputy President Watson in Feltex said at a para [33] and [89]:
‘[33] The parties accept, as do I, that matters to be considered in assessing whether alternative acceptable employment has been obtained include matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security, the location of work, continuity of service and accruals and the application of probationary periods. The relevant authorities also demonstrate that this listing of matters is not exhaustive and the question of whether an employment is acceptable alternative employment will be decided on the peculiar facts of a matter. Further, the authorities suggest that acceptable employment is not synonymous with identical employment, although the basis of the 2004 variation of the TCR test case provision suggests that, whilst not identical, terms and conditions should be substantially similar and no less favourable, overall, than the terms and conditions applicable to the employee at the time of the redundancy.
…
[89] I accept the proposition advanced by Feltex Australia that 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.’
[63] In Vicstaff Pty Ltd (t/as Stratco) v May (2010) 204 IR 233 (‘Vicstaff’), Bissett C said at paras [29]-[30]:
‘[29] The determination of whether or not alternative employment is acceptable must be determined objectively and not subjectively from the perspective of the employer or employees. That the alternative employment may be rejected does not objectively make it unacceptable nor does the fact that the employment was offered make it, by virtue of the offer, acceptable. Further, that one of the persons out of a group may have accepted the employment does not make the employment acceptable for the others in the group. The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.
[30] It is therefore incumbent upon the employer (Vicstaff) in this matter to demonstrate that the alternative employment is acceptable taking into account all matters relevant in such a consideration. Had the alternative work been considered acceptable to the individuals one imagines they would have accepted the work offered.’
[64] In DRW Investments t/as Wettenhalls v Timothy Richards & Others [2016] FWC 461, I said at para [183]:
‘[183] Notwithstanding the above general principles, whether the alternative employment is acceptable, will likely include consideration of the following matters:
• rate of pay;
• hours of work;
• work location;
• seniority;
• fringe benefits;
• workload;
• job security;
• continuity of service;
• accrual of benefits;
• probationary periods;
• carer’s responsibilities; and
• family circumstances.
This list is not exhaustive. There may be other relevant factors.’
[65] The above decisions have some common features, including:
• The test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.
• ‘Acceptable employment’ is not identical employment, as no two jobs could be exactly the same.
• An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.
• An employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable’.
• The acceptance of alternative employment by one or more persons in a group of redundant employees, does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.
• There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.
Meaning of ‘acceptable employment’
[22] The question remains whether the offer by Lee Crane Hire was on terms and conditions no less favourable than the terms and conditions that the Respondents experienced prior to the restructure.
[23] The proposed roles do not have to be identical and in considering this the Commission must determine the matter objectively weighing up aspects of the role that include duties, conditions, pay level and location to mention some of them.
[24] Relevant to this point in Derole Nominees 1, the Full Bench of the Australian Industrial Relations Commission (AIRC) found:
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 like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.
[25] A further explanation on this point was put forward by in Von Bibra Robina Autovillage Pty Ltd [2007] AIRC 397 by Richards SDP, who adopted the principles in Derole Nominees and said at paras [27]-[27]:
“[26]In contrast, the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.”
Was the substance of the role the same?
[26] Having regard to the above authorities, I consider the two options given to the Respondents do not constitute acceptable alternative work. Whilst the work remained the same for each of the Respondents, there was a significant objective difference in each of the options. There was more than some detrimental alteration to the terms and conditions of the proposed employment which rendered the options unacceptable.
[27] The first option of continuing the same work based from the Depot in Biloela would impose a significant impost on the employees being required to travel from Gladstone to Biloela, the travel time is approximately 1h 24 min (121kms). The Applicant indicated that all travel costs for the travel would be borne by the Applicant (as per the Agreement) however, there would be also the occasional requirement to stay overnight. The number of nights away from the home location of Gladstone was not indicated. It is also to be noted that each of the employees did some level of travel to Biloela and did stay away from home on occasions however this was not quantified by either the Applicant or the Respondent.
[28] The other option of casual work still in Gladstone is equally perilous for the Respondents. As casuals there was no ongoing commitment to work being provided. If the market for mobile crane service was in decline such that the Depot was being closed it may continue until all work effectively dries up. As a casual, there would no longer be the entitlement to leave, long service leave and other benefits that accrue to permanent work. Further, it was acknowledged that the Gladstone business was in decline. No data was put forward on the long term future of the Gladstone business – whether it was in continued decline, had it hit rock bottom, or was there to be a further decline to even lower levels? For the Respondents the relocation of work to be based out of Biloela was a significant one, steeped in uncertainty and laden with risk – in these circumstances the alternative arrangement cannot be considered acceptable.
[29] It is the devil’s alternative: move to a new location some 121kms away and incur a practical detriment on a continuous basis or, keep your job, but as a casual with no assurance of work in an evidently declining market. This should not be classified as acceptable alternative work that would release the employer from their obligation to pay out a redundancy entitlement. In short, the travel to Biloela makes the options, in line with the authority cited, unreasonably distant.
[30] This decision is made keeping in mind the personal situation of the Respondents and I will briefly touch on some of the relevant criteria.
[31] Mr Sneek submitted that at 64 years of age performing a 260km round trip was not practical, especially given the conditions of travel between Gladstone and Biloela. This includes the time of day (being either early morning or later in the evening), road condition and potential for wild animals requiring constant alertness to avoid harm. Inherent in extra time spent travelling is the extra time and energy expended as what would be part of regular employment. Mr Sneek further submitted that his wife is several years older than himself and that to leave the entire week was not practical. I accept these submissions and find them to relevant in determining the employment was not acceptable for Mr Sneek.
[32] Mr Kennedy put forward similar submissions in regard to the travel conditions and also noted that he has significant family responsibilities, including caring for his grandchildren. I accept these submissions and find them to relevant in determining the employment was not acceptable for Mr Kennedy.
[33] Mr Wiemers submitted a similar statement regarding travel. As to his personal responsibilities, his wife has suffered a bleed on the brain and he was not comfortable leaving her alone throughout the week. accept these submissions and find them to relevant in determining the employment was not acceptable for Mr Wiemers.
[34] It is noted that all three Respondents made similar submissions regarding the travel between Biloela and Gladstone and the impact such a journey would have. As to evidentiary value, it is not unsurprising that this statement is echoed and I do not detract any weight from this submission on the ground that all three Respondents have raised it – it is a live and significant issue which is of concern to the Respondents.
[35] My considered view is that the two employment options offered by Lee Crane Pty Ltd are not ‘acceptable other employment’ for the purpose of s.120(1)(b)(i) of the Act.
Conclusion
[36] Taking into account all of the circumstances, I consider that I should not exercise my discretion to reduce the Respondents redundancy pay. I Order that each of the Respondents receive their full respective redundancy entitlements, as outlined in [5]-[7] above, within 14 days of this decision being issued.
DEPUTY PRESIDENT
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